ZCAR issues $514k 12% convertible notes; dilution risk on default

Zoomcar Holdings, Inc. (ZCAR) filed an 8-K disclosing that on 24 June 2025 it privately placed two 12% convertible bridge notes with 1800 Diagonal Lending LLC and Boot Capital LLC.

Rhea-AI Filing Summary

Zoomcar Holdings, Inc. (ZCAR) filed an 8-K disclosing that on 24 June 2025 it privately placed two 12% convertible bridge notes with 1800 Diagonal Lending LLC and Boot Capital LLC.

• Gross principal: $402,000 and $111,760, respectively; combined $513,760.
• Original-issue discount (OID): 10% on each note, resulting in net cash proceeds of $350,000.
• Maturity: 30 March 2026, with scheduled installments; issuer may prepay at a discount.
• Default terms: interest rises to 22% and the outstanding balance inflates to 150%—and up to 200%—of principal plus accrued interest. Late share delivery incurs a $1,000/day penalty.
• Conversion right (default only): holder may convert outstanding balance into common stock at 75% of the lowest trading price in the prior 15 trading days, exposing shareholders to potential dilution.

The securities were issued under Rule 506 of Regulation D, avoiding SEC registration. Exhibit 4.1 contains the form of note; Exhibit 10.1 the purchase agreement.

Positive

• $350,000 in immediate net proceeds strengthens short-term liquidity.
• Company retains the option to prepay the notes at a discount, potentially avoiding conversion.

Negative

• Notes carry a 12% coupon plus 10% OID, making the effective cost of capital high.
• Default conversion at 25% discount could cause significant shareholder dilution.
• Default multipliers of 150%–200% and 22% interest highlight elevated credit risk.
• The small size of the raise implies ongoing funding constraints; additional dilution may be required.

Insights

Financial Analyst

TL;DR: Small cash infusion, high-cost convertible notes signal liquidity strains and raise dilution risk.

The $350k net proceeds provide near-term working capital but come with a punitive 12% coupon, 10% OID, and harsh default escalators. Conversion only triggers on default yet occurs at a 25% market discount, incentivising noteholders to push for equity rather than cash repayment. The 150%–200% default multipliers and $1k/day penalties underscore lender leverage and suggest limited financing alternatives for Zoomcar. For a micro-cap with limited liquidity, even this modest raise could translate into meaningful share dilution if repayment falters. Investors should monitor cash burn, future capital raises, and timely servicing of installments to avoid a dilutive default scenario.

8-K Event Classification

3 items: 1.01, 3.02, 9.01

3 items

Item 1.01 Entry into a Material Definitive Agreement Business

The company signed a significant contract such as a merger agreement, credit facility, or major partnership.

Item 3.02 Unregistered Sales of Equity Securities Securities

The company sold equity securities in a private placement or other unregistered transaction.

Item 9.01 Financial Statements and Exhibits Exhibits

Financial statements, pro forma financial information, or exhibit attachments filed with this report.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

How much capital did Zoomcar Holdings (ZCAR) raise in June 2025?

The company received $350,000 in net proceeds from two convertible bridge notes.

What are the key terms of the Zoomcar convertible notes?

Each note bears 12% interest, matures on March 30 2026, and carries a 10% original-issue discount.

When can the notes convert into ZCAR common stock?

Conversion is permitted only after an uncured default and occurs at 75% of the lowest 15-day trading price.

What penalties apply if Zoomcar defaults?

Outstanding balance jumps to 150%–200% of principal plus interest, and late share delivery costs $1,000 per day.

Under which SEC exemption were the notes issued?

The notes were issued under Section 4(a)(2) and Rule 506 of Regulation D (private placement).

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Accepted by SEC EDGAR 06/30/2025 - 05:11 PM Learn about SEC filing dates

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): June 24, 2025

ZOOMCAR HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware		001-40964		99-0431609
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

Anjaneya Techno Park, No.147, 1st Floor Kodihalli, Bangalore, India		560008
(Address of principal executive offices)		(Zip Code)

+918048821871

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
NA		NA		NA

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

Item 1.01. Entry into a Material Definitive Agreement.

On June 24, 2025, Zoomcar Holdings, Inc. (the “Company”) closed two Securities Purchase Agreements (each, a “Purchase Agreement”) with 1800 Diagonal Lending LLC, a Virginia limited liability company (“DLL”), and Boot Capital LLC, a Delaware limited liability company (“Boot”), respectively, in connection with a private placement offering of convertible bridge notes (each, a “Note” and collectively, the “Notes”) in the aggregate principal amount of $402,000.00 and $111,760.00, respectively.

Pursuant to the Purchase Agreements, DLL purchased a Note in the original principal amount of $290,240.00 with an original issue 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 amount 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 at 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 by 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 customary events of default and covenants.

In the event of an uncured default under either Note, the holder may elect to convert the then-outstanding obligations (including principal, accrued interest, default interest, and other fees) into shares of the Company’s common stock at a conversion price equal to 75% of the lowest trading price of the Company’s common stock during the fifteen (15) trading days immediately prior to the applicable conversion date, representing a 25% discount to market.

Additionally, upon the occurrence and continuation of an event of default, the outstanding balance of each Note shall be automatically increased to 150% of the sum of the unpaid principal and accrued interest (the “Default Amount”). If, following such a default, the Company also fails to timely deliver shares upon a conversion request or otherwise fails to honor the conversion provisions of the Note, the applicable default multiplier may be increased to 200% of the Default Amount. The Notes also provide for a $1,000 per day late delivery penalty for failure to timely deliver shares of common stock upon conversion.

The foregoing descriptions of the Purchase Agreements and Notes do not purport to be complete and are qualified in their entirety by reference to the respective forms thereof, copies of which are filed as Exhibits 10.1 and 4.1, respectively, to this Current Report on Form 8-K.

Item 3.02. Unregistered Sales of Equity Securities.

The information set forth in Item 1.01 above is incorporated herein by reference into this Item 3.02. The Notes and any shares of common stock issued upon conversion thereof were issued and sold pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933 and/or Rule 506 of Regulation D promulgated thereunder, as transactions not involving a public offering.

Item 9.01 Financial Statements and Exhibits.

 (c) Exhibits 

Exhibit Number		Description
4.1		Form of Bridge Note
10.1		Form of Securities Purchase Agreement
104		Cover Page Interactive Data File (formatted as inline XBRL)

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: June 30, 2025	Zoomcar Holdings, Inc.
	By:	/s/ Shachi Singh
	Name:	Shachi Singh
	Title:	Chief Legal Officer

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