Valor Energy Inc 10-Q for FY2026 Q2
Valor Energy Inc (VAI)
About this 10-Q
Valor Energy Inc filed this 10-Q on November 19, 2025, covering the quarter ended September 30, 2025 (FY2026 Q2).
Headline figures
Quarter ended September 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $936.34K
- up 25.5% from $745.88K a year earlier
- Net loss
- $648.74K
- compared with a net loss of $711.45K a year earlier
- Diluted EPS
- -$0.43
- compared with -$0.68 a year earlier
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.) |
| High-Tech Zone Chengdu, | ||
| (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 November 14, 2025, 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)
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable | ||||||||
| Accounts receivable, a related party | ||||||||
| Finance lease receivables, current | ||||||||
| Prepayments, other receivables and other current assets, net | ||||||||
| Prepayment - a related party | ||||||||
| Due from related parties, net, current | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Other assets | ||||||||
| Operating lease right-of-use assets, net, a related party | ||||||||
| Financing lease right-of-use assets, net | ||||||||
| Intangible assets, net | ||||||||
| Finance lease receivables, non-current | ||||||||
| Due from a related party, net, non-current | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES, MEZZANNIE EQUITY AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Advances from customers | ||||||||
| Income tax payable | ||||||||
| Accrued expenses and other liabilities | ||||||||
| Due to related parties | ||||||||
| Operating lease liabilities, current - a related party | ||||||||
| Financing lease liabilities | ||||||||
| Derivative liabilities | ||||||||
| Current liabilities - discontinued operations | ||||||||
| Total current liabilities | ||||||||
| Other liabilities | ||||||||
| Operating lease liabilities, non-current - a related party | ||||||||
| Total other 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) equity | ( | ) | ||||||
| Total liabilities, mezzanine equity and equity/ deficit | $ | $ | ||||||
| * | Giving retroactive effect to the 1-for-10 reverse stock split effected on July 29, 2025 |
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 September 30, | For the Six Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Revenues | ||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Revenues, a related party | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Cost of revenues, related parties | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total cost of revenues | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for credit losses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Other income, net | ||||||||||||||||
| Interest expense on finance leases | ( | ) | ( | ) | ( | ) | ||||||||||
| Change in fair value of derivative liabilities | ( | ) | ( | ) | ||||||||||||
| Total other income, net | ||||||||||||||||
| Loss before income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||||||
| Net Loss from continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss from discontinued operations | ( | ) | ( | ) | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss (income) 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) income attributable to non-controlling interests | ( | ) | ( | ) | ||||||||||||
| Total comprehensive loss attributable to stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common stock* | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
| Net loss per share - basic and diluted* | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss per share - basic and diluted | ||||||||||||||||
| Continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Discontinued operations | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| * | Giving retroactive effect to the 1-for-10 reverse stock split effected on July 29, 2025 |
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
For the Six Months Ended September 30, 2025 and 2024
(Expressed in U.S. dollar, except for the number of shares)
| For the Six Months Ended September 30, 2024 | ||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Additional | other | Non- | ||||||||||||||||||||||||||
| Common stock | paid-in | Accumulated | comprehensive | controlling | Total | |||||||||||||||||||||||
| Shares* | Par value | capital | deficit | loss | interest | equity | ||||||||||||||||||||||
| BALANCE, March 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Foreign currency translation adjustment | — | ( | ) | ( | ) | |||||||||||||||||||||||
| BALANCE, June 30, 2024 (Unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
| Net (loss) income | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation adjustment | — | |||||||||||||||||||||||||||
| BALANCE, September 30, 2024 (Unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
| For the Six Months Ended September 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) | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Exercise of November 2021 Private Placement Warrants | ||||||||||||||||||||||||||||
| Cashless exercise of November 2021 Investor warrants into common stock | ( | ) | ||||||||||||||||||||||||||
| Fair value of derivative liabilities upon exercise of warrants | — | |||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | |||||||||||||||||||||||||||
| BALANCE, September 30, 2025 (Unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
| * | Giving retroactive effect to the 1-for-10 reverse stock split effected on July 29, 2025 |
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 Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss from discontinued operations | ( | ) | ||||||
| Net loss from continuing operations | ( | ) | ( | ) | ||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation of property and equipment | ||||||||
| Amortization of right-of-use assets | ||||||||
| Amortization of intangible assets | ||||||||
| Provision for credit losses | ||||||||
| Gain on disposal of equipment | ( | ) | ( | ) | ||||
| Gain from disposal of a subsidiary | ( | ) | ( | ) | ||||
| Loss from lease modification | ||||||||
| Change in fair value of derivative liabilities | ( | ) | ||||||
| Change in operating assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Accounts receivable, a related party | ( | ) | ||||||
| Finance lease receivables | ||||||||
| Prepayments, other receivables and other assets | ( | ) | ||||||
| Prepayment - a related party | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Advances from customers | ( | ) | ( | ) | ||||
| Due from a related party | ||||||||
| Accrued expenses and other liabilities | ||||||||
| Due to a related party | ||||||||
| Operating lease liabilities | ( | ) | ||||||
| Operating lease liabilities – a related party | ( | ) | ||||||
| Net Cash (Used in) Provided by Operating Activities from Continuing Operations | ( | ) | ||||||
| Net Cash Used in Operating Activities from Discontinued Operations | ( | ) | ||||||
| Net Cash (Used in) Provided by Operating Activities | ( | ) | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Purchases of property and equipment | ( | ) | ||||||
| Cash received from disposal of property and equipment | ||||||||
| Loan to a related party | ( | ) | ( | ) | ||||
| Cash released from disposal of a subsidiary | ( | ) | ( | ) | ||||
| Net Cash Used in Investing Activities from Continuing Operations | ( | ) | ( | ) | ||||
| Net Cash Provided by 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 | ||||||||
| Borrowings from a related party | ||||||||
| Repayments from a related party | ||||||||
| Repayments to a related party | ( | ) | — | |||||
| Principal payments of finance lease liabilities | ( | ) | ||||||
| Net Cash Provided by Financing Activities from Continuing Operations | ||||||||
| Net Cash Used in Financing Activities from Discontinued Operations | ( | ) | ||||||
| Net Cash Provided by (Used in) in Financing Activities | ( | ) | ||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | ||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | ( | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of the period | ||||||||
| Cash, cash equivalents and restricted cash, end of the period | ||||||||
| Less: Cash and cash equivalents from discontinued operations | ||||||||
| Cash, cash equivalents and restricted cash from continuing operations, end of the period | ||||||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for interest expense | $ | $ | ||||||
| Cash paid for income tax | $ | $ | ||||||
| Non-cash Transaction in Investing and Financing Activities | ||||||||
| Termination of right-of use assets and lease liabilities | $ | $ | ||||||
| Recognition of right-of-use assets and lease liabilities, a related party | ||||||||
| Settlement of other receivables and liabilities between related parties | $ | $ | ||||||
The following tables provides a reconciliation of cash, cash equivalent and restricted cash 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 Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash and cash equivalent from continuing operations, end of the period | $ | $ | ||||||
| Restricted cash from continuing operations, end of the period | $ | $ | ||||||
| Cash and cash equivalent from discontinued operations, end of the period | $ | $ | ||||||
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash and cash equivalent from continuing operations, beginning of the period | $ | $ | ||||||
| Restricted cash from continuing operations, beginning of the period | $ | $ | ||||||
| Cash and cash equivalent 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, and Hunan Ruixi held business license for automobile financial leasing and engaged in automobile financial leasing services since March 2019, which has been ceased as of July 31, 2025. The Company also has been engaged in operating leasing services through Hunan Ruixi, Jiekai and its equity investee company, Jinkailong since March 2019. Jinkailong used to facilitate automobile sales and financing transactions for its clients, who are primarily ride-hailing drivers and provides them operating lease and relevant after-transaction services.
The Company also used to operate online ride-hailing
platform services through its own platform (known as Xixingtianxia) from October 2020 to August 2024, through Hunan Xixingtianxia Technology
Co., Ltd., a PRC limited liability company (“XXTX”), which was a wholly owned subsidiary of Sichuan Senmiao Zecheng Business
Consulting Co., Ltd. (“Senmiao Consulting”), a PRC limited liability company and wholly-owned subsidiary of the Company. The
Company’s ride hailing platform enabled qualified ride-hailing drivers to provide transportation services in several cities in China.
On August 8, 2024, Senmiao Consulting entered into a certain Acquisition Agreement with Debt Assumption Takeover (the “Acquisition
Agreement”) with Jiangsu Yuelaiyuexing Technology Co., Ltd. (the “Purchaser”), and other parties thereto, in connection
with the acquisition (the “Acquisition”) by the Purchaser of
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 September 30, 2025, the Company has outstanding
balance due from Jinkailong amounted to $
As of September 30, 2025 and March 31, 2025, allowance
for credit losses due from Jinkailong amounted to $
2. GOING CONCERN
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.
The Company’s management has considered whether there is substantial doubt about its ability to continue as a going concern due
to (1) the net loss of approximately $
Although the Company has completed
| ● | Equity financing to support its working capital; |
| ● | Other available sources of financing (including debt) from PRC banks and other financial institutions; and |
| ● | Financial support and credit guarantee commitments from the Company’s related parties. |
6
Based on the above considerations, management is of the opinion that the Company will probably not have sufficient funds to meet its working capital requirements and debt obligations as they become due one year from the filing date of these unaudited condensed consolidated financial statements if the Company is unable to obtain additional financing. There is no assurance that the Company will be successful in implementing the foregoing plans or that additional financing will be available to the Company on commercially reasonable terms, or at all. There are a number of factors that could potentially arise that could undermine the Company’s plans, such as (i) changes in the demand for the Company’s services, (ii) PRC government policies, (iii) economic conditions in China and worldwide, (iv) competitive pricing in the automobile transaction and related service and ride-hailing industries, (v) changes in the Company’s relationships with key business partners, (vi) the ability of financial institutions in China to provide continued financial support to the Company’s customers, and (vii) the perception of PRC-based companies in the U.S. capital markets. The Company’s inability to secure needed financing when required could require material changes to the Company’s business plans and could have a material adverse effect on the Company’s ability to continue as a going concern and results of operations. The unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of such uncertainties.
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 September 30, 2025, the unaudited condensed consolidated statements of operations and comprehensive loss, and the unaudited condensed consolidated statements of changes in equity for the three and six months ended September 30, 2025 and 2024, and the unaudited condensed consolidated statements of cash flows for the six months ended September 30, 2025 and 2024, 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, 2025, which was filed with the SEC on July 10, 2025.
The interim 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) 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.
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.
7
Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective periods:
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| Balance sheet items, except for equity accounts – RMB: US$1: | ||||||||
| For the three months ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Items in the statements of operations and comprehensive loss, and cash flows – RMB: US$1: | ||||||||
| For the six months ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Items in the statements of operations and comprehensive loss, and cash flows – RMB: US$1: | ||||||||
(c) 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, and valuation of deferred tax assets.
(d) 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. |
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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 September 30, 2025 and March 31, 2025:
| Carrying Value as of | Fair Value Measurement as of | |||||||||||||||
| September 30, | September 30, 2025 | |||||||||||||||
| 2025 | Level 1 | Level 2 | Level 3 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
| Carrying Value as of | Fair Value Measurement as of | |||||||||||||||
| March 31, | March 31, 2025 | |||||||||||||||
| 2025 | 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 six months ended September 30, 2025 and for the year ended March 31, 2025:
| August 2020 Underwritten Public | February 2021 Registered Direct | May 2021 Registered Direct Offering | November 2021 Private Placement | |||||||||||||||||||||||||
| Offering Warrants | Offering Warrants | Investors Warrants | Placement Warrants | Investors Warrants | Placement Warrants | Total | ||||||||||||||||||||||
| BALANCE as of March 31, 2024 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Change in fair value of derivative liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| BALANCE as of March 31, 2025 | ||||||||||||||||||||||||||||
| Change in fair value of derivative liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Exercise | ( | ) | ( | ) | ||||||||||||||||||||||||
| BALANCE as of September 30, 2025 (Unaudited) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
The August 2020 Underwriters’ Warrants, the February 2021 Placement Agent Warrants, the February 2021 ROFR Warrants, the May 2021 Investors Warrants, the May 2021 Placement Agent Warrants, and the November 2021 Investors Warrants and November 2021 Placement Agent Warrants (all discussed below) 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 September 30, 2025 and March 31, 2025.
| As of September 30, 2025 | ||||||||||||||||||||||||
| February 10, 2021 | May 13, 2021 | November 10, 2021 | ||||||||||||||||||||||
| Placement | Placement | Placement | ||||||||||||||||||||||
| Agent | ROFR | Investor | Agent | Investor | Agent | |||||||||||||||||||
| Granted Date | Warrants | Warrants | Warrants | Warrants | Warrants | Warrants | ||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||
| # of shares exercisable* | ||||||||||||||||||||||||
| Valuation date | ||||||||||||||||||||||||
| Exercise price* | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Stock price* | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Expected term (years) | ||||||||||||||||||||||||
| Risk-free interest rate | % | % | % | % | % | % | ||||||||||||||||||
| Expected volatility | % | % | % | % | % | % | ||||||||||||||||||
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| As of March 31, 2025 | ||||||||||||||||||||||||||||
| August 4, 2020 | February 10, 2021 | May 13, 2021 | November 10, 2021 | |||||||||||||||||||||||||
| Placement | Placement | Placement | ||||||||||||||||||||||||||
| Underwriters’ | Agent | ROFR | Investor | Agent | Investor | Agent | ||||||||||||||||||||||
| Granted Date | Warrants | 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 September 30, 2025 and March 31, 2025, financial instruments of the Company comprised primarily current assets and current liabilities including cash and cash equivalents, restricted cash, accounts receivable, finance lease receivables, prepayments, other receivables and other assets, due from related parties, accounts payable, advance from customers, lease liabilities, accrued expenses and other liabilities, due to related parties, and operating and financing lease liabilities, which approximate their fair values because of the short-term nature of these instruments, and current liabilities of borrowings from a financial institution, which approximate their fair values because of the stated loan interest rate to the rate charged by similar financial institutions.
The non-current portion of finance lease receivables, operating and financing lease liabilities 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 September 30, 2025 and March 31, 2025.
Other than as listed above, the Company did not identify any assets or liabilities that are required to be presented on the balance sheet at fair value.
(e) 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.
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating decision maker (the “CODM”), the Company’s CODM has been
identified as its CEO, who reviews the consolidated results when making decisions about allocating resources and assessing performance
of the Company. During the years ended March 31, 2019 and 2021, the Company acquired Hunan Ruixi and XXTX, respectively, and disposed
XXTX in August 2024. The Company evaluated how the CODM manages the businesses of the Company to maximize efficiency in allocating resources
and assessing performance. The Company has
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(f) 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. Cash and cash equivalents also consist of funds received from automobile purchasers as payments for automobiles, funds received from automobile lessees as payments for rentals, which were held at the third-party platforms’ fund accounts and which are unrestricted and immediately available for withdrawal and use.
(g) Accounts receivable
Accounts receivable are recorded at the invoiced amount less an allowance for any uncollectible accounts and do not bear interest, and are due on demand. The carrying value of accounts receivable is reduced by an allowance that reflects the Company’s best estimate of the amounts that will not be collected. An allowance for credit losses is recorded in the period when a loss is probable based on an assessment of specific evidence indicating collection is unlikely, historical bad debt rates, accounts aging, financial conditions of the customer and industry trends. 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”). Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. 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. As of September 30, 2025 and March 31, 2025, the Company determined allowance for credit losses was necessary for accounts receivable.
(h) 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 September 30, 2025 and March 31, 2025, the Company determined allowance for credit losses was necessary for finance lease receivables.
As of September 30, 2025 and March 31, 2025, finance lease receivables consisted of the following:
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Minimum lease payments receivable | $ | $ | ||||||
| Less: Unearned interest | ( | ) | ( | ) | ||||
| Financing lease receivables | $ | $ | ||||||
| Finance lease receivables, current | $ | $ | ||||||
| Finance lease receivables, non-current | $ | $ | ||||||
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Future scheduled minimum lease payments for investments in sales-type leases as of September 30, 2025 are as follows:
| Minimum future payments receivable | ||||
| Twelve months ending September 30, 2026 | $ | |||
| Twelve months ending September 30, 2027 | ||||
| Total | $ | |||
(i) Property and equipment, net
Property and equipment primarily consist of computer
equipment, office equipment, fixtures and furniture and automobiles, which are stated at cost less accumulated depreciation and amortization
less any provision required for impairment in value. Depreciation and amortization is computed using the straight-line method with no
residual value based on the estimated useful life.
| Categories | Useful life | |
| Computer equipment | ||
| Office equipment, fixture and furniture | ||
| Automobiles |
The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the future net undiscounted cash flows that the asset is expected to generate. If such asset is considered to be impaired, the impairment recognized is the amount by which the carrying amount of the asset, if any, exceeds its fair value determined using a discounted cash flow model. For the three and six months ended September 30, 2025 and 2024, the Company did not recognize 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 and amortization 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.
(j) Intangible assets, net
Purchased intangible assets are recognized and measured at fair value upon acquisition. Separately identifiable intangible assets that have determinable lives continue to be amortized over their estimated useful lives using the straight-line method as follows:
| 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 and six months ended September 30, 2025 and 2024, there was no impairment of intangible assets.
(k) 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, adjusted for outstanding shares of common stock that are subject to repurchase.
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, of which the amounts are insignificant, have been excluded from the computation of diluted net loss per share if their inclusion is anti-dilutive.
As of September 30, 2025, the Company’s
dilutive securities from the outstanding series A convertible preferred stock are convertible into
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(l) Derivative liabilities
A contract is designated as an asset or a liability and is carried at fair value on the Company’s balance sheet, with any changes in fair value recorded in the Company’s results of operations. The Company then determines which options, warrants and embedded features require liability accounting and records the fair value as a derivative liability. The changes in the values of these instruments are shown in the unaudited condensed consolidated statements of operations and comprehensive loss as “change in fair value of derivative liabilities”.
(m) 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 75)%; and (ii) a review of the present value of the lease payments to determine if they are equal to or greater than substantially
all of the fair market value of the equipment at the inception of the lease (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
The Company’s lease pricing interest rates,
which are used in determining customer payments in a bundled 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 September 30, 2025, the
Company’s pricing interest rate was
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Contract liability
The Company’s contract liabilities consist
of advances from customers, which are the upfront rent received from customers. The revenue recognized for the six months ended September
30, 2025 and 2024 that was previously included in the advances from customers balances as of March 31, 2025 and March 31, 2024 was $
The Company’s advances from customers amounted
to $
Disaggregated information of revenues by business lines are as follows:
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Automobile Transaction and Related Services | ||||||||||||||||
| - Operating lease revenues from automobile rentals | $ | $ | $ | $ | ||||||||||||
| - Service fees from NEVs leasing | ||||||||||||||||
| - Monthly services commissions | ||||||||||||||||
| - Financing revenues | ||||||||||||||||
| - Default revenue | ||||||||||||||||
| - Service fees from automobile purchase services | ||||||||||||||||
| - Other service fees | ||||||||||||||||
| Total Revenues | $ | $ | $ | $ | ||||||||||||
Automobile transaction and related services
Operating lease revenues from automobile rentals –The Company generates revenue from sub-leasing automobiles to some online ride-hailing drivers or third-parties and 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, is accounted for under ASC Topic 842. Rental transactions are satisfied over the rental period and is recognized over time. As the operating lease revenue are variable in nature which is based on online ride-hailing drivers or third-parties’ performance for a certain period, the Company recognized the revenue from operating lease by using the output method based on periodic settlement between the Company and the online ride-hailing drivers or third-parties when such revenue is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Rental periods are short term in nature, generally are 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, which based on the product solutions. The service content includes: (1) introducing the current situation of the online ride-hailing industry; (2) guiding the lessees to open an account on Partner Platforms; (3) introducing online ride-hailing business and order-taking skills; (4) providing violation handling consultation, insurance claims consultation, and traffic accident legal consultation; etc.
Monthly services commissions – Commissions from the services 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.
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.
14
Default revenue - The Company charged the lessees default expenses such as early-termination the contracts or other violation behaviors to the contracts. The default punishment is calculated and confirmed by the customers.
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, which is based on the sales price of the automobiles and relevant services provided.
The Company recognizes those revenues at a point in time when above mentioned services are completed, and corresponding an automobile is delivered to the lessee or purchaser. The Company recognizes the revenue of service fees from NEVs leasing once the lessees terminate the lease term and confirmed the settlement between the Company and the lessees. 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 and sales of automobiles. The Company recognizes revenues at a point in time when performance obligations are completed and the collectability is probable from the customers.
(n) 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.
The Company combines lease and non-lease components in its contracts under Topic 842, when permissible.
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.
15
Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. 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 of the automobile loans on the remaining balance of the liability.
The Company’s review on the impairment of its ROU assets is 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 the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset 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 and six months ended September 30, 2025 and 2024, the Company did not recognize impairment loss on its finance lease ROU assets.
(o) 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).
(p) Significant risks and uncertainties
| 1) | Credit risk |
| a. | Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents. The maximum exposure of these assets to credit risk is their carrying amounts as of the balance sheet dates. As of September 30, 2025 and March 31, 2025, 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 September 30, 2025 and March 31, 2025, the Company record no allowance for credit losses against accounts receivable.
16
| 2) | Foreign currency risk |
As of September 30, 2025 and March 31, 2025 substantially
all of the Company’s operating activities and major assets and liabilities, except for the cash deposit of approximately $
(q) Comparability and reclassification adjustments
The Company has reclassified certain comparative amounts in the unaudited condensed consolidated statements of operations and comprehensive loss for the three and six months ended September 30, 2024 to conform to the current period’s presentation. The results of discontinued operations for the three and six months ended September 30, 2024 have been reflected separately in the unaudited condensed consolidated statements of operations and comprehensive loss as a single line item for all periods presented in accordance with U.S. GAAP. Cash flows from discontinued operations of the three categories for the three and six months ended September 30, 2024 were separately presented in the unaudited condensed consolidated statements of cash flows for all periods presented in accordance with U.S. GAAP.
(r) 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.
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 - P2P lending services business
Since October 2019, the Company has discontinued its online P2P lending services business. Carrying amounts of major classes of liabilities was included as part of discontinued operations of Online P2P lending services, whose change was due to the effect of exchange rate changes as of September 30, 2025 and March 31, 2025:
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Current liabilities | ||||||||
| Accrued expenses and other liabilities | $ | $ | ||||||
17
Discontinued operations – Online ride-hailing platform service
Since August 2024, the Company has discontinued its online ride-hailing platform service business. Carrying amounts of major classes of liabilities was included as part of discontinued operations of online ride-hailing platform service as of September 30, 2025 and March 31, 2025:
| September 30, 2025 | March 31, 2025 | |||||||
| (Unaudited) | ||||||||
| Current liabilities | ||||||||
| Accrued expenses and other liabilities | $ | $ | ||||||
The following table sets forth the reconciliation of the amounts of major classes of income and losses from discontinued operations of online ride-hailing platform service in the unaudited condensed consolidated statements of operations and comprehensive loss for the three and six months ended September 30, 2025 and 2024.
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative expenses | ( | ) | ( | ) | ||||||||||||
| Provision for credit losses | ( | ) | ( | ) | ||||||||||||
| Total operating expenses | ( | ) | ( | ) | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ||||||||||||
| Other income, net | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ||||||||||||
| Income tax benefit | ||||||||||||||||
| Net loss from discontinued operations | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
Reconciliation of the amount of cash flows from discontinued operations in the unaudited condensed consolidated statements of cash flows for the six months ended September 30, 2025 and 2024 are as follows:
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Net cash used in operating activities from discontinued operations | $ | $ | ( | ) | ||||
| Net cash provided by investing activities from discontinued operations | $ | $ | ||||||
| Net cash used in financing activities from discontinued operations | $ | $ | ( | ) | ||||
18
5. ACCOUNTS RECEIVABLE
Accounts receivable includes rental receivables due from operating lessees. It also includes a portion of bundled lease arrangements on fixed minimum monthly payments to be paid by the automobile purchasers arising from automobile sales and services fees, net of unearned interest income, discounted using the Company’s lease pricing interest rates.
As of September 30, 2025 and March 31, 2025, accounts receivable were comprised of the following:
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Receivables of operating lease | $ | $ | ||||||
| Receivables of automobile sales due from automobile purchasers | ||||||||
| Total Accounts receivable | $ | $ | ||||||
Movement of allowance for credit losses for the six months ended September 30, 2025 and for the year ended March 31, 2025 are as follows:
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Beginning balance | $ | $ | ||||||
| Write off | ( | ) | ||||||
| Translation adjustment | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
6. PREPAYMENTS, OTHER RECEIVABLES AND OTHER CURRENT ASSETS, NET
As of September 30, 2025 and March 31, 2025, the prepayments, other receivables and other current assets, net were comprised of the following:
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Purchase contract termination refund (i) | $ | $ | ||||||
| Deposits (ii) | ||||||||
| Prepaid expenses (iii) | ||||||||
| Value added tax (“VAT”) recoverable (iv) | ||||||||
| Employee advances | ||||||||
| Others | ||||||||
| Less: Allowance for credit losses | ( | ) | ||||||
| Total prepayments, other receivables and other current assets, net | $ | $ | ||||||
19
Movement of allowance for credit losses for the six months ended September 30, 2025 and for the year ended March 31, 2025 are as follows:
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Beginning balance | $ | $ | ||||||
| Write off | ( | ) | ( | ) | ||||
| Translation adjustment | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
| (i) | Purchase contract termination refund |
The balance of Purchase contract termination refund represented the part of the purchase prepayments originally made for automobile purchase, which will be refunded before March 31, 2026 due to the termination of automobile purchase.
| (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 September 30, 2025 and March 31, 2025, the allowance for credit losses of $
| (iii) | Prepaid expense |
The balance of prepaid expense represented automobile purchase prepayments, automobile liability insurance premium for automobiles for operating lease and other miscellaneous expense such as office lease, office remodel expense, etc. that will expire within one year.
| (iv) | Value added tax (“VAT”) recoverable |
The balance represented the amount of VAT, which resulted from historical purchasing activities and could be further used for deducting future VAT in PRC.
7. PROPERTY AND EQUIPMENT, NET
Property and equipment as of September 30, 2025 and March 31, 2025 consist of the following:
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Automobiles | $ | $ | ||||||
| Office equipment, fixtures and furniture | ||||||||
| Computer equipment | ||||||||
| Subtotal | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation expense for the three and six months ended September 30,
2025 were $
Depreciation expense for the three and six months ended September 30,
2024 were $
20
8. INTANGIBLE ASSETS, NET
Intangible assets as of September 30, 2025 and March 31, 2025 consisted of the following:
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Software | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total intangible assets, net | $ | $ | ||||||
Amortization expense for the three and six months
ended September 30, 2025 were $
Amortization expense for the three and six months
ended September 30, 2024 were $
The following table sets forth the Company’s amortization expense for the next five years as of September 30, 2025:
| Amortization expenses | ||||
| Twelve months ending September 30, 2026 | $ | |||
| Twelve months ending September 30, 2027 | ||||
| Twelve months ending September 30, 2028 | ||||
| Twelve months ending September 30, 2029 | ||||
| Twelve months ending September 30, 2030 | ||||
| $ | ||||
9. ACCRUED EXPENSES AND OTHER LIABILITIES
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Accrued payroll and welfare | $ | $ | ||||||
| Payables to drivers from aggregation platforms (i) | ||||||||
| Deposits (ii) | ||||||||
| Accrued expenses (iii) | ||||||||
| Other taxes payable | ||||||||
| Payables for expenditures on automobile transaction and related services | ||||||||
| Other payables | ||||||||
| Total accrued expenses and other liabilities | $ | $ | ||||||
| (i) | Payables to drivers from aggregation platforms |
The balance of payables to drivers from aggregation platforms represented the amount the Company collected on behalf of drivers who completed their transaction through the Company’s online ride-hailing platform base on the confirmed billings.
21
| (ii) | 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.
| (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.
10. 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 $
As of September 30, 2025 and March 31, 2025, the
Company did not make adequate employee benefit contributions in the amount of $
11. EQUITY
Warrants
Warrants in Offerings
The Company adopted the provisions of ASC 815 on determining what types of instruments or embedded features in an instrument held by a reporting entity can be considered indexed to its own stock for the purpose of evaluating the first criteria of the scope exception in ASC 815. Warrants issued in connection with the direct equity offering with exercise prices denominated in US dollars are no longer considered indexed to the Company’s stock, as their exercise prices are not in the Company’s functional currency (RMB), and therefore no longer qualify for the scope exception and must be 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.”
August 2020 Underwriters’ Warrants
Giving retroactive effect to the twice
February 2021 Registered Direct Offering Warrants
Giving retroactive effect to the twice
22
May 2021 Registered Direct Offering Warrants
Giving retroactive effect to the twice
November 2021 Private Placement Warrants
Giving retroactive effect to the twice
On November 18, 2022, a holder of November 2021
private placement warrants exercised the warrants on a “cashless” basis. 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
Restricted Stock Units
On October 29, 2020, the Board approved the issuance
of an aggregate of
23
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 $
1-for- 10 shares reverse split on common stock
The Company considered the above transactions after giving a retroactive
effect to a
24
12. 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
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 six months ended September 30, 2025 and 2024, the Company’s foreign subsidiaries in China were operating at loss and as such, did not record a liability for GILTI tax.
The Company’s net operating loss for U.S. income taxes from U.S.
amounted to approximately $
PRC
Senmiao Consulting, Sichuan Senmiao Ronglian Technology
Co., Ltd. (“Sichuan Senmiao”), Hunan Ruixi, Sichuan Senmiao Yicheng Assets Management Co., Ltd. (“Yicheng”), Corenel,
and Jiekai are 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
Net loss before income tax by jurisdiction as follows:
| For the Six Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| U.S. | $ | ( | ) | $ | ( | ) | ||
| PRC | ( | ) | ( | ) | ||||
| Total net loss before income tax | $ | ( | ) | $ | ( | ) | ||
For the three and six months ended September 30, 2025 and 2024, the Company had no current tax expense or deferred tax expense.
As of September 30, 2025 and March 31, 2025, the
Company’s PRC entities from continuing operations had net operating loss carryforwards of approximately $
25
The tax effects of temporary differences from continuing operations that give rise to the Company’s deferred tax assets and liabilities are as follows:
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Deferred Tax Assets | ||||||||
| Net operating loss carryforwards in the PRC | $ | $ | ||||||
| Net operating loss carryforwards in the U.S. | ||||||||
| Allowance for credit losses | ||||||||
| Others | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net | $ | $ | ||||||
As of both September 30, 2025 and March 31, 2025,
the Company’s PRC entities associated with discontinued operations had net operating loss carryforwards of approximately $
The tax effects of temporary differences from discontinued operations that give rise to the Company’s deferred tax assets are as follows:
| September 30, 2025 | March 31, 2025 | |||||||
| (Unaudited) | ||||||||
| Net operating loss carry forwards in the PRC | $ | $ | ||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
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 September 30, 2025 and March 31, 2025, the Company did not have any unrecognized uncertain tax positions and the Company does not
believe that its unrecognized tax benefits will change over the next twelve months. For the three and six months ended September 30, 2025
and 2024, the Company did not 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 five years under special circumstances, which are
not clearly defined (but an underpayment of tax liability exceeding RMB
26
13. CONCENTRATION
Major Suppliers
For the three months ended September 30, 2025, two suppliers
accounted for approximately
For the three months ended September 30, 2024, three suppliers
accounted for approximately
14. RELATED PARTY TRANSACTIONS AND BALANCES
1. Related Party Balances
1) Accounts receivable, a related party
As of September 30, 2025 and March 31, 2025, accounts
receivable from a related party amounted to $
2) Prepayment, a related party
As of September 30, 2025 and March 31, 2025, the
balance of prepayment to a related party represented automobile lease prepayment made by the Company to Jinkailong, the Company’s
equity investee company, with amount of and $
3) Due from related parties
As of September 30, 2025 and March 31, 2025, balances due from related parties from the Company’s operations were comprised of the following:
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Total due from related parties | $ | $ | ||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| Due from related parties, net | $ | $ | ||||||
| Due from related parties, net, current | $ | $ | ||||||
| Due from a related party, net, non-current | $ | $ | ||||||
As of September 30, 2025, balances due from Jinkailong,
the Company’s equity investee company, was $
For the six months ended September 30, 2025, the
decrease in the balance due from Jinkailong was primarily attributable to (1) $
As of March 31, 2025, balances due from Jinkailong, the Company’s
equity investee company, was $
27
Movement of allowance for credit losses due from Jinkailong for the six months ended September 30, 2025 and for the year ended March 31, 2025 are as follows:
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Beginning balance | $ | $ | ||||||
| Addition | ||||||||
| Translation adjustment | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
On January 3, 2024, Xiang Hu, the Legal Representative
of Sichuan Senmiao and a shareholder of the Company, entered into a loan agreement wherein the Company agreed to provide an interest-free
special reserve loan of $
As of September 30, 2025 and March 31, 2025, balance
of $
As of September 30, 2025, the balances of $
4)
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Loan payable to a related party (i) | $ | $ | ||||||
| Other payable due to a related party (ii) | ||||||||
| Other payable due to a related party (iii) | ||||||||
| Total due to related parties | $ | $ | ||||||
| (i) |
| (ii) |
| (iii) |
28
5)
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Operating lease right-of-use assets – a related party | $ | $ | ||||||
| Operating lease liabilities, current – a related party | $ | $ | ||||||
| Operating lease liabilities, non-current – a related party | $ | $ | ||||||
In November 2018, Hunan Ruixi entered into an
office lease agreement with Hunan Dingchentai Investment Co., Ltd. (“Dingchentai”), a company where one of the Company’s
independent directors serves as the legal representative and general manager. The original lease agreement with Dingchentai was terminated
on July 1, 2019. The Company entered into another lease with Dingchentai on substantially similar terms on September 27, 2019, and a renewal
lease contract was signed in June 2022 which extended the original lease to May 2025, another renewal lease contract was signed on June
2025 which extended the original lease to May 2027, with an annual rent of approximately $
2. Related Party Transactions
For the three and six months ended September 30,
2025, the Company incurred rental expenses to Hong Li, supervisor of Sichuan Senmiao, pursuant to the rent-free lease contract.
For the three and six months ended September 30, 2024, the Company incurred $
For the three and six months ended September 30,
2025, the Company incurred $
During the three and six months ended September
30, 2025, Jiekai leased automobiles to Laobing and generated revenue of $
During the three months ended September 30, 2025,
Jiekai leased automobiles from Corenel, Laobing and another related party, Sichuan Xindaoda Automobile Sales Service Co., Ltd. (“Xindaoda”),
and had a rental cost of $
During the three and six months ended September 30, 2025, the Company
incurred $
15. LEASES
Lessor
The Company’s operating leases for automobile rentals have rental periods that are typically short term, generally is twelve months or less. Revenue recognition section of Note 3 (m), 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 six months ended September 30, 2025 and 2024.
Lessee
As of September 30, 2025 and March 31, 2025, the Company has engaged in offices and parking lot which were classified as operating leases.
The Company leased automobiles under operating lease agreements with a term shorter than twelve months which it elected not to recognize lease assets and lease liabilities under ASC 842. Instead, the Company recognized the lease payments in profit or loss on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred. In addition, the Company had automobiles leases which were classified as finance lease before the disposal of Corenel on April 16, 2025.
29
The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The Company recognized lease expense on a straight-line basis over the lease term for operating lease. Meanwhile, the Company recognized 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 of the automobile loans on the remaining balance of the liability.
As of September 30, 2025, the weighted-average
remaining operating term of its existing leases is approximately
Operating and finance lease expenses consist of the following:
| For the Three Months Ended September 30, | For the Six Months Ended September 30, | |||||||||||||||||
| Classification | 2025 | 2024 | 2025 | 2024 | ||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||
| Operating lease cost | ||||||||||||||||||
| Automobile lease costs | Cost of revenues | $ | $ | $ | $ | |||||||||||||
| Lease expenses | Selling, general and administrative | |||||||||||||||||
| Finance lease cost | ||||||||||||||||||
| Amortization of leased asset | Cost of revenue | |||||||||||||||||
| Interest on lease liabilities | Interest expenses on finance leases | |||||||||||||||||
| Total lease expenses | $ | $ | $ | $ | ||||||||||||||
Operating lease costs for automobiles totaled
$
Operating lease expenses for offices and showroom leases totaled $
Interest expenses on finance leases totaled $
The following table sets forth the Company’s minimum lease payments in future periods:
| Operating lease | ||||
| payments* | ||||
| (Unaudited) | ||||
| Twelve months ending September 30, 2026 | $ | |||
| Twelve months ending September 30, 2027 | ||||
| Total lease payments | ||||
| Less: discount | ( | ) | ||
| Present value of lease liabilities | $ | |||
| * |
30
16. COMMITMENTS AND CONTINGENCIES
Contingencies
In measuring the credit risk of automobile purchasers, the Company primarily reflects the “probability of default” by the automobile purchasers on its contractual obligations and considers the current financial position of the automobile purchasers and its likely future development.
The Company manages the credit risk of automobile purchasers by performing preliminary credit checks of each automobile purchaser and ongoing monitoring every month. By using the current credit loss model, management is of the opinion that the Company is bearing the credit risk to repay the principal and interests to the financial institutions if automobile purchasers’ default on their payments for more than three months. Management also periodically re-evaluates probability of default of automobile purchasers to make adjustments in the allowance, when necessary.
Purchase commitments
As of the filing date of these unaudited condensed consolidated financial statements, the Company has no purchase commitment.
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 September 30, 2025, 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 allocates costs and expenses that are not directly attributable to a specific segment, such as those that support infrastructure across different segments, to different segments mainly on the basis of usage, revenue or headcount, depending on the nature of the relevant costs and expenses. The Company does not allocate assets to its segments as the CODM does not evaluate the performance of segments using asset information.
By assessing the qualitative and quantitative criteria established by Accounting Standards Codification (“ASC”) 280, “Segment Reporting”, the Company considers it operates in a reportable segment for automobile transaction and related services, and operated in a reportable segment for online ride-hailing platform, which had been ceased on August 20, 2024. The segments were organized based on type of service offered.
31
The following table presents the significant revenue, loss from operations, loss before income taxes and net loss in the Company’s operating segments for the three and six months ended September 30, 2025 and 2024:
| For the Three Months Ended September 30, | ||||||||||||
| 2025 | 2024 | |||||||||||
| Automobile | Automobile | |||||||||||
| Transaction and | Transaction and | Online ride-hailing | ||||||||||
| Related | Related | platform | ||||||||||
| Services | Services | Services | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Revenues | $ | $ | $ | |||||||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Loss from operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Capital expenditure | $ | $ | $ | |||||||||
| For the Six Months Ended September 30, | ||||||||||||
| 2025 | 2024 | |||||||||||
| Automobile | Automobile | |||||||||||
| Transaction and | Transaction and | Online ride-hailing | ||||||||||
| Related | Related | platform | ||||||||||
| Services | Services | Services | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Revenues | $ | $ | $ | |||||||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Loss from operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Capital expenditure | $ | $ | $ | |||||||||
18. SUBSEQUENT EVENTS
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
On November 14, 2025, the Company entered into a securities purchase
agreement (the “Agreement”) with certain accredited investors (the “Investors”) providing for the issuance of
32
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, 2025 (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 through our majority owned subsidiaries, Chengdu Jiekai Yunli Technology Co., Ltd., a PRC limited liability company and its subsidiary (“Jiekai”), and Hunan Ruixi Financial Leasing Co., Ltd., a PRC limited liability company (“Hunan Ruixi”), and our former wholly owned subsidiary, Chengdu Corenel Technology Co., Ltd. a PRC limited liability company (“Corenel”). Substantially all of our operations are conducted in China.
From October 2020 to August 2024, we also operated an online ride-hailing platform through Hunan Xixingtianxia Technology Co., Ltd. (“XXTX”), a former wholly-owned subsidiary of Sichuan Senmiao Zecheng Business Consulting Co., Ltd., our wholly-owned subsidiary (“Senmiao Consulting”). The platform enabled qualified ride-hailing drivers to provide application-based transportation services mainly in Chengdu, Changsha and other 20 cities in China. As more fully discussed below under “– Our Discontinued Ride-Hailing Platform Services,” we ceased our online ride-hailing Platform Services on August 20, 2024.
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 financing leases (the “Auto Financing”); (vi) default expenses 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.
Since November 22, 2018, the acquisition date of Hunan Ruixi, and as of September 30, 2025, we have facilitated financing for an aggregate of 312 automobiles with a total value of approximately $5.3 million, sold an aggregate of 1,516 automobiles with a total value of approximately $14.5 million and delivered 2,234 automobiles under operating leases and 197 automobiles under financing leases to customers, the vast majority of whom are online ride-hailing drivers.
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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 and six months ended September 30, 2025 and 2024, respectively:
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||
| Number of | Number of | Number of | Number of | |||||||||||||||||||||||||||||
| Vehicles | Revenue* | Vehicles | Revenue* | Vehicles | Revenue* | Vehicles | Revenue* | |||||||||||||||||||||||||
| Auto Operating Leasing | 715 | $ | 748,000 | 596 | $ | 584,000 | 751 | 1,443,000 | 627 | $ | 1,341,000 | |||||||||||||||||||||
| Auto Commissions | — | $ | 24,000 | — | $ | 31,000 | — | 60,000 | — | $ | 57,000 | |||||||||||||||||||||
| Auto Financing | 53 | $ | 19,000 | 51 | $ | 27,000 | 59 | 41,000 | 51 | $ | 49,000 | |||||||||||||||||||||
| Other Services | >730 | $ | 145,000 | >600 | $ | 104,000 | >790 | 252,000 | >610 | $ | 178,000 | |||||||||||||||||||||
| * | The number was rounded to the nearest thousand for disclosure purpose. |
During the three months ended September 30, 2025, our Auto Operating Leasing, Auto Commissions, Auto Financing and other services income accounted for approximately 79.8%, 2.6%, 2.0% and 15.6% of our total revenue from our automobile transactions and related services, respectively, while our Auto Operating Leasing, Auto Commissions, Auto Financing, and other services income accounted for approximately 78.4%, 4.1%, 3.6%, and 13.9% for the three months ended September 30, 2024, respectively. During the six months ended September 30, 2025, our Auto Operating Leasing, Auto Commissions, Auto Financing and other services income accounted for approximately 80.3%, 3.3%, 2.3%, and 14.1% of our total revenue from our automobile transactions and related services, respectively, while our Auto Operating Leasing, Auto Commissions, Auto Financing, and other services income accounted for approximately 82.5%, 3.5%, 3.0%, and 11.0% for the six months ended September 30, 2024, respectively.
Our Discontinued Online Ride-Hailing Platform Services
From October 2020 to August 2024, we operated our own online ride-hailing platform in China. The platform (called Xixingtianxia) was owned and operated by XXTX, of which Senmiao Consulting acquired the 100% equity interest pursuant to a series of investment and supplementary agreements. XXTX operated Xixingtianxia and held a national online reservation taxi operating license, which served online ride-hailing drivers in 22 cities in China, providing them with a platform to view and take customer orders for rides. XXTX generated revenue from providing services to online ride-hailing drivers to assist them in providing transportation services to the riders looking for taxi/ride-hailing services. XXTX earned commissions for each completed order as the difference between an upfront quoted fare and the amount earned by a driver based on actual time and distance for the ride charged to the rider.
Due to the fierce competition of the online ride-hailing industry, XXTX had suffered loss in the past. Since December 2023, XXTX had engaged Anhui Lianma Technology Co., Ltd. (“Anhui Lianma”), a third-party to co-operate the online ride-hailing platform by outsourcing certain daily operation work to Anhui Lianma in most of cities it operates platform in XXTX and Anhui Lianma will jointly share the operational profits, with the specific calculation method being defined in the cooperation agreement. However, considering the changes in online ride-hailing industry and development plan of the Company, on August 8, 2024, we entered into the Acquisition Agreement with the Purchaser, and certain other parties thereto. Pursuant to the Acquisition Agreement, the Purchaser acquired all of the equity interests the XXTX at a total purchase price of zero, while taking over certain liabilities of XXTX as defined in the Acquisition Agreement. On August 20, 2024, the acquisition was completed and we ceased the online ride-hailing platform services.
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 financial leasing. 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 September 30, 2025, we had two employees in our own sales department.
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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 and six months ended September 30, 2025. To meet the demand in Chengdu and Changsha, we have purchased and leased automobiles from third parties 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 September 30, 2025, for parking and management of automobiles for operating lease, we had one parking lot and three employees in Changsha, and we also share the parking lot with our equity investee company, Jinkailong in Chengdu. During the three months ended September 30, 2025 and 2024, the average utilization of the automobiles for operating lease was approximately 91.9% and 80.4%, respectively. During the six months ended September 30, 2025 and 2024, the average utilization of the automobiles for operating lease was approximately 89.9% and 85.2%, 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 in certain cities, our subsidiaries, Hunan Ruixi and Jiekai, have built up cooperation relationships with Partner Platforms, such as Hunan Didi Technology Co., Ltd., Chengdu Anma Zhixing Technology Co., Ltd., Sichuan Peitu Kuaixing Technology Co., Ltd. and Nanjing Lingxing Technology Co., Ltd.(i.e.,“T3”), 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 and Jiekai earned rental income from drivers and earned commissions from Partner Platforms.
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 Gaode, 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 September 30, 2025, we had accounts receivable of operating lease of approximately $26,000 in total. Besides, during the three and six months ended September 30, 2025, we settled our commissions with the Partner Platforms for our online ride-hailing platform services and 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. We have used the majority of the proceeds from our equity offerings and plan to seek equity and/or debt financings to pay for the expenditure related to the automobile purchase. To pay for the expenditure in advance will enhance the stability of our daily operation and lower the liquidity risk, and attract more customers.
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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 and six months ended September 30, 2025. 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 expenses from customers for their behaviors violated to the contracts.
Further, the automobiles subject to our financing leases are not collateralized by us. As of September 30, 2025, 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 financing 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 56th Statistical report on Internet Development in China published in July 2025 by the China Internet Network Information Center (the “CNNIC”), the number of online ride-hailing service users had reached 511 million by the end of June 2025, and took approximately 45.6% of the total number of Chinese internet users. In addition, in recent years, aggregation platforms have gained rising significance in the shared mobility industry. According to Frost & Sullivan, the portion of ride hailing orders fulfilled through aggregation platforms increased from 3.5% in 2018 to 30.0% in 2023, and is expected to further increase to 49.0% by 2028. 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.
However, the participants in the online ride-hailing industry are facing increasingly fierce competitions. According to the Ministry of Transportation (the “MOT”) of the People’s Republic of China, as of September 30, 2025, approximately 393 online ride-hailing platforms have obtained booking taxi operating licenses, representing an increase of approximately 9% as compared with the one as of September 30, 2024. And the total volume of online ride-hailing orders was approximately 758 million in September 2025 in China, representing a decrease of approximately 26% as compared with the one as of September 30, 2024. 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.
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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 November 5, 2016, the Municipal Communications Commission of Chengdu City and a number of municipal departments jointly issued the “Implementation Rules for the Administration of Online Booking Taxi Management Services for Chengdu”, which was abolished and replaced by the updated version issued on July 26, 2021. On August 10, 2017, the Transportation Commission of Chengdu further issued the guidelines on compliance requirements for online ride-hailing businesses, including Working Process for the Online Appointment of Taxi Drivers Qualification Examination and Issuance and Online Appointment Taxi Transportation Certificate Issuance Process. On November 28, 2016, Guangzhou Municipal People’s Government promulgated Interim Measures for the Management of Online Ride Hailing Operation and Service in Guangzhou, as amended on November 14, 2019. According to these regulations and guidelines, three licenses /certificates are required for operating the online ride-hailing business in Chengdu and Guangzhou: (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 the new cars used for online ride-hailing in Chengdu should be NEVs since July 2021.
However, approximately 40% of ride-hailing drivers who leased our automobiles or used our services have not obtained the driver’s license for online ride-hailing services as of September 30, 2025 while 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. Meanwhile, during the three and six months ended September 30, 2025, Gaode conducted several rounds of compliance checks in Chengdu and other cities and reduced the number of orders dispatched platforms that allowed drivers to provide services without appropriate licenses or certificates. 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.
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Results of Continuing Operations for the three months ended September 30, 2025 Compared to the three months ended September 30, 2024
| For the Three Months Ended | ||||||||||||
| September 30, | ||||||||||||
| 2025 | 2024 | Change | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Revenues | $ | 936,344 | $ | 745,880 | $ | 190,464 | ||||||
| Cost of revenues | (662,256 | ) | (648,981 | ) | (13,275 | ) | ||||||
| Gross profit | 274,088 | 96,899 | 177,189 | |||||||||
| Operating expenses | ||||||||||||
| Selling, general and administrative expenses | (907,255 | ) | (530,651 | ) | (376,604 | ) | ||||||
| Provision for credit losses | (125,046 | ) | (181,995 | ) | 56,949 | |||||||
| Total operating expenses | (1,032,301 | ) | (712,646 | ) | (319,655 | ) | ||||||
| Loss from operations | (758,213 | ) | (615,747 | ) | (142,466 | ) | ||||||
| Other income, net | 31,356 | 388,405 | (357,049 | ) | ||||||||
| Interest expense on finance leases | — | (4,270 | ) | 4,270 | ||||||||
| Change in fair value of derivative liabilities | 3,127 | (7,127 | ) | 10,254 | ||||||||
| Loss before income taxes expense | (723,730 | ) | (238,739 | ) | (484,991 | ) | ||||||
| Income tax expense | — | — | — | |||||||||
| Net loss from continuing operations | $ | (723,730 | ) | $ | (238,739 | ) | $ | (484,991 | ) | |||
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 plan to 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 September 30, 2025 and 2024, respectively:
| For the Three Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| (unaudited) | (unaudited) | |||||||
| Revenue from automobile transactions and related services | ||||||||
| - Operating lease revenues from automobile rentals | $ | 747,515 | $ | 584,418 | ||||
| - Service fees from NEVs leasing | 111,115 | 51,694 | ||||||
| - Monthly services commissions | 24,058 | 30,681 | ||||||
| - Default revenue | 21,291 | 24,931 | ||||||
| - Financing revenues | 18,849 | 26,853 | ||||||
| - Service fees from automobile purchase services | 7,666 | 5,165 | ||||||
| - Other service fees | 5,850 | 22,138 | ||||||
| Total Revenue | $ | 936,344 | $ | 745,880 | ||||
Revenue from our automobile transaction and related services mainly includes operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, default revenue, financing revenues, service fees from automobile purchase services, and other services fees, which accounted for approximately 79.8%, 11.9%, 2.6%, 2.3%, 2.0%, 0.8% and 0.6%, respectively, of the total revenue during the three months ended September 30, 2025. Meanwhile, operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, financing revenues, default revenue, service fees from automobile purchase services and other services fees, which accounted for approximately 78.4%, 6.9%, 4.1%, 3.6%, 3.3%, 0.7% and 3.0%, respectively, of the total revenue during the three months ended September 30, 2024.
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Operating lease revenues from automobile rentals
We generate revenues from leasing our own automobiles and 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. The increase in rental income of $163,097 or approximately 27.9% during the three months ended September 30, 2025 was mainly due to the increase in number of automobiles leased for operating lease. We leased over 710 automobiles with an average monthly rental income of approximately $402 per automobile, resulting in a rental income of $747,515, including rental income of $29,842 from a related party, for the three months ended September 30, 2025. We leased approximately 596 automobiles with an average monthly rental income of approximately $405 per automobile, resulting in a rental income of $584,418, including rental income of $3,622 from another related party, for the three months ended September 30, 2024.
Service fees from NEVs leasing
We generated revenues of $111,115 and $51,694 from leasing NEVs by charging leases service fees during the three months ended September 30, 2025 and 2024, respectively. 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
We generated revenues of $24,058 and $30,681 from the monthly management and related services provided to our Partner Platforms and other companies during the three months ended September 30, 2025 and 2024, respectively.
Default revenue
We generated default revenues of $21,291 and $24,931 from the automobile lessee’s early-termination of the contracts or other violation behaviors to the contracts during the three months ended September 30, 2025 and 2024, respectively.
Financing revenues
We started our financial leasing business in March 2019 and began to generate interest income from providing financial leasing 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 36 or 48 months. We recognized a total interest income of $18,849 from an average monthly number of 50 automobiles and $26,853 from an average monthly number of 48 automobiles during the three months ended September 30, 2025 and 2024, respectively. The decrease was due to the monthly payment we charged to customers decreased during the three months ended September 30, 2025.
Service fees from automobile purchase services and Other Service fees
We generated revenues of $7,666 and $5,165 from the automobile purchase services during the three months ended September 30, 2025 and 2024, respectively. The increase was due to the number of automobiles purchase transactions increased to 6 during the three months ended September 30, 2025 from 3 in the same period in 2024.
We generate other revenues from other miscellaneous service fees charged to our customers during the three months ended September 30, 2025 and 2024. Other services fees mainly include the maintenance fees charged to our customers pursuant to certain new production solutions.
Cost of Revenues
Cost of revenues represents the amortization of ROUs, depreciation and rental cost of automobiles, daily maintenance and insurance expense of automobiles which related to our Auto Operating Leasing. Cost of revenues increased by $13,275 or approximately 2.0% during the three months ended September 30, 2025 as compared with the three months ended September 30, 2024, mainly due to an increase in the monthly average number of the automobiles leased for operating lease from 292 in the three months ended September 30, 2024 to 343 in the three months ended September 30, 2025. During the three months ended September 30, 2025 and 2024, we paid $30,633 and $17,334, respectively, to related parties for costs of automobiles under operating leases.
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Gross Profit
We had gross profit of $274,088 and $96,899, respectively, during the three months ended September 30, 2025 and 2024. The increase of $177,189 was mainly due to the increase in gross profit from Auto Operating Leasing. The following table sets forth the breakdown of gross profit (loss) by major revenue source for the three months ended September 30, 2025 and 2024:
| For the Three Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| (unaudited) | (unaudited) | |||||||
| - Auto Operating Leasing | $ | 85,259 | $ | (64,563 | ) | |||
| - Other Automobile transaction and related Services | 188,829 | 161,462 | ||||||
| Total Gross Profit | $ | 274,088 | $ | 96,899 | ||||
We had a gross profit of $85,259 from our Auto Operating Leasing during the three months ended September 30, 2025, which increased by $149,822 from a gross loss of $64,563 in the three months ended September 30, 2024. The increase was attributable to the average utilization of the automobiles for operating lease increased from 80.4% in the three months ended September 30, 2024 to 91.9% in the three months ended September 30, 2025. As the gross margin of the revenues from our Auto Business increased during the three months ended September 30, 2025, our overall gross profit margin increased to approximately 29.3% from approximately 13.0% during the three months ended September 30, 2024.
Selling, General and Administrative Expenses
Selling, general and administrative expenses primarily consist of salary and employee benefits, office rental expense, travel expenses, and other expenses. Selling, general and administrative expenses increased from $530,651 for the three months ended September 30, 2024 to $907,255 for the three months ended September 30, 2025, representing an increase of $376,604, or approximately 71.0%. The increase mainly consisted of (1) the increase of $413,362 in professional service fees such as financial, market consulting and 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 in the corresponding service fee obligations; and (2) an increase of $35,802 in miscellaneous expense for the three months ended September 30, 2025; partly offset by (3) a decrease of $72,560 in salary and employee benefits as the average monthly number of our employees decreased from 60 for the three months ended September 30, 2024 to 36 for the three months ended September 30, 2025.
Provision for credit losses
We re-evaluated the possibility of collection of unsettled balances from customers/suppliers of our automobile transactions and related services, and we provided provision for credit losses of $125,046 and $181,995 against receivables from Jinkailong for the three months ended September 30, 2025 and 2024, respectively.
Other income, net
For the three months ended September 30, 2025, we had other income, net of $31,356, which primarily consist of the (1) penalty income of approximately $20,000 from the customers; and (2) the miscellaneous other income, net of approximately $11,000.
For the three months ended September 30, 2024, we had other income, net of $388,405, which primarily consist of (1) a gain of $397,775 from deconsolidation of XXTX; (2) penalty income of approximately $28,000 from the customers; (3) income of approximately $3,000 from the disposal of our own vehicles used for operating leases; partially offset by (4) the expense of approximately $20,000 from the termination of our right-of-use assets for an exhibition hall we leased in Changsha; and (5) the miscellaneous expense of approximately $20,000.
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Interest Expense on Finance Leases
Interest expense on finance leases for the three months ended September 30, 2025 and 2024 was $0 and $4,270, respectively, representing the interest expense accrued under financing leases for the leased automobiles Corenel, our former subsidiary, leased from a third-party company.
Change in Fair Value of Derivative Liabilities
Warrants issued in our registered direct offerings that took place in February 2021 and May 2021, and the August 2020 underwritten public offering, and the November 2021 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 September 30, 2025 and 2024 was a gain of $3,127 and a loss of $7,127, respectively. The following table sets forth the breakdown of the gain (loss) in fair value of derivative liabilities for the three months ended September 30, 2025 and 2024:
| For the Three Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| (unaudited) | (unaudited) | |||||||
| - August 2020 underwritten public offering | $ | — | $ | 599 | ||||
| - February 2021 registered direct offering | — | 597 | ||||||
| - May 2021 registered direct offering | 166 | 2,985 | ||||||
| - November 2021 private placement | 2,961 | (11,308 | ) | |||||
| Total Change in Fair Value of Derivative Liabilities | $ | 3,127 | $ | (7,127 | ) | |||
Income Tax Expense
Generally, our subsidiaries are subject to enterprise income tax on their taxable income in China at a rate of 25%. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. All the subsidiaries in China suffered losses and no tax expense was recorded for the three months ended September 30, 2025 and 2024.
Net loss from continuing operations
As a result of the foregoing, net loss from continuing operations for the three months ended September 30, 2025 was $723,730, representing an increase of $484,991 from net loss of $238,739 for the three months ended September 30, 2024.
Results of Continuing Operations for the six months ended September 30, 2025 Compared to the six months ended September 30, 2024
| For the Six Months Ended | ||||||||||||
| September 30, | ||||||||||||
| 2025 | 2024 | Change | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Revenues | $ | 1,796,443 | $ | 1,624,889 | $ | 171,554 | ||||||
| Cost of revenues | (1,325,400 | ) | (1,275,020 | ) | (50,380 | ) | ||||||
| Gross profit | 471,043 | 349,869 | 121,174 | |||||||||
| Operating expenses | ||||||||||||
| Selling, general and administrative expenses | (1,715,500 | ) | (1,384,149 | ) | (331,351 | ) | ||||||
| Provision for credit losses | (125,046 | ) | (355,436 | ) | 230,390 | |||||||
| Total operating expenses | (1,840,546 | ) | (1,739,585 | ) | (100,961 | ) | ||||||
| Loss from operations | (1,369,503 | ) | (1,389,716 | ) | 20,213 | |||||||
| Other income, net | 289,641 | 439,864 | (150,223 | ) | ||||||||
| Interest expense on finance leases | (615 | ) | (9,358 | ) | 8,743 | |||||||
| Change in fair value of derivative liabilities | 80,309 | (15,414 | ) | 95,723 | ||||||||
| Loss before income taxes expense | (1,000,168 | ) | (974,624 | ) | (25,544 | ) | ||||||
| Income tax expense | — | — | — | |||||||||
| Net loss from continuing operations | $ | (1,000,168 | ) | $ | (974,624 | ) | $ | (25,544 | ) | |||
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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 plan to 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 six months ended September 30, 2025 and 2024, respectively:
| For the Six Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| (unaudited) | (unaudited) | |||||||
| Revenue from automobile transactions and related services | ||||||||
| - Operating lease revenues from automobile rentals | $ | 1,442,918 | $ | 1,340,733 | ||||
| - Service fees from NEVs leasing | 194,559 | 73,788 | ||||||
| - Monthly services commissions | 59,883 | 56,935 | ||||||
| - Financing revenues | 41,180 | 49,029 | ||||||
| - Default revenue | 31,520 | 47,695 | ||||||
| - Service fees from automobile purchase services | 8,936 | 26,903 | ||||||
| - Other service fees | 17,447 | 29,806 | ||||||
| Total Revenue | $ | 1,796,443 | $ | 1,624,889 | ||||
Revenue from our automobile transaction and related services mainly includes operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, financing revenues, default revenue, service fees from automobile purchase services, and other services fees, which accounted for approximately 80.3%, 10.8%, 3.3%, 2.3%, 1.8%, 0.5% and 1.0%, respectively, of the total revenue during the six months ended September 30, 2025. Meanwhile, operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, financing revenues, default revenue, service fees from automobile purchase services and other services fees, which accounted for approximately 82.5%, 4.5%, 3.5%, 3.0%, 2.9%, 1.7% and 1.9%, respectively, of the total revenue during the six months ended September 30, 2024.
Operating lease revenues from automobile rentals
We generate revenues from leasing our own automobiles and 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. The increase in rental income of $102,185 or approximately 7.6% during the six months ended September 30, 2025 was mainly due to the increase in number of automobiles leased for operating lease. We leased over 750 automobiles with an average monthly rental income of approximately $401 per automobile, resulting in a rental income of $1,442,918, including rental income of $53,899 from a related party, for the six months ended September 30, 2025. While we leased approximately 627 automobiles with an average monthly rental income of approximately $413 per automobile, resulting in a rental income of $1,340,733, including rental income of $8,865 from another related party, for the six months ended September 30, 2024.
Service fees from NEVs leasing
We generated revenues of $194,559 and $73,788 from leasing NEVs by charging leases service fees during the six months ended September 30, 2025 and 2024, respectively. 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
We generated revenues of $59,883 and $56,935 from the monthly management and related services provided to our Partner Platforms and other companies during the six months ended September 30, 2025 and 2024, respectively.
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Financing revenues
We started our financial leasing business in March 2019 and began to generate interest income from providing financial leasing 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 36 or 48 months. We recognized a total interest income of $41,180 from an average monthly number of 51 automobiles and $49,029 from an average monthly number of 43 automobiles during the six months ended September 30, 2025 and 2024, respectively. The decrease was due to the monthly payment we charged to customers decreased during the six months ended September 30, 2025.
Default revenue
We generated default revenues of $31,520 and $47,695 from the automobile lessee’s early-termination of the contracts or other violation behaviors to the contracts during the six months ended September 30, 2025 and 2024, respectively.
Service fees from automobile purchase services and Other Service fees
We generated revenues of $8,936 and $26,903 from the automobile purchase services during the six months ended September 30, 2025 and 2024, respectively. The decrease was due to the number of automobiles purchase transactions decreased to 7 during the six months ended September 30, 2025 from 19 in the same period in 2024.
We generate other revenues from other miscellaneous service fees charged to our customers during the six months ended September 30, 2025 and 2024. Other services fees mainly include the maintenance fees charged to our customers pursuant to certain new production solutions.
Cost of Revenues
Cost of revenues represents the amortization of ROUs, depreciation and rental cost of automobiles, daily maintenance and insurance expense of automobiles which related to our Auto Operating Leasing. Cost of revenues increased by $50,380 or approximately 4.0% during the six months ended September 30, 2025 as compared with the six months ended September 30, 2024, mainly due to an increase in the monthly average number of the automobiles leased for operating lease from 279 in the six months ended September 30, 2024 to 333 in the six months ended September 30, 2025. During the six months ended September 30, 2025 and 2024, we paid $90,272 and $18,961, respectively, to related parties for costs of automobiles under operating leases.
Gross Profit
We had gross profit of $471,043 and $349,869, respectively, during the six months ended September 30, 2025 and 2024. The following table sets forth the breakdown of gross profit by major revenue source for the six months ended September 30, 2025 and 2024:
| For the Six Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| (unaudited) | (unaudited) | |||||||
| - Auto Operating Leasing | $ | 117,518 | $ | 65,713 | ||||
| - Other Automobile transaction and related Services | 353,525 | 284,156 | ||||||
| Total Gross Profit | $ | 471,043 | $ | 349,869 | ||||
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We had a gross profit of $117,518 from our Auto Operating Leasing during the six months ended September 30, 2025, which increased by $51,805 from a gross profit of $65,713 in the six months ended September 30, 2024. The increase was attributable to the average utilization of the automobiles for operating lease increased from 85.2% in the six months ended September 30, 2024 to 89.9% in the six months ended September 30, 2025. We had a gross profit of $353,525 from our Other Automobile transaction and related Services during the six months ended September 30, 2025, which increased by $69,369 from a gross profit of $284,156 in the six months ended September 30, 2024. The increase was attributable to our Service fees from NEVs leasing increased in the six months ended September 30, 2025 based on our timely product solutions in accordance which adjusted with different market conditions. As a result, our overall gross profit margin for the six months ended September 30, 2025 increased to approximately 26.2% from approximately 21.5% for the six months ended September 30, 2024.
Selling, General and Administrative Expenses
Selling, general and administrative expenses primarily consist of salary and employee benefits, office rental expense, travel expenses, and other expenses. Selling, general and administrative expenses increased from $1,384,149 for the six months ended September 30, 2024 to $1,715,500 for the six months ended September 30, 2025, representing an increase of $331,351, or approximately 23.9%. The decrease mainly consisted of (1) the increase of $553,279 in professional service fees such as financial, market consulting and 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; partly offset by (2) a decrease of $177,153 in salary and employee benefits as the average monthly number of our employees decreased from 62 for the six months ended September 30, 2024 to 37 for the six months ended September 30, 2025; and (3) a decrease of $44,775 in other miscellaneous expenses for the six months ended September 30, 2025.
Provision for credit losses
We re-evaluated the possibility of collection of unsettled balances from customers/suppliers of our automobile transactions and related services, and we provided provision for credit losses of $125,046 and $355,436 against receivables from Jinkailong for the six months ended September 30, 2025 and 2024, respectively.
Other income, net
For the six months ended September 30, 2025, we had other income, net of $289,641, which primarily consist of the (1) a gain of approximately $240,000 from disposal of Corenel; (2) penalty income of approximately $35,000 from the customers; (3) the miscellaneous other income, net of approximately $30,000; partially offset by (4) the expense of approximately $16,000 for processing automobile violation fines.
For the six months ended September 30, 2024, we had other income, net of $439,864, which primarily consist of the (1) a gain of $397,775 from deconsolidation of XXTX; (2) penalty income of approximately $60,000 from the customers; (3) income of approximately $6,000 from the disposal of our own vehicles used for operating leases; partially offset by (4) the expense of approximately $20,000 from the termination of our right-of-use assets for an exhibition hall we leased in Changsha, and (5) the miscellaneous expense of approximately $4,000.
Interest Expense on Finance Leases
Interest expense on finance leases for the six months ended September 30, 2025 and 2024 was $615 and $9,358, respectively, representing the interest expense accrued under financing leases for the leased automobiles Corenel, our former subsidiary, leased from a third-party company.
Change in Fair Value of Derivative Liabilities
Warrants issued in our registered direct offerings that took place in February 2021 and May 2021, and the August 2020 underwritten public offering, and the November 2021 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 six months ended September 30, 2025 and 2024 was a gain of $80,309 and a loss of $15,414, respectively. The following table sets forth the breakdown of the gain (loss) in fair value of derivative liabilities for the six months ended September 30, 2025 and 2024:
| For the Six Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| (unaudited) | (unaudited) | |||||||
| - August 2020 underwritten public offering | $ | 21 | $ | 1,024 | ||||
| - February 2021 registered direct offering | 219 | 1,048 | ||||||
| - May 2021 registered direct offering | 13,775 | 4,422 | ||||||
| - November 2021 private placement | 66,294 | (21,908 | ) | |||||
| Total Change in Fair Value of Derivative Liabilities | $ | 80,309 | $ | (15,414 | ) | |||
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Income Tax Expense
Generally, our subsidiaries are subject to enterprise income tax on their taxable income in China at a rate of 25%. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. All the subsidiaries in China suffered losses and no tax expense was recorded for the six months ended September 30, 2025 and 2024.
Net loss from continuing operations
As a result of the foregoing, net loss from continuing operations for the six months ended September 30, 2025 was $1,000,168, representing an increase of $25,544 from net loss of $974,624 for the six months ended September 30, 2024.
Results of Discontinued Operations for the three and six months ended September 30, 2025 Compared to the three and six months ended September 30, 2024
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| Revenues | $ | — | $ | 100,850 | $ | — | $ | 344,241 | ||||||||
| Cost of revenues | — | (71,199 | ) | — | (247,025 | ) | ||||||||||
| Gross profit | — | 29,651 | — | 97,216 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative expenses | — | (80,167 | ) | — | (166,937 | ) | ||||||||||
| Provision for credit losses | — | (173,278 | ) | — | (173,278 | ) | ||||||||||
| Total operating expenses | — | (253,445 | ) | — | (340,215 | ) | ||||||||||
| Loss from operations | — | (223,794 | ) | — | (242,999 | ) | ||||||||||
| Other income, net | — | 37,017 | — | 33,214 | ||||||||||||
| Interest expense | — | (2,512 | ) | — | (8,372 | ) | ||||||||||
| Loss before income taxes | — | (189,289 | ) | — | (218,157 | ) | ||||||||||
| Income tax benefit | — | 2,575 | — | 4,510 | ||||||||||||
| Net loss from discontinued operations | $ | — | $ | (186,714 | ) | $ | — | $ | (213,647 | ) | ||||||
The result of discontinued operations was the financial figures of our former subsidiary, XXTX. As of August 20, 2024, we deconsolidated XXTX and its business result was included in our online ride-hailing platform services before we deconsolidated its financial figures.
Revenues
XXTX generated revenue from providing services to online ride-hailing drivers to assist them in providing transportation service to the riders though Xixingtianxia platform and earned commissions for each completed order equal to the difference between an upfront quoted fare and the amount earned by a driver based on actual time and distance for the ride charged to the rider.
During the three months ended September 30, 2024, approximately 0.2 million rides with gross fare of approximately $0.5 million were completed through Xixingtianxia platform and an average of over 1,700 ride-hailing drivers completed rides and earned income through Xixingtianxia (the “Active Drivers”) each month. XXTX earned online ride-hailing platform service fees of $100,850, after netting off approximately $7,000 incentives paid to Active Drivers.
During the six months ended September 30, 2024, approximately 0.6 million rides with gross fare of approximately $1.8 million were completed through our Xixingtianxia platform and an average of over 2,100 Active Drivers each month. XXTX earned online ride-hailing platform service fees of $344,241, after netting off approximately $32,000 incentives paid to Active Drivers.
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Selling, General and Administrative Expenses
Selling, general and administrative expenses from discontinued operations primarily consisted of (1) $29,081 in salary and employee benefits; (2) $15,186 in depreciation of office equipment and amortization of intangible assets; (3) $9,868 in entertainment, advertising and promotion; and (4) other miscellaneous expenses in the three months ended September 30, 2024.
Selling, general and administrative expenses from discontinued operations primarily consisted of (1) $64,859 in salary and employee benefits; (2) $37,733 in depreciation of office equipment and amortization of intangible assets; (3) $32,187 in entertainment, advertising and promotion; and (4) other miscellaneous expenses in the six months ended September 30, 2024.
Provision for credit losses
For the three and six months ended September 30, 2024, XXTX provided provision for credit losses of $173,278 against receivables from a prepaid software development fee and a deposit due to the termination on the development which resulting from the discontinuing of the business.
Other income, net
For the three and six months ended September 30, 2024, XXTX had other income, net of $37,017 and $33,214, respectively, which primarily due to the miscellaneous income in its daily operations.
Interest Expense
Interest expense from discontinued operations was resulted from the borrowings of XXTX from a financial institution for its working capital turnover.
Income Tax Benefit
For the three and six months ended September 30, 2024, XXTX had deferred tax benefit of $2,575 and $4,510, respectively, resulted from deferred tax.
Net loss from discontinued operations
As a result of the foregoing, the net loss from discontinued operations for the three and six months ended September 30, 2024 was $186,714 and $213,647, respectively.
Liquidity and Going Concern
We have financed our operations primarily through proceeds from our equity offerings, stockholder loans, commercial debt, borrowings from financial institutions and cash flow from operations.
We had cash and cash equivalents of $676,980 as of September 30, 2025 as compared to $833,577 as of March 31, 2025. We primarily hold our excess unrestricted cash in short-term interest-bearing bank accounts at financial institutions.
Our business is capital intensive. We have considered whether there is substantial doubt about our ability to continue as a going concern due to (1) the net loss of approximately $1.0 million for the six months ended September 30, 2025; (2) accumulated deficit of approximately $45.9 million as of September 30, 2025; (3) the working capital deficit of approximately $2.6 million as of September 30, 2025.
46
Although we have completed one financing transaction with gross proceeds of $0.66 million as of the filing date of this Report and expect to complete another with gross proceeds of $2.8 million by November 21, 2025, we still determine there is substantial doubt about our ability to continue as a going concern. This is due to the cost incurred to obtain the financing and the planned settlement of payables, which result in the financing obtained not being sufficient for us to maintain a net working capital position for a reasonable period of time (i.e., one year from the filing date of these unaudited condensed consolidated financial statements). Given we are expected to sustain operating cash outflow, there is still substantial doubt on going concern. If we are unable to generate significant revenue, we may be required to curtail or cease its operations. We are trying to alleviate the going concern risk through the following sources:
| ● | equity financing to support our working capital; |
| ● | other available sources of financing (including debt) from PRC banks and other financial institutions; and |
| ● | financial support and credit guarantee commitments from our related parties. |
Based on the above considerations, we are of the opinion that we will probably not have sufficient funds to meet our working capital requirements and debt obligations as they become due one year from the filing date of this Report, if we are unable to obtain additional financing. In addition, there is no assurance that we will be successful in implementing the foregoing plans or that additional capitals will be available to us on commercially reasonable terms, or at all. There are a number of factors that could potentially arise that could undermine our plans, such as (i) changes in the demand for our services, (ii) PRC government policies, (iii) economic conditions in China and worldwide, (iv) competitive pricing in the automobile transaction and related service and ride-hailing industries, (v) changes in our relationships with key business partners, (vi) that financial institutions in China may not able to provide continued financial support to our customers, and (vii) the perception of PRC-based companies in the U.S. capital markets. Our inability to secure needed financing when required could require material changes to our business plans and could have a material adverse effect on our viability and results of operations.
| For the Six Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| (unaudited) | (unaudited) | |||||||
| Net Cash (Used in) Provided by Operating Activities | $ | (392,547 | ) | $ | 192,349 | |||
| Net Cash Used in Investing Activities | (224,174 | ) | (271,201 | ) | ||||
| Net Cash Provided by (Used in) Financing Activities | 416,008 | (46,293 | ) | |||||
| Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash | 44,173 | 122,534 | ||||||
| Cash, Cash Equivalents and Restricted Cash at Beginning of the Period | 833,577 | 794,636 | ||||||
| Cash, Cash equivalents and Restricted Cash, end of Period | $ | 677,037 | $ | 792,025 | ||||
Cash Flow in Operating Activities
For the six months ended September 30, 2025, net cash used in operating activities was $392,547 from continuing operations. While for the six months ended September 30, 2024, net cash provided by operating activities was $192,349, which consisted of net cash inflows of $265,827 from continuing operations and net cash outflows of $73,478 from discontinued operations.
The increase of $658,374 in net cash used in operating activities from continuing operations for the six months ended September 30, 2025 as compared with the six months ended September 30, 2024 was primarily attributable to (1) decrease of $390,149 in the change of accrued expenses and other liabilities; (2) decrease of $230,390 in the provision for credit losses; (3) decrease of $111,901 in amortization of right-of-use assets; (4) $95,723 in change in fair value of derivative liabilities from a loss of $15,414 for the six months ended September 30, 2024 to a gain of $80,309 for the six months ended September 30, 2025; (5) decrease of $66,451 in the change of accounts payable; and partially offset by (6) $151,397 in change of the gain from disposal of a subsidiary. Specifically, there was a one-off gain of $246,378 from disposal of Corenel during the six months ended September 30, 2025, whereas a gain of $397,775 from deconsolidation of XXTX during the six months ended September 30, 2024; (7) decrease of $106,858 in the change of prepayments, other receivables and other assets (included third parties and a related party).
47
Cash Flow in Investing Activities
For the six months ended September 30, 2025, we had net cash used in investing activities of $224,174, which consisted of: (1) the loan to a related party of $229,469; (2) the cash of $388 released upon disposal of Corenel; partially offset by (3) the proceeds from sales of the used-automobiles of $5,683.
For the six months ended September 30, 2024, we had net cash used in investing activities of $271,201, which consisted of the net outflows of $271,250 from continuing operations and net inflows of $49 from discontinued operations. The majority of net cash used in investing activities from continuing operations was (1) a loan to a related party of $137,897; (2) the cash of $148,481 released upon disposal of XXTX; (3) the purchase furniture for office purpose of $1,189; partially offset by (4) the proceeds from sales of the used-automobiles of $16,317.
Cash Flow in Financing Activities
For the six months ended September 30, 2025, we had net cash provided by financing activities of $416,008 from continuing operations, which consisted of: (1) net proceeds of $341,251 from the exercise of November 2021 Private Placement Warrants from an investor; (2) borrowings from a related party of $119,150; (3) repayments from a related party of $83,272; partially offset by (4) repayments to a related party of $127,665.
For the six months ended September 30, 2024, we had net cash used in financing activities of $46,293, which consisted net inflows of $35,733 from continuing operations and net outflows of $82,026 from discontinued operations. The majority of net cash provided by financing activities financing activities from continuing operations was consisted of: (1) borrowings from a related party of $33,582; and (2) repayments from a related party of $13,884; partially offset by (3) principal payments made for finance lease liabilities of $11,733.
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 September 30, 2025, Hunan Ruixi holds 35% of equity interest of Jinkailong and has not made any payments towards to the investment amounted to RMB3.5 million (approximately $492,000). 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.
48
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.
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) accounts receivable, net; (ii) property and equipment, net; (iii) revenue recognition. See Note 3—Summary of Significant Accounting Policies to our consolidated financial statements in our 2025 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 September 30, 2025, 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; |
| ● | 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. |
We are improving our IT environment and daily management to ensure network and information security. 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) | 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
There has been no change in our internal control over financial reporting that occurred during the quarter ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II -
Item 6. Exhibits.
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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: November 19, 2025 | Senmiao Technology Limited | ||
| By: | /s/ Xi Wen | ||
| Name: | Xi Wen | ||
| Title: | Chief Executive Officer | ||
| (Principal Executive Officer) | |||
| Dated: November 19, 2025 | By: | /s/ Xiaoyuan Zhang | |
| Name: | Xiaoyuan Zhang | ||
| Title: | Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) | |||
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Exhibit 31.1
Certification Pursuant to
Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended
I, Xi Wen, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Senmiao Technology Limited. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 19, 2025 | |
| /s/ Xi Wen | |
| Xi Wen | |
| Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.2
Certification Pursuant to
Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended
I, Xiaoyuan Zhang, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Senmiao Technology Limited. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 19, 2025 | |
| /s/ Xiaoyuan Zhang | |
| Xiaoyuan Zhang | |
| Chief Financial Officer | |
| (Principal Financial Officer and | |
| Principal Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 (the “Report”) of Senmiao Technology Limited (the “Company”) as filed with the Securities and Exchange Commission on the date hereof, we, Xi Wen, President and Chief Executive Officer, and Xiaoyuan Zhang, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Xi Wen | |
| Xi Wen | |
| Chief Executive Officer | |
| (Principal Executive Officer) | |
| /s/ Xiaoyuan Zhang | |
| Xiaoyuan Zhang | |
| Chief Financial Officer | |
| (Principal Financial Officer and Principal Accounting Officer) |
|
| November 19, 2025 |