UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-40964

ZOOMCAR HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware		99-0431609
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Anjaneya Techno Park, No.147, 1st Floor
Kodihalli, Bangalore, Karnataka India 560008

+91 80488 21871

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☐	Large accelerated filer	☐	Accelerated filer
☒	Non-accelerated filer	☒	Smaller reporting company
		☒	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of November 12, 2025, 6,902,727 shares of the registrant’s common stock were outstanding.

ZOOMCAR HOLDINGS, INC.

Quarterly Report on Form 10-Q

Table of Contents

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Unaudited Condensed Consolidated Balance Sheets at September 30, 2025 and March 31, 2025.	1

	Unaudited Condensed Consolidated Statements of Operations for six months ended September 30, 2025 and 2024	2

	Unaudited Condensed Consolidated Statements of Comprehensive Income / (Loss) for the six months ended September 30, 2025 and 2024.	3

	Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the six months ended September 30, 2025 and 2024.	4

	Unaudited Condensed Statement of Cash Flows for the six months ended September 30, 2025 and 2024.	5

	Notes to Unaudited Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	53

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	72

Item 4.	Controls and Procedures	72

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	75

Item 1A.	Risk Factors	78

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	118

Item 3.	Defaults Upon Senior Securities	119

Item 4.	Mine Safety Disclosures	119

Item 5.	Other Information	119

Item 6.	Exhibits	119

SIGNATURES		120

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q may contain certain statements that may constitute forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. This includes, without limitation, statements regarding expectations, hopes, beliefs, intentions, plans, prospects, financial results or strategies regarding us and the future held by our management team and the products and markets, future financial condition, expected future performance and market opportunities of our business. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Form 10-Q, forward-looking statements may be identified by the use of words such as “estimate,” “continue,” “could,” “may,” “might,” “possible,” “predict,” “should,” “would,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target,” “designed to” or other similar expressions that predict or indicate future events or trends or that are not statements of historical facts. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements.

We caution readers of this Quarterly Report on Form 10-Q that these forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, which could cause the actual results to differ materially from the expected results. The following factors, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements contained in this Quarterly Report on Form 10-Q:

●

our ability to maintain the quotation of our common stock on the OTCQB;

●

our ability to execute our anticipated business plans and strategy, or continue as a going concern, particularly in light of our current liquidity and capital resources;

●

our ability to obtain additional capital, which will be necessary to continue our business and operations;

●

our limited operating history under our current business model and history of net losses;

●

our reliance on key technology providers and payment processors facilitating payments to and by our customers;

●

unfavorable interpretations of laws or regulations or changes in applicable laws or regulations;

●

the possibility that we may be adversely affected by other economic, political, business, regulatory, and/or competitive factors;

●

our estimates of future bookings, revenues and capital requirements;

●

the evolution of the markets in which we compete;

●

political instability associated with operating in current and future emerging markets we have entered or may later enter;

●

risks associated with our ability to obtain and maintain adequate insurance to cover risks associated with business operations now or in the future;

●

our ability to adhere to legal requirements with respect to the protection of personal data and privacy laws;

●

cybersecurity risks, data loss and other breaches of our network security and the disclosure of personal information or the infringement upon our intellectual property by unauthorized third parties;

●

risks associated with the performance or reliability of infrastructure upon which we rely, including, but not limited to, internet and cellular phone services;

●

the risk of regulatory or other lawsuits or proceedings relating to our platform or the peer-to-peer car sharing we facilitate;

●

increased compliance risks associated with operating in multiple foreign jurisdictions at once, including regulatory and accounting compliance issues;

●

our ability to manage the risks associated with current defaults of our outstanding indebtedness and other payment obligations to third-parties and breaches or potential breaches of our contractual and other outstanding obligations; and

●

other risks and uncertainties described in this Quarterly Report on Form 10-Q, including those under the section entitled “Risk Factors,” as well as risk factors and in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025, which was filed with the Securities and Exchange Commission on June 30, 2024

If any of these risks materialize or any of our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that we presently do not know or that we currently believe are immaterial that could also cause actual results to differ materially from those contained in the forward-looking statements. In addition, forward-looking statements reflect our expectations, plans or forecasts of future events and views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments may cause our assessments to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing our assessments as of any date subsequent to the date of this Quarterly Report on Form 10-Q. Accordingly, undue reliance should not be placed upon the forward-looking statements. Actual results, performance or achievements may, and are likely to, differ materially, and potentially adversely, from any projections and forward-looking statements and the assumptions on which those forward-looking statements were based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance as projected financial information and other information are based on estimates and assumptions that are inherently subject to various significant risks, uncertainties and other factors, many of which are beyond our control. Forward-looking statements are not guarantees of performance. All forward-looking statements attributable to us or a person acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward- looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

iii

FREQUENTLY USED TERMS

Unless otherwise stated in this quarterly report or the context otherwise requires, references to:

“ACM” means ACM Zoomcar Convert LLC.

“Board” means the board of directors of the Company. References herein to the Company will include its subsidiaries to the extent reasonably applicable.

“Business Combination” and “Reverse Recapitalization” means the business combination of the IOAC and Zoomcar pursuant to the terms of the Merger Agreement and the other transactions contemplated by the Merger Agreement.

“Bylaws” means the Amended and Restated Bylaws of the Company as in effect on the date of its prospectus.

“Charter” means the Amended and Restated Certificate of Incorporation of the Company as in effect on the date of its prospectus.

“Closing” means the closing of the Business Combination.

“Closing Date” means December 28, 2023.

“Common Stock” means the shares of Common Stock, par value $0.0001 per share, of the Company.

“Company”, “we”, “us“, “our” and “Zoomcar” means Zoomcar Holdings, Inc., a Delaware corporation, and its consolidated subsidiaries following the Closing

“Incentive Plan” means the Zoomcar Holdings, Inc. 2023 Equity Incentive Plan.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“GAAP” means generally accepted accounting principles in the United States.

“IOAC” means the Company prior to the Closing.

“Merger” means the merger of Merger Sub with and into Zoomcar, with Zoomcar continuing as the surviving corporation and as a wholly owned subsidiary of the Company, in accordance with the terms of the Merger Agreement.

“Merger Agreement” means the Agreement and Plan of Merger and Reorganization, dated as of October 13, 2022, as amended by the Post-Closing Amendment, by and among IOAC, Zoomcar, Merger Sub and the Seller Representative.

“Merger Sub” means Innovative International Merger Sub, Inc.

“Nasdaq” means The Nasdaq Stock Market LLC.

“Ordinary Shares” means the Class A Ordinary Shares and Class B Ordinary Shares.

“OTCQX” means the OTCQX Best Market of the OTC Markets Group.

“OTCQB Market” or “OTCQB” is the OTCQB Venture Market for companies to provide information to investors. It is not a registered stock exchange.

“OTC Markets Group” shall mean OTC Markets Group Inc., a corporation organized under the laws of the State of Delaware, located at 300 Vesey Street, 12th Floor, New York, NY 10282. OTC Markets Group is not a securities regulator or self-regulatory organization.

“OTCQX Rules” shall mean the rules and standards outlined herein applicable to U.S. companies seeking qualification of their securities for trading on the OTCQX Market.

“OTCQB Rules” shall mean the rules and standards outlined herein applicable to U.S. companies seeking qualification of their securities for trading on the OTCQB Market.

“Post-Closing Amendment” means the amendment to the Merger Agreement, dated as of December 29, 2023.

“Public Warrants” means one (1) whole redeemable warrant that was included in as part of each Unit, entitling the holder thereof to purchase one (1) share of Common Stock after the Business Combination at a purchase price of $5.71 per share.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Sponsor” means Innovative International Sponsor I LLC, a Delaware limited liability company.

“Zoomcar Common Stock” means, collectively, the shares of Common Stock, par value $0.0001 per share, of Zoomcar Holdings, Inc..

“Zoomcar, Inc.” means Zoomcar, Inc., a Delaware corporation. References herein to Zoomcar will include its subsidiaries to the extent reasonably applicable.

“Zoomcar India” means Zoomcar India Private Limited, an Indian limited liability company and subsidiary of Zoomcar.

“Zoomcar Stockholders” means security holders of Zoomcar prior to the Closing, including holders of outstanding shares of Zoomcar India.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

ZOOMCAR HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in USD, except number of shares)

As at	September 30, 2025			March 31, 2025

Assets
Current assets :
Cash and cash equivalents (Refer Note 27- VIE)	$	169,357		$	1,077,275
Accounts receivable, net of allowance for credit losses		94,357			200,650
Assets held for sale		233,110			267,293
Prepaid expenses		418,376			1,020,170
Balances with government authorities		-			187,458
Other current assets (Refer Note 27- VIE)		227,106			261,200
Total current assets	$	1,142,306		$	3,014,046
Property and equipment, net of accumulated depreciation $5,944,663 and $6,870,891 respectively		222,403			327,124
Operating lease right-of-use assets		888,705			1,021,898
Intangible assets, net of accumulated amortisation of $12,112 and $10,941 respectively		3,678			5,451
Long term investments (Refer Note 27- VIE)		21,471			25,653
Prepaid expenses		225,291			257,385
Other non-current assets, net of allowance for credit losses		614,580			705,767
Total assets	$	3,118,434		$	5,357,324

Liabilities and stockholders’ deficit
Current liabilities :
Accounts payable (Refer Note 27- VIE)	$	13,805,383		$	12,396,147
Accounts payable towards related parties		152,435			152,435
Current maturities of long-term debt		2,387,943			2,851,341
Current portion of operating lease liabilities		310,838			316,756
Finance lease liabilities		2,468,617			3,966,962
Contract liabilities		795,871			471,720
Current portion of pension and other employee obligations (Refer Note 27- VIE)		153,361			152,872
Unsecured notes		509,850			-
Convertible Redeemable note		370,557			-
Unsecured convertible note		6,272,911			6,002,269
Other current liabilities (Refer Note 27- VIE)		2,497,449			3,199,649
Total current liabilities	$	29,725,215		$	29,510,151
Operating lease liabilities, less current portion		670,459			801,981
Pension and other employee obligations, less current portion		438,370			394,030
Total liabilities	$	30,834,044		$	30,706,162
Commitments and contingencies (Note 29)
Stockholders’ deficit:
Common stock, $0.0001 par value per share, 250,000,000 shares authorized as of September 30, 2025 and March 31, 2025; 6,902,727 shares and 2,462,418 shares issued and outstanding as of September 30, 2025 and March 31, 2025 respectively		690			246
Additional paid-in capital		309,163,442			305,693,199
Accumulated deficit		(338,173,267	)		(333,173,805	)
Accumulated other comprehensive income		1,293,525			2,131,522

Total stockholders’ deficit	$	(27,715,610	)	$	(25,348,838	)

Total liabilities and stockholders’ deficit	$	3,118,434		$	5,357,324

The accompanying notes are an integral part of these Condensed Consolidated Balance Sheets.

ZOOMCAR HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In USD, except number of shares)

	Three months ended September,						Six months ended September,
	2025			2024			2025			2024

Revenue :
Revenues from services	$	2,281,111		$	2,239,538		$	4,581,435		$	4,445,940
Other revenues		5,999			7,359			18,428			41,942
Total revenue	$	2,287,110		$	2,246,897		$	4,599,863		$	4,487,882
Cost and Expenses
Cost of revenue		1,197,289			1,213,422			2,510,976			2,725,711
Technology and development		730,090			734,920			1,439,421			1,636,701
Sales and marketing		188,560			214,770			365,523			1,017,341
General and administrative		2,151,287			1,656,036			4,025,482			4,054,948
Total costs and expenses	$	4,267,226		$	3,819,148		$	8,341,402		$	9,434,701
Loss from operations before income tax		(1,980,116	)		(1,572,251	)		(3,741,539	)		(4,946,819	)
Finance costs		471,680			2,160,178			903,813			2,320,963
Gain on troubled debt restructuring		-			(352,447	)		(72,912	)		(352,447	)
Other expense/(income), net		(1,657,647	)		(28,007	)		427,022			(1,031,781	)
Loss before income taxes	$	(794,149	)	$	(3,351,975	)	$	(4,999,462	)	$	(5,883,554	)
Provision for income taxes		-			-			-			-

Net loss attributable to common stockholders	$	(794,149	)	$	(3,351,975	)	$	(4,999,462	)	$	(5,883,554	)

Net loss per share *
Basic	$	(0.07	)	$	(88.56	)	$	(0.49	)	$	(163.15	)
Diluted	$	(0.07	)	$	(88.56	)	$	(0.49	)	$	(163.15	)
Weighted average shares used in computing loss per share: *
Basic		11,759,019			37,849			10,128,247			36,062
Diluted		11,759,019			37,849			10,128,247			36,062

*	Prior period numbers have been adjusted to reflect the First Reverse Stock Split and the Second Reverse Stock Split of the Common Stock at a ratio of 1-for-100 and 1-for-20, respectively. (Refer Note)

The accompanying notes are an integral part of these Condensed Consolidated Statements of Operations.

(This space has been left intentionally blank)

ZOOMCAR HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

(In USD, except number of shares)

	Three months ended September,						Six months ended September,
	2025			2024			2025			2024

Net loss	$	(794,149	)		(3,351,975	)	$	(4,999,462	)	$	(5,883,554	)

Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustment		591,632			15,537			589,448			43,892
Gain/ (Loss) for defined benefit plan		8,222			21,276			(22,471	)		(42,235	)

Reclassification adjustments:
Amortization of gains on defined benefit plan		(296	)		(1,672	)		(598	)		(3,351	)

Other comprehensive loss attributable to common stockholders	$	599,558			35,141		$	566,379		$	(1,694	)
Comprehensive loss	$	(194,591	)		(3,316,834	)	$	(4,433,083	)	$	(5,885,248	)

The accompanying notes are an integral part of these Condensed Consolidated Statements of Comprehensive Loss

(This space has been left intentionally blank)

ZOOMCAR HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (UNAUDITED)

FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(In USD, except number of shares)

			Zoomcar Holdings, Inc.
	Shares pending issuance Amounts		Shares			Amounts			Additional paid-in capital			Accumulated deficit			Accumulated other comprehensive income/(loss)			Total equity (deficit)
Balance as at April 01, 2024		-		63,185,881			6,319			272,057,003			(307,551,501	)		1,795,992			(33,692,187	)
Retroactive application of First Reverse Stock Split **		-		(62,553,508	)		(6,256	)		6,256			-			-			-
Retroactive application of Second Reverse Stock Split **		-		(600,213	)		(60	)		60			-			-			-
Balance as at April 01, 2024		-		32,160			3			272,063,319			(307,551,501	)		1,795,992			(33,692,187	)
Stock based compensation		-		-			-			-			-			-			-
Issue of common stock against Atalaya note		-		6,257			1			2,324,695			-			-			2,324,696
Issue of common stock warrants along with redeemable promissory notes -		-		-						2,047,925			-						2,047,925
Issue of common stock warrants to placement agents		-		-			-			418,157			-			-			418,157
Gain on employee benefit, (net of taxes amounts to $NIL)		-		-			-			-			-			(65,190	)		(65,190	)
Net loss		-		-			-			-			(2,531,579	)		-			(2,531,579	)
Foreign currency translation adjustment, (net of taxes amounts to $NIL)		-		-			-			-			-			28,355			28,355
Balance as at June 30, 2024		-		38,417			4			276,854,096			(310,083,080	)		1,759,157			(31,469,823	)
Shares pending issuance on conversion of Unsecured promissory note		2,027,840		-			-			-			-			-			2,027,840
Gain on employee benefit, (net of taxes amounts to $NIL)		-		-			-			-			-			19,604			19,604
Net loss		-		-			-			-			(3,351,975	)		-			(3,351,975	)
Foreign currency translation adjustment, (net of taxes amounts to $NIL)		-		-			-			-			-			15,537			15,537
Balance as at September 30, 2024		2,027,840		38,417			4			276,854,096			(313,435,055	)		1,794,298			(32,758,817	)

Balance as at April 01, 2025		-		2,462,418			246			305,693,199			(333,173,805	)		2,131,522			(25,348,838	)
Issue of common stock*		-		6,222,383			622			(584	)		-			-			38
Issue of prefunded warrants in exchange of common stock*		-		(2,400,310	)		(240	)		240			-			-			-
Issue of prefunded warrants *		-		-			-			2,771,457			-			-			2,771,457
Warrants pending issuance in lieu of placement agent fees		-		-			-			14,139			-			-			14,139
Gain on employee benefit, (net of taxes amounts to $NIL)		-		-			-			-			-			(30,995	)		(30,995	)
Net loss		-		-			-			-			(4,205,313	)		-			(4,205,313	)
Foreign currency translation adjustment, (net of taxes amounts to $NIL)		-		-			-			-			-			(2,184	)		(2,184	)
Balance as at June 30, 2025		-		6,284,491			628			308,478,451			(337,379,118	)		2,098,343			(26,801,696	)
Issue of common stock*		-		118,236			12			(12	)		-			-			-
Shares issued under employee stock plans		-		500,000			50			284,950			-			-			285,000
Stock based compensation***		-		-			-			400,053			-			-			400,053
Gain on employee benefit, (net of taxes amounts to $NIL)		-		-			-			-			-			7,926			7,926
Net loss		-		-			-			-			(794,149	)		-			(794,149	)
Translation adjustment on derecognition of subsidiary		-		-			-			-			-			(1,404,376	)		(1,404,376	)
Foreign currency translation adjustment, (net of taxes amounts to $NIL)		-		-			-			-			-			591,632			591,632
Balance as at September 30, 2025		-		6,902,727			690			309,163,442			(338,173,267	)		1,293,525			(27,715,610	)

*	Refer Note 18 for the details of the common stock and warrants issued and exercised during the year.

**	Prior period numbers have been adjusted to reflect the First Reverse Stock Split and the Second Reverse Stock Split of the Common Stock at a ratio of 1-for-100 and 1-for-20, respectively. (Refer Note 3A)

***

Includes cost recorded towards restricted shares granted to CEO and RSU granted to directors/employees of the Company

The accompanying notes are an integral part of these Condensed Consolidated Statements of Stockholders’ Deficit

ZOOMCAR HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	September 30, 2025			September 30, 2024
	(unaudited)
A. Cash flows from operating activities
Net loss	$	(4,999,462	)	$	(5,883,554	)
Adjustments to reconcile net loss to net cash used in operating activities :
Depreciation and amortization		70,480			215,136
Interest on redeemable promissory note		-			1,467,623
Interest on unsecured loans		73,897			-
Interest on Convertible note		11,056			-
Interest on finance leases		170,271			267,209
Change in fair value of Unsecured Convertible Note		270,642			(970,020	)
Other borrowing cost		-			12,719
Gain on sale and disposal of assets, net		-			(1,194	)
Gain on sale and disposal of assets held for sale, net		(277	)		(2,850	)
Gain on derecognition of subsidiary		(1,857,204	)		-
Stock based compensation		685,053			-
Assets written off		71,549			93,740
Liabilities written off		(80	)		-
Payable to customers and provision written back		(56,767	)		(36,130	)
Liquidated damages		2,540,537			-
Gain on troubled debt restructuring		(72,912	)		(352,447	)
Impairment on assets held for sale		24,318			-
Host receivable written off		37,287			153,114
Unrealized foreign currency exchange loss, net		454			539
	$	(3,031,158	)	$	(5,036,115	)
Changes in operating assets and liabilities :
Decrease in accounts receivable		101,087			90,105
Decrease in balances with government authorities		185,350			72,603
Decrease in prepaid expenses		630,926			905,930
(Increase)/Decrease in other assets		(40,260	)		14,637
Increase in accounts payables		1,463,720			1,758,382
(Decrease)/Increase in other liabilities		(236,881	)		5,697
Increase/(Decrease) in pension and other employee obligations		43,441			(190,635	)
Decrease in operating lease right of use asset		98,199			146,594
(Decrease) in operating lease liabilities		(98,908	)		(140,735	)
Increase/(Decrease) in contract liabilities		350,505			(123,031	)
Net cash used in operating activities (A)	$	(533,980	)	$	(2,496,568	)

B. Cash flows from investing activities
Payment for purchase of property and equipment, including intangible assets and capital advances		(712	)		-
Proceeds from sale of property and equipment		-			14,314
Proceeds from sale of asset held for sale		972			6,589
(Investments in) / proceeds from fixed deposits		(620	)		363,922
Net cash (used in)/generated from investing activities (B)	$	(360	)	$	384,825

C. Cash flows from financing activities
Proceeds from issue of redeemable promissory notes		-			3,000,000
Payment of redeemable promissory note issue expenses		-			(491,500	)
Proceeds from Unsecured notes		532,500			-
Payment of Unsecured notes issuance cost		(53,000	)		-
Repayment of Unsecured notes		(43,546	)		-
Proceeds from Convertible notes		372,000			-
Payment of Convertible notes issuance cost		(12,500	)		-
Principal repayment of debt		(370,005	)		(1,249,505	)
Principal payment of finance lease obligation		(57,186	)		-
Net cash generated from financing activities (C)	$	368,263		$	1,258,995

Net increase in cash and cash equivalents and restricted cash (A+B+C)		(166,077	)		(852,748	)
Effect of foreign exchange on cash and cash equivalents.		(833,950	)		(29,190	)
Cash and cash equivalents and restricted cash
Cash and cash equivalents at the beginning of period		1,077,275			1,496,144
Restricted cash included under other non-current assets at the beginning of period		94,762			-
Cash and cash equivalents derecognized due to derecognition of subsidiary		(2,653	)		-
End of period	$	169,357		$	614,206

Reconciliation of cash, cash equivalents and restricted cash to the Condensed Consolidated Balance Sheets
Cash and cash equivalents		169,357			614,206
Total cash and cash equivalents and restricted cash shown in Condensed Consolidated Statement of Cash Flows	$	169,357		$	614,206

Supplemental disclosures of cash flow information
Cash refund for income taxes		-			392
Interest paid on debt		(81,475	)		(145,989	)

Supplemental disclosures of non-cash investing and financing activities:
Issue of Common stock upon conversion of unsecured convertible Note		-			2,324,696
Issue of warrants to redeemable promissory note holders		-			2,047,925
Conversion of unsecured promissory note into equity (shares pending issuance)		-			2,027,840
Warrants issued to placement agents		-			418,157
Gain on troubled debt restructuring with the lenders		-			115,999
Issue of common stock upon exercise of warrants		629			-
Issue of prefunded warrants in exchange of common stock		240			-
Issue of prefunded warrants in lieu of liquidated damages payable		2,771,457			-
Warrants pending issuance in lieu of placement agent fees		14,139			-

The accompanying notes are an integral part of these Condensed Consolidated Statements of Cash Flows

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Organization, Business operation and Going concern

Zoomcar Holdings, Inc. (formerly “Innovative International Acquisition Corp”) a Delaware corporation provides mobility solutions to consumers and businesses. The accompanying Condensed Consolidated Financial Statements include the accounts and transactions of Zoomcar Holdings, Inc. and its subsidiaries (collectively, the “Company” or “the combined entity” or “Zoomcar”). The Company operates its facilitation services under the Zoomcar brand with its operations in India.

Going concern

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP and the rules and regulations of the SEC. The Condensed Consolidated Financial Statements have been prepared using U.S. GAAP applicable to a going concern that contemplates the realization of assets and settlement of liabilities in the normal course of business. The Company incurred a net loss of $794,149 and $4,999,462 during the three months and six months ended September 30, 2025, and cash used in operations was $ 533,980 for the six months ended September 30, 2025. The Company’s accumulated deficit amounts to $338,173,267 (March 2025: $333,173,805). The Company has negative working capital of $28,582,909 as on September 30, 2025. In addition, the Company’s cash position is critically deficient and critical payments to the operational and financial creditors of the Company are not being made in the ordinary course of business, all of which raises substantial doubt about the Company’s ability to continue as a going concern.

Management is evaluating plans with respect to these adverse financial conditions that caused to express substantial doubt about the Company’s ability to continue as a going concern. Management’s plan is to seek funding through additional debt or equity financing arrangements, implement business initiatives to improve customer experience and incremental expense reduction measures or a combination thereof to continue financing its operations. The Company has filed Registration Statement under Form S-1 on May 5, 2025 to raise up to $15 million. No amount has been raised against the same. Currently the Company is working with banker to finalize the engagement letter to raise up to $ 5 million via bridge financing and approximately $20 million by way of uplist raise before the end of the Fiscal year ended March 31, 2026. Further the Company continues to raise money by way of promissory note, convertible promissory note, share and warrant issuance to manage the working capital requirements. Additionally, the company entered into the financing arrangements below:

●

On July 31, 2025 , the Company entered into Securities Purchase Agreements with certain institutional accredited investors pursuant to which the Company issued Bridge notes for a total principal amount of $206,225 with an initial issue discount of $23,725. The net proceeds disbursed to the Company were $175,000 after deduction of legal and due diligence fees of $7,500. Hence, the total debt issuance costs amounts to $7,500. The Bridge notes have a maturity date of May 31, 2025, and bear interest at an annual rate of 12%. The notes include scheduled monthly installment repayments and interest payments starting August 30, 2025 and may be prepaid in part or full, by the Company at a discount to the outstanding balance. The notes are subject to default interest rate of 22% per annum and include customary events of default.

●

On August 19, 2025, the Company closed a Securities Purchase Agreement with Labrys Fund II, L.P. (“Labrys”) in connection for purchase of a promissory note convertible on default. Labrys purchased a note for a principal amount $180,000 with an original issue discount of $18,000 and net proceeds to the Company of $158,500 after adjusting issuance cost of $3,500. The note is repayable in 12 months maturing on August 19, 2026 with interest accruing at 12% per annum on the outstanding principal. This note is subject to a default interest at a rate of 22% per annum and include customary events of default and covenants.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Organization, Business operation and Going concern (Continued)

●

On August 24, 2025, the Company closed a Securities Purchase Agreement with AES Capital Management, LLC (“AES”) in connection with purchase of convertible redeemable notes. AES purchased for an aggregate principal amount of $75,000 with $NIL initial issue discount and disbursed sum of $71,000 (after deducting legal and due diligence fee of $4,000). The AES Notes are repayable in 12 months from their closing dates with interest accruing at 8% per annum on the outstanding principal. The AES Notes are subject to a default interest at a rate of 22% per annum and include customary events of default and covenants.

●

On August 24, 2025, the Company closed a Securities Purchase Agreement with CFI CAPITAL LLC (“CFI”) in connection with purchase of convertible redeemable notes. CFI purchased a convertible for a principal amount of $150,000 at an original issue discount of $15,000. The note is repayable in 12 months maturing on August 24, 2026 with interest accruing at 6 % per annum on the outstanding principal. The Company received net proceeds of $130,000 after adjusting issuance cost of $5000. This note is subject to a default penalty amounting to increase in the principal amount by 50% and includes customary events of default and covenants.

While these financing arrangements shall result in the payment of certain outstanding indebtedness, the Company will still need to raise additional capital imminently in order to have sufficient capital. There can be no assurance that the Company will be able to achieve its business plan, raise any additional capital or secure the additional financing necessary to implement its current operating plan.

The ability of the Company to continue as a going concern is dependent upon its ability to increase its revenues and eventually achieve profitable operations. The accompanying Condensed Consolidated Financial Statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Summary of Significant Accounting Policies

Basis of presentation

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (US GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by US GAAP have been condensed or omitted. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and an Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The results of operations for the three and six months ended September 30, 2025, are not necessarily indicative of the results for the fiscal year ending March 31, 2026, or any future interim period.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

These Condensed Consolidated Financial Statements follow the same significant accounting policies as those included in the audited Consolidated Financial Statements of the Company for the year ended March 31, 2025. In the opinion of management, these Condensed Consolidated Financial Statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Condensed Consolidated Financial position, results of operations, and cash flows for these interim periods.

The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries and variable interest entities in which the Company is the primary beneficiary, including an entity in India and in other geographical locations. All intercompany accounts and transactions have been eliminated in the Condensed Consolidated Financial Statements herein.

ii.

Principles of consolidation

The Condensed Consolidated Financial Statements include the accounts of Zoomcar Holdings, Inc. and of its wholly owned subsidiaries and Variable Interest Entities (“VIE”) in which the Company is the primary beneficiary, including an entity in India and in other geographical locations (collectively, the “Company”).

The Company determines, at the inception of each arrangement, whether an entity in which it has made an investment or in which it has other variable interest is considered a VIE in accordance with ASC 810.

Periodically, the Company determines whether any changes in its interest or relationship with the entity impact the determination of whether the entity is still a VIE and, if so, whether the Company is the primary beneficiary.

As at September 30, 2025, following are the list of subsidiaries and step-down subsidiaries:

Name of Entity	Place of Incorporation	Investor Entity	Method of consolidation
Zoomcar, Inc.	USA	Zoomcar Holdings, Inc.	Voting Interest
Zoomcar India Private Limited	India	Zoomcar, Inc.	Voting Interest
Zoomcar Netherlands Holding B. V	Netherlands	Zoomcar, Inc.	Voting Interest
Fleet Holding Pte ltd	Singapore	Zoomcar, Inc.	Voting Interest
PT Zoomcar Indonesia Mobility Service	Indonesia	Fleet Holding Pte ltd	Voting Interest
Fleet Mobility Philippines Corporation	Philippines	Zoomcar, Inc.	VIE

The assets/liabilities consolidated for the VIE are not material. Refer note 27 for details.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

iii.

Use of estimates and assumptions

The use of estimates and assumptions as determined by management is required in the preparation of Condensed Consolidated Financial Statements in conformity with US GAAP. These estimates are based on management’s evaluation of historical trends and other information available when the Condensed Consolidated Financial Statements are prepared and may affect the amounts reported and related disclosures. Actual results could differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis.

The significant estimates, judgments and assumptions that affect the Condensed Consolidated Financial Statements include, but are not limited to; are:

Estimation of defined benefit obligation

Fair value measurement of financial instruments

Estimation of utilization of loyalty points

Leases – assumption to determine the incremental borrowing rate

Valuation allowance on deferred tax assets

Estimation of utilization of balances with government authorities

Fair value measurement of share-based payments

Changes in accounting estimates are accounted for in the period of change and for prospective periods, if applicable. A change to an accounting estimate is recorded based on events, facts, or circumstances that occurred during the period in which the estimate was changed.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

iv.

Currency translation

The Condensed Consolidated Financial Statements are presented in US Dollars (“$”) which is the reporting currency of the Company.

Monetary assets and liabilities, and transactions denominated in currencies other than the functional currency are remeasured at the exchange rate on the Balance Sheet date and non- monetary assets and liabilities are measured at historical exchange rates. The gains and losses resulting from remeasurement are recorded as foreign exchange gains (losses), within other income (expense), in the Condensed Consolidated Statement of Operations.

The functional currency of the Company’s foreign subsidiaries is either the local currency or U.S. dollar depending on the nature of the subsidiaries’ activities. The Company determines the functional currency for each of its foreign subsidiaries by reviewing their operations and currencies used in their primary economic environments.

Assets and liabilities of the subsidiaries with functional currency other than U.S. Dollar are translated into U.S. Dollar at the rate of exchange existing at the Balance Sheet date. Retained earnings and other equity items are translated at historical rates, revenues and expenses are translated at average exchange rates during the year. Foreign currency translation adjustments are recorded within accumulated other comprehensive income, a separate component of total equity (deficit).

Comprehensive Income (Loss)

Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss), net of tax. Other comprehensive income (loss), net of tax, refers to revenue, expenses, gains, and losses that under generally accepted accounting principles are recorded as an element of members’ equity but are excluded from net income (loss). The Company’s other comprehensive income (loss), net of tax, consists of foreign currency translation adjustments that result from consolidation of its foreign entities and actuarial gain/ (loss) on defined benefit obligations.

vi.

Revenue recognition

During the six months ended September 30, 2025 and September 30, 2024, the Company derives its revenue principally from the following:

Facilitation revenue

Zoomcar Host Services is a marketplace feature of the platform that helps owners of vehicles (“Hosts/ Customer/Lessors”) connect with users (“Renters/Lessee”) in temporary need of a vehicle on leasehold basis for their personal use.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

Facilitation Services revenue consists of facilitation fees charged to Hosts, net of incentives and refunds and trip protection charged to the Renters. The Company’s primary performance obligation in the transaction towards the Host is to facilitate the successful completion of the rental transaction and towards the renter is to offer trip protection.

Customer support is rendered to both the Host (customer/lessor) and the renter (lessee). Company being the intermediary between the two provides its platform through which all communication takes place related to any services e.g., extension of trip period. Such services also include the normal customer support related to any vehicle breakdowns, tracking of vehicles, renter background checks, vehicle ownership checks and various other activities which are part of an ongoing set of series required for successful listing, renting and completion of trip. These activities are not distinct from each other and are not separate performance obligations. As a result, these series of services integrate together to form a single performance obligation.

In case of booking value collected from the renter on behalf of the Host, the Company evaluated the presentation of revenue on a gross versus net basis based on factors given under ASC 606 whether or not it is the principal (gross) or the agent (net) in the transaction and concluded that it is acting in an agent capacity, and revenue is presented net reflecting the facilitation fees received from the Marketplace service. The customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs. Revenue is recognized ratably over the trip period on straight line basis using the output method as its performance obligation is satisfied over time.

The Company offers various incentive programs to hosts. The incentives are recorded in accordance with ASC 606- 10-32-25 and ASC 606-10-32-27 as a reduction to revenue and in cases where the amount of incentive paid to the Host are above the facilitation fees earned from that Host on cumulative basis, the excess of the revenue amount is recorded as a marketing expense in the Condensed Consolidated Statements of Operations. These incentives are offered as part of overall marketing strategy of the Company and incentivize the hosts to refer the platform.

Loyalty program

The Company offers loyalty program, Z-Points, wherein customers are eligible to earn loyalty points that are redeemable for payment towards facilitation fees. Under ASC 606, each transaction that generates loyalty points results in the deferral of revenue equivalent to the retail value at the date the points are earned. The associated revenue is recognized when the customer redeems the loyalty points. The retail value of points is estimated based on the current retail value measured as of the date the loyalty points are earned, less an estimated amount representing loyalty points that are not expected to be redeemed (“breakage”). Breakage is reviewed on an annual basis and includes significant assumptions such as historical breakage trends, internal Company forecasts and extended redemption period, if any.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

Vouchers

During the six months ended September 30, 2025, the Company sold vouchers of certain redemption value that are utilized for payment towards facilitation fees. Vouchers may be sold for less than their redemption value and in such cases, the transaction price is limited to the amount received, unless additional consideration is expected. The sale of such vouchers results in the deferral of revenue equivalent to the amount received on the date of sale. The associated revenue is recognized when the customer utilizes such voucher. On expiry of validity of the voucher, the unutilized portion is recognized as Other operating revenues in the Condensed Consolidated Statements of Operations.

Contract liabilities

Contract liabilities primarily consist of obligations to customers for advance received against bookings, revenue-share payable to customers for vehicles listed by them on Company’s portal for short-term rentals and related to Company’s points-based loyalty program. As per ASC 606- 10-50-14 the Company does not aggregate amount of transaction price allocated to remaining performance obligations as required under ASC 606-10-50-13, since the company’s performance obligation is a part of a contract that has an original expected duration of one year or less.

vii.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, bank balances. Cash and cash equivalents are recorded at cost, which approximates fair value.

Cash and cash equivalents include amounts collected on behalf of but not yet remitted to the Hosts which are included in accrued and other current liabilities in the Condensed Consolidated Financial Statements.

viii.

Restricted Cash

The Company is required to place cash in an indemnification escrow fund with the placement agent for all indemnification liabilities and expenses payable by the Company as per the placement agent agreement for a period of 3 years from closing of the November 2024 Offering. Such cash is classified as restricted cash and reported as a component of other non-current assets in the Condensed Consolidated Balance Sheets.

ix.

Accounts receivable, net of allowance

Accounts receivables are stated net of allowances and primarily represent corporate debtors and dues from payment gateways for amounts paid by customers. In case of corporate debtors, the payment terms generally include a credit of 30-60 days. The amounts receivable from payment gateways are settled within 2 days.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

The Company records an allowance for credit losses for amounts owed for completed transactions that may never settle or be collected. The Company estimates its exposure to balances deemed to be uncollectible based on factors including known facts and circumstances, historical experience, and the age of the uncollected balances. Accounts receivable balances are written off against the allowance of credit losses after all means of collection has been exhausted and potential recovery is considered remote.

Other receivables

Other receivables include amounts recoverable from host. The receivable from host is adjusted for an allowance on account of host which are not active on the platform for more than 90 days.

xi.

Balances with government authorities – Input Tax Credit

Balances with government authorities represent the tax credit with government agencies which are recognized when the Company has performed the required services and when they meet the eligibility criteria outlined in the applicable government regulations.

The input tax credits are related to Indian Goods and Service Tax (“GST”). These balances are classified based on their expected period of utilization of future GST credit and GST debit that comes from domestic purchases and sales of services, respectively. If the tax credits are expected to be utilized within twelve months from the reporting date, they are classified as current assets. If the tax credits are not expected to be utilized within twelve months from the reporting date, they are classified as non-current assets.

xii.

Concentration of credit risk

Cash and cash equivalents, investments, other receivables, and accounts receivable are potentially subject to credit risk concentration. The Company has not experienced any material losses related to these concentrations during the years presented. No customers accounted for 10% or more of revenue for the six months ended September 30, 2025 and September 30, 2024.

xiii.

Property and equipment, net

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives.

The devices installed on host vehicles in the marketplace business have been depreciated over 5 years. During the year ended March 31, 2025, the Company revised its estimate of the salvage value of the devices from 30% to 0%.

When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the Condensed Consolidated Balance Sheets and any resulting gain or loss is reflected on the Condensed Consolidated Statements of Operations in the period realized.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

xiv.

Assets held for sale

The Company classifies vehicles to be disposed of as held for sale in the period in which they are available for immediate sale in their present condition and the sale is probable and expected to be completed within one year. The Company initially measures assets held for sale at the lower of their carrying value or fair value less costs to sell and assesses their fair value annually until disposed. The fair value of Assets held for sale not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an asset are observable, the Valuation is included in Level 2.

In case of certain vehicles which are not sold within one year from date of classification, the Company reassess the carrying value of the assets to adjust it for the realizable value.

xv.

Impairment

Long-lived assets such as property and equipment, right-of-use assets and intangible assets that are held and used by the Company are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The Company monitors the long-lived assets for impairment indicators on an on-going basis. If impairment indicators exist, the Company determines the recoverability of the asset by comparing the undiscounted cash flows expected to be generated from the use and eventual disposition the long-lived asset groups to the related net book values. If the net book value of the asset group exceeds the undiscounted cash flows, an impairment loss is recognized as the difference between the carrying value of the asset and its estimated fair value.

The Company estimate cash flows and fair value using internal budgets based on recent sales data and economic uncertainties. The key factors that affect estimates are (1) future revenue estimates; (2) customer preferences and decisions; and (3) product pricing. Any differences in actual results from the estimates could result in fair values different from the estimated fair values, which could materially affect our future results of operations and financial condition. The Company believes the projections of anticipated future cash flows and fair value assumptions are reasonable; however, changes in assumptions underlying these estimates could affect its valuations.

xvi.

Leases

The Company determines if an arrangement is a lease at inception of the contract. The Company’s assessment is based on whether: (1) the contract involves the use of a distinct identified asset, (2) the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the term of the contract, and (3) the Company has the right to direct the use of the asset. A lease is classified as a finance lease if any one of the following criteria are met: (1) the lease transfers ownership of the asset by the end of the lease term, (2) the lease contains an option to purchase the asset that is reasonably certain to be exercised, (3) the lease term is for a major part of the remaining useful life of the asset or (4) the present value of the lease payments equals or exceeds substantially all of the fair value of the asset.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

Operating leases are presented within “Operating lease right-of-use assets,” “Current portion of operating lease liabilities” and “Operating lease liabilities, less current portion” in the Company’s Condensed Consolidated Balance Sheets. The current portion of finance lease liabilities are presented within “Finance lease liabilities” in the Company’s Condensed Consolidated Balance Sheets.

ROU assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease arrangement. Lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease ROU assets are recognized at commencement date in an amount equal to lease liability, adjusted for any lease prepayments, initial direct costs, and lease incentives. For leases in which the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate based on the information available at commencement date. Lease terms includes the effects of options to extend or terminate the lease when it is reasonably certain at commencement of the lease that the Company will exercise that option. Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term reflecting single operating lease cost. The Company evaluates lease agreements to determine lease and non- lease components, which are accounted for separately.

Lease payments that depend on factors other than an index or rate are considered variable lease payments and are excluded from the operating lease assets and liabilities and are recognized as expense in the period in which the obligation is incurred. The Company accounts for lease-related concessions in accordance with guidance in Topic 842, Leases, to determine, on a lease-by-lease basis, whether the concession provided by lessor should be accounted for as a lease modification.

The Company accounts for a modification as a separate contract when it grants an additional right of use not included in the original lease and the increase is commensurate with the standalone price for the additional right of use, adjusted for the circumstances of the particular contract. Modifications which are not accounted for as a separate contract are reassessed as of the effective date of the modification based on its modified terms and conditions and the facts and circumstances as of that date. Upon modification, the Company remeasures the lease liability to reflect changes to the remaining lease payments and discount rates and recognizes the amount of the remeasurement of the lease liability as an adjustment to the ROU assets. However, if the carrying amount of the ROU assets is reduced to zero as a result of modification, any remaining amount of the remeasurement is recognized as an expense in condensed consolidated statements of income.

The Company reviews ROU assets for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

xvii.

Expenses

Cost of revenue

Cost of revenue expenses primarily consist of personnel-related compensation costs of local operations teams and teams who provide phone, email and chat support to users, repairs and maintenance expenses of vehicles, vehicle site rentals, devices depreciation, power, software support charges, payment gateway charges and other direct expenses.

Technology and development

Technology and development expenses primarily consist of personnel-related compensation costs and information technology and data science expenses. Technology and development costs are expensed as incurred.

Sales and marketing

Sales and marketing expenses primarily consist of personnel-related compensation costs, advertising expenses and marketing partnerships with third parties. Sales and marketing costs are expensed as incurred.

General and administrative

General and administrative expenses primarily consist of personnel-related compensation costs, professional services fees, administrative fees, depreciation, facility costs, and other corporate costs. General and administrative expenses are expensed as incurred.

xviii.

Finance costs

Finance costs comprises interest cost on debt, transaction costs, fair value changes in financial instruments, SSCPN issue expenses, and interest expense on lease liabilities. Borrowing costs and interest on leases are recognized in the Condensed Consolidated Statements of Operations using the effective interest method.

xix.

Employee benefits

Defined benefit plan

Employees in India are entitled to a defined benefit retirement plan covering eligible employees of the Company. The plan provides for a lump-sum payment to eligible employees, at retirement, death, and incapacitation or on termination of employment, of an amount based on the respective employees’ salary and tenure of employment. The Company’s benefit plan is unfunded.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

Management makes certain assumptions relating to discount rates, salary growth, retirement rates, mortality rates and other factors when calculating annual amounts to be recognized. These assumptions are reviewed annually by management, assisted by the enrolled actuary, and updated as warranted.

Amortization of a net gain or loss included in accumulated other comprehensive income shall be included as a component of net pension cost for a year if, as of the beginning of the year, that net gain or loss exceeds 10 percent of the greater of the projected benefit obligation or the market- related value of plan assets. If amortization is required, the minimum amortization shall be that excess divided by the average remaining service period of active employees expected to receive benefits under the plan. Prior service cost is amortized on a straight-line basis from the date recognized over the average remaining service period of active participants, when applicable.

Compensated absences

The Company’s liability for compensated absences is determined based on an actuarial valuation using the projected unit credit method and is charged to Condensed Consolidated Statements of Operations in the year in which they accrue.

Defined contribution plan

Eligible employees of the Company in India participate in a defined contribution fund in accordance with the regulatory requirements in the Indian jurisdiction. Both the employee and the Company contribute an equal amount to the fund which is equal to a specified percentage of the employee’s salary.

The Company has no further obligation under defined contribution plans beyond the contributions made under these plans. Contributions are charged to profit or loss and are included in the Condensed Consolidated Statements of Operations in the year and/or period in which they accrue.

xx.

Stock-based compensation

The Company accounts for stock-based compensation expense in accordance with the fair value recognition and measurement provisions of US GAAP, which requires compensation cost for grant-date fair value of stock-based awards to be recognized over the requisite service period. The Company includes a forfeiture estimate in the amount of compensation expense being recognized based on the Company’s estimate of equity instruments that will eventually vest. The fair value of stock-based awards, granted or modified, is determined on the grant date at fair value, using appropriate valuation techniques. For the options that vest in a graded vesting manner over the vesting period, the Company has adopted the graded vesting approach for recognition of compensation cost over the vesting period.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

For stock options or restricted stock units with service-based vesting conditions only, the valuation model, typically the Black-Scholes option-pricing model, incorporates various assumptions including expected stock price volatility, expected term, and risk-free rates. For stock options or restricted stock units with graded vesting, the fair- value-based measure is estimated of the entire award by using a single weighted-average expected term. The Company estimated the volatility of common stock on the date of the grant based on weighted-average historical stock price volatility of comparable publicly traded companies in its industry group. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant with a term equal to the expected term. The Company estimates the term based on the simplified method for employee stock options considered to be “plain vanilla” options as the Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate the expected term. The expected dividend yield is 0.0% as the Company has not paid and does not anticipate paying dividend on its common stock.

The Company estimates a forfeiture rate on an annual basis for the purpose of computation of stock-based compensation expense. The rate is used consistently across the subsequent interim periods during the year.

In case of cancellation of stock-based awards with no concurrent grant of a replacement award or other valuable consideration, any unrecognized compensation cost is recognized immediately on the cancellation date.

xxi.

Debt

The debt instruments of the Company consist of debentures and term loans from financial institutions. The Company based on available proceeds makes periodic prepayments of scheduled instalments and the same has been accounted for under ASC 470-50.

Unsecured Notes

During the six months ended September 30, 2025, the Company has issued Bridge Notes which are repayable at the principal value along with an interest of 12% p.a. on the maturity date and has been accounted for under ASC 470-10. The Company issued these Bridge Notes at discount and incurred expenses on the issue of these Notes. As per ASC 835, the discount and the expenses incurred on issue of the Bridge Notes have been amortized over the contractual period using the effective interest method. The Bridge Notes liabilities have been presented net off the discount and issue expenses.

Convertible Notes

During the six months ended September 30, 2025, the Company has issued Convertible Notes which are repayable at the principal value along with an interest of 6-12% p.a. on the maturity date or the holder as an option to convert those in variable number of equity shares and the same has been accounted for as a share settled debt under ASC 480-10. The Company issued these Convertible Notes at discount and incurred expenses on the issue of these Convertible Notes. As per ASC 835, the discount and the expenses incurred on issue of the Convertible Notes have been amortized over the contractual period using the effective interest method. The Convertible Notes liabilities have been presented net off the discount and issue expenses.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

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, the variability in number of warrants exercisable towards Series A and Series B of both the November 2024 and December 2024 offering was fixed in accordance with agreement. Hence, as per ASC 815-10, the outstanding Series A Series B warrants for both November 2024 and December 2024 offering have been reclassified to equity at the reclassification date fair value.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

Warrants exercised before the reclassification have been reclassified at their respective exercise date fair value and warrants exercised after the reclassification were adjusted with additional paid in capital.

(b)

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 the placement agent for the issuance of the Redeemable Promissory Note. These warrants were classified as equity in accordance with ASC 815-40 on the initial recognition.

xxiii.

Net profit/(loss) per share attributable to common stockholders

The Company computes net profit/(loss) per share using the two-class method required for participating securities. The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all the income for the period had been distributed. The Company’s convertible preferred stock is participating security. The holders of the convertible preferred stock would be entitled in preference to common shareholders, at specified rate, if declared.

Then any remaining earnings would be distributed to the holders of common stock and convertible preferred stock on a pro-rata basis assuming conversion of all convertible preferred stock into common stock. This participating security do not contractually require the holders of such shares to participate in the Company’s losses. As such, net losses for the periods presented were not allocated to the Company’s participating securities.

The Company’s basic profit/(loss) per share is computed using the weighted-average number of ordinary shares outstanding during the period. The diluted profit/(loss) per share is computed by considering the impact of potential issuance of common stock on the weighted average number of shares outstanding during the period, except where the results would be anti- dilutive.

xxiv.

Provisions and accrued expenses

A provision is recognized in the Condensed Consolidated Balance Sheets when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are recognized at present value by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract. The Company does not have any onerous contracts.

xxv.

Fair value measurements and financial instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In accordance with ASC 820, Fair Value Measurement (“ASC 820”), the Company uses the fair value hierarchy, which prioritizes the inputs used to measure fair value. The hierarchy, as defined below, gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are set forth below:

	Level 1	Observable inputs such as quoted prices in active markets for identical assets or liabilities.

	Level 2	Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs other than the quoted prices that are observable either directly or indirectly for the full term of assets or liabilities.

	Level 3	Unobservable inputs in which there is little or no market data and that are significant to the fair value of the assets or liabilities.

During the six months ended September 30, 2025, the Company’s primary financial instruments included cash and cash equivalents, investments, accounts receivables, other financial assets, accounts payable, debt, unsecured convertible note and other financial liabilities. The estimated fair value of cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their carrying value due to short-term maturities of these instruments.

xxvi.

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.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

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.

xxvii.

Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Interest related to unrecognized tax benefits in interest expense and penalties.

xxviii.

Contingencies

The Company is subject to legal proceedings and claims that arise in the ordinary course of business. The Company accrues for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change.

xxix.

Segment information

Operating segments are defined as components of an entity for which discrete financial information is available and is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in making decisions regarding resource allocation and performance assessment. The Company’s CODM is its Board of Directors. The Company has determined it has one operating and reportable segment as the CODM reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

xxx.

Common Stock Reverse Split

In October 2024 and March 2025, the Company effectuated a one-for-hundred and a one-for- twenty reverse stock split, respectively. All share, stock option and warrant information has been retroactively adjusted to reflect these stock splits.

xxxi.

Reclassification

Certain prior year amounts have been reclassified to conform with current year presentation. These changes did not have any effect on net loss, stockholder's equity, the Condensed Consolidated Statements of Operations or the net change in cash and cash equivalents in the Condensed Consolidated Statement of Cashflows.

xxxii.

Recent Accounting Pronouncements

Accounting Pronouncement Pending Adoption

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” to improve income tax disclosure requirements by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) the disaggregation of income taxes paid by jurisdiction. The guidance makes several other changes to the income tax disclosure requirements. The guidance in ASU 2023-09 will be effective for annual reporting periods in fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact that the adoption of ASU 2023-09 will have on its Condensed Consolidated Financial Statements and disclosures.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, “Disaggregation of Income Statement Expenses, which requires public companies to disaggregate key expense categories such as inventory purchases, employee compensation and depreciation in their financial statements. Further, in January 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2025-01, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date” which clarifies the effective date of ASU 2024-03. The guidance is effective for all public entities with fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact that adoption of the provisions of ASU 2024-03 will have on the Company’s Condensed Consolidated Financial Statements.

In December 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2024-03, “Debt—Debt with Conversion and Other Options (Subtopic 470- 20): Induced Conversions of Convertible Debt Instruments”. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2025 (and interim reporting periods within those annual reporting periods). Early adoption is permitted as of the beginning of a reporting period if the entity has also adopted ASU 2020-06 for that period. This update does not have any impact on the Company’s Condensed Consolidated Financial Statements.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies (Continued)

In May 2025, the FASB issued ASU 2025-03 which revises the guidance in ASC 805 on identifying the accounting acquirer in a business combination in which the legal acquiree is a variable interest entity (VIE). ASU 2025-03 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The amendments in ASU 2025-03 must be applied prospectively to any business combination that occurs after the initial adoption date. The Company is evaluating the impact that adoption of the provisions of ASU 2025-03 will have on the Company’s Condensed Consolidated Financial Statements.

In May 2025, the FASB issued ASU 2025-04 which clarifies the guidance in both ASC 606 and ASC 718 on the accounting for share-based payment awards that are granted by an entity as consideration payable to its customer. ASU 2025-04 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact that adoption of the provisions of ASU 2025- 04 will have on the Company’s Condensed Consolidated Financial Statements.

In July 2025, the FASB issued ASU 2025-05 which amends ASC 326-202 to provide a practical expedient (for all entities) and an accounting policy election (for all entities, other than public business entities, that elect the practical expedient) related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. This update does not have any impact on the Company’s Condensed Consolidated Financial Statements.

In September 2025, the FASB issued ASU 2025-06 which amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. The update clarifies the guidance for accounting for costs related to internal use-software. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, including interim periods within those annual periods. Early adoption is permitted. This update does not have any impact on the Company’s Condensed Consolidated Financial Statements.

In September 2025, the FASB issued ASU 2025-07 which refines the scope of the guidance on derivatives in ASC 815 and clarifies the guidance on share-based payments from a customer in ASC 606. The ASU is intended to address concerns about the application of derivative accounting to contracts that have features based on the operations or activities of one of the parties to the contract and to reduce diversity in the accounting for share-based payments in revenue contracts. ASU 2025-07 is effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual periods. Early adoption is permitted. The Company is evaluating the impact that adoption of the provisions of ASU 2025-07 will have on the Company’s Condensed Consolidated Financial Statements.

There are other new accounting pronouncements issued by the FASB that the Company has adopted or will adopt, as applicable, and the Company does not believe any of these accounting pronouncements have had, or will have, a material impact on its Condensed Consolidated Financial Statements or disclosures.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Reverse Stock Split

The Company’s shareholders authorized, and the Board of Directors approved for a 1-for-100 Reverse Stock Split (the ” First Reverse Stock Split”), which became effective on October 21, 2024. Any fractional shares that would have otherwise resulted from the First Reverse Stock Split were rounded up to the nearest whole share.

Every 100 shares of issued and outstanding Common Stock has been consolidated into one share, without affecting the par value. In addition, (i) a proportionate adjustment has been made to the number of outstanding warrants, per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options and warrants to purchase shares of common stock as per the terms and conditions of the respective warrant agreements, and (ii) the number of shares reserved for issuance pursuant to the Company’s equity incentive plans was also reduced proportionately.

The Company’s shareholders authorized, and the Board of Directors approved for a 1-for-20 Reverse Stock Split (the “Second Reverse Stock Split”), which became effective on March 21, 2025. Any fractional shares that would have otherwise resulted from the Reverse Stock Split were rounded up to the nearest whole share.

Every 20 shares of issued and outstanding Common Stock has been consolidated into one share, without affecting the par value. In addition, (i) a proportionate adjustment has been made to the number of outstanding warrants, per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options and warrants to purchase shares of common stock as per the terms and conditions of the respective warrant agreements, and (ii) the number of shares reserved for issuance pursuant to the Company’s equity incentive plans was also reduced proportionately.

Troubled Debt Restructuring

Payable against rental dues

On April 22, 2025, the Company entered into a settlement agreement with Siddharth Assets, wherein the lessor has waived a portion of the outstanding liability and penalty accrued thereon. The Company agreed to make settlement in four monthly instalments, starting from April 2025. In the event of default, $1,127 per month for every defaulted installment until realisation of the entire settlement amount shall be paid additionally. During the quarter ended September 2025, the Company has fully paid the balance payable to Siddharth Assets.

The Company has accounted for this transaction as troubled debt restructuring under ASC 470-60. The gain on troubled debt restructuring recorded for the three months and six months ended September 30, 2025 is $Nil and $72,912 respectively ($352,447 for the three months and six months ended September 30, 2024). Basic EPS was increased by $0.01 as a result of these gains during the period ended September 30, 2025.

Accounts Payable

During the year ended March 31, 2025, the Company carried out negotiations with its vendors and as per the revised agreements with the vendors, they have granted a short-term deferral in payments and/or reduction in outstanding liability.

The Company has accounted for this transaction as troubled debt restructuring under ASC 470-60 and the same was recorded as a net gain on troubled debt restructuring in the Consolidated Statements of Operations during the year ended March 31, 2025. As per the terms of the revised contract with one of its vendor, the Company had to pay the remaining liability within a specified period of time otherwise the reduction in liability will be reversed.

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cash and cash equivalents

The components of cash and cash equivalents were as follows:

(In USD) As at	September 30, 2025		March 31, 2025

Balances in bank accounts*	$	169,357	$	1,077,275
Cash and cash equivalents	$	169,357	$	1,077,275

This includes $83,327 collected on behalf of but not yet remitted to the Hosts which are included in accounts payable. Refer note 13.

Accounts receivable, net of allowance for credit losses

The components of accounts receivable were as follows:

(In USD) As at	September 30, 2025			March 31, 2025

Accounts receivable	$	107,297		$	214,083
Allowance for credit losses		(12,940	)		(13,433	)
Net accounts receivable	$	94,357		$	200,650

The Company records an allowance for credit losses for amounts owed for completed transactions that may never settle or be collected. For the three months and six months ended September 30, 2025, allowance amounting to $NIL and $NIL respectively was created for expected credit losses respectively (March 31, 2025 :$NIL).

Movement in allowance for expected credit loss

(In USD) As at	September 30, 2025			March 31, 2025

Balance at the beginning of the period	$	13,433		$	13,774
Foreign currency translation adjustment		(493	)		(341	)
Closing balance	$	12,940		$	13,433

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Balances with government authorities

The components of balances with government authorities were as follows:

(In USD) As at	September 30, 2025			March 31, 2025
Current
Goods and service tax receivable	$	3,616,337		$	3,941,649
Less: Impairment*		(3,616,337	)		(3,754,191	)
	$	-		$	187,458

As of September 30, 2025, the impairment amounts to $3,616,337 ( March 31, 2025 : $3,754,191) for the estimated losses resulting from substantial doubt about the utilization of the tax credits. This allowance for impairment of tax credits was determined by estimating future uses of tax credits against output Goods and Service Tax (“GST”). No impairment allowance has been created for the three months and six months ended September 30, 2025.

(a)

Other current assets

The components of other current assets were as follows:

(In USD) As at	September 30, 2025		March 31, 2025

Security deposits	$	24,448	$	24,997
Franchise tax refund receivable		-		84,490
Advance to employees		19,271		29,730
Advance to suppliers		37,722		5,201
Receivables from car sale		55,766		57,892
Other receivables		89,899		58,890
Other current assets	$	227,106	$	261,200

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Assets held for sale

The components of assets held for sale were as follows:

(In USD) As at	September 30, 2025		March 31, 2025

Vehicles	$	233,110	$	267,293
Total assets held for sale	$	233,110	$	267,293

Vehicles represent the vehicles held for sale in the Indian subsidiary, Zoomcar India Private Limited. The gain or loss on sale of these assets is included in (Gain)/Loss on sale of assets held for sale under Other (income)/expense of Condensed Consolidated Statements of Operations. During the three months and six months ended September 30, 2025, total gain of $277 and $277 respectively was recorded against (Gain)/Loss on sale of assets held for sale (loss of $73 and gain of $2,850 for the three months and six months ended September 30, 2024). Further, during the three months and six months ended September 30, 2025, the Company has recorded $24,318 and $24,318 impairment respectively ($NIL and $NIL for the three months and six months ended September 30, 2024).

Property and equipment, net

The components of property and equipment were as follows:

(In USD) As at	Estimated useful life	September 30, 2025			March 31, 2025

Vehicles and devices	5 years	$	1,410,666		$	2,399,282
Computer equipments	2 - 7 years		531,612			551,877
Office equipments	3 - 10 years		221,747			229,481
Furniture and fixtures	10 years		1,657			1,720
Total, at cost			2,165,682			3,182,360
Less: Accumulated depreciation			(1,943,279	)		(2,855,236	)
		$	222,403		$	327,124
Right-of-use assets under finance leases:

Vehicles, at cost		$	5,565,031		$	5,777,170
Accumulated depreciation			(3,868,200	)		(4,015,655	)
Accumulated impairment			(1,696,831	)		(1,761,515	)
		$	-		$	-

Total property and equipment, net		$	222,403		$	327,124

Depreciation expense for the three months and six months ended September 30, 2025 was $34,248 and $68,865 respectively ( $100,815 and $213,163 for the three months and six months ended September 30, 2024).

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Leases

The Company’s leases primarily include vehicles and corporate offices which have been classified as finance leases and operating leases, respectively. The lease term of operating and finance leases varies between 3 to 7 years. The lease agreements do not contain any covenants to impose any restrictions except for market-standard practice for similar lease arrangements. In assessment of the lease term, the Company considers the extension option as part of its lease term for those lease arrangements where the Company is reasonably certain of availing the extension option.

The components of lease expense were as follows:

(In USD) Period ended	September 30, 2025		March 31, 2025
Interest on finance lease liabilities	$	172,380	$	550,903
Operating lease cost		167,400		363,435
Short term lease cost		59,847		486,289
Total lease cost	$	399,627	$	1,400,627

Supplemental cash flow information related to leases was as follows:

(In USD) Period ended	September 30, 2025			March 31, 2025
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$	(83,314	)	$	(338,626	)
Financing cash outflows for finance leases	$	(57,768	)	$	(2,103,219	)

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Leases (Continued)

Supplemental balance sheet information related to leases was as follows:

(In USD) As at	September 30, 2025			March 31, 2025
Operating Leases
Operating lease right-of-use assets	$	888,705		$	1,021,898

Current operating lease liabilities	$	310,838		$	316,756
Non-current operating lease liabilities		670,459			801,981
Total operating lease liabilities	$	981,297		$	1,118,737

Finance Leases

Property and equipment, at cost	$	5,565,031		$	5,777,170
Accumulated depreciation		(3,868,200	)		(4,015,655	)
Accumulated impairment		(1,696,831	)		(1,761,515	)
Property and equipment, net	$	-		$	-

Current finance lease liabilities	$	2,468,617		$	3,966,962
Total finance lease liabilities	$	2,468,617		$	3,966,962

Weighted Average Remaining Lease Term
Operating leases	42 months	48 months
Finance leases	12 months	18 months

Weighted Average Discount Rate
Operating leases	13.00	%	13.00	%
Finance leases	9.00	%	9.00	%

The Company determines the incremental borrowing rate by adjusting the benchmark reference rates, with appropriate financing spreads applicable to the respective geographies where the leases were entered and lease specific adjustments for the effects of collateral.

	Six months ended September 30, 2025				Year ended March 31, 2025
Maturities of lease liabilities are as follows:	Operating Leases		Finance Leases		Operating Leases		Finance Leases
2026	$	162,334	$	3,022,159	$	337,044	$	4,285,354
2027		340,451		-		353,429		-
2028		357,024		-		370,634		-
2029		374,427		-		388,699		-
Total Lease Payments	$	1,234,235	$	3,022,159	$	1,449,806	$	4,285,354
Less : Imputed Interest		252,938		553,542		331,069		318,392
Total Lease Liabilities	$	981,297	$	2,468,617	$	1,118,737	$	3,966,962

As at September 30, 2025, the Company continues to default on equated monthly installments (EMI) payments owed to Leaseplan India Private Limited (Lender). In adherence to the agreement, the Company has accumulated penal interest at a simple interest rate of 1% per month on the overdue EMIs for first 2 months of default and an additional simple interest of 1.5% per month is levied on the overdue amount as it is continues to be unpaid after 60 days from date of default, amounting to $59,698 and $90,883 for the three and six months ending September 30, 2025 respectively ($80,217 and $131,879 for the three and six months ended September 30, 2024 respectively).

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Investments

The components of investments were as follows:

(In USD) As at	September 30, 2025		March 31, 2025
Long term investments
Investments in certificate of deposits*	$	21,471	$	25,653
	$	21,471	$	25,653

Investments includes certificate of deposits and interest accrued on the same.

Other non-current assets

The components of other non-current assets were as follows:

(In USD) As at	September 30, 2025		March 31, 2025

Security deposits	$	181,793	$	188,723
Deposits with tax authorities		432,787		422,282
Restricted cash*		-		94,762
Other non-current assets	$	614,580	$	705,767

Restricted cash represented amount held as an indemnification escrow fund with the placement agent for all indemnification liabilities and expenses payable by the Company as per the placement agent agreement for a period of 3 years from closing of the November 2024 Offering.

Accounts Payable

The components of accounts payable were as follows:

(In USD) As at	September 30, 2025		March 31, 2025

Current
Accounts payable towards related parties	$	152,435	$	152,435
Accounts Payable towards others		13,805,383		12,396,147
Total accounts payable	$	13,957,818	$	12,548,582

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Debt

The components of long term and short term debt were as follows:

(In USD) As at	Effective interest rates	Original Maturities*	September 30, 2025		March 31, 2025
Current
From NBFCs
- Mahindra & Mahindra Financial Services Limited	-	November 30, 2025	$	366,920	$	439,415
- TATA Motors Finance Limited	12.40%	May 31, 2027		1,558,355		1,749,415
- Kotak Mahindra Financial Services Limited	1.00%	November 30, 2025		387,362		376,861
- Orix Leasing and Financial Services India LTD	12.00%	December 15, 2025		6,253		58,978
- Clix Finance India Private Limited	0.68%	December 2, 2025		69,053		64,621
- AON Risk Insurance Services West, Inc	8.25%	April 28, 2025		-		162,051

			$	2,387,943	$	2,851,341
Total maturity for the year ending on September 30, 2026
					$	2,387,943

Maturities have been stated as per the respective agreements with the financiers. For Tata Motors Finance Limited, due to non-payment of scheduled EMIs, the loan is immediately payable and is classified as current. The debts are not associated with any restrictive covenants.

The Company has recorded an interest expense amounting to $52,421 and $109,151 for the three months and six months ended September 30, 2025 ($85,918 and $162,084 for three months and six months ended September 30, 2024).

As of September 30, 2025, the Company has defaulted on debt obligations owed to various lenders totaling to $981,765 (March 31, 2025 - $820,679). Further, the Company has recorded penal interest expense amounting to $23,998 and $43,698 for the three months and six months ended September 30, 2025 respectively ($46,505 and $87,584 for three months and six months ended September 30, 2024 respectively).

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

14A

Unsecured notes

The following is a summary of the Company’s Unsecured notes payable as of September 30, 2025 and March 31, 2025:

(In USD) As at	September 30, 2025			March 31, 2025
Bridge notes	$	581,704		$	-
Less: Discount and debt issuance cost on issuance, net of amortization		(71,854	)		-
Total	$	509,850		$	-

On June 23, 2025, the Company entered into Securities Purchase Agreements with certain institutional accredited investors pursuant to which the Company issued Bridge notes for a total principal amount of $402,000 with an initial issue discount of $42,000. The net proceeds disbursed to the Company were $350,000 after deduction of legal and due diligence fees of $10,000. Additionally, $45,500 (i.e., 13% of net proceeds) is due to the placement agent relating to the issuance of these bridge notes which is directly attributable to the loan raised, thereby bringing the total debt issuance costs to $55,500.

The discount and issuance cost on bridge notes has been amortized over the contractual period using the effective interest method. The unamortized discount and issuance cost have been presented as net of the bridge notes or promissory note liability.

Terms of Bridge notes

The Bridge notes issued in June have a maturity date of March 30, 2026 and those issued in July have a maturity date of May 31, 2025, and bear interest at an annual rate of 12%. The notes include scheduled monthly installment repayments and interest payments starting November 30, 2025 for notes issued in June and August 30, 2025 for notes issued in July and may be prepaid in part or full, by the Company at a discount to the outstanding balance. The notes are subject to default interest rate of 22% per annum and include customary events of default.

In the event of an uncured default under either of the Bridge notes, the holder has the right to elect to convert the outstanding amount (includes principal, accrued interest, default interest, and other fees as applicable) into the Company’s Common stock at a conversion price equal to 75% of the lowest trading price of the Company’s Common stock during the fifteen or ten trading days (as specified in the Note agreement) immediately prior to the applicable conversion date.

The interest on the Unsecured notes was $69,666 and $73,897 for the three months and six months ended September 30, 2025 ($NIL and $NIL for the three months and six months ended September 30, 2024 which has been recognized in the Condensed Consolidated Statements of Operations for their respective periods.

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

14B

Convertible notes

The following is a summary of the Company’s Convertible Redeemable notes payable as of September 30, 2025 and March 31, 2025:

(In USD) As at	September 30, 2025			March 31, 2025
Convertible Redeemable notes	$	226,772		$	-
Less: Discount and debt issuance cost on issuance, net of amortization		(21,833	)		-

Promissory note	$	182,971		$	-
Less: Discount and debt issuance cost on issuance, net of amortization		(17,353	)		-
Total	$	370,557		$	-

On August 24, 2025 , the Company entered into Securities Purchase Agreements with certain institutional accredited investors pursuant to which the Company issued convertible redeemable notes for a total principal amount of $225,000 with an initial issue discount of $15,000. The net proceeds disbursed to the Company were $201,000 after deduction of legal and due diligence fees of $9,000. Hence, the total debt issuance costs amounts to $9,000.

On August 19, 2025 , the Company entered into Securities Purchase Agreement with certain institutional accredited investor pursuant to which the Company issued a Promissory Note for a total principal amount of $180,000 with an initial issue discount of $18,000. The net proceeds disbursed to the Company were $158,500 after deduction of legal and due diligence fees of $3,500. Hence, the total debt issuance costs amounts to $3,500.

Terms of Convertible notes

The convertible redeemable notes issued have a maturity date of August 24, 2026 and bear interest at an annual rate ranging from 6 - 8% as specified in the agreement. The Company will pay each interest payment and the outstanding principal due upon this convertible redeemable notes before or on the Maturity Date. These convertible redeemable notes may be prepaid in part or full, by the Company at a discount to the outstanding balance. One of the convertible redeemable note are subject to default interest rate of 22% per annum and include customary events of default and upon default, in the other convertible redeemable note, the then outstanding principal shall be increased by 50%.

The Holders of these convertible redeemable notes is entitled, at its option, at time specified in the agreements, to convert all or any amount of the principal face amount of these convertible redeemable notes then outstanding into shares of the Company’s common stock (the “Common Stock”) at a price (“Conversion Price”) equal to 72% or 72.5% (as specified in the agreement) of the average of the three lowest trading prices of the Common Stock as reported on the OTC Markets on which the Company’s shares are then traded or any exchange upon which the Common Stock may be traded in the future (the “Exchange”), for the seven or fifteen prior trading days (as specified in the agreement) including the day upon which a Notice of Conversion is received by the Company.

Terms of Promissory notes

The Promissory notes have a maturity date of August 11, 2026 and bear interest at an annual rate of 12%. The notes include scheduled monthly installment repayments as stipulated in the agreement and may be prepaid in part or full, by the Company at a discount to the outstanding balance.

The Holder shall have the right, on any Trading Day, at any time on or following the earlier of (i) the date that an Event of Default occurs under this Note or (ii) the date that that is one hundred eighty (180) calendar days after the Issue Date, to convert all or any portion of the then outstanding and unpaid Principal Amount and interest (including any Default Interest) into fully paid and nonassessable shares of Common Stock. The per share conversion price into which Principal Amount and interest (including any Default Interest) under this Note shall be convertible into shares of Common Stock hereunder as further described in this Note (the “Conversion Price”) shall equal the Market Price (as defined in this Note), subject to adjustment as provided in this Note. “Market Price” shall mean 75% of the lowest closing bid price of the Common Stock on the Principal Market during the fifteen (15) Trading Day period immediately preceding the respective Conversion Date.

The interest on the convertible redeemable notes was $11,056 and $11,056 for the three months and six months ended September 30, 2025 ($NIL and $NIL for the three months and six months ended September 30, 2024 which has been recognized in the Condensed Consolidated Statements of Operations for their respective periods.

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Unsecured convertible note (‘Atalaya Note’)

The following is a summary of the Company’s Atalaya Note payable for which it elected fair value option as on September 30, 2025 and March 31, 2025:

(In USD) As at	September 30, 2025		March 31, 2025
Atalaya Note	$	6,272,911	$	6,002,269
Total	$	6,272,911	$	6,002,269

The Atalaya Note was initially recorded at the fair value of $10,167,194 on issuance. The Atalaya Note was issued at 7.5% discount on principal amounting to $632,596 and bears an interest of 8% and an additional interest on default of 8% compounded monthly.

During the year ended March 31, 2025, partial liability was settled by issue of 6,257 shares to the Atalaya Note holders for a settlement of $2,324,696.

Further during the year ended March 31, 2025, the Company received notices from Atalaya regarding equity line transactions and incurring debt without the Purchaser’s consent. Atalaya filed a case against the Company seeking relief from the above mentioned defaults. On March 28, 2025, the Supreme Court of the state of New York ordered the Company to pay the outstanding principal amount along with interest accrued till date amounting to $5,997,833. Furthermore as per the order of the court, the Company is liable to pay interest at 9% per annum till the date the ordered amount is paid in full.

The change in fair value resulted in loss of $136,060 and $270,642 that is recorded for the three months and six months ended September 30, 2025 respectively (loss of $390,218 and gain of $970,020 for the three months and six months ended September 30, 2024) in the Condensed Consolidated Statements of Operations (as no portion of such fair value adjustment resulted from instrument-specific credit risk). Also, Refer Note 28.

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Other current liabilities

The components of other current liabilities were as follows:

(In USD) As at	September 30, 2025		March 31, 2025

Payable to customers	$	213,819	$	273,591
Statutory dues payable		1,418,859		1,588,047
Capital creditors		5,577		5,790
Employee benefit expenses payable		144,919		274,049
Other liabilities*		714,275		1,058,172
Other current liabilities	$	2,497,449	$	3,199,649

Includes payables related to operating leases and the residual value of vehicles acquired from Leaseplan India Private Limited.

Accumulated other comprehensive income/ (loss)

The components of accumulated other comprehensive income/(loss) were as follows:

(In USD) As at	September 30, 2025			March 31, 2025

(Loss)/ Gain on employee benefit
Balance, beginning of period	$	(18,186	)	$	46,101
Recognized during the period, net of taxes amounts to $NIL		(22,471	)		(57,663	)
Reclassification to net income: Amortization gains		(598	)		(6,624	)
Balance, end of period	$	(41,255	)	$	(18,186	)

Foreign currency translation adjustment
Balance, beginning of period	$	2,149,708		$	1,749,891
Translation adjustment on derecognition of subsidiary		(1,404,376	)		-
Translation adjustments gain recognized during the period, net of taxes amounts to $NIL		589,448			399,817
Balance, end of period	$	1,334,780		$	2,149,708
Accumulated other comprehensive income	$	1,293,525		$	2,131,522

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Capital Stock and Warrants

During the year ended March 31,2025, the Company executed four equity offerings. These offerings involved the sale of Common Stock, Pre-Funded Warrants, Series A Warrants and a maximum number of Series B Warrants as defined in the respective agreements.

Holders of common stock are entitled to one vote per share, dividends at the discretion of the Board of Directors, and a pro-rata share of residual assets upon liquidation. This comprehensive activity reflects the Company’s capital restructuring and financing strategy during the reporting period.

Series A warrants were issued with initial exercise prices of $80.60, $39.00, and $6.24, each exercisable for five years from the initial exercise date. Series B warrants were issued with zero initial eligibility, subject to increase on the Reset Date based on the Reset Share Amount formula. Placement agents received 10% of the Series A and Series B warrants issued to investors, along with Common Stock Warrants, as compensation. The Company classified all Series A and Series B warrants as derivative financial instruments under ASC 815-10-15-83 upon initial recognition. During the year ended March 31, 2025, due to anti-dilution and reset provisions, the exercise prices of Series A and Series B warrants were adjusted to the floor price during the year, and the number of warrants was increased to maintain the aggregate exercise price. As a result, the number of exercisable warrants became fixed, eliminating variability, and the outstanding Series A and Series B warrants were reclassified to equity at their respective reclassification date fair values. Warrants exercised before reclassification were reclassified at their exercise date fair value, while those exercised after were adjusted through additional paid-in capital.

As of September 30, 2025, 1,103,832 Series A warrants exercisable at $16.12, 2,549,164 Series A warrants exercisable at $6.24 and 781,100 Series B warrants exercisable at $0.002 remains outstanding. During the six months ended September 30, 2025, 4,654,461 shares were issued on exercise of Series A warrants and 1,469,497 shares on exercise of Series B warrants.

As of September 30, 2025, the Company has issued 1,874,559 Pre-Funded warrants in lieu of liquidation damages payable to some investors. Out of these, 33,458 Pre-Funded warrants has been exercised during the period.

Further, during the six months ended September 30, 2025, the Company has issued 2,400,310 Pre-Funded warrants in exchange of common stock cancelled during the period.

As of September 30, 2025, the Company has 2,640,569 number of restricted shares (1,909,833 as of March 31, 2025) and 4,262,158 number of unrestricted shares (552,585 as on March 31, 2025).

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Revenue

The components of revenue, net were as follows:

(In USD)	Three months ended September 30,				Six months ended September 30,
	2025		2024		2025		2024
Revenue from services
Facilitation revenue (net)	$	2,281,111	$	2,239,538	$	4,581,435	$	4,445,940

Other operating revenues		5,999		7,359		18,428		41,942
Total	$	2,287,110	$	2,246,897	$	4,599,863	$	4,487,882

	Three months ended September 30,				Six months ended September 30,
Revenue by geographical location	2025		2024		2025		2024
India	$	2,287,110	$	2,246,844	$	4,599,863	$	4,470,616
Egypt		-		-		-		13,365
Indonesia		-		53		-		3,901
	$	2,287,110	$	2,246,897	$	4,599,863	$	4,487,882

Contract balances

The Company’s contract liabilities for consideration collected prior to satisfying the performance obligations against scheduled trips is $701,156 and $450,355 as at September 30, 2025 and March 31, 2025, respectively.

During the six months ended September 30, 2025, the Company has offered vouchers that results in the deferral of revenue equivalent to amount received on the date of purchase of such vouchers. The accumulated deferred revenue in relation to vouchers issued amounts to $41,318 and $NIL as at September 30, 2025 and March 31, 2025, respectively.

Further, the Company offers loyalty program, Z-Points, that results in the deferral of revenue equivalent to the retail value on the date points are earned. The Company had accumulated deferred revenue amounting to $53,397 and $21,365 as at September 30, 2025 and March 31, 2025, respectively in relation to loyalty program.

The total balance under contract liability as at September 30, 2025 and March 31, 2025 is $795,871 and $471,720, respectively.

Revenue recognized during the three months and six months ended September 30, 2025 which was included in contract liabilities balance at the beginning of the respective period amounts to $48,605 and $181,236 ($453 and $269,829 recognized during the three months and six months ended September 30, 2024).

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Finance costs

The components of finance costs were as follows:

(In USD)	Three months ended September 30,				Six months ended September 30,
	2025		2024		2025		2024
Finance costs -other than related parties
Interest on vehicle loans	$	52,421	$	85,918	$	109,151	$	162,084
Interest on finance leases		72,802		131,166		172,380		267,209
Interest on subcontractor liability		22,133		23,072		44,958		46,488
Interest on redeemable promissory notes		-		1,320,861		-		1,467,623
Interest on unsecured notes		69,666		-		73,897		-
Interest on Convertible notes		11,056		-		11,056		-
Change in fair value of Atalaya Note		136,060		390,218		270,642		-
Bank charges		5,761		6,405		9,763		13,605
Other borrowings cost		101,781		202,538		211,966		363,954
Total	$	471,680	$	2,160,178	$	903,813	$	2,320,963

Other expense/(income), net

The components of other (income)/expense, net were as follows:

(In USD)	Three months ended September 30,						Six months ended September 30,
	2025			2024			2025			2024
Other expense/(income), net - other than related parties
Interest income	$	(2,193	)	$	(4,483	)	$	(6,583	)	$	(14,608	)
Change in fair value of Atalaya Note		-			-						(970,020	)
Gain on sale of property & equipment		-			637			-			(1,194	)
(Gain)/Loss on sale of assets held for sale		(277	)		73			(277	)		(2,850	)
Gain on derecognition of subsidiary (Refer Note 27)		(1,456,024	)		-			(1,857,204	)		-
Liquidated damages payable to Investors**		-			-			2,540,537			-
Impairment on assets held for sale		24,318			-			24,318			-
Loss on assets written off		29,236			56			71,549			93,740
Payable to customers and provision written back		(18,081	)		(8,625	)		(56,767	)		(35,709	)
Gain on recovery of goods and service tax receivable		(195,802	)		-			(195,802	)		-
Other, net		(38,824	)		(15,665	)		(92,749	)		(101,140	)
Total	$	(1,657,647	)	$	(28,007	)	$	427,022		$	(1,031,781	)

This relates to damages payable to Investors on account of delay in filing of registration statements for securities issued under multiple offerings made during the year.

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Income taxes

The components of (loss)/gain before income taxes consist of the following:

(In USD)	Three months ended September 30,						Six months ended September 30,
	2025			2024			2025			2024

Domestic	$	(3,142,651	)	$	(2,463,842	)	$	(6,796,266	)	$	(2,182,865	)
Foreign		2,348,502			(888,133	)		1,796,804			(3,700,689	)
Loss before income taxes	$	(794,149	)	$	(3,351,975	)	$	(4,999,462	)	$	(5,883,554	)

The Company has filed appeals against the above orders before higher authority.

The Company has computed income tax expense/(benefit) for the three months ended September 30, 2025 and September 30, 2024 by using a forecasted annual effective tax rate and adjust for any discrete items arising during the period. The Company has recorded $NIL tax expense for the given periods. Our effective tax rate was 0.00% for the three months and six months ended September 30, 2025 and September 30, 2024, respectively. The Company has computed a valuation allowance on deferred tax assets for the three months and six months ended September 30, 2025 and hence no deferred tax asset is recognized as September 30, 2025. The effective tax rate differs from the statutory tax rate of 21% for the three months and six months ended September 30, 2025 and 2024, due to changes in valuation allowance on the deferred tax assets.

The Company has received various orders from Indian tax authorities, for details Refer Note 29.

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Net loss per share

The components of basic and diluted loss per share were as follows:

(In USD, except loss per share)	Three months ended September 30,						Six months ended September 30,
	2025			2024			2025			2024

Net loss available for common shareholders (A)	$	(794,149	)	$	(3,351,975	)	$	(4,999,462	)	$	(5,883,554	)
Weighted average outstanding shares of common stock (B) #		11,759,019			37,849			10,128,247			36,062
Common stock and common stock equivalents (C) #		11,759,019			37,849			10,128,247			36,062
Loss per share
Basic (A/B)	$	(0.07	)	$	(88.56	)	$	(0.49	)	$	(163.15	)
Diluted (A/C)	$	(0.07	)	$	(88.56	)	$	(0.49	)	$	(163.15	)

Since the Company was in a loss position for the three months and six months ended September 30, 2025 and September 30, 2024, basic loss per share was same as diluted net loss per share for the periods presented. The following potentially dilutive outstanding securities as of September 30, 2025 and September 30, 2024 were excluded from the computation of diluted loss per share because their effect would have been anti-dilutive for the periods presented, or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period.

	Three months ended September 30,				Six months ended September 30,
	2025		2024		2025		2024
Stock options*		16		204		16		204
Public warrants		11,500,000		11,500,000		11,500,000		11,500,000
Private warrants		19,416		84,922		19,416		59,706
Warrants issued in November 2024 and December 2024 offering (including Second and Third closing of December offering)		3,706,443		-		3,706,443		-
Total		15,225,875		11,585,126		15,225,875		11,559,910

In 2012, the Company adopted its 2012 Equity Incentive Plan, under which the Company may grant options and restricted stock to eligible participants. The plan is equity settled. Options are generally granted for a term of ten years. Options have a graded vesting period of up to four years and the expenses are recorded on a straight-line basis over the requisite service period for each separately vesting portion of the awards. The Company cancelled certain outstanding options at the time of Reverse Recapitalization. The remaining 16 fully vested options were assumed by the Company on the Reverse Recapitalization date, exercisable at exercise price ranging from $120 to $300.

Prior period numbers have been adjusted to reflect the First Reverse Stock Split and the Second Reverse Stock Split of the Common Stock at a ratio of 1-for-100 and 1-for-20, respectively. (Refer Note 3A)

Employee benefit plans (unfunded)

Employee benefit plans includes gratuity and compensated absences payable to employees. These benefit plans consist of a defined benefit plan for gratuity payable by the Indian subsidiary of the Company under Indian regulations. These are determined under the projected unit credit method, with actuarial valuations being carried out at each reporting date. The retirement benefit obligations recognized in the Consolidated Balance Sheets represents the present value of the defined obligations. Under an employee benefit plan, it is the Company’s obligation to provide agreed benefits to the employees. The related actuarial and investment risks fall on the Company. The summary of current and non-current employee benefit plans obligations along with its components are as below:

Pension and other employee obligations As at	September 30, 2025		March 31, 2025
Current
Gratuity	$	77,323	$	82,547
Compensated absences		76,038		70,325
	$	153,361	$	152,872
Non-current
Gratuity	$	265,353	$	221,961
Compensated absences		171,010		170,062
Other statutory dues		2,007		2,007
	$	438,370	$	394,030

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Employee benefit plans (unfunded) (Continued)

Gratuity

	Three months ended September 30,						Six months ended September 30,
	2025			2024			2025			2024
Changes in projected benefit obligation (PBO)
PBO at the beginning of the year	$	347,169		$	325,441		$	304,509		$	352,492
Service cost		19,230			14,971			37,737			34,523
Interest cost		4,646			4,693			9,533			9,976
Actuarial loss		(8,222	)		(21,276	)		22,471			42,235
Benefits paid		(8,698	)		(31,452	)		(19,087	)		(146,029	)
Effect of exchange rate changes		(11,449	)		(808	)		(12,487	)		(1,628	)
PBO at the end of the period	$	342,676		$	291,569		$	342,676		$	291,569

Accrued pension liability
Current liability	$	77,323	$	77,170
Non-current liability		265,353		214,399
	$	342,676	$	291,569

Accumulated benefit obligation	$	263,151	$	221,574

Net gratuity cost recognized in income statement	Three months ended September 30,						Six months ended September 30,
	2025			2024			2025			2024
Service cost	$	19,230		$	14,971		$	37,737		$	34,523
Interest cost		4,646			4,693			9,533			9,976
Amortization of net actuarial gains		(296	)		(1,672	)		(598	)		(3,351	)
Net periodic benefit cost	$	23,580		$	17,992		$	46,672		$	41,148

Re-measurement losses in other comprehensive income	Three months ended September 30,						Six months ended September 30,
	2025			2024			2025			2024
Actuarial Loss	$	(8,222	)	$	(21,276	)	$	22,471		$	42,235
Amortization loss		(296	)		(1,672	)		(598	)		(3,351	)
Total	$	(7,926	)	$	(19,604	)	$	23,069		$	45,586

Components of actuarial gain:	Three months ended September 30,						Six months ended September 30,
	2025			2024			2025		2024
Actuarial loss/(gain) due to demographic assumption changes in defined benefit obligation	$	(1,696	)	$	2,004		$	4,879	$	1,063
Actuarial loss/(gain) due to financial assumption changes in defined benefit obligation		(1,254	)		3,378			6,092		2,701
Actuarial loss due to experience on defined benefit obligation		(5,272	)		(26,571	)		11,500		38,558
Total	$	(8,222	)	$	(21,189	)	$	22,471	$	42,322

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Employee benefit plans (unfunded) (Continued)

The assumptions used in accounting for the gratuity plan are as follows:

	September 30, 2025			September 30, 2024
Discount rate - staff		6.23	%		6.78	%
Discount rate - independent service provider*		6.54	%		6.78	%
Attrition rate - staff		42.61	%		38.91	%
Attrition rate - independent service provider*		82.00	%		81.49	%
Rate of increase in compensation levels - staff		12.98	%		12.63	%
Rate of increase in compensation levels - independent service provider*		10.96	%		11.49	%

Independent service provider are contract employees responsible for maintaining the fleet of the Company.

During the quarter ended September 30, 2025 and September 30, 2024, actuarial gain was driven by changes in actuarial assumptions, offset by experience adjustments on present value of benefit obligations.

The Company evaluates these assumptions annually based on its long-term plans of growth and industry standards. The discount rates are based on current market yields on government securities adjusted for a suitable risk premium.

Expected benefit payments as of September 30, 2025 is as follows:

Year ended March 31,
2026 (October 1, 2025 till March 31, 2026)	$	39,460
2027		68,075
2028		44,289
2029		25,805
2030		16,881
Thereafter		148,165
Total	$	342,676

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Employee benefit plans (unfunded) (Continued)

II.

Compensated absences

The employees are permitted to encash a maximum of 45 days of accumulated leave balance on separation. The Company has provided liability for compensated absences as per an actuarial valuation carried out by an independent actuary as of the Balance Sheet dates. The amount of compensated absences cost is $7,576 and $42,170 for the three months and six months ended September 30, 2025 respectively ( $(45,949) and $(1,358) for the three months and six months ended September 30, 2024).

III.

Defined contribution plan

The Indian subsidiary makes provident fund contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Indian subsidiary is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions are made to provident fund in accordance with the fund rules. The interest rate payable to the beneficiaries every year is notified by the Government. The amount of contributions made to provident fund is $54,908 and $113,620 for the three months and six months ended September 30, 2025 respectively ($65,147 and $158,559 for the three months and six months ended September 30, 2024 respectively).

Stock-based compensation expense

The Company adopted the 2023 Equity and Incentive Plan, which provides for grants of share-based awards, including Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units (“RSUs”), and other forms of share-based awards. The Company settles employee stock-based options with newly issued common stock of the Company. The Company has reserved 388,921 shares of common stock for the issuance of awards under the 2023 Plan.

In addition, the number of shares of common stock reserved and available for issuance under the 2023 Plan will automatically increase on January 1 of each year for a period of ten years, beginning on January 1, 2024 and on each January 1 thereafter until January 1, 2033, by a number equal to (i) 3% of the issued and outstanding number of shares of common stock of the Company on the preceding December 31, or (ii) a lesser number of shares as approved by the Company’s board of directors.

Additionally, during the year ended March 31, 2025, the stockholders approved a one-time increase in the number of Common Stock shares reserved for issuance under the 2023 Plan. The increase is equal to 15% of the total number of Common Stock shares issued and outstanding on that date.

On February 12, 2025, the Company granted 17,950 RSUs to its employees wherein all the RSU’s granted will fully vest on the vesting commencement date i.e., March 31, 2025 pursuant to the amendment agreement dated March 31, 2025.

On August 4, 2025, the Company granted an additional 4,525,000 RSUs to its employees with a total vesting period of 3 years. The RSUs follow a graded vesting schedule under which 25% of the units will vest after the 6^th, 12^th, 24^th and 36^th month following the vesting commencement date.

The following tables summarizes total stock-based compensation expense by function for the three and six months ended September 30, 2025 and September 30, 2024:

	Three months ended September 30,				Six months ended September 30,
	2025		2024		2025		2024
Cost of revenue	$	34,816	$	-	$	-	$	-
Technology expenses		66,052		-		-		-
Marketing expenses		22,777		-		-		-
General and administrative expenses		170,825		-		-		-
Total stock-based compensation expense		294,470		-		-		-

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Stock-based compensation expense (Continued)

The fair value of options granted is estimated on the date of grant using the Black-Scholes- option-pricing model using the weighted average assumptions. The assumptions used in the valuation are as follows:

	September 30, 2025			September 30, 2024
Dividend yield		0.00	%		-
Expected volatility		60.00	%		-
Risk-free interest rate		3.68 - 4.16	%		-
Exercise price		-			-
Expected life (in years)		0.5 - 3			-
Stock price		0.501			-
Attrition rate		15	%		-

The movement in number of stock-based options outstanding and their related weighted average exercise price for the 2023 Plan are as follows:

	Six months ended September 30,					Six months ended September 30,
	2025					2024
	No. of options			Weighted average exercise price		No. of options		Weighted average exercise price
Outstanding at the beginning of the year		17,950		$	-		-	$	-
Add: Granted during the year		4,525,000			-		-		-
Less: Cancelled during the year		(2,044	)		-		-		-
Outstanding at the end of the period		4,540,906					-

Exercisable at the end of the period		15,906			-		-		-
Unvested at the end of the period		4,525,000			-		-		-

The compensation cost of non-vested awards not yet recognized as of September 30, 2025, is $1,972,555 (September 30,2024 : NIL). The weighted average period over which stock-based compensation expenses of non-vested awards not yet recognized is expected to be recognized is 1.47 years (September 30, 2024 : NIL).

The total intrinsic value at the date of exercise for the options exercised during the six months ended September 30, 2025 is NIL (September 30, 2024 : NIL)

Restricted shares issued to CEO

On May 9, 2025, the Company entered into a consulting agreement with Mr. Deepankar Tiwari to engage him as the Chief Executive Officer (“CEO”) of the Company. As consideration for services rendered, Mr. Tiwari shall be eligible to receive a monthly consultancy fee and restricted shares of the Company. As per the terms of the agreement, 1,000,000 restricted shares were granted, of which 250,000 restricted shares shall vest at the end of each quarter starting June 30, 2025. Such restricted shares granted shall be subject to- i) execution of relevant Restricted Shares award agreement, ii) approval by Board of Directors, and iii) Compliance with applicable securities laws and tax regulations in the relevant jurisdictions, collectively called as ‘conditions for grant’. The Board had approved the restricted shares granted to Mr. Tiwari on July 16, 2025 pursuant to which the Inducement Award Agreement was executed on July 17, 2025 and Form S-8 along with required documents were submitted with relevant regulators on July 18, 2025. Therefore, July 18, 2025 has been taken as the grant date as all the required conditions were satisfied on this date.

The Company has registered 1,000,000 shares of common stock issuable to Mr. Deepankar Tiwari to induce the employee to accept employment as the Company’s CEO and executed inducement award agreement. Such inducement awards granted to the CEO are outside of the 2023 Equity and Incentive Plan.

During the six months ended September 30, 2025, 500,000 restricted shares have been issued to Mr. Tiwari and stock based compensation expense of $390,583 pertaining to these Restricted shares have been recorded in the Statements of Operations.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Related Party Transactions

Key managerial personnel (KMP)

Gregory Bradford Moran	Chief Executive Officer & Director (until June 20, 2024)
Hiroshi Nishijima	Chief Executive Officer (until May 02, 2025)
Uri Levine	Director (w.e.f. March 31, 2025)
Evelyn D’An	Director
Graham Gullan	Director (until June 18, 2024)
Swatick Majumdar	Director
Mohan Ananda	Director
Madan Menon	Director (until April 16, 2025)
John Robert Clarke	Director (w.e.f. June 20, 2024)
Mark Bailey	Director (until December 06, 2024)
Deepankar Tiwari	Chief Executive Officer (w.e.f May 09, 2025)

Related party transactions pertaining to debt, investments, and other current liabilities have been stated on the face of the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations.

The Company had following transactions with related parties:

	Three months ended September 30,				Six months ended September 30,
	2025		2024		2025		2024
Consultancy Charges
Deepankar Tiwari	$	434,491	$	-	$	452,020	$	-

The Company has the following outstanding balances with related parties:

As at	30-Sep-25		March 31, 2025

Payable to Director
Mohan Ananda	$	152,435	$	152,435

Accounts Payable
Uri Levine	$	-	$	62,176
Deepankar Tiwari	$	12,884	$	-
	$	165,319	$	214,611

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Variable Interest Entities

An entity is a VIE if it has any of the following characteristics :

●

The entity does not have enough equity to finance its activities without additional subordinated financial support.

●

The equity holders, as a group, lack the characteristics of a controlling financial interest.

●

The entity is structured with non-substantive voting rights (i.e., an anti-abuse clause).

We consolidate VIEs in which Company hold a variable interest and are the primary beneficiary. Company is the primary beneficiary because it has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that potentially could be significant to the VIE and the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). As a result, we consolidate the assets and liabilities of these consolidated VIEs.

The VIEs have been incorporated in their respective locations to perform the business of providing mobility solutions to consumers and businesses.

The following table summarizes the assets and liabilities related to the Company’s consolidated VIEs:

	September 30, 2025		March 31, 2025
Assets
Cash and cash equivalents	$	-	$	2,878
Other current assets	$	-	$	391
Long term Investments	$	-	$	3,991

Liabilities
Accounts payable	$	56,635	$	383,355
Current portion of pension and other employee obligations	$	-	$	80
Other current liabilities	$	9,168	$	141,164

Nature of investment in the VIEs is as follows:

Name of the VIE	Place of incorporation	Nature of investment	Investor entity
Fleet Mobility Philippines Corporation *	Philippines	Debt	Zoomcar Inc.

These amounts have been eliminated during the process of consolidation.

In May 2022, Company had initiated the process of winding-up for Fleet Mobility Philippines Corporation. The assets consolidated for the VIE are not material.

In August 2023, Zoomcar Vietnam Mobility LLC had filed for bankruptcy with the local authorities. This application was admitted by the local authorities and bankruptcy proceedings were ordered to commence on June 4, 2025. In accordance with ASC 810-10-15-10, the Company consolidated the VIE till June 3, 2025 since the Company held a variable interest and continued to be the primary beneficiary. However on June 04, 2025, the Company ceased to be the primary beneficiary and consequently, the Company has derecognized its cost of investment and assets and liabilities of the VIE and recognized a gain upon derecognition of VIE amounting to $401,180 as ‘Gain on derecognition of subsidiary’ under Other expense/(income), net.

On June 3, 2024, Zoomcar Egypt Car Rental LLC had closed down its operations due to decrease in operations and rising economic difficulties. On December 15, 2024, Zoomcar Egypt Car Rental LLC held an extraordinary general meeting to initiate the liquidation process and appoint a liquidator. Subsequently, on August 5, 2025, Zoomcar Egypt Car Rental LLC’s name was deleted from the commercial register.

In accordance with ASC 810-10-15-10, the Company consolidated the VIE till August 4, 2025 since the Company held a variable interest and continued to be the primary beneficiary. However on August 05, 2025, the Company ceased to be the primary beneficiary and consequently, the Company has derecognized its cost of investment and assets and liabilities of the VIE and recognized a gain upon derecognition of VIE amounting to $1,456,024 as ‘Gain on derecognition of subsidiary’ under Other expense/(income), net.

The VIE included in the Condensed Consolidated Financial Statements is separate legal entity and its assets are legally owned by the entity and is not available to the Company’s creditors or creditors of the Company’s other subsidiaries.

Nature of, and changes (if any) in, the risks associated with a reporting entity’s involvement with the VIE

In case of all the entities, the reporting entity is exposed to foreign currency exchange risk of the subsidiaries since the subsidiaries are incorporated in countries other than the country in which the reporting entity has been incorporated.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Financial Instruments - Fair Value Measurements

ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability as against assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the Company’s own credit risk.

The carrying value of financial instruments not carried at fair value by categories are as below:
As at	September 30, 2025		March 31, 2025
	Carrying value		Carrying value
Financial assets
Cash and cash equivalents	$	169,357	$	1,077,275
Accounts receivable		94,357		200,650
Receivable from government authorities		-		187,458
Long term investments		21,471		25,653
Other financial assets		408,899		365,433
Total assets	$	694,084	$	1,856,469
Financial liabilities
Accounts payable	$	13,957,818	$	12,548,582
Debt		2,387,943		2,851,341
Unsecured notes		509,850		-
Convertible notes		370,557		-
Other financial liabilities		1,078,590		1,611,602
Total liabilities	$	18,304,758	$	17,011,525

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:

	September 30, 2025
	Total Carrying value		Level 1		Level 2		Level 3
Assets:
Assets held for sale	$	233,110	$	-	$	233,110	$	-
Liabilities:
Atalaya Note	$	6,272,911	$	-	$	-	$	6,272,911

	March 31, 2025
	Total Carrying value		Level 1		Level 2		Level 3
Assets:
Assets held for sale	$	267,293	$	-	$	267,293	$	-
Liabilities:
Atalaya Note	$	6,002,269	$	-	$	-	$	6,002,269

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Financial Instruments - Fair Value Measurements (Continued)

Level 2: The fair value of Assets held for sale not traded in an active market is determined using the quoted prices in markets that are not active or inputs other than the quoted prices that are observable either directly or indirectly considering all the relevant factors of assets.

The Company’s recurring Level 3 financial instruments within the Company’s fair value hierarchy as of September 30, 2025 consist of Company’s unsecured convertible note.

Atalaya Note

On March 28, 2025, a court order was received for settlement of the Atalaya note. As of September 30, 2025, the Company’s fair value measurement of its Atalaya note reflects the carrying amount, as the obligation is immediately payable and no market premium or discount is applicable. This measurement is classified as Level 3 in the fair value hierarchy, with no valuation adjustments made due to the immediacy of settlement.

The changes in the fair value are summarized below:

	Unsecured Convertible
	Note (‘Atalaya Note’)
Balance as of April 1, 2024	$	10,067,601
Shares issued to Atalaya Note holders		(2,324,696	)
Change in fair value of unsecured convertible note		(1,360,238	)
Balance as of June 30, 2024	$	6,382,667
Change in fair value of unsecured convertible note		390,218
Balance as of September 30, 2024	$	6,772,885
Balance as of April 1, 2025		6,002,269
Change in fair value of derivative financial instruments		134,582
Balance as of June 30, 2025	$	6,136,851
Change in fair value of unsecured convertible note		136,060
Balance as of September 30, 2025	$	6,272,911

During the three months and six months ended September 30, 2025 and September 30, 2024 , there were no non-recurring fair value measure of assets or liabilities subsequent to initial recognition.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Commitments and contingencies

Contingencies

(A) Claims filed by customers and third-parties not acknowledged as liability amounted to $4,563,129 and $4,503,122 as at September 30, 2025 and March 31, 2025, respectively. The claims made by the customers against the Company includes claims that have been made for amounts charged to customers by the Company as damages for improper use of vehicles and/or physical damages made to vehicles during an active trip ; or claims made by customers for unavailability of the booked vehicle or for any mechanical default in the booked vehicle ; or claims against any similar issue faced by either the host or the customer. Under the erstwhile business model of the Company , the Company had procured third-party insurance policies for fleet under its management which indemnifies against personal death and/or injuries suffered either by the customer or third-parties during the use of its vehicles. Based on the insurance coverage, the Company is confident that liability, if any, arising from the claims under the previous business model will be covered by the insurance. Further, under the current business model of the Company, wherein the Company acts only as a facilitator, any issues arising from breach of any terms including improper use of vehicles and/or physical damages made to the vehicles or any mechanical issues in the vehicle will be the responsibility of either the host or the customer. While uncertainties are inherent in the final outcome of these matters, the Company believes that the disposition of these proceedings will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

(B) The Company has received various orders and show cause notices from Indian indirect tax authorities relating to disputes on input tax credits, service tax liabilities, GST dues, and taxability of car rental revenue for periods between 2014 and 2023, totaling $9,469,331 (March 31, 2025: $9,514,651). These disputes include disallowance of input credits, service tax liabilities on booking fees and penalty charges, disputes on goods and service tax input availed, and GST demands on gross booking value. The Company has taken necessary steps, including filing appeals, submissions, and deposits, and is awaiting further communication from the authorities. In relation to the GST demands on gross booking value, the Company has filed a writ petition with various authorities challenging the order. Based on the submissions provided and documents available, management believes that no significant outflow is expected, and therefore, no provision has been recorded as of September 30, 2025 and March 31, 2025.

(C) In February 2023, a former employee of Zoomcar India instituted a suit before the City Civil and Sessions Judge at Mayo Hall, Bengaluru against Zoomcar India, Zoomcar, Inc. and Zoomcar Holdings, Inc. (formerly IOAC) challenging his termination, claiming damages amounting to $382,445 and claiming that 100,000 options to purchase shares of Zoomcar, Inc. have vested. On March 3, 2023, the City Civil and Sessions Judge at Mayo Hall, Bengaluru, issued an interim injunction to restrain each of Zoomcar, Inc. and Zoomcar Holdings, Inc. from “alienating or dealing” the 100,000 shares of Zoomcar, Inc. claimed by the former employee while the suit is pending. Zoomcar believes that such claims are baseless and is attempting to have the interim order vacated. In addition, Zoomcar India filed an application in the former employee’s suit, seeking that Zoomcar Holdings, Inc. be deleted from the array of parties in the suit.

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Commitments and contingencies (Continued)

(D) On November 1, 2024, Gregory Moran, a former employee of Zoomcar India, has filed a case with the Superior Court, Delaware, challenging his termination without a cause or a sufficient notice, claiming $100,000 payment that was agreed to be paid on the 6 month anniversary of the effective date of closing of the SPAC transaction along with a 8% fully diluted equity interest in Zoomcar Holdings, Inc., non-payment of “vacation” valued at approximately $30,000, leave encashment of approximately $42,000, $96,000 entitled to him for severance pay and gratuity as per India’s Payment of Gratuity Act, 1972. Additionally, he has claimed 210,520 stock units already existing, fully vested. The Company filed a motion to dismiss the matter on November 27, 2024. On January 7, 2025, the Company subsequently filed the opening brief in support of the motion to dismiss filed on November 27, 2024. The Company further filed the opening brief in support of the motion to dismiss on 7 January 2025. Mr. Moran filed opposition to Zoomcar’s motion on February 5, 2025 and Zoomcar filed a reply in further support of its motion on February 20, 2025. Oral arguments on Zoomcar’s motion to dismiss were heard on April 29, 2025. The court granted the motion to dismiss Mr. Moran’s quasi-contractual claims and reserved decision on the balance of the motion in the next hearing held on August 15, 2025. The judgement from the hearing is currently pending with the Court.

(E) Zoomcar Holdings, Inc. files tax returns in the U.S. federal, various state, and foreign jurisdictions. In the normal course of business, the Company is subject to examination by tax authorities. Our major tax jurisdiction is in India. The Indian tax authority is currently examining our 2016 through 2023 tax returns. There are other ongoing audits in various other jurisdictions that are not material to our financial statements. The Company received an order for fiscal year 2015-16 in relation to non- deduction of tax deducted at source withholding taxes on certain payments to resident payees/service providers amounting to $121,218 (March 31, 2025: $125,839). Penalty of $125,442 has been claimed but the proceedings are kept under abeyance until the above order is disposed off. The Company has filed appeals against the above orders before higher authority.

The Company has not recognized any uncertain tax position as at September 30, 2025 and March 31, 2025, respectively. The Company believes these orders are unlikely to be sustained at the higher appellate authorities.

(F) On August 2025, the Company received a notice from the legal representatives of certain holders of warrants to purchase Series E Preferred Stock of Zoomcar, Inc. pursuant to the warrant agreement dated May 12, 2021. The warrant holders have raised a dispute regarding the non-delivery of shares following the submission of their respective notices of exercise. The warrant holders are collectively entitled to warrants amounting to $6,217,614. The Company believes that such claims are without merit and is in discussion with the legal representatives to dismiss the same.

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ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Subsequent events

(A) On August 7, 2025, the Company received a notice from OTC Markets Group Inc. (“OTC Markets”) indicating that the Company no longer meets certain eligibility requirements for continued trading on the OTCQX U.S. tier as per the OTCQX Rules for U.S Companies Section 2.1(B) with respect to market capitalization. Following receipt of the notice and after evaluating available alternatives, the Company elected to transition its quotation to the OTCQB tier of OTC Markets Group (“OTCQB”). On November 4, 2025, the Company’s ordinary shares commenced trading on the OTCQB under the ticker symbol “ZCAR.”

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the three and six months ended September30, 2025 and 2024. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements” included in this Form 10-Q. Additionally, our historical results are not necessarily indicative of the results that may be expected in any future period. Amounts are presented in U.S. dollars.

Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “Zoomcar,” “we”, “us”, “our”, and the “Company” are intended to refer to (i) following the Business Combination, the business and operations of Zoomcar Holdings, Inc. and its consolidated subsidiaries, and (ii) prior to the Business Combination, Zoomcar, Inc. (the predecessor entity in existence prior to the consummation of the Business Combination) and its consolidated subsidiaries.

Overview

Zoomcar’s current business model is an online peer-to-peer car sharing platform which connects Hosts (car owners) with Guests (persons in temporary need of vehicles). Our business model is explained in details under the “Standard booking Flow” section below.

As of November 12, 2025, we had 6,902,727 shares of our Common Stock issued and outstanding. Except as otherwise indicated, all share and per share information in this report gives effect to second reverse stock split effected on March 21, 2025 at a ratio of 1-for-20.

Standard Booking Flow

We operated a peer-to-peer car sharing platform in emerging markets across three countries and generated revenues from bookings by our Guests of vehicles listed on our Zoomcar platform by our Hosts. Zoomcar receives a portion of the associated booking fee charged to the Guest (less any credits or discounts applied), as well as platform fees charged to Guests and Hosts and trip protection fees (which we refer to as “value-added fees”) charged to Guests. As further described below, other fees charged to Guests, such as fuel charges, are paid fully to Hosts, who also receive a revenue share equal to approximately 60% of booking fees and between 0% and 40% of certain other charges. We use our customized algorithm to price trips dynamically on the platform, leveraging our data from the millions of miles driven on our platform to intelligently price the risks of trips and the market, incorporating information about Guests informed by data we collect and Zoomcar management’s professional experience. While Hosts can opt to offer bookings at prices that are different from those the platform generates as recommendations, most Hosts tend to select the algorithmically derived pricing for their bookings. The functionality enabled by our customized pricing tools is reflected in both Guest booking fees and in the trip protection or “value-added fees” charged to Guests, who are presented with three algorithmically derived trip protection pricing options from which to choose. The revenue- generating components of a trip booked on our peer-to-peer car sharing platform include:

●

Charges to Guests: For each booking on our platform, the aggregate amount we charge the Guest consists of the upfront booking fee, value-added fees, the Guest platform fees, and certain other charges (e.g., late fees, trip extension fees, etc.). We refer to these fees collectively as the “gross booking value (GBV).” The booking fee and trip protection fees are determined algorithmically by our system at the time of booking inception, while other fees may be charged during or after the trip, depending on events arising during the trip. Neither Zoomcar nor our Host subsidize fuel costs for Guests. Guests cover their own fuel costs, which are in addition to the booking fee.

●

Charges to Hosts: For each booking on our platform, we charge a “revenue share” to the Host based on a percentage of the booking fee plus other fees that are transferable to the Host. The average revenue share that Zoomcar receives from a booking on our platform is approximately 40%, with the Host retaining the remaining 60%. Our platform provides Hosts with a menu of incentives related to specific factors such as bookings served and minimum host ratings. We charge Hosts minimum marketplace fees to offset the costs of our installed devices.

Key Business Metrics

In addition to the measures presented in our Unaudited Condensed Consolidated Financial Statements, we use the following key business metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions. We are not aware of any uniform standards for calculating these key metrics, which may hinder comparability with other companies that may calculate similarly titled metrics in a different way.

	For the three months Ended				For the six months Ended
	September 30,		September 30,		September 30,		September 30,
(In thousands)	2025		2024		2025		2024
Booking Days		180		147		371		317
Gross Booking Value	$	6,226	$	6,119	$	12,698	$	12,349

Booking Days

We define “Booking Days” as total days (24 hours measured in minutes) that a vehicle is booked by Guests on our platform in a given period, for trips ended, net of total days relating to cancelled bookings in that period. We believe Booking Days is a key business metric to help investors and others understand and evaluate our results of operations in the same manner as our management team, as it represents a standardized unit of transaction volume on our platform in any given time period.

(1)	Refers to calendar quarters (i.e., Q3-22 = July 01 to September 30, 2022).

For the three months ended September 30, 2025, Booking Days on the platform totaled approximately 179,898, compared to 146,832 during the three months ended September 30, 2024.

For the six months ended September 30, 2025, Booking Days on the platform totaled approximately 370,829, compared to 316,957 during the six months ended September 30, 2024.

Gross Booking Value

We define the Gross Booking Value, or GBV, as the total dollar value of Booking Days booked on our platform, including upfront booking fee (less discounts and credits), value-added fees (i.e., trip protection fees), Guest and Host platform fees, and other charges. GBV includes applicable pass-through taxes and other fees required to be remitted to local authorities, which are excluded from net revenue. GBV is driven by the number of Booking Days and related trip pricing. Revenue from bookings is recognized ratably over the duration of the trip; accordingly, we consider GBV a “leading indicator” of revenue.

(1)	Refers to calendar quarters (i.e., Q3-22 = July 01 to September 30, 2022).

(2)	Booking Days and GBV for bookings ended, excludes cancelled bookings.

During the three months ended September 30, 2025, Gross Booking Value on the platform totaled approximately $6.23 million, compared to approximately $6.12 million during the three months ended September 30, 2024.

During the six months ended September 30, 2025, Gross Booking Value on the platform totaled approximately $12.70 million, compared to approximately $12.35 million during the six months ended September 30, 2024.

Components of results of operations

Net revenue

During the fiscal year ended March 31, 2022, we began offering a peer-to-peer car sharing platform, which enables Hosts to connect with Guests. We act as an agent under this model and thus, our primary source of revenue is recording revenue from services (on a net basis) for those trips fulfilled by Host vehicles. Prior to August 2021, vehicles available on our platform consisted solely of Company-owned or leased vehicles that we offered for short-term rental or longer-term subscription.

Our revenue for the three and six months ended September 30, 2025, and September 30, 2024, consists of revenue from services and other operating revenue.

Revenue from Services

Support and facilitation services offered by the Company include services like assistance in execution of a lease agreement, payment facilitation, vehicle delivery, on-road assistance, prospective renter diligence and vehicle usage/location tracking (in cases of loss or theft).

Revenue from services consists of our share of GBV. The fees that are components of GBV are charged as a percentage of the value of certain components of the gross booking value, excluding taxes. Our revenue from services consists of our share of the service fees charged to the Hosts, net of incentives and refunds. We collect these fees from the Guest and share a portion of the booking fee and trip extension with the Host post recovery of our share of facilitation revenue. Daily we, or our third-party payment processors, disburse a portion of the GBV to the Hosts, less the fees due from the Host to us. The amounts charged for the booking fee vary based on factors such as the vehicle type, the day of the week, time of the trip, and the duration of the trip. Revenue is recognized ratably over the trip period as we satisfy our performance obligations.

We also require our Guests to choose one of the three trip protection options. A per-trip amount (included in the booking fee) is charged for trip protection, which is collected upon the booking. We recognize revenue from trip protection charges over the trip completion period.

Recorded revenue from services is reduced by the portion of those incentives and credits paid to our Hosts and Guests that cannot be directly attributable to distinct services performed by the Hosts and Guests. These incentives are treated as contra-revenue and reduce our net Revenue recorded in each period. Those incentive costs that can be attributed to a distinct service (e.g., referral bonuses paid to referrer) are included in sale and marketing expenses.

Others

We exclude from revenue the taxes assessed by governmental authorities that are imposed on specific revenue- producing transactions and collected from customers/subscribers.

Cost of Revenue

Cost of revenue primarily consists of, (1) personnel-related compensation costs of local operations teams and teams that provide phone, email and chat support to users, (2) repair and maintenance expenses of vehicles, (3) payment gateway charges, (4) depreciation of devices for keyless entry system and GPS which are installed in the vehicles of Hosts, (5) software support and maintenance, and (6) other direct expenses. We expect that the cost of revenue will continue to increase on an absolute dollar basis for the foreseeable future to the extent that we continue to see growth on the platform. However, cost of revenue may vary as a percentage of revenue from period to period based on activity on the platform.

Technology and Development

Technology and development expenses primarily consist of personnel-related compensation expenses for technology, product, and engineering teams, as well as expenses associated with our information technology and data science platforms. We expect that our technology and development expenses will increase on an absolute dollar basis but vary from period to period as a percentage of net revenue for the foreseeable future as we continue to invest in technology and development activities relating to ongoing improvements to and maintenance of our platform, including the potential hiring of additional personnel to support these efforts.

Sales and Marketing

Sales and marketing expenses primarily consist of online marketing expenses, marketing promotion expense, marketing partnerships with third parties, sales and marketing personnel compensation expenses and certain incentives and referral bonuses paid to Hosts (reflecting the portion of incentive costs not adjusted against net revenue). Sales and marketing expenses also include allocated overhead. We expect that our sales and marketing expenses will increase on an absolute dollar basis but vary from period to period as a percentage of net revenue for the foreseeable future.

General and Administrative

General and administrative expenses primarily consist of personnel-related expenses for executive management and administrative functions, including finance and accounting, legal, and human resources. General and administrative expenses also include certain travel expenses, professional service fees, including legal expenses, rent expenses, office expenses, repairs and maintenance of office equipment and furniture, directors’ and officers’ insurance and other expenses. We further expect to continue incurring general and administrative expenses of operating as a public company, including expenses for insurance, costs to comply with the rules and regulations applicable to public companies, costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, investor relations, and professional services expenses. We expect general and administrative expenses will reduce on absolute dollar basis owing to our efforts to manage costs.

Finance Costs

Finance costs consist primarily of interest on vehicle loans, finance leases, bridge loan , changes in fair value of Atalaya note, and redeemable promissory note. In addition, it also includes Note issue expenses, bank charges, other borrowing costs.

Other (Income) and Expense, Net

Other expense and (income), net consists primarily of interest income, change in fair value of Atalaya note, Loss on assets written off, Liquidated damages to Investors and Gain on derecognition of subsidiary and other expenses.

Gain on troubled debt restructuring

Gain on troubled debt restructuring consists of gains on account of restructuring of loans from lenders and dues from vendors.

Reversal of previously recognized gain on troubled debt restructuring

Reversal of previously recognized gain on troubled debt restructuring includes the reversal of gains on account of restructuring of vendor dues.

Results of Operations

The following table sets forth our results of operations for the periods presented:

	For the Three Months Ended Sep 30,						For the Six Months Ended Sep 30,
	2025			2024			2025			2024
Net revenue		2,287,110			2,246,897			4,599,863			4,487,882
Costs and expenses
Cost of revenue		1,197,289			1,213,422			2,510,976			2,725,711
Technology and development		730,090			734,920			1,439,421			1,636,701
Sales and marketing		188,560			214,770			365,523			1,017,341
General and administrative		2,151,287			1,656,036			4,025,482			4,054,948
Total costs and expenses		4,267,226			3,819,148			8,341,402			9,434,701
Loss from operations		(1,980,116	)		(1,572,251	)		(3,741,539	)		(4,946,819	)
Finance costs		471,680			2,160,178			903,813			2,320,963
Gain on troubled debt restructuring		-			(352,447	)		(72,912	)		(352,447	)
Other income, net		(1,657,647	)		(28,007	)		427,002			(1,031,781
Loss before income taxes		(794,149	)		(3,351,975	)		(4,999,462	)		(5,883,554	)
Provision for income taxes		-			-			-			-
Net loss		(794,149	)		(3,351,975	)		(4,999,462	)		(5,883,554	)

The following table sets forth our results of operations as a percentage of net revenue:

	For the Three Months Ended Sep 30,						For the Six Months Ended Sep 30,
	2025			2024			2025			2024
Net revenue		100	%		100	%		100	%		100	%
Costs and expenses
Cost of revenue		52	%		54	%		55	%		61	%
Technology and development		32	%		33	%		31	%		36	%
Sales and marketing		8	%		10	%		8	%		23	%
General and administrative		94	%		74	%		88	%		90	%
Total costs and expenses		187	%		170	%		181	%		210	%
Loss from operations		-87	%		-70	%		-81	%		-110	%
Finance costs		21	%		96	%		20	%		52	%
Gain on troubled debt restructuring		0	%		-16	%		-2	%		-8	%
Other income, net		-72	%		-1	%		9	%		-23	%
Loss before provision for income taxes		-35	%		-149	%		-109	%		-131	%
Provision for income taxes		0	%		0	%		0	%		0	%
Net loss income		-35	%		-149	%		-109	%		-131	%

Net Revenue

Our total net revenue for the three months ended on September 30, 2025, and September 30, 2024, was $2.29 million and $2.25 million, respectively, representing a marginal increase of $0.04 million, or 2%.

Our total net revenue for the six months ended on September 30, 2025, and September 30, 2024, was $4.60 million and $4.49 million, respectively, representing a marginal increase of $0.11 million, or 2%.

Costs and Expenses

Cost of Revenue

	For the Three Months Ended Sep 30,										For the Six Months Ended Sep 30,
	2025		2024		Change			% Change			2025		2024		Change			% Change
Cost of revenue		1,197,289		1,213,422		(16,133	)		-1	%		2,510,976		2,725,711		(214,735	)		-8	%

Cost of revenue was $1.20 million during the three months ended on September 30, 2025, as compared to $1.21 million during the three months ended on September 30, 2024, a decrease of $0.02 million, or 1%.

Cost of revenue was $2.51 million during the six months ended on September 30, 2025, as compared to $2.73 million during the six months ended on September 30, 2024, a decrease of $0.21 million, or 8%. This decrease was driven by overall Company-wide efforts to drive greater operational efficiency. Key drivers of the cost savings include $0.15 million reduction in personnel costs (driven by headcount reductions in India, and discontinuation of operations in Vietnam, Egypt and Indonesia), there were cost savings of $0.10 million on account of depreciation on tracking devices during the six months ended September 30, 2025, as compared to the six months ended September 30, 2024, since majority of the devices were completely depreciated in the previous Fiscal year ending March 31, 2025.

Technology and Development

For the Three Months
Ended Sep 30,

For the Six Months
Ended Sep 30,

2025

2024

Change

%
Change

2025

2024

Change

%
Change

Technology and development

730,090

734,920

(4,830

)

-1

1,439,421

1,636,701

(197,280

)

-12

Technology and development expenses totaled $0.73 million during the three months ended on September 30, 2025 and during the three months ended on September 30, 2024 as well.

Technology and development expenses totaled $1.44 million during the six months ended on September 30, 2025, as compared to $1.64 million during the six months ended on September 30, 2024 a decrease of $0.20 million, or 12%. This decrease was driven by employee benefit costs reductions of $0.14 million, and a further reduction of $0.06 million in IT platforms support costs as the Company continues to optimize usage of cloud-based IT services while enabling more in-app features for Guests and Hosts

Sales and Marketing

	For the Three Months Ended Sep 30,										For the Six Months Ended Sep 30,
	2025		2024		Change			% Change			2025		2024		Change			% Change
Sales and marketing		188,560		214,770		(26,210	)		-12	%		365,523		1,017,341		(651,818	)		-64	%

Sales and marketing expense totaled $0.19 million during the three months ended on September 30, 2025, as compared to $0.21 million during the three months ended on September 30, 2024, a decrease of $0.03 million, or 12%, primarily driven by personnel-related costs decreased by $0.04 million due to reductions in headcount.

Sales and marketing expense totaled $0.37 million during the six months ended on September 30, 2025, as compared to $1.02 million during the six months ended on September 30, 2024, a decrease of $0.65 million, or 64%, primarily driven by $0.43 million reduction in performance marketing expenses, Personnel-related costs decreased by $0.14 million due to reductions in headcount and $0.08 million reduction in brand marketing.

General and Administrative

	For the Three Months Ended Sep 30,									For the Six Months Ended Sep 30,
	2025		2024		Change		% Change			2025		2024		Change			% Change
General and administrative		2,151,287		1,656,036		495,251		30	%		4,025,482		4,054,948		(29,466	)		-1	%

General and administrative expenses were $2.15 million during the three months ended on September 30, 2025, as compared to $1.66 million during the three months ended on September 30, 2024, an increase of $0.50 million, or 30%. This increase is primarily due to increase in personnel-related costs by $0.17 million and professional charges increased by $0.31 million due to RSU and Stock Inducement to employees and CEO incurred during the three months ended September 30, 2025.

General and administrative expenses were $4.03 million during the six months ended on September 30, 2025, as compared to $4.05 million during the six months ended on September 30, 2024, a decrease of $0.02 million, or 1%. Legal and professional cost increased by $0.29 million due to Stock inducement awarded to CEO during the six months ended September 30, 2025, this increase is offset by reduction of personal-related costs by $0.19 million despite of RSU issuance cost incurred, due to reduction of headcount during the six months ended September 30, 2025and the rent expense is reduced by $0.11 million pertains to rental towards parking site where Assets held for sale was parked due to sale of Assets held for sale and closure of city office rentals.

Finance Costs

	For the Three Months Ended Sep 30,										For the Six Months Ended Sep 30,
	2025		2024		Change			% Change			2025		2024		Change			% Change
Finance costs		471,680		2,160,178		(1,688,498	)		-78	%		903,813		2,320,963		(1,417,150	)		-61	%

Finance costs were $0.47 million during the three months ended on September 30, 2025, as compared to $2.16 million during the three months ended on September 30, 2024, a reduction of $1.69 million, or 78%. There were Non-cash expenses related to change in Interest on redeemable promissory notes amounting to $1.32 million during the three months ended September 30, 2024 as compared to Nil during the three months ended September 30, 2025 due to repayment of the same during November 2024 financing, Interest on vehicle loans and finance lease has reduced by $0.03 million and $0.06 million respectively and also change in the fair value of Atalaya note has been reduced by $0.25 million during the three months ended September 30, 2025, as compared to three months ending September 30, 2024.

Finance costs were $0.90 million during the six months ended on September 30, 2025, as compared to $2.32 million during the six months ended on September 30, 2024, a reduction of $1.42 million, or 61%. There were Non-cash expenses related to change in Interest on redeemable promissory notes amounting to $1.47 million during the six months ended September 30, 2024 as compared to Nil during the six months ended September 30, 2025 due to repayment of the same during November 2024 financing,

Gain on troubled debt restructuring

	For the Three Months Ended Sep 30,										For the Six Months Ended Sep 30,
	2025		2024			Change		% Change			2025			2024			Change		% Change
Gain on troubled debt restructuring		-		(352,447	)		352,447		-100	%		(72,912	)		(352,447	)		279,535		-79	%

Gain on troubled debt restructuring during the three months ended on September 30, 2025 was Nil as compared to $0.35 million during the three months ended on September 30, 2024. The gain on troubled debt restructuring was on account of restructuring of vendor and lender dues.

Gain on troubled debt restructuring during the six months ended on September 30, 2025 was $0.07 million was on account of the gain on troubled debt restructuring of operating lease restructurings as compared to $0.35 million on account of gain on troubled debt restructuring was on account of restructuring of vendor and lender dues during the six months ended on September 30,2025. There is a reduction of $0.28 million or 79% of these gains during the six months ending September 30, 2025 as compared to the six months ending September 30, 2024.

Other expense/(income), net

	For the Three Months Ended Sep 30,												For the Six Months Ended Sep 30,
	2025			2024			Change			% Change			2025		2024			Change		% Change
Other (income) expense, net		(1,657,647	)		(28,007	)		(1,629,640	)		5819	%		427,022		(1,031,781	)		1,458,803		-141	%

Other income was $1.66 million during the three months ended on September 30, 2025, versus other income of $0.03 million during the three months ended on September 30, 2024, an increase in income of $1.63 million or 5819%.This increase in income is due to gain on account of derecognition of subsidiary amounting to $1.46 million during the three months ended September 30, 2025.

Other expenses were $0.43 million during the six months ended on September 30, 2025, versus other income of $1.03 million during the six months ended on September 30, 2024, an increase in expenses of $1.46 million or 141%.This increase in expenses is due to recognition of non-cash expenses towards liquidated damages amounting to $ 2.54 million to the investors of December 2024 First Closing and March 2025 Third Closing due to delay in registering of securities with SEC, expenses towards change in the fair value of Atalaya note is $0.27 million during the six months ended September 30, 2025 recorded under finance cost as compared to gain of $0.97 million during six months ended September 30, 2024.This increase in expenses is offset by gain on account of derecognition of subsidiary amounting to $1.86 million during the six months ended September 30, 2025.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we believe the following non-GAAP financial measures help us to evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions. We use the following non-GAAP financial measures, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes.

We believe that these non-GAAP financial measures, when taken collectively, may be helpful to investors because they provide consistency and comparability with past financial performance and assist in comparisons with other companies, some of which use similar non-GAAP financial measures to supplement their GAAP results. The non-GAAP financial measures are presented for supplemental informational purposes only, should not be considered as a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP financial measures used by other companies. Because of these limitations, we consider, and you should consider, our non-GAAP financial measures alongside other financial performance measures presented in accordance with GAAP. A reconciliation of each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP is provided below. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

The following table summarizes our non-GAAP financial measures, along with the most directly comparable GAAP measure, for each period presented below.

	For the Three Months Ended Sep 30,						For the Six Months Ended Sep30,
	2025			2024			2025			2024
Gross profit	$	1,089,821		$	1,033,475		$	2,088,887		$	1,762,171
Gross margin		48	%		46	%		45	%		39	%
Contribution profit		1,197,417			1,207,766			2,335,841			1,666,927
Contribution margin		52	%		54	%		51	%		37	%
Net (loss) income		(794,149	)		(3,351,975	)		(4,999,462	)		(5,883,554	)
Adjusted EBITDA	$	(1,260,011	)	$	(1,470,442	)	$	(2,986,006	)	$	(4,731,683	)

Contribution Profit (Loss) and Contribution Margin

We define contribution profit (loss) as our gross profit (loss) plus (a) depreciation expense included in cost of revenue, (b) Stock based compensation included in cost of revenue, (c) other general costs included in cost of revenue (rent, software support, insurance, travel); less (i) Host incentive payments and (ii) marketing and promotional expenses (excluding brand marketing).

We use contribution profit (loss) and contribution margin as indicators of the economic impact of a new booking on our platform, as they capture the direct expenses attributable to a new booking on our platform and the cost required to generate revenue. While certain contribution profit (loss) adjustments may not be non-recurring, non-cash, non-operating, or unusual, contribution profit (loss) is a metric our management and board of directors find useful, and we believe investors may find useful in understanding the costs most directly associated with our revenue-generating activities.

We recorded a contribution profit of $1.20 million during the three months ended on September 30, 2025, versus a contribution profit of $1.21 million during the three months ended on September 30, 2024. Our gross profit improved to $1.09 million during the three months ended on September 30, 2025, versus $1.03 million during the three months ended on September 30, 2024.

We recorded a contribution profit of $2.34 million during the six months ended on September 30, 2025, versus a contribution profit of $1.67 million during the six months ended on September 30, 2024. Our gross profit improved to $2.09 million during the six months ended on September 30, 2025, versus $1.76 million during the six months ended on September 30, 2024, which was driven by reductions in cost of revenue due to the overall improvements in Companywide operational efficiencies accomplished over the past few quarters. In addition, host incentives and marketing costs (excl. brand marketing) were reduced significantly to $0.16 million during the six months ended on September 30, 2025, versus $0.59 million during the same period in 2024, which further contributed to the Company achieving contribution profit as compared to contribution loss in the previous comparable period.

Contribution profit (loss) and contribution margin are non-GAAP financial measures with certain limitations regarding their usefulness; they should be considered as supplemental in nature and are not meant as substitutes for gross profit /(loss) and gross margin, which are measures prepared in accordance with GAAP. For purposes of calculating the non-GAAP financial measures, we utilize the GAAP financial measure of gross profit (loss), which is defined as revenue minus cost of revenue, each of which is presented in our audited consolidated statements of operations. Our definitions of contribution profit (loss) and contribution margin may differ from the definitions used by other companies in our industry and, therefore, comparability may be limited. In addition, other companies may not publish these or other similar metrics. Further, our definition of contribution profit (loss) does not include the impact of certain expenses that are reflected in our Unaudited Condensed Consolidated Statements of Operations. Thus, our contribution profit (loss) should be considered in addition to, not as a substitute for or in isolation from, gross profit (loss) prepared in accordance with GAAP.

The following tables present reconciliations of gross profit/(loss) to contribution profit/(loss) and gross margin to contribution margin for each of the periods indicated:

Contribution Profit/(Loss)

	For the Three Months Ended Sep 30,						For the Six Months Ended Sep 30,
	2025			2024			2025			2024
Net revenue	$	2,287,110		$	2,246,897		$	4,599,863		$	4,487,882
Cost of revenue		1,197,289			1,213,422			2,510,976			2,725,711
Gross profit/(loss)		1,089,821			1,033,475			2,088,887			1,762,171
Add: Depreciation and amortization in COR		22,761			74,306			45,727			149,179
Add: Stock-based compensation in COR		34,816			-			34,816			-
Add: Overhead costs in COR (rent, software support, insurance, travel)		139,160			145,346			326,975			350,321
Less: Host Incentives and Marketing costs (excl. brand marketing)		89,141			45,361			160,564			594,744
Less: Host incentives		34,766			30,242			77,155			77,864
Less: Marketing costs (excl. brand marketing)		54,374			15,119			83,410			516,880
Contribution profit/(loss)	$	1,197,417		$	1,207,766		$	2,335,841		$	1,666,927
Contribution margin		52	%		54	%		51	%		37	%

Adjusted EBITDA is a non-GAAP financial measure that represents our net income or loss adjusted for (i) other income and (expense), net; (ii) depreciation and amortization;(iii) finance costs; (iv) stock based compensation; (v) any other exceptional nonrecurring expenses.

We use adjusted EBITDA in conjunction with net income or loss, its corresponding GAAP measure, as a performance measure that we use to assess our operating performance and operating leverage in our business. The above items are excluded from our adjusted EBITDA measure because these items are non-cash in nature, or because the amount and timing of these items is unpredictable, or they are not driven by core results of operations, thereby rendering comparisons with prior periods and competitors less meaningful.

We believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating the results of our operations, as well as provides a useful measure for period-to-period comparisons of our business performance. Moreover, we have included adjusted EBITDA because it is a key measurement used by our management internally to make operating decisions, including those related to analyzing operating expenses, evaluating performance, and performing strategic planning and annual budgeting.

Our adjusted EBITDA loss reduced to $1.28 million during the three months ended on September 30, 2025, as compared to an adjusted EBITDA loss of $1.47 million during the three months ended on September 30, 2024. This improvement is a direct result of broad-based cost reduction and optimization initiatives. These initiatives successfully lowered our cost of revenue, technology and development costs, sales and marketing costs, and general and administrative costs (as detailed in the preceding section). It is also notable that this reduction occurred despite incurring an RSU cost of $0.69 million during the three-month period ended September 30, 2025, compared to $ nil expense during the same period in 2024.

Our adjusted EBITDA loss has reduced to $2.99 million during the six months ended on September 30, 2025, as compared to an adjusted EBITDA loss of $4.73 million during the six months ended on September 30, 2024.This improvement is a direct result of broad-based cost reduction and optimization initiatives. These initiatives successfully lowered our cost of revenue, technology and development costs, sales and marketing costs, and general and administrative costs (as detailed in the preceding section). It is also notable that this reduction occurred despite incurring an RSU cost of $0.69 million during the six-month period ended September 30, 2025, compared to $ nil expenses during the same period in 2024.

Adjusted EBITDA has limitations as a financial measure, should be considered as supplemental in nature, and is not meant as a substitute for the related financial information prepared in accordance with GAAP. These limitations include the following:

●

Adjusted EBITDA does not reflect other (income)/expense, net, which includes interest income on cash, cash equivalents, restricted cash and investments, net of interest expense, and gains and losses on foreign currency transactions and balances;

●

Adjusted EBITDA excludes certain recurring non-cash charges, such as depreciation of property and equipment and amortization of intangible assets; although these are non-cash charges, the assets being depreciated and amortized may need to be replaced in the future, and adjusted EBITDA does not reflect all cash requirements for such replacements or for new capital expenditure requirements;

●

Adjusted EBITDA excludes stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a recurring expense in our business and an important part of our compensation strategy: and

●

Adjusted EBITDA excludes all finance charges.

Because of these limitations, you should consider adjusted EBITDA alongside other financial performance measures, including net loss and our other GAAP results.

The following is a reconciliation of adjusted EBITDA to the most comparable GAAP measure, Net (Loss) / Income:

	For the Three Months Ended Sep 30,						For the Six Months Ended Sep 30,
	2025			2024			2025			2024
Net (Loss)/Income	$	(794,149	)	$	(3,351,975	)	$	(4,999,462	)	$	(5,883,554	)
Add/(deduct)
Stock-based compensation		685,053			-			685,053			-
Depreciation and amortization		35,052			101,809			70,480			215,136
Finance costs		471,680			2,160,178			903,813			2,320,963
Other expense/(income), net		(1,657,647	)		(28,007	)		427,022			(1,031,781	)
Gain on troubled debt restructuring		-			(352,447	)		(72,912	)		(352,447	)
Adjusted EBITDA		(1,260,011	)		(1,470,442	)		(2,986,006	)		(4,731,683	)

Liquidity and Capital Resources

During the six months ended on September 30, 2025, and 2024 respectively, we used cash flows from operations of $0.53 million and $ 2.50 million, respectively, reflecting greater operating cost efficiencies and reduced overhead expenditures in 2025. The Company incurred a net loss of $5.00 million and $5.88 million during the six months ended on September 30, 2025, and 2024, respectively, and the accumulated deficit amounts to $338.17 million and $313.44 million as of September 30, 2025, and 2024, respectively.

As of September 30, 2025, our cash and cash equivalents totaled $0.17 million.

Our primary use of cash is to fund our existing operations. If we have sufficient working capital, we will continue to invest in product development and in our technology platform. We expect that our general and administrative expenses will be reduced on an absolute dollar basis due to our efforts to manage cost, use of our cash effectively and improve profitability while managing our research and development programs. As on September 30, 2025, the Company’s cash position was critically deficient and critical payments to the operational and financial creditors of the Company are not being made in the ordinary course of business, all of which raises substantial doubt about the Company’s ability to continue as a going concern.

In October 2022, we entered into a Business Combination Agreement (BCA) for merger with Innovative International Acquisition Corp. (“IOAC”) In October 2022, we entered into a note purchase agreement with Ananda small business trust, an affiliate of the SPAC sponsor. Ananda small business trust has purchased notes worth $10.00 million. Additionally, pursuant to signing the BCA, the Company has entered into a warrant and convertible note agreement in February 2023 with new investors and raised a total of $21.28 million (before fees) as of August 16, 2023 (which has converted at a discount in the deSPAC). On December 28, 2023, we completed our deSPAC transaction with IOAC and received cash of $5.77 million, assumed liabilities amounting to $21.5 million and unsecured promissory notes of $3.26 million were also assumed.

On June 18, 2024, the Company entered into a securities purchase agreement with certain institutional accredited investors (the “June Aegis Securities Purchase Agreement”) pursuant to which the Company issued and sold an aggregate of $3.60 million in principal amount of notes (the “June Notes”) and warrants to purchase up to an aggregate of 1,267,728 shares (52,966,102 shares prior to Reverse Stock Split) shares of Company Common Stock (the “June Warrants”) for gross proceeds to the Company of $3.00 million. The June Notes are due nine (9) months from the date of issuance, provided that the Company is required to use the proceeds at the closing date of one or more subsequent equity, debt or other capital raise(s) or any sale of tangible or intangible assets with net proceeds sufficient to repay all or any portion of the amounts due under the June Notes, and bear interest at a rate of 15% per annum (up to 20% per annum during the occurrence of an Event of Default). The June Notes are also subject to optional redemption at the option of the Note Holder in the event of a change of control or upon occurrence of an Event of Default (in which case the June Notes are redeemable at a premium of 125% of the amount due thereunder). The June Notes contain certain negative covenants including, but not limited to, a prohibition on incurring indebtedness (other than certain permitted indebtedness) or allowing or suffering to exist any liens or encumbrances (other than permitted liens), repaying or redeeming any outstanding indebtedness other than the June Notes, redeeming or repurchasing any equity interests of the Company, declaring any dividends or distributions, changing the Company’s business, entering into any related party transactions or issuing any securities that would cause a breach or default of the June Notes. The June Notes also contain certain affirmative covenants, including, but not limited to, maintaining good standing, maintaining the Company’s property and intellectual property, maintaining current insurance policies and providing prompt notice in the event of an Event of Default or the commencement of voluntary bankruptcy or liquidation proceedings.

Our future capital requirements will depend on many factors, including, but not limited to, our growth, our ability to attract and retain Hosts and Guests, and the scope of future sales and marketing activities.

The Company expects to continue to incur net losses and have significant cash outflows from operating activities for at least the next 12 months. Management has evaluated the significance of the conditions described above in relation to the Company’s ability to meet its obligations and concluded that, without additional funding, the Company will not have sufficient funds to meet its obligations within one year from the date of the Unaudited Condensed Consolidated Financial Statements were issued. The Company underwent various rounds of financing as described in the “Financing Arrangements” section (see Management’s Discussion and Analysis of Financial Condition and Results of Operations of this form 10-Q), which resulted in the payment of certain outstanding indebtedness, the Company will still need to raise additional capital imminently in order to have sufficient capital. The Company believes that current cash and cash equivalents will allow the Company to continue operations through September 30, 2025, assuming that the Company does not make payment towards its currently outstanding indebtedness and future accruals. The Company was advised by its largest investor and director that he would no longer commit to continuing his support to the Company in the event that any liquidity requirements arise in the future.

There can be no assurance that the Company will be able to achieve its business plan, raise any additional capital or secure the additional financing necessary to implement its current operating plan. The ability of the Company to continue as a going concern is dependent upon its ability to increase its revenues and eventually achieve profitable operations. No adjustments have been made to the financial statements based on this uncertainty.

Financing Arrangements

We have financed our operations through revenue generated from sales, borrowings, and issuance of Common Stock, preferred stock, senior subordinated convertible promissory notes, convertible promissory note and unsecured convertible notes and redeemable promissory notes.

Debentures and Other Borrowings from Financial Institutions

We have obtained loan facilities from various financial institutions during earlier time periods, which remained outstanding as of September 30, 2025.

Issue of Common Stock

The Company’s shareholders authorized, and the Board of Directors approved for a 1-for-100 Reverse Stock Split, which became effective on October 21, 2024.

The Company’s shareholders authorized, and the Board of Directors approved for a 1-for-20 Reverse Stock Split, which became effective on March 21, 2025.

In December 2023, we raised $5,000,000 against issuance of 16,667 shares (1,666,666 prior to Reverse Stock Split) to Mohan Ananda, the former Chairman of Board of Directors and our largest shareholder.

In May 2024, we issued 125,120 shares (12,512,080 prior to Reverse Stock Split) to Atalaya Note holders to settle a part of the unsecured promissory note liability.

Issue of Unsecured Convertible Note

In December 2023, we issued an Unsecured Convertible Note bearing a principal amount of $8,434,605.

Issue of Redeemable Promissory Note

On June 18, 2024, the Company entered into a Securities Purchase Agreement with certain institutional accredited investors pursuant to which the Company issued and sold an aggregate of $3,600,000 in principal amount of notes and warrants to purchase up to an aggregate of 1,267,728 shares (52,966,102 shares prior to Reverse Stock Split) of Company Common Stock for gross proceeds of $3,000,000. The closing occurred on June 20, 2024.

Private Placement of Equity

On November 5, 2024, the Company entered into a private placement transaction for gross proceeds of $9.15 million (before deduction of fees to the placement agent and other offering expenses payable by the Company). Aegis Capital Corp. acted as the Exclusive Placement Agent for the private placement. The Company intends to use the net proceeds from the private placement to repay approximately $3.80 million of outstanding indebtedness (including accrued interest).

On December 23, 2024, the Company entered into a securities purchase agreement in connection with a private placement offering pursuant to which the Company raised gross proceeds of $5.48 million and after the deduction of fees and expenses payable to the Placement Agent and other offering expenses, including legal fees payable to the Company’s and Placement Agent’s counsel, the net proceeds to the Company was approximately $4.79 million.

On January 31, 2025, the Company entered into a securities purchase agreement, in connection with the second closing of the Offering (the “Second Closing”) pursuant to a Confidential Private Placement Memorandum, dated December 3, 2024. The Securities were offered at a for an aggregate amount of $3 million; provided, however, that the Company did not receive any cash proceeds with respect to Securities with a subscription price of $1.56 million of such amount, as those Securities were issued in consideration for the settlement of litigation with a claimant. The Company received balance net proceeds of approximately $1.25 million after the deduction of fees and expenses payable to the Placement Agent and other offering expenses, including legal fees payable to the Company’s and Placement Agent’s counsel.

Bridge Note:

Issue of Convertible Notes

On August 11, 2025 , the Company entered into Securities Purchase Agreement with certain institutional accredited investor pursuant to which the Company issued Promissory for a total principal amount of $180,000 with an initial issue discount of $18,000. The net proceeds disbursed to the Company were $158,500 after deduction of legal and due diligence fees of $3,500. Hence, the total debt issuance costs amounts to $3,500.

The following table summarizes our cash flows for the periods presented:

Statements of Cash Flows Data:	For the Years Ended Sep 30,
	2025			2024
Net cash used in provided by operating activities		(533,980	)		(2,496,568	)
Net cash flows (used in)/ generated from investing activities		(360	)		384,825
Net cash generated from financing activities		368,263			1,258,995
Effect of foreign exchange on cash and cash equivalents.		(833,950	)		(29,190	)
Net decrease in cash and cash equivalents		(166,077	)		(852,748	)

Operating Activities

Net cash generated used in operating activities was $0.53 million and $ 2.50 million for the six months ended September 30, 2025, and September 30, 2024, respectively. The major drivers contributing to the decrease of $1.96 million during the current six months compared to previous six months included the following:

Decrease in net loss of $2.00 million after adjustments for non-cash items. These adjustments include Depreciation and amortization, fair value changes in financial instruments, interest on redeemable promissory note, gain on troubled debt restructuring, Stock based compensation, Interest on finance leases, Gain on sale and disposal of assets, net, Gain on sale and disposal of assets held for sale, net, Gain on derecognition of subsidiary, Payable to customers and provision written back, Assets written off, Liquidated damages, Host receivable written off and Unrealized foreign currency exchange loss, net ,etc.

Net increase in working capital of $0.04 million was a result of improved working capital management during the six months ended September 30, 2025, as compared to the six months ended September 30, 2024.

Investing Activities

Net cash used in investing activities totaled nominal amount of $ 360 for six months ended on September 30, 2025, as compared to cash generated from investing activities amounting to $0.38 million during the same period in 2024. The cash generated during six months ended on September 30, 2024, is largely attributable to receipt of proceeds from maturity of investment in fixed deposits and proceeds from sale of assets held for sale.

Financing Activities

Net cash generated from financing activities totaled $0.37 million and $1.26 million during the six months ended on September 30, 2025, and September 30, 2024, respectively. The Company received net proceeds from the issuance of unsecured notes and convertible notes amounting to $0.48 million and $0.36 million respectively, further the payments include repayment of debt $0.37 million, repayment of unsecured note amounting to $0.04 million and payment towards finance lease amounting to $0.06 million during the six months ended September30, 2025 as compared to higher proceeds from the issuance of redeemable promissory note amounting to $3.00 million, further there are cash outflows towards redeemable promissory note issue expenses amounting to $0.49 million and repayment of Debt amounting to $1.25 million during the six months ended September 30, 2024. As the Company’s cash position decreased, critical payments and debt repayments were not being made in the ordinary course of business.

Contractual Obligations and Commitments

Contractual obligations are cash amounts that we are obligated to pay as part of certain contracts that we have entered into during the normal course of business.

Below is a table that shows our contractual lease obligations as of September 30, 2025:

	Sep 30, 2025
Maturities of lease liabilities are as follows:	Operating Leases		Finance Leases
2026		162,334		3,022,159
2027		340,451		-
2028		357,024		-
2029		374,427		-
2030		-		-
Total Lease Payments	$	1,234,235	$	3,022,159
Less : Imputed Interest		252,938		553,542
Total Lease Liabilities	$	981,297	$	2,468,617

Borrowings

The contractual commitment amounts in the table below are associated with agreements that are enforceable and legally binding. Obligations under contracts that we can cancel without a material penalty are not included in the table above.

As at	Sep 30, 2025
Current
From Others
- Mahindra & Mahindra Financial Services Limited	$	366,920
- TATA Motors Finance Limited		1,558,355
- Kotak Mahindra Financial Services Limited		387,362
- Orix Leasing and Financial Services India LTD		6,253
- Clix Finance India Private Limited		69,053
- AON Risk Insurance Services West, Inc		-
	$	2,387,943

Total maturity for the year ending on September 30, 2026	$	2,387,943

Contingencies

(A)

Claims filed by customers and third-parties not acknowledged as liability amounted to $4,563,129 and $4,503,122 as at September 30, 2025 and March 31, 2025, respectively. The claims made by the customers against the Company includes claims that have been made for amounts charged to customers by the Company as damages for improper use of vehicles and/or physical damages made to vehicles during an active trip ; or claims made by customers for unavailability of the booked vehicle or for any mechanical default in the booked vehicle ; or claims against any similar issue faced by either the host or the customer. Under the erstwhile business model of the Company , the Company had procured third-party insurance policies for fleet under its management which indemnifies against personal death and/or injuries suffered either by the customer or third-parties during the use of its vehicles. Based on the insurance coverage, the Company is confident that liability, if any, arising from the claims under the previous business model will be covered by the insurance. Further, under the current business model of the Company, wherein the Company acts only as a facilitator, any issues arising from breach of any terms including improper use of vehicles and/or physical damages made to the vehicles or any mechanical issues in the vehicle will be the responsibility of either the host or the customer. While uncertainties are inherent in the final outcome of these matters, the Company believes that the disposition of these proceedings will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

(B)

The Company has received various orders and show cause notices from Indian indirect tax authorities relating to disputes on input tax credits, service tax liabilities, GST dues, and taxability of car rental revenue for periods between 2014 and 2023, totaling $9,469,331 (March 31, 2025: $9,514,651). These disputes include disallowance of input credits, service tax liabilities on booking fees and penalty charges, disputes on goods and service tax input availed, and GST demands on gross booking value. The Company has taken necessary steps, including filing appeals, submissions, and deposits, and is awaiting further communication from the authorities. In relation to the GST demands on gross booking value, the Company has filed a writ petition with various authorities challenging the order. Based on the submissions provided and documents available, management believes that no significant outflow is expected, and therefore, no provision has been recorded as of September 30, 2025 and March 31, 2025.

(C)

In February 2023, a former employee of Zoomcar India instituted a suit before the City Civil and Sessions Judge at Mayo Hall, Bengaluru against Zoomcar India, Zoomcar, Inc. and Zoomcar Holdings, Inc. (formerly IOAC) challenging his termination, claiming damages amounting to $382,445 and claiming that 100,000 options to purchase shares of Zoomcar, Inc. have vested. On March 3, 2023, the City Civil and Sessions Judge at Mayo Hall, Bengaluru, issued an interim injunction to restrain each of Zoomcar, Inc. and Zoomcar Holdings, Inc. from “alienating or dealing” the 100,000 shares of Zoomcar, Inc. claimed by the former employee while the suit is pending. Zoomcar believes that such claims are baseless and is attempting to have the interim order vacated. In addition, Zoomcar India filed an application in the former employee’s suit, seeking that Zoomcar Holdings, Inc. be deleted from the array of parties in the suit.

(D)

On November 1, 2024, Gregory Moran, a former employee of Zoomcar India, has filed a case with the Superior Court, Delaware, challenging his termination without a cause or a sufficient notice, claiming $100,000 payment that was agreed to be paid on the 6 month anniversary of the effective date of closing of the SPAC transaction along with a 8% fully diluted equity interest in Zoomcar Holdings, Inc., non-payment of “vacation” valued at approximately $30,000, leave encashment of approximately $42,000, $96,000 entitled to him for severance pay and gratuity as per India's Payment of Gratuity Act, 1972. Additionally, he has claimed 210,520 stock units already existing, fully vested. The Company filed a motion to dismiss the matter on November 27, 2024. On January 7, 2025, the Company subsequently filed the opening brief in support of the motion to dismiss filed on November 27, 2024. The Company further filed the opening brief in support of the motion to dismiss on 7 January 2025. Mr. Moran filed opposition to Zoomcar’s motion on February 5, 2025 and Zoomcar filed a reply in further support of its motion on February 20, 2025. Oral arguments on Zoomcar’s motion to dismiss were heard on April 29, 2025. The court granted the motion to dismiss Mr. Moran’s quasi-contractual claims and reserved decision on the balance of the motion in the next hearing held on August 15, 2025. The judgement from the hearing is currently pending with the Court.

(E)

Zoomcar Holdings, Inc. files tax returns in the U.S. federal, various state, and foreign jurisdictions. In the normal course of business, the Company is subject to examination by tax authorities. Our major tax jurisdiction is in India. The Indian tax authority is currently examining our 2016 through 2023 tax returns. There are other ongoing audits in various other jurisdictions that are not material to our financial statements. The Company received an order for fiscal year 2015-16 in relation to non-deduction of tax deducted at source withholding taxes on certain payments to resident payees/service providers amounting to $121,218 (March 31, 2025: $125,839). Penalty of $125,442 has been claimed but the proceedings are kept under abeyance until the above order is disposed off. The Company has filed appeals against the above orders before higher authority. The Company has not recognized any uncertain tax position as at September 30, 2025 and March 31, 2025, respectively. The Company believes these orders are unlikely to be sustained at the higher appellate authorities.

(F)

On August 2025, the Company received a notice from the legal representatives of certain holders of warrants to purchase Series E Preferred Stock of Zoomcar, Inc. pursuant to the warrant agreement dated May 12, 2021. The warrant holders have raised a dispute regarding the non-delivery of shares following the submission of their respective notices of exercise. The warrant holders are collectively entitled to warrants amounting to $6,217,614. The Company believes that such claims are without merit and is in discussion with the legal representatives to dismiss the same.

Critical Accounting Policies and Estimates

The Company prepared its financial statements in accordance with GAAP. Our preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, and related disclosures at the date of the financial statements, as well as revenue and expense recorded during the reporting periods. The Company evaluates our estimates and judgments on an ongoing basis.

The Company bases its estimates on historical experience and/or other relevant assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ materially from management’s estimates.

See Note 2, Summary of Significant Accounting Policies, to our Unaudited Condensed Consolidated Financial Statements for further information related to our critical accounting policies and estimates, which are as follows:

Debt

Unsecured Notes

Convertible Notes

Issuance costs on Debt

Warrants

(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.

(b)

Warrants issued along with Redeemable Promissory Note:

Fair value measurements and financial instruments

	Level 1	Observable inputs such as quoted prices in active markets for identical assets or liabilities.

	Level 2	Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs other than the quoted prices that are observable either directly or indirectly for the full term of assets or liabilities.

	Level 3	Unobservable inputs in which there is little or no market data and that are significant to the fair value of the assets or liabilities.

Troubled debt restructuring

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of such date, our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting described below. In light of this fact, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting, the Unaudited Condensed Consolidated Financial Statements for the periods covered by and included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cashflows for the periods presented in conformity with GAAP.

Material Weaknesses in Internal Control over Financial Reporting

Controls and Procedures — Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance with policies or procedures may deteriorate.

Management conducted, under the supervision of our Principal Executive Officer and Principal Financial Officer, an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, commonly referred to as the “COSO” criteria. Based on the assessment performed as of March 31, 2025, in our Annual Report on Form 10-K filed on June 30, 2025, we identified five material weaknesses in our internal control over financial reporting, which remained unremediated as of September 30, 2025, related to:

(i)

Our controls over independent review and documentation of third-party advisors’ reports were not operating effectively. We rely on third-party advisors for assistance with the preparation of key schedules and financial statements. However, we failed to establish a consistent process for independently reviewing these third-party advisor documents before incorporating them into our financial statements.

(ii)

Our controls over financial reporting, specifically related to the inadequacy of our financial reporting policies and procedures, were not operating effectively. The Company lacks financial reporting policies and procedures that are commensurate with GAAP and SEC reporting requirements.

(iii)

Our controls over the financial statement close process do not provide sufficient evidence of review.

(iv)

Our resources are deficient in comprehensive knowledge and expertise pertaining to technical accounting and SEC reporting requirements.

(v)

Our controls were not adequately designed to provide sufficient documentation and review of the operating effectiveness of Information Technology General Controls (ITGC’) for information systems that are relevant to the preparation of the Company’s consolidated financials. Specifically, our user access controls were not adequately designed or implemented and our monitoring of ITGC controls was insufficient.

Based on the assessment performed, as of March 31, 2025, our management concluded that the internal control over financial reporting was ineffective.

Changes in Internal Control over Financial Reporting

We are taking actions to remediate the material weaknesses relating to our internal control over financial reporting, as described above. Except as otherwise described herein, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Remediation Plans

We have commenced measures to remediate the identified material weaknesses, including:

(i)

We have been working with consultants to assist in the preparation and presentation of financial statements in accordance with US GAAP and PCAOB guidelines. Furthermore, we are putting a framework in place to properly manage the review and approval process of work prepared by our third-party advisors.

(ii)

We will work on scheduling training sessions on a quarterly basis to provide relevant USGAAP knowledge. In addition to this management would look to hire people with USGAAP knowledge to bridge the gap over the next few quarters.

(iii)

Management will be finalizing work commenced on developing accounting manuals, policies, and standard operating procedures in consultation with Deloitte, our external SOX consultants.

(iv)

We are designing and implementing additional review procedures within our accounting and finance department to provide more robust and comprehensive internal controls over financial reporting.

(v)

We have properly concluded that ITGC controls over SAP (our accounting software) are operating effectively as of March 31, 2025. We are in the midst of reviewing and implementing proper ITGC controls in all other areas relevant to the preparation of the Company’s financial statements.

We intend to continue to take steps to remediate the material weaknesses described above and further evolving our accounting processes. The actions we are taking are subject to ongoing executive management review and are also subject to the oversight of the Audit Committee. We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time. If we are unable to successfully remediate these material weaknesses, or if in the future, we identify further material weaknesses in our internal control over financial reporting, we may not detect errors on a timely basis and our Unaudited Condensed Consolidated Financial Statements may be materially misstated.

This Quarterly Report on Form 10-Q does not include an attestation report of our registered public accounting firm due to a transition period established by rules of the SEC for an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Except as described below, we are not currently subject to any material claims, lawsuits, arbitration proceedings, administrative actions, government investigations and other legal and regulatory disputes and proceedings (collectively, “Legal Proceedings”) and we are not subject to any pending Legal Proceedings in any of the jurisdictions where we operate other than in India.

We may become subject to other Legal Proceedings over time or from time to time, in the ordinary course of our business and as our business continues to grow and expand over time. Becoming involved with Legal Proceedings, regardless of the outcome, may result in substantial cost and diversion of our resources, including our management’s time and attention.

As a result of our business operations in India, we are regularly subject to legal proceedings, many of which are de minimis in nature and amount and the majority of which relate to local tax matters. Many of these tax and vehicle accident-related Legal Proceedings are pending before various forums in India and involve localized practices and interpretations of regulatory matters that make the ultimate outcomes or resolution of these Legal Proceedings inherently uncertain and difficult to predict. Management’s views and estimates related to these matters may change in the future, as new events and circumstances arise and the matters continue to develop.

Litigation with Former Employee

In February 2023, a former employee of Zoomcar India instituted a suit before the City Civil and Sessions Judge at Mayo Hall, Bengaluru against Zoomcar India, Zoomcar and IOAC challenging his termination, claiming approximately $400,000 in damages, and claiming that 100,000 options to purchase shares of Zoomcar have vested. On March 3, 2023, the City Civil and Sessions Judge at Mayo Hall, Bengaluru, issued an interim injunction to restrain each of Zoomcar and IOAC from “alienating or dealing” the 100,000 shares, (without giving effect to the reverse splits and the conversion ratio for the business combination), of Zoomcar claimed by the former employee while the suit is pending. Zoomcar believes that such claims are baseless and is attempting to have the interim order vacated. In addition, Zoomcar India filed an application in the former employee’s suit, seeking that IOAC be deleted from the array of parties in the suit, inter alia since (i) IOAC is neither a necessary nor a proper party to the suit; (ii) no reliefs have been sought by the former employee from IOAC; and (iii) there is no cause of action against IOAC. For more information see the section entitled herein “Risk Factors — A former employee of Zoomcar India has instituted a wrongful termination suit and claims that certain Zoomcar options have vested”

Litigation with the Founder and Former CEO

On September 26, 2024, we received a copy of a complaint filed with the United States District Court for the District of Delaware wherein our founder and former CEO Greg Moran has challenged the Company’s termination of his employment for cause, effective as of June 18, 2024. Mr. Moran has contested the facts leading up to the grounds on which his termination was based and has also claimed that this alleged wrongful termination has deprived him of his vested right to 8% of the Company’s outstanding equity that he claims was owed to him under his Employment Agreement. He has also claimed that in connection with his termination he is entitled to the payment of certain amounts for unused paid leave during his employment with Zoomcar, along with certain other compensation he claims to be owed under the terms of his Employment Agreement, including “Owed Severance” equal to approximately $72,000. In total, Mr. Moran seeks damages of at least $238,000 plus damages associated with the 8% of shares. He also seeks damages under the New York Labor Law, under which he seeks liquidated damages equal to 100% of any unpaid wages. He claims that all of the above constitute wages under New York Labor Law.

Zoomcar believes that the termination of Mr. Moran’s employment for cause was proper in accordance with the terms of his Employment Agreement. Mr. Moran’s case in the District Court was dismissed on account of Mr. Moran’s stated intention to refile the case in Delaware Superior Court. Mr. Moran refiled his lawsuit in the Superior Court of the State of Delaware on November 1, 2024. On November 27, 2024, the Company filed a motion to dismiss certain of the causes of action for failure to state a cause of action, and the briefing on that motion was filed on January 7, 2025. Mr. Moran filed opposition to Zoomcar’s motion on February 5, 2025 and Zoomcar filed a reply in further support of its motion on February 20, 2025. Zoomcar’s oral arguments in its motion to dismiss were heard on April 29, 2025. The Court has requested additional briefing with respect to the Company’s motion to dismiss Mr. Moran’s Wage claim. The additional briefing is due on August 15, 2025. The court granted the motion to dismiss Mr. Moran’s quasi-contractual claims and reserved decision on the balance of the motion. Zoomcar believes the allegations are without merit, intends to defend them vigorously and expects to prevail either at the motion stage or at a hearing on the merits. For more information see the section herein titled “Risk-Factors — The founder and former CEO of the Company has initiated a civil complaint against the Company contesting the reasons for his termination and has raised certain other claims with regards to his ownership of the Company and compensation for termination of his employment.”

Litigation with ACM

The Company received two default notices from ACM. The first notice was issued on May 22, 2024 which stated that the Company is in default of the terms of the Unsecured Convertible Note issued to ACM on December 28, 2023, since the Company had entered into an equity line arrangement with White Lion Capital LLC, a variable rate transaction, without the prior consent of ACM. Further, on June 25, 2024, the Company received the second notice of default from ACM stating that the Company has incurred indebtedness in the form of $3,600,000 in principal amount of notes in a transaction involving Aegis Capital Corp. acting as the placement agent, prior to which, the consent of ACM was not obtained. As per the terms of the ACM note, in the event of any default, all accrued but unpaid interest plus liquidated damages and other amounts thereof, shall become immediately due and payable in cash. On November 7, 2024, ACM filed a notice of motion for summary judgement in in lieu of complaint against Zoomcar in New York courts for accelerated payment of $5,997,832.72 due under the ACM note and related legal expenses, pursuant to breach of the terms of the note. ACM alleged that two “Events of Default” (as defined in the Note) had occurred thereby entitling ACM to full and accelerated payment of the Note. The first was a Form 8-K, filed by Zoomcar on May 9, 2024, which allegedly disclosed that on May 6, 2024, Zoomcar had entered into an equity line arrangement and “Variable Rate Transaction” (as defined in the Note) with White Lion Capital LLC (“White Lion”). The second was a Form 8-K, filed by Zoomcar on June 21, 2024, which allegedly disclosed that on June 18, 2024, Zoomcar had incurred a form of debt that was not “Excluded Debt” (as defined in the Note) arising from its placement agent agreement with Aegis Capital Corp. without ACM’s prior consent. The Note generally provides that, upon the occurrence of an Event of Default, all accrued but unpaid interest plus liquidated damages and other amounts thereof shall become immediately due and payable to the Note holder. On January 14, 2025, Zoomcar filed opposition to the Motion. In relevant part, Zoomcar challenged the fact allegations concerning: (i) the first Form 8-K by tendering to the Court evidence confirming that the subject transaction with White Lion in fact had been terminated and the underlying filing of a Form S-1 registration statement contemplated in that transaction was never effectuated; and (ii) the second Form 8-K by tendering to the Court evidence confirming that the subject transaction involved Excluded Debt. The effect of the foregoing is the transactions were excluded from the definitions of Events of Default and extinguished ACM’s alleged entitlement to accelerated payment under the Note. Additional defenses were also presented by Zoomcar to the Motion. On March 28, 2025, New York County Supreme Court Justice granted a summary judgment in favor of ACM in the amount of $5,656,086.72, as well as default interest in the amount of $346,481.00, post-judgment interest at the statutory rate, attorneys’ fees, and costs. The issue of attorneys’ fees was referred to a special referee to report and recommend on submission from the parties. On April 22, 2025, the Company filed a Notice of Appeal seeking to reverse the March 28, 2025, order granting summary judgment in favor of ACM. On May 9, 2025, the Court reduced the award of attorneys’ fees and costs to $12,000.00. Based on the foregoing, on July 1, 2025, the Clerk of the Court entered two (2) money judgments against the Company for the underlying liability and attorneys’ fees: $5,997,832.72 and $12,000.00. On July 29, 2025, the Company filed Notices of Appeal seeking to reverse both money judgments in favor of ACM. The Company will continue to vigorously prosecute its appeals. . For more information see the section herein titled “Risk Factors — ACM has filed a notice of motion for summary judgement in lieu of complaint against Zoomcar in New York courts for payment of amounts due under the Note pursuant to breach of the terms of a note.”

Litigation with Prior Placement Agent

On March 14, 2025, the Company received a demand letter (the “Demand Letter”) from the attorneys for the placement agent (the “Prior Placement Agent”), with which the Company had entered into an engagement agreement on or about May 23, 2024 (the “Prior Placement Agreement”). A claim has been made, pursuant to the terms of the Prior Placement Agreement, for the payment of cash fees and the issuance of warrants to the Prior Placement Agent, as and for “tail fees” owed in connection with any financings within 18 months after the expiration or termination of the Prior Placement Agreement. The claims are made with respect to the sales of securities in the offerings closed by the Company in June 2024, November 2024, December 2024 and February 2025. The demand is for 7% of the aggregate gross proceeds received by the Company in each of those offerings from investors on a “tail list” provided by the Prior Placement Agent and warrants to purchase up to 7% of the aggregate number of shares of common stock issued in each of the offerings to investors on the “tail list,” which warrants are to have the same terms and warrants offered to investors in each of the offerings, with an exercise price equal to 125% of the applicable offering price.

With respect to the offering closed in June 2024, the claim is made with respect to one investor claimed to be on the “tail list,” for a cash fee of 7% of the aggregate gross proceeds received from such investor and 7% warrant coverage, with respect to that investor, but no specific amount is claimed. With respect to the offering closed in November 2024, there is a claim for a cash fee of $77,000 and warrants to purchase an aggregate of 17,900 shares of common stock at an exercise price of $107 per share, for the same investor.” With respect to the offering closed in December 2024, there is a claim for a cash fee of 7% of the aggregate gross proceeds received from the same investor and 7% warrant coverage, with respect to that investor, but no specific amount is claimed. A similar claim was also made to the extent that such investor participated in the offering closed in February 2025.

The Company has taken necessary financial provisions of $202,999 as recorded in the “Other expense/(income), net” in the Unaudited Condensed Consolidated Financial Statements for the six months ending on September 30, 2025.

Other Matters

Zoomcar utilizes a set of Terms and Conditions (“T&Cs”) tailored specifically for each of the jurisdictions in which we operate which includes privacy policy, platform use policy, terms and conditions for Host and Guest. These T&Cs are in the form of a clickwrap agreement which lays down the duties, risks, and the liabilities of Zoomcar, Hosts and the Guests in relation to use of services rendered by Zoomcar through its Platform. These T&Cs inter alia cover the eligibility criteria for listing/leasing of vehicles, facilitation of booking, cancellation and incident reporting via the platform, processing of payments/refunds etc. and they further lay out the risks, rights and obligations of the Hosts and the Guests with respect to handling of the vehicles, responsibility for damage, accident, traffic violations and/or for any incidents in violation of applicable law.

In addition to the T&Cs, due to regulatory requirements in India, an additional lease agreement is executed between the Host and the Guest which encompasses the allocation of risks and responsibilities of the Hosts and Guests with respect to listing and use of the relevant vehicle. The execution of such lease agreement is facilitated through the Zoomcar Platform in the form of a clickwrap agreement.

Given that Zoomcar operates as a peer-to-peer carsharing marketplace which facilitates sharing of vehicles between the Hosts and Guests through its platform, the responsibility and liability of Zoomcar under the T&Cs is limited to being a facilitator of such transaction and the obligations for liabilities arising out of listing and/or use of the vehicle booked through the platform is on the Guests and the Hosts. The use of the Zoomcar platform and sharing of vehicle through the platform is undertaken by the Host and Guests entirely at their own risk. Zoomcar’s liability is further capped under the T&Cs at approximately $120 (across all jurisdictions) for any claims arising out of the use of Zoomcar platform. However, Zoomcar, as part of the facilitation services to Hosts and Guests, also provides for trip-based vehicle protection whereby Zoomcar collects and pools the “value-add” damage coverage fee to be applied to the costs of repairs or other damage or loss of vehicle in the event a Host vehicle is involved in an incident, such as an accident, during a trip and this value-add trip protection fee pool may not always help set off the damage claims. Therefore, Zoomcar often remains at a risk of residual claims that it may have to absorb in absence of a third-party insurance. See the section titled “Risk Factors - Insurance Risks Related to Our Business,” as our business is subject to certain risks in absence of third-party insurance cover that could have a material impact on our business.

Item 1A. Risk Factors

An investment in our securities involves a high degree of risk. You should carefully consider the risks described below before making an investment decision. Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. The trading price of our securities could decline due to any of these risks, and, as a result, you may lose all or part of your investment.

In the course of conducting our business operations, we are exposed to a variety of risks. Any of the risk factors we describe below have affected or could materially adversely affect our business, financial condition, and results of operations. The market price of our securities could decline, possibly significantly or permanently, if one or more of these risks and uncertainties occur. Certain statements in “Risk Factors” are forward-looking statements. See “Special Note Regarding Forward-Looking Statements.”

Risk Factors Summary

Our business is subject to numerous risks and uncertainties, including those highlighted in the section entitled “Risk Factors” immediately following this risk factors summary, that represent challenges that we face in connection with the successful implementation of our strategy and the growth of our business. Our business, prospects, financial condition or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. In particular, the following considerations, among others, may offset our competitive strengths or have a negative effect on our business strategy, which could cause a decline in the price of shares of our Common Stock or Public Warrants and result in a loss of all or a portion of your investment.

Any of the risk factors we describe below have affected or could materially adversely affect our business, financial condition and results of operations. The market price of our securities could decline, possibly significantly or permanently, if one or more of these risks and uncertainties occurs:

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We have a history of operating losses and negative cash flow, we have limited cash resources, we will need to raise funds imminently to finance operations and as a result there is substantial doubt about our ability to continue as a going concern;

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Our Common Stock is quoted on an OTC Markets Group trading platform, the OTCQB, instead of a national exchange or quotation system. Accordingly, our investors may experience significant volatility in the market price of our Common Stock and have difficulty selling their shares.

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Because our Common Stock is quoted on the OTCQB and not listed on a national exchange, U.S. broker-dealers may be discouraged from effecting transactions in shares of our Common Stock because it may be considered a penny stock and thus be subject to the penny stock rules.

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Failure to comply with the continued qualification standards within, and any removal from OTCQB could materially and adversely affect the liquidity and market price of our common stock and our access to capital.

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Our current business model’s limited operating history and financial results make our future results, prospects, and the risks we may encounter difficult to predict.

	●	In addition to our defaults under current indebtedness described elsewhere here, certain of our debt financing arrangements are currently in default and we have delayed certain other payments to lenders, which may restrict our current and future business and operations;

	●	We require additional capital to support current operations and will require additional capital to support the growth of our business, which may not be available on terms acceptable to us, or at all.

	●	Future sales of our securities may affect the market price of the Common Stock and result in material dilution, including the anti-dilution protection in the warrants issued in 2024. We are also in default of various outstanding debt obligations, including under the Notes issued to ACM, and may issue shares of Common Stock or other securities to satisfy those obligations in the future (in the case of ACM, subject to receipt of shareholder approval). The issuance of shares of Common Stock or other securities in the future will dilute your percentage ownership interest and may also result in downward pressure on the price of our Common Stock.

	●	Our operating and financial forecasts are subject to various known and unknown contingencies and factors outside of our control and may not prove accurate, and we may not achieve results consistent with management’s expectations;

	●	We have issued a significant number of warrants and exercise of these securities and the sale of the shares of Common Stock issuable thereunder (along with the issuance of any similar securities in the future,) will dilute your percentage ownership interest and may also result in downward pressure on the price of our Common Stock.

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The market for online platforms for peer-to-peer car sharing is relatively new and rapidly evolving. If we fail to successfully adapt to developments in our market, or if peer-to-peer car sharing online platforms do not achieve general acceptance, it could adversely affect our business, financial condition and operating results;

	●	If we do not retain existing Hosts, or attract and maintain new Hosts, or if Hosts fail to provide an adequate supply of high-quality vehicles, our business, financial condition, and results of operations may be negatively impacted;

	●	If we fail to retain existing Guests, or attract and maintain new Guests, our business, financial condition, and results of operations may be negatively impacted;

	●	If we are unable to introduce new or upgraded platform features that Hosts or Guests recognize as valuable, we may fail to retain and attract such users to our platform and our operating results would be adversely affected;

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Our success depends upon our ability to maintain favorable customer reviews and ratings, and if our reputation suffers, our business, financial condition and operating results may be adversely affected;

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Maintaining and enhancing our brand and reputation is critical to our business prospects. While we have taken significant steps to build and improve our brand and reputation, failure to maintain or enhance our brand and reputation will cause our business to suffer;

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Breaches and other types of security incidents of our networks or systems similar to the recent Cybersecurity Incident, or those of our third-party service providers, could negatively impact our business, our brand and reputation, our ability to retain existing Hosts and Guests and attract new Hosts and Guests, may cause us to incur significant liabilities and adversely affect our business, results of operations, financial condition, and future prospects;

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Our business depends on attracting and retaining capable management, technology development and operating personnel;

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We may be exposed to risk if we cannot enhance, maintain, and adhere to our internal controls and procedures;

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We are in the process of remediating identified material weaknesses in our internal controls and if we fail to remediate these weaknesses or if we experience additional material weakness in the future, or otherwise fail to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act, we may not be able to accurately or timely report our financial condition or results of operations, or comply with the accounting and reporting requirements applicable to public companies, which may adversely affect investor confidence in the Company and the market price of our stock;

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Geographic areas in which Zoomcar operates and plans to operate in the future have been and may continue to be subject to political and economic instability;

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We may incur liability for the activities of Hosts or Guests which could harm our reputation, increase our operating costs, and adversely affect our business, financial condition, and operating results.;

	●	Our business operations may result in losses for which we are not insured;

	●	Members of our management team have limited or no prior experience managing a public company;

	●	As a public company, we have incurred and expect to continue to incur increased expenses associated with the costs of being a public company.

	●	We are the subject of litigation and may not have the ability or the cash to successfully defend such litigation that has been and may in the future be brought against us;

	●	We are an “emerging growth company” within the meaning of the Securities Act, and, if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors;

	●	Future sales, or the perception of future sales, by us or our stockholders in the public market could cause the market price for the Common Stock to decline;

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The requirements of being a public company may strain our resources, divert our management’s attention, and affect our ability to attract and retain qualified independent board members;

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Uncertain global macro-economic and political conditions could materially adversely affect our results of operations and financial condition; and

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Natural disasters, including and not limited to unusual weather conditions, epidemic outbreaks, terrorist acts and political events could disrupt our business schedule.

Risks related to our Financial Condition

We have a history of operating losses and negative cash flow, we have limited cash resources, we will need to raise additional funds imminently to finance operations and as a result there is substantial doubt about our ability to continue as a going concern.

We have a history of operating losses and expect to continue incurring operating losses in the foreseeable future as we continue to develop our current business model and enhance our platform offerings. We also have indebtedness that is in default in excess of our current capital resources (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” in this Quarterly Report on Form 10-Q for the six months ended September30, 2025). On June 18, 2024, the Company entered into a securities purchase agreement with certain institutional accredited investors (the “June Aegis Securities Purchase Agreement”) pursuant to which the Company issued and sold an aggregate of $3,600,000 in principal amount of notes (the “June Notes”) and warrants to purchase up to an aggregate of 1,267,728 shares of Common Stock (which takes into account an adjustment following the Company’s Share Combination Event that was effective on October 22, 2024, but not reflecting the Reverse Stock Splits) (the “June Warrants”) for gross proceeds of $3,000,000.

Additionally, on November 7, 2024, the Company closed the November 7 Placement for gross proceeds of $9.15 million (including $2.5 million of which was provided by one of the Company’s directors) (before deduction of fees to the placement agent and other offering expenses payable by the Company). The Placement Agent in this Offering acted as exclusive placement agent in the November 7 Placement. At closing of the November 7 Placement, the Company issued an aggregate of 2,137,850 units at a price of $4.28 per unit, each unit consisting of one share of Common Stock (or pre-funded warrant in lieu thereof), two November Series A Warrants (as hereinafter defined) each to purchase one share of Common Stock and a November Series B Warrant (as hereinafter defined) to purchase such number of shares of Common Stock, as determined on the November Reset Date, which does not reflect the Second Reverse Split. As a result of the November 7 Placement, the Company received $3.62 million of cash and cash equivalents after giving effect to offering fees and expenses, the payment of $3.8 million to the holders of the Company’s June 2024 notes and a holdback of $0.2 million for indemnification of the Placement Agent as described in more detail herein.

Further, on December 24, 2024, the Company held the First Closing of this Offering for gross proceeds of $5,484,843 (including $50,000 of which was provided by the Company’s former Chief Executive Officer i.e., Hiroshi Nishijima and $300,000 of which was provided by a consultant to the Company) (before deduction of fees to the placement agent and other offering expenses payable by the Company). The Placement Agent in this Offering acted as exclusive placement agent at the First Closing. At the First Closing, the Company issued an aggregate of (i) 3,095,925 shares of Common Stock, which does not reflect the Second Reverse Split (ii) Pre-Funded Warrants issued to certain of the investors, at their option, exercisable for an aggregate of up to 420,000 shares of Common Stock, which does not reflect the Second Reverse Split, to the extent that the issuance of shares of Common Stock would cause such Investors to beneficially own more than 4.99% or 9.99% of the shares of Common Stock outstanding. Also issued along with the shares of Common Stock and/or the Pre-Funded Warrants were (x) Series A Warrants to initially purchase up to an aggregate of 8,680,443 shares of Common Stock, which does not reflect the Second Reverse Split, subject to certain adjustments and (y) Series B Warrants to initially purchase no shares of Common Stock, subject to certain adjustments as provided in the Series B Warrants. As a result of the First Closing, the Company received $4,786,963 of cash and cash equivalents after giving effect to offering fees and expenses.

Further, on February 4, 2025, the Company held the Second Closing of this Offering for gross proceeds of $1,437,936 (before deduction of fees to the Placement Agent and other offering expenses payable by the Company). The Placement Agent in this Offering acted as exclusive placement agent at the Second Closing. At the Second Closing, the Company issued an aggregate of (i) 1,049,796 shares of Common Stock, which does not reflect the Second Reverse Split (ii) Pre-Funded Warrants issued to certain of the investors, at their option, exercisable for an aggregate of up to 872,000 shares of Common Stock, which does not reflect the Second Reverse Split, to the extent that the issuance of shares of Common Stock would cause such Investors to beneficially own more than 4.99% or 9.99% of the shares of Common Stock outstanding. Also issued along with the shares of Common Stock and/or the Pre-Funded Warrants were (x) Series A Warrants to initially purchase up to an aggregate of 4,804,491 shares of Common Stock, which does not reflect the Second Reverse Split, subject to certain adjustments and (y) Series B Warrants to initially purchase no shares of Common Stock, subject to certain adjustments as provided in the Series B Warrants. As a result of the Second Closing, the Company received $1,249,911 of cash and cash equivalents after giving effect to offering fees and expenses.

On March 31, 2025, the Company further entered into a securities purchase agreement, substantially in the same form as the December 2024 SPA and the January 2025 SPA with certain additional accredited investors in connection with the third closing of the Offering (the “Third Closing”). The Company did not receive any cash proceeds in the Third Closing. The securities were issued to the investors either (i) as consideration for waiving certain rights that such investors may have had in connection with a most favored nations provision included in the transaction documents for a prior financing of Zoomcar, Inc. or (ii) to settle outstanding amounts owed by the Company to its Placement Agent and the Legal Counsels. Pursuant to the terms and conditions of the Securities Purchase Agreement, the Company issued to such investors an aggregate of $15,639,099 of securities consisting of 501,318 shares of common stock of the Company, par value $0.0001 per share (the Common Stock). The Company along with the Common Stock issued (i) Series A Warrants to purchase up to an aggregate of 6,706,192 shares of Common Stock at an exercise price of $6.24 per share, which takes into account a “share combination event” adjustment effective following the issuance of such warrants as a result of the Reverse Split (the “Series A Warrants”) and (ii) Series B Warrants to purchase initially no shares of Common Stock and then up to a maximum of 2,004,955 shares of Common Stock subject to certain adjustments, at an initial exercise price of $0.002.

On June 24, 2025, the Company issued a bridge note to certain investors totaling $402,000 at a discount of $42,000. The note is repayable in five monthly installments beginning November 30, 2025, and maturing on March 31, 2026, with interest accruing at 12% per annum on the outstanding principal. The Company received net proceeds of $350,000 after adjusting deduction of legal and due diligence fees of $10,000. Additionally, $45,500 (i.e., 13% of net proceeds) is due to the placement agent relating to the issuance of these bridge notes which is directly attributable to the loan raised, thereby bringing the total debt issuance costs to $55,500.

On August 19, 2025, the Company closed a Securities Purchase Agreement (“Labrys SPA”) with Labrys Fund II, L.P. (“Labrys”) pursuant to which it issued a promissory note totaling $180,000 at a discount of $18,000. The note is repayable in 12 months maturing on August 19, 2026 with interest accruing at 12 % per annum on the outstanding principal. The Company received net proceeds of $158,500 after adjusting deduction of legal and due diligence fees of $3,500.

On August 24, 2025, the Company issued a convertible note to AES Capital Management, LLC(“AES”) totaling $112,500 through 2 convertible notes of $75,000, and $37,500 respectively (“AES Notes”). The note amounting $75,000 is the “Primary Note” and the subsequent note of $37,500 is the “Secondary Note”. The AES Notes are repayable in 12 months from their respective closing dates with interest accruing at 8% per annum on the outstanding principal. As of date of filing of this 10-Q, the Company received net proceeds of $ 71,000 after adjusting deduction of legal and due diligence fees of $4,000 from the issuance and closing of the Primary Notes.

On August 24, 2025, the Company issued a convertible note to CFI CAPITAL LLC (“CFI”) totaling $150,000 at a discount of $15,000 (“CFI Note”). The CFI Note is repayable in 12 months maturing on August 24, 2026 with interest accruing at 6 % per annum on the outstanding principal. The Company received net proceeds of $130,000 after adjusting legal cost of $5000.

We believe that the current cash and cash equivalents will allow us to continue operations through March 31, 2026 assuming we do not make any payments on our currently outstanding indebtedness and withhold some future accruals, however there can be no assurance that this will be the case. Accordingly, we believe that additional funds will be required to support operations and, in the long term, the growth of our business. Our operations have consumed substantial amounts of cash, and we have incurred operating losses since we began operating in 2013. While our cash consumption has been reduced following our business transition from short-term rental of vehicles owned by or leased to Zoomcar to an online platform for peer-to-peer car sharing, we have consumed significant amounts of cash in effecting such transition in terms of technology and platform innovation, and our cash consumption has varied over time. Our cash needs will depend on numerous factors, including our revenues, upgrade and innovation of our peer-to-peer car sharing platform, customer and market acceptance and use of our platform, and our ability to reduce and control costs. We expect to devote substantial capital resources to, among other things, fund operations, continued improvement, upgrading or innovation of our platform, and expand our international outreach. If we are unable to secure such additional financing, it will have a material adverse effect on our business, and we may not be able to meet our obligations or continue as a going concern.

Our Common Stock is currently quoted on an OTC Markets Group trading platform, the OTCQB, under the ticker symbol “ZCAR.” The OTC Markets Group is a regulated quotation service that displays real-time quotes, last sale prices, and volume limitations in over-the-counter securities. Trading in shares quoted on an OTC Markets Group trading platform is often thin and characterized by volatility in trading prices. This volatility may be caused by a variety of factors, including the lack of readily available price quotations, the absence of consistent administrative supervision of bid and ask quotations, lower trading volume, and market conditions. As a result, there may be wide fluctuations in the market price of the shares of our Common Stock for reasons unrelated to operating performance, and this volatility, when it occurs, may have a negative effect on the market price for our securities. Moreover, the OTC Markets Group is not a stock exchange, and trading of securities on one of its trading platforms is often more sporadic than the trading of securities listed on a national quotation system or stock exchange. Accordingly, our stockholders may not be able to realize a fair price from their shares when they determine to sell them or may have to hold them for a substantial period of time until the market for our Common Stock improves.

The SEC has adopted a number of rules to regulate a “penny stock” that restricts transactions involving stock which is deemed to be a penny stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 5g-7, and 15g-9 under the Exchange Act. These rules may have the effect of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or traded on Nasdaq if current price and volume information with respect to transactions in such securities is provided by the exchange or system). Our shares of common stock may, in the future constitute, a “penny stock” within the meaning of the rules. The additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions in shares of our common stock, which could severely limit the market liquidity of such shares of common stock and impede their sale in the secondary market.

A U.S. broker-dealer selling a penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with a net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the “penny stock” regulations require the U.S. broker-dealer to deliver, prior to any transaction involving a “penny stock”, a disclosure schedule prepared in accordance with SEC standards relating to the “penny stock” market, unless the broker-dealer or the transaction is otherwise exempt. A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representative and current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent price information with respect to any “penny stock” held in a customer’s account and information with respect to the limited market in “penny stocks.”

You should be aware that, according to the SEC, the market for “penny stocks” has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, resulting in investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.

On August 5, 2025, we received notice from the OTCQX U.S. tier of OTC Markets Group that our Global Market Capitalization has been below the $5.0 million minimum for more than 30 consecutive calendar days, and that we therefore no longer satisfy OTCQX continued qualification standards.

Following receipt of the notice and after evaluating available alternatives, the Company elected to transition its quotation to the OTCQB tier of OTC Markets Group (“OTCQB”).

On November 4, 2025, the Company’s ordinary shares commenced trading on the OTCQB under the ticker symbol “ZCAR.” The transition from the OTCQX to the OTCQB does not affect the Company’s reporting obligations under the Securities Exchange Act of 1934, as amended, or the public trading of its securities in the United States.

Earlier on August 5, 2025, we had received a written notice from the OTCQX U.S. tier of OTC Markets Group stating that our Global Market Capitalization has remained below the minimum $5.0 million required under Section 2.1(B) of the OTCQX Rules for U.S. Companies for more than 30 consecutive calendar days and, as a result, we no longer satisfy the OTCQX standards for continued qualification. Under those rules, we have a 90-calendar-day cure period, expiring on November 3, 2025, to regain compliance by maintaining a Global Market Capitalization of at least $5.0 million for 10 consecutive trading days. Following receipt of the notice and after evaluating available alternatives, the Company elected to transition its quotation to the OTCQB tier of OTC Markets Group (“OTCQB”).

If the Company fails to comply with the OTCQB Rules its securities could be removed from OTCQB and may trade on a less liquid market tier or otherwise experience reduced liquidity. Any such outcome could, among other things: (i) further depress the market price and increase the volatility of our common stock; (ii) limit or preclude the ability of certain brokers to make a market in, or of certain institutional investors to purchase or hold, our securities; (iii) reduce analyst coverage and overall investor interest; (iv) impair our ability to raise additional capital on acceptable terms or at all; and (v) adversely affect the terms of any financing or strategic transactions we may seek. In an effort to regain or maintain compliance, the Company may consider and pursue one or more corporate or financing actions—such as equity or equity-linked issuances, strategic transactions, or other measures—which could be dilutive to existing stockholders, increase our leverage, or otherwise involve significant costs and risks. Even if the Company regains compliance, it may be unable to sustain it, and any future failure could have the same adverse effects.

We require additional capital to support current operations and will require additional capital to support the growth of our business, which may not be available on terms acceptable to us, or at all.

To continue current operations, we will need to raise capital imminently. Further, to continue to effectively compete thereafter, we will require additional funds to support the growth of our business. Our operations have consumed substantial amounts of cash, and we have incurred operating losses, since we began operating in 2013. While our cash consumption has been reduced following our business transition from short-term rental of vehicles owned by or leased to Zoomcar to an online platform for peer-to-peer car sharing, we have consumed significant amounts of cash in effecting such transition in terms of technology and platform innovation, and our cash consumption has varied over time. Because of our limited resources the company was not able to expand to emerging markets outside of India and in fact, discontinued operations in Vietnam during June 2023 and subsequently in Egypt, Indonesia during June 2024 as a result.

Further, as a result of the consummation of the Business Combination, our expenses have increased substantially in connection with actions and efforts required to operate as a public company. During the six months ended September 30, 2025, we have incurred expenses in maintaining the listing requirements and complying with statutory filings with SEC along with significant professional and consultancy fee to professionals and we contemplate that we will continue to incur these expenses as long as we remain a public company to fulfill which we will need additional capital.

Moreover, we expect our expenses to increase moderately with growth in our business operations. We do not currently have sufficient cash resources to operate our business beyond March 31, 2026 (assuming that we do not repay any of our currently outstanding indebtedness) and accordingly, will need to raise capital imminently to continue our operations and to fully execute our business plan. Additionally, circumstances could cause us to consume capital more rapidly than we currently anticipate and if our cash resources are insufficient to satisfy our cash requirements, we may seek to issue additional equity or debt securities or obtain new or expanded credit facilities or identify and secure additional sources of capital. Our ability to obtain external financing in the future is subject to a variety of uncertainties, including our future financial condition, results of operations, cash flows, share price performance, liquidity of capital and lending markets and governmental regulations in India. In addition, incurring indebtedness would subject us to increased debt service obligations and could result in operating and financing covenants that would restrict our operations. There can be no assurance that financing will be available in a timely manner or in amounts or on terms acceptable to us, or at all. Any failure to raise needed funds on terms favorable to us, or at all, will severely restrict our liquidity as well as have a material adverse effect on our business, financial condition and results of operations. In addition, any issuance of equity or equity-linked securities could result in significant dilution to our existing shareholders. Additionally, fundraising efforts may divert our management from its day-to-day duties and activities, which may affect our ability to execute on our business plan. If we do not raise substantial additional capital imminently to continue operations in the short term or otherwise when required or in sufficient amounts and on acceptable terms, we may need to:

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significantly delay, scale back or discontinue certain business initiatives, such as our international expansion;

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significantly delay key investments in IoT, advanced computer vision, machine learning and related artificial intelligence technology; or

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significantly delay our consumer brand-building initiatives, thereby delaying our broader expansion.

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Our future funding requirements, both short-term and long-term, depend on many factors, including but not limited to:

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our ability to successfully scale our business within the market in which we currently operate, including by increasing the number and quality of Host vehicles and attracting and retaining more Guests to use our platform to meet a broader variety of mobility needs;

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our ability to successfully expand into additional emerging markets as opportunities to grow our operations become available to us;

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the pace of technological development in core focus areas such as IoT, computer vision, machine learning, and artificial intelligence;

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the cost to establish, maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make in preparing, filing, prosecution, defence and enforcement of any intellectual property rights;

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the effect of competing technological and market developments; and

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market acceptance of our platform and the functionality it provides to facilitate peer-to-peer car sharing.

If lack of available capital prevents us from proceeding with the execution of our business plan, our ability to become profitable will be compromised and our business will be harmed.

Future sales of our securities may affect the market price of the Common Stock and result in material dilution, including the anti-dilution protection in the warrants issued in 2024. We are also in default of various outstanding debt obligations, including under the Notes issued to ACM, and may issue shares of Common Stock or other securities to satisfy those obligations in the future (in the case of ACM, subject to receipt of shareholder approval). The issuance of shares of Common Stock or other securities in the future will dilute your percentage ownership interest and may also result in downward pressure on the price of our Common Stock.

We will finance our immediate cash needs (and expect to finance our future cash needs until we become profitable, if ever) through equity offerings, debt financings or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. We will require substantial funding to fund our business. In June 2024 we issued warrants that contain an “alternative cashless exercise” provision which gives the warrant holder the right to exchange the warrant on a one-for-one basis for shares of Common Stock at any time that the warrant is exercisable without any cash payment and without regard to the then market price of the Company’s Common Stock or exercise price of the warrant. In addition, the warrants include a provision that resets the warrant exercise price with a proportionate adjustment to the number of shares underlying the warrant in the event of a reverse split of the Company’s Common Stock at any time between the issuance date and the three year anniversary of the issuance date (a “Share Combination Event”). In the event of a Share Combination Event, the exercise price of the warrant will be reset to a price equal to the lesser of (i) the then exercise price and (ii) the lowest volume weighted average price (VWAP) during the period commencing five trading days immediately after the date the Company effects both the reverse stock splits, subject to a floor price of $283.2 prior to receipt of stockholder approval or $56.64 following receipt of stockholder approval (in each case, adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction, the “Floor Price”). The warrants are also subject to full ratchet anti-dilution protection for any issuances of Company securities (other than certain excluded issuances) at a price or effective price (as determined in accordance with the terms of the warrant, the “Dilutive Issuance Price”) that is less than the then current exercise price of the warrants following the issuance date (a “Dilutive Issuance”). In the event of a Dilutive Issuance, the exercise price of the warrants will be reduced to the lower of the Dilutive Issuance Price and the lowest VWAP during the five consecutive trading days commencing after the date of the Dilutive Issuance, in each case, subject to the Floor Price, and there will be a proportionate adjustment to the number of shares underlying the warrant. In connection with the Business Combination, we also issued the Notes to ACM in satisfaction of certain transaction expenses associated with the Business Combination. The Notes contain price based anti-dilution protection on the conversion price of such Notes down to a floor price of $500 per share (considering both reverse stock splits effectuated by the Company) which has already been reached. While the Notes have already converted into the maximum number of shares permissible under the terms of the Notes without receiving stockholder approval, we may seek stockholder approval in the future to allow for the Notes to convert into additional shares. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, anti-dilution provision may be triggered, and the terms of the newly issued securities may include liquidation or other preferences that adversely affect your rights.

Any future adjustments to the exercise price of the warrants (or additional issuances to make the Financing Investors whole) may have a negative impact on the trading price of our Common Stock. Additionally, raising additional capital with new investors may be difficult as a result of anti-dilution protection. Sales of substantial amounts of Common Stock in the public market, or the perception that such sales could occur, could materially adversely affect the market price of the Common Stock and may make it more difficult for you to sell your securities at a time and price which you deem appropriate.

In addition to our defaults under current indebtedness described elsewhere here, certain of our debt financing arrangements are currently in default and we have delayed certain other payments to lenders, which may restrict our current and future business and operations.

Since November 2023, we have been in violation of our scheduled monthly installment payment obligations of $215,337 per month on our lease liability with Ayvens Group (f/k/a Leaseplan India Private Limited) (“Leaseplan”). Leaseplan notified us on February 7, 2024, that we are in default of our November 2023 payment. As of the date hereof, we are in default beyond the 30-day extended cure period (as envisaged under the terms of our debt with Leaseplan) of our November 2023 payment and continue to be default of all EMIs thereafter. As a result of such defaults, as of the date hereof, Leaseplan (i) has initiated the process of repossession of all vehicles, and (ii) has invoked the bank guarantee of $120,482 which was a security created by Zoomcar in favor of Leaseplan. Such outcomes may have a material adverse impact on our business, operations or financial condition. The Company continues to negotiate a deferred payment plan to the restructured debt proposal shared by the Company wherein the debt after certain waivers and discounts, will stand restructured to $4,755,942 and the Company is hopeful that Leaseplan will issue a comfort letter in this regard acknowledging the proposed payment schedule spread across six tranches repayment of the restructured debt. As of the date of this Form 10-Q, the Company has already cleared the first three tranches in accordance with the proposed payment schedule as per the comfort letter, amounting to $2,847,177 (approx.) towards the outstanding debt. The Company is yet to clear the fourth tranche of payment (as per the proposed payment schedule) which was due as of July 31, 2025 and has sought further extension of time to repay the remaining three tranches. The Company awaits a confirmation from LeasePlan on the extension sought, but given the continuing negotiations, and the expected comfort letter, we do not contemplate any immediate legal action against the Company in this regard. If LeasePlan refuses to issue such comfort letter, or we are unable to execute a settlement agreement with respect to the restructured debt, or fail to honor the obligations under any proposals accepted or agreement executed for the subject matter it may, possibly result in inter alia (a) the entire outstanding debt becoming due and payable, and (b) the withdrawal of a conditional waiver of $1.2 million which was given during a prior restructuring and will become immediately due and payable with interest of 1.5% per month.

Further, we are in violation of the final payment obligation of $371,805 (approx.) on our loan with Mahindra & Mahindra Financial Services Limited (“Mahindra”). As of the date hereof, Mahindra has not formally extended or provided a waiver of such overdue payment. Mahindra may initiate legal action for resolution of the dispute. Such outcomes may have a material adverse impact on our business, operations or financial condition.

Additionally, we are in various stages of discussion on deferment with our other lenders with regards to the scheduled loan payments from November 2023 onwards and extending up to July 2025. However, we have not received any formal notice of default from these other lenders, but such lenders have not formally extended or provided waivers of such overdue payments. While the Company is actively engaging in discussions with its lenders and vendors to restructure the existing indebtedness by means of reductions and deferment of payment timelines, no assurance can be made that the Company will be successful in restructuring these outstanding liabilities.

As a result of the foregoing, the Company is at material risk that the above parties including certain vendors could initiate insolvency proceedings under Indian Insolvency and Bankruptcy Code 2016 (IBC). As per the provisions of IBC, an operational creditor can initiate an insolvency resolution process against the Company where the minimum amount of the default is INR 1,00,00,000 (Rupees One crore) or ~USD 119,000. If insolvency proceedings were initiated and the petition is admitted, it could result in significant disruptions to our operations, loss of management control, and a substantial decrease in stockholder value. Furthermore, the outcomes of such proceedings are uncertain and could materially affect our financial position and results of operations.

The Zoomcar Board and Zoomcar management are evaluating options to improve liquidity and address Zoomcar’s long-term capital structure, however, there can be no assurance that any such option or plan will be available on favorable terms, or at all.

Zoomcar Holdings, Inc. 10-Q