VAI 10-Q
Senmiao Technology Ltd (VAI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For the quarterly period ended
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices) (Zip Code) | (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading Symbol | Name of each exchange on which registered: | ||
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):
| Large accelerated filer ☐ | Accelerated filer ☐ | ||
| Smaller reporting company | |||
| 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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b 2 of the Exchange Act). Yes ☐ No
As of August 10, 2026, there were
TABLE OF CONTENTS
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (the “Report”), including, without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continues,” or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating to our ability to consummate any acquisition or other business combination and any other statements that are not statements of current or historical facts. These statements are based on management’s current expectations, but actual results may differ materially due to various factors, including, but not limited to:
| ● | our goals and strategies, including our ability to maintain our automobile transaction and related services business in China; | |
| ● | our management’s ability to properly develop and achieve any future business growth and any improvements in our financial condition and results of operations; | |
| ● | the regulations and the impact by public health epidemics in China on the industries we operate in and our business, results of operations and financial condition; | |
| ● | the growth or lack of growth in China of disposable household income and the availability and cost of credit available to finance car purchases; | |
| ● | the growth or lack of growth of China’s online ride-hailing, automobile financing and leasing industries; | |
| ● | changes in online ride-hailing, transportation networks, and other fundamental changes in transportation pattern in China; | |
| ● | our expectations regarding demand for and market acceptance of our products and services; | |
| ● | our expectations regarding our customer base; | |
| ● | our ability to maintain positive relationships with our business partners; | |
| ● | competition in the online ride-hailing, automobile financing and leasing industries in China; | |
| ● | macro-economic and political conditions affecting the global economy generally and the market in China specifically; and | |
| ● | relevant Chinese government policies and regulations relating to the industries in which we operate. |
You should read this Report and the documents that we refer to in this Report with the understanding that our actual future results may be materially different from and worse than what we expect. Other sections of this Report and our other reports filed with the Securities and Exchange Commission (the “SEC”) include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.
You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
This Report also contains statistical data and estimates that we obtained from industry publications and reports generated by third-parties. Although we have not independently verified the data, we believe that the publications and reports are reliable. The market data contained in this Report involves a number of assumptions, estimates and limitations. The ride-hailing and automobile financing markets in China may not grow at the rates projected by market data, or at all. The failure of these markets to grow at the projected rates may have a material adverse effect on our business and the market price of our common stock. If any one or more of the assumptions underlying the market data turns out to be incorrect, actual results may differ from the projections based on these assumptions. In addition, projections, assumptions and estimates of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described herein or our other reports filed with the SEC. You should not place undue reliance on these forward-looking statements.
ii
PART I – FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements
SENMIAO TECHNOLOGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollar, except for the number of shares)
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Finance lease receivables, current | ||||||||
| Prepayments, other receivables and other current assets | ||||||||
| Due from a related party, net, current | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Other assets | ||||||||
| Operating lease right-of-use assets, net, a related party | ||||||||
| Intangible assets, net | ||||||||
| Finance lease receivables, non-current | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES, MEZZANINE EQUITY AND DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Advances from customers | ||||||||
| Accrued expenses and other liabilities | ||||||||
| Due to a related party | ||||||||
| Operating lease liabilities, current, a related party | ||||||||
| Derivative liabilities | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (note 16) | ||||||||
| Mezzanine Equity | ||||||||
| Series A convertible preferred stock (par value $ | ||||||||
| Stockholders’ deficit | ||||||||
| Common stock (par value $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total Senmiao Technology Limited stockholders’ deficit | ( | ) | ( | ) | ||||
| Non-controlling interests | ||||||||
| Total deficit | ( | ) | ( | ) | ||||
| Total liabilities, mezzanine equity and deficit | $ | $ | ||||||
| * |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
1
SENMIAO TECHNOLOGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in U.S. dollar, except for the number of shares)
| For the Three Months Ended June 30, |
||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Revenues | $ | $ | ||||||
| Cost of revenues | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Selling, general and administrative expenses | ( | ) | ( | ) | ||||
| Total operating expenses | ( | ) | ( | ) | ||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other (expenses) income | ||||||||
| Other (expenses) income, net | ( | ) | ||||||
| Excess of warrant fair value over offering proceeds | ( | ) | ||||||
| Change in fair value of derivative liabilities | ||||||||
| Total other (expenses) income, net | ( | ) | ||||||
| Loss before income tax expense | ( | ) | ( | ) | ||||
| Income tax expense | ||||||||
| Net Loss from continuing operations | ( | ) | ( | ) | ||||
| Discontinued operations: | ||||||||
| Income before income taxes from operations of discontinued operations | ||||||||
| Income tax expense | ||||||||
| Net income from discontinued operations | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Less: Net loss attributable to non-controlling interests | ( | ) | ( | ) | ||||
| Net loss attributable to the Company’s stockholders | $ | ( | ) | $ | ( | ) | ||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive income (loss) | ||||||||
| Foreign currency translation adjustment | ( | ) | ||||||
| Comprehensive loss | ( | ) | ( | ) | ||||
| Less: Total comprehensive loss attributable to non-controlling interests | ( | ) | ( | ) | ||||
| Total comprehensive loss attributable to stockholders | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common stock* | ||||||||
| Basic and diluted | ||||||||
| Loss per share - basic and diluted* | ( | ) | ( | ) | ||||
| Loss per share - basic and diluted | ||||||||
| Continuing operations | $ | ( | ) | $ | ( | ) | ||
| Discontinued operations | $ | $ | ||||||
| * |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
2
SENMIAO TECHNOLOGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
For the Three Months Ended June 30, 2026 and 2025
(Expressed in U.S. dollar, except for the number of shares)
| For the Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Additional | other | Non- | ||||||||||||||||||||||||||
| Common stock | paid-in | Accumulated | comprehensive | controlling | Total | |||||||||||||||||||||||
| Shares* | Par value | capital | deficit | loss | interest | equity | ||||||||||||||||||||||
| BALANCE, March 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Exercise of November 2021 Private Placement Warrants | ||||||||||||||||||||||||||||
| Fair value of derivative liabilities upon exercise of warrants | — | |||||||||||||||||||||||||||
| Conversion of preferred stock into common stock | ||||||||||||||||||||||||||||
| Additional shares of common stock round up adjustment due to retroactive effect of 1-for-10 reverse stock split | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| BALANCE, June 30, 2025 (Unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
| For the Three Months Ended June 30, 2026 | ||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Additional | other | Non- | ||||||||||||||||||||||||||
| Common stock | paid-in | Accumulated | comprehensive | controlling | Total | |||||||||||||||||||||||
| Shares* | Par value | capital | deficit | loss | interest | deficit | ||||||||||||||||||||||
| BALANCE, March 31, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Issuance of common stock and warrant in Units Private Placement | ( | ) | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | ( | ) | |||||||||||||||||||||||||
| BALANCE, June 30, 2026 (Unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
| * |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
3
SENMIAO TECHNOLOGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollar, except for the number of shares)
| For the Three Months Ended June 30, |
||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net income from discontinued operations | ||||||||
| Net loss from continuing operations | ( | ) | ( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation of property and equipment | ||||||||
| Amortization of right-of-use assets | ||||||||
| Amortization of intangible assets | ||||||||
| Gain on disposal of equipment | ( | ) | ||||||
| Excess of warrant fair value over offering proceeds | ||||||||
| Offering costs allocated to derivative liabilities | ||||||||
| Change in fair value of derivative liabilities | ( | ) | ( | ) | ||||
| Change in operating assets and liabilities | ||||||||
| Accounts receivable | ||||||||
| Finance lease receivables | ||||||||
| Prepayments, other receivables and other assets | ( | ) | ( | ) | ||||
| Due from a related party | ||||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Advances from customers | ( | ) | ( | ) | ||||
| Accrued expenses and other liabilities | ||||||||
| Due to a related party | ( | ) | ||||||
| Operating lease liabilities – a related party | ||||||||
| Net Cash Used in Operating Activities from Continuing Operations | ( | ) | ( | ) | ||||
| Net Cash Used in Operating Activities from Discontinued Operations | ( | ) | ||||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Purchases of property and equipment | ( | ) | ||||||
| Cash received from disposal of property and equipment | ||||||||
| Net Cash Used in Investing Activities from Continuing Operations | ( | ) | ||||||
| Net Cash Used in Investing Activities from Discontinued Operations | ( | ) | ||||||
| Net Cash Used in Investing Activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Net proceeds from exercise of November 2021 Private Placement Warrants | ||||||||
| Gross proceeds from issuance of common stock and warrant in Units Private Placement | ||||||||
| Common stock and warrant issuance costs in Units Private Placement | ( | ) | ||||||
| Borrowings from a related party | ||||||||
| Net Cash Provided by Financing Activities from Continuing Operations | ||||||||
| Net Cash Provided by Financing Activities from Discontinued Operations | ||||||||
| Net Cash Provided by Financing Activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents, beginning of the period | ||||||||
| Cash and cash equivalents, end of the period | ||||||||
| Less: Cash and cash equivalents from discontinued operations | ( | ) | ||||||
| Cash and cash equivalents from continuing operations, end of the period | ||||||||
| Non-cash Transaction in Investing and Financing Activities | ||||||||
| Recognition of right-of-use assets and lease liabilities, a related party | $ | $ | ||||||
The following tables provides a reconciliation of cash and cash equivalents reported within the unaudited condensed consolidated balance sheets that sum to the total of the same amounts shown in the unaudited condensed consolidated statements of cash flows:
| For the Three Months Ended June 30, |
||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash and cash equivalents from continuing operations, end of the period | $ | $ | ||||||
| Cash and cash equivalents from discontinued operations, end of the period | $ | $ | ||||||
| For the Three Months Ended June 30, |
||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash and cash equivalents from continuing operations, beginning of the period | $ | $ | ||||||
| Cash and cash equivalents from discontinued operations, beginning of the period | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
4
SENMIAO TECHNOLOGY LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
Senmiao Technology Limited (the “Company”) is a U.S. holding company incorporated in the State of Nevada on
Hunan Ruixi holds a business license for automobile sales and has been engaged in automobile sales since January 2019. Hunan Ruixi also held a business license for automobile finance lease and was engaged in automobile finance lease services from March 2019 through July 31, 2025, the date of cessation. The Company also has been engaged in operating leasing services since March 2019. Jinkailong previously focused on providing automobile sales and financing transactions primarily to ride-hailing drivers and now mainly provides them operating lease and relevant after-transaction services.
In December 2025, the Company entered into a certain Acquisition Agreement (the “Sichuan Acquisition Agreement”) with Hu Mao Sheng Tang Holdings Limited., a non-affiliated Hong Kong company (“HMST”). Pursuant to the Sichuan Acquisition Agreement, the Company sold
The following diagram illustrates the Company’s corporate structure as of the filing date of these unaudited condensed consolidated financial statements:
5
Former Voting Agreements with Jinkailong’s Other Shareholders
Hunan Ruixi entered into two voting agreements signed in August 2018 and February 2020, respectively, as amended (the “Voting Agreements”), with Jinkailong and other Jinkailong’s shareholders holding an aggregate of
On March 31, 2022, Hunan Ruixi entered into an Agreement for the Termination of the Agreement for Concerted Action by Shareholders of Jinkailong (the “Termination Agreement”), pursuant to which the Voting Agreements mentioned above was terminated as of the date of the Termination Agreement. The termination will not impair the past and future legitimate rights and interests of all parties in Jinkailong. Starting from April 1, 2022, the parties no longer maintain a concerted action relationship with respect to the decision required to take concerted action at its shareholders meetings as stipulated in the Voting Agreements. Each party shall independently express opinions and exercise various rights such as voting rights and perform relevant obligations in accordance with the provisions of laws, regulations, normative documents and the Jinkailong’s articles of association.
As a result of the Termination Agreement, the Company no longer has a controlling financial interest in Jinkailong and has determined that Jinkailong was deconsolidated from the Company’s consolidated financial statements effective as of March 31, 2022. However, as Hunan Ruixi still holds
As of June 30, 2026 and March 31, 2026, the continuing operations of the Company has outstanding balance due from Jinkailong amounted to $
As of June 30, 2026 and March 31, 2026, allowance for credit losses due from Jinkailong amounted to $
2. LIQUIDITY AND CAPITAL RESOURCES
In assessing the Company’s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. Debt financing from financial institutions and equity financings have been utilized to finance the working capital requirements of the Company.
The Company’s business is capital intensive, and certain factors show negative trends in its liquidity position, including (1) the net loss of approximately $
6
Recent financing arrangements, however, have materially strengthened the Company’s cash position. As of June 30, 2026, the Company recorded total derivative liabilities of approximately $
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation
The unaudited condensed consolidated financial statements, including the unaudited condensed consolidated balance sheet as of June 30, 2026, the unaudited condensed consolidated statements of operations and comprehensive loss, and the unaudited condensed consolidated statements of changes in equity (deficit) for the three months ended June 30, 2026 and 2025, and the unaudited condensed consolidated statements of cash flows for the three months ended June 30, 2026 and 2025, as well as other information disclosed in the accompanying notes, have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and pursuant to the rules and regulations of the SEC and pursuant to Regulation S-X. The interim unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto, included in the Form 10-K for the fiscal year ended March 31, 2026, which was filed with the SEC on June 30, 2026.
The unaudited condensed consolidated financial statements and the accompanying notes have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The consolidated results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future years or interim periods.
(b) Comparability and retrospective reclassification adjustments of prior period
The Company has reclassified certain comparative amounts in the unaudited condensed consolidated statements of operations and comprehensive loss for the three months ended June 30, 2025 to conform to the current period’s presentation, as a result of the retrospective application of discontinued operations of Yicheng, Senmiao Consulting and its subsidiaries (refer to Note 4) in accordance with ASC 205-20-45. The results of discontinued operations for the three months ended June 30, 2025 have been reflected separately in the unaudited condensed consolidated statements of operations and comprehensive loss as a single line item presented in accordance with U.S. GAAP. Cash flows from discontinued operations of the three categories for the three months ended June 30, 2025 were separately presented in the unaudited condensed consolidated statements of cash flows presented in accordance with U.S. GAAP.
(c) Foreign currency translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing on the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates on the date of the balance sheet. The resulting exchange differences are recorded in the statement of operations.
The reporting currency of the Company and its subsidiaries is U.S. dollars (“US$”) and the unaudited condensed consolidated financial statements have been expressed in US$. However, the Company maintains the books and records in its functional currency, Chinese Renminbi (“RMB”), being the functional currency of the economic environment in which its operations are conducted.
7
In general, for consolidation purposes, assets and liabilities of the Company and its subsidiaries whose functional currency is not the US$, are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of the Company and its subsidiaries are recorded as a separate component of accumulated other comprehensive loss within the unaudited condensed consolidated statements of changes in equity (deficit).
Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective periods:
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| Balance sheet items, except for equity accounts – RMB: US$1: | ||||||||
| For the Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Items in the statements of operations and comprehensive loss, and cash flows – RMB: US$1: | ||||||||
(d) Use of estimates
In presenting the unaudited condensed consolidated financial statements in accordance with U.S. GAAP, management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. The Company bases its estimates on past experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, residual values of property and equipment, determinations of the useful lives and valuation of long-lived assets, estimates of allowances for credit losses for receivables and due from related parties, estimates of impairment of long-lived assets, fair value of derivative liabilities and valuation of deferred tax assets.
(e) Fair values of financial instruments
Accounting Standards Codification (“ASC”) Topic 825, Financial Instruments (“Topic 825”) requires disclosure of fair value information of financial instruments, whether or not recognized in the balance sheets, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Topic 825 excludes certain financial instruments and all nonfinancial assets and liabilities from its disclosure requirements. Accordingly, the aggregate fair value amounts do not represent the underlying value of the Company. The three levels of valuation hierarchy are defined as follows:
| Level 1 | Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| Level 2 | Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. |
| Level 3 | Inputs to the valuation methodology are unobservable and significant to the fair value. |
8
The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2026 and March 31, 2026:
| Carrying Value as of | Fair Value Measurement as of | |||||||||||||||
| June 30, | June 30, 2026 | |||||||||||||||
| 2026 | Level 1 | Level 2 | Level 3 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
| Carrying Value as of | Fair Value Measurement as of | |||||||||||||||
| March 31, | March 31, 2026 | |||||||||||||||
| 2026 | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
The following is a reconciliation of the beginning and ending balance of the assets and liabilities measured at fair value on a recurring basis for the three months ended June 30, 2026 and for the year ended March 31, 2026:
| August 2020 Underwritten Public | February 2021 Registered Direct | May 2021 Registered Direct Offering | November 2021 Private Placement | November 2025 Private Placement | November 2025 Registered Direct Offering | June 2026 Units Private Placement | ||||||||||||||||||||||||||||||||||
| Offering Warrants | Offering Warrants | Investors Warrants | Placement Warrants | Offering Warrants | Placement Warrants | Investors Warrants | Pre-funded Warrant | Investors Warrants | Total | |||||||||||||||||||||||||||||||
| BALANCE as of March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Derivative liabilities recognized at grant date | ||||||||||||||||||||||||||||||||||||||||
| Change in fair value of derivative liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Exercise | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| BALANCE as of March 31, 2026 | ||||||||||||||||||||||||||||||||||||||||
| Derivative liabilities recognized at grant date | ||||||||||||||||||||||||||||||||||||||||
| Change in fair value of derivative liabilities | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| BALANCE as of June 30, 2026 (Unaudited) | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
9
The warrants presented in the table above are not traded in an active securities market; therefore, the Company estimates the fair value to those warrants using the Black-Scholes valuation model as of June 30, 2026 and March 31, 2026.
| As of June 30, 2026 | ||||||||||||||||||||
| November 10, 2021 | November 14, 2025 | November 17, 2025 | June 26, 2026 | |||||||||||||||||
| Placement | ||||||||||||||||||||
| Investor | Agent | Investor | Pre-funded | Units | ||||||||||||||||
| Granted Date | Warrants | Warrants | Warrants | Warrants | Warrants | |||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
| # of shares exercisable* | ||||||||||||||||||||
| Valuation date | ||||||||||||||||||||
| Exercise price* | $ | $ | $ | $ | $ | |||||||||||||||
| Stock price* | $ | $ | $ | $ | $ | |||||||||||||||
| Expected term (years) | ||||||||||||||||||||
| Risk-free interest rate | % | % | % | % | % | |||||||||||||||
| Expected volatility | % | % | % | % | % | |||||||||||||||
| As of March 31, 2026 | ||||||||||||||||||||||||
| May 13, 2021 | November 10, 2021 | November 14, 2025 | November 17, 2025 | |||||||||||||||||||||
| Placement | Placement | |||||||||||||||||||||||
| Investor | Agent | Investor | Agent | Investor | Pre-funded | |||||||||||||||||||
| Granted Date | Warrants | Warrants | Warrants | Warrants | Warrants | Warrants | ||||||||||||||||||
| # of shares exercisable* | ||||||||||||||||||||||||
| Valuation date | ||||||||||||||||||||||||
| Exercise price* | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Stock price* | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Expected term (years) | ||||||||||||||||||||||||
| Risk-free interest rate | % | % | % | % | % | % | ||||||||||||||||||
| Expected volatility | % | % | % | % | % | % | ||||||||||||||||||
| * |
| ** |
As of June 30, 2026 and March 31, 2026, financial instruments of the Company comprised primarily current assets and current liabilities including cash and cash equivalents, finance lease receivables, prepayments, other receivables and other assets, due from a related party, accounts payable, advances from customers, operating lease liabilities, accrued expenses and other liabilities, and due to related parties which approximate their fair values because of the short-term nature of these instruments.
The non-current portion of finance lease receivables were recorded at the gross amount adjusted for the interest using the effective interest rate method. The Company believes that the effective interest rates underlying these instruments approximate their fair values because the Company used its incremental borrowing rate to recognize the present value of these instruments as of June 30, 2026 and March 31, 2026.
(f) Segment reporting
In November 2023, the FASB issued ASU 2023-07, which is an update to Topic 280, Segment Reporting: Improvements to reportable Segment Disclosures (“ASU 2023-07”), which enhances the disclosure required for reportable segments in annual and interim consolidated financial statements, including additional, more detailed information about a reportable segment’s expenses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company adopted ASU 2023-07 for the year ended March 31, 2025, retrospectively to all periods presented in the consolidated financial statement. The adoption of this ASU had no material impact on reportable segments identified and had no effect on the Company’s consolidated financial position, results of operations, or cash flows.
10
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (the “CODM”),
(g) Cash and cash equivalents
Cash and cash equivalents primarily consist of bank deposits with original maturities of three months or less, which are unrestricted as to withdrawal and use.
(h) Accounts receivable
Accounts receivable are recorded at the invoiced amount less an allowance for credit losses, do not bear interest, and are subject to contractual payment term within one month. Starting from April 1, 2023, the Company adopted ASU No.2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”). The Company’s estimation of allowance for credit losses considers factors such as historical credit loss experience, age of receivable balances, current market conditions, reasonable and supportable forecasts of future economic conditions, as well as an assessment of receivables due from specific identifiable counterparties to determine whether these receivables are considered at risk or uncollectible. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company’s management continues to evaluate the reasonableness of the valuation allowance policy and update it if necessary. For the three months ended June 30, 2026 and 2025, provision for credit losses related to accounts receivable was provided.
(i) Finance lease receivables
Finance lease receivables, which result from sales-type leases, are measured at discounted present value of (i) future minimum lease payments, (ii) any residual value not subject to a bargain purchase option as finance lease receivables on its balance sheet and (iii) accrued interest on the balance of the finance lease receivables based on the interest rate inherent in the applicable lease over the term of the lease. Management also periodically evaluates individual customer’s financial condition, credit history and the current economic conditions to make adjustments in the allowance for credit losses when necessary. Finance lease receivables is charged off against the allowance for credit losses after all means of collection have been exhausted and the potential for recovery is considered remote. As of June 30, 2026 and March 31, 2026, the Company determined allowance for credit losses was necessary for finance lease receivables.
As of June 30, 2026 and March 31, 2026, finance lease receivables consisted of the following:
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| (Unaudited) | ||||||||
| Minimum lease payments receivable | $ | $ | ||||||
| Less: Unearned interest | ( | ) | ( | ) | ||||
| Financing lease receivables | $ | $ | ||||||
| Finance lease receivables, current | $ | $ | ||||||
| Finance lease receivables, non-current | $ | $ | ||||||
11
Future scheduled minimum lease payments for investments in sales-type leases as of June 30, 2026 are as follows:
| Minimum future payments receivable | ||||
| Twelve months ending June 30, 2027 | $ | |||
| Twelve months ending June 30, 2028 | ||||
| Total | $ | |||
(j) Property and equipment, net
Property and equipment primarily consist of office equipment, fixtures and furniture and automobiles, which are stated at cost less accumulated depreciation and any provision required for impairment in value. Depreciation is computed using the straight-line method with no residual value based on the estimated useful life.
| Categories | Useful life | |
| Office equipment, fixture and furniture | ||
| Automobiles |
The Company evaluates property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An asset or asset group is considered impaired if the asset’s or asset group’s carrying amount exceeds the future net undiscounted cash flows that the asset or asset group is expected to generate. If such asset or asset group is considered to be impaired, the impairment recognized is the amount by which the carrying amount of the asset or asset group, if any, exceeds its fair value determined using a discounted cash flow model. For the three months ended June 30, 2026 and 2025, the Company did recognize any impairment for property and equipment.
Costs of repairs and maintenance are expensed as incurred and asset improvements are capitalized. The cost and related accumulated depreciation of assets disposed of or retired are removed from the accounts, and any resulting gain or loss is reflected in the unaudited condensed consolidated statements of operations and comprehensive loss.
(k) Intangible assets, net
Purchased intangible assets are recognized and measured at fair value upon acquisition.
| Categories | Useful life | |
| Software |
Separately identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for identifiable intangible assets is based on the amount by which the carrying amount of the assets exceeds the fair value of the assets. For the three months ended June 30, 2026 and 2025, there was impairment of intangible assets.
(l) Loss per share
Basic loss per share is computed by dividing net loss attributable to stockholders by the weighted average number of outstanding shares of common stock. Liability-classified pre-funded warrants are excluded from the denominator in the computation of basic loss per ordinary share, as such instruments are not considered to be outstanding ordinary shares.
For the calculation of diluted loss per share, net loss attributable to stockholders for basic loss per share is adjusted by the effect of dilutive securities, including share-based awards, under the treasury stock method and convertible securities under the if-converted method. Potentially dilutive securities have been excluded from the computation of diluted loss per share if their inclusion is anti-dilutive.
12
(m) Derivative liabilities
The Company accounts for derivative liabilities in accordance with ASC 815 Derivatives and Hedging and ASC 820 Fair Value Measurement. The derivative liabilities are carried at fair value on the Company’s unaudited condensed consolidated balance sheets, with any changes in fair value recognized in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss. The Company estimates the fair value of derivative liabilities using the Black-Scholes valuation model at initial recognition and each subsequent valuation date.
(n) Revenue recognition
The Company recognized its revenue under Accounting Standards Codification (“ASC”) 842 Leases (“ASC 842”) and Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606).
ASC 606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. It also requires the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer.
To achieve that core principle, the Company applies the five steps defined under ASC 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company accounts for a contract with a customer when the contract is entered into by the parties, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration to collect is substantially probable.
Leases - Lessor
The Company recognized revenue as lessor in accordance with ASC 842. The two primary accounting provisions the Company uses to classify transactions as sales-type or operating leases are: (i) a review of the lease term to determine if it is for the major part of the economic life of the underlying equipment (defined as greater than
The Company excludes from the measurement of its lease revenues any tax assessed by a governmental authority that is both imposed on and concurrent with a specific revenue-producing transaction and collected from a customer.
The Company considers the economic life of most of the automobiles to be to years, since this represents the most common long-term lease term for its automobiles and the automobiles will be used for online ride-hailing services. The Company believes to years is representative of the period during which an automobile is expected to be economically usable, with normal service, for the purpose for which it is intended.
The Company’s lease pricing interest rates, which are used in determining customer payments in a finance lease arrangement, are developed based upon the local prevailing rates in the marketplace where its customer will be able to obtain an automobile loan under similar terms from the bank. The Company reassesses its pricing interest rates quarterly based on changes in the local prevailing rates in the marketplace. As of June 30, 2026, the Company’s pricing interest rate was
13
Contract liabilities
The Company’s contract liabilities consist of advances from customers, which are the upfront rent received from customers. The revenue recognized by continuing operations for the three months ended June 30, 2026 and 2025 which was previously included in the advances from customers balances as of March 31, 2026 and March 31, 2025 was $
The Company’s advances from customers amounted to $
Disaggregated information of revenues recorded by continuing operations by business lines are as follows:
| For the Three Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Automobile Transaction and Related Services | ||||||||
| - Operating lease revenues from automobile rentals | $ | $ | ||||||
| - Service fees from NEVs leasing | ||||||||
| - Financing revenues | ||||||||
| - Service fees from automobile purchase services | ||||||||
| - Default revenue | ||||||||
| - Monthly services commissions | ||||||||
| - Other service fees | ||||||||
| Total Revenues | $ | $ | ||||||
Automobile transaction and related services
Operating lease revenues from automobile rentals –The Company generates revenue from leasing its own automobiles. The Company recognizes revenue wherein an automobile is transferred to the lessees and the lessees has the ability to control the asset. Rental transactions are satisfied over the rental period and is recognized over time. As the operating lease revenue is fixed in nature under the Company’s various product solutions, the Company recognizes the revenue from operating lease on a straight-line basis over the lease term, based on periodic settlement between the Company and the online ride-hailing drivers. Rental periods are short term in nature, generally twelve months or less.
Service fees from NEVs leasing - Services fees from NEVs leasing are paid by some lessees who rent new energy electric vehicles from the Company. The amount of services fees is based on the product solutions chosen by lessees. The service content includes: (1) training services covering online ride-hailing regulations, operational skills, safety and other related aspects; (2) assistance to apply for the Network-Appointed Taxi Transport Certificate; (3) introducing online ride-hailing business and order-taking skills; (4) providing online ride-hailing operation and management services, etc.
Financing revenues – Interest income from the lease arising from the Company’s sales-type leases and bundled lease arrangements are recognized as financing revenues over the lease term based on the effective rate of interest in the lease.
Service fees from automobile purchase services - Automobile purchase services are paid by automobile purchasers for a series of the services provided to them throughout the purchase process such as credit assessment, installment of GPS devices, ride-hailing driver qualification and other administrative procedures. The service fee is based on the sales price of the automobiles and relevant services provided.
Default revenue - The Company charged the lessees default fees upon occurrence of default events such as early-termination of the contracts or other violation behaviors to the contracts. The default punishment is calculated and confirmed by the customers.
14
Monthly services commissions – Commissions from the services are generated from the management and related services provided to Partner Platforms and other companies, which are settled on a monthly basis. The Company recognizes revenues at a point in time when performance obligations are completed and the commission amount is confirmed by the Partner Platforms and other companies, based on their evaluations on the services provided by the Company.
The Company recognizes those revenues at a point in time when above mentioned services are completed, and the related automobile is delivered to the lessee or purchaser. The Company recognizes the revenue of service fees from NEVs leasing when the Company has fulfilled its performance obligation to provide NEVs leasing service such as consulting service and training service upon delivery of automobile. Accounts receivable related to automobile purchase services is collected upon the automobiles are delivered to lessees or purchaser. The Company recognizes default revenue at a point in time when performance obligations are completed and the default punishment is calculated and confirmed by the customers, which represent the collectability is probable from the customers.
Other revenues – The Company generated other revenues such as miscellaneous service fees charged to its customers for some supporting services provided to online ride-hailing drivers. The Company recognizes revenues at a point in time when performance obligations are completed and the collectability is probable from the customers.
(o) Leases – lessee
The Company accounts for leases in accordance with ASC 842. The Company enters into certain agreements as a lessee to lease automobiles and to conduct its automobiles rental operations. If any of the following criteria are met, the Company classifies the lease as a direct financing or sales-type lease (as a lessee):
| ● | The lease transfers ownership of the underlying asset to the lessee by the end of the lease term; |
| ● | The lease grants the lessee an option to purchase the underlying asset that the Company is reasonably certain to exercise; |
| ● | The lease term is for |
| ● | The present value of the sum of the lease payments equals or exceeds |
| ● | The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. |
Leases that do not meet any of the above criteria are accounted for as operating leases.
Finance and operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Since the implicit rate for the Company’s leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.
The Company considers extension, renewal and termination options at lease inception when calculating the present value of lease payments. However, the Company has determined there is no reasonable certainty that any of these options will be exercised, so such optional periods are generally excluded from the lease terms used for present value of lease payments. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally do not provide a residual guarantee. The finance or operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term for operating lease. Meanwhile, the Company recognizes the finance leases ROU assets and interest on an amortized cost basis. The amortization of finance ROU assets is recognized on a straight-line basis as amortization expense, while the lease liability is increased to reflect interest on the liability and decreased to reflect the lease payments made during the period. Interest expense on the lease liability is determined each period during the lease term as the amount that results in a constant periodic interest rate applied to the remaining balance of the liability.
15
The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recovery ability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of an asset or asset group may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset or asset group from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of finance and operating lease liabilities in any tested asset group and include the associated lease payments in the undiscounted future pre-tax cash flows. For the three months ended June 30, 2026 and 2025, the Company did recognize impairment loss on its ROU assets.
(p) Share-Based Awards
The Company accounts for share-based awards issued in exchange for employee and non-employee services under ASC 718, Stock Compensation. Share-based awards issued to non-employees for goods or services are measured at the grant-date fair value of the equity instruments issued. For share-based awards that are not subject to vesting, forfeiture, or future service requirements, the full fair value of the awards is recognized as compensation expense on the issuance date.
(q) Discontinued operations
A discontinued operation may include a component of an entity or a group of components of an entity, or a business or nonprofit activity. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operation if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when any of the following occurs: (1) the component of an entity or group of components of an entity meets the criteria to be classified as held for sale; (2) the component of an entity or group of components of an entity is disposed of by sale; (3) the component of an entity or group of components of an entity is disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spinoff).
(r) Significant risks and uncertainties
| 1) | Credit risk |
| a. | Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash. The maximum exposure of these assets to credit risk is their carrying amounts as of the balance sheet dates. As of June 30, 2026 and March 31, 2026, approximately $ |
The Company’s operations are carried out entirely in mainland China. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the social, political, economic and legal environments in the PRC as well as by the general state of the PRC economy. In addition, the Company’s business may be influenced by changes in PRC government laws, rules and policies with respect to, among other matters, anti-inflationary measures, currency conversion and remittance of currency outside of China, rates and methods of taxation and other factors.
| b. | In measuring the credit risk of accounts receivable due from the automobile purchasers (the “customers”), the Company mainly reflects the “probability of default” by the customer on its contractual obligations and considers the current financial position of the customer and the risk exposures to the customer and its likely future development. |
Historically, most of the automobile purchasers would pay the Company their previously defaulted amounts within one to three months. As a result, the Company would provide full provisions on accounts receivable if the customers default on repayments for over three months. As of June 30, 2026 and March 31, 2026, the Company record allowance for credit losses against accounts receivable.
16
| 2) | Foreign currency risk |
As of June 30, 2026 and March 31, 2026 substantially all of the Company’s operating activities and major assets and liabilities, except for the cash deposit of approximately $
(s) Recently adopted accounting pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topics 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. For public business entities (PBEs), the ASU is effective for annual periods beginning after December 15, 2024. For all other entities (i.e. non-PBEs), the ASU is effective for annual periods beginning after December 15, 2025. Early adoption is permitted. As a PBE, the Company adopted ASU 2023-09 for its annual period beginning April 1, 2024, on a retrospective basis.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets arising from transactions accounted for under Topic 606 – Revenue from Contracts with Customers. Under this practical expedient, entities may assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. The ASU is effective for financial statements issued for fiscal years beginning after December 15, 2025. Early adoption is permitted. The Company adopted this ASU at this reporting period, and it has no material impact on its unaudited condensed consolidated financial statements.
(t) Recent accounting pronouncements not yet adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact of this accounting standard update on its unaudited condensed consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The ASU clarifies interim disclosure requirements and the applicability of Topic 270. The objective of the amendments is to provide further clarity about the current interim disclosure requirements. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Adoption of this ASU can be applied either a prospective or a retrospective approach. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its unaudited condensed consolidated financial statements and related disclosures.
17
In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements. The ASU addresses thirty-three items, representing the changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. Generally, the amendments in this Update are not intended to result in significant changes for most entities. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026. The adoption method of this ASU may vary, on an issue-by-issue basis. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its unaudited condensed consolidated financial statements and related disclosures.
Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the unaudited condensed consolidated statements and related disclosures.
4. DISCONTINUED OPERATIONS
Discontinued operations - Automobile Transaction related Services in Sichuan
Since December 2025, the Company has discontinued its automobile transaction related services in Sichuan.
The following table sets forth the reconciliation of the amounts of major classes of income and losses from discontinued operations of automobile transaction related services in Sichuan in the unaudited condensed consolidated statements of operations and comprehensive loss for the three months ended June 30, 2026 and 2025.
| For the Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| (unaudited) | (unaudited) | |||||||
| Revenues | $ | $ | ||||||
| Cost of revenues | ( | ) | ||||||
| Gross profit | ||||||||
| Operating expenses | — | |||||||
| Selling, general and administrative expenses | ( | ) | ||||||
| Total operating expenses | ( | ) | ||||||
| Loss from operations | ( | ) | ||||||
| Other income, net | ||||||||
| Interest expense on finance leases | ( | ) | ||||||
| Income before income taxes | ||||||||
| Income tax expenses | ||||||||
| Net income from discontinued operations | $ | $ | ||||||
18
Reconciliation of the amount of cash flows from discontinued operations in the unaudited condensed consolidated statements of cash flows for the three months ended June 30, 2026 and 2025 are as follows:
| For the Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Net cash used in operating activities from discontinued operations | $ | $ | ( | ) | ||||
| Net cash used in investing activities from discontinued operations | $ | $ | ( | ) | ||||
| Net cash provided by financing activities from discontinued operations | $ | $ | ||||||
5. PREPAYMENTS, OTHER RECEIVABLES AND OTHER CURRENT ASSETS
As of June 30, 2026 and March 31, 2026, the prepayments, other receivables and other current assets were comprised of the following:
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| (Unaudited) | ||||||||
| Prepaid expenses (i) | $ | $ | ||||||
| Deposits (ii) | ||||||||
| Others | ||||||||
| Total prepayments, other receivables and other current assets | $ | $ | ||||||
allowance for credit losses was recorded as of June 30, 2026 and March 31, 2026, and there was no movement of allowance for credit losses for the three months ended June 30, 2026 and for the year ended March 31, 2026.
| (i) | Prepaid expense |
The balance of prepaid expense represented automobile liability insurance premium for automobiles for operating lease, consulting service for strategic and capital-market, and other miscellaneous expense such as office expense, etc. that will expire within one year.
| (ii) | Deposits |
The balance of deposits mainly represented the security deposit made by the Company to various automobile leasing companies and Didi Chuxing Technology Co., Ltd., who runs an online ride-hailing platform. As of June 30, 2026 and March 31, 2026, allowance for credit losses was recorded.
6. PROPERTY AND EQUIPMENT, NET
Property and equipment as of June 30, 2026 and March 31, 2026 consist of the following:
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| (Unaudited) | ||||||||
| Automobiles | $ | $ | ||||||
| Office equipment, fixtures and furniture | ||||||||
| Subtotal | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation expense for the three months ended June 30, 2026 and 2025 were $
19
7. INTANGIBLE ASSETS, NET
Intangible assets as of June 30, 2026 and March 31, 2026 consisted of the following:
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| (Unaudited) | ||||||||
| Software | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total intangible assets, net | $ | $ | ||||||
Amortization expense for the three months ended June 30, 2026 and 2025 were $
The following table sets forth the Company’s amortization expense for the next four years as of June 30, 2026:
| Amortization expenses | ||||
| Twelve months ending June 30, 2027 | $ | |||
| Twelve months ending June 30, 2028 | ||||
| Twelve months ending June 30, 2029 | ||||
| Twelve months ending June 30, 2030 | ||||
| Total | $ | |||
8. ACCRUED EXPENSES AND OTHER LIABILITIES
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| (Unaudited) | ||||||||
| Deposits (i) | $ | $ | ||||||
| Assumed liabilities of Disposed Entities (ii) | ||||||||
| Accrued payroll and welfare | ||||||||
| Accrued expenses (iii) | ||||||||
| Other taxes payable | ||||||||
| Payables for expenditures on automobile transaction and related services | ||||||||
| Other payables | ||||||||
| Total accrued expenses and other liabilities | $ | $ | ||||||
| (i) | Deposits |
The balance of deposits represented the security deposit from operating and finance lease customers to cover lease payment and related automobile expense in case the customers’ accounts are in default. The balance is refundable at the end of the lease term, after deducting any missed lease payment and applicable fee.
| (ii) | Assumed liabilities of Disposed Entities |
The assumed liabilities of the disposed subsidiaries represent the debts that the Company is required to assume pursuant to the Sichuan Acquisition Agreement in connection with the disposal of Disposed Entities, which are repayable on demand or per contractual terms.
| (iii) | Accrued expenses |
The balance of accrued expenses represented the unbilled or payable balances to the expenses related to the daily operations of automobiles and services fees to professional institutions.
20
9. EMPLOYEE BENEFIT PLAN
The Company has made employee benefit plan in accordance with relevant PRC regulations, including retirement insurance, unemployment insurance, medical insurance, housing fund, work injury insurance and maternity insurance.
The contributions made by the Company were $
10. EQUITY
Warrants
Warrants in Offerings
Warrants issued in connection with the equity offering meet the definition of derivatives as contemplated in Derivatives and Hedging (“ASC 815”) and are accounted for as a derivative. These warrants are classified as liabilities under the caption “Derivative liabilities” in the unaudited condensed consolidated statements of balance sheets and recorded at estimated fair value at each reporting date, computed using the Black-Scholes valuation model. Changes in the liability from period to period are recorded in the unaudited condensed consolidated statements of operations and comprehensive loss under the caption “Change in fair value of derivative liabilities.”
May 2021 Registered Direct Offering Warrants
Giving retroactive effect to the twice
November 2021 Private Placement Warrants
Giving (1) retroactive effect to the twice
On June 11, 2025, a holder of November 2021 private placement warrants exercised the warrants with exercise price of $
Giving retroactive effect to the twice
During the three months ended June 30, 2026 and 2025, the change of fair value was a gain of $
21
November 2025 registered direct offering of common stock and pre-funded warrants, and concurrent private placement of warrants
On November 14, 2025, the Company entered into a securities purchase agreement with certain accredited investors, providing for (i) the issuance of
As of both June 30, 2026 and March 31, 2026,
As of both June 30, 2026 and March 31, 2026,
April 2026 Private Placement of Units consisting of Common stock and Warrants
On April 23, 2026, the Company entered into a certain securities purchase agreement with certain purchasers, pursuant to which the Company agreed to sell an aggregate of up to
The Company concluded that June 2026 Units Warrants qualify as derivative liabilities. At the issuance date in June 2026, the fair value of these warrants was estimated at $
As of June 30, 2026,
Restricted Stock Units
On October 29, 2020, the Board approved the issuance of an aggregate of
22
Equity Incentive Plan
At the 2018 Annual Meeting of Stockholders of the Company held on November 8, 2018, the Company’s stockholders approved the Company’s 2018 Equity Incentive Plan for employees, officers, directors and consultants of the Company and its affiliates. In March 2023 and April 2024, the Annual Meeting of Stockholders of Company for the years ended March 31, 2022 and 2023 further approved the amendments to the 2018 Equity Incentive Plan, to increase the number of shares of common stock reserved under the Plan to
Conversion Price Adjustment for November 2021 Preferred Shares
Pursuant to the Certificate of Designation for the series A convertible preferred stock signed by the Company and certain institutional investors in November 2021 Private Placement, the initial conversion price of the series A Convertible Preferred Shares was $
Giving retroactive effect to the twice
1-for- 10 shares reverse split on common stock
The Company considered the above transactions after giving a retroactive effect to a
23
November 2025 PIPE Offering of common stock
On November 13, 2025, the Company entered into a securities purchase agreement (the “PIPE SPA”) with certain non-U.S. investors (the “PIPE Purchasers”), pursuant to which the Company agreed to sell, and the PIPE Purchasers agreed to purchase, severally and not jointly, an aggregate of
11. INCOME TAXES
The United States of America
The Company is incorporated in the State of Nevada in the U.S., and is subject to U.S. federal corporate income taxes with tax rate of
Green Energy Capital Asset Inc. (“Green Energy”) is incorporated in the State of Wyoming in the U.S., and is subject to U.S. federal corporate income taxes with tax rate of
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries, and future foreign earnings are subject to U.S. taxation. The Tax Act also established the Global Intangible Low-Taxed Income (GILTI), a new inclusion rule affecting non-routine income earned by foreign subsidiaries. For the three months ended June 30, 2026 and 2025, the Company’s foreign subsidiary in China was operating at loss and as such, did not record a liability for GILTI tax.
On July 4, 2025, the One Big Beautiful Act (“OBBBA”) was signed into law. The OBBBA made several key provisions of the Tax Cuts and Jobs Act of 2017 permanent, including
The Company’s net loss for U.S. income taxes from U.S amounted to approximately $
PRC
Hunan Ruixi is subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws. The EIT rate for companies operating in the PRC is
Hong Kong
Senmiao Technology (Hong Kong)., Limited (“Senmiao HK”) is subject to Hong Kong Profits Tax (“Profits Tax”) on the assessable profits in accordance with the relevant Hong Kong tax legislation. The applicable tax rate for the first HKD$
24
Loss before income tax from continuing operations by jurisdiction as follows:
| For the Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| U.S. | $ | ( | ) | $ | ( | ) | ||
| PRC | ( | ) | ( | ) | ||||
| Hong Kong | ( | ) | ||||||
| Total net loss before income tax | $ | ( | ) | $ | ( | ) | ||
For the three months ended June 30, 2026 and 2025, the Company had current tax expense or deferred tax expense.
Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 3 (s), Recently adopted accounting pronouncements, cash paid for income taxes, during the three months ended June 30, 2026 and 2025 were as follows:
| For the Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| U.S. | $ | $ | ||||||
| PRC | ||||||||
| Hong Kong | ||||||||
| Total | $ | $ | ||||||
The significant components of deferred taxes for continuing operations were as follows:
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| Deferred Tax Assets | (Unaudited) | |||||||
| Net operating loss carried forward | $ | $ | ||||||
| Allowance for credit losses | ||||||||
| Excess of warrant fair value over offering proceeds | ||||||||
| Lease liability | ||||||||
| Total deferred tax assets | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Total deferred tax assets, net of valuation allowance | ||||||||
| Net off against deferred tax liabilities | ( | ) | ( | ) | ||||
| Net deferred tax assets | $ | $ | ||||||
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| (Unaudited) | ||||||||
| Deferred tax liabilities | ||||||||
| Right of use asset | $ | ( | ) | $ | ( | ) | ||
| Change in fair value of derivative liabilities | ( | ) | ( | ) | ||||
| Total deferred tax liabilities | ( | ) | ( | ) | ||||
| Net off against deferred tax assets | ||||||||
| Net deferred tax liabilities | $ | $ | ||||||
25
The changes related to valuation allowance from continuing operations are as follows:
| June 30, | March 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| Balance at beginning of the year | $ | $ | ||||||
| Additions | ||||||||
| Balance at end of the year | $ | $ | ||||||
As of June 30, 2026 and March 31, 2026, the Company’s PRC entity from continuing operations had net operating loss carryforwards of approximately $
Uncertain tax positions
The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of June 30, 2026 and March 31, 2026, the Company did have any unrecognized uncertain tax positions. For the three months ended June 30, 2026 and 2025, the Company did incur any interest and penalties related to potential underpaid income tax expenses.
According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended to five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB
12. CONCENTRATION
Major customers
No Major customer disclosures are required as the Company’s revenue and accounts receivable are not concentrated with any single or group of customers meeting the materiality threshold for concentration disclosure.
Major Suppliers
For the three months ended June 30, 2026, one supplier accounted for approximately
For the three months ended June 30, 2025, two suppliers accounted for approximately
As of June 30, 2026, two suppliers represented approximately
26
13. RELATED PARTY TRANSACTIONS AND BALANCES
1. Related Party Balances
1) Due from related parties
As of June 30, 2026 and March 31, 2026, balances due from related parties from the Company’s continuing operations were comprised of the following:
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| (Unaudited) | ||||||||
| Total due from related parties (i) (ii) | $ | $ | ||||||
| Less: Allowance for credit losses(i) | ( | ) | ( | ) | ||||
| Due from related parties, net | $ | $ | ||||||
| Due from a related party, net, current (ii) | $ | $ | ||||||
| (i) |
Movement of allowance for credit losses due from Jinkailong for the three months ended June 30, 2026 and for the year ended March 31, 2026 are as follows:
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| (Unaudited) | ||||||||
| Beginning balance | $ | $ | ||||||
| Addition | ||||||||
| Translation adjustment | ||||||||
| Ending balance | $ | $ | ||||||
| (ii) |
2) Due to related parties
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| (Unaudited) | ||||||||
| Other payable due to a related party (i) | $ | $ | ||||||
| Other payable due to a related party (ii) | ||||||||
| Total due to related parties | $ | $ | ||||||
| (i) |
| (ii) |
27
3) Operating lease right-of-use assets, a related party and Operating lease liabilities, a related party
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| (Unaudited) | ||||||||
| Operating lease right-of-use assets, a related party | $ | $ | ||||||
| Operating lease liabilities, current, a related party | $ | $ | ||||||
The Company entered into lease agreements with Hunan Dingchentai Investment Co., Ltd. (“Dingchentai”), a company where one of the Company’s independent directors Ms. Xiaojuan Lin serves as the legal representative and general manager, and recorded operating lease right-of-use assets and lease liabilities accordingly. The current lease agreement will expire in May 2027.
2. Related Party Transactions
| For the Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Lease expenses to Dingchentai (1) | $ | $ | ||||||
| Repayment of advance by Jie Gao (2) | $ | $ | ||||||
| Remittance of Funds Collected for Xiang Hu (3) | $ | ( | ) | $ | ||||
| Borrowings from Xi Wen (4) | $ | $ | ||||||
| (1) |
| (2) |
| (3) |
| (4) |
14. LEASES
Lessor
The Company’s operating leases for automobile rentals have rental periods that are typically short term, generally is twelve months or less. In the revenue recognition section of Note 3 (n), the Company discloses that revenue earned from automobile rentals, wherein an identified asset is transferred to the customer and the customer has the ability to control that asset, is accounted for under Topic 842 upon adoption for the three months ended June 30, 2026 and 2025.
Lessee
As of June 30, 2026 and March 31, 2026, the Company has engaged in offices and parking lot which were classified as operating leases. Payments under the Company’s lease arrangement are fixed.
The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
28
The Company recognized lease expense on a straight-line basis over the lease term for operating lease. Interest expense on the lease liability is determined each period during the lease term as the amount that results in a constant periodic interest rate applied to the remaining balance of the liability.
As of June 30, 2026 and March 31, 2026, the weighted-average remaining operating lease term of its existing leases is approximately
expense and cost for office and parking lot leases totaled $
The following table sets forth the Company’s minimum lease payments in future periods:
| Operating lease | ||||
| payments* | ||||
| (Unaudited) | ||||
| Twelve months ending June 30, 2027 | $ | |||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
| * |
As of March 31, 2026, the outstanding balance of operating lease payments due to a related party was $ |
15. LOSS PER SHERE – BASIC AND DILUTED
Basic loss per share is computed by dividing net loss for the period by the weighted average number of ordinary shares outstanding during the period. Diluted loss per ordinary share is calculated by adjusting the weighted average number of ordinary shares outstanding, assuming conversion of all potentially dilutive ordinary shares. As the Company incurred a loss for the three months ended June 30, 2026 and 2025, all potentially dilutive ordinary shares for these periods would have an anti-dilutive effect, if converted, and thus have been excluded from the computation of basic and diluted loss per ordinary share.
| For the Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Numerator: | (Unaudited) | (Unaudited) | ||||||
| Net loss attributable to the Company’s stockholders | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Weighted average number of common stock - basic and diluted | ||||||||
29
The following table presents ordinary share equivalents that were excluded from the calculation of diluted loss per ordinary share for all period presented, as the effect of their inclusion would have been anti-dilutive:
| June 30, | June 30, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Anti-dilutive ordinary share equivalents | ||||||||
| Warrants | ||||||||
| Series A convertible preferred stock | ||||||||
| Total anti-dilutive ordinary share equivalents | ||||||||
16. COMMITMENTS AND CONTINGENCIES
Purchase commitments
As of June 30, 2026, the Company did have any significant capital and other commitments.
Contingent liability of Jinkailong
Pursuant to the Regulations of the State Council on Implementing the Management System for Registered Capital Registration in the Company Law of the People’s Republic of China issued on July 1, 2024 (the “Registered Capital Registration Implementing Rules”), as Jinkailong was registered and established before June 30, 2024, its shareholders should fully pay their unpaid subscribed capital before June 30, 2032. As of June 30, 2026, Hunan Ruixi holds
17. SEGMENT INFORMATION
The Company presents segment information after elimination of inter-company transactions. In general, revenue, cost of revenue and operating expenses are directly attributable, or are allocated, to each segment. The Company’s long-lived assets are all located in the PRC and all of the Company’s revenues are derived from the PRC. Therefore, no geographical segments are presented. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (CODM) for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company does not allocate assets to its segments as the CODM does not evaluate the performance of segments using asset information.
30
By assessing the qualitative and quantitative criteria established by Accounting Standards Codification (“ASC”) 280, “Segment Reporting”, the Company considers itself to be operating in only one reportable segment of automobile transaction and related services after discontinued the online ride-hailing platform services on August 20, 2024. The Company’s CODM relies upon the consolidated results of operations as a whole when making decisions about allocating resources and assessing the performance of the Company. The Company has concluded that consolidated net loss is the measure of segment profitability. Within the information provided, the CODM specifically reviews depreciation and amortization, which are a significant segment expense, as this represents significant cost affecting the Company’s decision on how to allocate resources. Other operating expenses are reviewed in aggregate.
The following table presents the significant revenue, loss from operations, loss before income taxes and net loss in the Company’s operating segments from continuing operations for the three months ended June 30, 2026 and 2025:
| For the Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Revenues | $ | $ | ||||||
| Depreciation and amortization | $ | $ | ||||||
| Loss from operations | $ | ( | ) | $ | ( | ) | ||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | ||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Capital expenditure | $ | $ | ||||||
18. SUBSEQUENT EVENTS
In July 2026, Green Energy signed an operating agreement with Constant Energy Construction Corp. (“CECC”) and jointly established Nebula Matrix AI LLC (“NMA LLC”). Pursuant to the operating agreement, all ownership interests of the NMA LLC, including, without limitation, (i) economic interest and (ii) voting interest, are evidenced by membership units. Green Energy holds 90 membership units (constituting
On August 6, 2026, the Company filed a Certificate of Change pursuant to NRS 78.209 with the Secretary of State of the State of Nevada, which became effective on August 6, 2026. Upon effectiveness, total authorized shares of the Company were increased to
The Company evaluated all events and transactions that occurred after June 30, 2026 up through the date the Company filed these unaudited condensed consolidated financial statements. Other than the event disclosed above, there was no other subsequent event occurred that would require recognition or disclosure in the unaudited condensed consolidated financial statements.
31
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our results of operations and financial condition should be read together with our unaudited condensed consolidated financial statements and the notes thereto, which are included elsewhere in this Report and our Annual Report on Form 10-K for the year ended March 31, 2026 (the “Annual Report”) filed with the SEC. Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Overview
We are a provider of automobile transaction and related services, connecting consumers, who are mostly existing and prospective ride-hailing drivers affiliated with different operators of online ride-hailing platforms in the People’s Republic of China (“PRC” or “China”). We provide automobile transaction and related services in Hunan Province of China through our majority owned subsidiary, Hunan Ruixi Business Operation Management Co., Ltd., a PRC limited liability company (“Hunan Ruixi”).
Prior to December 31, 2025, we provided automobile transaction and related services in Sichuan Province of China through our former majority owned subsidiary, Chengdu Jiekai Yunli Technology Co., Ltd., a PRC limited liability company and its subsidiary (“Jiekai”) and our former wholly owned subsidiary, Chengdu Corenel Technology Co., Ltd. a PRC limited liability company (“Corenel”). As discussed below under “Our Automobile Transactions and Related Services”, we ceased our automobile transactions and related services in Sichuan Province of China on December 31 2025.
Starting in 2026, we began evaluating opportunities to expand its business into AI infrastructure. In furtherance of this initiative, we appointed David Nichols as a strategic advisor to assist us in advancing our strategy across AI infrastructure, digital infrastructure and new energy initiatives, with a particular focus on power infrastructure origination, capital formation and institutional partnerships.
In July 2026, we signed an operating agreement with Constant Energy Construction Corp. (“CECC”) and jointly established Nebula Matrix AI LLC (“NMA LLC”). Pursuant to the operating agreement, all ownership interests of the NMA LLC, including, without limitation, (i) economic interest and (ii) voting interest, are evidenced by membership units. We hold 90 membership units (constituting 90% of the total 100 membership units), entitling us to 90% economic and voting interests in NMA LLC, while CECC holds the remaining 10 membership units with the corresponding 10% economic and voting interests. NMA LLC will serve as the core platform through which the two companies develop, invest in, construct and operate AI data centers and digital infrastructure projects in the United States. NMA LLC intends to pursue AI data center projects covering site selection, power procurement, engineering-procurement-construction (“EPC”), project financing and long-term operation. As of the filing date of this Report, specific project locations, capital contribution amounts, ownership percentages, project timelines and power capacity metrics have not been finalized. All contemplated projects are subject to completion of due diligence, availability of financing, and satisfaction of applicable regulatory and permitting requirements. There can be no assurance that we will successfully implement or generate operating revenues from such planned data-center initiatives.
Our Automobile Transactions and Related Services
Our automobile transaction and related Services are mainly comprised of (i) automobile operating lease where we provide car rental services to individual customers to meet their personal needs with lease term no more than twelve months (the “Auto Operating Leasing”); (ii) service fees from new energy vehicles (“NEVs”) leasing where we charge NEVs lessees for a series of the services provided to them based on the chosen product solutions (the “Service for NEVs Leasing”); (iii)service fees from automobile purchase for a series of the services provided to purchasers throughout the purchase process based on the sales price of the automobiles and relevant services provided (the “ Service for Automobile Purchase”) ;(iv) monthly services where we provide management and related services to other online ride-hailing platforms we cooperated with (“Partner Platforms”) and other companies and earn commission from them (the “Auto Commissions”); (v) automobile financing where we provide our customers with auto finance solutions through finance leases (the “Auto Financing”); (vi) default fees we charges to the lessees for early-termination the contracts or other violation behaviors to the contracts (the “Default Revenue”); and (vii) other supporting services provided to customers, including auto management and other related services (the “Auto Management Services”) and automobile sales (the “Auto Sales”). We started our facilitation and supporting services in November 2018, the sale of automobiles in January 2019, and financial and operating leasing in March 2019, respectively.
32
Considering the fierce competition of the online ride-hailing industry and our operating losses in China, in December 2025 the Company entered into a certain Acquisition Agreement (the “Sichuan Acquisition Agreement”) with Hu Mao Sheng Tang Holdings Limited., a non-affiliated Hong Kong company (“HMST”). Pursuant to the Sichuan Acquisition Agreement, the Company sold all of the equity interests in Sichuan Senmiao Yicheng Assets Management Co., Ltd. (“Yicheng”), Sichuan Senmiao Zecheng Business Consulting Co., Ltd. (“Senmiao Consulting”) and its subsidiaries, which were our former subsidiaries in Sichuan Province of China (“former subsidiaries in Sichuan”), to HMST for nil consideration, while we undertook certain liabilities of $518,388 which were previously assumed by former subsidiaries in Sichuan (the “Disposition”). On December 31, 2025, the Disposition was completed and we ceased our automobile transactions and related services in Sichuan Province of China.
Since November 22, 2018, the acquisition date of Hunan Ruixi, and as of June 30, 2026, we have facilitated financing for an aggregate of 312 automobiles with a total value of approximately $5.4 million, sold an aggregate of 381 automobiles with a total value of approximately $3.7 million and delivered 470 automobiles under operating leases and 197 automobiles under finance leases to customers, the vast majority of whom are online ride-hailing drivers.
The table below provides a breakdown of the number of vehicles sold or delivered under different leasing arrangements or managed by us and corresponding revenue generated for the three months ended June 30, 2026 and 2025, respectively:
| For the Three Months Ended | ||||||||||||||||
| June 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Number of | Number of | |||||||||||||||
| Vehicles | Revenue* | Vehicles | Revenue* | |||||||||||||
| Auto Operating Leasing | 329 | $ | 313,000 | 339 | $ | 386,000 | ||||||||||
| Auto Financing | 33 | $ | 12,000 | 59 | $ | 22,000 | ||||||||||
| Auto Commissions | — | $ | 1,000 | — | $ | 8,000 | ||||||||||
| Other Services | >360 | $ | 35,000 | >350 | $ | 12,000 | ||||||||||
| * | The number was rounded to the nearest thousand for disclosure purpose. |
During the three months ended June 30, 2026, our Auto Operating Leasing, Auto Financing, Auto Commissions and other services income accounted for approximately 86.8%, 3.3%, 0.3% and 9.6% of our total revenue from our automobile transactions and related services, respectively, while our Auto Operating Leasing, Auto Financing, Auto Commissions, and other services income accounted for approximately 90.3%, 5.2%, 1.9%, and 2.6% for the three months ended June 30, 2025, respectively.
Key Factors and Risks Affecting Results of Operations
Ability to Increase Our Automobile Lessee
Our revenue growth has been largely driven by the expansion of our automobile lessee base and the corresponding revenue generated from operating and finance lease. We acquire customers for our Automobile Transaction and Related Services through the network of third-party sales teams, referral from online ride-hailing platforms and our own efforts including online advertising and billboard advertising. We also send out fliers and participate in trade shows to advertise our services. We plan to maintain the number of our customers by marketing our companies to our existing and prospective automobile lessees in the cities we now operate in. We expect to keep promoting the growth of our automobile rental business with automobile rental solutions/incentives specifically targeted at drivers using our Partner Platforms. An effective cross-selling strategies between our automobile leasing business and our Partner Platforms is important to our expansion and revenue growth. We also plan to strengthen our marketing efforts through the collaboration with certain automobile dealers and through our own team by employing more experienced staff, sharing market resources with our equity investee company, and improving the quality and variety of our services. As of June 30, 2026, we had one employee in our own sales department.
33
Management of Automobile Rentals
Due to the fierce competition of online ride-hailing industry in those cities we operated in, we have witnessed a high turn-over rate on the short-term car rentals during the three months ended June 30, 2026. To meet the demand in Changsha, we have purchased automobiles for our operating lease. The daily management and timely maintenance of leased automobiles will have a significant effect on the stability and potential growth of our income from leasing automobiles in the next twelve months. The effective management, including maintaining the high turn-over rate of our automobiles through our proprietary system and experienced auto-management team could provide in-time delivery and qualified automobiles to potential lessees, either for personal use or providing online ride-hailing services. As of June 30, 2026, for parking and management of automobiles for operating lease, we had one parking lot and three employees in Changsha. During the three months ended June 30, 2026 and 2025, the average utilization of the automobiles for operating lease was approximately 93.1% and 96.0%, respectively.
Our Service Offerings and Pricing
The growth of our revenue depends on our ability to improve existing solutions and services provided, continue identifying evolving business needs, refine our collaborations with business partners and provide value-added services to our customers. The attraction of new automobile leases depends on our leasing solutions with attractive rental price and flexible leasing terms. We have also adopted a series of pricing formulas to adopt the market changes, considering the historical and future expenditure, remaining available leasing months and market price to determine our rental price for varied rental solutions. Furthermore, our product designs affect the type of automobile leases we attract, which in turn affect our financial performance. The attraction of new customers depends on the comprehensive income they could earn from our own or Partner Platforms, which is mainly affected by the number of orders distributed to them through our platform and the amount of the incentives paid to them from platforms. Our revenue growth also depends on our abilities to effectively price our services, which enables us to attract more customers and improve our profit margin.
Ability to Retain Key Business Cooperators
Historically, we have set up a series of strategy and business relationships with certain affiliates of some famous and leading companies of NEVs manufacturers, online ride-hailing platforms, local NEVs leasing companies, and travel service providers to develop our Automobile Transaction and Related Services. We earned commissions or services fees from them, purchased and leased automobiles for our business at a favorable price. The close relationships have provided us with the necessary capacity to support the development of our online ride-hailing platform and leasing business. To retain these valuable cooperators and continuously explore opportunities to collaborate with them in more areas is important to us to have considerable resources to support the exploration and expansion of our business into new cities.
Meanwhile, in order to strengthen our market position, Hunan Ruixi has built up cooperation relationships with Partner Platforms, such as Hunan Didi Chuxing Technology Co., Ltd., whereby the online ride-hailing requests and orders shall be completed on Partner Platforms utilizing the network of cars and drivers of us while Hunan Ruixi earned rental income from drivers and earned commissions from Partner Platforms.
34
Ability to Collect Receivables on a Timely Basis
For receivables from Auto Operating Leasing, we usually settle the rental income with each online ride-hailing driver monthly based on the product solutions they chose. In accordance with the development of the operating lease business, our Partner Platforms, such as Didi, agree to temporarily “lock-up” the fares of the rides which the driver earned from the platform to ensure the timely collection of our rental receivables from them. As of June 30, 2026, we had no accounts receivable of operating lease. Besides, during the three months ended June 30, 2026, we settled our commissions with the Partner Platforms for our automobile rental income on a monthly basis.
The efficiency of collection of the monthly and weekly payments has a material impact on our daily operation. Our risk and asset management department has set up a series of procedures to monitor the collection from drivers. Our business department has also set up a stable and close relationship with Partner Platforms to ensure the timely collection of commissions. The accounts receivable and advance payments may increase our liquidity risk.
Ability to Manage Defaults Effectively
We manage the credit risk arising from the default of automobile purchasers and lessees by performing credit checks on each automobile purchaser or lessee based on the credit reports from People’s Bank of China and third-party credit rating companies, and personal information including residence, ethnicity group, driving history and involvement in legal proceeding. Our risk department continuously monitors the payment by each purchaser and sends them payment reminders. We also keep monitoring the daily gross fare earned by the online ride-hailing drivers, who are our majority customers and run their business through our Partner Platforms during the three months ended June 30, 2026. We do this so that we can evaluate their financial conditions and provide them with assistance including the transfer of automobile to a new driver if they are no longer interested in providing ride-hailing services or are unable to earn enough income to make monthly lease/loan payments. We also charge default fees from customers for their behaviors violated to the contracts.
Further, the automobiles subject to our finance leases are not collateralized by us. As of June 30, 2026, the total value of non-collateralized automobiles was close to the amount of finance lease receivables since it was on a straight-line basis. We believe our risk exposure of financing leasing is immaterial as we have experienced limited default cases and we are able to re-lease those automobiles to drivers under finance leases.
Ability to Compete Effectively
Our business and results of operations depend on our ability to compete effectively. Overall, our competitive position may be affected by, among other things, our service quality and our ability to price our solutions and services competitively. We will set up and continuously optimize our own business system to improve our service quality and user experience. Our competitors may have more resources than we do, including financial, technological, marketing and others and may be able to devote greater resources to the development and promotion of their services. We will need to continue to introduce new or enhance existing solutions and services to continue to attract automobile dealers, financial institutions, car buyers, lessees, ride-hailing drivers and other industry participants. Whether and how quickly we can do so will have a significant impact on the growth of our business.
Market Opportunity and Government Regulations in China
The demand for our services depends on overall market conditions of the online ride-hailing industry in China. The continuous growth of the urban population places increasing pressure on the urban transportation and the improvement of living standards has increased the market demand for quality travel in China. Traditional taxi service is limited, and the emerging online platforms have created good opportunities for the development of the online ride-hailing service market. The market value is expected to increase from RMB354.7 billion in 2024 to RMB751.3 billion in 2028, owing to rising consumer demand for economical mobility options and an amplified penetration of shared mobility services, especially in lower-tier cities. According to the 57th Statistical report on Internet Development in China published in February 2026 by the China Internet Network Information Center (the “CNNIC”), the number of online ride-hailing service users had reached 539 million by the end of December 2025, and took approximately 47.9% of the total number of Chinese internet users. We cooperate with DiDi, the dominant player in China’s ride-hailing market. Benefiting from DiDi’s leading market share, massive driver and passenger network, advanced AI intelligent dispatching technology, standardized compliance control system and high user loyalty, our business is well-positioned to capture the incremental growth brought by the rapid expansion of aggregation ride-hailing orders in the coming years. In addition, the online ride-hailing industry is also facing increasing competition in China and is attracting more capital investment. For example, Dida Inc. Chenqi Technology Limited and CaoCao Inc. were listed on the Hong Kong Stock Exchange in June 2024 and June 2025, respectively.
35
However, the participants in the online ride-hailing industry are facing increasingly fierce competition and the platforms for passengers and providing services together with online ride-hailing platform companies (“Aggregation Platforms”) have gained rising significance in the shared mobility industry. According to the Ministry of Transportation (the “MOT”) of the People’s Republic of China, as of June 30, 2026, approximately 401 online ride-hailing platform companies have obtained booking taxi operating licenses, representing an increase of approximately 3% as compared with the one as of June 30, 2025. Total online ride-hailing order volume was approximately 979 million in June 2026 in China, representing an increase of approximately 29% as compared with the one in June 2025. Of this volume, orders completed by Aggregation Platforms amounted to 327 million, accounting for approximately 33.4% of the industry’s total orders in June 2026 in China, representing an increase of 17.6% as compared with the one in June 2025. Meanwhile, approximately 3.21 million online booking taxi transportation certificates and approximately 7.48 million online booking taxi driver’s licenses were issued nationwide in China as of December 31, 2024, respectively. Since 2023, the municipal transportation bureaus in a series of cities in China have released operational dynamics and risk warnings for the online ride-hailing industry, stating that the online ride-hailing market has become saturated. They remind enterprises and practitioners who intend to engage in online ride-hailing services should have a detailed understanding of relevant regulations, conduct market research, fully consider changes in operating income due to factors such as supply and demand, market conditions, fluctuations or continuous declines, objectively evaluate the actual income level of industry practitioners, and make rational and prudent career choices.
The online ride-hailing industry may also be affected by, among other factors, the general economic conditions in China. The interest rates and unemployment rates may affect the demand of ride-hailing services and automobile purchasers’ willingness to seek credit from financial institutions. Adverse economic conditions could also reduce the average income of individual and intensify the competition between platforms. Should any of those negative situations occur, the volume and value of the automobile transactions we service will decline, and our revenue and financial condition will be negatively impacted.
On April 1, 2017, the General Office of Changsha City People’s Government issued the “Detailed Rules for the Administration of Online Car-Hailing Business Services of Changsha City”, which was abolished and replaced by the updated version issued on July 23, 2018. On August 20, 2025, the Changsha Municipal Bureau of Transportation further issued “Announcement of Changsha Municipal Bureau of Transportation on Further Improving the Issuance of Vocational Qualification Certificates for Taxi Drivers and Other Related Matters”. According to these regulations and guidelines, three licenses /certificates are required for operating the online ride-hailing business in Changsha: (1) the ride-hailing service platform should obtain the online booking taxi operating license; (2) the automobiles used for online ride-hailing should obtain the online booking taxi transportation certificate (“automobile certificate”); (3) the drivers should obtain the online booking taxi driver’s license (“driver’s license”). Besides, all newly added cars used for online ride-hailing in Changsha shall be NEVs starting from 2027.
As of June 30, 2026, all ride-hailing drivers who leased our automobiles or used our services have obtained the driver’s license for online ride-hailing services, and all of the cars used for online ride-hailing services which we provided management services have the automobile certificate. Without requisite automobile certificate or driver’s license, these drivers may be suspended from providing ride-hailing services, confiscated their illegal income and subject to fines of up to 10 times of their illegal income. We assisted drivers to obtain the required certificate and license for our Automobile Transaction and Related Services. However, there was no guarantee that all of the drivers who run their online ride-hailing business would be able to obtain all the certificates and licenses. These Partner Platforms may not allow unqualified drivers who lease our automobiles to drive through these platforms, or reduce their commission income, so that they may not be able to earn enough income from those Partner Platforms to pay our rental fees. Our business and results of operations shall be materially and adversely affected if we could not serve qualified drivers or our served drivers are suspended from providing ride-hailing services.
The Chinese government has exercised and continued to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. For example, the Chinese cybersecurity regulator announced on July 2, 2021 that it had begun an investigation of Didi and two days later ordered that the company’s app be removed from smartphone app stores. We believe that our current operations are in compliance with the laws and regulations of the Chinese cybersecurity regulator. However, the Company’s operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to its business or industry.
36
Results of Continuing Operations for the three months ended June 30, 2026 Compared to the three months ended June 30, 2025
| For the Three Months Ended | ||||||||||||
| June 30, | ||||||||||||
| 2026 | 2025 | Change | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Revenues | $ | 360,889 | $ | 427,698 | $ | (66,809 | ) | |||||
| Cost of revenues | (299,197 | ) | (345,831 | ) | 46,634 | |||||||
| Gross profit | 61,692 | 81,867 | (20,175 | ) | ||||||||
| Operating expenses | ||||||||||||
| Selling, general and administrative expenses | (692,472 | ) | (500,829 | ) | (191,643 | ) | ||||||
| Total operating expenses | (692,472 | ) | (500,829 | ) | (191,643 | ) | ||||||
| Loss from operations | (630,780 | ) | (418,962 | ) | (211,818 | ) | ||||||
| Other (expense) income, net | (737,700 | ) | 29,087 | (766,787 | ) | |||||||
| Excess of warrant fair value over offering proceeds | (34,149,713 | ) | — | (34,149,713 | ) | |||||||
| Change in fair value of derivative liabilities | 2,732,106 | 77,182 | 2,654,924 | |||||||||
| Loss before income taxes expense | (32,786,087 | ) | (312,693 | ) | (32,473,394 | ) | ||||||
| Income tax expense | — | — | — | |||||||||
| Net loss from continuing operations | $ | (32,786,087 | ) | $ | (312,693 | ) | $ | (32,473,394 | ) | |||
Revenues
We started generating revenue from Automobile Transaction and Related Services from our acquisition of Hunan Ruixi on November 22, 2018. As we focus on our automobile rental business, we expect revenue from our automobile rental to continuously account for a majority of our revenues. We provide a series of product solutions to sustain and further increase the number of our automobiles for operating leases.
The following table sets forth the breakdown of revenues by revenue source for the three months ended June 30, 2026 and 2025, respectively:
| For the Three Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (unaudited) | (unaudited) | |||||||
| Revenue from automobile transactions and related services | ||||||||
| - Operating lease revenues from automobile rentals | $ | 313,335 | $ | 386,266 | ||||
| - Service fees from NEVs leasing | 21,291 | — | ||||||
| - Financing revenues | 11,813 | 22,331 | ||||||
| - Service fees from automobile purchase services | 4,670 | 1,270 | ||||||
| - Default revenue | 3,439 | 7,294 | ||||||
| - Monthly services commissions | 1,163 | 8,265 | ||||||
| - Other service fees | 5,178 | 2,272 | ||||||
| Total Revenue | $ | 360,889 | $ | 427,698 | ||||
Revenue from our automobile transaction and related services mainly includes operating lease revenues from automobile rentals, service fees from NEVs leasing, financing revenues, service fees from automobile purchase services, default revenue, monthly services commissions, and other services fees, which accounted for approximately 86.8%, 5.9%, 3.3%, 1.3%, 1.0%, 0.3% and 1.4%, respectively, of the total revenue during the three months ended June 30, 2026. Meanwhile, operating lease revenues from automobile rentals, financing revenues, service fees from automobile purchase services, default revenue, monthly services commissions, and other services fees, which accounted for approximately 90.3%, 5.2%, 0.3%, 1.7%, 1.9% and 0.6%, respectively, of the total revenue during the three months ended June 30, 2025.
37
Operating lease revenues from automobile rentals
We generate revenues from leasing our own automobiles by online ride-hailing drivers with their authorization, with the majority of lease term of no more than 12 months. The decrease in rental income of $72,931, or approximately 18.9% during three months ended June 30, 2026 was mainly due to the decrease in the number and average monthly rental of automobiles leased for operating lease. We leased 329 automobiles with an average monthly rental income of approximately $344 per automobile, resulting in a rental income of $313,335 for the three months ended June 30, 2026. While we leased 339 automobiles with an average monthly rental income of approximately $398 per automobile, resulting in a rental income of $386,266 for the three months ended June 30, 2025.
Service fees from NEVs leasing
We generated revenues of $21,291 and $0 from leasing NEVs by charging leases service fees during the three months ended June 30, 2026 and 2025, respectively. The amount of service fees for NEVs leasing is based on our timely product solutions which are adjusted in accordance with different market conditions. We suspended charging Service fees from NEVs leasing from continuing operations for the period August 2023 through July 2025 and resumed such charges starting August 2025, which resulted in no related service fee revenue recognized from continuing operations for the three months ended June 30, 2025.
Financing revenues
We started our finance lease business in March 2019 and began to generate interest income from providing finance lease services to ride-hailing drivers in April 2019. We also charge the customers of our automobile financing facilitation services interest on their monthly payments which cover purchase price of automobile and our services fees and facilitation fees for terms of 24 or 48 months. We recognized a total interest income of $11,813 from an average monthly number of 26 automobiles and $22,331 from an average monthly number of 52 automobiles during the three months ended June 30, 2026 and 2025, respectively. The decrease was due to the average number of automobiles served for financial leasing decreased during the three months ended June 30, 2026.
Service fees from automobile purchase services
We generated revenues of $4,670 and $1,270 from the automobile purchase services during the three months ended June 30, 2026 and 2025, respectively. The increase was due to the number of automobiles purchase transactions increased to 4 during the three months ended June 30, 2026 from 1 during the three months ended June 30, 2025.
Default revenue
We generated default revenues of $3,439 and $7,294 from the automobile lessee’s early-termination of the contracts or other violation behaviors to the contracts during the three months ended June 30, 2026 and 2025, respectively. The decrease was primarily attributable to a lower incidence of early-terminations and contractual breaches by the automobile lessees, driven by improved credit quality of our lessee base, enhanced risk management and contract monitoring practices during three months ended June 30, 2026.
Monthly services commissions
We generated revenues of $1,163 and $8,265 from the monthly management and related services provided to our Partner Platforms and other companies during the three months ended June 30, 2026 and 2025, respectively. The decrease was due to the decrease in the number of automobiles leased to online ride-hailing drivers for operating lease during the three months ended June 30, 2026, which in turn led to lower commission income from the Partner Platforms related to the monthly management and related services.
Other Service fees
We generate other revenues from other miscellaneous service fees charged to our customers during the three months ended June 30, 2026 and 2025. Other services fees mainly include the maintenance fees charged to our customers pursuant to certain new product solutions.
38
Cost of Revenues
Cost of revenues represents the depreciation and rental cost of automobiles, daily maintenance, insurance and other usage costs of automobiles which related to our Auto Operating Leasing. The decrease of $46,634, or approximately 13.5% was primarily due to decreased in the depreciation of automobiles. Although the total number of our own automobiles used for operating leasing remaining substantially unchanged during the three months ended June 30, 2026 as compared with the three months ended June 30, 2025, these automobiles were fully depreciated in or prior to the three months ended June 30, 2026.
Gross Profit
We had gross profit of $61,692 and $81,867, respectively, during the three months ended June 30, 2026 and 2025. The following table sets forth the breakdown of gross profit by major revenue source for the three months ended June 30, 2026 and 2025:
| For the Three Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (unaudited) | (unaudited) | |||||||
| - Auto Operating Leasing | $ | 14,138 | $ | 40,435 | ||||
| - Other Automobile transaction and related Services | 47,554 | 41,432 | ||||||
| Total Gross Profit | $ | 61,692 | $ | 81,867 | ||||
We had a gross profit of $14,138 from our Auto Operating Leasing during the three months ended June 30, 2026, which decreased by $26,297 from a gross profit of $40,435 in the three months ended June 30, 2025. The decrease was attributable to the average monthly rental of automobiles leased for operating lease decreased from $389 in the three months ended June 30, 2025 to $344 in the three months ended June 30, 2026. As the gross margin of the revenues from our operating leasing decreased, our overall gross profit margin decreased to approximately 17.1% for the three months ended June 30, 2026 from approximately 19.1% for the three months ended June 30, 2025.
Selling, General and Administrative Expenses
For the three months ended June 30, 2026, selling, general and administrative expenses primarily consist of salary and employee benefits, rental expense, travel expenses, and other expenses. Selling, general and administrative expenses increased from $500,829 for three months ended June 30, 2025 to $692,472 for the three months ended June 30, 2026, representing an increase of $191,643, or approximately 38.3%. The increase was mainly due to (1) the increase of $160,178 in professional service fees such as financial, market consulting due to our financing arrangements during the three months ended June 30, 2026; (2) an increase of $52,699 in salary and employee benefits mainly due to the higher compensation scales for current executive officers.
Other (expense) income, net
For the three months ended June 30, 2026, we had other expense, net of $737,700, which primarily consist of the (1) $770,000 in offering costs allocable to the derivative liabilities for our June 2026 Units Warrants; partially offset by (2) income of approximately $15,000 from the disposal of our own automobiles used for operating leases; (3) penalty income of approximately $12,000 from the customers; and (4) the miscellaneous other income of approximately $5,000.
For the three months ended June 30, 2025, we had other income, net of $29,087, which primarily consist of (1) penalty income of approximately $15,000 from the customers; and (2) the miscellaneous other income of approximately $14,000.
39
Excess of warrant fair value over offering proceeds
In June 2026, we issued common shares and warrants in Units Private Placement, generating aggregate gross proceeds of $11.0 million. We concluded that these warrants qualify as liability instruments. At the issuance date in June 2026, the fair value of the warrants was estimated at $45,149,713 using the Black-Scholes valuation model, and the $34,149,713 excess of the warrants’ fair value over the total offering proceeds was recognized as a loss in the unaudited condensed consolidated statements of operations and comprehensive loss.
Change in Fair Value of Derivative Liabilities
Warrants issued in our registered direct offerings that took place in February 2021, May 2021 and November 2025, and the August 2020 underwritten public offering, and the November 2021, November 2025 and June 2026 private placement were classified as liabilities under the caption “Derivative Liabilities” in the unaudited condensed consolidated balance sheet and recorded at estimated fair value at each reporting date, computed using the Black-Scholes valuation model. The change in fair value of derivative liabilities for the three months ended June 30, 2026 and 2025 was a gain of $2,732,106 and $77,182, respectively. The following table sets forth the breakdown of the gain (loss) in fair value of derivative liabilities for the three months ended June 30, 2026 and 2025:
| For the Three Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (unaudited) | (unaudited) | |||||||
| - August 2020 underwritten public offering | $ | — | $ | 21 | ||||
| - February 2021 registered direct offering | — | 219 | ||||||
| - May 2021 registered direct offering | — | 13,609 | ||||||
| - November 2021 private placement | — | 63,333 | ||||||
| - November 2025 Private placement | (440,056 | ) | — | |||||
| - November 2025 registered direct offering | (81,448 | ) | — | |||||
| - June 2026 private placement | 3,253,610 | — | ||||||
| Total Change in Fair Value of Derivative Liabilities | $ | 2,732,106 | $ | 77,182 | ||||
Income Tax Expense
Generally, our subsidiary Hunan Ruixi is subject to enterprise income tax on its taxable income in China at a rate of 25%. And the applicable tax rate of our HK subsidiary, Senmiao HK, for the first HKD$2 million of assessable profits is 8.25% and assessable profits above HKD$2 million will continue to be subject to the rate of 16.5% for corporations in Hong Kong. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. With the exception of Senmiao HK, which generated profits primarily from tax-exempt interest income on bank deposits, all entities suffered losses. Accordingly, no tax expense was recorded for the three months ended June 30, 2026 and 2025.
Net loss from continuing operations
As a result of the foregoing, net loss from continuing operations for the three months ended June 30, 2026 was $32,786,087, representing an increase in loss of $32,473,394 from net loss of $312,693 for the three months ended June 30, 2025.
40
Results of Discontinued Operations for the three months ended June 30, 2026 Compared to the three months ended June 30, 2025
| For the Three Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (unaudited) | (unaudited) | |||||||
| Revenues | $ | — | $ | 432,401 | ||||
| Cost of revenues | — | (317,313 | ) | |||||
| Gross profit | — | 115,088 | ||||||
| Operating expenses | — | |||||||
| Provision for credit losses | — | (307,416 | ) | |||||
| Total operating expenses | — | (307,416 | ) | |||||
| Loss from operations | — | (192,328 | ) | |||||
| Other income, net | — | 229,198 | ||||||
| Interest expense on finance leases | — | (615 | ) | |||||
| Income before income taxes | — | 36,255 | ||||||
| Income tax expenses | — | — | ||||||
| Net income from discontinued operations | $ | — | $ | 36,255 | ||||
The result of discontinued operations was the financial figures of our former subsidiaries in Sichuan. As of December 31, 2025, we deconsolidated former subsidiaries in Sichuan and its business result was included in our automobile transactions and related services before we deconsolidated its financial figures.
Revenues
The following table sets forth the breakdown of revenues by revenue source for the three months ended June 30, 2026 and 2025:
| For the Three Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (unaudited) | (unaudited) | |||||||
| Revenue from automobile transactions and related services (discontinued operations) | ||||||||
| - Operating lease revenues from automobile rentals | $ | — | $ | 309,137 | ||||
| - Service fees from NEVs leasing | — | 83,444 | ||||||
| - Monthly services commissions | — | 27,560 | ||||||
| - Default revenue | — | 2,935 | ||||||
| - Other service fees | — | 9,325 | ||||||
| Total Revenue from discontinued operations | $ | — | $ | 432,401 | ||||
Revenue from automobile transactions and related services (discontinued operations)
Revenue from automobile transaction and related services (discontinued operations) mainly included operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, default revenue and other services fees, which accounted for approximately 71.5%, 19.3%, 6.4%, 0.7% and 2.1%, respectively, of the total revenue from discontinued operations during the three months ended June 30, 2025.
Operating lease revenues from automobile rentals
Our former subsidiaries in Sichuan generated revenues from leasing sub-leasing automobiles leased from third-parties and related parties or rendered by online ride-hailing drivers with their authorization for a lease term of no more than twelve months. Our former subsidiaries in Sichuan leased 327 automobiles with an average monthly rental income of approximately $401 per automobile, resulting in a rental income of $309,137, including rental income of $24,057 from a related party, for the three months ended June 30, 2025.
41
Service fees from NEVs leasing
Our former subsidiaries in Sichuan generated revenues of $83,444 from leasing NEVs by charging leases service fees during the three months ended June 30, 2025. The amount of services fees for NEVs leasing were based on our timely product solutions in accordance which adjusted with different market conditions.
Monthly services commissions
Our former subsidiaries in Sichuan generated revenues of $27,560 from the monthly management and related services provided to our Partner Platforms during the three months ended June 30, 2025.
Default revenue
Our former subsidiaries in Sichuan generated default revenues of $2,935 from the automobile lessee’s early-termination of the contracts or other violation behaviors to the contracts during the three months ended June 30, 2025.
Other Service fees
Our former subsidiaries in Sichuan generated other revenues from other miscellaneous service fees charged to our customers during the three months ended June 30, 2025. Other services fees mainly include the maintenance fees charged to our customers pursuant to certain new production solutions.
Cost of Revenues
During the three months ended June 30, 2025, cost of revenues from discontinued operations of $317,313 represented the amortization of ROUs, rental cost of automobiles, daily maintenance and insurance expense of automobiles which related to Auto Operating Leasing.
Selling, General and Administrative Expenses
For the three months ended June 30, 2025, selling, general and administrative expenses from discontinued operations related to Auto Operating Leasing, which amounted to $307,416, primarily consisted of (1) $217,920 in outsourced operating services related to automobile lease, mainly attributable to the streamlining of the workforce in Chengdu, thereby sharing venue and personnel resources with Jinkailong, which resulted the corresponding service fee obligations; (2) $47,065 in salary and employee benefits; (3) $21,400 in entertainment, advertising and promotion; and (4) other miscellaneous expenses.
Other income, net
For the three months ended June 30, 2025, our former subsidiaries in Sichuan had other income, net of $229,198, which was primarily due to deconsolidation of Corenel.
Income Tax expense
Our former subsidiaries in Sichuan are subject to enterprise income tax on its taxable income in China at a rate of 25%. All of our former subsidiaries in Sichuan suffered losses and no tax expense was recorded for the three months ended June 30, 2025.
Net income from discontinued operations
As a result of the foregoing, the net income from discontinued operations for the three months ended June 30, 2025 was $36,255.
42
Liquidity and Capital Resources
In assessing liquidity, we monitor and analyze our cash on-hand and our operating and capital expenditure commitments. Our liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. Debt financing from financial institutions and equity financings have been utilized to finance our working capital requirements.
Our business is capital intensive, and certain factors show negative trends in its liquidity position, including (1) the net loss of approximately $32.8 million for the three months ended June 30, 2026; (2) accumulated deficit of approximately $83.1 million as of June 30, 2026; (3) $0.9 million of net cash outflows in operating activities from continuing operations for the three months ended June 30, 2026; and (4) the working capital deficit of approximately $36.3 million as of June 30, 2026.
Recent financing arrangements, however, have materially strengthened our cash position. As of June 30, 2026, we recorded total derivative liabilities of approximately $48.0 million, of which $41.9 million related to warrants issued under the April 2026 Units private placement. Management assessed that these warrants will not be settled in cash upon exercise. Management evaluated and concluded that the factors aforementioned did not raise substantial doubt as to our ability to continue as a going concern. We believe that our cash balance of approximately $12.9 million as of June 30, 2026 will be sufficient to meet our liquidity needs for the twelve months following issuance of these unaudited condensed consolidated financial statements. If we experienced an adverse operating environment or incurred unanticipated capital expenditure requirements, or if we determined to accelerate our growth, then additional financing may be required.
The following table summarizes our cash flows:
| For the Three Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (unaudited) | (unaudited) | |||||||
| Net Cash Used in Operating Activities from Continuing Operations | $ | (881,647 | ) | $ | (179,798 | ) | ||
| Net Cash Used in Operating Activities from Discontinued Operations | — | (141,357 | ) | |||||
| Net Cash Used in Operating Activities | (881,647 | ) | (321,155 | ) | ||||
| Net Cash Used in Investing Activities from Continuing Operations | (39,538 | ) | — | |||||
| Net Cash Used in Investing Activities from Discontinued Operations | — | (385 | ) | |||||
| Net Cash Used in Investing Activities | (39,538 | ) | (385 | ) | ||||
| Net Cash Provided by Financing Activities from Continuing Operations | 10,230,000 | 325,347 | ||||||
| Net Cash Provided by Financing Activities from Discontinued Operations | — | 52,124 | ||||||
| Net Cash Provided by Financing Activities | 10,230,000 | 377,471 | ||||||
| Effect of Exchange Rate Changes on Cash and Cash Equivalents | 831 | (21,741 | ) | |||||
| Cash and Cash Equivalents, Beginning of the Period | 3,562,219 | 833,577 | ||||||
| Cash and Cash Equivalents, End of the Period | 12,871,865 | 867,767 | ||||||
| Less: Cash and Cash Equivalents from discontinued operations | — | (77,532 | ) | |||||
| Cash from continuing operations, End of Period | $ | 12,871,865 | $ | 790,235 | ||||
Cash Flow in Operating Activities
For the three months ended June 30, 2026, net cash used in operating activities was $881,647, which was the net outflows from continuing operations. While for the three months ended June 30, 2025, net cash used in operating activities was $321,155, which consisted of net cash outflows of $179,798 from continuing operations and $141,357 from discontinued operations.
The increase of $701,849 in net cash used in operating activities from continuing operations for the three months ended June 30, 2026 as compared with the three months ended June 30, 2025 was primarily attributable to (1) increase of $32,473,394 in net loss from continuing operations; (2) increase of $2,654,924 in Change in fair value of derivative liabilities from a gain of $77,182 for the three months ended June 30, 2025 to a gain of $2,732,106 for the three months ended June 30, 2026; (3) increase of $256,594 in the change of prepayments, other receivables and other assets; (4) increase of $145,803 in the change of accrued expenses and other liabilities (included third parties and a related party); (5) decrease of $60,793 in depreciation of property and equipment as our owned automobiles used in operating leases were fully depreciated in or prior to the three months ended June 30, 2026; and partially offset by (6) a loss of $34,149,713 arising from excess of the warrants’ fair value over the total offering proceeds from Units Private Placement issuance of common shares and warrants; and (7) $770,000 of offering costs for the Units Private Placement issuance of common shares and warrants allocated to derivative liabilities.
43
Cash Flow in Investing Activities
For the three months ended June 30, 2026, we had net cash used in investing activities of $39,538, which consisted of: (1) purchase of property and equipment for office purpose of $61,875; partially offset by (2) the proceeds from sales of the used-automobiles of $22,337.
For the three months ended June 30, 2025, we had net cash used in investing activities of $385, which was the net outflows from discontinued operations.
Cash Flow in Financing Activities
For the three months ended June 30, 2026, we had net cash provided by financing activities of $10,230,000, generated from gross proceeds of $11,000,000 from issuance of common stock and warrant in Units Private Placement, net of related issuance costs of $770,000.
For the three months ended June 30, 2025, we had net cash provided by financing activities of $377,471, which consisted net inflows of $325,347 from continuing operations and $52,124 from discontinued operations. The net cash provided by financing activities from continuing operations consisted of: (1) net proceeds of $226,000 from the exercise of November 2021 Private Placement Warrants from an investor; and (2) borrowings from a related party of $99,347.
Off-Balance Sheet Arrangements
As of the filing date of this Report, we have the following off-balance sheet arrangements that are likely to have a future effect on our financial condition, revenues or expenses, results of operations and liquidity:
| ● | Purchase Commitments |
As of the filing date of this Report, we have no purchase commitment.
| ● | Contingent Liabilities |
Pursuant to the Regulations of the State Council on Implementing the Management System for Registered Capital Registration in the Company Law of the People’s Republic of China issued on July 1, 2024 (the “Registered Capital Registration Implementing Rules”), as Jinkailong was registered and established before June 30, 2024, its shareholders should fully pay their unpaid subscribed capital before June 30, 2032. As of June 30, 2026, Hunan Ruixi holds 35% of equity interest of Jinkailong and has not made any payments towards the investment amounting to RMB3.5 million (approximately $516,000). According to the Registered Capital Registration Implementing Rules, Hunan Ruixi shall pay the subscribed capital of Jinkailong before June 30, 2032.
Inflation
We do not believe our business and operations have been materially affected by inflation.
Critical Accounting Estimates
Our unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
44
Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application. The management determined there were no critical accounting estimates.
When reading our unaudited condensed consolidated financial statements, you should consider our selection of critical accounting policies, the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions. Our critical accounting policies and practices include the following: (i) property and equipment, net; and (ii) revenue recognition. See Note 3—Summary of Significant Accounting Policies to our consolidated financial statements in our 2026 Form 10-K for the disclosure of these accounting policies.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Based on an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of June 30, 2026, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective due to the following material weaknesses in our internal control over financial reporting:
| ● | We did not have sufficient personnel with appropriate levels of accounting knowledge and experience to address complex U.S. GAAP accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP. Specifically, our control did not operate effectively to ensure the appropriate and timely analysis of and accounting for unusual and non-routine transactions and certain financial statement accounts, which resulted in restatement of our unaudited financial statements as of and for the three and nine months ended December 31, 2025; |
| ● | We are lacking adequate policies and procedures in internal audit function to ensure that our policies and procedures have been carried out as planned; and |
| ● | We had deficiencies in our IT general controls regarding to the Logical Access Security, Change Management, IT Operations and Cybersecurity of our financial system, etc. |
In addition, we plan to address the weaknesses identified above by implementing the following measures:
| (i) | Continuously hiring additional accounting staffs with comprehensive knowledge of U.S. GAAP and SEC reporting requirements; |
| (ii) | Setting up an internal audit function and continuously ameliorating our internal audit to assist with assessment of Sarbanes-Oxley compliance requirements and improvement of internal controls related to financial reporting; and |
| (iii) | improving our IT environment and daily management. |
Changes in Internal Control over Financial Reporting
Other than as described above, there were no change in our internal control over financial reporting that occurred during the quarter ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
45
PART II -
Item 6. Exhibits.
46
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Dated: August 14, 2026 | Senmiao Technology Limited | ||
| By: | /s/ Ronggang (Jonathan) Zhang | ||
| Name: | Ronggang (Jonathan) Zhang | ||
| Title: | Chief Executive Officer | ||
| (Principal Executive Officer) | |||
| Dated: August 14, 2026 | By: | /s/ Yafeng Li | |
| Name: | Yafeng Li | ||
| Title: | Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) | |||
47