UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event
reported): December 13, 2023
Innovative International Acquisition Corp.
(Exact name of registrant as specified in its charter)
Cayman Islands |
|
001-40964 |
|
N/A |
(State or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
|
(IRS Employer
Identification No.) |
24681 La Plaza Ste 300
Dana Point, CA 92629
(Address of principal executive offices, including
zip code)
Registrant’s telephone number,
including area code: (805) 907-0597
Not Applicable
(Former name or former address,
if changed since last report)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
x |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading
Symbol(s) |
|
Name of each
exchange on
which registered |
Units, each consisting of one Class A ordinary share, par value $0.0001 per share, and one-half of one Redeemable Warrant |
|
IOACU |
|
The Nasdaq Stock Market LLC |
|
|
|
|
|
Class A ordinary shares, par value $0.0001 per share, included as part of the Units |
|
IOAC |
|
The Nasdaq Stock Market LLC |
|
|
|
|
|
Redeemable Warrants, each exercisable for one Class A ordinary share for $11.50 per share, included as part of the Units |
|
IOACW |
|
The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company x
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.
INTRODUCTORY NOTE
As previously disclosed,
Innovative International Acquisition Corp. (“IOAC”) entered into the Agreement and Plan of Merger and Reorganization (as may
be amended or supplemented, the “Merger Agreement”), dated as of October 13, 2022, by and among IOAC, Zoomcar, Inc. (“Zoomcar”),
Innovative International Merger Sub Inc. (“Merger Sub”) and Greg Moran, in the capacity as the Seller Representative for the
purposes and as described under the Merger Agreement (the “Seller Representative”). We refer to transactions contemplated
by the Merger Agreement, collectively, including the issuance of IOAC securities in connection therewith, as the “Business Combination”.
Item 8.01 Other
Events.
The unaudited consolidated financial statements
of Zoomcar for the six months ended September 2023, are attached hereto as Exhibit 99.1.
Item 9.01 Financial
Statements and Exhibits.
(d) Exhibits.
Important Information
About the Business Combination and Where to Find It
In connection with the
Business Combination, IOAC has filed with the SEC a Registration Statement on Form S-4 (Registration No. 333-269627) (the “Registration
Statement”), which includes the joint proxy statement/consent solicitation statement/prospectus (the “Proxy Statement/Prospectus/Consent
Solicitation Statement”). The Registration Statement was declared effective on September 29, 2023. IOAC has mailed the Proxy Statement/Prospectus/Consent
Solicitation Statement and other relevant documents to its shareholders. This document is not a substitute for the Proxy Statement/Prospectus/Consent
Solicitation Statement. INVESTORS AND SECURITY HOLDERS AND OTHER INTERESTED PARTIES ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS/CONSENT
SOLICITATION STATEMENT (AS UPDATED BY SUPPLEMENT NO. 1 ON OCTOBER 20, 2023 AND SUPPLEMENT NO. 2 ON NOVEMBER 17, 2023) AND ANY OTHER RELEVANT
DOCUMENTS THAT HAVE BEEN FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND
IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ZOOMCAR, IOAC, THE PROPOSED TRANSACTION
AND RELATED MATTERS. The documents filed or that will be filed with the SEC relating to the Business Combination (when they are available)
can be obtained free of charge from the SEC’s website at www.sec.gov.
Forward-Looking
Statements
This document contains
“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include,
but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with
respect to future operations, products and services; and other statements identified by words such as “will likely result,”
“are expected to,” “will continue,” “is anticipated,” “estimated,” “believe,”
“intend,” “plan,” “projection,” “outlook” or words of similar meaning.
These forward-looking
statements and factors that may cause actual results and the timing of events to differ materially from the anticipated results include,
but are not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the
Merger Agreement or could otherwise cause the transactions contemplated therein to fail to close; (2) the outcome of any legal proceedings
that may be instituted against IOAC, Zoomcar, the combined company or others following the announcement of the Business Combination and
any definitive agreements with respect thereto; (3) the inability to complete the Business Combination due to the failure to obtain approval
of the shareholders of IOAC or stockholders of Zoomcar; (4) the inability of Zoomcar to satisfy other conditions to closing; (5) changes
to the proposed structure of the Business Combination that may be required or appropriate as a result of applicable laws or regulations
or as a condition to obtaining regulatory approval of the Business Combination; (6) the ability to meet stock exchange listing standards
in connection with and following the consummation of the Business Combination; (7) the risk that the Business Combination disrupts current
plans and operations of Zoomcar as a result of the announcement and consummation of the Business Combination; (8) the ability to recognize
the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, the ability of the combined
company to grow and manage growth profitably, maintain its reputation, grow its customer base, maintain relationships with customers and
suppliers and retain its management and key employees; (9) the impact of the COVID-19 pandemic on the business of Zoomcar and the combined
company (including the effects of the ongoing global supply chain shortage); (10) Zoomcar’s limited operating history and history
of net losses; (11) Zoomcar’s customer concentration and reliance on a limited number of key technology providers and payment processors
facilitating payments to and by Zoomcar’s customers; (12) costs related to the Business Combination; (13) unfavorable interpretations
of laws or regulations or changes in applicable laws or regulations; (14) the possibility that Zoomcar or the combined company may be
adversely affected by other economic, business, regulatory, and/or competitive factors; (15) Zoomcar’s estimates of expenses and
profitability; (16) the evolution of the markets in which Zoomcar competes; (17) political instability associated with operating in current
and future emerging markets Zoomcar has entered or may later enter; (18) risks associated with Zoomcar maintaining inadequate insurance
to cover risks associated with business operations now or in the future; (19) the ability of Zoomcar to implement its strategic initiatives
and continue to innovate its existing products; (20) the ability of Zoomcar to adhere to legal requirements with respect to the protection
of personal data and privacy laws; (21) cybersecurity risks, data loss and other breaches of Zoomcar’s network security and the
disclosure of personal information or the infringement upon Zoomcar’s intellectual property by unauthorized third parties; (22)
risks associated with the performance or reliability of infrastructure upon which Zoomcar relies, including, but not limited to, internet
and cellular phone services; (23) the risk of regulatory lawsuits or proceedings relating to Zoomcar’s products or services; (24)
increased compliance risks associated with operating in multiple foreign jurisdictions at once, including regulatory and accounting compliance
issues; (25) Zoomcar’s exposure to operations in emerging markets where improper business practices may be prevalent; and (26) Zoomcar’s
ability to obtain additional capital when necessary.
The foregoing list of
factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the
“Risk Factors” section of the Registration Statement referenced above and other documents filed by IOAC from time to time
with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to
differ materially from those contained in the forward-looking statements. 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
speak only as of the date they are made, and IOAC and Zoomcar disclaim any intention or obligation to update or revise any forward-looking
statements, whether as a result of developments occurring after the date of this communication. Forecasts and estimates regarding Zoomcar’s
industry and end markets are based on sources we believe to be reliable, however there can be no assurance these forecasts and estimates
will prove accurate in whole or in part. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only,
are not forecasts and may not reflect actual results.
SIGNATURE
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
INNOVATIVE INTERNATIONAL ACQUISITION CORP. |
|
|
|
By: |
/s/ Mohan Ananda |
|
Name: |
Mohan Ananda |
|
Title: |
Chief Executive Officer |
Dated: December 13, 2023
Exhibit 99.1
ZOOMCAR, INC.
CONDENSED
CONSOLIDATED BALANCE SHEET
(in
USD, except number of shares)
As at | |
September 30,
2023 | | |
March 31,
2023 | |
| |
(unaudited) | | |
| |
Assets | |
| | | |
| | |
Current assets : | |
| | | |
| | |
Cash and cash equivalents (Refer Note 28- VIE) | |
$ | 3,846,543 | | |
$ | 3,686,741 | |
Accounts receivable, net of allowance for doubtful accounts
(Refer Note 28- VIE) | |
| 217,345 | | |
| 255,175 | |
Receivable from government authorities | |
| 3,070,822 | | |
| 3,962,822 | |
Short term investments with related parties | |
| 164,583 | | |
| 166,540 | |
Prepaid expenses (Refer Note 28- VIE) | |
| 276,582 | | |
| 909,828 | |
Other current assets (Refer Note 28- VIE) | |
| 1,092,161 | | |
| 1,150,209 | |
Other current assets with related parties | |
| 46,089 | | |
| 19,682 | |
Assets held for sale | |
| 847,759 | | |
| 923,176 | |
Total current assets | |
| 9,561,884 | | |
| 11,074,173 | |
Property and equipment, net of accumulated depreciation $5,076,664
and $6,189,452 respectively (Refer Note 28- VIE) | |
| 2,111,490 | | |
| 2,728,523 | |
Operating lease right-of-use assets | |
| 1,508,120 | | |
| 1,694,201 | |
Intangible assets, net of accumulated amortisation of $11,647
and $106,769 respectively (Refer Note 28- VIE) | |
| 22,295 | | |
| 33,412 | |
Long term investments (Refer Note 28- VIE) | |
| 216,713 | | |
| 158,455 | |
Long term investments with related parties | |
| 98,233 | | |
| 95,577 | |
Receivable from government authorities, (Refer Note 28- VIE) | |
| 1,041,543 | | |
| 248,321 | |
Other non-current assets | |
| 412,003 | | |
| 425,669 | |
Total assets | |
$ | 14,972,281 | | |
$ | 16,458,331 | |
Liabilities, redeemable noncontrolling interests, mezzanine
equity and stockholders' equity | |
| | | |
| | |
Current liabilities : | |
| | | |
| | |
Accounts payable (Refer Note 28- VIE) | |
$ | 6,552,234 | | |
$ | 6,547,978 | |
Current portion of long-term debt | |
| 1,583,856 | | |
| 1,415,861 | |
Current portion of long-term debt from related parties | |
| 989,820 | | |
| 1,054,887 | |
Current portion of operating lease liabilities | |
| 459,725 | | |
| 466,669 | |
Current portion of finance lease liabilities | |
| 1,842,645 | | |
| 1,257,423 | |
Contract Liabilities (Refer Note 28- VIE) | |
| 879,768 | | |
| 786,572 | |
Current portion of pension and other employee obligations
(Refer Note 28- VIE) | |
| 170,457 | | |
| 146,006 | |
Other current liabilities (Refer Note 28- VIE) | |
| 2,697,192 | | |
| 2,917,965 | |
Other current liabilities towards related
parties | |
| 18,019 | | |
| 15,067 | |
Total current liabilities | |
| 15,193,716 | | |
| 14,608,428 | |
Long-term debt, less current portion | |
| 2,104,194 | | |
| 3,039,200 | |
Operating lease liabilities, less current portion | |
| 1,121,615 | | |
| 1,284,755 | |
Finance lease liabilities, less current portion | |
| 4,206,010 | | |
| 5,098,262 | |
Pension and other employee obligations, less current portion
(Refer Note 28- VIE) | |
| 543,853 | | |
| 438,808 | |
Preferred stock warrant liability | |
| 770,446 | | |
| 1,190,691 | |
Convertible promissory note | |
| 11,940,183 | | |
| 10,944,727 | |
Senior Subordinated Convertible Promissory Notes | |
| 47,258,369 | | |
| 17,422,132 | |
Derivative financial instrument | |
| 24,410,231 | | |
| 14,373,856 | |
Total liabilities | |
| 107,548,617 | | |
| 68,400,859 | |
Commitments and contingencies (Note 31) | |
| | | |
| | |
Redeemable non controlling interests | |
| 25,114,751 | | |
| 25,114,751 | |
Mezzanine equity: | |
| | | |
| | |
Preferred stock, $0.0001 par value (refer note 19 (a)) | |
| 168,974,437 | | |
| 168,974,437 | |
Stockholders’ equity: | |
| | | |
| | |
Common stock, $0.0001 par value, 220,000,000 shares authorized at September 30,
2023 and March 31, 2023, and 16,987,064 shares issued and outstanding at September 30, 2023 and March 31, 2023 respectively | |
| 1,699 | | |
| 1,699 | |
Additional paid-in capital | |
| 22,758,771 | | |
| 22,140,866 | |
Accumulated deficit | |
| (311,185,699 | ) | |
| (270,002,280 | ) |
Accumulated other comprehensive income | |
| 1,759,705 | | |
| 1,827,999 | |
Total
stockholders’ equity | |
| (286,665,524 | ) | |
| (246,031,716 | ) |
Total
liabilities, redeemable non-controlling interests, mezzanine equity and stockholders' equity | |
$ | 14,972,281 | | |
$ | 16,458,331 | |
The
accompanying notes are an integral part of these Condensed Consolidated Balance Sheet.
ZOOMCAR, INC.
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(In
USD, except number of shares)
Six months ended | |
September
30, 2023 | | |
September
30, 2022 | |
| |
(unaudited) | |
Revenue : | |
| | | |
| | |
Income from rentals | |
$ | - | | |
$ | 255,785 | |
Revenues from services | |
| 5,295,626 | | |
| 3,471,350 | |
Other revenues | |
| - | | |
| 84,514 | |
Total revenue | |
| 5,295,626 | | |
| 3,811,649 | |
Cost and Expenses | |
| | | |
| | |
Cost of revenue | |
| 6,348,468 | | |
| 14,163,264 | |
Technology and development | |
| 2,246,738 | | |
| 2,393,391 | |
Sales and marketing | |
| 3,859,994 | | |
| 4,481,557 | |
General and administrative | |
| 4,642,103 | | |
| 6,269,897 | |
Total costs and expenses | |
| 17,097,303 | | |
| 27,308,109 | |
Loss from operations before income tax | |
| (11,801,677 | ) | |
| (23,496,460 | ) |
Finance costs | |
| 29,884,357 | | |
| 1,566,257 | |
Finance costs to related parties | |
| 25,777 | | |
| 68,407 | |
Other income, net | |
| (522,716 | ) | |
| (1,660,176 | ) |
Other income from related parties | |
| (5,676 | ) | |
| (9,729 | ) |
Loss before income taxes | |
| (41,183,419 | ) | |
| (23,461,219 | ) |
Provision for income taxes | |
| - | | |
| - | |
Net loss attributable to common
stockholders | |
$ | (41,183,419 | ) | |
$ | (23,461,219 | ) |
Net loss per share | |
| | | |
| | |
Basic and diluted | |
$ | (2.42 | ) | |
$ | (1.38 | ) |
Weighted average shares used in computing loss per share: | |
| | | |
| | |
Basic and diluted | |
| 16,987,064 | | |
| 16,991,740 | |
The accompanying notes are an integral part of these Condensed Consolidated
Statement of Operations.
(This space has been left intentionally blank)
ZOOMCAR, INC.
CONDENSED
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
(In
USD, except number of shares)
Six months ended | |
September
30, 2023 | | |
September
30, 2022 | |
| |
(unaudited) | |
Net loss | |
$ | (41,183,419 | ) | |
$ | (23,461,219 | ) |
Other comprehensive loss, net of tax: | |
| | | |
| | |
Foreign currency translation adjustment | |
| (14,080 | ) | |
| 823,448 | |
(Loss)/gain for defined benefit plan | |
| (43,605 | ) | |
| 28,150 | |
Reclassification adjustments: | |
| | | |
| | |
Amortization of
gains on defined benefit plan | |
| (10,609 | ) | |
| (9,360 | ) |
Other comprehensive income (loss) attributable
to common stockholders | |
| (68,294 | ) | |
| 842,238 | |
Comprehensive loss | |
$ | (41,251,713 | ) | |
$ | (22,618,981 | ) |
The accompanying notes are an integral part of these Condensed Consolidated
Statement of Comprehensive Loss
(This space has been left intentionally blank)
ZOOMCAR, INC.
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended | |
September
30, 2023 | | |
September
30, 2022 | |
| |
(unaudited) | |
A. Cash flows from operating activities | |
| | | |
| | |
Net loss | |
$ | (41,183,419 | ) | |
$ | (23,461,219 | ) |
Adjustments to reconcile net loss to net cash used
in operating activities : | |
| | | |
| | |
Depreciation and amortization | |
| 510,608 | | |
| 313,360 | |
Stock-based compensation | |
| 617,905 | | |
| 2,639,333 | |
Interest income | |
| (546 | ) | |
| (20,088 | ) |
Change in fair value of preferred stock warrant | |
| (420,245 | ) | |
| 630,367 | |
Change in fair value of convertible promissory note | |
| 995,456 | | |
| - | |
Change in fair value of senior subordinated convertible promissory
note | |
| 16,661,212 | | |
| - | |
Change in fair value of derivative financial instrument | |
| 10,036,375 | | |
| - | |
Note issue expenses | |
| 1,564,210 | | |
| - | |
Loss on sale and disposal of assets, net | |
| 84,093 | | |
| - | |
Loss on assets written off | |
| 40,014 | | |
| - | |
Gain on liabilities written off | |
| (388 | ) | |
| - | |
Loss/(gain) on sale of assets held for sale | |
| 1,385 | | |
| (1,470,582 | ) |
Amortization of operating lease right-of-use assets | |
| 16,802 | | |
| 25,986 | |
Unrealized foreign currency exchange
(gain)/loss, net | |
| 2,556 | | |
| 2,733 | |
Operating loss before working capital changes | |
| (11,073,982 | ) | |
| (21,340,110 | ) |
Changes in operating assets and liabilities : | |
| | | |
| | |
Decrease in Accounts receivables | |
| 32,327 | | |
| 68,917 | |
Decrease in Receivable from government authorities | |
| 9,520 | | |
| 562,970 | |
Decrease/(increase) in Prepaid expenses | |
| 627,694 | | |
| (11,324 | ) |
Decrease/(increase) in Other current assets | |
| 71,572 | | |
| (283,051 | ) |
Increase in Accounts payables | |
| 81,883 | | |
| 1,193,917 | |
Decrease in Other current liabilities | |
| (150,104 | ) | |
| (2,746,172 | ) |
Increase in Pension and other employee obligations | |
| 83,303 | | |
| 55,277 | |
Increase in Contract liabilities | |
| 103,647 | | |
| 636,914 | |
Net cash used in operating activities
(A) | |
| (10,214,140 | ) | |
| (21,862,662 | ) |
B. Cash flows from investing activities | |
| | | |
| | |
Purchase of property, plant and equipment, including intangible
assets and capital advances | |
| (85,794 | ) | |
| (48,159 | ) |
Payment towards investments in fixed deposits | |
| (127,088 | ) | |
| (275,084 | ) |
Proceeds from sale of property, plant and equipment | |
| - | | |
| 3,251,327 | |
Proceeds from sale of asset held for sale | |
| 68,925 | | |
| - | |
Proceeds from maturity of investments in fixed deposits | |
| 70,231 | | |
| 338,797 | |
Interest received on fixed deposits | |
| 546 | | |
| 11,334 | |
Net cash flows (used)/generated
from investing activities (B) | |
| (73,180 | ) | |
| 3,278,215 | |
C. Cash flows from financing activities | |
| | | |
| | |
Proceeds from issue of senior subordinated convertible promissory
note, net | |
| 13,175,026 | | |
| - | |
Payment of notes issuance cost | |
| (1,564,210 | ) | |
| - | |
Repayment of debt | |
| (773,650 | ) | |
| (3,759,428 | ) |
Principal payment of finance lease obligation | |
| (234,267 | ) | |
| (467,610 | ) |
Net cash generated/(used) from
financing activities (C) | |
| 10,602,899 | | |
| (4,227,038 | ) |
Net decrease in cash and cash equivalents (A+B+C) | |
| 315,579 | | |
| (22,811,485 | ) |
Effect of foreign exchange on cash and cash equivalents. | |
| (155,777 | ) | |
| (397,231 | ) |
Cash and cash equivalents | |
| | | |
| | |
Beginning of period | |
| 3,686,741 | | |
| 26,783,791 | |
End of period | |
$ | 3,846,543 | | |
$ | 3,575,075 | |
Reconciliation of cash and cash equivalents to the condensed
consolidated balance sheet | |
| | | |
| | |
Cash and cash equivalents | |
| 3,846,543 | | |
| 3,575,075 | |
Total cash and cash equivalents | |
$ | 3,846,543 | | |
$ | 3,575,075 | |
Supplemental disclosures of cash flow information | |
| | | |
| | |
Cash paid/ (refund) for income taxes | |
$ | (28,223 | ) | |
$ | 15,719 | |
Interest paid on debt | |
$ | (216,715 | ) | |
$ | (484,131 | ) |
The
accompanying notes are an integral part of these Condensed Consolidated Statement of Cash Flows
ZOOMCAR, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF REDEEMABLE NON-CONTROLLING INTERESTS, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (UNAUDITED) FOR THE SIX MONTHS ENDED SEPTEMBER
30, 2023 AND 2022
(In USD,
except number of shares)
| |
Redeemable
Non-controlling Interest | | |
Mezzanine
equity Preferred stock | | |
Stockholders'
equity | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Accumulated | | |
| |
| |
| | |
| | |
| | |
| | |
| | |
Additional | | |
| | |
other | | |
| |
| |
| | |
| | |
| | |
| | |
| | |
paid-in | | |
Accumulated | | |
comprehensive | | |
Total equity | |
| |
Amounts | | |
Shares | | |
Amounts | | |
Shares | | |
Amounts | | |
capital | | |
Deficit | | |
income/(loss) | | |
(deficit) | |
Balance as
at April 01, 2022 | |
$ | 25,114,751 | | |
| 99,309,415 | | |
$ | 168,974,437 | | |
| 16,991,740 | | |
$ | 1,699 | | |
$ | 18,530,769 | | |
$ | (207,970,204 | ) | |
$ | 769,156 | | |
$ | (188,668,580 | ) |
Stock based
compensation | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 2,639,333 | | |
| - | | |
| - | | |
| 2,639,333 | |
Gain for
defined benefit plan, (net of taxes amounts to $ Nil) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 18,790 | | |
| 18,790 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (23,461,219 | ) | |
| - | | |
| (23,461,219 | ) |
Foreign
currency translation adjustment, (net of taxes amounts to $ Nil) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 823,448 | | |
| 823,448 | |
Balance as at September
30, 2022 | |
| 25,114,751 | | |
| 99,309,415 | | |
| 168,974,437 | | |
| 16,991,740 | | |
| 1,699 | | |
| 21,170,102 | | |
| (231,431,423 | ) | |
| 1,611,394 | | |
| (208,648,228 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as at April 01,
2023 | |
| 25,114,751 | | |
| 99,309,415 | | |
| 168,974,437 | | |
| 16,987,064 | | |
| 1,699 | | |
| 22,140,866 | | |
| (270,002,280 | ) | |
| 1,827,999 | | |
| (246,031,716 | ) |
Stock based
compensation | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 617,905 | | |
| - | | |
| - | | |
| 617,905 | |
Loss on employee
benefit, (net of taxes amounts to $ Nil) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (54,214 | ) | |
| (54,214 | ) |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (41,183,419 | ) | |
| - | | |
| (41,183,419 | ) |
Foreign
currency translation adjustment, (net of taxes amounts to $ Nil) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (14,080 | ) | |
| (14,080 | ) |
Balance as at September
30, 2023 | |
| 25,114,751 | | |
| 99,309,415 | | |
| 168,974,437 | | |
| 16,987,064 | | |
| 1,699 | | |
| 22,758,771 | | |
| (311,185,699 | ) | |
| 1,759,705 | | |
| (286,665,524 | ) |
The accompanying notes are an integral part of
these Condensed Consolidated Statement of Redeemable Non-controlling Interests, Mezzanine Equity and Stockholders' Equity
(This space has been
left intentionally blank)
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Zoomcar, Inc. was incorporated
in Delaware in April 2012 and is headquartered in Bangalore, India. Zoomcar, Inc., provides mobility solutions to consumers
and businesses. The accompanying Condensed Consolidated Financial Statements include the accounts and transactions of Zoomcar, Inc.
and its subsidiaries (collectively, the “Company” or “Zoomcar”). The Company operates its facilitation services
as well as rental business under the Zoomcar brand with its operations in India, Indonesia, and Egypt.
| a. | Risks and uncertainties |
The Company’s business, operations
and financial results are subject to various risks and uncertainties, including those described below, that could materially adversely
affect the business, results of operations and financial condition.
The Company has incurred net loss
of $41,183,419 during the six months ended September 30, 2023, and cash used in operations during the period was $10,214,140. The
Company’s accumulated deficit amounts to $311,185,699 as of September 30, 2023 (March 31, 2023:$270,002,280).
Pursuant to the Business Combination
Agreement (BCA) for merger entered into with Innovative International Acquisition Corp. (SPAC), the Company has raised $10,000,000 and
$8,109,955 through issuance of convertible promissory notes and convertible note and warrants, respectively during the year ended March 31,
2023. Further, the Company raised an additional amount of $13,175,027 through issuance of convertible note during the period ended September 30,
2023. The Company is in discussion of raising further funds by issuing promissory notes at discount.
As a result, based on current operational
assumptions and cash flow projections and additional fund raise through aforesaid merger with SPAC, the Company believes it has adequate
liquidity for the next twelve months to meet the liabilities of the Company as and when they fall due.
2. | Summary of Significant Accounting Policies |
The accompanying unaudited 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. As such, the information should be read in conjunction with the audited consolidated financial statements
and the related notes thereto as of and for the year ended March 31, 2023. 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”).
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
These interim condensed consolidated
financial statements follow the same significant accounting policies as those included in our audited consolidated financial statements
for the year ended March 31, 2023. 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 unaudited 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 unaudited condensed consolidated financial statements herein.
| ii. | Principles of consolidation |
The unaudited condensed consolidated
financial statements include the accounts of Zoomcar, Inc. and of 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 (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. The Company consolidates a VIE when it is the primary beneficiary. The primary beneficiary of a VIE is the party that meets both
of the following criteria:
| (i) | has the power to direct the activities
that most significantly affect the economic performance of the VIE; and |
| (ii) | has the obligation to absorb losses or
the right to receive benefits that in either case could potentially be significant to the
VIE. |
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, 2023, following
are the list of subsidiaries and step-down subsidiaries:
Name of Entity | |
Place of Incorporation | |
Investor Entity |
Zoomcar India Private Limited | |
India | |
Zoomcar, Inc. |
Zoomcar Netherlands Holding B.V | |
Netherlands | |
Zoomcar, Inc. |
Fleet Holding Pte ltd | |
Singapore | |
Zoomcar, Inc. |
Fleet Mobility Philippines Corporation | |
Philippines | |
Zoomcar, Inc. |
Zoomcar Egypt Car Rental LLC | |
Egypt | |
Zoomcar Netherlands Holding |
PT Zoomcar Indonesia Mobility Service | |
Indonesia | |
Fleet Holding Pte ltd |
Zoomcar Vietnam Mobility LLC | |
Vietnam | |
Fleet Holding Pte ltd |
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As at September 30,
2023, the subsidiaries and step-down subsidiaries of Zoomcar Inc. have been consolidated using the Variable Interest Entity (‘VIE’)
model as per ASC 810. In determining whether the VIE model was applicable to the subsidiaries the criteria prescribed under ASC 810 were
examined as below:
| - | The subsidiaries were incorporated as legal entities under the laws and
regulations of the country in which they are incorporated. |
| - | The scope exemptions under ASC 810 were not applicable to the entities |
| - | Zoomcar Inc holds variable interest in all the subsidiaries by way of
contribution towards equity and in the form of debt |
| - | The entities are variable interest entities for Zoomcar Inc since the
legal entities do not have sufficient equity investment at risk and equity investors at risk. |
For the purpose of equity interests,
the interests held by employees are also considered under ASC 810 since employees are considered as de-facto agents. Thus, Zoomcar Egypt
Car Rental LLC, Fleet Mobility Philippines Corporation, and Zoomcar Vietnam Mobility LLC are considered as wholly owned subsidiaries
of Zoomcar Inc.
Through the direct and indirect interest
that Zoomcar Inc. holds in the subsidiaries, Zoomcar Inc. has the power to direct the activities of a VIE that most significantly impact
the VIE’s economic performance and has the obligation to absorb losses of the VIE that could potentially be significant to the
VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. Accordingly, Zoomcar Inc. is the
primary beneficiary with respect to all the subsidiaries and consolidates the subsidiaries under the VIE model except Zoomcar India Private
Limited, Zoomcar Netherlands Holding B.V, Fleet Holding Pte Ltd and PT Zoomcar Indonesia Mobility Service which are consolidated as per
the voting interest model.
On August 14, 2023, Zoomcar Vietnam
Mobility LLC has voluntarily filed application for bankruptcy with the local authorities of Vietnam. In accordance with ASC 205-30, the
liquidation of the VIE is imminent and thus the financial statements of VIE are prepared on a liquidation basis, which entails valuing
assets at their estimated net realizable values and recording liabilities at their expected settlement amounts. Further, in accordance
with ASC 810-10-15-10, the Company consolidate the VIE as the bankruptcy application is pending with the authorities in Vietnam and unless
the application is admitted, the Company holds a variable interest and still is the primary beneficiary. Refer Note 28
The assets/liabilities consolidated
for the VIE are not material.
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Certain prior period balances have
been reclassified to conform to the current year presentation. Such changes include reclassifications or combinations of certain accounts
on the condensed consolidated balance sheets.
These reclassifications had no impact
on total assets, total liabilities, net loss or comprehensive loss or accumulated deficit in the previously reported consolidated financial
statements for the year ended March 31, 2023.
| iv. | Use of estimates and assumptions |
The use of estimates and assumptions
as determined by management is required in the preparation of the 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:
| a. | Estimation of defined benefit obligation |
| b. | Estimation of useful lives and residual values of property, plant &
equipment and intangible assets |
| c. | Fair value measurement of financial instruments |
| d. | Fair value measurement of share-based payments |
| e. | Leases – assumption to determine the incremental borrowing
rate |
| f. | Valuation allowance on deferred tax assets |
| g. | Estimation of utilisation of receivable from government authorities |
The Company derives its revenue principally
from short-term self-drive rentals.
Self-drive rentals
Zoomcar operates a fleet of rental
vehicles comprising of both vehicles owned by them and vehicles leased from third-party leasing companies. The Company either leases
or subleases vehicles to its customers as a result, the Company has considered itself to be the accounting lessor or sublessor, as applicable,
in these arrangements in accordance with ASC 842.
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Rental revenues are recognized for
rental and rental related activities on a straight-line basis evenly over the period of where an identified asset is transferred to the
customer and the customer has the ability to control that asset in accordance with ASC 842. Transaction price charged by the Company
is as per agreed rates between the Company and the customer. In case of leased vehicles, the Company was solely responsible for paying
vehicle lease costs to the lessor regardless of whether the vehicles were booked for use by guests on the platform and accordingly recognized
vehicle lease revenue on a gross basis.
For vehicles that are subleased, sublease
income and related lease expense for these transactions are recognized on a gross basis in the condensed consolidated financial statements.
Rental periods are generally short-term
in nature and are classified as operating leases.
Facilitation revenue (“Host
services”)
The Company has launched a new platform
“Zoomcar Host Services” during the year ended March 2022. 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.
Facilitation
Services revenue consists of facilitation fees charged to Hosts, net of incentives and refunds and
trip protection charged to the Renters. The Company charges facilitation fees to its customers as a percentage of the value of the total
booking, excluding taxes. The Company collects both the booking value on behalf of the Host and the trip protection charges from the
renter. On a daily basis the Company, or its third-party payment processors, disburse the booking value to the host, less the fees due
from the host to the Company. The amounts charged for trip fees for the Marketplace service vary based on factors such as the vehicle
type, the day of the week, time of the trip, and the duration of the trip. Hence, the Company’s primary performance obligation
in the transaction with respect to the Host is to facilitate the successful completion of the rental transaction and with respect to
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 evaluates the presentation of revenue on a gross versus net basis based on whether
or not it is the principal(gross) or the agent (net) in the transaction. The Company considers whether it controls the right to use the
vehicle before control is transferred to the renter. Indicators of control that the Company considers include whether the Company is
primarily responsible for fulfilling the promise associated with the booking of the vehicle, whether it has inventory risk associated
with the vehicle, and whether it has discretion in establishing the prices for the vehicles booked. The Company determined that it does
not establish pricing for vehicles listed on its platform and does not control the right to use the host’s vehicle at any time
before, during, or after completion of a trip booked on the Company’s platform. Accordingly, the Company has 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 recognised rateably over the trip period. The Company recognizes facilitation revenue from these performance obligations on a straight-line
basis over the duration of the rental trip using the output method as its performance obligation is satisfied over time. The Company
uses the output method based on rental hours or days, where revenue is calculated based on the percentage of total time elapsed in relation
to total estimated rental period. In the event a user books a trip extension, at the time the extension is booked, the service revenue
is recognized on a straight-line basis over the duration of the extension period.
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company offers various incentive
programs to hosts, including minimum guaranteed listing fees and vehicle listing bonus payments. 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 are recorded as a marketing expense
in the condensed consolidated statement of operations. These incentives are offered as part of overall marketing strategy of the company
and incentivize the hosts to refer the platform. During the year ended March 31, 2023, company has stopped providing minimum guaranteed
listing fees incentive.
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, self-drive
rentals and vehicle subscriptions. Under ASC 606 and ASC 842, 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 or rental is recognized when the
customer redeems the loyalty points at some time in future. 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. As at September 30, 2023 and March 31,
2023, the Company's deferred revenue balance amounted to $92,856 and $260,705 respectively.
Others
The Company has elected to exclude
from revenue, taxes assessed by a governmental authority that are both imposed on and are concurrent with specific revenue producing
transactions and collected from customers and remitted to governmental authorities. Accordingly, such amounts are not included as a component
of revenue or cost of revenue.
Contract liabilities
Contract liabilities primarily consists
of obligations to customers for advance received against a new booking, 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.
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| vi. | Receivables from government authorities |
Receivables from government authorities
represent amounts owed to the Company by 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.
Receivables from government authorities
are classified based on their expected period of utilization. If the receivables are expected to be utilized within twelve months from
the reporting date, they are classified as current assets. If the receivables are not expected to be utilized within twelve months from
the reporting date, they are classified as non-current assets.
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 maximise 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.
The Company has a policy of disposing
vehicles once it has crossed 120,000 kilometres in order to ensure that customer experience is maintained at a premium level. In addition,
the Company also disposes vehicles early if it has met with accident and is no more fit for use in the business once the insurance claims
are realized on these vehicles.
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 compare it with the
realisable value.
| viii. | 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.
The Company records stock-based compensation
expense for service-backed stock options over the requisite service period, which ranges from 6 months to 4 years.
For stock options 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. Stock options with graded vesting the fair-value-based measure is
estimated of the entire award by using a single weighted-average expected term. The Company estimates 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.
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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.
When the Company issues warrants,
it evaluates the proper 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
sheet at fair value with any changes in its fair value recognized currently in the condensed consolidated statement of operations.
During the year, the Company has issued
warrants along with Notes as defined in “Convertible Promissory notes and Senior Subordinated Convertible Promissory Note (SSCPN)”
policy and also as consideration to placement agents for the issuance of SSCPN which are classified as derivative instruments.
The Company also has preferred stocks
and common stocks warrants (as described below) issued during the year ended March 31, 2022 and are classified as liabilities and
equity respectively.
Each unit of Series E preferred
stock issued by the Company consists of one Series E preferred stock and a warrant which entitle the holder to purchase one share
of common stock of the Company on the satisfaction of certain conditions. Warrants are also issued to placement agencies of Series E
and Series E1. Warrants issued to placement agencies include the following two categories: a) warrants to purchase common stock
of the company; and b) warrants to purchase Series E and Series E1 shares.
Warrants to be converted into common
stock:
The Company’s warrants to purchase
common stock are classified as equity on the condensed consolidated balance sheets. Upon issuance of the warrant, the Company allocated
a portion of the proceeds from the sale of its preferred stock to the warrant based on the relative fair values of warrants and preferred
stock.
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Warrants to be converted into preferred stock:
The Company’s warrants to purchase
convertible preferred stock are classified as a liability on the condensed consolidated balance sheets and held at fair value because
the warrants are exercisable for contingently redeemable preferred stock, which is classified outside of stockholders’ deficits.
The warrant liability is subject to
re-measurement at each balance sheet date, and any change in fair value is recognized as a component of finance costs. The Company will
continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the warrants.
Warrants issued along with SSCPN:
The warrants issued along with the
SSCPN satisfy the definition of a derivative in accordance with ASC 815-10-15-83 since it contains an underlying, has payment provisions,
can be net settled and has a very minimal initial net investment. Accordingly, the derivatives are measured at fair value and subsequently
revalued at each reporting date.
| x. | Financial liabilities measured at
fair value |
Convertible Promissory notes and
Senior Subordinated Convertible Promissory Note (SSCPN)
On April 1, 2022, the Company
adopted Accounting Standards Update (“ASU”) 2020-06 that simplifies the accounting for convertible instruments. ASU 2020-06
(i) reduced the number of accounting models for convertible instruments, by eliminating the models that require separation of cash
conversion or beneficial conversion features from the host and (ii) revised the derivative scope exception and (iii) provided
targeted improvements for Earnings Per Share (“EPS”). The adoption of ASU 2020-06 did not have a material impact on the Company’s
outstanding convertible debt instruments as of April 1, 2022.
The Company has issued convertible
promissory notes and senior subordinated convertible promissory notes (“Notes”), it evaluates the balance sheet classification
to determine whether the instrument should be classified either as debt or equity, and whether the conversion feature should be accounted
for separately from the host instrument. According to ASC 480-10-25-14, the notes are classified as liabilities because the Company intends
to settle them by issuing variable number of shares with a fixed and known monetary value at the time of inception. The Company evaluates
the conversion feature of notes would be separated from the instrument and classified as a derivative liability if the conversion feature,
were it a standalone instrument, meets the definition of an “embedded derivative” in ASC 815, Derivatives and Hedging. However,
the Company has elected fair value option for all notes, as discussed below and thus does not bifurcate the embedded conversion feature.
Fair Value Option (“FVO”) Election
The Company accounts for Convertible
Promissory notes and Senior Subordinated Convertible Promissory Note and convertible promissory notes issued under the fair value option
election of ASC 825, Financial Instruments (“ASC-825”) as discussed below.
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The convertible promissory notes accounted
for under the FVO election are a debt host financial instruments containing conversion features which would otherwise be required to
be assessed for bifurcation from the debt-host and recognized as separate derivative liabilities subject to measurements under ASC 815.
Notwithstanding, ASC 825-10-15-4 provides for the “fair value option” (“FVO”) election, to the extent not otherwise
prohibited by ASC 825-10-15- 5, to be afforded to financial instruments, wherein bifurcation of an embedded derivative is not necessary,
and the financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated
fair value on a recurring basis at each reporting period date.
The estimated fair value adjustment,
as required by ASC 825-10-45-5, is recognized as a component of other comprehensive income (“OCI”) with respect to the portion
of the fair value adjustment attributed to a change in the instrument-specific credit risk, with the remaining amount of the fair value
adjustment recognized under Finance costs shown as “Change in fair value of convertible promissory note” and “Change
in fair value of senior subordinated convertible promissory note” in the accompanying condensed consolidated statement of operations.
With respect to the above convertible promissory notes, as provided for by ASC 825-10-50-30(b), the estimated fair value adjustment is
presented as a separate line item in the accompanying condensed consolidated statement of operations, since the change in fair value
of the convertible promissory notes payable was not attributable to instrument specific credit risk.
| xi. | Recent Accounting Pronouncements |
Accounting Pronouncement Adopted
In July 2023,
the FASB issued ASU 2023-03 - Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income
(Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic
718). The ASU amends or supersedes various SEC paragraphs within the Codification to conform to past SEC announcements and guidance issued
by the SEC. The ASU is effective immediately upon issuance and did not have a material impact on the Company’s condensed consolidated
financial statements.
Accounting Pronouncement Pending
Adoption
In March 2023, the FASB issued
ASU 2023-01 - Leases (Topic 842): Common Control Arrangements, which provides a practical expedient for certain companies to consider
the written terms and conditions to determine the existence of a lease and it's corresponding accounting and classification, if any.
The ASU also addresses the accounting for leasehold improvements associated with leases between companies of common control transactions
which is applicable to all entities. The ASU is effective for fiscal years beginning after December 15, 2023. Early adoption is
permitted for both interim and annual financial statements that have not yet been issued. The Company is currently evaluating the impact
of this ASU on its 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, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| 3 | Cash
and cash equivalents |
The
components of cash and cash equivalents were as follows:
(In
USD)
As at | |
September
30, 2023 | | |
March
31, 2023 | |
Balances in bank accounts | |
$ | 3,760,740 | | |
$ | 3,657,580 | |
Certificate to deposits | |
| 85,168 | | |
| 15,633 | |
Cash | |
| 635 | | |
| 13,528 | |
Cash and cash equivalents | |
| 3,846,543 | | |
| 3,686,741 | |
| 4 | Accounts
receivable, net of allowance for doubtful accounts |
The components
of accounts receivables were as follows:
(In USD)
As at | |
September 30, 2023 | | |
March 31, 2023 | |
Accounts receivable | |
$ | 217,345 | | |
$ | 255,175 | |
Net accounts receivable | |
| 217,345 | | |
| 255,175 | |
The Company records an allowance for credit losses for amounts owed for completed transactions that may never settle or be collected. For the year ended March 31, 2023 and six months ended September 30, 2023, no allowance was created for expected credit losses.
| 5 | Receivable from government authorities |
The components of receivable from government authorities were as follows:
(In USD)
As at | |
September 30, 2023 | | |
March 31, 2023 | |
Current | |
| | | |
| | |
Goods and service tax receivable | |
$ | 3,070,822 | | |
$ | 3,962,822 | |
| |
| 3,070,822 | | |
| 3,962,822 | |
| |
| | | |
| | |
Non current | |
| | | |
| | |
Goods and service tax receivable* | |
$ | 1,023,607 | | |
$ | 196,483 | |
Other tax receivables | |
| 17,936 | | |
| 51,838 | |
| |
| 1,041,543 | | |
| 248,321 | |
*These
taxes are contractually available to the Company immediately. However, the Company has determined the non-current amount based upon their
expected utilization of these available credits.
| 6 | Short term investments with related
parties |
The components of short term investments with related parties were as follows:
(In USD)
As at | |
September 30, 2023 | | |
March 31, 2023 | |
Certificate to deposits with related parties* | |
$ | 164,583 | | |
$ | 166,540 | |
Short term investments with related parties | |
| 164,583 | | |
| 166,540 | |
*These deposits are under lien against debt availed from related parties
| 7 (a) | Other current assets |
The components of other current assets were as follows:
(In USD)
As at | |
September 30, 2023 | | |
March 31, 2023 | |
Insurance claims receivable | |
$ | 24,722 | | |
$ | 23,677 | |
Advance to suppliers | |
| 59,586 | | |
| 88,115 | |
Security deposits | |
| 49,462 | | |
| 53,585 | |
Advance income taxes, net | |
| 144,622 | | |
| 174,654 | |
Advance to employees | |
| 109,981 | | |
| 87,679 | |
Receivables from car sale | |
| 537,289 | | |
| 578,523 | |
Other receivables | |
| 166,499 | | |
| 143,976 | |
Other current assets | |
| 1,092,161 | | |
| 1,150,209 | |
| 7 (b) | Other current assets with related
parties |
The components of other current assets with related parties were as follows:
(In USD)
As at | |
September 30, 2023 | | |
March 31, 2023 | |
Advance to director | |
$ | 46,089 | | |
$ | 19,682 | |
Other current assets with related parties | |
| 46,089 | | |
| 19,682 | |
(This space has been left intentionally blank)
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
8 Assets held for sale
The components of assets held for sale were as follows:
(In USD)
As at | |
September 30, 2023 | | |
March 31, 2023 | |
Vehicles | |
$ | 847,759 | | |
$ | 923,176 | |
Total assets held for sale | |
| 847,759 | | |
| 923,176 | |
Vehicles represent the vehicles held for sale
in Indian subsidiary, Zoomcar India Private Limited. The gain or loss on sale of these assets is included in Loss/ (gain) on sale of assets
held for sale under Other income of Condensed Consolidated Statement of Operations. During the six months ended September 30, 2023,
total loss of $36,110 (loss of $30,428 for the six months ended September 30, 2022) was recorded against Loss/ (gain) on sale of
vehicles held for sale. During the six months ended September 30, 2023, the Company has recorded the impairment amount of $Nil ($42,852
for the six months ended September 30, 2022) on vehicles held for sale. The same is adjusted with Loss/ (gain) on sale of assets
held for sale under Other income of Condensed Consolidated Statement of Operations.
9 Property and equipment, net
The components of property and equipment were as follows:
(In USD)
As at | |
Estimated useful life | |
September 30, 2023 | | |
March 31, 2023 | |
Devices | |
3 - 5 years | |
$ | 3,365,981 | | |
$ | 3,402,749 | |
Computer equipment's | |
2 - 7 years | |
| 749,117 | | |
| 873,178 | |
Office equipment's | |
3 - 10 years | |
| 248,160 | | |
| 452,489 | |
Furniture and fixtures | |
10 years | |
| 10,269 | | |
| 10,287 | |
Total, at cost | |
| |
| 4,373,527 | | |
| 4,738,703 | |
Less: Accumulated depreciation | |
| |
| (2,262,037 | ) | |
| (2,010,180 | ) |
| |
| |
| 2,111,490 | | |
| 2,728,523 | |
Right-of-use assets under finance leases: | |
| |
| | | |
| | |
| |
| |
| | | |
| | |
Vehicles, at cost | |
| |
$ | 4,130,169 | | |
$ | 4,179,272 | |
Accumulated depreciation | |
| |
| (4,130,169 | ) | |
| (4,179,272 | ) |
| |
| |
| - | | |
| - | |
Total property and equipment, net | |
| |
| 2,111,490 | | |
| 2,728,523 | |
Depreciation expense for the six months ended September 30, 2023
and September 30, 2022 was $510,608 and $277,127 respectively. Depreciation expense has been shown under cost of revenue amounting
to $419,370 ($204,024 for the six months ended September 30, 2022) for the six months ended September 30, 2023 and under General
and administrative expenses amounting to $91,238 ($73,103 for the six months ended September 30, 2022) for the six months ended September 30,
2023. Vehicles are pledged against debt from financial institutions.
There is no change in useful life of the assets during the period.
As of September 30, 2023 and March 31, 2023 , the Company
believes no impairment exists because the long-lived asset's future undiscounted net cash flows expected to be generated exceeds its carrying
value; however, there can be no assurances that long-lived assets will not be impaired in future periods.
(This space has been left intentionally blank)
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
10 Leases
The Company's lease primarily includes vehicles
and corporate offices which has 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)
Six months ended | |
September 30, 2023 | | |
September 30, 2022 | |
Finance lease cost: | |
| | | |
| | |
Amortization of right-of-use assets | |
$ | - | | |
$ | 3,123 | |
Interest on lease liabilities | |
| 316,481 | | |
| 434,049 | |
Operating lease cost | |
| 260,282 | | |
| 273,412 | |
Short term lease cost | |
| 79,673 | | |
| 60,750 | |
Total lease cost | |
| 656,436 | | |
| 771,334 | |
| |
September 30, 2023 | | |
March 31, 2023 | |
Maturities of lease liabilities are as follows: | |
Operating Leases | | |
Finance Leases | | |
Operating Leases | | |
Finance Leases | |
2024 | |
$ | 240,258 | | |
$ | 1,309,595 | | |
$ | 497,344 | | |
$ | 1,877,744 | |
2025 | |
| 457,525 | | |
| 2,078,417 | | |
| 471,185 | | |
| 2,103,127 | |
2026 | |
| 346,655 | | |
| 3,012,684 | | |
| 350,777 | | |
| 3,048,501 | |
2027 | |
| 363,508 | | |
| 664,370 | | |
| 367,830 | | |
| 672,269 | |
2028 | |
| 381,203 | | |
| - | | |
| 385,735 | | |
| - | |
Thereafter | |
| 399,783 | | |
| - | | |
| 404,536 | | |
| - | |
Total Lease Payments | |
| 2,188,932 | | |
| 7,065,066 | | |
| 2,477,407 | | |
| 7,701,641 | |
Less : Imputed Interest | |
| 607,594 | | |
| 1,016,411 | | |
| 725,982 | | |
| 1,345,957 | |
Total Lease Liabilities | |
$ | 1,581,338 | | |
$ | 6,048,655 | | |
$ | 1,751,425 | | |
$ | 6,355,684 | |
An amount of $364,671 and $369,007 which is receivable
from Leaseplan India Private Limited has been netted off with lease liability balance as on September 30, 2023 and March 31,
2023 respectively.
As of September 30, 2023, the Company continues to default on
EMI payments for August and September 2023, owed to Leaseplan India Private Limited (Lender). The outstanding balance as of
September 30, 2023 is $5,867,218. In adherence to the agreement, the Company has accumulated penal interest at a simple interest
rate of 1% per month on the overdue EMIs, amounting to $1,217 for the period six months ended September 30, 2023. If the overdue
amount remains unpaid after 60 days from the date of default, an additional simple interest of 1.5% per month is levied for the subsequent
30 days. Should the default persist beyond this extended period, it will be deemed a breach of the agreement, resulting in; a) entire
outstanding debt becoming due and payable, inclusive of all accrued interests, b) the lender can seek and cause compulsory re-possession
of all vehicles from Zoomcar which were financed from Lender, c) withdrawal of conditional waiver of USD 1.2 million (INR 10 crores) given
during restructuring and shall become immediately due and payable with interest of 1.5% per month.
The Company had subsequently made the EMI payment for the month of
August 2023. Refer note 32, Subsequent events.
(This space has been left intentionally blank)
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
11 Investments
The components of investments were as follows:
(In USD)
As at | |
September 30, 2023 | | |
March 31, 2023 | |
Long term investments | |
| | | |
| | |
Investments in fixed deposits* | |
$ | 216,713 | | |
$ | 158,455 | |
Investments in fixed deposits with related parties** | |
| 98,233 | | |
| 95,577 | |
| |
| 314,946 | | |
| 254,032 | |
Investments includes fixed deposits and interest accrued
on the same.
* includes a fixed deposit of $120,353 with IndusInd bank against which a bank guarantee has been given to Lease Plan India Private Limited for the vehicles taken on lease.
** these fixed deposits have a maturity of more than 12 months and hence have been considered under long term. However, these have been given under lien against debt availed from related parties.
12 Other non-current assets
The components of other non-current assets were as follows:
(In USD)
As at | |
September 30, 2023 | | |
March 31, 2023 | |
Security deposits | |
$ | 412,003 | | |
$ | 425,669 | |
Other non current assets | |
| 412,003 | | |
| 425,669 | |
13 Debt
The components of long term and short term debt were as follows:
(In USD)
As at | |
September 30, 2023 | | |
March 31, 2023 | |
Current | |
| | | |
| | |
Non-convertible debentures | |
| | | |
| | |
7.7% Debentures | |
$ | 411,487 | | |
$ | 454,969 | |
Term loans | |
| | | |
| | |
- from non-banking financial companies (NBFCs) | |
| 1,172,369 | | |
| 960,892 | |
- from related parties (NBFCs) | |
| 989,820 | | |
| 1,054,887 | |
| |
| 2,573,676 | | |
| 2,470,748 | |
Non current | |
| | | |
| | |
Term loans | |
| | | |
| | |
- from non-banking financial companies (NBFCs) | |
$ | 2,104,194 | | |
$ | 3,039,200 | |
| |
| 2,104,194 | | |
| 3,039,200 | |
Total maturity as of September 30, 2023 is as follows:
Year ending March 31, | |
| |
2024 (October 1, 2023 till March 31,
2024) | |
$ | 2,124,904 | |
2025 | |
| 819,633 | |
2026 | |
| 488,161 | |
2027 | |
| 903,819 | |
2028 | |
| 341,354 | |
| |
$ | 4,677,871 | |
Non-convertible debentures
The terms and conditions of the debentures
have remain unchanged since the year ended March 31, 2022. The debentures were to be fully repaid by July 2022 as per the restructured
terms agreed on May 2021. However, the Company has further taken an extension in May 2022 basis which these were fully repaid
on October 20, 2022. This change has been accounted for as a debt modification.
The Company has recorded an interest
expense amounting to $82,796 for the six months ended September 30, 2022.
Non-convertible debentures
The Company has recorded an interest expense amounting to
$22,086 and $36,569 for the six months ended September 30, 2023 and September 30, 2022.
The terms and conditions of the loans taken from NBFS's have
remain unchanged since the year ended March 31, 2023. The Company has recorded an interest expense amounting to $194,629 and $356,507
for the six months ended September 30, 2023 and September 30, 2022.
(This space has been left intentionally blank)
ZOOMCAR, INC.
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 14 | Convertible
promissory note ('Notes') |
The
following is a summary of the Company’s notes payable for which it elected the fair value option as of September 30, 2023 and March
31, 2023:
(In
USD)
| |
Fair
Value Outstanding | |
As at | |
September
30, 2023 | | |
March
31, 2023 | |
Notes | |
$ | 11,940,183 | | |
$ | 10,944,727 | |
Total | |
| 11,940,183 | | |
| 10,944,727 | |
As
of September 30, 2023 and March 31, 2023, the principal balance of the notes was $10,000,000. As of September 30, 2023 and March 31,
2023, the fair value of the notes is $11,940,183 and $10,944,727, respectively. The notes are recorded at fair value in the condensed
consolidated balance sheet.
For
the six months ended September 2023, the change in the fair value of Notes is $ 995,456. This change in fair value of Notes is recognised
in the condensed consolidated statement of operations. There is no portion of fair value adjustment that resulted from instrument-specific
credit risk.
The
terms of the Note have remained unchanged since the year ended March 31, 2023.
The
notes were accounted for at fair value with changes in fair value being recognized under ‘Change in fair value of convertible promissory
note’ within the Condensed Consolidated Statement of Operations. See Note 29, Fair value measurements.
| 15 | Senior
Subordinated Convertible Promissory Note ('SSCPN' or 'Convertible note') |
The
following is a summary of the Company’s convertible notes payable for which it elected the fair value option as of September 30,
2023 and March 31, 2023:
(In
USD)
| |
Fair
Value Outstanding | |
As at | |
September
30, 2023 | | |
March
31, 2023 | |
Convertible note | |
$ | 47,258,369 | | |
$ | 17,422,132 | |
Warrants issued against SSCPN | |
| 24,410,231 | | |
| 14,373,856 | |
Total | |
| 71,668,600 | | |
| 31,795,988 | |
|
The instrument issued by the
company was priced at a significant discount, considering the current market dynamics and the unique circumstances surrounding the
investors entering before the deSPAC (Special Purpose Acquisition Company) is completed. The decision to offer the instrument at
a discount was driven by the board's objective to de-risk the business and secure capital ahead of the deSPAC process. This approach
ensures that the Company can continue executing its planned strategies, considering the potential impact of factors beyond our direct
control on the SPAC timeline. By raising this capital, we aim to safeguard our ability to meet operational goals and maintain business
continuity throughout the deSPAC process. |
|
|
|
The term and conditions of the
SSCPN, warrants issued with SSCPNs and placement agent warrants remained unchanged since the year ended March 31, 2023. |
|
|
|
The Company had raised $8,109,954
during the year ended March 31, 2023 and $13,175,027 during the six months ended September 30, 2023 against issuance of SSCPN and
Warrants. The terms and conditions for the SSCPN and Warrants issued during the six months ended September 30, 2023 are similar to
those issued during the year ended March 31, 2023. The Company recorded the SSCPN and Warrants (issued with these SSCPNs and those
issued to Placement agent) at fair value amounting to $47,258,369 and $24,410,231 respectively, in the condensed consolidated balance
sheet. |
|
|
|
As of March 31, 2023, and September
30, 2023, the principal balances of the SSCPN were $8,109,954 and $21,284,982, respectively. The fair values of these SSCPNs were
$17,422,132 and $47,258,369 as of March 31, 2023, and September 30, 2023, respectively. Additionally, the fair value of the Warrant
was $14,373,856 and $24,410,231 as of March 31, 2023, and September 30, 2023, respectively. The SSCPN and Warrants are recorded at
fair value in the condensed consolidated balance sheet. |
|
|
|
For the six months ended September
30, 2023 and 2022, the change in the fair value of the SSCPN was $16,661,212 and $ NIL respectively, which was recognized in the
condensed consolidated statement of operations for their respective period. There is no portion of fair value adjustment that resulted
from instrument-specific credit risk. |
|
|
|
For the six months ended September
30, 2023 and 2022, the change in the fair value of the Warrant was $10,036,375 and $ NIL, respectively, which was recognized in the
condensed consolidated statement of operations for their respective period. There is no portion of fair value adjustment that resulted
from instrument-specific credit risk. |
(This
space has been left intentionally blank)
ZOOMCAR,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 16(a) | Other
current liabilities |
The components of other current liabilities were as follows:
(In
USD)
As at | |
September
30, 2023 | | |
March
31, 2023 | |
Payable to customers | |
$ | 597,174 | | |
$ | 647,283 | |
Statutory dues payable | |
| 1,523,439 | | |
| 1,583,639 | |
Capital creditors | |
| 32,142 | | |
| 88,484 | |
Employee benefit expenses payable | |
| 321,518 | | |
| 379,167 | |
Other liabilities | |
| 222,919 | | |
| 219,392 | |
Other current liabilities | |
| 2,697,192 | | |
| 2,917,965 | |
16(b) |
Other current liabilities towards
related parties |
(In USD)
As at | |
September
30, 2023 | | |
March
31, 2023 | |
Other liabilities with
related parties | |
$ | 18,019 | | |
$ | 15,067 | |
Other current liabilities towards
related parties | |
| 18,019 | | |
| 15,067 | |
| 17 | Accumulated
other comprehensive income/ (loss) |
The
components of accumulated other comprehensive income/(loss) were as follows:
(In
USD)
As at | |
September
30, 2023 | | |
March
31, 2023 | |
Gain on employee benefit | |
| | | |
| | |
Balance, beginning of period | |
$ | 115,818 | | |
$ | 88,735 | |
(Loss)/gain on employee benefit | |
| | | |
| | |
- Gratuity | |
| | | |
| | |
Recognised during the period, net of taxes amounts to
$ Nil | |
| (43,605 | ) | |
| 45,373 | |
Reclassification to net income:
Amortization losses/(gains) | |
| (10,609 | ) | |
| (18,290 | ) |
Balance, end of period | |
| 61,604 | | |
| 115,818 | |
| |
| | | |
| | |
Foreign currency translation adjustment | |
| | | |
| | |
Balance, beginning of period | |
$ | 1,712,181 | | |
$ | 680,421 | |
Translation adjustments (gain)/loss
recognised during the period, net of taxes amounts to $ Nil | |
| (14,080 | ) | |
| 1,031,760 | |
Balance, end of period | |
| 1,698,101 | | |
| 1,712,181 | |
Accumulated other comprehensive
income | |
| 1,759,705 | | |
| 1,827,999 | |
(This
space has been left intentionally blank)
ZOOMCAR,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Common
stock capital
The
Company's authorized common stock consists of 220,000,000 shares with par value of $0.0001 per share. Common stock is entitled to 1 vote
per share. The holders of the common stock are entitled to receive dividends out of available profits only when, (i) such dividends are
declared by the Board of Directors, and (ii) dividends are paid or declared and set aside for payment to the holders of preferred stock.
In the event of liquidation, dissolution, distribution of assets or winding up of the Company, the holders of common stock have right
to receive all the assets of the Company after the rights of the holders of the preferred stock, if any, have been satisfied.
There
has been no further issue of preferred stock and the term and conditions have remained unchanged since the year ended March 31, 2023.
Capital
stock outstanding is as follows:
| |
As
at September 30, 2023 | | |
As
at March 31, 2023 | |
Type | |
Authorized
shares | | |
Shares
issued | | |
Conversion
Ratio | | |
Net
carrying
value | | |
Liquidation
preference | | |
Authorized
shares | | |
Shares
issued | | |
Conversion
Ratio | | |
Net
carrying
value | | |
Liquidation
preference | |
Preferred Stock | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Series Seed | |
6,836,726 | | |
6,836,726 | | |
1.43 | | |
1,542,203 | | |
1,542,203 | | |
6,836,726 | | |
6,836,726 | | |
1.05 | | |
1,542,203 | | |
1,542,203 | |
Series A | |
11,379,405 | | |
11,379,405 | | |
2.02 | | |
9,288,872 | | |
9,288,872 | | |
11,379,405 | | |
11,379,405 | | |
1.24 | | |
9,288,872 | | |
9,288,872 | |
Series A2 | |
4,536,924 | | |
4,536,924 | | |
2.28 | | |
10,760,224 | | |
10,760,224 | | |
4,536,924 | | |
4,536,924 | | |
1.30 | | |
10,760,224 | | |
10,760,224 | |
Series B | |
18,393,332 | | |
18,393,332 | | |
2.28 | | |
31,416,488 | | |
31,416,488 | | |
18,393,332 | | |
18,393,332 | | |
1.30 | | |
31,416,488 | | |
31,416,488 | |
Series C | |
12,204,208 | | |
4,125,666 | | |
2.36 | | |
10,534,889 | | |
10,534,889 | | |
12,204,208 | | |
4,125,666 | | |
1.32 | | |
10,534,889 | | |
10,534,889 | |
Series D | |
21,786,721 | | |
19,016,963 | | |
2.34 | | |
34,894,262 | | |
34,894,262 | | |
21,786,721 | | |
19,016,963 | | |
1.32 | | |
34,894,262 | | |
34,894,262 | |
Series E | |
32,999,472 | | |
29,999,520 | | |
17.11 | | |
55,260,089 | | |
55,260,089 | | |
32,999,472 | | |
29,999,520 | | |
10.61 | | |
55,260,089 | | |
55,260,089 | |
Series E1 | |
32,000,000 | | |
5,020,879 | | |
23.96 | | |
15,277,410 | | |
15,277,410 | | |
32,000,000 | | |
5,020,879 | | |
14.85 | | |
15,277,410 | | |
15,277,410 | |
Total preferred stock | |
140,136,788 | | |
99,309,415 | | |
| | |
168,974,437 | | |
168,974,437 | | |
140,136,788 | | |
99,309,415 | | |
| | |
168,974,437 | | |
168,974,437 | |
Warrants to be converted into common stock:
There has been no further issue of warrants and the term and conditions have remained unchanged since the year ended March 31, 2023. The total outstanding warrants to be converted into common stock is 32,999,472 as at September 30, 2023 (32,999,472 as at March 31, 2023).
The
Company’s warrants to purchase common stock are classified as equity on the condensed consolidated balance sheets. Upon issuance
of the warrant, the Company allocated a portion of the proceeds from the sale of its preferred stock to the warrant based on the relative
fair values of warrants and preferred stock.
Warrants to be converted into preferred stock:
There has been no further issue of warrants and the terms and conditions have remained unchanged since the year ended March 31, 2023. The total outstanding warrants to be converted into preferred stock is 3,502,040 as at September 30, 2023 (3,502,040 as at March 31, 2023).
The
Company’s warrants to purchase convertible preferred stock are classified as a liability on the condensed consolidated balance
sheets and held at fair value because the warrants are exercisable for contingently redeemable preferred stock, which is classified outside
of stockholders’ deficits. The convertible preferred stock warrant liability is subject to remeasurement at the end of each reporting
period, and changes in the fair value of the warrant liability are reflected in other income and expense, net in the Company’s
condensed consolidated statement of operations. See Note 29, Fair value measurements.
| 19 (b) | Redeemable non-controlling interests |
Series P1 and P2 Preferred stock represents the minority preferred stockholders ownership in the Indian subsidiary of the Company which is classified as a redeemable non-controlling interest, because it is redeemable on a deemed liquidation event that is outside of its control. The redeemable non-controlling interest is not accreted to redemption value because it is currently not probable that the non-controlling interest will become redeemable.
There has been no further issue of preferred stock in Indian subsidiary and the term and conditions have remained unchanged since the year ended March 31, 2023.
The Company do not attribute the pro rata share of the Indian subsidiary’s loss to the redeemable non-controlling interests because these shares are entitled to a liquidation preference and therefore do not participate in losses that would cause their interest to be below the liquidation preference. Upon liquidation, these preferred stocks are entitled to the greater of either (i) the Original issue price for such series plus any dividend declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of such series been converted into common stock immediately prior to such liquidation, dissolution, winding up or deemed liquidation event.
(This space has been left intentionally blank)
ZOOMCAR, INC.
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The components of revenue, net were as follows:
(In USD)
Six months ended | |
September 30, 2023 | | |
September 30, 2022 | |
Income from rentals | |
| | | |
| | |
Self-drive rentals | |
$ | - | | |
$ | 255,785 | |
Revenues from services | |
| | | |
| | |
Facilitation revenue (net) | |
| 5,295,626 | | |
| 3,471,350 | |
Other revenues | |
| - | | |
| 84,514 | |
Total | |
| 5,295,626 | | |
| 3,811,649 | |
Revenue by geographical location | |
September 30, 2023 | | |
September 30, 2022 | |
India | |
$ | 5,223,818 | | |
$ | 3,700,183 | |
Egypt | |
| 50,391 | | |
| 64,487 | |
Indonesia | |
| 3,380 | | |
| 153 | |
Vietnam | |
| 18,037 | | |
| 46,826 | |
| |
| 5,295,626 | | |
| 3,811,649 | |
Contract balances
The
Company's contract liabilities for consideration collected prior to satisfying the performance obligations is $879,768 and $786,572 as
at September 30, 2023 and March 31, 2023 respectively. The Company has collected $786,912 as advance from customers during the six months
ended September 30, 2023.
The
Company offers loyalty program, Z-Points, that results in the deferral of revenue equivalent to the retail value at the date the points
are earned. The Company has deferred revenue amounting to $92,856 and $260,705 as at September 30, 2023 and March 31, 2023, respectively
in relation to Loyalty program.
Revenue
recognized during the six months ended September 30, 2023 and September 30, 2022 which was included in contract liabilities balance at
the beginning of the period is $362,920 and $92,492 respectively.
The components of finance costs were as follows:
(In
USD)
Six months ended | |
September 30, 2023 | | |
September 30, 2022 | |
Finance costs -other than related parties | |
| | | |
| | |
Interest on vehicle loans | |
$ | 190,938 | | |
$ | 410,075 | |
Interest on finance leases | |
| 316,481 | | |
| 434,049 | |
Interest on subcontractor liability | |
| 47,150 | | |
| - | |
Change in fair value of preferred stock warrant | |
| - | | |
| 630,367 | |
Change in fair value of convertible promissory note | |
| 995,456 | | |
| - | |
Change in fair value of senior subordinated convertible promissory notes | |
| 16,661,212 | | |
| - | |
Change in fair value of derivative financial instrument | |
| 10,036,375 | | |
| - | |
Note issue expenses | |
| 1,564,210 | | |
| - | |
Bank charges | |
| 23,930 | | |
| 34,866 | |
Other borrowings cost | |
| 48,605 | | |
| 56,900 | |
Total | |
| 29,884,357 | | |
| 1,566,257 | |
| |
| | | |
| | |
Finance costs -to related parties | |
| | | |
| | |
Interest on vehicle loans | |
$ | 25,777 | | |
$ | 68,407 | |
Total | |
| 25,777 | | |
| 68,407 | |
(This space has been left intentionally blank)
ZOOMCAR, INC.
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 22 | Other
(income) /expense, net |
The
components of other income (expense), net were as follows:
(In
USD)
Six
months ended | |
September
30, 2023 | | |
September
30, 2022 | |
Other (income) /expense, net - other
than related parties | |
| | | |
| | |
Interest income | |
$ | (20,387 | ) | |
$ | (10,584 | ) |
Change in fair value of preferred stock warrant | |
| (420,245 | ) | |
| - | |
Loss/(gain) on sale of assets | |
| 84,093 | | |
| - | |
Loss/ (gain) on sale of assets held for sale | |
| 1,385 | | |
| (1,470,582 | ) |
Net (gains)/ losses on foreign currency remeasurements | |
| 13,698 | | |
| (157,107 | ) |
Loss on assets written off | |
| 40,014 | | |
| - | |
Payable to customers written back | |
| (57,503 | ) | |
| (5,502 | ) |
Provision written back | |
| (113,827 | ) | |
| - | |
Other, net | |
| (49,944 | ) | |
| (16,401 | ) |
Total | |
| (522,716 | ) | |
| (1,660,176 | ) |
| |
| | | |
| | |
Other (income) - from related
parties |
Interest
income | |
$ | (5,676 | ) | |
$ | (9,729 | ) |
Total | |
| (5,676 | ) | |
| (9,729 | ) |
The
components of loss before income taxes consist of the following:
(In
USD)
Six
months ended | |
September
30, 2023 | | |
September
30, 2022 | |
Domestic | |
$ | (31,176,668 | ) | |
$ | (1,393,009 | ) |
Foreign | |
| (10,006,751 | ) | |
| (22,068,210 | ) |
Loss before income taxes | |
$ | (41,183,419 | ) | |
$ | (23,461,219 | ) |
The
Company has computed income tax expense/(benefit) for the six months ended September 30, 2023 and September 30, 2022 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
both the periods. Our effective tax rate was 0.00% and 0.00% for the six months ended September 30, 2023 and 2022, respectively. The
effective tax rate differs from the statutory tax rate of 21% for the six months ended September 30, 2023 and 2022, due to changes in
valuation allowance on the deferred tax assets.
The
Company 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 2022 tax returns.
As at September 30, 2023, tax returns for years ended March 31, 2020 and onward remain subject to
examination by tax authorities in India. There are other ongoing audits in various other jurisdictions that are not material to our financial
statements.
The
Company has received various orders from Indian tax authorities, for details refer note 31.
The
components of basic and diluted loss per share were as follows:
(In
USD, except loss per share)
Six
months ended | |
September
30, 2023 | | |
September
30, 2022 | |
Net loss available for common shareholders
(A) | |
$ | (41,183,419 | ) | |
$ | (23,461,219 | ) |
Weighted average outstanding shares of common stock
(B) | |
| 16,987,064 | | |
| 16,991,740 | |
Common stock and common stock equivalents
(C) | |
| 16,987,064 | | |
| 16,991,740 | |
Loss per share | |
| | | |
| | |
Basic (A/B) | |
$ | (2.42 | ) | |
$ | (1.38 | ) |
Diluted (A/C) | |
$ | (2.42 | ) | |
$ | (1.38 | ) |
ZOOMCAR, INC.
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Since
the Company is in a loss position for the six months ended September 30, 2023 and September 30, 2022 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, 2023
and September 30, 2022 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.
(In USD) | |
| |
| |
| |
As
at | |
September
30, 2023 | | |
September
30, 2022 | |
Convertible preferred stock | |
$ | 112,660,326 | | |
$ | 112,660,326 | |
Preferred stock warrants | |
| 36,501,508 | | |
| 36,501,508 | |
Stock options | |
| 360,690 | | |
| 2,246,663 | |
Senior subordinated convertible promissory note | |
| 69,609,903 | | |
| - | |
Derivative financial instruments | |
| 83,531,884 | | |
| - | |
Total | |
| 302,664,311 | | |
| 151,408,497 | |
| 25 | Employee benefit plans (unfunded) |
Employee
benefit plans includes gratuity and compensated absences payable to employees. These benefit plans consist 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 recognised in the condensed
consolidated balance sheet 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 it's components are as below:
Pension and other employee
obligations | |
| |
| |
| |
As
at | |
September
30, 2023 | | |
March
31, 2023 | |
Current | |
| | | |
| | |
Gratuity | |
$ | 80,698 | | |
$ | 70,872 | |
Compensated absences | |
| 89,759 | | |
| 75,134 | |
| |
| 170,457 | | |
| 146,006 | |
Non current | |
| | | |
| | |
Gratuity | |
| 266,949 | | |
| 215,841 | |
Compensated absences | |
| 276,904 | | |
| 222,967 | |
| |
| 543,853 | | |
| 438,808 | |
I. Gratuity | |
| |
| |
| |
For
six months | |
September
30, 2023 | | |
September
30, 2022 | |
Changes in projected benefit obligation
(PBO) | |
| | | |
| | |
PBO at the beginning of the year | |
$ | 286,713 | | |
$ | 341,726 | |
Service cost | |
| 50,109 | | |
| 50,945 | |
Interest cost | |
| 9,793 | | |
| 9,869 | |
Actuarial loss/ (gain) | |
| 43,605 | | |
| (28,150 | ) |
Benefits paid | |
| (38,677 | ) | |
| (69,624 | ) |
Effect of exchange rate changes | |
| (3,896 | ) | |
| (21,693 | ) |
PBO at the end of the period | |
| 347,647 | | |
| 283,073 | |
| |
| | | |
| | |
Accrued pension liability | |
| | | |
| | |
Current liability | |
$ | 80,698 | | |
$ | 74,670 | |
Non-current liability | |
| 266,949 | | |
| 208,403 | |
| |
| 347,647 | | |
| 283,073 | |
| |
| | | |
| | |
Accumulated benefit obligation | |
| 252,121 | | |
| 197,158 | |
Net gratuity cost recognized
in income statement | |
| |
| |
| |
Six
months ended | |
September
30, 2023 | | |
September
30, 2022 | |
Service cost | |
$ | 50,109 | | |
$ | 50,945 | |
Interest cost | |
| 9,793 | | |
| 9,869 | |
Amortization of net actuarial gains | |
| (10,609 | ) | |
| (9,360 | ) |
Net periodic
benefit cost | |
| 49,293 | | |
| 51,454 | |
Re-measurement losses/(gains)
in other comprehensive income | |
| |
| |
| |
Six
months ended | |
September
30, 2023 | | |
September
30, 2022 | |
Actuarial loss/(gain) | |
$ | 43,605 | | |
$ | (28,150 | ) |
Amortization gain | |
| (10,609 | ) | |
| (9,360 | ) |
Total | |
| 54,214 | | |
| (18,790 | ) |
ZOOMCAR, INC.
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Components of actuarial
gain: | |
| |
| |
| |
Six
months ended | |
September
30, 2023 | | |
September
30, 2022 | |
Actuarial loss/(gain) due to demographic
assumption changes in defined benefit obligation | |
$ | 748 | | |
$ | (2,895 | ) |
Actuarial gain due to financial assumption changes in
defined benefit obligation | |
| (5,535 | ) | |
| (7,757 | ) |
Actuarial loss/(gain) due to experience
on defined benefit obligation | |
| 48,392 | | |
| (17,498 | ) |
Total | |
| 43,605 | | |
| (28,150 | ) |
The assumptions
used in accounting for the gratuity plan are as follows:
Six
months ended | |
September
30, 2023 | | |
September
30, 2022 | |
Discount rate - staff | |
| 7.38 | % | |
| 7.51 | % |
Discount rate - independent service provider* | |
| 7.26 | % | |
| 7.18 | % |
Attrition rate - staff | |
| 36.47 | % | |
| 32.00 | % |
Attrition rate - independent service provider* | |
| 78.78 | % | |
| 91.80 | % |
Rate of increase in compensation levels - staff | |
| 12.19 | % | |
| 12.87 | % |
Rate of increase in compensation levels - independent
service provider* | |
| 11.43 | % | |
| 14.80 | % |
*Independent service
provider are contract employees responsible for maintaining the fleet of the Company.
During
the six months ended September 30, 2023 and September 30, 2022, 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, 2023 is as follows:
Year ending March 31, | |
| |
2024 (October 1, 2023 till March 31, 2024) | |
$ | 80,698 | |
2025 | |
| 45,962 | |
2026 | |
| 27,915 | |
2027 | |
| 22,347 | |
2028 | |
| 13,295 | |
Thereafter | |
| 157,430 | |
Total | |
| 347,647 | |
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 on the Balance Sheet date.
Net leave encashment
cost includes the following components | |
| |
| |
| |
Six
months ended | |
September
30, 2023 | | |
September
30, 2022 | |
Service cost | |
$ | 125,756 | | |
$ | 45,135 | |
Interest cost | |
| 10,412 | | |
| 6,483 | |
Recognized net actuarial (gains)/loss | |
| (34,540 | ) | |
| 75,193 | |
Net periodic benefit cost | |
| 101,628 | | |
| 126,811 | |
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 $218,823 for the six months ended September 30, 2023 and $373,395 for
the six months ended September 30, 2022.
(This
space has been left intentionally blank)
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
26 | Stock-based compensation expense |
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
settles employee stock-based options with newly issued common stock of the Company. As at September 30, 2023, the Company had 2,118,704
number of shares authorized for awards of options or other equity instruments.
The following tables summarizes total stock-based compensation
expense by function for the six months ended September 30, 2023 and September 30, 2022:
Six months ended | |
September 30, 2023 | | |
September 30, 2022 | |
Cost of revenue | |
$ | 83,035 | | |
$ | 514,063 | |
Technology and development | |
| 59,494 | | |
| 77,935 | |
Marketing expenses | |
| 5,453 | | |
| 187,437 | |
General and administrative expenses | |
| 469,923 | | |
| 1,859,897 | |
Total stock-based compensation expense | |
| 617,905 | | |
| 2,639,332 | |
The stock-based compensation expense is recorded in the
employee benefit cost and apportioned basis respective functions.
The fair
value of options granted is estimated on the date of grant using the Black-Scholes-Merton option-pricing model using the weighted average
assumptions. No grants were made during the six months ended September 30, 2023. The assumptions for the six months ended September 30,
2022 are as follows:
Six months ended | |
September 30, 2022 | |
Dividend yield | |
| 0.00% | |
Expected volatility | |
| 50.00 - 60.00% | |
Risk-free interest rate | |
| 2.64 - 2.81% | |
Exercise price | |
| $0.06 - $2.20 | |
Expected life (in years) | |
| 5.5 - 7 | |
Attrition rate | |
| 30.00% | |
The movement in number of stock-based options outstanding
and their related weighted average exercise price are as follows:
| |
Six months ended September 30, | |
| |
2023 | | |
2022 | |
| |
No. of options | | |
Weighted average
exercise price | | |
No. of options | | |
Weighted average
exercise price | |
Outstanding at the beginning of the six months | |
| 16,258,113 | | |
$ | 1.82 | | |
| 16,081,481 | | |
$ | 1.78 | |
Granted during the six months | |
| - | | |
| - | | |
| 1,873,500 | | |
| 2.20 | |
Forfeited during the six months | |
| (730,460 | ) | |
| 1.81 | | |
| (548,128 | ) | |
| 1.53 | |
Exercised during the six months | |
| - | | |
| - | | |
| - | | |
| - | |
Outstanding at the end of the six months | |
| 15,527,653 | | |
| 1.83 | | |
| 17,406,853 | | |
| 1.84 | |
| |
| | | |
| | | |
| | | |
| | |
Exercisable at the end of the six months | |
| 10,616,155 | | |
| 1.65 | | |
| 7,596,599 | | |
| 1.39 | |
Unvested at the end of the six months | |
| 4,911,498 | | |
| 2.20 | | |
| 9,810,254 | | |
| 2.19 | |
The weighted average grant date fair value of stock options granted
during the six months ended September 30, 2023 and September 30, 2022 were $ NIL and $0.80 per share, respectively.
Weighted average remaining life (in years) | |
Six months ended | |
Six months ended | |
September 30, 2023 | | |
September 30, 2022 | |
Vested options | |
| 6.50 | | |
| 6.74 | |
Unvested options | |
| 7.99 | | |
| 9.01 | |
The expected life of the stock is based on historical data
and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the
assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may
also not necessarily be the actual outcome.
The compensation cost of unvested awards not yet recognized
as of September 30, 2023, is $1,265,828 (September 30, 2022 : $4,350,327). The weighted average period over which stock-based compensation
expenses of non-vested awards not yet recognized is expected to be recognized is 0.96 years (September 30, 2022 : 1.42 years).
(This space has been left intentionally blank)
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
27 | Related Party Transactions |
Key managerial personnel (KMP) |
|
|
|
Gregory Bradford Moran |
Chief Executive Officer & Director |
|
|
Mahindra & Mahindra Limited |
Investor in Indian subsidiary |
|
|
Enterprises owned or significantly influenced by above |
|
Mahindra & Mahindra Financial Services Limited |
|
Mahindra First Choice Wheels Limited |
|
Related party transactions pertaining to loans, investments,
and other current liabilities have been stated on the face of the condensed consolidated balance sheet and condensed consolidated statement
of operations.
The Company had following
transactions with related parties:
Six months ended | |
September 30, 2023 | | |
September 30, 2022 | |
Interest expense | |
| | | |
| | |
Mahindra & Mahindra Financial Services Limited | |
$ | 25,777 | | |
$ | 68,407 | |
| |
| | | |
| | |
Interest income | |
| | | |
| | |
Mahindra & Mahindra Financial Services Limited | |
| 5,676 | | |
| 9,729 | |
| |
| | | |
| | |
Debt - principal repayment | |
| | | |
| | |
Mahindra & Mahindra Financial Services Limited | |
| 53,051 | | |
| 157,508 | |
| |
| | | |
| | |
Debt - foreclosure charges | |
| | | |
| | |
Mahindra & Mahindra Financial Services Limited | |
| 153 | | |
| 1,107,828 | |
| |
| | | |
| | |
Proceeds from sale of property and equipment | |
| | | |
| | |
Mahindra First Choice Wheels Ltd | |
| - | | |
| 3,665,386 | |
| |
| | | |
| | |
Legal Fees | |
| | | |
| | |
Mahindra First Choice Wheels (MH) | |
| - | | |
| 748 | |
| |
| | | |
| | |
Advance received for sale of property and equipment | |
| | | |
| | |
Mahindra First Choice Wheels Ltd | |
| - | | |
| 124,403 | |
| |
| | | |
| | |
Credit notes against sale of property and equipment | |
| | | |
| | |
Mahindra First Choice Wheels Ltd | |
| 3,155 | | |
| - | |
The
Company has the following outstanding balances with related parties:
As at | |
September 30, 2023 | | |
March 31, 2023 | |
Debt (non-current and current maturities) | |
| | | |
| | |
Mahindra & Mahindra Financial Services Limited | |
$ | 989,820 | | |
$ | 1,054,887 | |
| |
| | | |
| | |
Fixed deposits (including interest accrued) | |
| | | |
| | |
Mahindra & Mahindra Financial Services Limited | |
| 262,816 | | |
| 262,117 | |
| |
| | | |
| | |
Advance received for sale of property and equipment | |
| | | |
| | |
Mahindra First Choice Wheels Ltd | |
| 18,019 | | |
| 15,067 | |
| |
| | | |
| | |
Advance to director (net) | |
| | | |
| | |
Gregory Bradford Moran | |
| 46,089 | | |
| 19,682 | |
| |
| | | |
| | |
Payable to KMP | |
| | | |
| | |
Geiv Dubash | |
| 132 | | |
| - | |
(This space has been left intentionally blank)
ZOOMCAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
28 | 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, 2023 | | |
March 31, 2023 | |
Assets | |
| | | |
| | |
Cash and Cash equivalents | |
$ | 36,972 | | |
$ | 50,498 | |
Accounts receivable | |
| 7,457 | | |
| 100,691 | |
Other current assets | |
| 12,651 | | |
| 14,279 | |
Prepaid expenses | |
| 317 | | |
| 4,148 | |
Property and equipment, net | |
| 71,754 | | |
| 147,579 | |
Intangible assets, net | |
| 3,943 | | |
| 11,900 | |
Long term Investments | |
| 4,326 | | |
| 4,347 | |
Receivable from government authorities -non current | |
| 17,936 | | |
| 51,838 | |
| |
| | | |
| | |
| |
| | | |
| | |
Liabilities | |
| | | |
| | |
Accounts payable | |
$ | 404,788 | | |
$ | 417,884 | |
Contract Liabilities | |
| 3,994 | | |
| 11,912 | |
Current portion of pension and other employee obligations | |
| 2,307 | | |
| - | |
Other current liabilities | |
| 191,349 | | |
| 370,831 | |
Pension and other employee obligations, less current portion | |
| 4,068 | | |
| - | |
Total investment in the VIEs is as follows:
Name of the VIE entity | |
Place of incorporation | |
Nature of investment | |
Investor entity |
Zoomcar Egypt Car Rental LLC | |
Egypt | |
Debt | |
Zoomcar Netherlands Holding B.V |
Zoomcar Egypt Car Rental LLC | |
Egypt | |
Debt | |
Zoomcar Inc. |
Fleet Mobility Philippines Corporation * | |
Philippines | |
Debt | |
Zoomcar Inc. |
PT Zoomcar Indonesia Mobility Service *** | |
Indonesia | |
Equity | |
Fleet Holding Pte Ltd |
PT Zoomcar Indonesia Mobility Service *** | |
Indonesia | |
Debt | |
Zoomcar Inc. |
Zoomcar Vietnam Mobility LLC** | |
Vietnam | |
Debt | |
Fleet Holding Pte Ltd |
Zoomcar Vietnam Mobility LLC** | |
Vietnam | |
Debt | |
Zoomcar Inc. |
Zoomcar Vietnam Mobility LLC** | |
Vietnam | |
Equity | |
Fleet Holding Pte Ltd |
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 has filed for bankruptcy with the local authorities. In accordance with ASC 810-10-15-10, the Company consolidate the VIE
as the bankruptcy application is pending with the authorities in Vietnam and unless the application is admitted, the Company holds a variable
interest and still is the primary beneficiary. The assets/liabilities consolidated for the VIE are not material.
***As of March 31, 2022, Fleet
Holding Pte Ltd. was consolidated under VIE model as it did not have enough equity to finance its activities to operate the business.
During the year ended March 31, 2023, Fleet Holding Pte Ltd. has made equity investment in PT Zoomcar Indonesia Mobility Service, and
as a result, the entity has sufficient equity at risk to operate the business. Therefore, PT Zoomcar Indonesia Mobility Service has been
consolidated as a voting interest entity as at March 31, 2023 and September 30, 2023.
The VIEs included in condensed consolidated financial
statements are separate legal entities and their assets are legally owned by them and are not available to the Company's creditors or
creditors of 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.
Further, Zoomcar Netherlands Holding B.V has advanced
loan to Zoomcar Egypt Car Rental LLC. Accordingly, Zoomcar Netherlands Holding B.V is exposed to the credit risk of Zoomcar Egypt Car
Rental LLC.
ZOOMCAR, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 29 | 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, 2023 | | |
March 31, 2023 | |
Financial assets | |
| | | |
| | |
Cash and cash equivalents | |
$ | 4,011,126 | | |
$ | 3,853,281 | |
Accounts receivable | |
| 217,345 | | |
| 255,175 | |
Receivable from government authorities | |
| 4,112,365 | | |
| 4,211,143 | |
Long term investments | |
| 314,946 | | |
| 254,032 | |
Other financial assets | |
| 887,953 | | |
| 887,440 | |
Total assets | |
| 9,543,735 | | |
| 9,461,071 | |
Financial liabilities | |
| | | |
| | |
Accounts payable | |
$ | 6,552,234 | | |
$ | 6,547,978 | |
Debt | |
| 4,677,870 | | |
| 5,509,948 | |
Other financial liabilities | |
| 1,093,720 | | |
| 1,349,393 | |
Total liabilities | |
| 12,323,824 | | |
| 13,407,319 | |
The following tables present information about the Company’s
financial assets and liabilities measured at fair value on a recurring basis:
| |
September 30, 2023 | |
| |
Total Carrying
value | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
Assets: | |
| | |
| | |
| | |
| |
Assets held for sale | |
$ | 847,759 | | |
$ | - | | |
$ | 847,759 | | |
$ | - | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Preferred stock warrant liability | |
$ | 770,446 | | |
$ | - | | |
$ | - | | |
$ | 770,446 | |
Convertible promissory note | |
| 11,940,183 | | |
| - | | |
| - | | |
| 11,940,183 | |
Senior subordinated convertible promissory note | |
| 47,258,369 | | |
| - | | |
| - | | |
| 47,258,369 | |
Derivative financial instrument | |
| 24,410,231 | | |
| - | | |
| - | | |
| 24,410,231 | |
| |
March 31, 2023 | |
| |
Total Carrying
value | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
Assets: | |
| | |
| | |
| | |
| |
Assets held for sale | |
$ | 923,176 | | |
$ | - | | |
$ | 923,176 | | |
$ | - | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Preferred stock warrant liability | |
$ | 1,190,691 | | |
$ | - | | |
$ | - | | |
$ | 1,190,691 | |
Convertible promissory note | |
| 10,944,727 | | |
| - | | |
| - | | |
| 10,944,727 | |
Senior subordinated convertible promissory note | |
| 17,422,132 | | |
| - | | |
| - | | |
| 17,422,132 | |
Derivative financial instrument | |
| 14,373,856 | | |
| - | | |
| - | | |
| 14,373,856 | |
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, 2023 and March 31, 2023 consist
of Company’s convertible promissory note, senior subordinated convertible promissory note, preferred stock warrant liability and
derivative financial instrument.
The fair value of the warrant liability
is estimated using a Monte Carlo simulation model as the series and number of shares issued upon exercise is contingent upon the outcome
of multiple discrete scenarios. The fair value of the underlying shares used within the Monte Carlo simulation model was estimated using
an option pricing model to estimate the allocation of value to the various classes of securities of the Company. The significant unobservable
inputs into the valuation model include the expected warrant term, the fully-diluted stock value, and volatility. A significant increase
(decrease) in any of the unobservable inputs in isolation would result in a material increase (decrease) in the Company’s estimate
of fair value of the derivative financial instrument.
Warrant
The Company used the following assumptions for preferred
stock warrant liability and derivative financial instrument in the model:
| |
September 30, 2023 | | |
September 30, 2022 | |
Remaining term (years) | |
| 5.12 | | |
| 5.42 | |
Volatility1 | |
| 52% | | |
| 55% | |
Risk-free rate2 | |
| 4.60% | | |
| 4.10% | |
Estimated exercise price | |
| $0.15 - 5.2 | | |
| $2.5-3.5 | |
Calculated fair value per share | |
| $0.15 - 11.3 | | |
| $2.47 | |
1. Expected volatility is based upon the historical volatility of a peer group of publicly traded companies.
2. The risk-free rate for the expected term of the warrant is based on U.S. Treasury constant maturities yield at measurement date.
ZOOMCAR, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Convertible promissory notes
The Company measures its notes and SSCPN at fair value based on significant inputs not observable in the market, which caused them to be classified as Level 3 measurements within the fair value hierarchy. Changes in the fair value of the convertible promissory notes and securities related to updated assumptions and estimates were recognized as change in fair value of convertible promissory note within the condensed consolidated statements of operations and comprehensive loss. Changes in the fair value of senior subordinated convertible promissory note and securities related to updated assumptions and estimates were recognized as change in fair value of senior subordinated convertible promissory note within the condensed consolidated statements of operations and comprehensive loss.
The Company used the following assumptions for the six months ended September 30, 2023 in the model for valuation of:
| |
Convertible
promissory note | | |
Senior subordinated
convertible
promissory note | |
Remaining term (years) | |
| 0.25 | | |
| 0.11 | |
Volatility1 | |
| 30 | % | |
| 30 | % |
Risk-free rate2 | |
| 5.40 | % | |
| 5.40 | % |
Estimated conversion price | |
$ | 10 | | |
$ | 5.2 | |
Calculated fair value per share | |
$ | 11.3 | | |
$ | 11.3 | |
The changes in the fair value are summarized below:
1. Expected volatility is based upon the historical volatility of a peer group of publicly traded companies.
2. The risk-free rate for the expected term of the warrant is based on U.S. Treasury constant maturities yield at measurement date.
| |
Preferred stock
warrant liability | | |
Convertible
promissory note | | |
Senior subordinated
convertible
promissory note | | |
Derivative financial
instrument | |
Balance as of April 01, 2022 | |
$ | 1,610,938 | | |
$ | - | | |
$ | - | | |
$ | - | |
Change in fair value of convertible preferred stock warrant | |
| 630,366 | | |
| - | | |
| - | | |
| - | |
Balance as of September 30, 2022 | |
| 2,241,304 | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Balance as of April 01, 2023 | |
| 1,190,691 | | |
| 10,944,727 | | |
| 17,422,131 | | |
| 14,373,856 | |
Issue of senior subordinated convertible promissory note and warrants | |
| - | | |
| - | | |
| 13,175,026 | | |
| - | |
Change in fair value of convertible preferred stock warrant | |
| (420,245 | ) | |
| - | | |
| - | | |
| - | |
Change in fair value of convertible promissory note | |
| - | | |
| 995,456 | | |
| - | | |
| - | |
Change in fair value of SSCPN | |
| - | | |
| - | | |
| 16,661,212 | | |
| - | |
Change in fair value of derivative financial instrument | |
| - | | |
| - | | |
| - | | |
| 10,036,375 | |
Balance as of September 30, 2023 | |
| 770,446 | | |
| 11,940,183 | | |
| 47,258,369 | | |
| 24,410,231 | |
During the six months ended September 30, 2022 and September 30, 2023, there were no non-recurring fair value measure of assets or liabilities
subsequent to initial recognition.
| 30 | Derivative financial
instrument |
The warrants were issued to de-risk the business and secure capital ahead of the deSPAC process. This approach ensures that the Company can continue executing its planned strategies, considering the potential impact of factors beyond its direct control on the completion of deSPAC process.
The warrants are subject to equity price risk since the underlying for the instrument is the Company's common stock price.
The fair value of derivative liabilities as on September 30,
2023 and March 31, 2023 are as follows:
| |
September 30, 2023 | |
March 31, 2023 |
As at | |
Balance Sheet
Location | |
Fair Value | | |
Balance Sheet
Location | |
Fair Value | |
Derivatives not designated as hedging instruments under ASC 815-20 | |
| |
| |
| |
| | |
| |
| |
Warrants issued against SSCPN | |
Derivative financial instrument | |
$ | 20,341,859 | | |
Derivative financial instrument | |
$ | 11,978,213 | |
Warrants issued to Placement agent | |
| |
| 4,068,372 | | |
| |
| 2,395,643 | |
Total | |
| |
$ | 24,410,231 | | |
| |
$ | 14,373,856 | |
The changes in fair value of warrants
are being recognized under ‘Change in fair value of derivative financial instrument’ within the Condensed Consolidated Statement
of Operations. See Note 29, Fair value measurements. The Company classifies cash flows related to derivative liabilities as financing
activities in the Condensed Consolidated Statement of Cash Flows.
(This space has been left intentionally blank)
ZOOMCAR, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 31 | Commitments
and contingencies |
Contingencies
(A) Claims filed against the Company
by customers and third-parties not acknowledged as liability amounted to $4,854,413 and $4,639,473 as at September 30, 2023 and March 31,
2023, respectively. These claims have been made for personal injuries (customer and/or third parties) and 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. The Company has
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 these claims will be covered by the insurance. 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 from time to time from Indian indirect tax authorities.
The Company has received an order
disallowing input credit taken on certain vehicles purchased for the period from July 2017 to July 2019 amounting to $435,525
(March 31, 2023: $440,703).
The Company received a show cause notice for service tax liability on booking fees and penalty charges collected for the period October 2014 to July 2017 amounting to $4,451,824 (March 31, 2023: $4,504,751).
The Company has filed an appeal against the above orders before higher authority.
The Company has received demand notice for $34,224
from Indian indirect tax authorities for the period April 2017 to September 2017 due to disallowance input tax credit.
The
Company has received show cause notice from Indian indirect tax authorities disputing the goods and service tax input availed and the
rate of input availed amounting to $445,185 (March 31, 2023: $450,477).
The Company has filed submissions and is awaiting further
communication on the matter.
Based on the submissions provided to the authorities
and documents available no outflow is expected. Hence the Company has not created any provision as at September 30, 2023 and March 31,
2023 for the above matters.
(C) As at September 30,
2023, there are 5,928 bookings in progress. The Company bears the risk of loss or damage to the host vehicle with respect to such bookings.
The Company makes certain assumptions based on currently available information to estimate the trip protection reserves. A number of
factors can affect the actual cost of a claim, including the length of time the claim remains open and the results of any related litigation.
Furthermore, claims may emerge in future years for events that occurred in a prior year at a rate that differs from previous projections.
Trip protection reserves are continually reviewed and adjusted as necessary as experience develops or new information becomes known.
However, ultimate results may differ materially from the Company’s estimates, which could result in losses over the Company’s
reserved amounts. The Company has determined the trip protection reserves for such risk of loss to be immaterial for the purpose of this
condensed consolidated financial statements.
(A) In November 2023, the Company has paid the overdue EMI payment for August 2023 to Leaseplan India Private Limited. However, as of the December 13, 2023, the EMI for September 2023 remains outstanding.
The Company has evaluated subsequent events for potential recognition and/or disclosure from the balance sheets date through December 13, 2023, the date at which the Condensed Consolidated financial statements were available to be issued.
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