| Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies
(a) Basis of presentation The accompanying Condensed Consolidated
Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (US
GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. As
permitted under those rules, certain footnotes or other financial information that are normally required by US GAAP have been condensed
or omitted. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting
Standards Codification (“ASC”) and an Accounting Standards Update (“ASU”) of the Financial Accounting Standards
Board (“FASB”). The results of operations for the three and six months ended September 30, 2024, are not necessarily indicative
of the results for the fiscal year ending March 31, 2025, or any future interim period. These Condensed Consolidated Financial
Statements follow the same significant accounting policies as those included in the audited Consolidated Financial Statements of the Company
for the year ended March 31, 2024. In the opinion of management, these Condensed Consolidated Financial Statements reflect all adjustments,
consisting only of normal recurring adjustments, which are necessary for the fair statement of the Condensed Consolidated Financial position,
results of operations, and cash flows for these interim periods. The Condensed Consolidated Financial
Statements include the accounts of the Company and its wholly owned subsidiaries and variable interest entities in which the Company is
the primary beneficiary, including an entity in India and in other geographical locations. All intercompany accounts and transactions
have been eliminated in the Condensed Consolidated Financial Statements herein.
(b) Principles of consolidation The Condensed Consolidated Financial
Statements include the accounts of Zoomcar Holdings, Inc. and of its wholly owned subsidiaries and Variable Interest Entities (“VIE”)
in which the Company is the primary beneficiary, including an entity in India and in other geographical locations (collectively, the “Company”). The Company determines, at the inception
of each arrangement, whether an entity in which it has made an investment or in which it has other variable interest is considered a VIE.
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, 2024, following
are the list of subsidiaries and step-down subsidiaries: Name of Entity Place of Incorporation Investor Entity Method of consolidation Zoomcar, Inc. USA Zoomcar Holdings, Inc. Voting Interest Zoomcar India Private Limited India Zoomcar, Inc. Voting Interest Zoomcar Netherlands Holding B. V Netherlands Zoomcar, Inc. Voting Interest Fleet Holding Pte ltd Singapore Zoomcar, Inc. Voting Interest PT Zoomcar Indonesia Mobility Service Indonesia Fleet Holding Pte ltd Voting Interest Fleet Mobility Philippines Corporation Philippines Zoomcar, Inc. VIE Zoomcar Egypt Car Rental LLC Egypt Zoomcar Netherlands Holding VIE Zoomcar Vietnam Mobility LLC Vietnam Fleet Holding Pte ltd VIE 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 Holdings, 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 Holdings, 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 and step-down subsidiaries of Zoomcar Holdings, Inc. Through the direct and indirect interest
that Zoomcar Holdings, Inc. holds in the subsidiaries, Zoomcar Holdings, 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
Holdings, Inc. is the primary beneficiary to Zoomcar Egypt Car Rental LLC, Zoomcar Vietnam Mobility LLC and Fleet Mobility Philippines
Corporation under the VIE model. Zoomcar, Inc., Zoomcar India Private Limited, Zoomcar Netherlands Holding B.V, Fleet Holding Pte Ltd
and PT Zoomcar Indonesia Mobility Service 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. On May 30, 2024, PT Zoomcar Indonesia
Mobility Services has closed down its operations due to decrease in bookings and increased difficulties in carrying out the day-to-day
operations. Further, on June 3, 2024, Zoomcar Egypt Car Rental LLC has closed down its operations due to decrease in operations and rising
economic difficulties. The assets/liabilities consolidated
for the VIE are not material.
(c) 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. Fair value measurement of financial instruments
c. Fair value measurement of share-based payments
d. Leases – assumption to determine the incremental borrowing rate
e. Valuation allowance on deferred tax assets
f. Estimation of utilization of balances with government authorities
(d) Revenue recognition During the six months ended September
30, 2024 and September 30, 2023, the Company derives its revenue principally from the following: Facilitation revenue (“Host
services”) The Company launched its 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 towards the Host is to facilitate the successful completion of the rental
transaction and towards the renter is to offer trip protection. Customer support is rendered to both
the Host (customer/lessor) and the renter (lessee). Company being the intermediary between the two provides its platform through which
all communication takes place related to any services e.g., extension of trip period. Such services also include the normal customer support
related to any vehicle breakdowns, tracking of vehicles, renter background checks, vehicle ownership checks and various other activities
which are part of an ongoing set of series required for successful listing, renting and completion of trip. These activities are not distinct
from each other and are not separate performance obligations. As a result, these series of services integrate together to form a single
performance obligation. In case of booking value collected
from the renter on behalf of the Host, the Company 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 recognized ratably 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. The Company offers vehicle listing incentive programs to hosts. The
incentives are recorded in accordance with ASC 606- 10-32-25 and ASC 606-10-32-27 as a reduction to revenue and in cases where the amount
of incentive paid to the Host are above the facilitation fees earned from that Host on cumulative basis, the excess of the revenue amount
is recorded as a marketing expense in the Condensed Consolidated Statements of Operations. These incentives are offered as part of overall
marketing strategy of the Company and incentivize the hosts to refer the platform. No incentives were paid during the three and six months
ended September 30, 2024. Loyalty program The Company offers loyalty program,
Z-Points, wherein customers are eligible to earn loyalty points that are redeemable for payment towards facilitation fees. Under
ASC 606, each transaction that generates loyalty points results in the deferral of revenue equivalent to the retail value at the date
the points are earned. The associated revenue is recognized when the customer redeems the loyalty points 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, 2024 and March 31, 2024, the Company’s deferred revenue balance amounted to $20,467 and $96,710 respectively
and is included in Contract Liabilities in the Condensed Consolidated Balance Sheets. Contract Liabilities Contract Liabilities primarily consists
of obligations to customers for advance received against bookings, revenue-share payable to customers for vehicles listed by them on Company’s
portal for short-term rentals and related to Company’s points-based loyalty program. As per ASC 606- 10-50-14 the Company does not
aggregate the amount of transaction price allocated to remaining performance obligations as required under ASC 606-10-50-13, since the
company’s performance obligation is a part of a contract that has an original expected duration of one year or less.
(e) Accounts receivable, net of allowance Accounts receivables are stated net
of allowances and primarily represent corporate debtors and dues from payment gateways for amounts paid by customers. In case of corporate
debtors, the payment terms generally include a credit of 30-60 days. The amounts receivable from payment gateways are settled within 2
days. The Company records an allowance for
credit losses for amounts owed for completed transactions that may never settle or be collected. The Company estimates its exposure to
balances deemed to be uncollectible based on factors including known facts and circumstances, historical experience, and the age of the
uncollected balances. Accounts receivable balances are written off against the allowance of credit losses after all means of collection
has been exhausted and potential recovery is considered remote.
(f) Other receivables Other receivables include amounts
recoverable from host. The receivable from host is adjusted for an allowance on account of host who have not been active on the platform
for more than 90 days.
(g) Balances with government authorities – Input Tax Credit Balances with government authorities
represent the tax credit with government agencies which are recognized when the Company has performed the required services and when they
meet the eligibility criteria outlined in the applicable government regulations. The input tax credits are related
to Indian Goods and Service Tax (“GST”). These balances are classified based on their expected period of utilization of future
GST credit and GST debit that comes from domestic purchases and sales of services, respectively. If the tax credits are expected to be
utilized within twelve months from the reporting date, they are classified as current assets. If the tax credits are not expected to be
utilized within twelve months from the reporting date, they are classified as non-current assets.
(h) Assets held for sale The Company classifies vehicles to
be disposed of as held for sale in the period in which they are available for immediate sale in their present condition and the sale is
probable and expected to be completed within one year. The Company initially measures assets held for sale at the lower of their carrying
value or fair value less costs to sell and assesses their fair value annually until disposed. The fair value of Assets held for sale not
traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little
as possible on entity-specific estimates. If all significant inputs required to fair value an asset are observable, the Valuation is included
in Level 2. In case of certain vehicles which
are not sold within one year from date of classification, the Company reassess the carrying value of the assets to adjust it for the realizable
value.
(i) Stock-based compensation The Company accounts for stock-based
compensation expense in accordance with the fair value recognition and measurement provisions of US GAAP, which requires compensation
cost for grant-date fair value of stock-based awards to be recognized over the requisite service period. The Company includes a forfeiture
estimate in the amount of compensation expense being recognized based on the Company’s estimate of equity instruments that will
eventually vest. The fair value of stock-based awards, granted or modified, is determined on the grant date at fair value, using appropriate
valuation techniques. For 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 estimated the volatility of Common Stock on
the date of the grant based on weighted-average historical stock price volatility of comparable publicly traded companies in its industry
group. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant with a term equal to the expected term.
The Company estimates the term based on the simplified method for employee stock options considered to be “plain vanilla”
options as the Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate
the expected term. The expected dividend yield is 0.0% as the Company has not paid and does not anticipate paying dividend on its Common
Stock. The Company estimates a forfeiture
rate on an annual basis for the purpose of computation of stock-based compensation expense. In case of cancellation of stock-based
awards with no concurrent grant of a replacement award or other valuable consideration, any unrecognized compensation cost is recognized
immediately on the cancellation date.
(j) 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. Redeemable
Promissory Notes
During
the six months ended September 30, 2024, the Company has issued
Redeemable Promissory Notes which are repayable at the principal value on maturity date and has been accounted for under ASC 470-10. The
Company issued these Redeemable Promissory notes on discount and incurred expenses on issue of the Redeemable Promissory Notes. As per
ASC 835, the discount and the expenses incurred on issue of the Redeemable Promissory Notes have been amortized over the period of the
Redeemable Promissory note on a straight-line basis. The Redeemable Promissory Notes liabilities have been presented net off the discount
and issue expenses. Debt
Issuance costs Debt
issuance costs consist primarily of 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.
(k) 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 Statement of Operations.
(a) Warrants issued along with Redeemable Promissory Note: During the six months ended
September 30, 2024, the Company issued warrants along with Redeemable Promissory Note and as consideration to placement agents for the
issuance of the Redeemable Promissory Note. These warrants were
classified as equity in accordance with ASC 815-40 since all the conditions required for equity classification are met. Upon issuance
of the warrant, the Company had allocated a portion of the proceeds from the issuance of its Redeemable Promissory Note to the warrant
based on the relative fair values of warrants and Redeemable Promissory Note in accordance with ASC 820.
(b) Warrants issued along with SSCPN and to placement agent (‘Derivative financial instrument’): During the year ended March 31, 2024,
the Company issued warrants along with Senior Subordinated Convertible Promissory Note (“SSCPN)” and as consideration to placement
agents for the issuance of SSCPN. These warrants were deemed derivative
instruments in accordance with ASC 815-10-15-83 since they contained an underlying, had cash less payment provisions, that could have
been net settled in shares and had a very minimal initial net investment. Accordingly, the derivatives were measured at fair value and
subsequently revalued at each reporting date until the close of Reverse Recapitalization consummated during year ended March 31, 2024.
(c) Warrants issued to preferred stockholders: Before the date of reverse recapitalization,
the Company had warrants issued to preferred stockholders convertible into preferred stocks and Common Stocks which were issued during
the year ended March 31, 2022, and were classified as liabilities and equity respectively. Each unit of Series E preferred stock issued by the Company consisted
of one Series E preferred stock and a warrant which entitled the holder to purchase one share of Common Stock of the Company on the satisfaction
of certain conditions. Warrants were also issued to placement agencies of the Series E and Series E1 which included the following two
categories: a) warrants to purchase Common Stock of the company; and b) warrants to purchase Series E and Series E1 shares. Warrants to be converted
into Common Stock: The Company’s warrants to purchase
Common Stock were classified as equity. Upon issuance of the warrant, the Company had allocated a portion of the proceeds from the issuance
of its preferred stock to the warrant based on the relative fair values of warrants and preferred stock. Warrants to
be converted into preferred stock (“Preferred stock warrant liability”): The Company’s warrants to purchase
convertible preferred stock were classified as a liability and were held at fair value as the warrants were exercisable for contingently
redeemable preferred stock, which was classified outside of stockholders’ deficit. The warrant instruments classified
as liabilities were subject to re-measurement at each balance sheet date, and any change in fair value was recognized as a component of
finance costs. The Company continued to adjust the
liability classified warrant for changes in the fair value until the Reverse Recapitalization transaction at which time the warrants were
reclassified to additional paid-in-capital.
(l) Financial liabilities measured at fair value Convertible Promissory notes (“Notes”),
Senior Subordinated Convertible Promissory Note (“SSCPN”) and Unsecured Convertible Note (“Atalaya Note”) During the year ended March 31, 2024 the Company issued Notes and SSCPN.
The Company evaluated the balance sheet classification for these instruments either as liabilities or equity, and accounting for conversion
feature. As per ASC 480-10-25-14, the Notes and SSCPN were classified as liabilities because the Company intended to settle them by issuing
variable number of shares with a fixed and known monetary value at the time of inception. However, the Company had elected fair value
option for these Notes and SSCPN, as discussed below and thus did not bifurcate the embedded conversion feature. Fair Value Option (“FVO”)
Election The Company accounted for Notes and
SSCPN under the fair value option election of ASC 825, Financial Instruments (“ASC-825”) as discussed below. The Notes and SSCPN accounted under
the FVO election which were debt host financial instruments containing conversion features which otherwise would 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, was 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 Notes” and “Change in fair value of SSCPN”
in the accompanying Condensed Consolidated Statement of Operations. With respect to the above Notes and SSCPN, as provided for by ASC
825-10-50- 30(b), the estimated fair value adjustments were presented as a separate line item in the accompanying Condensed Consolidated
Statement of Operations, since the change in fair value of the Notes and SSCPN payable were not attributable to instrument specific credit
risk. During the year ended March 31, 2024,
as a result of consummation of the Business Combination by way of Reverse Recapitalization, the Notes and SSCPN outstanding were converted
into 59,757 shares (5,975,686 shares prior to the Reverse Stock Split) of the Company’s Common Stock. The SSCPN and Notes were adjusted
for their carrying value through Condensed Consolidated Statement of Operations as on date of Reverse Recapitalization and credited at
carrying value to the capital accounts upon conversion to reflect the stock issued. During the year ended March 31, 2024,
the Company issued an unsecured convertible note (“Atalaya Note) which had features similar to that of SSCPN and were accounted
accordingly as enumerated above.
(m) Net profit/(loss) per share attributable to Common Stockholders The Company computes net profit/(loss)
per share using the two-class method required for participating securities. The two-class method requires income available to Common Stockholders
for the period to be allocated between Common Stock and participating securities based upon their respective rights to receive dividends
as if all the income for the period had been distributed. The Company’s convertible preferred stock is participating security. The
holders of the convertible preferred stock would be entitled in preference to common shareholders, at specified rate, if declared. Then any remaining earnings would be
distributed to the holders of Common Stock and convertible preferred stock on a pro-rata basis assuming conversion of all convertible
preferred stock into Common Stock. This participating security do not contractually require the holders of such shares to participate
in the Company’s losses. As such, net losses for the periods presented were not allocated to the Company’s participating securities. The Company’s basic profit/(loss)
per share is computed using the weighted-average number of ordinary shares outstanding during the period. The diluted profit/(loss) per
share is computed by considering the impact of potential issuance of Common Stock on the weighted average number of shares outstanding
during the period, except where the results would be anti-dilutive.
(n) Provisions and accrued expenses A provision is recognized in the Condensed
Consolidated Balance Sheets when the Company has a present legal or constructive obligation as a result of a past event, and it is probable
that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are recognized at
present value by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value
of money. Provisions for onerous contracts are
recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the
future obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating
the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any
impairment loss on the assets associated with that contract. The Company does not have any onerous contracts.
(o) 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, 2024, the Company’s primary financial instruments included cash and cash equivalents, investments, accounts receivables, other
financial assets, accounts payable, debt, unsecured convertible note, redeemable promissory note and other financial liabilities. The
estimated fair value of cash equivalents, accounts receivable, accounts payable, redeemable promissory note and accrued liabilities approximate
their carrying value due to short-term maturities of these instruments.
(p) 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 forgivin | 2. Summary
of Significant Accounting Policies
i. Basis
of presentation The
accompanying 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”).
Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards
Codification (“ASC”) and an Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The
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 consolidated financial statements herein.
ii. Principles of consolidation The
consolidated financial statements include the accounts of Zoomcar Holdings, Inc. and of its wholly owned subsidiaries and Variable Interest
Entities (“VIE”) in which the Company is the primary beneficiary, including an entity in India and in other geographical
locations (collectively, the “Company”). The
Company determines, at the inception of each arrangement, whether an entity in which it has made an investment or in which it has other
variable interest is considered a VIE. 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 March 31, 2024, following are the list of subsidiaries and step-down subsidiaries: Name of Entity Place of Investor Entity Method of consolidation Zoomcar, Inc. USA Zoomcar Holdings, Inc. Voting Interest Zoomcar India Private Limited India Zoomcar, Inc. Voting Interest Zoomcar Netherlands Holding B. V Netherlands Zoomcar, Inc. Voting Interest Fleet Holding Pte Ltd Singapore Zoomcar, Inc. Voting Interest PT Zoomcar Indonesia Mobility Service Indonesia Fleet Holding Pte Ltd Voting Interest Fleet Mobility Philippines Corporation Philippines Zoomcar, Inc. VIE Zoomcar Egypt Car Rental LLC Egypt Zoomcar Netherlands Holding B.V VIE Zoomcar Vietnam Mobility LLC Vietnam Fleet Holding Pte Ltd VIE 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
Holdings, 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 Holdings, 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 and step-down subsidiaries of Zoomcar Holdings, Inc Through
the direct and indirect interest that Zoomcar Holdings, Inc. holds in the subsidiaries, Zoomcar Holdings, 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 Holdings, 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 33. The
assets/liabilities consolidated for the VIE are not material.
iii. Use
of estimates and assumptions The
use of estimates and assumptions as determined by management is required in the preparation of the 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 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 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 utilization of balances with government authorities
iv. Currency
translation The
consolidated financial statements are presented in US Dollars (“$”) which is the reporting currency of the Company. Monetary
assets and liabilities, and transactions denominated in currencies other than the functional currency are remeasured at the exchange
rate on the balance sheet date and nonmonetary assets and liabilities are measured at historical exchange rates. The gains and losses
resulting from remeasurement are recorded as foreign exchange gains (losses), within other income (expense), in the Consolidated Statement
of Operations. The
functional currency of the Company’s foreign subsidiaries is either the local currency or U.S. dollar depending on the nature of
the subsidiaries’ activities. The Company determines the functional currency for each of its foreign subsidiaries by reviewing
their operations and currencies used in their primary economic environments. Assets
and liabilities of the subsidiaries with functional currency other than U.S. Dollar are translated into U.S. Dollar at the rate of exchange
existing at the Balance Sheet date. Retained earnings and other equity items are translated at historical rates, revenues and expenses
are translated at average exchange rates during the year. Foreign currency translation adjustments are recorded within accumulated other
comprehensive income, a separate component of total equity (deficit).
v. Comprehensive
Income (Loss) Comprehensive
income (loss) consists of two components, net income (loss) and other comprehensive income (loss), net of tax. Other comprehensive income
(loss), net of tax, refers to revenue, expenses, gains, and losses that under generally accepted accounting principles are recorded as
an element of members’ equity but are excluded from net income (loss). The Company’s other comprehensive income (loss), net
of tax, consists of foreign currency translation adjustments that result from consolidation of its foreign entities and actuarial gain/
(loss) on defined benefit obligations.
vi. Revenue
recognition During
the year ended March 31, 2024 and 2023, the Company derives its revenue principally from the following: Facilitation
revenue (“Host services”) The
Company launched its 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 towards the Host is to facilitate
the successful completion of the rental transaction and towards 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 recognized ratably 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. 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
is recorded as a marketing expense in the 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. Self-drive
rentals Till
July 2022, Zoomcar operated a fleet of rental vehicles comprising of both vehicles owned by them and vehicles leased from third-party
leasing companies. The Company either leased or subleased vehicles to its customers as a result, the Company had considered itself to
be the accounting lessor or sublessor, as applicable, in these arrangements in accordance with ASC 842. Rental
revenues were 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 had the ability to control that asset in accordance with ASC 842. Transaction price
charged by the Company was as per agreed rates between the Company and the customer. In the 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 were recognized on a gross basis in the
consolidated financial statements. Rental
periods are generally short-term in nature and are classified as operating leases. The
Company collects taxes assessed by a governmental authority inclusive in its rentals and remits the same to the authority. Accordingly,
such amounts are not included as a component of revenue. 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 March 31, 2024 and March
31, 2023, the Company’s deferred revenue balance amounted to $96,710 and $260,705 respectively. Contract
liabilities Contract
liabilities primarily consists of obligations to customers for advance received against bookings, revenue-share payable to customers
for vehicles listed by them on Company’s portal for short-term rentals and related to Company’s points-based loyalty program.
vii. Cash
and cash equivalents Cash
and cash equivalents include cash on hand, bank balances. Cash and cash equivalents are recorded at cost, which approximates fair value. Cash
and cash equivalents include amounts collected on behalf of but not yet remitted to the Hosts which are included in accrued and other
current liabilities in the consolidated financial statements.
viii. Accounts
receivable, net of allowance Accounts
receivables are stated net of allowances and primarily represent corporate debtors and dues from payment gateways for amounts paid by
customers. In case of corporate debtors, the payment terms generally include a credit of 30-60 days. The amounts receivable from payment
gateways are settled within 2 days. The
Company records an allowance for credit losses for amounts owed for completed transactions that may never settle or be collected. The
Company estimates its exposure to balances deemed to be uncollectible based on factors including known facts and circumstances, historical
experience, and the age of the uncollected balances. Accounts receivable balances are written off against the allowance of credit losses
after all means of collection has been exhausted and potential recovery is considered remote.
ix. Other
receivables Other
receivables include amounts recoverable from host. The receivable from host is adjusted for an allowance on account of host which are
not active on the platform for more than 90 days.
x. Balances
with government authorities – Input Tax Credit Balances
with government authorities represent the tax credit with government agencies which are recognized when the Company has performed the
required services and when they meet the eligibility criteria outlined in the applicable government regulations. The
input tax credits are related to Indian Goods and Service Tax (“GST”). These balances are classified based on their expected
period of utilization of future GST credit and GST debit that comes from domestic purchases and sales of services, respectively. If the
tax credits are expected to be utilized within twelve months from the reporting date, they are classified as current assets. If the tax
credits are not expected to be utilized within twelve months from the reporting date, they are classified as non-current assets.
xi. Concentration
of credit risk Cash
and cash equivalents, investments, other receivables, and accounts receivable are potentially subject to credit risk concentration. The
Company has not experienced any material losses related to these concentrations during the years presented. No customers accounted for
10% or more of revenue for the years ended March 31, 2024 and 2023.
xii. Property
and equipment, net Property
and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method
over the estimated useful lives. The
devices installed on host vehicles in the marketplace business have been depreciated over 5 years with a residual value of 0 -30%. When
assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the Consolidated Balance Sheet and
any resulting gain or loss is reflected on the Consolidated Statement of Operations in the period realized.
xiii. Assets
held for sale The
Company classifies vehicles to be disposed of as held for sale in the period in which they are available for immediate sale in their
present condition and the sale is probable and expected to be completed within one year. The Company initially measures assets held for
sale at the lower of their carrying value or fair value less costs to sell and assesses their fair value annually until disposed. The
fair value of Assets held for sale not traded in an active market is determined using valuation techniques which maximize the use of
observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value
an asset are observable, the Valuation is included in Level 2. The
Company has a policy of disposing vehicles once it has crossed 120,000 kilometers (approx. 75,000 miles) 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 adjust it for the realizable value.
xiv. Impairment Long-lived
assets such as property and equipment, right-of-use assets and intangible assets that are held and used by the Company are reviewed for
impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The Company
monitors the long-lived assets for impairment indicators on an on-going basis. If impairment indicators exist, the Company determines
the recoverability of the asset by comparing the undiscounted cash flows expected to be generated from the use and eventual disposition
the long-lived asset groups to the related net book values. If the net book value of the asset group exceeds the undiscounted cash flows,
an impairment loss is recognized as the difference between the carrying value of the asset and its estimated fair value. The
Company estimate cash flows and fair value using internal budgets based on recent sales data and economic uncertainties. The key factors
that affect estimates are (1) future revenue estimates; (2) customer preferences and decisions; and (3) product pricing. Any differences
in actual results from the estimates could result in fair values different from the estimated fair values, which could materially affect
our future results of operations and financial condition. The Company believes the projections of anticipated future cash flows and fair
value assumptions are reasonable; however, changes in assumptions underlying these estimates could affect its valuations.
xv. Leases The
Company has made a policy election not to separate non-lease components from lease components, therefore, it accounts for lease and non-lease
components as a single lease component. The Company has also elected the short-term lease recognition exemption for all leases that qualify. As
a lessee The
Company determines if a contract contains a lease at the inception of the arrangement based on whether it has the right to obtain substantially
all of the economic benefits from the use of an identified asset and whether it has the right to direct the use of an identified asset
in exchange for consideration, which relates to an asset which the Company does not own. If
any of the following criteria are met, the Company classifies the lease as a financing lease (as a lessee) or as a direct financing or
sales-type lease (both as a lessor):
● The
lease transfers ownership of the underlying asset to the lessee by the end of the lease term;
● The
lease grants the lessee an option to purchase the underlying asset that the Company is reasonably
certain to exercise;
● The lease term is for 75% or more of the remaining economic life of the underlying asset, unless the commencement date falls within the last 25% of the economic life of the underlying asset;
● The present value of the sum of the lease payments equals or exceeds 90% of the fair value of the underlying asset; or
● The
underlying asset is of such a specialized nature that it is expected to have no alternative
use to the lessor at the end of the lease term Leases
that do not meet any of the above criteria are accounted for as operating leases. Right
of use (“ROU”) assets and lease liabilities are recognized at the commencement date based on the present value of the lease
payments over the lease term. Lease liabilities represent the present value of lease payments not yet paid and ROU assets represent the
Company’s right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued
lease payments, initial direct costs, lease incentives, and impairment of lease assets, if any. Lease
payments may be fixed or variable; however, only fixed payments or in-substance fixed payments are included in the Company’s lease
liability calculation. Variable lease payments are recognized in operating expenses in the period in which the obligation for those payments
is incurred. The
interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate (“IBR”),
because the interest rate implicit in most of the Company’s leases is not readily determinable. The IBR is obtained from financial
institutions based on the understanding of the Company’s credit rating and resulting interest rate the Company would have to pay
to borrow an amount equal to the lease payments in a similar economic environment over the lease term on a collateralized basis. The
lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective
interest method) and by reducing the carrying amount to reflect the lease payments made. The
Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
- The
lease term has changed or there is a significant event or change in circumstances resulting
in a change in the assessment of exercise of a purchase option, in which case the lease liability
is remeasured by discounting the revised lease payments using a revised discount rate.
- A
lease contract is modified, and the lease modification is not accounted for as a separate
lease, in which case the lease liability is remeasured based on the lease term of the modified
lease by discounting the revised lease payments using a revised discount rate at the effective
date of the modification. The
Company recognizes the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. However, if the
carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability,
any remaining amount is recognized as a gain on modification in the Consolidated Statement of Operations. Certain
lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities
includes these options when it is reasonably certain that they will be exercised. For
operating leases, lease expense is recognized on a straight-line basis in operations over the lease term. For finance leases, amortization
is recorded on a straight-line basis over the lease term and interest using the effective interest method. As
a Lessor In
the year ended March 31, 2023, the Company’s lease arrangements included vehicle rentals to its ultimate customers. Certain lease
arrangements included the options to extend or terminate the lease before the end of the lease term. Due to the short-term nature of
these arrangements, the Company classified these leases as operating leases. The Company did not separate lease and non-lease components
in its lessor lease arrangements. Lease payments were primarily fixed and were recognized as revenue in the period over which the lease
arrangement occurs. There are no such lease arrangements in the year ended March 31, 2024.
xvi. Investments Investments
in fixed deposits consist of term deposits with original maturities of more than three months with banks. These are designated as financial
assets at amortized cost.
xvii. Expenses Cost
of revenue Cost
of revenue expenses primarily consist of personnel-related compensation costs of local operations teams and teams who provide phone,
email and chat support to users, repairs and maintenance expenses of vehicles, vehicle site rentals, devices depreciation, power, software
support charges, payment gateway charges and other direct expenses. Technology
and development Technology
and development expenses primarily consist of personnel-related compensation costs and information technology and data science expenses.
Technology and development costs are expensed as incurred. Sales
and marketing Sales
and marketing expenses primarily consist of personnel-related compensation costs, advertising expenses and marketing partnerships with
third parties. Sales and marketing costs are expensed as incurred. Advertising expenses incurred for the year ended March 31, 2024 amounts
to $4,479,219 (March 31, 2023: $3,329,731). General
and administrative General
and administrative expenses primarily consist of personnel-related compensation costs, professional services fees, administrative fees,
depreciation, facility costs, and other corporate costs. General and administrative expenses are expensed as incurred. Finance
costs Finance
costs comprises interest cost on debt, transaction costs, fair value changes in financial instruments, SSCPN issue expenses, and interest
expense on lease liabilities. Borrowing costs and interest on leases are recognized in the Consolidated Statement of Operations using
the effective interest method.
xviii. Employee
benefits Defined
benefit plan Employees
in India are entitled to a defined benefit retirement plan covering eligible employees of the Company. The plan provides for a lump-sum
payment to eligible employees, at retirement, death, and incapacitation or on termination of employment, of an amount based on the respective
employees’ salary and tenure of employment. The Company’s benefit plan is unfunded. Management
makes certain assumptions relating to discount rates, salary growth, retirement rates, mortality rates and other factors when calculating
annual amounts to be recognized. These assumptions are reviewed annually by management, assisted by the enrolled actuary, and updated
as warranted. Amortization
of a net gain or loss included in accumulated other comprehensive income shall be included as a component of net pension cost for a year
if, as of the beginning of the year, that net gain or loss exceeds 10 percent of the greater of the projected benefit obligation or the
market- related value of plan assets. If amortization is required, the minimum amortization shall be that excess divided by the average
remaining service period of active employees expected to receive benefits under the plan. Prior service cost is amortized on a straight-line
basis from the date recognized over the average remaining service period of active participants, when applicable. Compensated
absences The
Company’s liability for compensated absences is determined based on an actuarial valuation using the projected unit credit method
and is charged to Consolidated Statement of Operations in the year in which they accrue. Defined
contribution plan Eligible
employees of the Company in India participate in a defined contribution fund in accordance with the regulatory requirements in the Indian
jurisdiction. Both the employee and the Company contribute an equal amount to the fund which is equal to a specified percentage of the
employee’s salary. The
Company has no further obligation under defined contribution plans beyond the contributions made under these plans. Contributions are
charged to profit or loss and are included in the Consolidated Statement of Operations in the year and/or period in which they accrue.
xix. Stock-based
compensation The
Company accounts for stock-based compensation expense in accordance with the fair value recognition and measurement provisions of US
GAAP, which requires compensation cost for grant-date fair value of stock-based awards to be recognized over the requisite service period.
The Company includes a forfeiture estimate in the amount of compensation expense being recognized based on the Company’s estimate
of equity instruments that will eventually vest. The fair value of stock-based awards, granted or modified, is determined on the grant
date at fair value, using appropriate valuation techniques. For 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 estimated the volatility of common stock on the date of the grant based on weighted-average
historical stock price volatility of com |
