Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

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

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

Overview

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

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

Standard Booking Flow

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

●

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

●

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

Key Business Metrics

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

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

Booking Days

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

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

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

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

Gross Booking Value

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

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

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

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

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

Components of results of operations

Net revenue

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

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

Revenue from Services

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

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

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

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

Others

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

Cost of Revenue

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

Technology and Development

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

Sales and Marketing

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

General and Administrative

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

Finance Costs

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

Other (Income) and Expense, Net

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

Gain on troubled debt restructuring

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

Reversal of previously recognized gain on troubled debt restructuring

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

Results of Operations

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

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

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

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

Net Revenue

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

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

Costs and Expenses

Cost of Revenue

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

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

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

Technology and Development

		For the Three Months Ended Sep 30,																For the Six Months Ended Sep 30,
		2025				2024				Change				% Change				2025				2024				Change				% Change
Technology and development			730,090				734,920				(4,830	)			-1	%			1,439,421				1,636,701				(197,280	)			-12	%

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

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

Sales and Marketing

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

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

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

General and Administrative

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

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

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

Finance Costs

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

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

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

Gain on troubled debt restructuring

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

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

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

Other expense/(income), net

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

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

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

Non-GAAP Financial Measures

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

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

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

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

Contribution Profit (Loss) and Contribution Margin

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

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

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

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

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

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

Contribution Profit/(Loss)

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

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

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

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

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

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

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

●

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

●

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

●

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

●

Adjusted EBITDA excludes all finance charges.

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

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

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

Liquidity and Capital Resources

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

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

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

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

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

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

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

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

Financing Arrangements

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

Debentures and Other Borrowings from Financial Institutions

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

Issue of Common Stock

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

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

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

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

Issue of Unsecured Convertible Note

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

Issue of Redeemable Promissory Note

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

Private Placement of Equity

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

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

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

Bridge Note:

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

On July 31, 2025 , the Company entered into Securities Purchase Agreements with certain institutional accredited investors pursuant to which the Company issued Bridge notes for a total principal amount of $206,225 with an initial issue discount of $23,725. The net proceeds disbursed to the Company were $175,000 after deduction of legal and due diligence fees of $7,500. Hence, the total debt issuance costs amounts to $7,500.

Issue of Convertible Notes

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

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

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

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

Operating Activities

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

1.

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

2.

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

Investing Activities

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

Financing Activities

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

Contractual Obligations and Commitments

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

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

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

Borrowings

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

As at		Sep 30, 2025
Current
From Others
- Mahindra & Mahindra Financial Services Limited		$	366,920
- TATA Motors Finance Limited			1,558,355
- Kotak Mahindra Financial Services Limited			387,362
- Orix Leasing and Financial Services India LTD			6,253
- Clix Finance India Private Limited			69,053
- AON Risk Insurance Services West, Inc			-
		$	2,387,943
Total maturity for the year ending on September 30, 2026		$	2,387,943

Contingencies

(A)

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

(B)

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

(C)

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

(D)

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

(E)

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

(F)

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

Critical Accounting Policies and Estimates

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

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

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

Debt

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

Unsecured Notes

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

Convertible Notes

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

Issuance costs on Debt

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

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

Warrants

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

(a)

Warrants issued towards the November 2024 and December 2024 offering:

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

Subsequently, during the year ended March 31, 2025, the variability in number of warrants exercisable towards Series A and Series B of both the November 2024 and December 2024 offering was fixed in accordance with agreement. Hence, as per ASC 815-10, the outstanding Series A Series B warrants for both November 2024 and December 2024 offering have been reclassified to equity at the reclassification date fair value.

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

(b)

Warrants issued along with Redeemable Promissory Note:

During the year ended March 31, 2025, the Company issued warrants along with Redeemable Promissory Note and as consideration to the placement agent for the issuance of the Redeemable Promissory Note. These warrants were classified as equity in accordance with ASC 815-40 on the initial recognition.

Fair value measurements and financial instruments

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

	Level 1	Observable inputs such as quoted prices in active markets for identical assets or liabilities.
	Level 2	Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs other than the quoted prices that are observable either directly or indirectly for the full term of assets or liabilities.
	Level 3	Unobservable inputs in which there is little or no market data and that are significant to the fair value of the assets or liabilities.

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

Troubled debt restructuring

As per ASC 470-60 Troubled Debt Restructuring (TDR) refers to a situation where the creditor, grants concessions to a borrower experiencing financial difficulties. These concessions may include modifications to the terms of the payable, such as reducing the interest rate, extending the repayment period, or forgiving a portion of the payable. Such restructuring is done with the intent to provide relief to the borrower and to maximize the potential for payable recovery by the Company.

In accordance with ASC 470-60, when the total future cash payments under the new terms are less than the carrying amount of the payable at the date of restructuring, the difference between the carrying amount and the total future cash payments is recognized as a 'Gain on Troubled Debt Restructuring' in the Condensed Consolidated Financial Statements. This gain is recorded immediately in the period the restructuring occurs.

If the total future cash payments under the new terms exceed the carrying amount of the payable at the date of restructuring, no adjustment to the carrying amount of the payable is made. Instead, the company calculates a New Effective Interest Rate (EIR) based on the revised terms of the restructured payable. The debt is then amortized over the remaining life of the payable using the new EIR, with interest expense recognized based on this rate in future periods.