Zoomcar Holdings(ZCAR) - 2023 Q2 - Quarterly Report

PART 1 – FINANCIAL INFORMATION Interim Unaudited Financial Statements The unaudited financial statements for the quarter ended June 30, 2023, reflect the company's non-operational status as a SPAC, with a net loss and assets primarily held in trust Unaudited Condensed Balance Sheets The balance sheet as of June 30, 2023, shows total assets of $34.1 million, a shareholders' deficit of $21.8 million, and $33.9 million in shares subject to redemption Condensed Balance Sheet Highlights (Unaudited) | Account | June 30, 2023 | March 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash | $36,287 | $50,274 | | Marketable securities held in Trust Account | $33,949,490 | $33,058,050 | | Total Assets | $34,095,880 | $33,293,846 | | Liabilities & Equity | | | | Total current liabilities | $9,812,934 | $8,552,109 | | Deferred underwriters' discount | $12,100,000 | $12,100,000 | | Total Liabilities | $21,912,934 | $20,652,109 | | Class A ordinary shares subject to possible redemption | $33,949,490 | $33,058,050 | | Total Shareholders' Deficit | ($21,766,544) | ($20,416,313) | Unaudited Condensed Statements of Operations The company reported a net loss of $458,791 for the quarter ended June 30, 2023, driven by operating costs and partially offset by interest income Statement of Operations Summary (Unaudited) | Account | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Operating costs | $855,233 | $478,919 | | Loss from operations | ($855,233) | ($478,919) | | Interest earned on cash held in Trust Account | $396,440 | $316,796 | | Net loss | ($458,791) | ($162,106) | | Basic and diluted net loss per share | ($0.04) | ($0.01) | Unaudited Condensed Statements of Changes in Shareholder's Deficit The shareholders' deficit increased to $21.8 million by June 30, 2023, due to the quarterly net loss and accretion of redeemable shares Changes in Shareholders' Deficit for Three Months Ended June 30, 2023 | Description | Amount | | :--- | :--- | | Balance – March 31, 2023 | ($20,416,313) | | Accretion of Class A ordinary shares to redemption amount | ($891,440) | | Net loss | ($458,791) | | Balance – June 30, 2023 | ($21,766,544) | Unaudited Condensed Statements of Cash Flows Net cash used in operations was $513,987 for the quarter, with financing from sponsor promissory notes covering the deficit and extension payments Cash Flow Summary for Three Months Ended June 30, 2023 | Activity | Amount | | :--- | :--- | | Net cash used in operating activities | ($513,987) | | Net cash used in investing activities | ($495,000) | | Net cash provided by financing activities | $995,000 | | Net Change in Cash | ($13,987) | | Cash at the end of the period | $36,287 | Notes to Condensed Financial Statements (unaudited) The notes disclose the company's SPAC nature, a pending merger with Zoomcar, Inc, and substantial doubt about its ability to continue as a going concern - The company is a SPAC formed to effect a business combination and has not commenced any operations or generated revenue as of June 30, 2023[20][21] - On October 13, 2022, the Company entered into a Merger Agreement with Zoomcar, Inc. for a business combination[108] - The company extended its deadline to complete a business combination to October 29, 2023, which involved shareholder redemptions of 20,289,579 public shares, removing approximately $210.3 million from the Trust Account[35][37][38] - Management has determined that there is substantial doubt about the Company's ability to continue as a going concern due to its approaching deadline to consummate a Business Combination[51][49] - As of June 30, 2023, the company had $2,490,000 outstanding in promissory notes from its Sponsor and an affiliate to fund working capital and extension payments[48][92][93] Management's Discussion and Analysis of Financial Condition and Results of Operations This analysis details the company's precarious financial condition as a blank check company, its reliance on sponsor funding, and significant going concern risks - The company is a blank check company that must complete a business combination by October 29, 2023[133][151] - A definitive Merger Agreement was signed with Zoomcar, Inc. on October 13, 2022[140] - Extensions of the business combination deadline were accompanied by significant redemptions, reducing the Trust Account balance from over $234 million to approximately $30.17 million[144][145][147][148] - The company's liquidity is severely constrained, with only $36,287 in cash and a working capital deficit of $9.7 million, relying on $2.49 million in promissory notes from its Sponsor[162][186] - Management has concluded there is substantial doubt about the company's ability to continue as a going concern due to the risk of not consummating a business combination by the deadline[174] Quantitative and Qualitative Disclosures about Market Risk The company states that this item is not applicable - Not applicable[204] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes in internal controls - Based on an evaluation as of June 30, 2023, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[205] - There were no material changes to the company's internal control over financial reporting during the quarter ended June 30, 2023[208] PART II – OTHER INFORMATION Legal Proceedings The company reports that there are no legal proceedings - None[211] Risk Factors Key risks include a potential excise tax on redemptions, rising inflation and interest rates, and geopolitical uncertainty impacting a business combination - The company may be subject to a 1% excise tax on stock redemptions under the Inflation Reduction Act of 2022, which could negatively impact a business combination[213] - Recent increases in inflation and interest rates could make it more difficult to consummate an initial business combination[214] - Geopolitical uncertainty, including military conflicts, may lead to price volatility and make it more difficult to complete a business combination[215] Unregistered Sales of Equity Securities and Use of Proceeds The company details the $230 million in gross proceeds from its IPO and the subsequent deposit of $234.6 million into the Trust Account - Following the IPO and private placement, a total of $234,600,000 was placed in a trust account[220] - Total offering costs amounted to $16,664,843, which included $3,173,059 in immediate underwriting fees and $12,100,000 in deferred fees[219] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[223] Mine Safety Disclosures The company states that this item is not applicable - Not applicable[224] Other Information The company reports no other information - None[225] Exhibits This section lists key legal and financial documents filed with the report, including charter documents, agreements, and officer certifications List of Exhibits | Exhibit No. | Description | | :--- | :--- | | 3.1 | Amended and Restated Memorandum and Articles of Association | | 10.1 | Amendment No. 2 to the Investment Management Trust Agreement | | 10.3 | Promissory Note, dated July 20, 2023, issued to Sponsor | | 31.1, 31.2 | Certifications of Principal Executive and Financial Officers (SOX 302) | | 32.1, 32.2 | Certifications of Principal Executive and Financial Officers (SOX 906) |