Zoomcar Holdings, Inc. Enters Securities Purchase Agreement for Series A Convertible Preferred Stock and Warrants
Key Highlights
- Private Placement: On June 2, 2026, Zoomcar Holdings, Inc. (the “Company”) entered into a Securities Purchase Agreement with certain accredited investors (the “Purchasers”), initiating a private placement of Series A Convertible Preferred Stock and associated warrants.
- Registration Rights Agreement: The Company also executed a Registration Rights Agreement, committing to register the resale of shares issuable upon conversion of the Preferred Stock and exercise of the Warrants.
- Amended Certificate of Designation: On June 2, 2026, the Company filed an Amended and Restated Certificate of Designation with the State of Delaware, establishing the rights and terms of the Series A Convertible Preferred Stock.
- Exemption from Registration: The securities were offered under exemptions provided by Section 4(a)(2) and Rule 506(c) of Regulation D, targeting accredited investors only.
- Emerging Growth Company: Zoomcar affirmatively checked its status as an emerging growth company.
Details of the Transaction
Securities Purchase Agreement
The Company agreed to sell units consisting of Series A Convertible Preferred Stock (“Preferred Shares”) and Series A Warrants (“Warrants”) to accredited investors. The terms specify a “First Closing” date of June 2, 2026. Each Preferred Share has a stated value of \$1,000 and is convertible into Common Stock at terms outlined in the Certificate of Designation. Warrants allow further purchase of Common Stock at a set exercise price, with a term of five years from issuance.
Registration Rights
Under the Registration Rights Agreement, Zoomcar must file a registration statement with the SEC to allow resale of all Common Stock issuable upon:
- Conversion of the Preferred Shares
- Exercise of the Warrants
The Company is obligated to file this registration statement within 15 days of the First Closing and use best efforts to ensure it becomes effective within specified deadlines. Failure to comply may trigger partial liquidated damages payments to investors.
Certificate of Designation for Series A Convertible Preferred Stock
The Certificate of Designation sets out the key rights and preferences:
- Dividends: No cash dividends. If dividends are declared on Common Stock, preferred holders participate on an as-converted basis.
- Liquidation Preference: Each Preferred Share carries a liquidation preference equal to its stated value (\$1,000) plus any unpaid dividends.
- Conversion Rights: Preferred Shares are convertible into Common Stock, subject to certain price-based and structural anti-dilution protections (i.e., adjustments for lower-priced issuances and stock splits).
- No Redemption or Sinking Fund: The shares cannot be redeemed by the Company or the Holders, and there is no sinking fund.
- No Preemptive Rights: Holders do not have preemptive rights unless provided in other agreements.
- Transferability: Shares can be transferred, subject to applicable securities laws and transaction document restrictions.
- Amendment: Changes require approval from the majority of Series A holders and any other required consents.
Warrants
Warrants issued enable the purchase of Common Stock at a fixed price over five years. The terms include:
- Anti-dilution adjustments for stock splits, dividends, or lower-priced issuances.
- No fractional shares issued; fractions are paid in cash or rounded up.
- Warrants are freely transferable, subject to compliance with securities regulations.
Placement Agent Agreement
The Company entered into a Placement Agent Agreement with ThinkEquity LLC, which also receives Placement Agent Warrants on terms similar to the investor Warrants.
Exemption From Registration & Accredited Investors
All securities in this offering were sold without SEC registration, in reliance on exemptions for private placements to accredited investors only. The Company undertook reasonable steps to verify investor status.
Potential Price-Sensitive and Shareholder-Impacting Information
- Dilution Risk: The Preferred Shares and Warrants are convertible/exercisable into Common Stock at potentially favorable terms for investors, especially with anti-dilution protections. This could substantially increase the Company’s outstanding share count, affecting existing shareholders’ ownership and potentially exerting downward pressure on the share price.
- Potential for Further Dilution: If the Company issues additional shares or securities at lower prices prior to an “Approved Uplisting,” conversion prices for Preferred Shares and Warrants may adjust downward, intensifying dilution risk.
- Registration Risk: Failure to register the shares for resale in a timely manner may result in liquidated damages, creating a cash outflow and possible negative sentiment regarding compliance.
- Structural Seniority: In a liquidation event, Preferred Shareholders have priority over Common Shareholders for the return of capital (i.e., the stated value plus unpaid dividends), which could reduce recoveries for Common Stockholders in a downside scenario.
- Emerging Growth Company Status: The Company is an “emerging growth company,” which may use scaled disclosure and accounting standards, potentially impacting investor visibility into operations and risks.
Exhibits
The following documents were filed as exhibits and are available for review:
- Amended and Restated Certificate of Designation
- Form of Series A Warrant
- Form of Placement Agent Warrant
- Securities Purchase Agreement
- Registration Rights Agreement
- Placement Agent Agreement
- Cover Page Interactive Data File
Conclusion
This transaction provides Zoomcar Holdings, Inc. with new capital from accredited investors, but shareholders should note the potential for significant dilution, as well as the structural seniority of the new Preferred Stock. The robust anti-dilution and registration rights features favor the new investors and may impact the value of existing Common Stock. These developments are material and may influence the Company’s trading price, especially as the market digests the implications of increased share supply and further potential dilution.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should review the original filings and consult their financial advisors before making investment decisions. The author does not guarantee the accuracy of the information and does not assume any liability for actions taken based on this article.
