{"url_path":"/sec/zcar/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A Risk Factors**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-07-14","source_url":"https://www.sec.gov/Archives/edgar/data/1854275/0001213900-26-078029-index.html","accession_number":"0001213900-26-078029","cik":"0001854275","ticker":"ZCAR","issuer_name":"Zoomcar Holdings, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1854275/0001213900-26-078029-index.html","primary_entity_key":"0001854275","primary_entity_name":"Zoomcar Holdings, Inc."},"word_count":40077,"has_tables":true,"body_markdown":"**Item\n1A. Risk Factors**\n\n \n\n*An\ninvestment in our securities involves a high degree of risk. You should carefully consider the risks described below before making an\ninvestment decision. Our business, prospects, financial condition or operating results could be harmed by any of these risks, as well\nas other risks not currently known to us or that we currently consider immaterial. The trading price of our securities could decline\ndue to any of these risks, and, as a result, you may lose all or part of your investment.*\n\n* *\n\n*In\nthe course of conducting our business operations, we are exposed to a variety of risks. Any of the risk factors we describe below have\naffected or could materially adversely affect our business, financial condition and results of operations. The market price of our securities\ncould decline, possibly significantly or permanently, if one or more of these risks and uncertainties occurs. Certain statements in “Risk\nFactors” are forward-looking statements. See “Special Note Regarding Forward-Looking Statements.”*\n\n** **\n\n**Risk\nFactors Summary**\n\n** **\n\nOur\nbusiness is subject to numerous risks and uncertainties, including those highlighted in the section entitled “*Risk Factors*”\nimmediately following this risk factors summary, that represent challenges that we face in connection with the successful implementation\nof our strategy and the growth of our business. *Our business, prospects, financial condition or operating results could be harmed\nby any of these risks, as well as other risks not currently known to us or that we currently consider immaterial.*In particular,\nthe following considerations, among others, may offset our competitive strengths or have a negative effect on our business strategy,\nwhich could cause a decline in the price of shares of our Common Stock or Public Warrants and result in a loss of all or a portion of\nyour investment.\n\n \n\n*Any\nof the risk factors we describe below have affected or could materially adversely affect our business, financial condition and results\nof operations. The market price of our securities could decline, possibly significantly or permanently, if one or more of these risks\nand uncertainties occurs*:\n\n \n\n \n●\nWe\nhave a history of operating losses and negative cash flow, we have limited cash resources, we will need to raise funds imminently\nto finance operations and as a result there is substantial doubt about our ability to continue as a going concern;\n\n \n \n \n\n \n●\nOur\nCommon Stock is quoted on an OTC Markets Group trading platform, the OTCQB, instead of a national exchange or quotation system. Accordingly, our\ninvestors may experience significant volatility in the market price of our Common Stock and have difficulty selling their shares.\n\n \n\n \n●\nBecause\nour Common Stock is quoted on the OTCQB and not listed on an exchange, U.S. broker-dealers may be discouraged from effecting transactions\nin shares of our Common Stock because it may be considered a penny stock and thus be subject to the penny stock rules.\n\n \n\n \n●\nFailure\nto comply with the continued qualification standards within, and any removal from OTCQB could materially and adversely affect the\nliquidity and market price of our common stock and our access to capital.\n\n \n \n \n\n \n●\nOur\ncurrent business model’s limited operating history and financial results make our future results, prospects, and the risks\nwe may encounter difficult to predict.\n\n \n\n \n●\nIn\naddition to our defaults under current indebtedness described elsewhere here, certain of our debt financing arrangements are currently\nin default and we have delayed certain other payments to lenders, which may restrict our current and future business and operations; \n\n \n \n \n\n \n●\nWe\nrequire additional capital to support current operations and will require additional capital to support the growth of our business,\nwhich may not be available on terms acceptable to us, or at all. \n\n \n \n \n\n \n●\nFuture\nsales of our securities may affect the market price of the Common Stock and result in material dilution, including the anti-dilution\nprotection in the warrants issued in 2024. We are also in default of various outstanding debt obligations, including under the Notes\nissued to ACM, and may issue shares of Common Stock or other securities to satisfy those obligations in the future (in the case of\nACM, subject to receipt of shareholder approval). The issuance of shares of Common Stock or other securities in the future and the\nshares issued during the Tender Offer, the preferred stock issued in the Bridge Financing 2026 or any other future financing will\ndilute your percentage ownership interest and may also result in downward pressure on the price of our Common Stock.\n\n \n\n24\n\n \n\n \n●\nOur\noperating and financial forecasts are subject to various known and unknown contingencies and factors outside of our control and may\nnot prove accurate, and we may not achieve results consistent with management’s expectations;\n\n \n\n \n●\nWe have issued a significant number of warrants and exercise of these securities and the sale of the shares of Common Stock issuable thereunder (along with the issuance of any similar securities in the future,) will dilute your percentage ownership interest and may also result in downward pressure on the price of our Common Stock.\n\n \n \n \n\n \n●\nOur pending warrant exchange offer may not be completed and could fail to achieve its intended reduction in warrant overhang.  \n\n \n \n \n\n  \n●\nThe warrant exchange offer and recent bridge financings will result in substantial dilution and do not provide significant cash proceeds.  \n\n \n \n \n\n \n●\nWe have relied on short-term and bridge financings with dilutive or restrictive terms and may be unable to raise additional capital.\n\n \n\n \n●\nThe\nmarket for online platforms for peer-to-peer car sharing is relatively new and rapidly evolving. If we fail to successfully adapt\nto developments in our market, or if peer-to-peer car sharing online platforms do not achieve general acceptance, it could adversely\naffect our business, financial condition and operating results*.*;\n\n \n\n \n●\nIf\nwe do not retain existing Hosts, or attract and maintain new Hosts, or if Hosts fail to provide an adequate supply of high-quality\nvehicles, our business, financial condition, and results of operations may be negatively impacted;\n\n \n \n \n\n \n●\nIf\nwe fail to retain existing Guests, or attract and maintain new Guests, our business, financial condition, and results of operations\nmay be negatively impacted;\n\n \n \n \n\n \n●\nIf\nwe are unable to introduce new or upgraded platform features that Hosts or Guests recognize as valuable, we may fail to retain and\nattract such users to our platform and our operating results would be adversely affected;\n\n \n \n \n\n \n●\nOur\nsuccess depends upon our ability to maintain favorable customer reviews and ratings, and if our reputation suffers, our business,\nfinancial condition and operating results may be adversely affected\n\n \n\n \n●\nMaintaining\nand enhancing our brand and reputation is critical to our business prospects. While we have taken significant steps to build and\nimprove our brand and reputation, failure to maintain or enhance our brand and reputation will cause our business to suffer;\n\n \n \n \n\n \n●\nBreaches\nand other types of security incidents of our networks or systems similar to the recent Cybersecurity Incident, or those of our third-party\nservice providers, could negatively impact our business, our brand and reputation, our ability to retain existing Hosts and Guests\nand attract new Hosts and Guests, may cause us to incur significant liabilities and adversely affect our business, results of operations,\nfinancial condition, and future prospects\n\n \n\n \n●\nOur\nbusiness depends on attracting and retaining capable management, technology development and operating personnel;\n\n \n\n \n●\nWe\nmay be exposed to risk if we cannot enhance, maintain, and adhere to our internal controls and procedures;\n\n \n\n \n●\nWe are obligated to develop and maintain proper and effective internal control over financial reporting. If we are unable to develop and maintain an effective system of internal controls and procedures required by Section 404 of the Sarbanes-Oxley Act, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our stock price, business and operating results.\n\n \n\n \n●\nGeographic\nareas in which Zoomcar operates and plans to operate in the future have been and may continue to be subject to political and economic\ninstability\n\n \n\n \n●\nWe\nmay incur liability for the activities of Hosts or Guests which could harm our reputation, increase our operating costs, and adversely\naffect our business, financial condition and operating results; \n\n \n\n \n●\nOur\nbusiness operations may result in losses for which we are not insured;\n\n \n\n \n●\nMembers\nof our management team have limited or no prior experience managing a public company;\n\n \n\n \n●\nAs\na public company, we have incurred and expect to continue to incur increased expenses associated with the costs of being a public\ncompany.\n\n \n\n \n●\nWe\nare the subject of litigation and may not have the ability or the cash to successfully defend such litigation that has been and may\nin the future be brought against us;\n\n \n\n25\n\n \n\n \n●\nWe\nare an “emerging growth company” within the meaning of the Securities Act, and, if we take advantage of certain exemptions\nfrom disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors;\n\n \n\n \n●\nFuture\nsales, or the perception of future sales, by us or our stockholders in the public market could cause the market price for the Common\nStock to decline;\n\n \n \n \n\n \n●\nThe\nrequirements of being a public company may strain our resources, divert our management’s attention and affect our ability to\nattract and retain qualified independent board members.\n\n \n\n \n●\nUncertain\nglobal macro-economic and political conditions could materially adversely affect our results of operations and financial condition;\nand\n\n \n\n \n●\nNatural\ndisasters, including and not limited to unusual weather conditions, epidemic outbreaks, terrorist acts and political events could\ndisrupt our business schedule.\n\n** **\n\n**Risks\nrelated to our Financial Condition**\n\n \n\n**We\nhave a history of operating losses and negative cash flow, we have limited cash resources, we will need to raise additional funds imminently\nto finance operations and as a result there is substantial doubt about our ability to continue as a going concern.** \n\n** **\n\nWe\nhave a history of operating losses and expect to continue incurring operating losses in the foreseeable future as we continue to develop\nour current business model and enhance our platform offerings. We also have indebtedness that is in default in excess of our current\ncapital resources (see “*Management’s Discussion and Analysis of Financial Condition and Results of Operations –\nLiquidity and Capital Resources”* in this Annual Report on Form 10-K for the year ended March 31, 2026)*.*On June 18,\n2024, the Company entered into a securities purchase agreement with certain institutional accredited investors (the “June Aegis\nSecurities Purchase Agreement”) pursuant to which the Company issued and sold an aggregate of $3,600,000 in principal amount of\nnotes (the “June Notes”) and warrants to purchase up to an aggregate of 1,267,728 shares of Common Stock (which takes into\naccount an adjustment following the Company’s Share Combination Event that was effective on October 22, 2024, but not reflecting\nthe Reverse Stock Splits) (the “June Warrants”) for gross proceeds of $3,000,000.\n\n \n\nAdditionally,\non November 7, 2024, the Company closed the November 7 Placement for gross proceeds of $9.15 million (including $2.5 million of which\nwas provided by one of the Company’s directors) (before deduction of fees to the placement agent and other offering expenses payable\nby the Company). The Placement Agent in this Offering acted as exclusive placement agent in the November 7 Placement. At closing of the\nNovember 7 Placement, the Company issued an aggregate of 2,137,850 units at a price of $4.28 per unit, each unit consisting of one share\nof Common Stock (or pre-funded warrant in lieu thereof), two November Series A Warrants (as hereinafter defined) each to purchase one\nshare of Common Stock and a November Series B Warrant (as hereinafter defined) to purchase such number of shares of Common Stock, as\ndetermined on the November Reset Date, which does not reflect the Second Reverse Split. As a result of the November 7 Placement, the\nCompany received $3.62 million of cash and cash equivalents after giving effect to offering fees and expenses, the payment of $3.8 million\nto the holders of the Company’s June 2024 notes and a holdback of $0.2 million for indemnification of the Placement Agent as described\nin more detail herein.\n\n \n\nFurther,\non December 24, 2024, the Company held the First Closing of this Offering for gross proceeds of $5,484,843 (including $50,000 of which\nwas provided by the Company’s former Chief Executive Officer i.e. Hiroshi Nishijima and $300,000 of which was provided by a consultant\nto the Company) (before deduction of fees to the placement agent and other offering expenses payable by the Company). The Placement Agent\nin this Offering acted as exclusive placement agent at the First Closing. At the First Closing, the Company issued an aggregate of (i)\n3,095,925 shares of Common Stock, which does not reflect the Second Reverse Split (ii) Pre-Funded Warrants issued to certain of the investors,\nat their option, exercisable for an aggregate of up to 420,000 shares of Common Stock, which does not reflect the Second Reverse Split,\nto the extent that the issuance of shares of Common Stock would cause such Investors to beneficially own more than 4.99% or 9.99% of\nthe shares of Common Stock outstanding. Also issued along with the shares of Common Stock and/or the Pre-Funded Warrants were (x) Series\nA Warrants to initially purchase up to an aggregate of 8,680,443 shares of Common Stock, which does not reflect the Second Reverse Split,\nsubject to certain adjustments and (y) Series B Warrants to initially purchase no shares of Common Stock, subject to certain adjustments\nas provided in the Series B Warrants. As a result of the First Closing, the Company received $4,786,963 of cash and cash equivalents\nafter giving effect to offering fees and expenses.\n\n \n\nFurther,\non February 4, 2025, the Company held the Second Closing of this Offering for gross proceeds of $1,437,936 (before deduction of fees\nto the Placement Agent and other offering expenses payable by the Company). The Placement Agent in this Offering acted as exclusive placement\nagent at the Second Closing. At the Second Closing, the Company issued an aggregate of (i) 1,049,796 shares of Common Stock, which\ndoes not reflect the Second Reverse Split (ii) Pre-Funded Warrants issued to certain of the investors, at their option, exercisable for\nan aggregate of up to 872,000 shares of Common Stock, which does not reflect the Second Reverse Split, to the extent that the issuance\nof shares of Common Stock would cause such Investors to beneficially own more than 4.99% or 9.99% of the shares of Common Stock outstanding.\nAlso issued along with the shares of Common Stock and/or the Pre-Funded Warrants were (x) Series A Warrants to initially purchase up\nto an aggregate of 4,804,491 shares of Common Stock, which does not reflect the Second Reverse Split, subject to certain adjustments\nand (y) Series B Warrants to initially purchase no shares of Common Stock, subject to certain adjustments as provided in the Series B\nWarrants. As a result of the Second Closing, the Company received $1,249,911 of cash and cash equivalents after giving effect to offering\nfees and expenses.\n\n \n\n26\n\n \n\nOn\nMarch 31, 2025, the Company further entered into a securities purchase agreement, substantially in the same form as the December 2024\nSPA and the January 2025 SPA with certain additional accredited investors in connection with the third closing of the Offering (the “Third\nClosing”). The Company did not receive any cash proceeds in the Third Closing. The securities were issued to the investors either\n(i) as consideration for waiving certain rights that such investors may have had in connection with a most favored nations provision\nincluded in the transaction documents for a prior financing of Zoomcar, Inc. or (ii) to settle outstanding amounts owed by the Company\nto its Placement Agent and the Legal Counsels. Pursuant to the terms and conditions of the Securities Purchase Agreement, the Company\nissued to such investors an aggregate of $15,639,099 of securities consisting of 501,318 shares of common stock of the Company, par value\n$0.0001 per share (the Common Stock). The Company along with the Common Stock issued (i) Series A Warrants to purchase up to an aggregate\nof 6,706,192 shares of Common Stock at an exercise price of $6.24 per share, which takes into account a “share combination event”\nadjustment effective following the issuance of such warrants as a result of the Reverse Split (the “Series A Warrants”) and\n(ii) Series B Warrants to purchase initially no shares of Common Stock and then up to a maximum of 2,004,955 shares of Common Stock subject\nto certain adjustments, at an initial exercise price of $0.002.\n\n \n\nOn\nJune 24, 2025, the Company issued a bridge note to certain investors totaling $402,000 at a discount of $42,000. The note is repayable\nin five monthly installments beginning November 30, 2025, and maturing on March 31, 2026, with interest accruing at 12% per annum\non the outstanding principal. The Company received net proceeds of $350,000 after adjusting deduction of legal and due diligence\nfees 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\nnotes which is directly attributable to the loan raised, thereby bringing the total debt issuance costs to $55,500. The repayment obligations\nunder these notes have been fully discharged as of the date of filing of this Form 10-K.\n\n \n\nOn\nJuly 31, 2025 , the Company entered into Securities Purchase Agreements with certain institutional accredited investors pursuant to which\nthe Company issued Bridge notes for a total principal amount of $206,225 with an initial issue discount of $23,725. The net proceeds\ndisbursed to the Company were $175,000 after deduction of legal and due diligence fees of $7,500. The repayment obligations under these\nnotes have been fully discharged as of the date of filing of this Form 10-K.\n\n \n\nOn\nAugust 19, 2025, the Company closed a Securities Purchase Agreement (“Labrys SPA”) with Labrys Fund II, L.P. (“Labrys”)\npursuant to which it issued a promissory note totaling $180,000 at a discount of $18,000. The note is repayable in 12 months maturing\non August 19, 2026 with interest accruing at 12 % per annum on the outstanding principal. The Company received net proceeds of $158,500\nafter adjusting deduction of legal and due diligence fees of $3,500.\n\n \n\nOn\nAugust 24, 2025, the Company issued a convertible note to AES Capital Management, LLC(“AES”) totaling $112,500 through 2\nconvertible notes of $75,000, and $37,500 respectively (“AES Notes”). The note amounting $75,000 is the “Primary Note”\nand the subsequent note of $37,500 is the “Secondary Note”. The AES Notes are repayable in 12 months from their respective\nclosing dates with interest accruing at 8% per annum on the outstanding principal. As of date of filing of this 10-Q, the Company received\nnet proceeds of $ 71,000 after adjusting deduction of legal and due diligence fees of $4,000 from the issuance and closing of the Primary\nNotes.\n\n \n\nOn\nAugust 24, 2025, the Company issued a convertible note to CFI CAPITAL LLC (“CFI”) totaling $150,000 at a discount of $15,000\n(“CFI Note”). The CFI Note is repayable in 12 months maturing on August 24, 2026 with interest accruing at 6 % per annum\non the outstanding principal. The Company received net proceeds of $130,000 after adjusting legal cost of $5000.\n\n \n\nOn\nNovember 28, 2025, we closed two Securities Purchase Agreements with DLL and Boot for convertible bridge notes in original principal\namounts of $152,550.00 and $56,500.00, respectively. The notes bear interest at 12% per annum, are due September 30, 2026, include installment\nrepayment features and may be prepaid at a discount, but are subject to default interest of 22% per annum and customary events of default\nand covenants.\n\n \n\nOn December 10, 2025, we\nentered into a Securities Purchase Agreement with FirstFire Global Opportunities Fund, LLC, (“FirstFire”) and issued a convertible\nredeemable note in a principal amount of $220,000 with an original issue discount of $20,000. The note bears interest at 12% per annum,\nmatures 12 months after issuance, is subject to a default penalty that increases the principal amount by 50% and includes customary events\nof default and covenants. We received net proceeds of approximately $200,000 after fees. Refer to Exhibits 10.60, 10.61 and 10.62 which\nare incorporated here by reference for terms of the FirstFire Note.\n\n \n\nOn\nDecember 24, 2025, we entered into a Securities Purchase Agreement with AUCTUS FUND, LLC, (“Auctus”) and issued a promissory\nnote for a principal amount of $125,000 with an original issue discount of $12,500 (“Auctus Note”). The note bears interest\nat 10% per annum with a guaranteed interest at issuance. It matures 12 months after issuance, is subject to a default interest of an\nadditional 8% per annum and includes customary events of default and covenants. It is convertible after the later of (a) 180 days from\nissuance and (b) upon an event of default under the Auctus Note. We received net proceeds of approximately $100,000 after fees.\n\n \n\nOn\nJanuary 8, 2026 we entered into a Securities Purchase Agreement with Quick Capital LLC (“Quick Capital”) and issued a convertible\nnote for principal amount of $42,613.64 with an original discount of $5,113.64 (“Quick Capital Note”). The Quick Capital\nNote bears interest at 12% per annum with a guaranteed interest at issuance, matures 6 months after issuance, and is subject to default\ninterest of 22% per annum and includes customary events of default and covenants. It is convertible anytime or upon default and has piggyback\nregistration rights. We received net proceeds of approximately $35,000 after fees. The repayment obligations under the Quick Capital\nNote have been fully discharged as of the date of filing of this Form 10-K.\n\n \n\n27\n\n \n\n“February Notes”\n(DLL & Boot): On February 25, 2026, we closed two Securities Purchase Agreements with DLL and Boot for convertible promissory notes\nin original principal amounts of $180,800.00 and $84,750.00, respectively. Similar to the June and July 2025 Bridge Notes, in the event\nof defaults, the note holders may convert the outstanding amount (includes principal, accrued interest, default interest, and other fees\nas applicable) into the Company’s Common stock at a conversion price equal to 75% of the lowest closing bid price of the Company’s\nCommon stock during the 10 trading days immediately prior to the applicable conversion date. Refer to Exhibits 10.58 and 10.59 which are\nincorporated here by reference for terms of these Notes.\n\n \n\nOn\nApril 5, 2026 the Company issued a Promissory Note to Walsh Industries (“Walsh industries”) for principal amount of $100,000\n(“Walsh Note”). In addition to the repayment obligation the Company is also required to issue $50,000 worth of Convertible\nPreferred Stock and additionally, upon occurrence of event of default i.e. non repayment of the Walsh Note, shall further entitle the\nWalsh Industries to seek $50,000 worth of Convertible Preferred Stock as Penalty Shares. While the repayment obligations have been discharged\nwith delays, the Company is yet to issue the Preferred Stock worth $100,000 (including the Penalty Shares) is pending issuance at the\ndate of filing of this Form 10-K.\n\n \n\nOn\nApril 23, 2026 the Company issued a Promissory Note to Sod Sciences Inc.(“Sod Sciences”) for principal amount of $22,500.00\n(“Sod Sciences April Note”). In addition to the repayment obligation the Company is also required to issue $100,000 worth\nof Convertible Preferred Stock and additionally, upon occurrence of event of default i.e. non repayment of the Sod Sciences April Note,\nshall further entitle the Sod to seek $100,000 worth of Convertible Preferred Stock as Penalty Shares.\n\n \n\nOn\nMay 5, 2026 the Company issued another Promissory Note to Sod Sciences Inc.(“Sod Sciences”) for principal amount of $43,845.70\n(“Sod Sciences May Note”). In addition to the repayment obligation the Company is also required to issue $241,200 worth of\nConvertible Preferred Stock and additionally, upon occurrence of event of default i.e. non repayment of the Sod Sciences May Note, shall\nfurther entitle the Sod to seek $241,200 worth of Convertible Preferred Stock as Penalty Shares.\n\n \n\nOn\nJune 04, 2026, we closed a Securities Purchase Agreement with DLL for convertible promissory note in original principal amount of $180,800.00.\nSimilar to the June and July 2025 Bridge Notes, in the event of defaults, the note holders may convert the outstanding amount (includes\nprincipal, accrued interest, default interest, and other fees as applicable) into the Company’s Common stock at a conversion price\nequal to 75% of the lowest closing bid price of the Company’s Common stock during the 10 trading days immediately prior to the\napplicable conversion date.\n\n \n\nOn\nJune 22, 2026, the Company entered into a Promissory Note for Provision of Services with Heskin & Proper PLLC (“Heskin Note”)\nfor a total services amount of $180,000.00. The note consists of a current amount of $33,000.00, which includes a $30,000.00 obligation\nfor legal services previously rendered plus a $3,000.00 original issue discount, due on or before November 30, 2026. Additionally, the\nnote accounts for future services valued at up to $150,000.00, which, subject to Board approval and definitive agreements, are to be\nsatisfied through the issuance of Preferred Stock within its ongoing Bridge Financing 2026.\n\n \n\nOn July 2, 2026, Zoomcar Holdings, Inc. issued a convertible promissory\nnote to Silvercrest Hybrid Capital LLC (“Silvercrest”) in original principal amount of $120,000 (the “Silvercrest Note”).\nThe original issue discount was $12,000, resulting in net proceeds of $100,000 after deduction of legal and due diligence fee. At the\noption of the holder, the outstanding balance can be converted into common stock following the earlier of 180 calendar days or an event\nof default, at a conversion price equal to 73% of the lowest closing bid price during the 15 trading days preceding the conversion date.\n\n \n\nWe believe that the current\ncash and cash equivalents will allow us to continue operations through September 30, 2026 assuming we make partial payments on our currently\noutstanding indebtedness and future accruals, however there can be no assurance that this will be the case. Accordingly, we believe that\nadditional funds will be required to support operations and, in the long term, the growth of our business. Our operations have consumed\nsubstantial amounts of cash, and we have incurred operating losses since we began operating in 2013. While our cash consumption has been\nreduced following our business transition from short-term rental of vehicles owned by or leased to Zoomcar to an online platform for peer-to-peer\ncar sharing, we have consumed significant amounts of cash in effecting such transition in terms of technology and platform innovation,\nand our cash consumption has varied over time. Our cash needs will depend on numerous factors, including our revenues, upgrade and innovation\nof our peer-to-peer car sharing platform, customer and market acceptance and use of our platform, and our ability to reduce and control\ncosts. We expect to devote substantial capital resources to, among other things, fund operations, continued improvement, upgrading or\ninnovation of our platform, and expand our international outreach. If we are unable to secure such additional financing, it will have\na material adverse effect on our business, and we may not be able to meet our obligations or continue as a going concern.\n\n \n\n28\n\n \n\n**We may not have sufficient authorized but\nunissued shares of Common Stock to satisfy our obligations under the Series A Convertible Preferred Stock, the Warrants, the convertible\nnotes, our other outstanding convertible and equity-linked securities, and our contemplated Tender Offers.**\n\n** **\n\nOur certificate\nof incorporation currently authorizes 250,000,000 shares of Common Stock and 10,000,000 shares of preferred stock (including the Series\nA Convertible Preferred Stock). The number of shares of Common Stock issuable upon (i) conversion of the Series A Convertible Preferred\nStock (whether at the fixed Conversion Price, after giving effect to any anti-dilution adjustment, or at the alternate conversion price),\n(ii) exercise of the Warrants, (iii) conversion of the existing convertible notes (if and to the extent the variable conversion price\nbecomes available), (iv) exercise or conversion of our other outstanding warrants, options, restricted stock units and convertible securities,\nand (v) consummation of our contemplated Tender Offers (which contemplate the issuance of shares of Common Stock at exchange ratios of\nup to 20,000 shares of Common Stock per surrendered warrant), in each case is highly variable and, in the aggregate, may exceed the number\nof shares of Common Stock currently authorized and available for issuance. The Company has previously disclosed, including in the tender\noffer statement on Schedule TO filed with the SEC on January 23, 2026 (as subsequently amended), that the consummation of the Tender\nOffers is expected to be conditioned on stockholder approval of an amendment to our certificate of incorporation to increase the number\nof authorized shares of Common Stock. There can be no assurance that we will be able to obtain such stockholder approval, or any other\nrequired stockholder approvals, on a timely basis or at all. If we are unable to obtain a sufficient increase in our authorized shares\nof Common Stock when needed, we may be unable to satisfy our obligations to issue shares of Common Stock under the Series A Convertible\nPreferred Stock, the Warrants, the existing convertible notes, our other outstanding convertible and equity-linked securities, or in\nthe Tender Offers, which could result in our breach of our obligations under those instruments, give rise to claims for damages or specific\nperformance, or otherwise materially adversely affect our business, financial condition, results of operations and prospects.\n\n* *\n\n**The accelerated registration rights described\nin this Supplement are subject to SEC rules, market conditions, and our continued ability to remain current in our Exchange Act reporting,\nand there can be no assurance that resale registration statements will be filed or declared effective on the timeline contemplated.**\n\n** **\n\nAlthough the registration\nrights described in the respective registration rights agreements for the Series A Preferred Stock that the Company will file a resale\nregistration statement within fifteen calendar days after each closing and use its best efforts to cause such registration statement\nto be declared effective on accelerated timelines, the Company’s ability to register and to keep effective resale registration\nstatements covering the Conversion Shares and the Warrant Shares is subject to a number of factors outside the Company’s control,\nincluding SEC review timelines and comments, SEC rules and policies regarding primary versus secondary offerings, the size of our public\nfloat, our status and history as a former shell company, and our ability to remain current in our Exchange Act reporting. There can be\nno assurance that resale registration statements will be filed or declared effective on the timeline contemplated, and the failure to\ndo so may result in our payment of liquidated damages and may delay holders’ ability to resell the Conversion Shares and Warrant\nShares in the public markets, particularly during the period preceding the Alternate Conversion Effective Date.\n\n \n\n**Our\nability to continue as a going concern depends on our ability to raise additional capital, and recent financings have involved highly\ndilutive or restrictive terms.**\n\n** **\n\nZoomcar\nhas relied on multiple bridge financings and other short-term capital raises to fund its operations. These financings have involved significant\nissuance costs, discounts, warrants, preferred securities or other terms that are dilutive to existing stockholders or impose restrictions\non the Company’s operations. There can be no assurance that the Company will be able to obtain additional financing on acceptable\nterms, or at all. If additional financing is not available when needed, the Company may be required to curtail or suspend its operations.\n\n \n\n**Risks\nRelated to Our Operations as a Public Company**\n\n** **\n\n**Our\nCommon Stock is quoted on an OTC Markets Group trading platform, the OTCQB, instead of a national exchange or quotation system. Accordingly,** **our\ninvestors may experience significant volatility in the market price of our Common Stock and have difficulty selling their shares.**\n\n \n\nOur\nCommon Stock is currently quoted on an OTC Markets Group trading platform, the OTCQB, under the ticker symbol “ZCAR.” The\nOTC Markets Group is a regulated quotation service that displays real-time quotes, last sale prices, and volume limitations\nin over-the-counter securities. Trading in shares quoted on an OTC Markets Group trading platform is often thin and characterized\nby volatility in trading prices. This volatility may be caused by a variety of factors, including the lack of readily available price\nquotations, the absence of consistent administrative supervision of bid and ask quotations, lower trading volume, and market conditions.\nAs a result, there may be wide fluctuations in the market price of the shares of our Common Stock for reasons unrelated to operating\nperformance, and this volatility, when it occurs, may have a negative effect on the market price for our securities. Moreover, the OTC\nMarkets Group is not a stock exchange, and trading of securities on one of its trading platforms is often more sporadic than the\ntrading of securities listed on a national quotation system or stock exchange. Accordingly, our stockholders may not be able to\nrealize a fair price from their shares when they determine to sell them or may have to hold them for a substantial period of time until\nthe market for our Common Stock improves.\n\n \n\n**Because\nour Common Stock is quoted on the OTCQB and not listed on a national exchange , U.S. broker-dealers may be discouraged from effecting\ntransactions in shares of our Common Stock because it may be considered a penny stock and thus be subject to the penny stock rules.**\n\n** **\n\nThe\nSEC has adopted a number of rules to regulate a “penny stock” that restricts transactions involving stock which is deemed\nto be a penny stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 5g-7, and 15g-9 under the Exchange Act.\nThese rules may have the effect of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities\nwith a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or traded on Nasdaq\nif current price and volume information with respect to transactions in such securities is provided by the exchange or system). Our shares\nof common stock may, in the future constitute, a “penny stock” within the meaning of the rules. The additional sales practice\nand disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions in shares\nof our common stock, which could severely limit the market liquidity of such shares of common stock and impede their sale in the secondary\nmarket.\n\n \n\n29\n\n \n\nA\nU.S. broker-dealer selling a penny stock to anyone other than an established customer or “accredited investor” (generally,\nan individual with a net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse)\nmust make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction\nprior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the “penny stock” regulations\nrequire the U.S. broker-dealer to deliver, prior to any transaction involving a “penny stock”, a disclosure schedule prepared\nin accordance with SEC standards relating to the “penny stock” market, unless the broker-dealer or the transaction is otherwise\nexempt. A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representative\nand current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent price\ninformation with respect to any “penny stock” held in a customer’s account and information with respect to the limited\nmarket in “penny stocks.”\n\n \n\nYou\nshould be aware that, according to the SEC, the market for “penny stocks” has suffered in recent years from patterns\nof fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often\nrelated to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and\nmisleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price\nprojections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers;\nand (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired\nlevel, resulting in investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market.\nAlthough we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market,\nmanagement will strive within the confines of practical limitations to prevent the described patterns from being established with respect\nto our securities.\n\n \n\nOn\nAugust 5, 2025, we received notice from the OTCQX U.S. tier of OTC Markets Group that our Global Market Capitalization has been below\nthe $5.0 million minimum for more than 30 consecutive calendar days, and that we therefore no longer satisfy OTCQX continued qualification\nstandards.\n\n \n\nFollowing\nreceipt of the notice and after evaluating available alternatives, the Company elected to transition its quotation to the OTCQB tier\nof OTC Markets Group (“OTCQB”).\n\n \n\nOn November 4, 2025, the Company’s\nCommon Stock commenced trading on the OTCQB under the ticker symbol “ZCAR.” The transition from the OTCQX to the OTCQB does\nnot affect the Company’s reporting obligations under the Securities Exchange Act of 1934, as amended, or the public trading of its\nsecurities in the United States. \n\n \n\n**Failure\nto comply with the continued qualification standards within, and any removal from OTCQB could materially and adversely affect the liquidity\nand market price of our common stock and our access to capital.**\n\n \n\nEarlier\non August 5, 2025, we had received a written notice from the OTCQX U.S. tier of OTC Markets Group stating that our Global Market Capitalization\nhas remained below the minimum $5.0 million required under Section 2.1(B) of the OTCQX Rules for U.S. Companies for more than 30 consecutive\ncalendar days and, as a result, we no longer satisfy the OTCQX standards for continued qualification. Under those rules, we have a 90-calendar-day\ncure period, expiring on November 3, 2025, to regain compliance by maintaining a Global Market Capitalization of at least $5.0 million\nfor 10 consecutive trading days. Following receipt of the notice and after evaluating available alternatives, the Company elected to\ntransition its quotation to the OTCQB tier of OTC Markets Group (“OTCQB”).\n\n \n\nOn November 4, 2025, the Company’s\nCommon Stock commenced trading on the OTCQB under the ticker symbol “ZCAR.” The transition from the OTCQX to the OTCQB does\nnot affect the Company’s reporting obligations under the Securities Exchange Act of 1934, as amended, or the public trading of its\nsecurities in the United States. \n\n \n\nIf\nthe Company fails to comply with the OTCQB Rules its securities could be removed from OTCQB and may trade on a less liquid market tier\nor otherwise experience reduced liquidity. Any such outcome could, among other things: (i) further depress the market price and increase\nthe volatility of our common stock; (ii) limit or preclude the ability of certain brokers to make a market in, or of certain institutional\ninvestors to purchase or hold, our securities; (iii) reduce analyst coverage and overall investor interest; (iv) impair our ability to\nraise additional capital on acceptable terms or at all; and (v) adversely affect the terms of any financing or strategic transactions\nwe may seek. In an effort to regain or maintain compliance, the Company may consider and pursue one or more corporate or financing actions—such\nas equity or equity-linked issuances, strategic transactions, or other measures—which could be dilutive to existing stockholders,\nincrease our leverage, or otherwise involve significant costs and risks. Even if the Company regains compliance, it may be unable to\nsustain it, and any future failure could have the same adverse effects.\n\n \n\n30\n\n \n\n**We\nrequire additional capital to support current operations and will require additional capital to support the growth of our business, which\nmay not be available on terms acceptable to us, or at all.** \n\n** **\n\nTo\ncontinue current operations, we will need to raise capital imminently. Further, to continue to effectively compete thereafter, we will\nrequire additional funds to support the growth of our business. Our operations have consumed substantial amounts of cash, and we have\nincurred operating losses, since we began operating in 2013. While our cash consumption has been reduced following our business transition\nfrom short-term rental of vehicles owned by or leased to Zoomcar to an online platform for peer-to-peer car sharing, we have consumed\nsignificant amounts of cash in effecting such transition in terms of technology and platform innovation, and our cash consumption has\nvaried over time. Because of our limited resources the company was not able to expand to emerging markets outside of India and in fact,\ndiscontinued operations in Vietnam during June 2023 and the entity was thereafter adjudged bankrupt in January 2026 and subsequently\noperations in Egypt, Indonesia were also discontinued during June 2024 as a result.\n\n \n\nOur\nexpenses have increased substantially in connection with actions and efforts required to operate as a public company. During the year\nended March 31, 2026, we have incurred expenses in maintaining the listing requirements and complying with statutory filings with SEC\nalong with significant professional and consultancy fee to professionals and we contemplate that we will continue to incur these expenses\nas long as we remain a public company to fulfill which we will need additional capital.\n\n \n\nOur expenses to increase\nmoderately in connection with growth in our business operations. We do not currently have sufficient cash resources to operate our business\nbeyond September 2026 (assuming that we partially repay some of our currently outstanding indebtedness) and accordingly, will need to\nraise capital imminently to continue our operations and to fully execute our business plan. Additionally, circumstances could cause us\nto consume capital more rapidly than we currently anticipate and if our cash resources are insufficient to satisfy our cash requirements,\nwe may seek to issue additional equity or debt securities or obtain new or expanded credit facilities or identify and secure additional\nsources of capital. Our ability to obtain external financing in the future is subject to a variety of uncertainties, including our future\nfinancial condition, results of operations, cash flows, share price performance, liquidity of capital and lending markets and governmental\nregulations in India. In addition, incurring indebtedness would subject us to increased debt service obligations and could result in operating\nand financing covenants that would restrict our operations. There can be no assurance that financing will be available in a timely manner\nor in amounts or on terms acceptable to us, or at all. Any failure to raise needed funds on terms favorable to us, or at all, will severely\nrestrict our liquidity as well as have a material adverse effect on our business, financial condition and results of operations. In addition,\nany issuance of equity or equity-linked securities could result in significant dilution to our existing shareholders. Additionally, fundraising\nefforts may divert our management from its day-to-day duties and activities, which may affect our ability to execute on our business plan.\nIf we do not raise substantial additional capital imminently to continue operations in the short term or otherwise when required or in\nsufficient amounts and on acceptable terms, we may need to:\n\n \n\n \n●\nsignificantly\ndelay, scale back or discontinue certain business initiatives, such as our international expansion;\n\n \n\n \n●\nsignificantly\ndelay key investments in IoT, advanced computer vision, machine learning and related artificial intelligence technology; or\n\n \n\n \n●\nsignificantly\ndelay our consumer brand-building initiatives, thereby delaying our broader expansion.\n\n \n\nOur\nfuture funding requirements, both short-term and long-term, depend on many factors, including but not limited to:\n\n \n\n \n●\nour\nability to successfully scale our business within the market in which we currently operate, including by increasing the number and\nquality of Host vehicles and attracting and retaining more Guests to use our platform to meet a broader variety of mobility needs;\n\n \n\n \n●\nour\nability to successfully expand into additional emerging markets as opportunities to grow our operations become available to us;\n\n \n\n \n●\nthe\npace of technological development in core focus areas such as IoT, computer vision, machine learning, and artificial intelligence;\n\n \n\n \n●\nthe\ncost to establish, maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing\nof any payments we may be required to make in preparing, filing, prosecution, defence and enforcement of any intellectual property\nrights;\n\n \n\n \n●\nthe\neffect of competing technological and market developments; and\n\n \n\n \n●\nmarket\nacceptance of our platform and the functionality it provides to facilitate peer-to-peer car sharing.\n\n \n\nIf\nlack of available capital prevents us from proceeding with the execution of our business plan, our ability to become profitable will\nbe compromised and our business will be harmed.\n\n \n\n31\n\n** **\n\n**Future\nsales of our securities may affect the market price of the Common Stock and result in material dilution, including the anti-dilution\nprotection in the warrants issued in 2024. We are also in default of various outstanding debt obligations, including under the Notes\nissued to ACM, and may issue shares of Common Stock or other securities to satisfy those obligations in the future (in the case of ACM,\nsubject to receipt of shareholder approval). The issuance of shares of Common Stock or other securities in the future and the shares\nissued during the Tender Offer and preferred stock issued in the Bridge Financing 2026 will dilute your percentage ownership interest\nand may also result in downward pressure on the price of our Common Stock.**\n\n** **\n\nWe\nwill finance our immediate cash needs (and expect to finance our future cash needs until we become profitable, if ever) through equity\nofferings, debt financings or other third-party funding, marketing and distribution arrangements and other collaborations, strategic\nalliances and licensing arrangements. We will require substantial funding to fund our business. In June 2024 we issued warrants that\ncontain an “alternative cashless exercise” provision which gives the warrant holder the right to exchange the warrant on\na one-for-one basis for shares of Common Stock at any time that the warrant is exercisable without any cash payment and without regard\nto the then market price of the Company’s Common Stock or exercise price of the warrant. In addition, the warrants include a provision\nthat resets the warrant exercise price with a proportionate adjustment to the number of shares underlying the warrant in the event of\na reverse split of the Company’s Common Stock at any time between the issuance date and the three year anniversary of the issuance\ndate (a “Share Combination Event”). In the event of a Share Combination Event, the exercise price of the warrant will be\nreset to a price equal to the lesser of (i) the then exercise price and (ii) the lowest volume weighted average price (VWAP)\nduring the period commencing five trading days immediately after the date the Company effects both the reverse stock splits, subject\nto a floor price of $283.2 prior to receipt of stockholder approval or $56.64 following receipt of stockholder approval (in each case,\nadjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction, the “**Floor Price**”).\nThe warrants are also subject to full ratchet anti-dilution protection for any issuances of Company securities (other than certain excluded\nissuances) at a price or effective price (as determined in accordance with the terms of the warrant, the “**Dilutive Issuance\nPrice**”) that is less than the then current exercise price of the warrants following the issuance date (a “**Dilutive\nIssuance**”). In the event of a Dilutive Issuance, the exercise price of the warrants will be reduced to the lower of the Dilutive\nIssuance Price and the lowest VWAP during the five consecutive trading days commencing after the date of the Dilutive Issuance, in each\ncase, subject to the Floor Price, and there will be a proportionate adjustment to the number of shares underlying the warrant. In connection\nwith the Business Combination, we also issued the Notes to ACM in satisfaction of certain transaction expenses associated with the Business\nCombination. The Notes contain price based anti-dilution protection on the conversion price of such Notes down to a floor price of $500\nper share (considering both reverse stock splits effectuated by the Company) which has already been reached. While the Notes have already\nconverted into the maximum number of shares permissible under the terms of the Notes without receiving stockholder approval, we may seek\nstockholder approval in the future to allow for the Notes to convert into additional shares. To the extent that we raise additional capital\nthrough the sale of equity or convertible debt securities, your ownership interest will be diluted, anti-dilution provision may be triggered,\nand the terms of the newly issued securities may include liquidation or other preferences that adversely affect your rights.\n\n \n\nAny\nfuture adjustments to the exercise price of the warrants (or additional issuances to make the Financing Investors whole) may have a negative\nimpact on the trading price of our Common Stock. Additionally, raising additional capital with new investors may be difficult as a result\nof anti-dilution protection. Sales of substantial amounts of Common Stock in the public market, or the perception that such sales could\noccur, could materially adversely affect the market price of the Common Stock and may make it more difficult for you to sell your securities\nat a time and price which you deem appropriate.\n\n \n\n32\n\n \n\nAdditionally,\non January 23, 2026, the Company commenced an offer to exchange (the “Offer to Exchange”) eligible outstanding warrants for\nshares of the Company’s common stock, par value $0.0001 per share, upon the terms and subject to the conditions set forth in the\nCompany’s offer to exchange, dated January 23, 2026 (as it may be amended or supplemented from time to time, the “Offer to\nExchange”), and the related letter(s) of transmittal and consent, notice(s) of withdrawal and other offer materials (together with\nthe Offer to Exchange, as amended or supplemented from time to time, the “Offer Materials”).\n\n \n\nThe\nOffer to Exchange relates to eligible holders of the Company’s outstanding: Common Warrants, (ii) Series A Warrants, (iii) Series\nB Warrants, (iv) pre-funded warrants to purchase shares of common), (v) Bridge placement agent common stock purchase warrants issued\nin connection with the Company’s bridge financing on June 18, 2024 (the “Bridge Placement Agent Warrants”), (vi) placement\nagent common stock purchase warrants issued in connection with the Company’s private placement dated November 5, 2024 (the “Placement\nAgent Warrants”), and (vii) Series A placement agent warrants issued in connection with the Company’s private placement dated\nNovember 5, 2024 (the “Series A Placement Agent Warrants” and, together with the Common Warrants, Series A Warrants, Series\nB Warrants, Pre-Funded Warrants, Bridge Placement Agent Warrants and Placement Agent Warrants, the “Existing Warrants”).\n\n \n\nUnder\nthe Offer to Exchange, subject to the terms and conditions described in the Offer Materials, the Company is offering to exchange the\nExisting Warrants for shares of Common Stock. The Offer to Exchange is conditioned upon, among other things, the adoption by the Company’s\nstockholders of an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized\nshares of Common Stock (the “Authorized Share Increase”) and the filing and effectiveness of such amendment with the Secretary\nof State of the State of Delaware.\n\n \n\nUpon\nreceipt of such Stockholder Approval, the Company expects to issue a large number of shares of common stock in exchange of the Existing\nWarrants which may further have a negative impact on the trading price of our Common Stock.\n\n \n\nIn\naddition to above, on June 2, 2026, Zoomcar Holdings, Inc. (the “Company”) entered into a securities purchase agreement (the\n“TE Purchase Agreement”) with certain accredited investors (the “TE Purchasers”) in connection with the initial\nclosing (the “First Closing”) of a private placement of the Company’s Series A units (the “Units”), each\nUnit consisting of (i) one share of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “Preferred\nShares”), and (ii) one Series A warrant to purchase one share of the Company’s common stock, par value $0.0001 per share\n(the “Common Stock”) (the “Warrants,” and the entire transaction, the “Bridge Financing 2026”). The\nUnits were sold at a purchase price of $1,000 per Unit. The Offering provides for the sale of up to an aggregate of $5,000,000 of Units,\nplus up to an additional $5,000,000 of Units issuable pursuant to an overallotment option exercisable by the placement agent in its sole\ndiscretion, in one or more closings, with a minimum subscription threshold of $1,000,000 having been satisfied.\n\n \n\nAt the First Closing, the\nCompany issued and sold an aggregate of 1,143 Units, consisting of 1,143 Preferred Shares and Warrants to purchase up to 1,143 shares\nof Common Stock, of which 50 units 50 Units were revoked/cancelled as one of the investors failed to meet the requisite compliance requirements.\nfor aggregate gross proceeds to the Company of approximately $1,143,000, before deducting placement agent fees and offering expenses.\nAccordingly, 1,093 units were issued at the First Closing.\n\n \n\nAt\n“Second Closing” on June 18, 2026, the Company issued and sold an aggregate of 537 Units, consisting of 537 Preferred Shares and Warrants\nto purchase up to 537 shares of Common Stock, for aggregate gross proceeds to the Company of approximately $537,000, before deducting\nplacement agent fees and offering expenses.\n\n \n\nAt\n“Third Closing” on June 30, 2026, the Company issued and sold an aggregate of 195 Units, consisting of 195 Preferred Shares and Warrants\nto purchase up to 195 shares of Common Stock, for aggregate gross proceeds to the Company of approximately $195,000 before deducting\nplacement agent fees and offering expenses.\n\n \n\nThe\nPreferred Shares are convertible into shares of Common Stock in accordance with the terms of the Amended and Restated Certificate of\nDesignation of Preferences, Rights and Limitations of the Series A Convertible Preferred Stock (the “Certificate of Designation”),\nat an initial conversion price of $0.05 per share, subject to adjustment as provided therein, including pursuant to an alternate conversion\nright and price-reset provisions set forth in the Certificate of Designation. The Warrants have an exercise price of $0.0625 per share,\nsubject to adjustment as provided therein, are exercisable beginning on the date of issuance, and expire five (5) years from the date\nof issuance.\n\n \n\nThe total shares of Common\nStock issuable upon exercise of preferred stock conversion of preferred stock across the First Closing, Second Closing and Third Closing\nare 36,490,000 and an equal number of warrants are issuable upon exercise of the Series A Warrants.\n\n \n\n33\n\n \n\nThinkEquity\nLLC (the “Placement Agent”) acted as the exclusive placement agent for the Offering pursuant to a placement agent agreement,\ndated as of June 2, 2026, June 18, 2026 and June 30, 2026 (the “TE Placement Agent Agreements”), between the Company and\nthe Placement Agent. As compensation for its services, the Company agreed to pay the Placement Agent a cash fee equal to 10.0% of the\naggregate gross proceeds received by the Company from the Purchasers at each closing, to pay a non-accountable expense allowance equal\nto 1.0% of the gross proceeds, and to issue to the Placement Agent (or its designees) warrants (the “Placement Agent Warrants”)\nto purchase a number of shares of Common Stock equal to 10% of the shares of Common Stock underlying the securities sold in the Offering,\nassuming full conversion. The Company issued Placement Agent Warrants to purchase up to 3,649,000 shares of Common Stock, having\nterms substantially similar to the Warrants.\n\n \n\nThe\nfull conversion of the Preferred Shares and exercise of the warrants (including those issued to the Placement Agent) issued in the Bridge\nFinancing 2026 are likely to result in the issuance of a massive volume of common stock relative to our current outstanding shares. In\nthe event of such large-scale issuance or resale of these shares, or even the market perception that these conversions will occur, could\nadversely affect the market price of our common stock which may experience severe downward pressure, significantly shrinking the equity\nvalue of existing common stockholders.\n\n \n\n**In\naddition to our defaults under current indebtedness described elsewhere here, certain of our debt financing arrangements are currently\nin default and we have delayed certain other payments to lenders, which may restrict our current and future business and operations.**\n\n \n\nSince\nNovember 2023, we have been in violation of our scheduled monthly installment payment obligations of $215,337 per month on our lease\nliability with Ayvens Group (f/k/a Leaseplan India Private Limited) (“Leaseplan”). Leaseplan notified us on February 7, 2024,\nthat we are in default of our November 2023 payment. As of the date hereof, we are in default beyond the 30-day extended cure period\n(as envisaged under the terms of our debt with Leaseplan) of our November 2023 payment and continue to be default of all EMIs thereafter.\nAs a result of such defaults, as of the date hereof, Leaseplan (i) has initiated the process of repossession of all vehicles, and (ii)\nhas invoked the bank guarantee of $120,482 which was a security created by Zoomcar in favor of Leaseplan. Such outcomes may have a material\nadverse impact on our business, operations or financial condition. The Company continues to negotiate a deferred payment plan to the\nrestructured debt proposal shared by the Company wherein the debt after certain waivers and discounts, will stand restructured to $4,755,942\nand the Company is hopeful that Leaseplan will issue a comfort letter in this regard acknowledging the proposed payment schedule spread\nacross six tranches repayment of the restructured debt. , Currently, the Company has already cleared the first three tranches in accordance\nwith the proposed payment schedule as per the comfort letter, amounting to $2,847,177 (approx.) towards the outstanding debt. The Company\nis yet to clear the fourth tranche of payment (as per the proposed payment schedule) which was due as of July 31, 2025. The Company also\nrequested a further extension to repay the remaining three tranches. However, on December 22, 2025, the Company received a Demand Notice\nfrom LeasePlan demanding the outstanding dues payable per the resolution agreement initially entered into by the Company and Leaseplan\nin August 2021 be released promptly. The Company is still discussing a deferred payment plan with LeasePlan and has made certain part\npayments towards these dues and awaits LeasePlan’s confirmation on the extension sought. As of May 05, 2026, the Company still\nhas $3,536,123 pending dues towards LeasePlan. If LeasePlan refuses to provide us an extension for making the deferred payments, or if\nwe are unable to execute a settlement agreement with respect to the restructured debt, or fail to honor the obligations under any proposals\naccepted or agreement executed for the subject matter it may, possibly result in inter alia (a) the entire outstanding debt becoming\ndue and payable, and (b) the withdrawal of a conditional waiver of $1.2 million—which was granted during a prior restructuring\nmaking it immediately due and payable with interest of 1.5% per month.\n\n \n\nThe\nCompany is in breach of the final payment obligation of $ 346,295 (approx.) (inclusive of interest accrued) on its loan with Mahindra\n& Mahindra Financial Services Limited (“Mahindra”). Mahindra has not formally extended or provided waiver of such overdue\npayment. For the period the overdue amount remains unpaid, interest accrues at the rate of 3% per month.\n\n \n\n34\n\n \n\nAdditionally,\nwe are in various stages of discussion on deferment with our other lenders with regards to the scheduled loan payments from November\n2023 onwards and extending up to June 2026. However, we have not received any formal notice of default from these other lenders, but\nsuch lenders have not formally extended or provided waivers of such overdue payments. While the Company is actively engaging in discussions\nwith its lenders and vendors to restructure the existing indebtedness by means of reductions and deferment of payment timelines, no assurance\ncan be made that the Company will be successful in restructuring these outstanding liabilities.\n\n \n\nAs\na result of the foregoing, the Company is at material risk that the above parties including certain vendors could initiate insolvency\nproceedings under Indian Insolvency and Bankruptcy Code 2016 (IBC). As per the provisions of IBC, an operational creditor can initiate\nan insolvency resolution process against the Company where the minimum amount of the default is INR 1,00,00,000 (Rupees One crore) or\n~USD 119,000. If insolvency proceedings were initiated and the petition is admitted, it could result in significant disruptions to our\noperations, loss of management control, and a substantial decrease in stockholder value. Furthermore, the outcomes of such proceedings\nare uncertain and could materially affect our financial position and results of operations.\n\n \n\nThe\nZoomcar Board and Zoomcar management are evaluating options to improve liquidity and address Zoomcar’s long-term capital structure,\nhowever, there can be no assurance that any such option or plan will be available on favorable terms, or at all.\n\n** **\n\n**We\nhave issued a significant number of warrants and exercise of these securities and the sale of the shares of Common Stock issuable thereunder\n(along with the issuance of any similar securities in the future,) will dilute your percentage ownership interest and may also result\nin downward pressure on the price of our Common Stock.**\n\n** **\n\nAs of July 13, 2026, we have issued and outstanding options to purchase\n15 and 1 shares of our Common Stock with a weighted average exercise prices of $300 and $120 respectively, pre-funded warrants to purchase\n5,306,013 shares of Common Stock, warrants to purchase 19,831 shares of Common Stock with an exercise price of $6,000 per share which\nwere assumed by the Company in connection with the Business Combination, 11,499,991 Public Warrants to purchase 5,750 shares of our Common\nStock, each Public Warrant exercisable into one two-thousandth of one share of Common Stock at an exercise price of $11,420.00 per full\nshare, warrants to purchase 5,297 shares of Common Stock at a current exercise price of $56.64 per share which were issued to the Placement\nAgent in June 2024, November Series A Warrants to purchase 763,294 shares of Common Stock at a current exercise price of $16.12, November\nSeries B Warrants to purchase up to 5,865 shares at an exercise price of $0.002 per share, November 2024 Placement Agent warrants to purchase\n53,447 shares at a current exercise price of $16.12 per share, November 2024 Placement Agent Series A warrants to purchase 106,893 shares\nat a current exercise price of $16.12 per share.\n\n \n\nAs of July 13, 2026, we also\nhave issued and outstanding December 2024 Series A Warrants to purchase 5,009 shares of Common Stock at a current exercise price of $6.24\nper share, December Series B Warrants to purchase up to 94,238 shares of Common Stock at a current exercise price of $0.002 per share,\n\n \n\nAs of July 13, 2026, we also\nhave issued and outstanding February 2025 Series B Warrants to purchase up to 89,744 shares of Common Stock at a current price of $0.002\nper share,\n\n \n\nAs of July 13, 2026, we have\nalso issued and outstanding March 2024 Series A Warrants to purchase 2,544,134 shares of Common Stock at a current exercise price of $6.24\nper share, and March Series B Warrants to purchase up to 591,275 shares of Common Stock at a current exercise price of $0.002 per share,\n\n \n\n35\n\n \n\nAll\nSeries B Warrants issued in the December Offering, the January/February Offering and the March Offering are exercisable for the maximum\nnumber of shares of Common Stock, because on March 18, 2025. the Board determined to fix the “Reset Price” of all of such\nSeries B Warrants down to the “Floor Price” of $6.24 per share. The Company has agreed to deem the “Reset Date”\nof the Series B Warrants to be effective.\n\n \n\nOn June 2, 2026, the Company entered into a securities purchase agreement\nfor a private pursuant to which we completed a first closing of 1,143 Series A units at $1,000 per unit for gross proceeds of approximately\n$1,143,000, with the potential to sell up to $10,000,000 in total units including an overallotment option.\n\n \n\nOn\nJune 18, 2026 entered into a securities purchase agreement for a private pursuant to which we completed a second closing of 537 Series\nA units at $1,000 per unit for gross proceeds of approximately $537,000.\n\n \n\nOn\nJune 30, 2026 entered into a securities purchase agreement for a private pursuant to which we completed a third closing of 195 Series\nA units at $1,000 per unit for gross proceeds of approximately $195,000.\n\n \n\nEach\nunit consists of one share of Series A Convertible Preferred Stock, initially convertible at $0.05 per share (subject to alternate conversion\nrights and price-reset adjustments), and one five-year warrant to purchase one share of Common Stock at an exercise price of $0.0625\nper share.\n\n \n\nAccordingly,\n\n \n\n●3,64,90,000\nshares of Common Stock are issuable upon exercise of Preferred Shares at an initial conversion price of $0.05 per share.\n\n \n\n●3,64,90,000\nshares of Common Stock are issuable upon exercise of Series A Warrants an exercise price of $0.0625 per share, subject to adjustment\nas provided under the respective Warrant document.\n\n   \n\n ●In connection with the First Closing, Second Closing and Third Closing,\nthe Company issued Placement Agent Warrants to purchase up to 3,649,000 shares of Common Stock, on terms substantially similar to the\nSeries A Warrants.\n\n \n\nBecause\nthe market for our Common Stock is thinly traded, the sales and/or the perception that those sales may occur, could adversely\naffect the market price of our Common Stock. Furthermore, even though, as of the date hereof, the options and warrants are all currently\nout of the money (other than the Series B Warrants, which all have an exercise price of $0.002 per share), the mere existence of\na significant number of shares of Common Stock issuable upon exercise of these securities may be perceived by the market as having\na potential dilutive effect, which could lead to a decrease in the price of our Common Stock.\n\n \n\n**The\ncompletion of the warrant exchange offer would result in the issuance of a substantial number of shares of common stock and significant\ndilution to existing stockholders without generating additional cash proceeds.**\n\n \n\nIf\nthe warrant exchange offer is completed, the Company expects to issue a substantial number of shares of common stock in exchange for\ntendered warrants. The issuance of these shares will dilute the ownership interests of existing stockholders and may adversely affect\nthe market price of the Company’s common stock. In addition, the exchange of warrants for shares of common stock will not result\nin any cash proceeds to the Company, and therefore will not improve the Company’s liquidity position. As a result, even if the\noffer is completed, the Company will continue to require additional financing to fund its operations.\n\n* *\n\n**If\nthe warrant exchange offer is completed with respect to some, but not all, classes of outstanding warrants, the Company’s capital\nstructure may remain complex and the anticipated reduction in warrant overhang may not be realized.**\n\n** **\n\nThe\nCompany may complete the warrant exchange offer with respect to certain classes of warrants but not others. In such event, a portion\nof the outstanding warrants would remain exercisable or outstanding, and the Company’s capital structure could continue to reflect\na significant potential dilutive overhang. This could adversely affect the market price of the Company’s common stock, investor\nperception and the Company’s ability to raise additional capital.\n\n \n\n36\n\n \n\n**Risks\nrelated to our Business and Operations**\n\n** **\n\n**Our\ncurrent business model’s limited operating history and financial results make our future results, prospects and the risks we may\nencounter difficult to predict.** \n\n** **\n\nAlthough\nZoomcar commenced operating in 2013, we have recently transitioned from a prior business model to our current business model, consisting\nof our asset-light online platform for peer-to-peer car sharing. As a result of this transition, certain components of our financial\nstatements have experienced variation, and our operating history may not be indicative of our future growth or financial results. The\nlimited history of our current business model makes predicting our future operating and other results difficult, if not impossible, and\nthere is no assurance that we will be able to grow our revenues in future periods. Our results of operations are impacted by a number\nof factors, some of which are beyond our control, and we may suffer adverse impacts to our further development as a result of circumstances\nwhich include decreasing customer demand, increasing competition, declining growth of the car sharing industry in general, insufficient\nsupply of vehicles on our platform, or changes in government policies or general economic conditions. We will continue to develop and\nimprove the features, functions, technologies and other offerings on our platform to increase our Guest and Host bases and volume of\nbookings on our platform. However, the execution of our business plan is subject to uncertainty and bookings may not grow at the rate\nwe expect. If our growth rates decline, investors’ perceptions of our business and prospects may be adversely affected and the\nmarket price of our common stock could decline.\n\n \n\nExisting\nand potential holders of our securities should also consider the risks and uncertainties that a company with a limited history, such\nas ours, will face in the evolving personal mobility solutions market. In particular, there can be no assurance that we will:\n\n \n\n \n●\nsuccessfully\nexecute on our business plan, particularly in light of our current liquidity and capital resources;\n\n \n\n \n●\nfacilitate\nsufficient bookings to become profitable in the near-term if at all;\n\n \n\n \n●\nattract\nincreasing numbers of Hosts and Guests within our current market and future potential additional markets;\n\n \n\n \n●\nincrease\npenetration within our current markets through continued improvements in vehicle density, platform features and strategic marketing\nefforts;\n\n \n\n \n●\nenable\nus to successfully execute our business plans;\n\n \n\n \n●\nenhance\nour brand recognition and awareness;\n\n \n\n \n●\nacquire\nnew Hosts and Guests by increasing our market penetration with deeper market coverage;\n\n \n\n \n●\ndevelop\nnew platform functionality and features that enhance our ability to retain Guests and Hosts;\n\n \n\n \n●\ndevelop,\nimprove or innovate our proprietary technology that allows for a sustainable competitive advantage;\n\n \n\n \n●\nattract,\nretain, and manage a sufficient staff of management and technology personnel; or\n\n \n\n \n●\nrespond\neffectively to competitive pressures.\n\n \n\n37\n\n \n\n**Our new “Bikes by Zoomcar” business\nsegment is subject to operational uncertainties, and we cannot guarantee its long-term viability, profitability, or continuity.**\n\n** **\n\nWe recently launched a new business segment, “Bikes by Zoomcar,”\nexpanding our platform’s shared mobility marketplace from automobiles to two-wheeler vehicles such as scooters and motorcycles.\nThis segment represents a relatively untested offering within our marketplace infrastructure, and its long-term success is highly uncertain.\nOur ability to successfully operate, scale, and maintain continuity for this segment faces numerous challenges, including operational\nrisks such as rapid asset wear and tear, rider misuse, and a higher vulnerability to vehicle theft, vandalism, and fraudulent bookings\nthat may evade our existing risk detection mechanisms. Furthermore, we are dependent on our fleet partners to maintain the supply of the\ninventory over our marketplace for this offering.\n\n \n\nThe two-wheeler\nrental market is governed by complex, hyper-local state transport regulations, commercial permit quotas, and shifting municipal\nmicromobility policies, meaning that any failure to maintain regulatory compliance could abruptly freeze local operations.\nAdditionally, this space is intensely competitive and price-sensitive, featuring established ride-hailing platforms, dedicated\nbike-rental startups, and public transit alternatives.\n\n \n\nBecause the unit economics of shared two-wheelers differ fundamentally from\nour core car-sharing marketplace, our historical performance is not indicative of this segment’s future financial results, and we\ncannot assure you that this new business segment will achieve or sustain profitability. As we continuously evaluate the operational\ndata, market demand, regulatory landscape, and margins of this segment, we may choose to materially alter, suspend, pivot, or\nentirely discontinue the “Bikes by Zoomcar” offerings at any time and without prior notice. Any decision to change or\nterminate these offerings, or any failure of the segment to achieve expected growth, could result in asset impairment charges,\ndamage to our brand reputation, and an adverse impact on our overall business, financial condition, and results of operations.\n\n \n\n**Our\noperating and financial forecasts are subject to various known and unknown contingencies and factors outside of our control and may not\nprove accurate, and we may not achieve results consistent with management’s expectations.** \n\n** **\n\nOur\nquarterly and annual operating results have fluctuated in the past and are likely to fluctuate in the future. During any given period,\nour operating and financial results may be influenced by numerous factors, many of which are unpredictable or are outside of our control.\nAdditionally, our limited operating history with our current peer-to-peer car sharing business model makes it difficult for us to forecast\nour future results and subjects us to a number of uncertainties, including our ability to plan for and anticipate future growth. As a\nresult, you should not rely upon our past quarterly and annual operating results as indicators of future performance. We have encountered,\nand will continue to encounter, risks and uncertainties frequently experienced by growing companies in rapidly evolving markets, such\nas the risks and uncertainties described herein.\n\n** **\n\n**We\nhave a history of operating losses and negative cash flow, we have limited cash resources, we will need to raise additional funds imminently\nto finance operations and as a result there is substantial doubt about our ability to continue as a going concern.**\n\n \n\nWe\nhave a history of operating losses and expect to continue incurring operating losses in the foreseeable future as we continue to develop\nour current business model and enhance our platform offerings. We also have indebtedness that is in default in excess of our current\ncapital resources (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity\nand Capital Resources” in our Form 10-Q for the nine months ended December 31 2025). On June 18, 2024, the Company entered into\na securities purchase agreement with certain institutional accredited investors (the “June Aegis Securities Purchase Agreement”)\npursuant to which the Company issued and sold an aggregate of $3,600,000 in principal amount of notes (the “June Notes”)\nand warrants to purchase up to an aggregate of 1,267,728 shares of Common Stock (which takes into account an adjustment following the\nCompany’s Share Combination Event that was effective on October 22, 2024) (the “June Warrants”) for gross proceeds\nof $3,000,000.\n\n \n\nAdditionally,\non November 7, 2024, the Company closed the November 7 Placement for gross proceeds of $9.15 million (including $2.5 million of which\nwas provided by one of the Company’s directors) (before deduction of fees to the placement agent and other offering expenses payable\nby the Company). The Placement Agent in this Offering acted as exclusive placement agent in the November 7 Placement. At closing of the\nNovember 7 Placement, the Company issued an aggregate of 2,137,850 units at a price of $4.28 per unit, each unit consisting of one share\nof Common Stock (or pre-funded warrant in lieu thereof), two November Series A Warrants (as hereinafter defined) each to purchase one\nshare of Common Stock and a November Series B Warrant (as hereinafter defined) to purchase such number of shares of Common Stock, as\ndetermined on the November Reset Date, which does not reflect the Second Reverse Split. As a result of the November 7 Placement, the\nCompany received $3.62 million of cash and cash equivalents after giving effect to offering fees and expenses, the payment of $3.8 million\nto the holders of the Company’s June 2024 notes and a holdback of $0.2 million for indemnification of the Placement Agent as described\nin more detail herein.\n\n \n\nFurther,\non December 24, 2024, the Company held the First Closing of this Offering for gross proceeds of $5,484,843 (including $50,000 of which\nwas provided by the Company’s former Chief Executive Officer i.e., Hiroshi Nishijima and $300,000 of which was provided by a consultant\nto the Company) (before deduction of fees to the placement agent and other offering expenses payable by the Company). The Placement Agent\nin this Offering acted as exclusive placement agent at the First Closing. At the First Closing, the Company issued an aggregate of (i)\n3,095,925 shares of Common Stock, which does not reflect the Second Reverse Split (ii) Pre-Funded Warrants issued to certain of the investors,\nat their option, exercisable for an aggregate of up to 420,000 shares of Common Stock, which does not reflect the Second Reverse Split,\nto the extent that the issuance of shares of Common Stock would cause such Investors to beneficially own more than 4.99% or 9.99% of\nthe shares of Common Stock outstanding. Also issued along with the shares of Common Stock and/or the Pre-Funded Warrants were (x) Series\nA Warrants to initially purchase up to an aggregate of 8,680,443 shares of Common Stock, which does not reflect the Second Reverse Split,\nsubject to certain adjustments and (y) Series B Warrants to initially purchase no shares of Common Stock, subject to certain adjustments\nas provided in the Series B Warrants. As a result of the First Closing, the Company received $4,786,963 of cash and cash equivalents\nafter giving effect to offering fees and expenses.\n\n \n\n38\n\n \n\nFurther,\non February 4, 2025, the Company held the Second Closing of this Offering for gross proceeds of $1,437,936 (before deduction of fees\nto the Placement Agent and other offering expenses payable by the Company). The Placement Agent in this Offering acted as exclusive placement\nagent at the Second Closing. At the Second Closing, the Company issued an aggregate of (i) 1,049,796 shares of Common Stock, which does\nnot reflect the Second Reverse Split (ii) Pre-Funded Warrants issued to certain of the investors, at their option, exercisable for an\naggregate of up to 872,000 shares of Common Stock, which does not reflect the Second Reverse Split, to the extent that the issuance of\nshares of Common Stock would cause such Investors to beneficially own more than 4.99% or 9.99% of the shares of Common Stock outstanding.\nAlso issued along with the shares of Common Stock and/or the Pre-Funded Warrants were (x) Series A Warrants to initially purchase up\nto an aggregate of 4,804,491 shares of Common Stock, which does not reflect the Second Reverse Split, subject to certain adjustments\nand (y) Series B Warrants to initially purchase no shares of Common Stock, subject to certain adjustments as provided in the Series B\nWarrants. As a result of the First Closing, the Company received $1,249,911 of cash and cash equivalents after giving effect to offering\nfees and expenses.\n\n \n\nOn June 24, 2025, the Company\nclosed two Securities Purchase Agreements (each, a “Purchase Agreement”) with 1800 Diagonal Lending LLC, a Virginia limited\nliability company (“DLL”), and Boot Capital LLC, a Delaware limited liability company (“Boot”) (both investors\ncollectively “June 2025 Noteholders”), respectively, in connection with a private placement offering of convertible bridge\nnotes (each, a “Note” and collectively, the “Notes”) in the aggregate principal amount of $290,240.00 and $111,760.00,\nrespectively. Pursuant to the Purchase Agreements, DLL purchased a Note in the original principal amount of $290,240.00 with an original\nissue discount of $30,240.00 and net proceeds to the Company of $250,000.00, after fees. Boot purchased a Note in the original principal\namount of $111,760.00 with an original issue discount of $11,760.00 and net proceeds to the Company of $100,000.00. Each Note bears interest\nat a rate of 12% per annum and is due on March 30, 2026. The Notes include scheduled installment repayments, and may be prepaid in full\nby the Company at a discount to the outstanding balance. The Notes are subject to default interest at a rate of 22% per annum and include\ncustomary events of default and covenants. The repayment obligations under these notes have been fully discharged as of the date of filing\nof this Form 10-K. Refer to Exhibits 10.58 and 10.59 which are incorporated here by reference for term of these Notes.\n\n \n\nOn July 31, 2025 , the Company\nfurther entered into two Securities Purchase Agreements (each a “Purchase Agreement”) with 1800 Diagonal Lending LLC, a Virginia\nlimited liability company (“DLL”), and Boot Capital LLC, a Delaware limited liability company (“Boot”) (both investors\ncollectively “July 2025 Noteholders”), respectively pursuant to which the Company issued convertible Bridge Notes(“July\nBridge Notes”) for a total principal amount of $206,225 with an initial issue discount of $23,725. The net proceeds disbursed to\nthe 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.\nThe Bridge notes have a maturity date of May 31, 2026, and bear interest at an annual rate of 12%. The notes include scheduled monthly\ninstallment repayments and interest payments starting August 30, 2025 and may be prepaid in part or full, by the Company at a discount\nto the outstanding balance. The notes are subject to default interest rate of 22% per annum and include customary events of default. The\nrepayment obligations under the July Bridge Notes have been fully discharged as of the date of filing of this Form 10-K. Refer to Exhibits\n10.58 and 10.59 which are incorporated here by reference for term of these Notes.\n\n \n\nOn\nAugust 19, 2025, the Company closed a Securities Purchase Agreement (“Labrys SPA”) with Labrys Fund II, L.P. (“Labrys”)\nin connection for purchase of a promissory note convertible on default. Pursuant to the Labrys SPA, Labrys purchased a note for a principal\namount $180,000 with an original issue discount of $18,000 (“Labrys Note”)and net proceeds to the Company of $158,500 after\nadjusting issuance cost of $3,500. The note is repayable in 12 months maturing on August 19, 2026 with interest accruing at 12 % per\nannum on the outstanding principal. This note is subject to a default interest at a rate of 22% per annum and include customary events\nof default and covenants.\n\n \n\n39\n\n \n\nOn\nAugust 24, 2025, the Company closed a Securities Purchase Agreement (“AES SPA”) with AES Capital Management, LLC(“AES”)\nin connection with purchase of convertible redeemable notes. Pursuant to the AES SPA, AES purchased 2 notes for an aggregate principal\namount $112,500split into $75,000and $37,500 respectively (“AES Notes”). The note amounting $75,000 is the “Primary\nNotes” and the subsequent note of $37,500 is the “Secondary Note”. The AES Notes are repayable in 12 months from their\nrespective closing dates with interest accruing at 8% per annum on the outstanding principal. As of date of filing of this 10-Q, the\nCompany received net proceeds of $ 71,000 after adjusting deduction of legal and due diligence fees of $4,000 from the issuance and closing\nof the Primary Notes. The AES Notes are subject to a default interest at a rate of 22% per annum and include customary events of default\nand covenants.\n\n \n\nOn\nAugust 24, 2025, the Company closed a Securities Purchase Agreement (“CFI SPA”) with CFI CAPITAL LLC (“CFI”)\nin connection with purchase of convertible redeemable notes. Pursuant to the CFI SPA, CFI purchased a convertible for a principal amount\nof $150,000 at an original issue discount of $15,000. The note is repayable in 12 months maturing on August 24, 2026 with interest accruing\nat 6 % per annum on the outstanding principal. The Company received net proceeds of $130,000 after adjusting issuance cost of $5000.\nThis note is subject to a default penalty amounting to increase in the principal amount by 50% and includes customary events of default\nand covenants.\n\n \n\nOn November 28, 2025, we closed two Securities\nPurchase Agreements with DLL and Boot (“Purchase Agreements”)” for 2 convertible bridge notes (“November DLL/Boot\nNotes”). Pursuant to the Purchase Agreements, DLL purchased a Note in the original principal amount of $152,550.00 with an original\nissue discount of $17,550.00 and net proceeds to the Company of $125,000.00, after fees. Boot purchased a Note in the original principal\namount of $56,500 with an original issue discount of $6,500.00 and net proceeds to the Company of $50,000.00. Each The notes bear interest\nat 12% per annum, are due September 30, 2026, include installment repayment features and may be prepaid at a discount, but are subject\nto default interest of 22% per annum and customary events of default and covenants. The notes include scheduled monthly installment repayments\nand interest payments starting December 30, 2025 and may be prepaid in part or full, by the Company at a discount to the outstanding balance.\nRefer to Exhibits 10.58 and 10.59 which are incorporated here by reference for terms of these Notes.\n\n \n\nOn December 10, 2025, we entered into a Securities\nPurchase Agreement with FirstFire Global Opportunities Fund, LLC, (“FirstFire”) and issued a convertible redeemable note (“FirstFire\nNote”) in a principal amount of $220,000 with an original issue discount of $20,000 resulting in net proceeds of $200,000 after\nfees. The note bears interest at 12% per annum, matures 12 months after issuance on December 10, 2026 and is subject to a default penalty\nthat increases the principal amount by 50% and includes customary events of default and covenants. The notes include scheduled monthly\ninstallment repayments and interest payments starting January 08, 2026 and may be prepaid in part or full by the Company at a discount\nto the outstanding balance. Refer to Exhibits 10.60, 10.61 and 10.62 which are incorporated here by reference for terms of the FirstFire\nNote.\n\n \n\nOn\nDecember 24, 2025, we entered into a Securities Purchase Agreement with AUCTUS FUND, LLC, (“Auctus”) and issued a promissory\nnote for a principal amount of $125,000 with an original issue discount of $12,500 (“Auctus Note”) resulting in net proceeds\nof approximately $100,000 after fees. The note bears interest at 10% per annum with a guaranteed interest at issuance. It matures 12\nmonths after issuance on December 24, 2026, is subject to a default interest of an additional 8% per annum and includes customary events\nof default and covenants. It is convertible after the later of (a) 180 days from issuance and (b) upon an event of default under the\nAuctus Note. The scheduled monthly installment repayments and interest payments start on June 24, 2026 and may be prepaid in part or\nfull, by the Company at a discount to the outstanding balance.\n\n \n\nOn\nJanuary 8, 2026 we entered into a Securities Purchase Agreement with Quick Capital LLC (“Quick Capital”) and issued a convertible\nnote for principal amount of $42,613.64 with an original discount of $5,113.64 (“Quick Capital Note”) resulting in net proceeds\nof approximately $35,000 after fees. The Quick Capital Note bears interest at 12% per annum with a guaranteed interest at issuance, matures\n6 months after issuance on July 08, 2026, and is subject to default interest of 22% per annum and includes customary events of default\nand covenants. It is convertible anytime or upon default and bears piggyback registration rights. The repayment obligations under the\nQuick Capital Note have been fully discharged as of the date of filing of this Form 10-K.\n\n \n\n“February Notes”\n(DLL & Boot): On February 25, 2026, the Company closed two Securities Purchase Agreements with DLL and Boot for convertible promissory\nnotes in original principal amounts of $180,800.00 and $84,750.00, respectively. The original issue discounts were $20,800 by DLL and\n$9,750 by Boot resulting in net proceeds of $150,000 and $75,000 respectively. Each The notes bear interest at 12% per annum, are due\nDecember 30, 2026, include installment repayment features and may be prepaid at a discount, but are subject to default interest of 22%\nper annum and customary events of default and covenants. The notes include scheduled monthly installment repayments and interest payments\nstarting August 30, 2026 and may be prepaid in part or full, by the Company at a discount to the outstanding balance. Refer to Exhibits\n10.58 and 10.59 which are incorporated here by reference for terms of these Notes.\n\n \n\n40\n\n \n\nOn\nApril 5, 2026 the Company issued a Promissory Note to Walsh Industries (“Walsh industries”) for principal amount of $100,000\n(“Walsh Note”) with an original discount of $5,000 resulting in net proceeds of $95,000. The Walsh Note matures in one (1)\nweek. In addition to the repayment obligation the Company is also required to issue $50,000 worth of Convertible Preferred Stock and\nadditionally, upon occurrence of event of default i.e. non repayment of the Walsh Note, shall further entitle the Walsh Industries to\nseek $50,000 worth of Convertible Preferred Stock as Penalty Shares. The Preferred Stock issued therein bears piggyback registration\nrights. While the repayment obligations have been discharged with delays, the Company is yet to issue the Preferred Stock worth $100,000\n(including the Penalty Shares) is pending issuance at the date of filing of this Form 10-K.\n\n \n\nOn\nApril 23, 2026 the Company issued a Promissory Note to Sod Sciences Inc.(“Sod Sciences”) for principal amount of $22,500.00\n(“Sod Sciences April Note”) with an original discount of $2,500 resulting in net proceeds of $20,000. The Sod Sciences April\nNote matures in one (1) month. In addition to the repayment obligation the Company is also required to issue $100,000 worth of Convertible\nPreferred Stock and additionally, upon occurrence of event of default i.e. non repayment of the Sod Sciences April Note, shall further\nentitle the Sod to seek $100,000 worth of Convertible Preferred Stock as Penalty Shares. The Preferred Stock issued therein bears piggyback\nregistration rights\n\n \n\nOn\nMay 5, 2026 the Company issued another Promissory Note to Sod Sciences Inc.(“Sod Sciences”) for principal amount of $48,231\n(“Sod Sciences May Note”) with an original discount of $4,385.30 resulting in net proceeds of $43,845.70. The Sod Sciences\nMay Note matures in one (1) month In addition to the repayment obligation the Company is also required to issue $241,200 worth of Convertible\nPreferred Stock and additionally, upon occurrence of event of default i.e. non repayment of the Sod Sciences May Note, shall further\nentitle the Sod to seek $241,200 worth of Convertible Preferred Stock as Penalty Shares. The Preferred Stock issued therein bears piggyback\nregistration rights.\n\n \n\nOn June 04, 2026, we closed\na Securities Purchase Agreement with DLL for convertible promissory note in original principal amount of $180,800.00 (“DLL June\n2026 Note”). The original issue discounts was $20,800 resulting in net proceeds of $150,000 after deduction of due diligence and\nlegal fees. The DLL June 14, 2026 Note bears interest at 12% per annum, are due March 30, 2027, include installment repayment features\nand may be prepaid at a discount, but are subject to default interest of 22% per annum and customary events of default and covenants.\nThe notes include scheduled monthly installment repayments and interest payments starting November 30, 2026 and may be prepaid in part\nor full, by the Company at a discount to the outstanding balance. Refer to Exhibits 10.58 and 10.59 which are incorporated here by reference\nfor terms of these Notes.\n\n \n\nOn\nJune 22, 2026, the Company entered into a Promissory Note for Provision of Services with Heskin & Proper PLLC (“Heskin Note”)\nfor a total services amount of $180,000.00. The note consists of a current amount of $33,000.00, which includes a $30,000.00 obligation\nfor legal services previously rendered plus a $3,000.00 original issue discount, due on or before November 30, 2026. Additionally, the\nnote accounts for future services valued at up to $150,000.00, which, subject to Board approval and definitive agreements, are to be\nsatisfied through the issuance of Preferred Stock within its ongoing Bridge Financing 2026.\n\n \n\nOn July 2, 2026, Zoomcar Holdings, Inc. issued a convertible promissory\nnote to Silvercrest Hybrid Capital LLC (“Silvercrest”) in original principal amount of $120,000 (the “Silvercrest Note”).\nThe original issue discount was $12,000, resulting in net proceeds of $100,000 after deduction of legal and due diligence fee. The Silvercrest\nNote bears interest at 10% per annum, with the first twelve months of interest ($12,000.00) guaranteed and earned in full as of the issue\ndate. The note is due on July 2, 2027, includes instalment repayment features and may be prepaid at a discount, but is subject to default\ninterest of 8% per annum and customary events of default and covenants. At the option of the holder, the outstanding balance can be converted\ninto common stock following the earlier of 180 calendar days or an event of default, at a conversion price equal to 73% of the lowest\nclosing bid price during the 15 trading days preceding the conversion date.\n\n \n\nFurther, on June 2, 2026, the Company entered into a private placement\ntransaction (the Bridge Financing 2026) to sell Series A Units to accredited investors at $1,000 per unit, completing its initial closing\nby selling 1,143 units for approximately $1.143 million in gross proceeds.\n\n \n\nOn\nJune 18, 2026 entered into a securities purchase agreement for a private pursuant to which we completed a second closing of 537 Series\nA units at $1,000 per unit for gross proceeds of approximately $537,000.\n\n \n\nOn\nJune 30, 2026 entered into a securities purchase agreement for a private pursuant to which we completed a second closing of 195 Series\nA units at $1,000 per unit for gross proceeds of approximately $195,000.\n\n \n\nThe Company believes that current cash and cash equivalents will allow\nthe Company to continue operations through September 30, 2026 assuming that the Company makes partial payments on its currently outstanding\nindebtedness and only pays current operating accruals, however, there can be no assurance that this will be the case. Even if our current\ncash position supports operations through September 30, 2026, we cannot assure that this cash will be sufficient in the longer run and\nwe will be required to obtain a further infusion of cash funds to support our operations or address the indebtedness, including through\nthis offering. The Company will still need to seek financing for the purpose of raising additional funds to be able to meet its obligations\nand so that there will no longer be substantial doubt about its ability to continue as a going concern. However, there is no assurance\nthat the Company will be able to raise any such financing or, even if it does, that it will be sufficient for it to meet its obligations\nor continue as a going concern.\n\n \n\n41\n\n \n\nThe Company as on July 13, 2026 has $0.17 million of cash and cash\nequivalents.\n\n \n\nAccordingly,\nwe believe that additional funds will be imminently required to support current operations and, in the long term, the growth of our business.\nOur operations have consumed substantial amounts of cash, and we have incurred operating losses since we began operating in 2013. While\nour cash consumption has been reduced following our business transition from short-term rental of vehicles owned by or leased to Zoomcar\nto an online platform for peer-to-peer car sharing, we have consumed significant amounts of cash in effecting such transition in terms\nof technology and platform innovation, and our cash consumption has varied over time. Our cash needs will depend on numerous factors,\nincluding our revenues, upgrade and innovation of our peer-to-peer car sharing platform, customer and market acceptance and use of our\nplatform, and our ability to reduce and control costs. We expect to devote substantial capital resources to, among other things, fund\noperations, continued improvement, upgrading or innovation of our platform, and expand our international outreach. If we are unable to\nsecure such additional financing, it will have a material adverse effect on our business, and we may have to limit operations in a manner\ninconsistent with our development.\n\n \n\n**The\nmarket for online platforms for peer-to-peer car sharing is relatively new and rapidly evolving. If we fail to successfully adapt to\ndevelopments in our market, or if peer-to-peer car sharing online platforms do not achieve general acceptance, it could adversely affect\nour business, financial condition and operating results.** \n\n** **\n\nIn\nDecember 2021, we transitioned to our current peer-to-peer cash sharing business model. The market for online peer-to-peer car sharing\nplatforms is relatively new and unproven and the data and research available regarding the market or the industry may be limited and\nunreliable. It is uncertain whether the peer-to-peer car sharing market will continue to develop or if our platform will achieve and\nsustain a level of demand and market acceptance sufficient for us to generate meaningful revenue, net income, and cash flow. Our success\nwill depend to a substantial extent on the willingness of Hosts and Guests to use our platform to identify car sharing opportunities.\nSome Hosts may be reluctant or unwilling to make their vehicles available for use on our platform because of concerns which may include,\nbut are not limited to, potential decline in the value of their vehicle if listed on our platform, uncertainty of economic benefits from\nplatform usage, ability to recover losses associated with lost or damaged property, compliance with our platform’s terms of use,\ndata privacy and security concerns, or other reasons.\n\n \n\nIn\naddition, our success also requires utilization of our platform by Guests to book vehicles. Guests’ willingness to utilize our\nplatform may depend, among other factors, on Guests’ belief in the ease-of use, integrity, quality, availability, safety, cost-effectiveness,\nconvenience and reliability of our platform and the vehicles listed by Hosts for bookings thereon. Any shift in Guest preferences in\nthe markets in which we operate could have a material adverse effect on our business. Additionally, Guests may be reluctant or unwilling\nto use a platform requiring Guests to provide personally identifiable information, payment information and driver’s license details,\nor have their driving behaviors monitored during bookings. Further, Guests may be reluctant to book vehicles containing GPS-enabled tracking\nor monitoring devices accessible by Zoomcar, or to use our platform at all due to the perception of the use of such devices.\n\n \n\n**If\nwe do not retain existing Hosts, or attract and maintain new Hosts, or if Hosts fail to provide an adequate supply of high-quality vehicles,\nour business, financial condition, and results of operations may be negatively impacted.** \n\n** **\n\nOur\nsuccess in a given geographic market depends on our ability to establish and grow the scale of our platform in that market by attracting\nHosts and Guests to our platform. We depend upon having Hosts register high quality vehicles on our platform, maintain the safety and\ncleanliness of their vehicles, and ensure that the descriptions and availability of their vehicles on our platform are accurate and up-to-date.\nThese practices are beyond our direct control and the number of vehicles shared by Hosts and resulting bookings options available to\nGuests on our platform may decline based on a number of factors including, among other things, public health and safety concerns, including\npandemics/epidemics; economic, social, and political factors; state laws and regulations regarding car sharing, or the absence of such\nlaws and regulations, challenges obtaining, insuring, financing and servicing vehicles to list on the platform, some of which may be\nexacerbated by infrastructure challenges in the emerging market where we operate our business. If Hosts register and offer fewer high-quality\nvehicles to Guests on our platform, our bookings and revenues may decline, and our results of operations could be materially adversely\naffected. Further, if Hosts with available vehicles choose not to offer their vehicles through our platform because competitive car sharing\nplatforms emerge that Hosts find more attractive than our platform, Hosts may be unwilling to continue registering vehicles or making\nthem available for bookings through the platform. For example, Hosts may cease or reduce vehicle registrations or the periods of time\nthey make cars available for bookings for any number of reasons, such as competitor platforms having more Guests making bookings, risk\nof vehicle damage for which Hosts may not be able to recoup damages from Zoomcar or for any other reason, we may lack sufficient supply\nof vehicles to attract Guests to utilize our platform. If Hosts do not share sufficient numbers of vehicles, or if the vehicles they\nregister to our platform are less attractive to Guests than vehicles offered by competitors, our revenue would likely decline and our\nbusiness, financial condition, and results of operations could be materially adversely affected.\n\n \n\nHosts\nare not required to make their vehicles available on our platform for a minimum sharing period or number of bookings and Hosts may choose\nnot to share their vehicles on our platform at all if we cannot generate sufficient demand for their vehicles or if bookings through\nour platform are not sufficiently attractive to Hosts to retain and attract Hosts to use the platform. While we continue to invest in\ntools and resources to support Hosts, the pricing features and other capabilities of our platform may not be as attractive to Hosts as\nthose developed by our competitors, and Hosts may not share their vehicles on our platform as a result. If Hosts perceive that listing\nvehicles on our platform may be insufficiently remunerative to, for example, offset any leasing, financing, parking, registration, maintenance,\nand repair costs of vehicles registered to the platform, we may lose or fail to attract Hosts and may not be able to make a sufficient\nnumber of vehicles available for use by our Guests.\n\n \n\n42\n\n \n\n**If\nwe fail to retain existing Guests, or attract and maintain new Guests, our business, financial condition, and results of operations may\nbe negatively impacted.**\n\n** **\n\nOur\nbusiness model depends on our ability to retain and attract Guests to make bookings on our platform. There are a number of trends in\nand aspects of Guest preferences which have an impact on us and the car sharing industry as a whole. These include, among others, preferences\nfor types of vehicles, convenience of online bookings, and monetary savings associated with car sharing and platform bookings relative\nto other possible transportation solutions. Any shift in Guest preferences, which are susceptible to change, in the markets in which\nwe operate could have a material adverse effect on our business. For example, if the vehicles registered to our platform are not popular\nor of sufficient quality or are not available at locations convenient for Guests, Guests may lose interest in utilizing our platform.\nAdditionally, if Guests find our platform not to be user-friendly or to lack functions that Guests expect from a car sharing or other\nonline platform, Guests may decrease or stop using our platform. Our competitiveness therefore depends on our ability to predict and\nquickly adapt to Guest trends, exploiting profitable opportunities for platform development, innovation and upgrades without alienating\nour existing Guest base or focusing excessive resources or attention on unprofitable or short-lived trends. If we are unable to respond\non a timely and appropriate basis to changes in demand or Guest preferences, our business may be adversely affected.\n\n \n\nAdditionally,\nif we are unable to compete with other car sharing platforms and other mobility solutions in the markets in which we operate, our bookings\nwill decrease, and our financial results will be adversely affected. Guests desiring to book vehicles through our platform must pay booking\nfees, which include, among other fees, “upfront booking fees,” less any applicable discounts and credits, and “value\nadded” or trip-protection fees payable at the time of a booking; other charges may also be incurred by Guests after a booking,\nsuch as trip cancellation fees, gasoline fees, late fees and other charges. Many of these fees are generated through our platform functions\nand some of the fees are selected by Guests from a range of options presented to them at the time of a booking. If our booking and trip-related\nfees are not competitive, or our platform functionality is not appealing or outdated, or negative reviews or publications are released\nin connection with our platform, Guests may stop or reduce their use of our platform, our business, results of operations, reputation,\nand financial condition may be adversely affected.\n\n \n\n**If\nwe are unable to introduce new or upgraded platform features that Hosts or Guests recognize as valuable, we may fail to retain and attract\nsuch users to our platform and our operating results would be adversely affected.**\n\n** **\n\nTo\ncontinue to retain and attract Hosts and Guests to our platform, we will need to continue to introduce new or upgraded features or product\nofferings, functions and technologies that add value for Hosts and Guests that differentiate us from our competitors. Developing and\ndelivering these new or upgraded features, functions and technologies is costly, and the success of such features, functions and technologies\ndepends on several factors, including the timely completion, introduction, and market acceptance of such features, functions and technologies.\nMoreover, any such new or upgraded features, functions and technologies may not work as intended or may not provide intended value to\nHosts and Guests. If we are unable to continue to develop new or upgraded features, functions and technologies, or if Hosts and Guests\ndo not perceive value in such new or upgraded features, functions and technologies, Hosts and Guests may choose not to use our platform,\nwhich would adversely affect our operating results.\n\n \n\nWe\nhave made substantial investments to develop new or upgraded features, functions and technologies, and we intend to continue investing\nsignificant resources in developing new technologies, tools, features, services and other platform offerings. If we are unable to attract/retain\nand pay qualified technical staff required to continue our platform feature development efforts, we may not realize the expected benefits\nof our developments.\n\n \n\nThere\ncan be no assurance that the new developments will exist or be sustained at the levels that we expect, or that any of these new developments\nwill gain sufficient traction or market acceptance to generate enough revenue to offset any new expenses or liabilities associated with\nthese new investments. Our development efforts with respect to new features, functions and technologies on our platform could distract\nmanagement from current operations and will divert capital and other resources from our more established functions and technologies.\nEven if we are successful in developing new features, functions or technologies, or otherwise update or upgrade our platform, regulatory\nauthorities may subject us to new rules or restrictions in response to our innovations that could increase our expenses or prevent us\nfrom successfully commercializing the new features, functions, technologies, updates or upgrades of our platform. If we are unable to\nadapt in a cost-effective and timely manner in response to the changing market conditions or platform users’ preferences, either\nfor technical, legal, financial or other reasons, our business, financial condition and results of operations may be materially and adversely\naffected. \n\n \n\n43\n\n \n\n**Our\nsuccess depends upon our ability to maintain favorable customer reviews and ratings, and if our reputation suffers, our business, financial\ncondition and operating results may be adversely affected.** \n\n** **\n\nWe\nhave a customized rating and review system connected to our search-and-ranking-base algorithm in order to provide a more holistic, more\nrelevant overall search experience for the Guests. By combining Host ratings and reviews into the overall sort algorithm, our platform\nis able to highlight particular Hosts who are more likely to receive bookings. The reliable and trustworthy ratings and reviews of our\nHosts and Guests are crucial to our business, which will to a substantial extent affect our Hosts and Guests’ determination as\nto whether to utilize the platform to book cars.\n\n \n\nMonitor\nthe rating and review system on an ongoing basis to enforce quality standards and build trust among members of our community. We have\nprocedures in place to combat fraud or abuse of our rating and review system, but there is no assurance that these procedures are or\nwill be effective, or at all. Further, Hosts and Guests can leave reviews or ratings on third-party platforms or websites, which are\nout of our control and off platform reviews and ratings or other statements about the platform, or a business or brand may have adverse\nimpact on our business operations. If any Hosts and Guests leave negative ratings and reviews, it may not only cause a decrease in the\nnumber of existing Hosts and Guests, but also may negatively affect acquisitions of new Hosts and Guests, which may adversely affect\nour business, financial conditions and results of operations. Unreliable ratings and reviews could also make it more difficult for us\nto enforce quality standards, which could damage our reputation and reduce trust within our community.\n\n \n\nAdditionally,\nour ability to attract and retain Hosts and Guests is dependent in part on our ability to provide high-quality customer support services.\nHosts and Guests depend on our customer support centers to resolve any issues relating to our platform both during and after their trips.\nAs we continue to grow our business and improve our platform, we will face challenges related to providing high-quality support services\nat scale. Any failure to maintain high-quality support, or a market perception that we do not maintain high-quality support, could harm\nour reputation and adversely affect our ability to scale our platform and business, our financial condition, and results of operations.\n\n \n\n**A\nformer employee of Zoomcar India has instituted a wrongful termination suit and claims that certain Zoomcar options have vested.**\n\n** **\n\nIn\nFebruary 2023, a former employee of Zoomcar India instituted a suit before the City Civil and Sessions Judge at Mayo Hall, Bengaluru\nagainst Zoomcar India, Zoomcar and IOAC challenging his termination, claiming approximately $400,000 in damages and claiming that 100,000\noptions to purchase shares of Zoomcar have vested. On March 3, 2023, the City Civil and Sessions Judge at Mayo Hall, Bengaluru, issued\nan interim injunction to restrain each of Zoomcar and IOAC from “alienating or dealing” the 100,000 shares(without giving\neffect to the reverse splits and the conversion ratio for the business combination) of Zoomcar claimed by the former employee while the\nsuit is pending. Zoomcar believes that such claims are baseless and is attempting to have the interim order vacated. In addition, Zoomcar\nIndia filed an application in the former employee’s suit, seeking that IOAC be deleted from the array of parties in the suit, inter\nalia since (i) IOAC is neither a necessary nor a proper party to the suit; (ii) no reliefs have been sought by the former employee from\nIOAC; and (iii) there is no cause of action against IOAC. However, there can be no assurance that Zoomcar India and Zoomcar will be successful\nin their efforts to have the matter vacated or IOAC deleted from the parties, and such efforts may be time-consuming, costly and may\nhave reputational and other negative effects on Zoomcar. \n\n \n\n44\n\n \n\n**The\nfounder and former CEO of the Company has initiated a civil complaint against the Company contesting the reasons for his termination\nand has raised certain other claims with regards to his ownership of the Company and compensation for termination of his employment.** \n\n \n\nOn\nSeptember 26, 2024, we received a copy of a complaint filed with the United States District Court for the District of Delaware wherein\nour founder and former CEO Greg Moran has challenged the Company’s termination of his employment for cause, effective as of June\n18, 2024. Mr. Moran has contested the facts leading up to the grounds on which his termination was based and has also claimed that this\nalleged wrongful termination has deprived him of his vested right to 8% of the Company’s outstanding equity that he claims was\nowed to him under his Employment Agreement. He has also claimed that in connection with his termination he is entitled to the payment\nof certain amounts for unused paid leave during his employment with Zoomcar, along with certain other compensation he claims to be owed\nunder the terms of his Employment Agreement, including “Owed Severance” equal to approximately $72,000. In total, Mr. Moran\nseeks damages of at least $238,000 plus damages associated with the 8% of shares. He also seeks damages under the New York Labor Law,\nunder which he seeks liquidated damages equal to 100% of any unpaid wages. He claims that all of the above constitute wages under New\nYork Labor Law.\n\n \n\nZoomcar believes that the termination of Mr. Moran’s employment for\ncause was proper in accordance with the terms of his Employment Agreement. Mr. Moran’s case in the District Court was dismissed\non account of Mr. Moran’s stated intention to refile the case in Delaware Superior Court. Mr. Moran refiled his lawsuit in the Superior\nCourt of the State of Delaware on November 1, 2024. On November 27, 2024, the Company filed a motion to dismiss certain of the causes\nof action for failure to state a cause of action, and the briefing on that motion was filed on January 7, 2025. Mr. Moran filed opposition\nto Zoomcar’s motion on February 5, 2025 and Zoomcar filed a reply in further support of its motion on February 20, 2025. Zoomcar’s\noral arguments in its motion to dismiss were heard on April 29, 2025. The Court has requested additional briefing with respect to the\nCompany’s motion to dismiss Mr. Moran’s Wage claim. The additional briefing was due on August 15, 2025. The court granted\nthe motion to dismiss Mr. Moran’s quasi-contractual claims and reserved decision on the balance of the motion. On November 20, 2025,\nthe court further granted the motion to dismiss Mr. Moran’s tortious interference with contract claim and breach of New York labor\nlaw claim. However, there can be no assurance that the Company will be successful in defending these claims in its entirety and such efforts\nmay be time-consuming, costly and may have reputational and other negative effects on Zoomcar.\n\n \n\nFurther on March 16, 2026,\nthe Company and Mr. Moran entered into a settlement agreement (the “Settlement Agreement”) resolving the litigation. The Settlement\nAgreement provides for the Company’s payment of $150,000 in installments and mutual releases of all claims, with no admission of\nliability by any party. The matter will be dismissed with prejudice upon completion of the settlement payments. *Refer to Exhibit 10.55\nfor the terms of settlement agreement with Mr. Greg Moran which is incorporate by reference herewith.*\n\n \n\n**The ACM Letter Agreement imposes significant\ncash payment, securities issuance, capital raise participation and other obligations on the Company, and ACM’s discretionary right\nto terminate the Courtesy Standstill Period creates significant ongoing risk to the Company.**\n\n \n\nACM had filed a notice of motion for summary judgement in lieu of complaint\nagainst Zoomcar in New York courts for payment of amounts due under the Note pursuant to breach of the terms of the Note. The Company\nreceived two default notices from ACM. The first notice was issued on May 22, 2024 which stated that the Company is in default of the\nterms of the Unsecured Convertible Note issued to ACM on December 28, 2023, since the Company had entered into an equity line arrangement\nwith White Lion Capital LLC, a variable rate transaction, without the prior consent of ACM. Further, on June 25, 2024, the Company received\nthe second notice of default from ACM stating that the Company has incurred indebtedness in the form of $3,600,000 in principal amount\nof notes in a transaction involving Aegis Capital Corp. acting as the placement agent, prior to which, the consent of ACM was not obtained.\nAs per the terms of the ACM note, in the event of any default, all accrued but unpaid interest plus liquidated damages and other amounts\nthereof, shall become immediately due and payable in cash.\n\n \n\nOn\nNovember 7, 2024, ACM filed a notice of motion for summary judgement in in lieu of complaint (“Motion”) against Zoomcar in\nNew York State Supreme Court, New York County, alleging it was entitled to accelerated payment of $5,997,832.72 pursuant to the terms\nof an unsecured promissory note issued by Zoomcar to ACM on December 28, 2023 (“Note”) as consideration for certain alleged,\nbona fide expenses that ACM’s members had aggregated and assigned to ACM for collection from Zoomcar. As alleged by ACM in its\nmoving papers, two “Events of Default” (as defined in the Note) had occurred thereby entitling ACM to full and accelerated\npayment of the Note. The first was a Form 8-K, filed by Zoomcar on May 9, 2024, which allegedly disclosed that on May 6, 2024, Zoomcar\nhad entered into an equity line arrangement and “Variable Rate Transaction” (as defined in the Note) with White Lion Capital\nLLC (“White Lion”). The second was a Form 8-K, filed by Zoomcar on June 21, 2024, which allegedly disclosed that on June\n18, 2024, Zoomcar had incurred a form of debt that was not “Excluded Debt” (as defined in the Note) arising from its placement\nagent agreement with Aegis Capital Corp. without ACM’s prior consent. The Note generally provides that, upon the occurrence of\nan Event of Default, all accrued but unpaid interest plus liquidated damages and other amounts thereof shall become immediately due and\npayable to the Note holder. \n\n \n\n45\n\n \n\nZoomcar\nbelieves it has meritorious defenses to the Motion and intends to zealously defend itself. As such, on January 14, 2025, Zoomcar filed\nopposition to the Motion. In relevant part, Zoomcar challenged the fact allegations concerning: (i) the first Form 8-K by tendering to\nthe Court evidence confirming that the subject transaction with White Lion in fact had been terminated and the underlying filing of a\nForm S-1 registration statement contemplated in that transaction was never effectuated; and (ii) the second Form 8-K by tendering to\nthe Court evidence confirming that the subject transaction involved Excluded Debt. The effect of the foregoing is the transactions were\nexcluded from the definitions of Events of Default and extinguished ACM’s alleged entitlement to accelerated payment under the\nNote. Additional defenses were also presented by Zoomcar to the Motion. On March 28, 2025, New York County Supreme Court Justice granted\na summary judgment in favor of ACM in the amount of $5,656,086.72, as well as default interest in the amount of $346,481.00, post-judgment\ninterest at the statutory rate, attorneys’ fees, and costs. The issue of attorneys’ fees was referred to a special referee\nto report and recommend on submission from the parties. On May 9, 2025, the Court reduced the award of attorneys’ fees and costs\nto $12,000.00. On April 22, 2025, the Company filed a Notice of Appeal seeking to reverse the March 28, 2025, order granting summary\njudgment in favor of ACM. On May 11, 2026, the Company and ACM entered into a letter agreement (the “ACM Letter Agreement”)\nsetting forth the parties’ agreement regarding the path forward to resolve this dispute above mentioned litigation and underlying\ndisputes therein.\n\n \n\nPursuant\nto the ACM Letter Agreement, the Company is obligated to pay $2,500,000 in cash to ACM on or before October 31, 2026, with ACM entitled\nto receive at least 10% of the gross proceeds of any capital raising activity of the Company (and a greater percentage to the extent\nany other creditor receives a greater percentage of such proceeds). The receipt by ACM of at least 10% of the gross proceeds of each\nClosing of this Offering will reduce the amount of net proceeds available to the Company for working capital, repayment of the Existing\nConvertible Notes and other corporate purposes. Once the $2,500,000 cash payment has been made in full, the residual balance of the ACM\nJudgment, which the parties acknowledge as approximately $3,500,000 as of the date of the ACM Letter Agreement, will be satisfied by\nthe issuance of equity securities to ACM at the price and on the economic terms of any subsequent Company financing closed prior to the\ndate the cash payment is made in full. The issuance of such equity securities will result in additional dilution to investors in this\nOffering, the magnitude of which will depend on the timing and pricing of subsequent financings (if any), and to the extent such financings\nprice at lower per share prices than the price at which the Series A Convertible Preferred Stock was issued, will trigger anti-dilution\nadjustments to the Conversion Price under Section 6(e) of the Certificate of Designation.\n\n \n\nIn addition, although the ACM Letter Agreement provides for a “Courtesy\nStandstill Period” through March 31, 2027, ACM retains the unilateral right, in its sole discretion and without any right of the\nCompany to challenge such determination, to terminate the Courtesy Standstill Period at any time if ACM believes that the Company is not\nworking to satisfy the cash payment obligation. If ACM elects to terminate the Courtesy Standstill Period, ACM may resume enforcement\nand realization actions against the Company in respect of the ACM Judgment, including levying on Company assets and bank accounts that\nthe Company is required to disclose to ACM under the ACM Letter Agreement. The Company had agreed to (i) submit a confession of judgment\nto ACM with respect to the ACM Judgment, (ii) withdraw all pending appeals of the ACM Judgment, and (iii) provide ACM with a list of all\nof its assets and bank accounts all of which substantially limit the Company’s ability to defend against, or delay, ACM’s\nenforcement of the ACM Judgment if the Courtesy Standstill Period is terminated.\n\n \n\nOn May 26, 2026, the Company\nentered the Confession of Judgement and withdrew all its ongoing appeals against ACM. By entering into the Confession of Judgement and\nwithdrawing all pending appeals, the Company has forfeited its right to contest the validity of the original $6,009,832.72 judgment. ACM\nhas also been provided a roadmap of all Company assets and bank accounts to perfect its judgment and place liens. If the Company defaults\nor if the Courtesy standstill is terminated, ACM can immediately move to execute the judgment, freeze bank accounts, and seize assets.\n\n \n\nAny such enforcement actions\ncould have a material adverse effect on the Company’s liquidity, operations, and ability to consummate this Offering or the contemplated\nApproved Uplisting.\n\n \n\nIn addition to the risks of the enforcement, the diversion of capital\nand impending $3.5 million equity conversion under the ACM Letter Agreement may severely deter future institutional investors from participating\nin subsequent funding rounds. This potential chilling effect on future capital raises could critically impair the Company’s liquidity\nand long-term operational viability. Any such enforcement actions could have a material adverse effect on the Company’s liquidity,\noperations, and ability to consummate this Offering or the contemplated Approved Uplisting.\n\n \n\nHowever,\nthere can be no assurance that the Company will be successful in its appeal or in resolving these claims in its entirety, and such efforts\nmay be time-consuming, costly and may have reputational and other negative effects on Zoomcar.\n\n \n\n**Our\nentering into a settlement with ACM could result in a breach of standstill provisions in agreements we entered into in connection with\nthe investors in the November Offering**\n\n \n\nWe\nhave in the past and may continue in the future to negotiate a settlement of a claim against us by ACM, the terms of which could breach\ncertain restrictive covenants in the securities purchase agreements we entered into with investors, and the Placement Agent Agreement\nwe entered into with the Placement Agent, each in connection with the November Offering. These restrictive covenants prohibit us, subject\nto certain exceptions, from issuing additional shares of Common Stock or securities convertible into or exercisable for shares of Common\nStock (“Common Stock Equivalents”), and from filing any registration statements to register for resale any of such securities,\nwithout the consent of the investors, who were issued 50.1% of the securities issued in the November Offering, and the Placement Agent.\nSince we expect to issue shares of Common Stock and Common Stock Equivalents to ACM, in connection with any settlement, and to register\nsuch shares of Common Stock and shares of Common Stock underlying Common Stock Equivalents for resale in one or more registration statements,\nsuch actions could result in a breach of these restrictive covenants and we could be liable for damages to the investors in the November\nOffering, and the Placement Agent, which could have a material adverse effect on our financial situation and operations. \n\n \n\n46\n\n \n\n**If\nthe pre-programmed IoT devices distributed to our Hosts to affix to registered cars, which IoT devices enable GPS tracking and data collection\nby Zoomcar and keyless, digital access to booked vehicles by Guests, do not function as they are intended to function, our business,\nfinancial condition, and results of operations could be adversely affected.** \n\n** **\n\nAs\npart of our vehicle registration process, all Hosts are provided with an option to install a variety of customized software-enabled IoT\ndevices These devices, which Zoomcar obtains from several suppliers and then programs prior to distribution to Hosts, serve multiple\nfunctions, including enabling Guests to access Host vehicles by digitized keyless access and start and end bookings using Zoomcar’s\nmobile app. The IoT devices also facilitate GPS monitoring by Zoomcar of in-trip vehicles, which serves a data collection function that\nis important to Zoomcar.\n\n \n\nWe\nhave no control over the quality or functionality of the IoT devices distributed to Hosts and such devices may not function as intended\nor may be out of service during the course of a booking or while a Guest is attempting to access a booked vehicle. In such scenarios,\nGuests are able to contact Hosts via number masking call or text chat enabled by Zoomcar Guest App. However, failures to provide the\nseamless keyless functions may deny or delay Guests’ quick access to the vehicles, thus reducing Guests’ interest in utilizing\nour platform. Hosts, in turn, may rely on Zoomcar’s customer support functionality to facilitate connecting Guests to emergency\nservices in the event of a vehicle accident or other situation that, if unresolved, could result in damage to a Host vehicle. If Zoomcar\nis unable to help Guests that encounter problems during bookings, it could result in complaints and negative reviews from both Hosts\nand Guests, and higher incidents of damages claims to Zoomcar by Hosts, leading to adverse consequences to our reputation, brand, business,\nprospects, and operating results.\n\n \n\n**We\ndo not have long term contracts with the third-party suppliers of the IoT devices distributed to our Hosts and such suppliers can reduce\nquantities or terminate their sales of IoT devices to us at any time. Any adverse changes in such supply or the costs of such products\nor services may adversely affect our operations.** \n\n** **\n\nWe\ncollaborate with third-party suppliers who regularly provide products and services, including but not limited to IoT devices and software\nintegrations, to us. We do not have long term purchase agreements in place with our current suppliers of the IoT devices that we program\nand advise our Hosts to install in the vehicles that they register to our platform and our suppliers could reduce the quantity of or\ndiscontinue providing IoT devices suitable for our needs. Given that the Hosts now have an option to install/not install these devices,\nwe do not currently anticipate material challenges to identifying replacement suppliers if shortages of IoT devices occur, we are reliant\non third parties to provide such devices and unanticipated shortages or an inability to identify new suppliers if our existing suppliers\ncease to be willing or able to provide the IoT devices on terms and at costs acceptable to Zoomcar may occur. Any such shortages, reductions\nor terminations in IoT device supply arrangements may have indirectly lead up to an adverse impact on our revenues, profits and financial\ncondition. Additionally, if the market prices for IoT devices that are suitable for our needs goes up, we may need to purchase the devices\nat a comparatively higher price, which may adversely affect our business, financial condition and results of operations.\n\n \n\nWe\nhave limited control over the operations of our suppliers and other business partners and any significant interruption in their operations\nmay have an adverse impact on our operations. For example, a significant interruption in the operations of our supplier’s production\nfacilities could cause delay or termination of shipment of the IoT devices to us, which may, in turn, reduce or delay our ability to\npre-program and distribute such devices to Hosts which may in turn affect the retention of Hosts who are more inclined towards installing\nthe devices leading to a lower availability of inventory on our Platform. \n\n \n\nAs\nour operations continue to scale and grow, we anticipate needing an increased number of IoT devices, and our demand therefore may exceed\nthe capabilities of our existing suppliers. If our suppliers cease to supply adequate numbers of IoT devices to us, or if we need alternative\nsources of supply for any other reason, those devices may not be immediately available to us. If alternative suppliers are not immediately\navailable, we will have to identify and qualify alternative suppliers, and the installation of such devices on vehicles which Hosts wish\nto add to our platform may be delayed. We may not be able to find adequate alternative or additional suppliers in a reasonable period\nof time or on commercially acceptable terms, if at all. An inability to obtain sufficient supply of IoT devices which we can program\nfor platform use may delay installation of such devices on vehicles that would otherwise become registered or more promptly registered\nto our platform, harm our relationships with Hosts, which could adversely affect our business and operations.\n\n \n\n47\n\n \n\n**Maintaining\nand enhancing our brand and reputation is critical to our business prospects. While we have taken significant steps to build and improve\nour brand and reputation, failure to maintain or enhance our brand and reputation will cause our business to suffer.** \n\n** **\n\nAs\nour platform continues to scale and becomes increasingly interconnected, resulting in increased media coverage and public awareness of\nour brand, future damage to our brand and reputation could have an amplified effect on our platform offerings. Our brand and reputation\nmay also be harmed by events outside of our control, including by perceptions of our business or our platform which are subjective in\nnature. For example, if Hosts misrepresent the features or safety of their vehicles in platform listings or otherwise provide diminished\nquality of vehicles, Guests may not have positive experiences with bookings and may not return to the platform for future transportation\nneeds. If Guests, in turn, do not treat Host vehicles with care, engage in reckless driving or other malfeasance during booked trips\nor violate platform terms and conditions or use Host vehicles in the commission of crimes or illegal acts, their actions could cause\nHosts to withdraw vehicles from our platform or pursue damages claims against Zoomcar. Events ranging from unanticipated litigation involving\nZoomcar to trip cancellations by Guests may affect perceptions of our business by individual Hosts and Guests or of larger numbers of\npersons or groups of persons about our platform and the perceived benefits or risks to booking cars through our platform. Because our\nratings and review system encourages and facilitates public sharing of Hosts’ and Guests’ experience with bookings and with\nour platform, platform users have a forum to express describe their individual, subjective experiences with Host vehicles, bookings and\nany other aspect of our business, which may not always be favorable. Although we monitor usage of our platform review and ratings systems,\nwe cannot control behaviors of our customers and from time to time, platform features designed to encourage productive information sharing\nmay lead to dissemination of information which is misleading, misrepresentative, false and which may be damaging to our reputation. Any\nof the foregoing, among other facts and circumstances, may result in unfavorable press coverage about Zoomcar and our reputation and,\nconsequently, our business may be harmed.\n\n \n\nThe\nacceptance of our brand will depend partially on maintaining a good reputation, minimizing the number of safety incidents, continuing\nan improved culture and workplace practices, improving existing functions, feature and technologies, developing new functions, features\nand technologies of our platform, maintaining a high quality of customer service and ethical behavior and continuing our marketing and\npublic relations efforts. Our brand promotion, reputation building, and media strategies involve and will continue to involve significant\ncosts, yet may not be successful. We anticipate that other competitors and potential competitors will scale and expand their business,\nwhich will make maintaining and enhancing our reputation and brand increasingly more difficult and expensive. If we fail to successfully\nmaintain our brand in the current or future competitive environment or if events occur in the future which negatively affect public perception\nof our Company, our brand and reputation would be further damaged, and our business may suffer.\n\n \n\n**The\nimpact of adverse or changing economic conditions, including the resulting effects on consumer spending or mobility patterns, may adversely\naffect our business, financial condition, and results of operations.** \n\n** **\n\nOur\nbusiness depends on the overall demand for vehicle bookings. Any significant weakening of the economy in our operating jurisdictions\nor of the global economy, including the current macroeconomic downturn, more limited availability of credit, economic uncertainty, inflation,\nfinancial turmoil affecting the banking system or financial markets, increased unemployment rates, restrictions and reduction in domestic\nor international travel, fluctuations in the price or availability of gasoline, and other adverse economic or market conditions may adversely\nimpact our business and operating results. Global economic and political events or uncertainty may cause some of our current or potential\nHosts and Guests to curtail their use of our platform. In addition, travel has been disproportionately impacted by a macroeconomic downturn.\nIn response to such downturns, Hosts and Guests may not use or spend on our platform at rates we expect, thus further reducing demand\nfor vehicle bookings. These adverse conditions, have in the past resulted, and could in the future result, in reductions in consumer\nspending, slower adoption of new technologies, and increased competition. We cannot predict the timing, strength, or duration of any\neconomic slowdown, including the current macroeconomic downturn, or any subsequent recovery generally. In addition, increases in inflation\nmay cause Guests to decrease travel or choose alternative or lower cost methods of transportation versus utilizing our platform. If the\nconditions in the general economy significantly deviate from present levels and continue to deteriorate as a result of any such macroeconomic\ndownturns, our business, financial condition, and results of operations could be adversely affected.\n\n \n\n48\n\n \n\n**Increases\nin, labor, energy, and other costs could adversely affect our operating results.** \n\n** **\n\nFactors\nsuch as inflation, increased labor and employee benefit costs, and increased technology upgrade and updated costs, as well as other inflationary\npressure, may increase our operating costs. Many of the factors affecting such costs are beyond our control cause these increased costs\nmay cause us to pass costs on to Hosts and Guests by increasing certain fees paid by them to us, which may cause booking volume to decline\nwhich would harm our business and operating results. \n\n \n\n**Our\noperations have grown substantially since our inception, and we expect that they will continue to do so, subject to our financial condition.\nIf we are unable to effectively manage that growth, our financial performance and future prospects will be adversely affected. **\n\n** **\n\nSince\nour inception, we have experienced significant growth in the scale of our operations. This expansion increases the complexity of our\nbusiness and places significant strains on our management, personnel, operations, systems, technical performance, financial resources,\nand internal financial control and reporting functions. We may not be able to manage growth effectively, which could damage our reputation,\nlimit our growth, increase our costs, and negatively affect our results of operations. Our business is becoming increasingly complex,\nand this complexity and our rapid growth have demanded, and will continue to demand, substantial resources and attention from our management.\n\n \n\nFurther,\nto accommodate our expected growth, we must improve and maintain our platform, technology, systems, and network infrastructure. Failure\nto effectively upgrade our technology or network infrastructure to support the expected increased traffic on our platform could result\nin unanticipated system disruptions, slow response times, or poor experiences for Hosts and Guests. To manage the expected growth of\nour operations and to support financial reporting requirements, we will need to improve our transaction processing and reporting, operational\nand financial systems and reporting, procedures, and controls. These improvements will be particularly challenging to realize if we acquire\nnew operations with different systems or if we continue to rely on manual financial reporting practices. Our current and planned personnel,\nsystems, procedures, and controls may not be adequate to support our future operations. If we are unable to expand our operations, improve\nour financial reporting processes, and hire additional qualified personnel in an efficient manner, it could adversely affect our business,\ncustomer and investor satisfaction, compliance with regulations and laws, and cause our expenses to grow disproportionately relative\nto our revenue, and our financial performance and future prospects will be adversely affected.\n\n \n\n**Breaches\nand other types of security incidents of our networks or systems similar to the recent Cybersecurity Incident, or those of our third-party\nservice providers, could negatively impact our business, our brand and reputation, our ability to retain existing Hosts and Guests and\nattract new Hosts and Guests, may cause us to incur significant liabilities and adversely affect our business, results of operations,\nfinancial condition, and future prospects.** \n\n** **\n\nIn\nthe regular course of our business, we collect, use, store, transmit, and process data and information about Hosts, Guests, employees,\nand others, some of which may be sensitive, personal, or confidential and make us an attractive target and potentially vulnerable to\ncyberattacks, computer viruses, electronic break-ins or similar disruptions. Recently on June 9, 2025, the Company identified a Cybersecurity\nIncident involving unauthorized access to its information systems. The Company became aware of the incident after certain employees received\nexternal communications from a threat actor alleging unauthorized access to Company data. Upon discovery, the Company promptly activated\nits incident response plan. Although based on its initial assessment the Company determined that an unauthorized third party accessed\na limited dataset containing certain personal information of a subset of approximately 8.4 million users, including names, phone numbers,\ncar registration numbers, personal addresses and email addresses associated with such users, it found no evidence to suggest that financial\ninformation, plaintext passwords, or other sensitive identifiers were compromised. To date, the incident has not resulted in any material\ndisruption to the Company’s operations. \n\n \n\nAccordingly,\nany such unauthorized access to or use of such data and information, or breach of our security measures or those of our third-party service\nproviders, could adversely affect our business, operations, and future prospects. While we have taken steps to mitigate our cyberattack\nrisks and protect the confidential information that we have access to, including but not limited to installation and periodical updates\nof antivirus software and backup of information on our computer systems, our security measures may be vulnerable to such security breaches.\nIn response to the Cybersecurity Incident, the Company took immediate actions to contain the threat and enhance its security posture.\nThese measures include implementing additional safeguards across the cloud and internal network, increasing system monitoring, and reviewing\naccess controls The Company had notified the appropriate regulatory and law enforcement authorities. The Company had also engaged third-party\ncybersecurity experts to perform an external cybersecurity assessment of its systems and processes, and the identified vulnerabilities\nand weaknesses have been remediated \n\n \n\n49\n\n \n\nEven\nthough the Company has taken the relevant steps to ensure that such breach does not occur again, because techniques used to sabotage\nor obtain unauthorized access to systems change frequently and generally are not recognized until they are launched against a target,\nwe may be unable to anticipate these techniques or to implement adequate preventative measures. Any cybersecurity incident like the one\nwe recently experienced, accidental or willful security breaches or other unauthorized access to our systems could cause confidential\ninformation to be stolen and used for criminal purposes. Cybersecurity incidents, security breaches or unauthorized access to confidential\ninformation could also expose us to liability related to the loss of the information, time-consuming and expensive litigation and negative\npublicity. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws\nin our technology infrastructure are exposed and exploited, our relationships with our Hosts and Guests could be severely damaged, we\ncould incur significant liability, and our business and operations could be adversely affected. Additionally, if we fail to protect confidential\ninformation, we may be susceptible to potential claims such as breach of contract, negligence or other claims. Such claims will require\nsignificant time and resources to defend and there can be no assurances that favorable final outcomes will be obtained.\n\n \n\nAn\nincreasing number of organizations, including large online and offline merchants and businesses, other large Internet companies, financial\ninstitutions, and government institutions have disclosed breaches of their information security systems and other information security\nincidents, some of which have involved sophisticated and highly targeted attacks. In addition, users on our platform could have vulnerabilities\non their own mobile devices that are entirely unrelated to our systems and platform, but which could mistakenly be attributed to us and\nour system and platform. Further, breaches experienced by other companies may also be leveraged against us. For example, credential stuffing\nand ransomware attacks are becoming increasingly common, and sophisticated actors can mask their attacks, making them increasingly difficult\nto identify and prevent. Certain efforts may be state-sponsored or supported by significant financial and technological resources, making\nthem even more difficult to detect. If a third party or employee circumvents any of our security measures or those of our third-party\nservice providers, they may access, misappropriate, delete, alter, publish, or modify this information, which could cause interruptions\nin our business and operations, fraud or loss to third parties, regulatory enforcement actions, litigation, indemnity obligations, competitive\nharm, and other possible liabilities, as well as negative publicity. Widespread negative publicity may also result from real, threatened,\nor perceived security compromises (or lack of adequate security measures) of our industry, competitors, Hosts, and Guests. Concerns regarding\nprivacy and data security could cause some Hosts and Guests to stop using our services, and for employees to be less satisfied with their\nemployment with us and potentially leave the Company or institute claims against us. This discontinuance in use and the potential failure\nto acquire new Hosts and Guests, and similar personnel issues, could substantially harm our business, results of operations, financial\ncondition, and future prospects.\n\n \n\nOur\ninformation technology systems, internal computer systems, cloud-based computing services, and those of our current and any future third-party\nservice providers are vulnerable to interruption and intrusion. Cyberattacks and other malicious internet-based activity, such as insider\nthreats, computer malware, hacking, and phishing attempts continue to increase. Any cybersecurity incident or material disruption or\nslowdown of our systems could cause outages or delays in our services, which could harm our brand and adversely affect our operating\nresults. Our failure to implement adequate cybersecurity protections could subject us to claims for any breach of security, particularly\nif it results in disclosure of information relating to our Hosts or Guests. If changes in technology cause our systems to become obsolete,\nor if our systems are inadequate to facilitate our growth, we could lose Hosts or Guests, and our business and operating results could\nbe adversely affected. From time to time, and most recently in 2025, we have experienced security incidents or attempted attacks, and\nin some instances, individuals have had their personal information compromised. We conduct investigations when we become aware of such\nincidents and/or attempted attacks (although our investigations may not be able to determine the method of attack) and may notify affected\npersons, as necessary. In addition to traditional computer “hackers” employing malicious code (such as viruses, worms, and\nransomware) to breach our systems and platform, we are susceptible to and monitor for social engineering, cyber extortion, and personnel\ntheft or misuse.\n\n \n\nWe\nmay also be the subject of denial of service attacks, server malfunction, software or hardware failures, loss of data or other computer\nassets, adware, or other similar issues. Threat actors, nation states, and nation state-supported actors engage in cyberattacks, including\nfor geopolitical reasons, continued opportunistic monetary reasons, and in connection with military conflicts and operations. During\ntimes of war and other major conflicts, we and our third-party service providers may be vulnerable to these attacks, including cyberattacks\nthat could materially disrupt our systems, platform and operations. While we have security measures in place to protect customer information\nand prevent data loss, service interruption, and other security breaches, we cannot guarantee that our security measures or our third-party\nservice providers’ security measures will be sufficient to protect against unauthorized access to, or other compromise of, personal\ninformation, confidential information, or proprietary information or of disruptions or damage to our systems. The techniques used to\nsabotage or to obtain unauthorized access to our platform, systems, networks, and/or physical facilities in which data is stored or through\nwhich data is transmitted change frequently, and we may be unable to anticipate such techniques or implement adequate preventative measures\nor stop security breaches that may arise from such techniques. As a result, our safeguards and preventive measures may not be adequate\nto prevent current or future cyberattacks and security incidents, including security breaches that may remain undetected for extended\nperiods of time, which can substantially increase the potential for a material and adverse impact resulting from the breach.\n\n \n\n50\n\n \n\nWe\nare required to comply with laws, rules, industry standards, and regulations that require us to maintain the security of personal information\nin India. We may also have contractual and other legal obligations to notify relevant stakeholders of security breaches. Failure to prevent\nor mitigate cyberattacks could result and has in the past resulted in unauthorized access to such data, including personal information.\nIndia has enacted laws requiring companies to notify individuals, regulatory authorities, and others of security breaches involving certain\ntypes of data. In addition, our agreements with certain partners may require us to notify them in the event of a security breach. Such\ndisclosures are and could be costly, could lead to negative publicity, may cause Hosts and Guests to lose confidence in the effectiveness\nof our security measures and to not use our services, and may require us to expend significant capital and other resources to respond\nto and/or alleviate problems caused by the actual or perceived security breach. In addition, the costs to respond to a cybersecurity\nevent or to mitigate any identified security vulnerabilities could be significant, including costs for remediating the effects of such\nan event, paying a ransom, restoring data from backups, and conducting data analysis to determine what data may have been affected by\nthe breach. In addition, our efforts to contain or remediate a security breach or any system vulnerability may be unsuccessful, and our\nefforts and any related failures to contain or remediate any breach or vulnerabilities could result in interruptions, delays, loss in\ncustomer trust, harm to our reputation, and increases in our insurance premiums.\n\n \n\nWe\ndo not currently have insurance coverage for security incidents or breaches, including fines, judgments, settlements, penalties, costs,\nattorney fees, and other impacts that arise out of incidents or breaches. While we may obtain cyber liability insurance in the future,\nwe cannot assure you that such insurance coverage will adequately cover liabilities actually incurred or that insurance will continue\nto be available to us on economically reasonable terms, or at all. The successful assertion against us of one or more large claims that\nexceeds available insurance coverage, or that results in changes to insurance policies (including premium increases or the imposition\nof large deductible or co-insurance requirements), could have an adverse effect on our business. Our risks are likely to increase as\nwe continue to expand, grow our Host and Guest base, and process, store, and transmit increasingly large amounts of confidential, proprietary\nand sensitive data. See Part I, Item 1C – Cybersecurity – for a more detailed discussion of our procedures relating to cybersecurity. \n\n \n\n**We\nface competition and could lose market share to competitors, which could adversely affect our business, financial condition and operating\nresults.** \n\n** **\n\nWe\nface and expect to continue to face competition from ride sharing companies, car rental and taxi companies. The car sharing market in\nparticular is intensely competitive and is characterized by rapid changes in technology, shifting guest needs and preferences, and frequent\nintroductions of new services and offerings. We expect competition to increase, both from existing competitors and new entrants in the\nmarkets in which we operate or plan to operate, and such competitors may be well-established and enjoy greater resources or other strategic\nadvantages. If Zoomcar is unable to anticipate or successfully react to these competitive challenges in a timely manner, Zoomcar’s\ncompetitive position could weaken, or fail to improve, and Zoomcar could experience a decline in revenue or growth stagnation that could\nadversely affect Zoomcar’s business, financial condition and operating results.\n\n \n\nCertain\nof our current and potential competitors may have greater financial, technical, marketing, research and development skills and other\nresources, greater name recognition, longer operating histories or a larger global user base than we do. Such competitors may be able\nto devote greater resources to the development, promotion and sale of offerings, and they may be able to offer lower prices in certain\nmarkets than we do, which could adversely affect our business, financial condition and operating results. These and other factors may\nallow our competitors to derive greater revenue and profits from their existing user bases, attract and retain Hosts and Guests at lower\ncosts or respond more quickly to new and emerging technologies and trends. Current and potential competitors may also establish cooperative\nor strategic relationships, or consolidate, amongst themselves or with third parties, which may further enhance their resources and offerings\nrelative to ours. \n\n \n\nWe\nbelieve that our ability to compete effectively depends upon many factors both within and beyond our control, including but not limited\nto:\n\n \n\n \n●\nacceptance\nof car-sharing and the use of our platform to solve transportation needs in the emerging markets in which we operate;\n\n \n\n \n●\nour\nability to attract and retain Guests and Hosts to use our platform;\n\n \n\n \n●\nthe\npopularity and perceived utility, ease of use, performance and reliability of our platform;\n\n \n\n \n●\nour\nbrand strength and recognition;\n\n \n\n \n●\nour\npricing models and the prices of our offerings;\n\n \n\n \n●\nour\nability to manage our business and operations during a pandemic and related travel restrictions if and when imposed upon outbreak\nof a pandemic;\n\n \n\n \n●\nour\nability to continue developing platform features which appeal to changing customer preferences;\n\n \n\n51\n\n \n\n \n●\nour\nability to continue leveraging and enhancing our data collection and analytics capabilities;\n\n \n\n \n●\nour\nability to establish and maintain relationships with strategic partners and third-party suppliers or providers;\n\n \n\n \n●\nchanges\nmandated by legislation, regulatory authorities or litigation, including settlements, judgments, injunctions and consent decrees,\nas well as changes that we may elect to make ourselves in the face of potential litigation, legislation, or regulatory scrutiny;\n\n \n\n \n●\nour\nability to attract, retain and motivate talented employees; and\n\n \n\n \n●\nour\nability to raise additional capital.\n\n \n\nIf\nwe are unable to compete successfully, our business, financial condition and operating results could be adversely affected.\n\n \n\n**We\nrely on mobile operating systems and application marketplaces to make its platform available to Hosts and Guests, and failure to effectively\noperate with or receive favorable placements within such application marketplaces could adversely affect Zoomcar’s business, financial\ncondition and operating results.** \n\n** **\n\nWe\ndepend in part on mobile operating systems, such as Android and iOS, and their respective app marketplaces, to make our app available\nto Hosts and Guests. Any changes in such systems and app marketplaces that degrade the functionality or popularity of our app could adversely\naffect our platform’s usage on mobile devices and may adversely affect our user ratings and reviews in app marketplaces. If such\nmobile operating systems or app marketplaces limit or prohibit us from making our app available to Hosts and Guests, or if such systems\nor marketplaces make changes that degrade the functionality of our app, slow the rollout of our app on other app marketplaces, increase\nthe cost of using our app, impose terms of use that are unsatisfactory to us, require users to opt in to enable marketing or advertising\nfeatures, or modify their search or ratings algorithms in ways that are detrimental to us, our Guest growth may be negatively affected.\nAny of the foregoing risks could adversely affect our business, financial condition, and results of operations.\n\n \n\n**Our\nbusiness depends on attracting and retaining capable management, technology development and operating personnel.** \n\n** **\n\nOur\nsuccess depends in large part on our ability to attract and retain high-quality management, technology development and operating personnel.\nCompetition for qualified employees is intense in our industry. There can be no assurance that members of our management team will continue\nto work for Zoomcar, or that we will be able to continue to attract or retain employees focused on technology development or other important\naspects of our business and operations. Our employees, including members of our management team, could leave our Company with little\nor no prior notice and would be free to work for a competitor. The loss of even a few qualified employees, or an inability to attract,\nretain, and motivate additional highly skilled employees required to carry out our business plans, could harm our operating results and\nimpair our ability to grow. If we were to lose key members of our management or technology teams, we would need to replace them with\nqualified individuals in a timely manner or else our business, results of operations and financial condition could be adversely impacted.\nAdditionally, certain of our executive officers and directors may allocate their time to other businesses, thereby causing potential\nconflicts of interests which could have a negative impact on our business operations.\n\n \n\n52\n\n \n\nWe\nalso do not maintain “key person” life insurance on any of our employees. The departure of one or more of our senior management\nteam members or other key employees could be disruptive to our business until we are able to hire qualified successors.\n\n \n\nTo\nattract and retain key personnel, we use various measures, including an equity incentive program for key executive officers and other\nemployees. These measures may not be enough to attract and retain the personnel we require to operate and grow our business effectively.\nIf we fail to identify, hire, train and retain the qualified management or technology personnel in the future, it may materially and\nadversely affect our business, financial condition, results of operations and prospects. \n\n \n\n**We\nare subject to payments-related risks.** \n\n** **\n\nWe\naccept payments using a variety of methods, including credit or debit cards, or digital payment alternatives like UPI or other specific\ndigital wallet platforms. As our payment policies are subject to change from time to time in accordance with evolving legal requirements\nand market availability of mobile and other payment systems in the jurisdiction where we operate, we offer new payment options to Hosts\nand Guests from time to time, subject to additional regulations, compliance requirements, and fraud risks. For certain payment methods,\nincluding credit and debit cards, we pay interchange and other fees that may increase over time and raise our operating costs and lower\nprofitability.\n\n \n\nWe\nrely on third-party payment processors to process payments, refunds, and reimbursements. Under our commercial agreements with these third\nparties, they may terminate the relationships with us at any time in their sole discretions. If one of these third parties terminates\nits relationship with us, or refuses to renew its agreement with us on commercially reasonable terms, we could incur substantial delays\nand expenses in locating and integrating an alternative payment service provider to process payments from Hosts and Guests, and the quality\nand reliability of any such alternative payment service provider may not be comparable. Further, the software and services provided by\nthese third parties may not meet our expectations, may contain errors or vulnerabilities, and could be compromised or experience outages.\nAdditionally, payment processing software is complex and involves automated processes implemented by us and the third parties that we\nengage. Therefore, the payment processing software can be misinterpreted and may be susceptible to errors. These risks could cause us,\nto lose our ability to accept and account for online payment or other payment transactions, make timely payments to Hosts, or result\nin over- or underpayments to Hosts, any of which could disrupt our business for an extended period of time, make our platform less convenient\nand attractive to users, expose user information to unauthorized disclosures and abuse, and adversely affect our ability to attract and\nretain Hosts and Guests, or materially adversely affect our business, financial condition, ability to forecast accurately, and results\nof operations.\n\n \n\n53\n\n \n\nIf\nwe are unable to maintain our chargeback or refund rates at levels that credit or debit card issuers, or payment processors deem acceptable,\nthese entities may increase fees for chargeback transactions or for many or all categories of transactions; they may also increase the\nrates of declining transactions or terminate their relationships with us. Any increases in fees could adversely affect our operating\nresults, particularly if we elect not to raise the prices for transactions on our platform to offset the increase. The termination of\nour ability to process payments on any major credit or debit cards or through certain online payment service providers or payment processors\ncould significantly impair our ability to operate our business.\n\n \n\nWe\nmay also be subject to, or may voluntarily comply with, a number of other laws and regulations relating to money laundering, money transmission,\ninternational money transfers, privacy and information security, and electronic fund transfers. If we are found to be in violation of\nsuch applicable laws or regulations, we could be subject to civil and criminal penalties or forced to cease our payments processing services\nor otherwise make changes to our business practices.\n\n \n\n**Any\nmajor disruption or failure of our information technology systems, or our failure to successfully implement new technology effectively,\ncould adversely affect our business and results of operations or the effectiveness of internal controls over financial reporting.** \n\n** **\n\nWe\nrely on various information technology systems, owned by us and third parties, to manage our operations. Over the last several years,\nwe have been and continue to implement modifications and upgrades to our systems, including making changes to legacy systems, replacing\nlegacy systems with successor systems with new functionality, and acquiring new systems with new functionality. These activities subject\nus to inherent costs and risks associated with replacing and upgrading these systems, including impairment of our ability to fulfil trip\nbookings, maintain books and records, potential disruption of our internal control structure, substantial capital expenditures, additional\nadministration and operating expenses, retention of sufficiently skilled personnel to implement and operate the new systems, demands\non management time, and other risks and costs of delays or difficulties in transitioning to new or upgraded systems or of integrating\nnew or upgraded systems into our current systems. Our system implementations may not result in productivity improvements at a level that\noutweighs the costs of implementation, or at all. In addition, the difficulties with implementing new or upgraded technology systems\nmay cause disruptions in our business operations and may have an adverse effect on our business and operations if not anticipated and\nappropriately mitigated.\n\n** **\n\n**The\nsuccessful operation of our business depends upon the performance and reliability of internet, mobile, and other infrastructures that\nare not under our control.** \n\n \n\nOur\nbusiness depends on the efficient, uninterrupted and reliable operations of internet, mobile, and other infrastructures that are not\nunder our control. We may operate in certain geographic areas with limited internet connectivity. Internet access and access to a mobile\ndevice are frequently provided by companies with significant market power, which could result in corporate action that degrades, disrupts,\nor increases the cost of users’ ability to access our platform. Failure to effectively upgrade our technology or internet infrastructure\nto support the expected increased utilization of our platform by larger numbers of Hosts and Guests could result in unanticipated system\ndisruptions, slow response times, or poor experiences for Hosts and Guests. In addition, the internet infrastructure that we and users\nof our platform rely on in any particular geographic area may be unable to support the demands placed upon it. Any such failure in internet\nor mobile device or computer accessibility, even for a short period of time, could interfere with the speed and availability of our platform.\nIn addition, we have no control over the costs of the services provided by national telecommunications operators. If mobile internet\naccess fees or other charges to internet users increase, consumer traffic may decrease, which in turn may cause our revenue to significantly\ndecrease. If our platform is unavailable when users attempt to access it, or if our platform does not load as quickly as users expect,\nHosts and Guests may not return to our platform as often in the future, or at all, and may use our competitors’ products, services,\nor offerings more often. Although we have attempted to prepare for contingencies through redundancy measures and disaster recovery plans,\nsuch preparation may not be sufficient, and we do not carry business interruption insurance. Despite any precautions we may take, the\noccurrence of a natural disaster, such as an earthquake, flood or fire, or other unanticipated problems in the jurisdictions where we\noperate, including power outages, telecommunications delays or failures, break-ins to our systems or computer viruses, could result in\ndelays or interruptions to our platform, our app and website, and loss of data and business interruption for us and our Hosts and Guests.\nAny of these events could damage our reputation, significantly disrupt our operations and subject us to liability, which could materially\nand adversely affect our business, financial condition and results of operations.\n\n \n\n54\n\n \n\n**Our\nbusiness operations may result in losses for which we are not insured.** \n\n** **\n\nOur\ncurrent business model consists of a peer-to-peer car-sharing platform which facilitates sharing of vehicles between Hosts and Guests.\nIn this context, we are a facilitator of vehicle bookings but disclaim legal responsibility for cars owned by Hosts and for actions by\nHosts and Guests on our platform and during bookings. Our platform terms and conditions, inform Hosts and Guests that booking, sharing\nand using cars through the platform is undertaken at their own risk; the lease agreement entered into between Hosts and Guests prior\nto each booking that occurs in India also disclaims our responsibility for Host and Guest property and for other damages incurred in\nrelation to bookings. We also include in our platform terms and conditions a limit on our overall liability equal to the greater of the\nbooking value of each trip and $120. However, we cannot be certain of the extent to which such disclaimers and limitations would be upheld\nas legally enforceable in every jurisdiction or circumstance. We regularly receive communication from Hosts (and from time to time, Guests)\nasserting that we are responsible, and requesting reimbursement, for damages to vehicles, lost property and other losses. All of our\nGuests pay a “value added” trip protection fee as part of a booking, however, the amount available to us from Guest trip\nprotection fees is not sufficient to offset the amounts requested to cover the cost of all damages claims, nor do we attempt to offset\nall such requests to cover vehicle damage. As a result, we often remain at a risk of residual claims that we may have to absorb in absence\nof a third-party insurance. For further information regarding the trip protection fees and related matters, please review information\ncontained in this 10-K under the heading  Item 3 Legal Proceedings - Other Matters. \n\n \n\nFurther,\nwe currently do not carry any insurance to protect against third-party damage claims tied to death, personal injury, or Guest or Host\ntheft or other losses, or third-party property damage. Although Hosts may insure their own vehicles to varying extents and are required\nto do so by law , or opt for trip insurance covers offered by certain empaneled third party insurance providers in certain selective\nlocations and for limited categories of vehicle damages, we do not carry out independent verification of Host insurance coverage, nor\ndoes Host vehicle insurance coverage, to the extent it exists, insulate us, in full or in part, from all types of damages claims or claims\nfor third-party indemnification associated with damages. We may therefore be subject to claims of significant liability based on any\nof the foregoing or based on other events or circumstances which occur during a booking or relate in some other manner to our platform\nor our business. We do not maintain balance sheet reserves to cover costs of defending, disputing, adjudicating, satisfying or settling\nany such claims if they are asserted against us and we may not be able to succeed in any such actions, should they materialize and be\ndetermined to result in liability to us. While are currently in the process of identifying adequate and feasible insurance coverage for\nour business, there can be no guarantee that we will be able to obtain or expand insurance coverage in the future, and even if we are\nable to obtain additional coverage, we may not carry sufficient insurance coverage to satisfy potential claims. As our business continues\nto grow, incidences of such claims may also increase and, unless we obtain insurance coverage for such matters, we may choose or be required\nto absorb larger parts of such uninsured claims to avoid becoming subject to legal proceedings that could be resolved against us, which\ncould lead to business losses and adversely affect our business, financial conditions and results of operations. Should uninsured losses\noccur, they could adversely affect our business, results of operations and financial condition. Further, our being subject to claims\nof liability, we may be subject to negative publicity and incur additional expenses, which could harm our business, financial condition,\nand operating results. \n\n \n\n**If\nwe do not adequately protect our intellectual property and our data, our business, results of operations, and financial condition could\nbe materially adversely affected.** \n\n** **\n\nWe\nrely on a combination of trademark, copyright, domain names, trade names and trade secret laws, international treaties, our terms of\nservice, other contractual provisions, user policies, restrictions on disclosures, and confidentiality agreements with our employees\nand consultants to protect our intellectual property rights from infringement and misappropriation. We currently have 21 registered trademarks\nand 1 recent trademark application that has passed the formalities check and is now under further examination along with 3 trademarks\nat variance – refused, abandoned and opposed, 1 patent application published, 3 patent applications have been abandoned, and 1\npatent application withdrawn in India; and 7 domain names. \n\n \n\nThere\nis no assurance that our pending or future trademark, patent, and copyright applications will be approved. Furthermore, effective intellectual\nproperty protection may not be available in every country in which we intend to operate our business and some of the platform features\nand other customization of software that is important to our operations is not protected by registered intellectual property rights.\nThere can be no assurance that others will not offer technologies, functions, features, or concepts that are substantially similar to\nours and compete with our business, or copy or otherwise obtain, disclose and/or use our brand, platform features, design elements, our\nsearch-and-ranking algorithms and machine-learning and artificial intelligence-enhanced tools and capabilities or other information that\nwe consider proprietary without authorization. We may be unable to prevent third parties from seeking to register, acquire, or otherwise\nobtain trademarks, copyrights or domain names that are similar to, infringe upon or diminish the value of our trademarks, copyrights,\nand our other proprietary rights. Third parties may obtain or misappropriate certain of our data through website scraping, robots, or\nother means to launch copycat sites, aggregate our data for their internal use, or to feature or provide our data through their respective\nwebsites, and/or launch businesses monetizing this data. While we routinely employ technological and legal measures in an attempt to\ndivert, halt, or mitigate such operations, we may not always be able to detect or halt the underlying activities as technologies used\nto accomplish these operations continue to rapidly evolve.\n\n \n\n55\n\n \n\nIf\nthe protection of our proprietary rights and data is inadequate to prevent unauthorized use or misappropriation by third parties, the\nvalue of our brand and other intangible assets may be diminished and our competitors may be able to more effectively mimic our technologies,\nofferings, or features or methods of operations. Even if we do detect violations or misappropriations and decide to enforce our rights,\nlitigation that may be necessary to enforce our rights may not be pursued by us, as it may be time-consuming and expensive, and divert\nour management’s attention. Additionally, a court of a competent jurisdiction may determine that certain of our intellectual property\nrights are unenforceable. If we fail to protect our intellectual property and data in a cost-effective and meaningful manner, our competitive\nstanding could be harmed; our Hosts, Guests, other consumers, and corporate and community partners could devalue the content of our platform;\nand our brand, reputation, business, results of operations, and financial condition could be materially adversely affected.\n\n \n\n**We\nhave been, and may in the future be, subject to claims that we or others violated certain third-party intellectual property rights, which,\neven where meritless, can be costly to defend and could materially adversely affect our business, results of operations, and financial\ncondition.** \n\n** **\n\nThe\ninternet and technology industries are characterized by significant creation and protection of intellectual property rights and by frequent\nlitigation based on allegations of infringement, misappropriation, or other violations of such intellectual property rights. There may\nbe intellectual property rights, including registered or pending patents, trademarks, and copyrights, and applications of the foregoing,\nheld by others that they allege cover significant aspects of our platform, technologies, content, branding, or business methods. Moreover,\ncompanies in the Internet and technology industries are frequent targets of practicing and non-practicing entities seeking to profit\nfrom royalties in connection with grants of licenses.\n\n \n\nWe\nhave received communications alleging unauthorized use of third-party trademarks in the past, and may receive in the future, communications\nfrom third parties, including practicing and non-practicing entities, claiming that we have infringed, misused, or otherwise misappropriated\ntheir intellectual property rights. Additionally, we have been, and may in the future be, involved in claims, suits, regulatory proceedings,\nand other proceedings involving alleged infringement, misuse, or misappropriation of third-party intellectual property rights, or relating\nto our intellectual property holdings and rights. Intellectual property claims against us, regardless of merit, could be time consuming\nand expensive to litigate or settle and could divert our management’s attention and other resources.\n\n \n\nClaims\ninvolving intellectual property could subject us to significant liability for damages and could result in our having to stop using certain\ntechnologies, content, branding, or business methods found to be in violation of another party’s rights. We might be required or\nmay opt to seek a license for rights to intellectual property held by others, which may not be available on commercially reasonable terms,\nor at all. Even if a license is available, we could be required to pay significant royalties, which would increase our operating expenses.\nWe may also be required to develop alternative non-infringing technology, content, branding, or business methods, which could require\nsignificant efforts and expenses and make us less competitive. Any of these results could materially adversely affect our business, results\nof operations, and financial condition.\n\n \n\nWe\nmay introduce new platform offerings or changes to existing platform offerings or make other business changes, including in areas where\nwe currently do not compete, which could increase our exposure to patent, copyright, trademark, and other intellectual property rights\nclaims from competitors, other practicing entities, and non-practicing entities. Any failure in maintaining, protecting or enforcing\nour intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.\n\n \n\n**Risks\nrelated to International, Regulatory and Legal Matters** \n\n** **\n\n**Our\nbusiness is subject to certain laws and regulations in the jurisdictions in which it operates, many of which are currently evolving,\nand the risk of unfavorable interpretations or failure to comply with such laws and regulations could harm Zoomcar’s business,\nfinancial condition and results of operations.** \n\n** **\n\nOur\nplatform currently operates across over 100 cities in India. We are subject to differing, and sometimes conflicting, laws and regulations\nin the various states in which we operate our business, which are evolving and may change from time to time, which may give rise to inconsistent\nor ambiguous interpretations among local, regional, or national laws or regulations applicable to our business. Compliance with laws\nand regulations of different states imposing varying standards and requirements is burdensome for businesses like ours, imposes added\ncost, increases potential liability to our business, and makes it difficult to realize business efficiencies and economies of scale.\n\n \n\nRelative\nto India, which is the location of our headquarters and the market where we currently have the largest number of bookings, we operate\nas an asset-light peer-to-peer car sharing business based on an interpretation of current legal and regulatory requirements. The operation\nof our business is informed by a regulatory framework which includes but is not limited to, the India Motor Vehicle Act, 1988 (“**MVA**”),\nwhich informs how we operate and the ways in which we promote our business. However, there can be no assurance that our interpretation\nof relevant Indian laws and regulations, including the MVA, is complete or correct, or that transportation authorities in India will\ninterpret the MVA or other applicable regulations the same way that we do. In the event that the MVA or other applicable laws and regulations\nare interpreted in a manner unfavorable to us, we could become the subject of investigations and could potentially face fines, duties,\njudgments or other negative consequences, which could materially adversely affect our business and results of operations. Additionally,\nas our business continues to grow and evolve, laws and regulations will be amended to address the evolution of our business, resulting\nin new and unpredictable legal and regulatory obligations in emerging markets. It may be difficult for us to comply with the new laws\nand regulations that will be developed to address changes in our industry and business, and we cannot guarantee that we will be able\nto comply with such new laws and regulations. If our current or future business models are determined to be noncompliant with the national,\nregional, and local laws and regulations, we may be required to make costly adjustments to our business model, which could result in\nnegative consequences, many of which may be outside of our control and impossible to predict. \n\n \n\n56\n\n \n\nIn\naddition to laws and regulations directly applicable to the peer-to-peer car sharing businesses, we are subject to laws and regulations\ngoverning other aspects of our business practices, including laws and regulations relating to use of the Internet, e-commerce, and electronic\ndevices, as well as those relating to taxation, online payments, automobile-related liability, consumer privacy, payments, and data protection,\npricing, content, advertising, discrimination, consumer protection, protection of intellectual property rights, distribution, messaging,\nmobile communications, environmental matters, labor and employment matters, claims management, electronic contracts, communications,\nInternet access, securities and public disclosure, corruption and anti-bribery, and unfair commercial practices. In addition, climate\nchange and greater emphasis on sustainability could lead to regulatory efforts to address the carbon impact of transportation and mobility,\nwhich could have a negative impact on our business.\n\n \n\nIn\naddition, the cities/states in which we have business operations may in the future enact new laws and regulations relating to emissions\nand other environmental matters associated with peer-to-peer car sharing operations, the peer-to-peer car sharing industry generally,\nand the operation of our business. The interpretation and enforcement of such laws may involve significant uncertainties. New laws and\nregulations that affect our existing and proposed future businesses may also be applied retroactively in ways that we cannot predict\nwith certainty.\n\n \n\nWe\ncannot predict the effect that the interpretation of existing or new laws or regulations may have on our business. Any of the foregoing\nor similar occurrences or developments could significantly disrupt our business operations and restrict us from conducting a substantial\nportion of our business operations in these jurisdictions, which could adversely affect our business, financial condition or operating\nresults. \n\n \n\nAny\nfailure or perceived failure to comply with existing or new laws and regulations, including the ones described in these risk factors,\nor with orders of any governmental authority, including changes to or expansion of their interpretations, may subject us to significant\nfines, penalties, criminal and civil lawsuits, forfeiture of significant assets or enforcement actions in one or more jurisdictions.\nThis failure or perceived failure could also result in the imposition of additional compliance and licensure requirements on us, as well\nas increased regulatory scrutiny of our business. In addition, we may be forced to restrict or change our operations or business practices,\nmake updates or upgrades of our platform, or delay planned launches or improvements of new features, functions and technologies. Any\nof the foregoing could materially adversely affect our brand, reputation, business, financial condition, and results of operations.\n\n \n\n**We are obligated to\ndevelop and maintain proper and effective internal control over financial reporting. If we are unable to develop and maintain an effective\nsystem of internal controls and procedures required by Section 404 of the Sarbanes-Oxley Act, we may not be able to accurately report\nour financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our\nstock price, business and operating results.**\n\n \n\nEffective internal control\nover financial reporting is necessary for us to provide reliable financial reports in a timely manner. The effectiveness of our internal\ncontrol over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making,\nassumptions about the likelihood of future events, the possibility of human error and the risk of fraud. If we are unable to develop\nand maintain effective internal control over our financial reporting, or remediate any material weaknesses we identify in the future,\nwe may not be able to accurately report our financial results in a timely manner, or prepare our financial statements within the time\nperiods specified by the forms of the SEC, which may adversely affect our reputation and business and the market price of our common\nstock. In addition, any such failures could result in litigation or regulatory actions by the SEC or other regulatory authorities, loss\nof investor confidence, delisting of our securities and harm to our reputation and financial condition, or diversion of financial and\nmanagement resources from the operation of our business. \n\n \n\nDuring the years ended March\n31, 2025, and 2024, we identified material weaknesses in our internal control over financial reporting pertaining to the inadequate design\nand maintenance of our internal control over our financial reporting and close activities and inadequate segregation of duties. Although\nthose material weaknesses were remediated and there were no material weaknesses identified as of March 31, 2026, there can be no assurance\nthat we will not experience additional material weaknesses in the future. We continue to assess our internal controls and procedures and\nintend to take further actions as necessary or appropriate to address any other matters we may identify in the future. We cannot assure\nyou that the measures we have taken to date and may take in the future, will be sufficient to prevent or avoid potential future material\nweaknesses in internal control over financial reporting. In addition, it is possible that control deficiencies or significant deficiencies\ncould be identified by our management or by our independent registered public accounting firm in the future or may occur without being\nidentified. Such a failure could result in regulatory scrutiny and cause investors to lose confidence in our reported financial condition,\nlead to a default under future indebtedness, and could have a material adverse effect on our business, financial condition, cash flow\nor results of operations.\n\n \n\n**Geographic\nareas in which Zoomcar operates and plans to operate in the future have been and may continue to be subject to political and economic\ninstability.** \n\n** **\n\nWe\ncurrently conduct all of our business operations in India (as of the date of this Form 10-K, we have closed our operations in Vietnam,\nIndonesia and Egypt). Our growth strategy is premised on the rapid expansion of our platform into emerging markets. Several of the countries\nin which we plan to operate our business in the future may be, subject to instances of political instability, civil unrest, hostilities,\nterrorist activities and economic volatility. Any such events may lead to, among other things, declines in Host and Guest demand for\nour platform, whether arising from safety concerns, a drop in consumer confidence, a general deterioration of economic conditions, currency\nvolatility, adverse changes to the political and regulatory environment, or otherwise. Any such developments and any other forms of political\nor economic instability in our markets may harm our business, financial condition and operating results.\n\n \n\n57\n\n \n\n**We\nare subject to risks associated with operating in rapidly evolving emerging markets.** \n\n** **\n\nTo\ncontinue growing our business, we plan, in the future, to strengthen our operations and presence in India and to expand into other emerging\nmarkets, which may include, without limitation, markets in Southeast Asia, Middle East/North Africa, and Latin America. We have limited\nexperience operating in jurisdictions outside India and plan to continue our efforts to expand into other jurisdictions. Business operations\nin multiple jurisdictions and markets is difficult, time consuming and expensive, and any international expansion efforts that we may\nundertake may not be successful. In addition, conducting international operations subjects us to risks associated with operating in emerging\nmarkets, including but not limited to the following:\n\n \n\n \n●\noperational\nand compliance challenges caused by distance, language, and cultural differences, including but not limited to the additional cost\nand resources required to localize our services, the translation of our mobile app, website and platform into foreign languages,\nand the adaptation of our operations to local cultures and practices, and any changes in such cultures and practices;\n\n \n\n \n●\nunexpected\nand more restrictive laws and regulations, as amended from time to time, including those laws and regulations governing internet\nactivities, peer-to-peer car sharing platforms, leasing or renting cars, insurance requirements, licensing and usage of vehicles,\nemployment, tax, licensing and permitting, identify verification and screening, email and text messaging, collection and use of personal\ninformation, privacy and data protection, payment processing, currency regulation, auto insurance scores, or other third-party data\nsources for trust and safety screening purposes, and other activities important to our online business practices;\n\n \n\n \n●\ndiffering\nlevels of technological compatibility with our platform and social acceptance of our brand and platform, and competition with companies\nthat understand the local market better than we do or that have preexisting relationships with potential Hosts and Guests in those\nmarkets;\n\n \n\n \n●\nlegal\nuncertainty regarding our liability for the actions of Hosts and Guests, including uncertainty resulting from unique local laws or\na lack of clear precedent of applicable law;\n\n \n\n \n●\ndependency\non third-party suppliers for the provision of essential business products/services including but not limited to IoT devices and software\nintegrations in different jurisdictions.\n\n \n\n \n●\nfluctuations\nin currency exchange rates;\n\n \n\n \n●\nhigher\nlevels of credit risk and payment fraud;\n\n \n\n \n●\npotentially\nadverse tax consequences, including the complexities of foreign value added tax systems and restrictions on the repatriation of earnings;\n\n \n\n \n●\nincreased\nfinancial accounting and reporting burdens, in addition to complexities and difficulties relating to the implementation and maintenance\nof adequate internal controls;\n\n \n\n \n●\ndifficulties\nin implementing and maintaining the financial systems and processes needed to enable compliance across multiple offerings and jurisdictions;\n\n \n\n \n●\npublic\nhealth concerns or emergencies, such as pandemic and other highly communicable diseases or viruses, outbreaks of which have from\ntime to time occurred in various parts of the world in which we operate;\n\n \n\n \n●\nmanaging\noperations in markets in which cash transactions are favored over credit or debit cards;\n\n \n\n \n●\npolitical,\nsocial, and economic instability abroad;\n\n \n\n \n●\nterrorist\nattacks, including data breaches and security concerns;\n\n \n\n \n●\nbreakdowns\nin infrastructure, utilities, and other services;\n\n \n\n \n●\nexposure\nto a business culture in which improper business practices may be prevalent;\n\n \n\n \n●\ncompliance\nwith various anti-bribery laws; and\n\n \n\n \n●\nreduced\nor varied protection of intellectual property rights in some countries.\n\n \n\n58\n\n \n\nWhile\nwe believe that the present regulatory environment in our target markets is generally favorable, this could and may change over time.\nIf the regulatory environment in our target markets becomes more unfavorable for car sharing businesses, this could have a negative impact\non our operations in these markets and could adversely impact our ability to achieve sustainable profitability in these markets.\n\n \n\n**Political\nchanges in the Government of India could delay or affect the further liberalization of the Indian economy and materially and adversely\naffect economic conditions in India, generally, and our business, in particular.** \n\n** **\n\nOur\nbusiness could be significantly influenced by economic policies adopted by the government of India. Since 1991, successive governments\nhave pursued policies of economic liberalization and financial sector reforms. The government has at various times announced its general\nintention to continue India’s current economic and financial liberalization and deregulation policies. However, protests against\nsuch policies, which have occurred in the past, could slow the pace of liberalization and deregulation. The rate of economic liberalization\ncould change, and specific laws and policies affecting foreign investment, currency exchange rates and other matters affecting investment\nin India could change as well. While we expect any new government to continue the liberalization of India’s economic and financial\nsectors and deregulation policies, there can be no assurance that such policies will be continued.\n\n \n\nThe\ngovernment of India has traditionally exercised and continues to exercise influence over many aspects of the economy. Our business may\nbe affected by interest rates, changes in policy, taxation, social and civil unrest and other political, economic or other developments\nin or affecting India.\n\n \n\nA\nchange in the government’s economic liberalization and deregulation policies could disrupt business and economic conditions in\nIndia generally, and specifically our business and operations, as substantially all of our business and operations are located in India.\nThis could have a material adverse effect on our business, prospects, financial condition and results of operations.\n\n \n\n**We\nmay incur liability for the activities of Hosts or Guests, which could harm our reputation, increase our operating costs, and adversely\naffect our business, financial condition and operating results.** \n\n** **\n\nWe\nmay be found to be subject to liability for the activities of Hosts and Guests on our platform. For example, we have in the past received,\nand expect to continue to receive, complaints from Hosts regarding damage to, or loss, theft, or impounding of, their vehicles and requests\nfor damage reimbursement, and from Guests regarding quality or serviceability of the vehicles, other safety and security issues, and\nactual or perceived discrimination in connection with Hosts declining trips and requests for reimbursement of their trip fees, as well\nas actual or threatened legal action against us if no reimbursement or perceived incomplete reimbursement is made. In addition, some\nof our Hosts may list or have listed vehicles on our platform in violation of their lease or financing agreements or personal automobile\ninsurance policies, or in violation of applicable legal restrictions on subleasing. Except for the examination of vehicle registration\ncertificates at the time of the Host onboarding and listing process, we do not screen vehicles for compliance with safety standards or\nmake efforts to determine whether they are legally registered to be driven on public roads, and it is possible that some vehicle registration\ncertificates may be forged, or some of our Hosts may list or have listed vehicles on our platform that fail to meet basic safety or legal\nrequirements for a vehicle. Our trust and safety checks and qualification procedures may not be capable of identifying all quality and\nsafety issues, including safety recalls, and our systems are not designed to identify legal, quality, and safety issues that may occur\nafter initial sign-up. Consequently, we could be and have been subject to liabilities incurred from local or state regulators and courts\nregarding the activities of Hosts and Guests on our platform or related legal, safety, and security issues.\n\n \n\nIf\nwe are found to be subject to liability or claims of liability relating to the acts of Hosts or Guests, or for failure to pay fees, fines,\nor taxes owed by them, we may be subject to negative publicity or other reputational harm, even if we are not found to be subject to\nsuch liability, and this may cause us to incur additional expenses, which could harm our business, results of operations, and financial\ncondition.\n\n \n\n**Host,\nGuest, or third-party actions that are criminal, violent, inappropriate, dangerous, or fraudulent may undermine the trust and safety\nor perception of trust and safety of our marketplace and our ability to attract and retain Hosts and Guests, which could materially and\nadversely affect our reputation, business, results of operations, and financial condition.** \n\n** **\n\nWe\nhave no control over or ability to predict the actions of our Hosts, Guests, and other third parties, such as additional passengers in,\nor drivers of, vehicles booked on our platform, and we cannot guarantee the safety of our Hosts, Guests, and such third parties. From\ntime to time, we may be subject to legal proceedings, including personal injury suits, claims, arbitrations, administrative proceedings,\nand government investigations or enforcement actions in the ordinary course of business. The actions of Hosts, Guests, and other third\nparties may result in fatalities, injuries, other bodily harm, assault, fraud, invasion of privacy, property damage, trespass, theft,\nincluding cases in which we are unable to recover the vehicle, discrimination, harassment, and libel, among other negative impacts, which\ncould create potential legal or other substantial liabilities for us, Hosts, or Guests. For example, Hosts may incur and have incurred\nliability due to the unlawful actions of their Guests or other third parties Guests allow in the vehicle, such as traffic violations\nor other legal violations, and Guests may incur and have incurred liability due to the unlawful actions of their Hosts, such as vehicle\nor registration violations. In addition, there have been rare instances where Guests were pulled over or detained by police because the\nvehicles they were driving had been reported as stolen by the vehicle owner. Depending on the circumstances, Hosts or Guests may also\nattempt to assert liability on the part of Zoomcar for unlawful actions stemming from the use of vehicles available on our platform.\nSuch liabilities could materially and adversely affect our reputation, business, results of operations, and financial condition.\n\n \n\n59\n\n \n\nIn\naddition, we do not, and may not in the future, undertake to independently verify the safety, suitability, quality, and compliance with\nour policies or standards of our Hosts’ vehicles. We have created policies and standards to respond to certain issues reported\nwith listings, but certain bookings may pose heightened safety risks to individual users because the underlying issues had never been\nreported to us. We rely, at least in part, on Hosts and Guests to investigate and enforce many of our policies and standards and report\nany issues with listings to us, and we cannot guarantee that they will do this promptly or accurately.\n\n \n\nMoreover,\nwe cannot conclusively verify the identity of all Guests, nor do we verify or screen third parties who may be present during a trip using\na vehicle booked through our platform. While we do some limited screening of Hosts, our trust and safety processes focus primarily on\nGuests to reduce the risk of vehicle theft and motor vehicle accidents. Our identity verification processes rely on, among other things,\ninformation provided by users at onboarding and booking, and our ability to validate that information and we do not require users to\nre-verify their identity following their successful completion of the initial verification process or require Guests to provide documentation\nor notification of any updates regarding their driving record or license status. We may not identify instances of identity fraud where\na Guest books a vehicle under another person’s identity for criminal or other unlawful purposes. Furthermore, we do not conduct\ncriminal background checks or any other screening processes on Guests and their invitees in a vehicle booked through our platform. Given\nthis ambiguity or potential change, it is possible that we are not now, or may not be in the future, compliant with those laws. Further,\nthe use of criminal background checks or credit checks in our marketplace may open us up to allegations of discrimination. Therefore,\nwe may be subject to negative publicity and incur additional expenses, which could harm our business, results of operations, and financial\ncondition.\n\n \n\n**Our\nexposure to exchange rate fluctuations and the translation of local currency results into U.S. dollars could negatively impact our results\nof operations.** \n\n** **\n\nAll\nof our business is transacted and/or denominated in foreign currencies, and fluctuations in currency exchange rates could have a significant\nimpact on our results of operations, financial condition and cash flows. Increased currency volatility, particularly in the Indian Rupee,\ncould also positively or negatively impact our foreign-currency-denominated costs, assets and liabilities. In addition, any devaluation\nof the Rupee relative to other foreign currencies could increase our operating expenses, adversely affecting the results of our operations.\nAny of these factors could adversely affect our financial condition and the results of our operations in the future.\n\n \n\n**The\neffective tax rates governing car rental and car subscription in India could change.** \n\n** **\n\nThe\ntax environment continues to evolve in India on a routine basis and remains relatively fluid compared to other more mature markets. The\nindirect tax rates associated with the Goods and Services Tax (GST) have changed on multiple occasions since the GST’s introduction\nin 2017 and these tax rates shave further undergone changes most recently in September 2025.. Any further increase in these indirect\ntax rates could result in a reduction in the Company’s operating cash flow, which could impair our future profitability.\n\n \n\n**We\nmay have exposure to materially greater than anticipated tax liabilities.** \n\n** **\n\nThe\ntax laws applicable to our business activities are subject to uncertainty and can be varied in the relevant jurisdictions. Like many\nother multinational companies, we are subject to tax in diverse jurisdictions and have structured our business to reduce our effective\ntax rate. The taxing authorities of the jurisdictions in which we operate have in the past, and may in the future, examine or challenge\nour methodologies for valuing developed technology, which could increase our worldwide effective tax rate and harm our financial position\nand operating results. Furthermore, our future income taxes could be adversely affected by earnings being lower than anticipated in jurisdictions\nthat have lower statutory tax rates and higher than anticipated in jurisdictions that have higher statutory tax rates, changes in the\nvaluation of our deferred tax assets and liabilities, or changes in tax laws, regulations, or accounting principles. We are subject to\nregular review and audit by the tax authorities in the jurisdictions where we operate, and currently face numerous income and other tax\nclaims pending appeals before higher authorities in India. Any adverse outcome of such appeals or an adverse interpretation from the\ntax authorities on the tax compliances and tax rates applicable to our car sharing business could have an adverse effect on our financial\nposition and operating results. In addition, the determination of our worldwide provision for income taxes and other tax liabilities\nrequires significant judgment by our management, and we have engaged in many transactions for which the ultimate tax determination remains\nuncertain. The ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial\nresults in the period or periods for which such determination is made. Our tax positions or tax returns are subject to change, and therefore\nwe cannot accurately predict whether we may incur material additional tax liabilities in the future, which could impact our financial\nposition.\n\n \n\n60\n\n \n\n**Our\nbusiness is subject to extensive government regulation and oversight relating to the provision of payment and financial services.** \n\n** **\n\nThe\njurisdictions in which we operate and jurisdictions we may enter may have laws that govern payment and financial services activities.\nThese laws govern, among other things, money transmission, prepaid access instruments, electronic funds transfers, anti-money laundering,\ncounter-terrorist financing, banking, systemic integrity risk assessments, and cyber-security of payment processes. Our business operations,\nincluding our payments to Hosts and Guests, may not always comply with these financial laws and regulations. Regulators s may determine\nthat certain aspects of our business are subject to these laws and could require us to obtain licenses to continue to operate in India\n. We have evaluated and will continue to critically evaluate our options for seeking applicable licenses and approvals in the jurisdictions\nwhere we operate to optimize our payment solutions and support the future growth of our business. Laws related to money transmission\nand online payments are evolving, and changes in such laws could affect our ability to provide payment processing on our platform in\nthe same form and on the same terms as we have historically, or at all.\n\n \n\nHistorical\nor future non-compliance with these laws or regulations could result in significant criminal and civil lawsuits, penalties, forfeiture\nof significant assets, or other enforcement actions. Costs associated with fines and enforcement actions, as well as reputational harm,\nchanges in compliance requirements, or limits on our ability to expand our product offerings, could harm our business.\n\n \n\nFurther,\nour payment system may be susceptible to illegal and improper uses, including money laundering, terrorist financing, fraudulent transactions,\nand payments to sanctioned parties. We have invested and will continue to invest substantial resources to comply with applicable anti-money\nlaundering and sanctions laws, and conduct appropriate risk assessments and implement appropriate controls. Government authorities may\nseek to bring legal action against us if our payment system is used for improper or illegal purposes or if our enterprise risk management\nor controls are not adequately assessed, updated, or implemented appropriately, and any such action could result in financial or reputational\nharm to our business. \n\n \n\n**Our\nreported financial results may be adversely affected by changes in accounting principles.** \n\n** **\n\nThe\naccounting for our business is complicated, particularly in the area of revenue recognition, and is subject to change based on the evolution\nof our business model, interpretations of relevant accounting principles, enforcement of existing or new regulations, and changes in\nSEC or other agency policies, rules, regulations, and interpretations, of accounting regulations. Changes to our business model and accounting\nmethods could result in changes to our financial statements, including changes in revenue and expenses in any period, or in certain categories\nof revenue and expenses moving to different periods, may result in materially different financial results, and may require that we change\nhow we process, analyze, and report financial information and our financial reporting controls.\n\n \n\n**We\nare subject to privacy laws and regulations, and compliance with these laws and regulations could impose significant compliance burdens.**\n\n** **\n\nThe\nregulatory framework for privacy issues worldwide is currently in flux and is likely to remain so for the foreseeable future. Practices\nregarding the collection, use, storage, transmission and security of personal information by companies operating over the internet have\nrecently come under increased public scrutiny. The European Union’s privacy and data security regulation, the General Data Protection\nRegulation (“**GDPR**”), that went into effect in May 2018, requires companies to implement and remain compliant with\nregulations regarding the handling of personal data, including its use, protection and the ability of persons whose data is stored to\ncorrect or delete such data about themselves. Other countries in Asia, Europe and Latin America have passed or are considering similar\nprivacy regulations, resulting in additional compliance burdens and uncertainty as to how some of these laws will be interpreted.\n\n \n\nWe\nreceive, collect and store a large volume of personally identifiable data by processing car sharing transactions on our platform. This\ndata is increasingly subject to legislation and regulations in numerous jurisdictions around the world.\n\n \n\nFor\nexample, the Indian Information Technology Act, 2000, as amended, would subject us to civil liability to compensate for wrongful loss\nor gain arising from any negligence by us in implementing and maintaining reasonable security practices and procedures with respect to\nsensitive personal data or information that we possess in our computer systems, networks, databases and software. India has also implemented\nprivacy laws, including the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information)\nRules, 2011, which impose limitations and restrictions on the collection, use and disclosure of personal information. The Digital Personal\nData Protection Act, 2023 (“DPDPA”) has been introduced in August of 2023 which has significant impact on the current regulatory\nenvironment with respect to the lawful use of digital personal data, cross border data transfers and additional compliances that may\nbe invoked for organizations collecting and/or processing personal data.\n\n \n\nFurther,\nin India, the Digital Personal Data Protection Rules (“DPDP Rules”) have recently been enforced partially and will continue\nto be enforced in a phased manner.\n\n \n\nWhile\nthe provisions for establishment of a “Data Protection Board” and Consent Managers have already been enforced, the remaining\nrules are yet to be enforced which would further operationalize the Digital Personal Data Protection Act, 2023 (DPDP Act), in line with\nIndia’s commitment to create a robust framework for protecting digital personal data in India. The entire framework for data protection\nlegislation is fairly new in India and going through the phases of implementation right now which may add to cost of compliances and\noperations for us and affect us in ways that we are currently unable to predict.\n\n \n\n61\n\n \n\nAny\nliability we may incur for violation of such laws and regulations and related costs of compliance and other burdens may adversely affect\nour business and profitability. We could be adversely affected if legislation or regulations are expanded to require changes in our business\npractices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business,\nresults of operations or financial condition.\n\n \n\n**Failure\nto comply with labor laws and regulations may cause us to incur additional costs, which may affect our business, financial conditions\nand results of operations.**\n\n** **\n\nOur\nbusiness operations are governed by various labor laws, regulations and government policies in multiple jurisdictions. The requirements\nfor labor law compliance, may change from time to time in each jurisdiction. We may be unable to comply with all these requirements in\ntime, or at all, or we may need to incur substantial costs to be compliant, which may adversely affect our business operations and financial\ncondition.\n\n \n\nIn\nIndia, provisions were released between 2019 and 2021 relating to the contribution of provident fund, employee state insurance, and professional\ntaxes by employers for the certain employees. Any delay or failure to make such contribution may result in penalties, interests, notices\nor other administrative actions by the relevant local authorities in India.\n\n** **\n\n**Uncertain\nglobal macro-economic and political conditions could materially and adversely affect our results of operations and financial condition.**\n\n \n\nOur\nresults of operations could be materially affected by economic and political conditions in the United States and internationally, including\ninflation, deflation, interest rates, availability of capital, war, terrorism, aging infrastructure, pandemics, energy and commodity\nprices, trade laws, election cycles and the effects of governmental initiatives to manage economic conditions. Current or potential business\nand consumer members may delay or decrease spending on our products and services sold through our platform as their business and/or budgets\nare impacted by economic conditions. The inability of current and potential business and consumer members to pay us for products and\nservices sold through our platform may adversely affect our earnings and cash flows.\n\n** **\n\n**Natural\ndisasters, including and not limited to unusual weather conditions, epidemic outbreaks, terrorist acts and political events could disrupt\nour business schedule.**\n\n \n\nThe\noccurrence of one or more natural disasters, including and not limited to tornadoes, hurricanes, fires, floods and earthquakes, unusual\nweather conditions, pandemics and endemic outbreaks, terrorist attacks or disruptive political events in certain regions where our facilities\nare located, or where our third-party contractors’ and suppliers’ facilities are located, could adversely affect our business.\nNatural disasters including tornados, hurricanes, floods and earthquakes may damage our facilities or those of our suppliers, which could\nhave a material adverse effect on our business, financial condition and results of operations. Terrorist attacks, actual or threatened\nacts of war or the escalation of current hostilities, or any other military or trade disruptions impacting our domestic or foreign suppliers\nof components of our products, may impact our operations by, among other things, causing supply chain disruptions and increases in commodity\nprices, which could adversely affect our raw materials or transportation costs. These events also could cause or act to prolong an economic\nrecession in the United States or abroad. In addition, the disaster recovery and business continuity plans we have in place currently\nare limited and are unlikely to prove adequate in the event of a serious disaster or similar event. We may incur substantial expenses\nas a result of the limited nature of our disaster recovery and business continuity plans and, more generally, any of these events could\ncause consumer member confidence and spending to decrease, which could adversely impact our operations.\n\n** **\n\n62\n\n** **\n\n**We\nmay be unable to successfully grow our business if we fail to compete effectively with others to attract and retain our executive officers\nand other key management and technical personnel.**\n\n \n\nWe\nbelieve our future success depends upon our ability to attract and retain highly competent personnel. Our employees are at-will and not\nsubject to employment contracts. We could potentially lose the services of any of our senior management personnel at any time due to\na variety of factors that could include, without limitation, death, incapacity, personal issues, retirement, resignation or competing\nemployers. Our ability to execute current plans could be adversely affected by such a loss. We may fail to attract and retain qualified\ntechnical, sales, marketing and managerial personnel required to continue to operate our business successfully. Personnel with the expertise\nnecessary for our business are scarce and competition for personnel with proper skills is intense.\n\n \n\nIn\naddition, new hires frequently require extensive training before they achieve desired levels of productivity. Additionally, attrition\nin personnel can result from, among other things, changes related to acquisitions, retirement and disability. We may not be able to retain\nexisting key technical, sales, marketing and managerial employees or be successful in attracting, developing or retaining other highly-qualified\ntechnical, sales, marketing and managerial personnel, particularly at such times in the future as we may need to fill a key position.\nIf we are unable to continue to develop and retain existing executive officers or other key employees or are unsuccessful in attracting\nnew highly-qualified employees, our financial condition, cash flows, and results of operations could be materially and adversely affected.\n\n \n\n**Risks\nRelated to Our Operations as a Public Company**\n\n \n\n**The\nrequirements of being a public company may strain our resources, divert our management’s attention and affect our ability to attract\nand retain qualified independent board members.**\n\n \n\nAs\na public company, we are subject to the reporting and corporate governance requirements of the Exchange Act, the listing requirements\nof OTC Markets Group and other applicable securities rules and regulations, including the Sarbanes-Oxley Act and the Dodd-Frank Wall\nStreet Reform and Consumer Protection Act of 2010 (the “**Dodd-Frank Act**”). Compliance with these rules and regulations\nwill increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand\non our systems and resources, particularly after we are no longer an “emerging growth company” as defined in the JOBS Act.\nAmong other things, the Exchange Act requires that we file annual, quarterly and current reports with respect to our business and results\nof operations and maintain effective disclosure controls and procedures and internal control over financial reporting. In order to improve\nour disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and\nmanagement oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could\nharm our business, financial condition, results of operations and prospects. Although we have already hired additional personnel to help\ncomply with these requirements, we may need to further expand our legal and finance departments in the future, which will increase our\ncosts and expenses.\n\n \n\nIn\naddition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for\npublic companies, increasing legal and financial compliance costs and making some activities more time-consuming. These laws, regulations\nand standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application\nin practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty\nregarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to\ninvest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative\nexpense and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our\nefforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies, regulatory\nauthorities may initiate legal proceedings against us and our business and prospects may be harmed. As a result of disclosure of information\nin the filings required of a public company and in this annual report, our business and financial condition will become more visible,\nwhich may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful,\nour business, financial condition, results of operations and prospects could be materially harmed, and even if the claims do not result\nin litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources\nof our management and materially harm our business, financial condition, results of operations and prospects.\n\n** **\n\n**We\nmay have increasing difficulty attracting and retaining qualified outside independent board members.**\n\n \n\nThe\ndirectors and management of publicly traded corporations are increasingly concerned with the extent of their personal exposure to lawsuits\nand shareholder claims, as well as governmental and creditor claims that may be made against them in connection with their positions\nwith publicly held companies. Outside directors are becoming increasingly concerned with the availability of directors’ and officers’\nliability insurance to pay on a timely basis the costs incurred in defending shareholder claims. Directors’ and officers’\nliability insurance is expensive and difficult to obtain. The SEC and OTCQB have also imposed higher independence standards and certain\nspecial requirements on directors of public companies. Accordingly, it may become increasingly difficult to attract and retain qualified\noutside directors to serve on our Board.\n\n \n\n63\n\n \n\n** \n\nStock\ntrading volatility could impact our ability to recruit and retain employees.**\n\n \n\nVolatility\nor lack of appreciation in our stock price may also affect our ability to attract and retain our key employees. Employees may be more\nlikely to leave us if the shares they own or the shares underlying their vested equity have not significantly appreciated in value relative\nto the original purchase price of the shares or the exercise price of the options, or conversely, if the exercise price of the options\nthat they hold are significantly above the market price of our common stock. If we are unable to retain our employees, or if we need\nto increase our compensation expenses to retain our employees, our business, operating results, and financial condition could be adversely\naffected.\n\n** **\n\n**Members\nof our management team have limited or no prior experience managing a public company.**\n\n \n\nExcept\na few, most of the members of our senior management team have no experience managing a publicly traded company, interacting with public\ncompany investors, and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully\nor efficiently manage our transition to being a public company, which will subject us to significant regulatory oversight and reporting\nobligations under the federal securities laws and the continuous scrutiny of securities analysts, investors and regulators. These new\nobligations and constituents will require significant attention from our senior management and could divert their attention away from\nthe day-to-day management of our business, which could harm our business, results of operations, and financial condition.\n\n** **\n\n**We\nmay be exposed to risk if we cannot enhance, maintain, and adhere to our internal controls and procedures.**\n\n \n\nAs\na public company trading on OTCQB, we have significant requirements for enhanced financial reporting and internal controls. The process\nof designing and implementing effective internal controls is a continuous effort that will require us to anticipate and react to changes\nin our business accounting, auditing and regulatory requirements and to expend significant resources to maintain a system of internal\ncontrols that is adequate to satisfy our reporting obligations as a public company, and we are still early in the process of generating\na mature system of internal controls and integration across business systems. If we are unable to establish or maintain appropriate internal\nfinancial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in\nmaterial misstatements in our financial statements, and harm our operating results.\n\n \n\nMatters\nimpacting our internal controls may cause us to be unable to report our financial information in an accurate manner or on a timely basis\nand thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of OTCQB rules. There also could\nbe a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements.\nConfidence in the reliability of our financial statements also could suffer if we or our independent registered public accounting firm\ncontinue to report a material weakness in our internal controls over financial reporting. This could materially adversely affect us and\nlead to a decline in the market price of our common stock.\n\n** **\n\n**As\na public company, we have incurred and expect to continue to incur increased expenses associated with the costs of being a public company.**\n\n \n\nWe\nhave and expect to continue to face a significant increase in insurance, legal, auditing, accounting, administrative and other costs\nand expenses as a public company that we did not currently incur as a private company. The Sarbanes-Oxley Act, including the requirements\nof Section 404 of that Act, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Act and the rules and\nregulations promulgated and to be promulgated thereunder, the Public Company Accounting Oversight Board (“**PCAOB**”),\nthe SEC and OTCQB, impose additional reporting and other obligations on public companies. Compliance with public company requirements\nhave and will continue to increase our costs and make certain activities more time-consuming. A number of those requirements require\nus to carry out activities that we have not done previously. For example, we recently created new board committees and adopted new internal\ncontrols and disclosure controls and procedures. In addition, additional expenses associated with SEC reporting requirements have and\nwill continue to be incurred. Furthermore, if any issues in complying with those requirements are identified (for example, if our independent\nregistered accounting firm identifies a material weakness or significant deficiency in the information technology general controls for\ninformation systems that are relevant to the preparation of the Company’s consolidated financial statements), we could incur additional\ncosts to remediate those issues, and the existence of those issues could adversely affect our reputation or investor perceptions of it.\nBeing a public company has and may in the future make it more difficult or costly for us to obtain certain types of insurance, including\ndirector and officer liability insurance. We may ultimately be forced to accept reduced policy limits and coverage with increased self-retention\nrisk or incur substantially higher costs to obtain the same or similar coverage in the future. Furthermore, if we are unable to satisfy\nour obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action\nand potentially civil litigation.\n\n \n\n64\n\n \n\nThe\nadditional reporting and other obligations imposed by various rules and regulations applicable to public companies has and is expected\nto continue to increase legal and financial compliance costs and the costs of related legal, auditing, accounting and administrative\nactivities. These increased costs will require us to divert a significant amount of money that could otherwise be used to expand the\nbusiness and achieve strategic objectives. Advocacy efforts by shareholders and third-parties may also prompt additional changes in governance\nand reporting requirements, which could further increase costs.\n\n** **\n\n**Our\ncurrent indebtedness and to the extent we incur indebtedness in the future, our future indebtedness could adversely affect our financial\ncondition, our ability to raise additional capital to fund our operations, our ability to operate our business, our ability to react\nto changes in the economy or our industry and our ability to pay our debts and could divert our cash flow from operations for debt payments.**\n\n \n\nWe are in default of a majority of our indebtedness of $31.55 million as\nof March 31, 2026 (*as more fully described under Item 8 Financial Statements; the Audited Consolidated Financial Statements*) which\nhas had and will continue to have an adverse effect on our financial condition, our ability to raise additional capital to fund our operations,\nand our ability to operate our business. Further, in the future, we may continue to incur a material amount of indebtedness. Our level\nof indebtedness increases the possibility that we may be unable to generate cash sufficient to pay the principal of, interest on, or other\namounts due with respect to our indebtedness. Our leverage and debt service obligations could adversely impact our business, including\nby:\n\n \n\n \n●\nimpairing\nour ability to generate cash sufficient to pay interest or principal, including periodic principal payments;\n\n \n\n \n●\nincreasing\nour vulnerability to general adverse economic and industry conditions;\n\n \n\n \n●\nrequiring\nthe dedication of a portion of our cash flow from operations to service our debt, thereby reducing the amount of our cash flow available\nfor other purposes, including capital expenditures, dividends to stockholders or to pursue future business opportunities;\n\n \n\n \n●\nrequiring\nus to sell debt or equity securities, possibly on unfavorable terms, to meet payment obligations;\n\n \n\n \n●\nlimiting\nour flexibility in planning for, or reacting to, changes in our business and the industries in which we compete; and\n\n \n\n \n●\nplacing\nus at a possible competitive disadvantage with less leveraged competitors and competitors that may have better access to capital\nresources.\n\n \n\n**The\nCompany may be subject to securities litigation, which is expensive and could divert management’s attention.** \n\n \n\nFollowing\nthe Business Combination, the per share price of the Common Stock has been and may continue to be volatile and, in the past, companies\nthat have experienced volatility in the market price of their stock have been subject to securities litigation, including class action\nlitigation. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which\ncould have a material adverse effect on our business, financial condition, and results of operations. Any adverse determination in litigation\ncould also subject the Company to significant liabilities.\n\n \n\n**Zoomcar\nhas limited operating history as a publicly traded company, and its historical financial information is not necessarily representative\nof the results we would have achieved as a publicly traded company and may not be a reliable indicator of its future results.** \n\n** **\n\nThe\nhistorical financial information included in this annual report from Zoomcar’s operation as a private company prior to the Business\nCombination does not necessarily reflect the results of operations and financial position we would have achieved as a publicly traded\ncompany during the periods presented, or those that we will achieve in the future. This is primarily because of the following factors:\n\n \n\n \n●\nPrior\nto the Business Combination, we operated as a private company. Our historical financial information reflects allocations of corporate\nexpenses as a private company. These allocations may not reflect the costs we will incur for similar services in the future as a\npublicly traded company.\n\n \n\n \n●\nOur\nhistorical financial information does not reflect changes that we expect to experience in the future as a result of becoming a publicly\ntraded company, including changes in the financing, insurance, cash management, operations, cost structure and personnel needs of\nour business. As a publicly traded entity, we may be unable to purchase goods, services and technologies, such as insurance and health\ncare benefits and computer software licenses, or access capital markets, on terms as favorable to us as those we obtained as a private\ncompany prior to the Business Combination, and our results of operations may be adversely affected.\n\n \n\nWe\nalso face additional costs and demands on management’s time associated with being a publicly traded company, including costs and\ndemands related to corporate governance, investor and public relations and public reporting. Stockholder activism, the current political\nand social environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations\nand disclosure obligations, which will likely result in additional compliance costs and could impact the manner in which Zoomcar operates\nits business in ways we cannot currently anticipate. For additional information about our past financial performance, see “*Management’s\nDiscussion and Analysis of Financial Condition and Results of Operations*” and our Consolidated Financial Statements and the\nNotes thereto included elsewhere in this annual report filing.\n\n \n\n65\n\n \n\n**Risks\nRelated to Ownership of Our Common Stock**\n\n** **\n\n**The\nCompany’s pending offer to exchange outstanding warrants may not be completed, which could adversely affect our capital structure,\nliquidity strategy and stock price.**\n\n \n\nThe\nCompany has commenced an offer to exchange certain outstanding warrants for shares of its common stock. The offer is subject to a number\nof conditions, including, among others, stockholder approval of an amendment to the Company’s Amended and Restated Certificate\nof Incorporation to increase the number of authorized shares of common stock. There can be no assurance that these conditions will be\nsatisfied or that the offer will be completed on the terms currently contemplated, or at all. If the offer is delayed, amended, extended\nor terminated, the Company may continue to have a complex capital structure with a significant number of outstanding warrants, which\ncould adversely affect investor perception, the market price of the Company’s common stock and the Company’s ability to raise\nadditional capital.\n\n** **\n\n**Future\nsales of our Common Stock could cause the market price for our Common Stock to decline.**\n\n \n\nWe\ncannot predict the effect, if any, that market sales of shares of our Common Stock or the availability of shares of our Common Stock,\nincluding upon exercise or conversion of any of our outstanding securities, for sale will have on the market price of our Common Stock\nprevailing from time to time. Sales of substantial amounts of shares of our Common Stock in the public market, or the perception that\nthose sales will occur, including sales pursuant to this annual report, could cause the market price of our Common Stock to decline or\nbe depressed.** **\n\n \n\nAs\ndescribed elsewhere herein, we expect to issue additional securities in the future to raise capital to continue our operations. Additionally,\nwe may issue our securities if we need to raise capital in connection with a capital expenditure, working capital requirement or acquisition.\nThe number of shares of our Common Stock issued in connection with a capital expenditure, working capital requirement or acquisition\ncould constitute a material portion of our then-outstanding shares of Common Stock. Any perceived excess in the supply of our shares\nin the market could negatively impact our share price and any issuance of additional securities in connection with investments or acquisitions\nmay result in additional dilution to you.\n\n \n\n**The\nmarket price and trading volume of our common stock may continue to be highly volatile, which could lead to a loss of all or part of\na stockholder’s investment.**\n\n \n\nThe market price of our Common Stock has fluctuated widely since the\nclosing of our Business Combination. During the period from January 1, 2024 to July 13, 2026, the trading price of our Common Stock has\nfluctuated from an intra-day high of $15,220 on January 12, 2024, to an intra-day low of $0.0562 on December 26, 2025.\n\n \n\nThe\nmarket price of our common stock is affected by a variety of factors, including but not limited to:\n\n \n\n \n●\nour\nability to execute our anticipated business plans and strategy;\n\n \n\n \n●\nactual\nor anticipated fluctuations in our quarterly or annual operating results;\n\n \n\n \n●\nour\nability to obtain additional capital which will be necessary to continue our business and operations;\n\n \n\n \n●\nchanges\nin financial or operational estimates or projections;\n\n \n\n \n●\nchanges\nin the economic performance or market valuations of companies similar to ours;\n\n \n\n \n●\nthe\nimpact of pandemics, inflation, war, other hostilities and other disruptive events on our business or that of our customers, partners,\nand supply chain or on the global economy; and\n\n \n\nIn\naddition, the trading price and trading volume of our common stock has very recently and at certain other times in the past exhibited,\nand may continue to exhibit, extreme volatility, including within a single trading day. Such volatility could cause purchasers of our\ncommon stock to incur substantial losses. With respect to certain such instances of trading volatility, we are not aware of any material\nchanges in our financial condition or results of operations that would explain such price volatility or trading volume, which we believe\nreflect market and trading dynamics unrelated to our operating business or prospects and outside of our control. We are thus unable to\npredict when such instances of trading volatility will occur or how long such dynamics may last. Under these circumstances, we would\ncaution you against investing in our common stock unless you are prepared to incur the risk of incurring substantial losses.\n\n \n\n66\n\n \n\nA\nproportion of our common stock may be traded by short sellers which may put pressure on the supply and demand for our common stock, creating\nfurther price volatility. In particular, a possible “short squeeze” due to a sudden increase in demand of our common stock\nthat largely exceeds supply may lead to sudden extreme price volatility in our common stock. Investors may purchase our common stock\nto hedge existing exposure in our common stock or to speculate on the price of our common stock. Speculation on the price of our common\nstock may involve long and short exposures. To the extent aggregate short exposure exceeds the number of shares of common stock available\nfor purchase in the open market, investors with short exposure may have to pay a premium to repurchase our common stock for delivery\nto lenders of our common stock. Those repurchases may in turn dramatically increase the price of our common stock until investors with\nshort exposure are able to purchase additional common stock to cover their short position. This is often referred to as a “short\nsqueeze.” Following such a short squeeze, once investors purchase the shares necessary to cover their short position, the price\nof our common stock may rapidly decline. A short squeeze could lead to volatile price movements in our shares that are not directly correlated\nto the performance or prospects of our company and could cause purchasers of our common shares to incur substantial losses.\n\n \n\nFurther,\nshareholders may institute securities class action litigation following periods of market volatility. If we were involved in securities\nlitigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business.** **\n\n** **\n\n**Our\nissuance of additional capital stock in connection with financing, acquisitions, investments, the Incentive Plan or otherwise will dilute\nall other stockholders.**\n\n \n\nIn\nfurtherance to the recent closing of the Bridge Financing 2026 as described elsewhere in this Report on 10-K we expect to issue additional\ncapital stock in the future that will result in dilution to all other stockholders. We expect to grant equity awards to employees, directors\nand consultants under the Incentive Plan. We may also raise capital through equity financing in the future. As part of our business strategy,\nwe may acquire or make investments in complementary companies, products or technologies and issue equity securities to pay for any such\nacquisition or investment. Any such issuances of additional capital stock may cause stockholders to experience significant dilution of\ntheir ownership interests and the per share value of our Common Stock to decline.\n\n \n\n**If\nsecurities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they\nchange their recommendations regarding our securities adversely, the price and trading volume of our securities could decline.**\n\n \n\nThe\ntrading market for our securities will be influenced by the research and reports that industry or securities analysts may publish about\nus, our business, markets, revenue streams, and competitors. Securities and industry analysts do not currently, and may never, publish\nresearch on us. If no securities or industry analysts commence coverage of us, our share price and trading volume would likely be negatively\nimpacted. If any of the analysts who may cover us adversely change their recommendation regarding our shares of common stock, or provide\nrelatively more favorable recommendations with respect to competitors, the price of our shares of common stock would likely decline.\nIf any analyst who may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in\nthe financial markets, which in turn could cause our share price or trading volume to decline.\n\n \n\n**We\ndo not intend to pay cash dividends for the foreseeable future.**\n\n \n\nWe\ncurrently intend to retain our future earnings, if any, to finance the further development and expansion of our business and do not intend\nto pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our Board and\nwill depend on our financial condition, results of operations, capital requirements, and future agreements and financing instruments,\nbusiness prospects and such other factors as our Board deems relevant.\n\n** **\n\n**Because\nthere are no current plans to pay cash dividends on our Common Stock for the foreseeable future, you may not receive any return on investment\nunless you sell your Common Stock at a price greater than what you paid for it.**\n\n \n\nWe\nintend to retain future earnings, if any, for future operations, expansion and debt repayment and there are no current plans to pay any\ncash dividends for the foreseeable future. The declaration, amount and payment of any future dividends on shares of our Common Stock\nwill be at the sole discretion of the Board. The Board may take into account general and economic conditions, our financial condition\nand results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and\nregulatory restrictions, implications of the payment of dividends by us to our stockholders or by our subsidiaries to us and such other\nfactors as the Board may deem relevant. As a result, you may not receive any return on an investment in the Common Stock unless you sell\nyour Common Stock for a price greater than that which you paid for it.\n\n \n\n67\n\n \n\n**Future\nsales, or the perception of future sales, by us or our stockholders in the public market could cause the market price for the Common\nStock to decline.**\n\n** **\n\nThe\nsale of shares of our Common Stock in the public market, or the perception that such sales could occur, could harm the prevailing market\nprice of shares of Common Stock. These sales, or the possibility that these sales may occur, also might make it more difficult for the\nus to sell equity securities in the future at a time and at a price that it deems appropriate.\n\n \n\nAs of July 13, 2026 we have a total of 8,488,485 shares of Common Stock\noutstanding (i) without giving effect to any awards that may be issued under the Incentive Plan and (ii) assuming no exercise of the outstanding\noptions and warrants. All shares currently held by public stockholders and all of the shares issued in the Business Combination to former\nZoomcar Stockholders are freely tradable without registration under the Securities Act (except for the Common Stock that are the subject\nof resale registration statement pending effectiveness or filing ), and without restriction by persons other than our “affiliates”\n(as defined under Rule 144 under the Securities Act, (“Rule 144”)), including our directors, executive officers and other\naffiliates.\n\n \n\nWe\nfiled resale registration statements on December 12, 2024, to register for resale a total of shares of Common Stock 660,320 (13,206,386\nshares of Common Stock prior to giving effect to the Second Reverse Split) including shares of Common Stock issuable upon exercise of\noutstanding warrants.\n\n \n\nAll\nof the remaining Registrable Securities in the above mentioned offerings were included in those registration statements. These registration\nstatements are still pending and a large number of such Registrable Securities continue to be unregistered, but upon effectiveness of\nthat registration statement, it is likely that many of the securities registered for resale thereunder will be sold.\n\n \n\nAs\nof March 31, 2025, the Company entered into a securities purchase agreement, substantially in the same form as the December 2024 SPA\nand the January 2025 SPA with certain additional accredited investors in connection with the third closing of the Offering (the\n“December **Third Closing**”). The Company did not receive any cash proceeds in the December Third Closing. The\nsecurities were issued to the investors either (i) as consideration for waiving certain rights that such investors may have had in\nconnection with a most favored nations provision included in the transaction documents for a prior financing of Zoomcar, Inc. or\n(ii) to settle outstanding amounts owed by the Company to its Placement Agent and the Legal Counsels (Aegis Settlement and Law Firm\nSettlement described below). Pursuant to the terms and conditions of the Securities Purchase Agreement, the Company issued to such\ninvestors an aggregate of $15,639,099 of securities consisting of 501,318 shares of common stock of the Company, par value $0.0001\nper share (the Common Stock). The Company along with the Common Stock issued (i) Series A Warrants to purchase up to an aggregate of\n6,706,192 shares of Common Stock at an exercise price of $6.24 per share, which takes into account a “share combination\nevent” adjustment effective following the issuance of such warrants as a result of the Reverse Split (the “**Series A\nWarrants**”) and (ii) Series B Warrants to purchase initially no shares of Common Stock and then up to a maximum of\n2,004,955 shares of Common Stock subject to certain adjustments, at an initial exercise price of $0.002.\n\n \n\nThe\nCompany had filed a registration statement on Form S-1 on May 05, 2025, which did not take effect for resale of the securities that were\nissued in the Third Closing. Accordingly, owing to the delay/ ineffectiveness of the Form S-1 filed on May 05, 2025, on June 6, 2025,\nthe Company issued a settlement letter (the “Settlement Letter”) to each of the investors from the First and the Second Closings\n(the “Settlement Investors”), pursuant to which the Settlement Investors agreed to the settlement of liquidated damages arising\nfrom Section 2.4 of the Registration Rights Agreements with the Investors, entered into on December 23, 2024 and January 31, 2025, respectively\n(“RRAs”). Under the provisions of the Settlement Letter, the Company agreed to issue an aggregate of 1,950,600 pre-funded\nwarrants with an aggregate value of $3,023,400 to the Settlement Investors (the “Settlement Warrants”), with each Settlement\nWarrant having an exercise price of $0.0001 per share of Common Stock, in consideration for the full payment of liquidated damages owed\nto each Settlement Investor under Section 2.4 of the applicable RRA, and each Settlement Investor’s release of the Company from\nany and all claims thereunder including, without limitation any additional liquidated damages. The liquidated Damages were calculated\ntill such period that the Investor first became eligible to freely resell the underlying securities under Rule 144 of the Securities\nAct of 1933. The valuation of the Settlement Warrants was calculated based on the volume-weighted average price of the Company’s\ncommon stock over the five (5) trading days immediately preceding June 6, 2025.\n\n \n\nIn addition, the shares of Common Stock reserved for future issuance under the Incentive Plan will become eligible\nfor sale in the public market once those shares are issued, subject to any applicable vesting requirements, lock-up agreements and other\nrestrictions imposed by law. As of July 13, 2026, a total of 1,002,544 shares of Common Stock have been reserved for future issuance under\nthe Incentive Plan. 19,609 shares have been registered in a Form S-8 Registration Statement filed with SEC on February 11, 2025. On March\n31, 2025, the number of shares of Common Stock reserved under the Incentive Plan was increased by a number of shares of Common Stock equal\nto 15% of the number of shares of Common Stock issued and outstanding on March 31, 2025, or an additional 369,311 shares. In furtherance\nof the increase to the Incentive Plan, on July 18, 2026, the Company filed a Form S-8 Registration Statement for the registration of an\nadditional 5,008,017 shares of our Common Stock, consisting of (i) 369,311 shares of our Common Stock that our shareholders approved at\na special meeting of stockholders held on February 18, 2025 and (ii) 4,638,706 shares of our Common Stock that our Board approved on July\n7, 2025.\n\n \n\n68\n\n \n\nAs\non December 31, 2025 the number of shares of Common Stock reserved under the Incentive Plan was further enhanced by a number of shares\nof Common Stock equal to 3% of the number of shares of Common Stock of the total number of Common Stock issued and outstanding pursuant\nto the Annual Increase Requirements under the Incentive Plan.\n\n \n\nOn July 7, 2026,\nthe Company’s Board of Directors approved an amendment to the Incentive Plan to increase the maximum aggregate number of shares\nof common stock reserved for issuance thereunder. Pursuant to the amendment, the share reserve will be increased by an amount of additional\nshares necessary to bring the total pool to thirty percent (30%) of the Company’s total issued and outstanding share capital on\na fully diluted basis. The exact number of additional shares will be calculated and fixed as of the later of (i) July 31, 2026, or (ii)\nthe closing of the Company’s ongoing exchange offer. These additional shares are restricted solely for the issuance of restricted\nstock units (RSUs), nonqualified stock options (NSOs), and other non-incentive stock option awards. The Company intends to file a Registration\nStatement on Form S-8 with the Securities and Exchange Commission to register the additional shares authorized under the amended Incentive\nPlan following the final determination date.  \n\n \n\nAccordingly, these shares registered under these registration statements\nand any new shares issued pursuant to increase in pool shall be available for sale in the open market.\n\n \n\nIn\nthe future, we may also issue our securities to raise capital or in connection with investments or acquisitions. We may also issue additional\nsecurities upon adjustments included in our existing securities. For example, on June 18, 2024, we closed a private placement transaction\nof notes and warrants for $3 million of gross proceeds, on November 7, 2024, we closed a private placement transaction of shares and\nwarrants for $9.15 million of gross proceeds, on December 24, 2024, we consummated the December Offering in which we issued shares and\nwarrants for $5,484,843 of gross proceeds, and on February 4, 2025, we consummated the January/February Offering in which we issued shares\nand warrants for $1,400,000 of gross proceeds.\n\n \n\nOn June 2, 2026, the Company entered into a securities purchase agreement\nfor a private pursuant to which we completed a first closing of 1,143 Series A units at $1,000 per unit for gross proceeds of approximately\n$1, 143,000 with the potential to sell up to $10,000,000 in total units including an overallotment option.\n\n \n\nOn\nJune 18, 2026 entered into a securities purchase agreement for a private pursuant to which we completed a second closing of 537 Series\nA units at $1,000 per unit for gross proceeds of approximately $537,000.\n\n \n\nOn\nJune 30, 2026 entered into a securities purchase agreement for a private pursuant to which we completed a third closing of 195 Series\nA units at $1,000 per unit for gross proceeds of approximately $195,000.\n\n \n\nEach\nunit consists of one share of Series A Convertible Preferred Stock, initially convertible at $0.05 per share (subject to alternate conversion\nrights and price-reset adjustments), and one five-year warrant to purchase one share of Common Stock at an exercise price of $0.0625\nper share. The subsequent conversion of these Preferred Shares or the exercise of these Warrants will result in the issuance of a substantial\nnumber of additional shares of our Common Stock. The resale of these shares, or even the perception that these future sales could occur,\nmay adversely affect our stock price, and severely dilute the ownership and voting power of our existing stockholders.\n\n \n\nAccordingly,\n\n \n\n●3,64,90,000 shares of Common Stock are issuable upon exercise\nof Preferred Shares at an initial conversion price of $0.05 per share.\n\n \n\n●3,64,90,000 shares of Common Stock are issuable upon exercise\nof Series A Warrants an exercise price of $0.0625 per share, subject to adjustment as provided under the respective Warrant document.\n\n \n\n●In connection with the First Closing, Second Closing and\nThird Closing, the Company issued Placement Agent Warrants to purchase up to 3,649,000 shares of Common Stock, on terms substantially\nsimilar to the Series A Warrants.\n\n \n\nThe\namount of shares of Common Stock issued or issuable upon exercise or conversion of securities issued in connection with a capital raise\nor an investment or acquisition could constitute a material portion of the then-outstanding shares of the Common Stock. Any issuance\nof additional securities in connection with capital raising activities, investments or acquisitions may result in additional dilution\nto our stockholders."}