VAI 10-K & 10-Q changes, risk factors and insider trading

The online ride-hailing market in China, especially in our key target markets of Chengdu and Changsha, is intensely competitive and characterized by rapid changes in technology, shifting user preferences, and frequent introductions of new services and offerings. Our success in a given geographic market significantly depends on our ability to maintain or increase the scale of our network in that geographic market by attracting and keeping drivers to engage their ride-hailing business through our Partner Platforms or leasing automobiles provided by us. We face intense competition in the Automobile Transaction and Financing Services. We face significant competition from existing, well-established, well-established, and low-cost alternatives, and in the future we expect to face competition from new market entrants. Our competitors may have significantly 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. As a result, they may have deeper relationships with online ride-hailing drivers, automobile dealers, automobile leasing companies and other third-party service providers than we do. This could allow them to develop new services, adapt more quickly to changes in technology and to undertake more extensive marketing campaigns, which allow them to derive greater revenue and profits from their existing user bases, enlarge their user base at lower costs, or respond more quickly to new and emerging technologies and trends. As a consequence, our services may be less attractive to consumers and cause us to lose market share.

We also cooperate with local automobile dealers, automobile leasing companies, financial institutions and others to attract online ride-hailing drivers to run their business through our Partner Platforms and provide automobile transaction and financing services. Our ability to acquire customers depends on our own marketing efforts through online advertising and billboard advertising, as well as the network of different third partythird-party sales teams. We intend to strengthen relationships with existing financing partners and develop new relationships for our automobile transaction and financing business. If we are not able to attract or retain cooperative automobile dealers, automobile leasing companies with favorable term as new business partners on acceptable terms, our business growth will be hindered and our results of operations and financial condition will suffer.

The online ride-hailing industry is highly regulated in China. According to the guidelines issued by the different local authorities in China, including our major operations, Chengdu and Changsha, online reservation taxi operating license, automobile certificate and online reservation taxi taxi driver’s license are required for a driver to operate the online ride-hailing business. Approximately 43%All of our served online online ride-hailing drivers have not obtained the online reservation taxi driver’s certificates as of March 31, 2025.2026. We cannot assure you that we will not be subject to further fines, penalties or more severe administrative actions or proceedings in the future. If we or drivers or vehicles fail to obtain or maintain any required licenses, permits or approvals or make any necessary filings in a timely matter or at all, we may be subject to a variety of penalties, including fines or potentially being forced to suspend, terminate or significantly reduce our operations in the city or jurisdiction. Our business and results of operations will be materially affected if our affiliated drivers are suspended from providing ride-hailing services or receive substantial fines.

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 March 31, 2025,2026, 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 $482,000$507,000). According to the Registered Capital Registration Implementing Rules, Hunan Ruixi shall pay the subscribed capital of Jinkailong before June 30, 2032. Furthermore, as a 35% equity holder, we could be required to fund a portion of any capital shortfall at Jinkailong, or we may lose the value of our equity investment entirely.

In January 2019, we started to purchase automobiles from automotive dealers for sales. As we shifted our business focus to automobile rental since March 2020, we lease automobiles mainly for operating lease during the year ended March 31, 2025.2026. We primarily purchase or lease automobile models that are reliable, affordable and based on the local regulation requirement of the automobiles used for online ride-hailing, feedback from and market analysis as to perception and demand for such models, and that will appeal to lessees in lower-tier cities. We adopt a stable pricing formula, considering the historical and future expenditure, remaining available leasing months and market price to determine our our rental price for various rental solutions. During the year ended March 31, 2025,2026, our average utilization of the automobiles for operating lease, including the ones leased to Jinkailong,lease was approximately 89.0%,88.3%, as compared with 79.7%92.3% in the year ended March 31, 2024.2025. However, the competition in the operating lease of automobiles is tough in Chengdu and Changsha, and there is no assurance that we will be able to do so effectively and the utilization of automobiles held for operating lease is satisfied to generate sufficient profit and cash. Demand for the automobiles that we purchase or lease can change significantly between the time the automobiles are purchased and the date of sale or lease. Demand may be affected by new automobile launches, changes in the pricing of such automobiles, market conditions for the online ride-hailing, defects, changes in consumer preference and other factors, and dealers may not purchase them in the quantities that we expect. We may also need to adopt more aggressive pricing strategies for these cars than originally anticipated. We also face inventory risk in connection with the automobiles purchased, including the risk of inventory obsolescence, a decline in values, and significant inventory write-downs or write-offs. If we were to adopt more aggressive pricing strategies, our profit margin may be negatively affected as well. We may also face increasing costs associated with the storage of these automobiles. Any of the above may materially and adversely affect our financial condition and results of operations.

Government policies on automobile purchases and ownership may have a material effect on our business due to their influence on consumer behaviors. Since 2009, the PRC government has changed the purchase tax on automobiles with 1.6 liter or smaller engines several times. In addition, in August 2014, several PRC governmental authorities jointly announced that from September 2014 to December 2017, purchases of NEVs designated on certain catalogs will be exempted from the purchase taxes. In April 2015, several PRC governmental authorities also jointly announced that from 2016 to 2020, NEV purchasers designated on certain catalogs will enjoy subsidies. In December 2016, relevant PRC governmental authorities authorities further adjusted the subsidy policy for NEVs. On March 26, 2019, the PRC governmental authorities updated government subsidy policy for NEVs which raises the threshold for the subsidy and reduces the amount of subsidies. On April 23, 2020, relevant PRC governmental authorities authorities issue a notice, amongst others, that the subsidy policy for NEVs will be extended to the end of 2022, while the amount of subsidies will be reduced year by year. According to a notice effective from January 1, 2021, the subsidies will be declined by 20% on 2020’s 2020’s basis. On March 24, 2021, Chengdu Ecological Environment Bureau issued the Action Plan for Prevention and Control of Air Pollution in Chengdu in 2021, pursuant to which, all the new cars (including the replaced ones) used for online ride-hailing should be NEVs or hydrogen fuel cell vehicles. Pursuant to the Action Plan for Prevention and Control of Air Pollution in Chengdu in 2022 issued on March 23, 2022, the whole city shall strive to ensure bus and cars used for online ride-hailing be NEVs. On August 21, 2018, General Office of Changsha Municipal People’s Government issued the Provisional Detailed Rules of the Implementation Rules for the Administration of Online Booking Taxi Management Services for Changsha, pursuant to which, the company who operates online ride-hailing platform shall give priority to the use of NEVs, and the number of NEVs put into operation shall not be less than 30%. On April 7, 2021, General Office of Changsha Municipal People’s Government issued the Three-year Action Plan of Blue Sky Defense for Changsha, pursuant to which, at least 50% of the new cars used for online ride-hailing should be NEVs or hydrogen fuel cell vehicles at the end of calendar year 2023.

As of March 31, 2025,2026, our business is available in twoone citiescity in China. As theThe online ride-hailing industry isremains still atin a relativelydeveloping early stage ofwith development,evolving regulatory frameworks, and relevant government authorities may periodically promulgate new lawslaws, regulations and regulationsimplementing may be adopted from time to timerules to address newemerging issues that come to the authorities’industry attention.issues. In addition, considerable uncertainties still exist with respect to the interpretation and implementation of existing laws and and regulations governing our business activities. A large number of proposals are before various regional, and local legislative bodies and and regulatory entities regarding issues related to our industry or our business model. As of March 31, 2025,2026, we had not been subject to any material fines or other penalties under any PRC laws or regulations as to our business operations. However, if the PRC government tightens tightens regulatory for industries our business been involved in the future, and subject industry participants to new or specific requirements (including without limitation, capital requirements and licensing requirements), our business, financial condition and prospects would be materially and adversely affected. Meanwhile, compliance with existing and future rules, laws and regulations can be costly and if our practice is deemed to violate any existing or future rules, laws and regulations, it may face injunctions, including orders to cease non-compliant activities, and may be exposed to other penalties as determined by the relevant government authorities as well.

We had net losses of $3,467,165 $5,268,901 and $3,854,206$1,906,841 offrom our continuing operations in the years ended March 31, 20252026 and 2024,2025, respectively. We may continue to incur losses in the future. We anticipate that our operating expenses will increase in the foreseeable future as we schedule to attract more customers and further enhance and develop our current businesses and may seek for other profitable business in the future. These efforts may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses. Our net revenue growth may slow, our net income margins may decline or we may incur additional net losses in the future and may not be able to achieve and maintain profitability on a quarterly or annual basis. In addition, our net revenue growth rate will likely decline as our net revenue grows to higher levels.

The material weaknesses that have been identified include: (i) insufficient 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. GAAPGAAP. Specifically, our control did not operate effectively to ensure the appropriate and timely analysis of and accounting for unusual and non-routine transactions and certain financial statement accounts, which resulted in restatement of our unaudited financial statements as of and for the three and nine months ended December 31, 2025; (ii) be lacking adequate policies and procedures in internal audit function to ensure that our policies and procedures have been carried out as planned; and (iii) had deficiencies in our IT general control regarding to the Logical Access Security, Change Management, IT Operations and Cybersecurity of our financial system.

We have implemented, and will continue to implement, measures designed to improve our internal control over financial reporting and remediate the control deficiencies that led to these material weaknesses. We plan to (i) continuously hire additional accounting staffs with comprehensive knowledge of U.S. GAAP and SEC reporting requirements; (ii) set up an internal audit function and continuously ameliorate our internal audit to assist with assessment of Sarbanes-Oxley compliance requirements and improvement of internal controls related to financial reporting; and (iii) improvingimprove our IT environment and daily management.

We cannot assure you that the measures we have taken to date, and actions we intend to take in the future, will be sufficient to remediate material weaknesses in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses. In addition, neither our management nor an independent registered public accounting firm has performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act because no such evaluation has been required. Had we or our independent registered public accounting firm performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act, additional material weaknesses may have been identified. These material weaknesses have adversely affected, and may continue to adversely affect, the accuracy and timing of our financial reporting. In particular, as described elsewhere in this Annual Report, these material weaknesses resulted in the restatement of our unaudited condensed consolidated financial statements for the three and nine months ended December 31, 2025. If we are unable to successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, or identify any additional material weaknesses, the accuracy and timing of our financial reporting may be adversely affected, potentially resulting in restatements of our financial statements, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports and applicable Nasdaq listing requirements, investors may lose confidence in our financial reporting, and our share price may decline as a result.

We face uncertainties on the reporting and consequences on future private equity financing transactions, share exchange or other transactions involving the transfer of shares in our company by investors that are non-PRC resident enterprises. The PRC tax authorities may pursue such non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request our PRC subsidiaries subsidiary to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of being subject to filing obligations or being taxed, under Circular 59, SAT Bulletin 7 or SAT Notice 37, and may be required to expend valuable resources to comply with Circular 59, SAT Bulletin 7 and SAT Notice 37 or to establish that we and our non-resident enterprises should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.

Our business operations conducted through our PRC Operating Entities may be adversely affected by the current and future political environment in the PRC. Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. The Chinese government exerts substantial influence and control over the manner in which we must conduct our business activities. Our ability to operate in China may be adversely affected by changes in Chinese laws and regulations. Under the current government leadership, the government of the PRC has been pursuing reform policies which have adversely affected China-based operating companies whose securities are listed in the United States, with significant policies changes being made from time to time without notice. There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business, or the enforcement and performance of our contractual arrangements with borrowers in the event of the imposition of statutory liens, death, bankruptcy or criminal proceedings. Only after 1979 did the Chinese government begin to promulgate a comprehensive system of laws that regulate economic affairs in general, deal with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade, as well as encourage foreign investment in China. Although the influence of the law has been increasing, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. Also, because these laws and regulations are relatively new, and because of the limited volume of published cases and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve significant uncertainties. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. In addition, there have been constant changes and amendments of laws and regulations over the past 30 years in order to keep up with the rapidly changing society and economy in China. Because government agencies and courts provide interpretations of laws and regulations and decide contractual disputes and issues, their inexperience in adjudicating new business and new polices or regulations in certain less developed areas causes uncertainty and may affect our business. Consequently, we cannot predict the future direction of Chinese legislative activities with respect to either businesses with foreign investment or the effectiveness on enforcement of laws and regulations in China. The uncertainties, including new laws and regulations and changes of existing laws, as well as judicial interpretation by inexperienced officials in the agencies and courts in certain areas, may cause possible problems to foreign investors. Although the PRC government has been pursuing economic reform policies for more than two decades, the PRC government continues to exercise significant control over economic growth in the PRC through the allocation of resources, controlling payments of foreign currency, setting monetary policy and imposing policies that impact particular industries in different ways. We cannot assure you that the PRC government will continue to pursue policies favoring a market oriented market-oriented economy or that existing policies will not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting political, economic and social life in the PRC.

Accordingly, given the PRC government’s significant oversight and discretion over the conduct of our operating subsidiaries’subsidiary’s business, it may intervene or influence the operations of our PRC subsidiariessubsidiary at any time and to exert control over an offering of securities conducted overseas and/or foreign investment in China-based issuers, which may cause us to make material changes to the operations of our PRC subsidiariessubsidiary and could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.

We conduct all of our business through our subsidiariessubsidiary in China. Our operations in China are governed by PRC laws and regulations. Our PRC subsidiariessubsidiary areis generally subject to laws and regulations applicable to foreign investments in China and, in particular, laws and regulations applicable to wholly foreign-owned enterprises. The PRC legal system is based on statutes. Prior court decisions may be cited for reference but have limited precedential value.

Additionally, China’s China’s Cyber Security Law, requires companies to take certain organizational, technical and administrative measures and other necessary measures to ensure the security of their networks and data stored on their networks. Specifically, the Cyber Security Law provides that China adopt adopts a multi-level protection scheme (MLPS), under which network operators are required to perform obligations of security protection to ensure that the network is free from interference, disruption or unauthorized access, and prevent network data from being disclosed, stolen or tampered. Under the MLPS, entities operating information systems must have a thorough assessment of the risks and the conditions of their information and network systems to determine the level to which the entity’s information and network systems belong-from the lowest Level 1 to the highest Level 5 pursuant to the Measures for the Graded Protection and the Guidelines for Grading of Classified Protection of Cyber Security. The grading result will determine the set of security protection obligations that entities must comply with. Entities classified as Level 2 or above should report the grade to the relevant government authority for examination and approval.

We have made our determinations based on prior discussion with Yuantai Law Offices, our former PRC counsel, to the extent that the discussion relates to matters of CSRC, CAC and other government authorities on our PRC subsidiaries’subsidiary’s operations and concluded that: as of the date of this Report, we, our PRC subsidiariessubsidiary and equity investee company, (i) are not required to obtain permissions from the CSRC, CAC or any other government authorities on our PRC subsidiaries’ subsidiary’s operations, and (ii) have not received or were denied such permissions by any PRC government authorities. If the Security Administration Draft is enacted as proposed, we believe that the operations of our PRC subsidiariessubsidiary and our listing will not be affected and that we will not be subject to cybersecurity review by the CAC, given that our PRC subsidiariessubsidiary possesspossesses personal data of fewer than one million individual clients and dodoes not collect data that affects or may affect national security in their business operations as of the date of this Report and dodoes not anticipate that they will be collecting over one million users’ personal information or data that affects or may affect national security in the near future. There remains uncertainty, however, as to how the Cybersecurity Review Measures and the Security Administration Draft will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures and the Security Administration Draft. If any such new laws, regulations, rules, or implementation and interpretation come into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us. We cannot guarantee, however, that we will not be subject to cybersecurity review and network data security review in the future. During such reviews, we may be required to suspend our operation or experience other disruptions to our operations. Cybersecurity review and network data security review could also result in negative publicity with respect to our Company and diversion of our managerial and financial resources, which could materially and adversely affect our business, financial conditions, and results of operations.

As of the date of this Report, we have not received any notice from any authorities identifying our PRC subsidiariessubsidiary as CIIOs. However, given the uncertainties surrounding the interpretation and implementation of the Cyber Security Law, Data Security Law and relevant regulations, we cannot rule out the possibility that we, or certain of our customers or suppliers may be deemed as a CIIO, or an operator processing “important data.” First, if we are deemed as a CIIO, our purchase of network products or services, if deemed to be affecting or may affect national security, will need to be subject to cybersecurity review, before we can enter into agreements with relevant customers or suppliers, and before the conclusion of such procedure, these customers will not be allowed to use our products or services, and we are not allowed to purchase products or services from our suppliers. There can be no assurance that we would be able to complete the applicable cybersecurity review procedures in a timely manner, or at all, if we are required to follow such procedures. Any failure or delay in the completion of the cybersecurity review procedures may prevent us from using certain network products and services, and may result in fines of up to ten times the purchase price of such network products and services being imposed upon us, if we are deemed a CIIO using network products or services without having completed the required cybersecurity review procedures. If the reviewing authority is of the view that the use of such network products or services by us, or by certain of our customers or suppliers, involves risk of disruption, is vulnerable to external attacks, or may negatively affect, compromise, or weaken the protection of national security, we may not be able to provide such products or services to relevant customers, or purchase products or services from relevant suppliers. This could have a material adverse effect on our results of operations and business prospects. Second, the notion of “important data” is not clearly defined by the Cyber Security Law or the Data Security Law. In order to comply with the statutory requirements, we will need to determine whether we possess important data, monitor the important data catalogs that are expected to be published by local governments and departments, perform risk assessments and ensure we are complying with reporting obligations to applicable regulators. We may also be required to disclose to regulators business-sensitive or network security-sensitive details regarding our processing of important data, and may need to pass the government security review or obtain government approval in order to share important data with offshore recipients, which can include foreign licensors, or share data stored in China with judicial and law enforcement authorities outside of China. If judicial and law enforcement authorities outside China require us to provide data stored in China, and we are not able to pass any required government security review or obtain any required government approval to do so, we may not be able to meet the foreign authorities’ requirements. The potential conflicts in legal obligations could have adverse impact on our operations in and outside of China.

PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of from our public offerings to make loans to or make additional capital contributions to our PRC subsidiaries,subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

Under PRC laws and regulations, we are permitted to utilize the proceeds from our public offerings to fund our PRC subsidiariessubsidiary by making loans to or additional capital contributions to our PRC subsidiaries,subsidiary, subject to applicable government registration and approval requirements.

Any loans to our PRC subsidiaries, subsidiary, which areis treated as foreign-invested enterprises under PRC laws, are subject to PRC regulations and foreign exchange loan registrations. For example, loans by us to our PRC subsidiariessubsidiary to finance theirits activities cannot exceed statutory limits and must be registered with the local counterpart of SAFE. The statutory limit for the total amount of foreign debts of a foreign-invested company is the difference between the amount of total investment as approved by the MOFCOM or its local counterpart and the amount of registered capital of such foreign-invested company or 2.5 times of the net assets of such foreign-invested company.

We have financed and expect to continue to finance our PRC subsidiariessubsidiary by means of capital contributions. These capital contributions must be approved by the MOFCOM or its local counterpart. In addition, SAFE issued a circular in September 2008, SAFE Circular 142, regulating the conversion by a foreign-invested enterprise of foreign currency registered capital into RMB by restricting how the converted RMB may be used. SAFE Circular 142 provides that the RMB capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used for purposes within the business scope approved by the applicable government authority and unless otherwise provided by law, may not be used for equity investments within the PRC. On July 4, 2014, the SAFE issued the Circular of the SAFE on Relevant Issues Concerning the Pilot Reform in Certain Areas of the Administrative Method of the Conversion of Foreign Exchange Funds by Foreign-invested Enterprises, or SAFE Circular 36, which launched a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises in certain designated areas from August 4, 2014 and some of the restrictions under SAFE Circular 142 will not apply to the settlement of the foreign exchange capitals of the foreign-invested enterprises established within the designate areas and such enterprises are allowed to use its RMB capital converted from foreign exchange capitals to make equity investment. On March 30, 2015, SAFE promulgated Circular 19, to expand the reform nationwide. Circular 19 came into force and replaced both Circular 142 and Circular 36 on June 1, 2015. Circular 19 allows foreign-invested enterprises to make equity investments by using RMB fund converted from foreign exchange capital. However, Circular 19 continues to prohibit foreign-invested enterprises from, among other things, using RMB fund converted from its foreign exchange capitals for expenditure beyond its business scope, providing entrusted loans or repaying loans between non-financial enterprises. In addition, SAFE strengthened its oversight of the flow and use of the RMB capital converted from foreign currency registered capital of a foreign-invested company. The use of such RMB capital may not be altered without SAFE’s approval, and such RMB capital may not in any case be used to repay RMB loans if the proceeds of such loans have not been used. On June 9, 2016, SAFE issued the Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts (“Circular 16”), which became effective simultaneously. Pursuant to Circular 16, enterprises registered in the PRC may also convert their foreign debts from foreign currency to RMB on self-discretionary basis. Circular 16 provides an integrated standard for conversion of foreign exchange under capital account items (including but not limited to foreign currency capital and foreign debts) on self-discretionary basis which applies to all enterprises registered in the PRC. Circular 16 reiterates the principle that RMB converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purpose beyond its business scope or prohibited by PRC Laws or regulations, while such converted RMB shall not be provide as loans to its non-affiliated entities. SAFE has not provided detailed guidelines with respect to its interpretation or implementation, it is uncertain how these rules will be interpreted and implemented. Violations of these Circulars could result in severe monetary or other penalties. These circulars may significantly limit our ability to use RMB converted from the net proceeds of our public offerings to fund the establishment of new entities in China by our PRC subsidiaries,subsidiary, to invest in or acquire any other PRC companies through our PRC subsidiaries.subsidiary.

As March 31, 2025,2026, the Company has made accumulated capital contributions of $21.1$6.0 million directly to the subsidiaries.subsidiary. The contributions were generated from our historical offering proceeds. Besides, the Company also loaned accumulated approximately $2.0 million to the equity investee company, Jinkailong, through our subsidiaries in PRC in prior years. The loans were used for the daily operation of Jinkailong.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future capital contributions or future loans by us to our PRC subsidiaries.subsidiary. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from our public offerings and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

We rely on dividends and other distributions on equity paid by our PRC subsidiariessubsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiariessubsidiary to make payments to us could have a material adverse effect on our ability to conduct our business.

We are a holding company, and we rely on dividends and other distributions on equity paid by our PRC subsidiariessubsidiary for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our stockholders and service any debt we may incur. If our PRC subsidiaries incursubsidiary incurs debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us.

Under PRC laws and regulations, our PRC subsidiaries,subsidiary, as a wholly foreign-owned enterprise in China, may pay dividends only out of their respective accumulated after-tax profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve funds, until the aggregate amount of such funds reaches 50% of its registered capital. At its discretion, a wholly foreign-owned enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable as cash dividends.

Our PRC subsidiariessubsidiary currently sufferhas suffered accumulated loss and areis unable to pay us any dividend given their financial condition. If our PRC subsidiaries’ subsidiary’s financial condition improves, the above discussed PRC laws will likely limit their ability to pay dividends or make other distributions to us. Such limitations could materially and adversely impact our cash flows and limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

Substantially all of our revenues and expenditures are denominated in RMB, whereas our reporting currency is the U.S. dollar. As a result, fluctuations in the exchange rate between the U.S. dollar and RMB will affect the relative purchasing power in RMB terms of our U.S. dollar assets and the proceeds from our public offerings. Our reporting currency is the U.S. dollar while the functional currency for our PRC subsidiariessubsidiary is RMB. Gains and losses from the re-measurement of assets and liabilities that are receivable or payable in RMB are included in our consolidated statements of operations. The re-measurement has caused the U.S. dollar value of our results of operations to vary with exchange rate fluctuations, and the U.S. dollar value of our results of operations will continue to vary with exchange rate fluctuations. A fluctuation in the value of RMB relative to the U.S. dollar could reduce our profits from operations and the translated value of our net assets when reported in U.S. dollars in our financial statements. This could have a negative impact on our business, financial condition or results of operations as reported in U.S. dollars. If we decide to convert our RMB into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or for other business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount available to us. In addition, fluctuations in currencies relative to the periods in which the earnings are generated may make it more difficult to perform period-to-period comparisons of our reported results of operations.

The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our net revenues in RMB. Under our current corporate structure, we rely on dividend payments from our PRC subsidiaries subsidiary to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies currencies without prior approval from SAFE by complying with certain procedural requirements. Therefore, our PRC subsidiariessubsidiary areis able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside outside of the PRC complies with certain procedures under PRC foreign exchange regulation, such as the overseas investment registrations by the beneficial owners of our company who are PRC residents. But approval from or registration with appropriate government authorities is is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our stockholders.

If the chops of our PRC subsidiariessubsidiary are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised.

In China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature. Each legally registered company in China is required to maintain a company chop, which must be registered with the local Public Security Bureau. In addition to this mandatory company chop, companies may have several other chops which can be used for specific purposes. The chops of our PRC subsidiariessubsidiary are generally held securely by personnel designated or approved by us in accordance with our internal control procedures. procedures. To the extent those chops are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised and those corporate entities may be bound to abide by the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite power and authority to do so. In addition, if the chops are misused by unauthorized persons, we could experience disruption to our normal business operations. We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from our operations.

In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies, replacing earlier rules promulgated in March 2007. Pursuant to these rules, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the PRC subsidiariessubsidiary of such overseas listed company, and complete certain other procedures. In addition, an overseas entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests. We and our executive officers and other employees who are PRC citizens or who have resided in the PRC for a continuous period of not less than one year and who are granted options or other awards under our 2018 Equity Incentive Plan will be subject to these regulations. Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiariessubsidiary and limit our PRC subsidiaries’subsidiary’s ability to distribute dividends to us. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law.

PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries’subsidiary’s ability to increase their registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law.

If our stockholders who are PRC residents or entities do not complete their registration as required, our PRC subsidiariessubsidiary may be prohibited from distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional capital to our PRC subsidiaries.subsidiary. Moreover, failure to comply with the SAFE registration described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.

In addition, we may not be informed of the identities of all the PRC residents or entities holding direct or indirect interest in our company, nor can we compel our beneficial owners to comply with SAFE registration requirements. As a result, we cannot assure you that all of our stockholders or beneficial owners who are PRC residents or entities have complied with, and will in the future make or obtain any applicable registrations or approvals required by, SAFE regulations. Failure by such stockholders or beneficial owners to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations of our PRC subsidiaries,subsidiary, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiaries’subsidiary’s ability to make distributions or pay dividends to us or affect our ownership structure, which could adversely affect our business and prospects.

Our common stock is currently listed for trading on The Nasdaq Capital Market, and the continued listing of our common stock on The Nasdaq Capital Market is subject to our compliance with a number of listing standards. On August 16, 2021, we received a notice from Nasdaq that because the closing bid price for our common stock had fallen below $1.00 per share for 30 consecutive business days, we no longer complied with the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market under Rule 5550(a)(2) of the Nasdaq Listing Rules. On February 15, 2022, we received a letter from Nasdaq informing that trading of the Company’s common stock will be suspended at the opening of business on February 24, 2022, unless the Company requests an appeal of Nasdaq’s determination. The Company has timely requested an appeal and on May 5, 2022, the Nasdaq Hearings Panel (the “Panel”) confirmed the Company has regained compliance with the minimum bid price through a reserve stock split effective on April 6, 2022. The Panel has also determined to impose a Panel Monitor for a period of one year from the date of the letter, or until May 5, 2023 to monitor the Company’s continued compliance with all Nasdaq continued listing requirements, pursuant to Nasdaq Listing Rule 5815(d)(4)(A). Should the Company fail to meet the minimum bid price requirement for a period of 30 consecutive trading days or any other requirements for continued listing on Nasdaq, the staff will issue a Delist Determination Letter and promptly schedule a new hearing. On May 8, 2023, we received a notice from Nasdaq to inform the Company was in compliance with the applicable Nasdaq Listing Rules. On June 15, 2023, we received a notice from Nasdaq that because the closing bid price for our common stock had fallen below $1.00 per share for 30 consecutive business days, we no longer complied with the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market under Rule 5550(a)(2) of the Nasdaq Listing Rules. On March 26, 2024, we received a letter from the Nasdaq notifying us that we have regained compliance with the Nasdaq Capital Market’s minimum bid price requirement and the matter is closed. On July 29, 2025, we received a deficiency notice from Nasdaq informing us that our common stock, par value $0.0001 per share, fails to comply with the $1 minimum bid price required for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) based upon the closing bid price of the common stock for the 30 consecutive business days prior to the date of the notice and the matter is closed. On December 1, 2025, we received a letter from Nasdaq informing us that, as reported in our quarterly report on Form 10-Q for the period ended September 30, 2025, because our stockholders’ equity was ($132,073), as of September 30, 2025, we did not meet the alternatives of market value of listed securities or net income from continuing operations, and we no longer complied with the Listing Rule. The Nasdaq notification had no immediate effect on the listing of our common stock on the Nasdaq Capital Market.

Pursuant to the Purchase Agreements with investors in our offerings in June 2019, May 2021 and2021, November 2021, November 2025 and April 2026 we issued to the investors a series of warrants. The issuance of shares of common stock upon the exercise of the warrants would dilute the percentage ownership interest of all stockholders, might dilute the book value per share of our common stock and would increase the number of our publicly traded shares, which could depress the market price of our common stock. In addition, the so-called full-ratchet anti-dilution protections and reset provisions, subject to limited exceptions, would reduce the exercise price of the warrants in the event that we in the future issue common stock, or securities convertible into or exercisable to purchase common stock, at a lower price per share.

Our business operations depend rely on the continued services of our senior management, particularlyspecifically the executive officers named in this Report. While we have provided different incentives to our management, we cannot assure you that we can continue to retain their services.services If long-term. Should one or more of our key executives werestep unabledown or unwillingchoose not to continue remain in their present positions,roles, we may notface bedifficulties ablesourcing tosuitable replacereplacements them easilyin ora attimely all,manner, which could constrain our future growth maytrajectory, disrupt beday-to-day constrained,operations, ournegatively business may be severely disrupted andimpact our financial conditionperformance, and results ofbring operationsextra mayrecruitment, be materiallytraining and adverselytalent affected, and we may incur additional expenses to recruit, train and retain qualified personnel.retention In addition, although we have entered into confidentiality and non-competition agreements with our management, there is no assurance that any member of our management team will not join our competitors or form a competing business. If any dispute arises between our current or former officers and us, we may have to incur substantial costs and expenses in order to enforce such agreements in China or we may be unable to enforce them at all.costs.

We are a provider of automobile transaction and related services, connecting consumers, who are mostly existing and prospective ride-hailing drivers affiliated with different operators of online ride-hailing platforms in the People’s Republic of China (“PRC” or “China”). We provide automobile transaction and related services in Hunan Province of China through our majority owned subsidiaries, Chengdu Jiekai Yunli Technology Co., Ltd., a PRC limited liability company and its subsidiary (“Jiekai”), andsubsidiary, Hunan Ruixi FinancialBusiness LeasingOperation Management 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,Services”, we ceased our online ride-hailing Platform Services on August 20, 2024.

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 financingfinance leases (the “Auto Financing”); (vi) default expensesfees 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 March 31, 2025,2026, we have facilitated financing for an aggregate of 312 automobiles with a total value of approximately $5.4 million, sold an aggregate of 381 automobiles with a total value of approximately $5.3 million, sold an aggregate of 1,516 automobiles with a total value of approximately $14.5$3.7 million and delivered 2,116470 automobiles under operating leases and 191197 automobiles under financingfinance leases to customers, the vast majority of whom are online ride-hailing drivers.

During the year ended March 31, 2025,2026, our Auto Operating Leasing, Auto Commissions,Financing, Auto FinancingCommissions, and other services income accounted for approximately 87.2%, 4.4%, 82.6%, 4.3%, 2.8%,1.1%, and 10.3%7.3% of our total revenue from our automobile transactions and related services, respectively, while our Auto Operating Leasing, Auto Financing, Auto Commissions, Auto Financing, and other services income accounted for approximately 88.7%,88.9%, 4.5%,4.9%, 1.3%,1.4%, and 5.5% 4.8% for the year ended March 31, 2024,2025, respectively.

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 XXTX Acquisition Agreement with the Purchaser, and certain other other parties thereto. Pursuant to the XXTX Acquisition Agreement, the Purchaser acquired all of the equity interests thein XXTX at a total purchase purchase price of zero, while taking over certain liabilities of XXTX as defined in the XXTX Acquisition Agreement. On August 20, 2024, the acquisition Acquisition was completed and we ceased the online ride-hailing platform services.

Our revenue growth has been largely driven by the expansion of our automobile lessee base and the corresponding revenue generated from operating and financialfinance leasing.lease. We acquire customers for our Automobile Transaction and Related Services through the network of third-party sales teams, referral from online ride-hailing platforms and our own efforts including online advertising and billboard advertising. We also send out fliers and participate in trade shows to advertise our services. We plan to maintain the number of our customers by marketing our companies to our existing and prospective automobile lessees in the cities we now operate in. We expect to keep promoting the growth of our automobile rental business with automobile rental solutions/incentives specifically targeted at drivers using our Partner Platforms. An effective cross-selling strategies between our automobile leasing business and our Partner Platforms is important to our expansion and revenue growth. We also plan to strengthen our marketing efforts through the collaboration with certain automobile dealers and through our own team by employing more experienced staff, sharing market resources with our equity investee company, and improving the quality and variety of our services. As of March 31, 2025,2026, we had 3one employeesemployee in our own sales department.

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 year ended March 31, 2025.2026. 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 March 31, 2025, 2026, for parking and management of automobiles for operating lease, we had one parking lot and 3three employees in Changsha, and we also share the parking lot with our equity investee company, Jinkailong in Chengdu.Changsha. During the years ended March 31, 20252026 and 2024,2025, the average utilization utilization of the automobiles for operating lease was approximately 89.0%88.3% and 79.7%,92.3%, respectively.

Meanwhile, in order to strengthen our market position in certain cities, our subsidiaries,position, Hunan Ruixi and Jiekai, havehas built up cooperation relationships with Partner Platforms, such as Hunan Didi Technology Co., Ltd., Chengdu Anma Zhixing Technology Co., Ltd., Sichuan Peitu KuaixingChuxing Technology Co., Ltd. And Chongqing Yiqizhao Technology Co., Ltd. Chengdu Branch,Ltd., whereby the online ride-hailing requests and orders shall be completed on Partner Platforms utilizing the network of cars and drivers of us while Hunan Ruixi and Jiekai earned rental income from drivers and earned commissions from Partner Platforms.

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, Didi, agree to temporarily “lock-up” the fares of the rides which the driver earned from the platform to ensure the timely collection of our rental receivables from them. As of March 31, 2025,2026, we had no accounts receivable of operating lease of approximately $20,000 in total.lease. Besides, during the year ended March 31, 2025,2026, we settled our commissions with the Partner Platforms for our online ride-hailing platform services and automobile rental income on a monthly basis.

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 year ended March 31, 2025.2026. We do this so that we can evaluate their financial conditions and provide them with assistance including the transfer of automobile to a new driver if they are no longer interested in providing ride-hailing services or are unable to earn enough income to make monthly lease/loan payments. We also charge default expensesfees from customers for their behaviors violated to the contracts.

Further, the automobiles subject to our financingfinance leases are not collateralized by us. As of March 31, 2025,2026, the total value of non-collateralized automobiles was 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 leasing is immaterial as we have experienced limited default cases and we are able to re-lease those automobiles to drivers under financing finance leases.

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 55th57th Statistical report on Internet Development in China published in January 2025February 2026 by the China Internet Network Information Center (the “CNNIC”), the number of online ride-hailing service users had reached 539 million by the end of December 2024,2025, and took approximately 48.7%47.9% 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. and Chenqi Technology Limited and CaoCao Inc. were listed on the Hong Kong Stock Exchange in June 2024,2024 and CaoCaoJune Inc.2025, have filed their prospectuses again to the Stock Exchange of Hong Kong Limited April 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 April 30, 2025,2026, approximately 382399 online ride-hailing platforms have obtained booking taxi operating licenses, representing an increase of approximately 9% as compared with the one as of April 30, 2024. And the total volume of online ride-hailing orders was approximately 727 million in April 2025 in China, representing a decrease of approximately 12%4% as compared with the one as of April 30, 2024.2025. And the total volume of online ride-hailing orders was approximately 727 million in April 30, 2026 in China, representing an increase of approximately 27% as compared with the one as of April 30, 2025. Meanwhile, approximately 3.21 million online booking taxi transportation certificates and approximately 7.48 million online booking taxi driver’s licenses were issued nationwide in China, representing an increase of approximately 13% and 10% as compared with the onesChina as of MarchDecember 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.

On November 5,April 2016,1, 2017, the Municipal Communications CommissionGeneral Office of ChengduChangsha City andPeople’s a number of municipal departments jointlyGovernment issued the “Implementation Detailed Rules for the Administration of Online BookingCar-Hailing Taxi ManagementBusiness Services of forChangsha ChengduCity”, which was abolished and replaced by the updated version issued on July 26,23, 2021.2018. On August 10,20, 2017,2025, the TransportationChangsha Municipal CommissionBureau of ChengduTransportation further issued the“Announcement guidelinesof Changsha Municipal Bureau of Transportation on complianceFurther Improving requirementsthe Issuance of Vocational Qualification Certificates for online ride-hailing businesses, including Working Process for the Online Appointment of Taxi Drivers Qualification Examination and IssuanceOther andRelated 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.Matters”. According to these regulations and guidelines, three licenses /certificates are required for operating the online ride-hailing business in Chengdu and GuangzhouChangsha: (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 newnewly added cars used for online ride-hailing in Chengdu shouldChangsha shall be NEVs sincestarting Julyfrom 2021.2027.

However,As approximately 43% of March 31, 2026, all ride-hailing drivers who leased our automobiles or used our services have not obtained the driver’s license for online ride-hailing servicesservices, as of March 31, 2025 whileand 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 year ended March 31, 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.

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 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.

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 authorizationauthorization, forwith athe majority of lease term of no more than twelve 12 months. The decrease in rental income of $1,030,045$336,570 or approximately 26.9% 20.0% during the year ended March 31, 20252026 was mainly due to the decrease in the number and average monthly rental of the automobiles leased for operating lease as well as average monthly rental income per automobile.lease. We leased 826approximately 340 automobiles with an average monthly rental income of approximately $410 $381 per automobile, resulting in a rental income of $2,800,992, including rental income of $46,461 from Jinkailong and other related parties,$1,348,542 for the year ended March 31, 2025.2026. While Wewe leasedapproximately over 1,400366 automobiles with an average monthly rental income of approximately $485 $437 per automobile, resulting in a rental income of $3,831,037, including rental income of $34,742 from Jinkailong,$1,685,112 for the year ended March 31, 2024.2025.

We generated revenues of $184,625$64,833 and $45,231$0 from leasing NEVs by charging leases service fees during the yearyears ended March 31, 20252026 and 2024, 2025, respectively. The amount of services fees for NEVs leasing were based on our timely product solutions timelywhich adjusted in accordance which adjusted with different market conditions.

We generated revenues of $145,227 $17,485 and $196,099$25,799 from the monthly management and related services provided to our Partner Platforms and other companies during the years ended March 31, 20252026 and 2024,2025, respectively. The decrease of $50,872 or approximately 25.9% was due to the decrease in the number of the automobiles andleased to online ride-hailing drivers wefor served,operating wholease randuring theirthe businessyear throughended March 31, 2026, which in turn led to lower commission income from the Partner Platforms Platforms.related to the monthly management and related services.

WeOur former subsidiaries in Sichuan generated default revenues of $105,025$30,190 and $100,763$71,975 from the automobile lessee’s early-termination of the contracts or other violation behaviors to the contracts during the years ended March 31, 20252026 and 2024,2025, respectively.

Prior to December 31, 2025, we provided automobile transaction and related services in Sichuan Province of China through our former majority owned subsidiary, Chengdu Jiekai Yunli Technology Co., Ltd., a PRC limited liability company and its subsidiary (“Jiekai”) and our former wholly owned subsidiary, Chengdu Corenel Technology Co., Ltd. a PRC limited liability company (“Corenel”). As discussed below under “–Our Automobile Transactions and Related Services”, we ceased our automobile transactions and related services in Sichuan Province of China on December 31 2025.

Our Automobileautomobile Transaction transaction and Relatedrelated 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 finance leases (the “Auto Financing”); (vi) default expensesfees 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.

Considering the fierce competition of the online ride-hailing industry and our operating losses in China, in December 2025 the Company entered into a certain Acquisition Agreement (the “Sichuan Acquisition Agreement”) with Hu Mao Sheng Tang Holdings Limited., a non-affiliated Hong Kong company (“HMST”). Pursuant to the Sichuan Acquisition Agreement, the Company sold all of the equity interests in Sichuan Senmiao Yicheng Assets Management Co., Ltd. (“Yicheng”), Sichuan Senmiao Zecheng Business Consulting Co., Ltd. (“Senmiao Consulting”) and its subsidiaries, which were our former subsidiaries in Sichuan Province of China (“former subsidiaries in Sichuan”), to HMST for zero considerationnil consideration, while we undertook certain liabilities of $518,388 which were previously assumed by former subsidiaries in Sichuan (the “Disposition”). On December 31, 2025, the Disposition was completed and we ceased our automobile Transactionstransactions and Relatedrelated Servicesservices in Sichuan Province of China.

Since November 22, 2018, the acquisition date of Hunan Ruixi, and as of DecemberJune 31,30, 2025,2026, we have facilitated financing for an aggregate of 312 automobiles with a total value of approximately $5.3$5.4 million, sold an aggregate of 1,516381 automobiles with a total value of approximately $14.5$3.7 million and delivered 2,300470 automobiles under operating leases and 197 automobiles under financingfinance leases to customers, the vast majority of whom are online ride-hailing drivers.

The table below provides a breakdown of the number of vehicles sold or delivered under different leasing arrangements or managed by us and corresponding revenue generated for the three and nine months ended DecemberJune 31,30, 20252026 and 2024,2025, respectively:

During the three months ended DecemberJune 31,30, 2025,2026, our Auto Operating Leasing, Auto Commissions,Financing, Auto FinancingCommissions and other services income accounted for approximately 88.4%, 1.0%,86.8%, 4.2%3.3%, 0.3% and 6.4%9.6% of our total revenue from our automobile transactions and related services, respectively, while our Auto Operating Leasing, Auto Commissions,Financing, Auto Financing,Commissions, and other services income accounted for approximately 90.8%, 0.8%,90.3%, 5.2%, 1.9%, and 3.2%2.6% for the three months ended December 31, 2024, respectively. During the nine months ended DecemberJune 31,30, 2025, our Auto Operating Leasing, Auto Commissions, Auto Financing and other services income accounted for approximately 88.2%, 1.2%, 4.6% and 6.0% 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 88.9%, 1.1%, 4.9%, and 5.1% for the nine months ended December 31, 2024, respectively.

Our revenue growth has been largely driven by the expansion of our automobile lessee base and the corresponding revenue generated from operating and financialfinance leasing. lease. We acquire customers for our Automobile Transaction and Related Services through the network of third-party sales teams, referral from online ride-hailing platforms and our own efforts including online advertising and billboard advertising. We also send out fliers and participate in trade shows to advertise our services. We plan to maintain the number of our customers by marketing our companies to our existing and prospective automobile lessees in the cities we now operate in. We expect to keep promoting the growth of our automobile rental business with automobile rental solutions/incentives specifically targeted at drivers using our Partner Platforms. An effective cross-selling strategies between our automobile leasing business and our Partner Platforms is important to our expansion and revenue growth. We also plan to strengthen our marketing efforts through the collaboration with certain automobile dealers and through our own team by employing more experienced staff, sharing market resources with our equity investee company, and improving the quality and variety of our services. As of DecemberJune 31,30, 2025,2026, we had one employee in our own sales department.

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 nine months ended DecemberJune 31,30, 2025.2026. To meet the demand in Changsha, we have purchased automobiles for our operating lease. The daily management and timely maintenance of leased automobiles will have a significant effect on the stability and potential growth of our income from leasing automobiles in the next twelve months. The effective management, including maintaining the high turn-over rate of our automobiles through our proprietary system and experienced auto-management team could provide in-time delivery and qualified automobiles to potential lessees, either for personal use or providing online ride-hailing services. As of DecemberJune 31,30, 2025,2026, for parking and management of automobiles for operating lease, we had one parking lot and three employees in Changsha. During the three months ended December 31,June 202530, 2026 and 2024,2025, the average utilization of the automobiles for operating lease was approximately 85.7%93.1% and 91.4%,96.0%, respectively. During the nine months ended December 31, 2025 and 2024, the average utilization of the automobiles for operating lease was approximately 92.2% and 92.3%, respectively.

Meanwhile, in order to strengthen our market position, Hunan Ruixi has built up cooperation relationships with Partner Platforms, such as Hunan Didi Chuxing Technology Co., Ltd., whereby the online ride-hailing requests and orders shall be completed on Partner Platforms utilizing the network of cars and drivers of us while Hunan Ruixi earned rental income from drivers and earned commissions from Partner Platforms.

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,Didi, agree to temporarily “lock-up” the fares of the rides which the driver earned from the platform to ensure the timely collection of our rental receivables from them. As of DecemberJune 31,30, 2025,2026, we had no accounts receivable of operating lease of approximately $1,000 in total.lease. Besides, during the three and nine months ended DecemberJune 31,30, 2025,2026, 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.

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 nine months ended DecemberJune 31,30, 2025.2026. We do this so that we can evaluate their financial conditions and provide them with assistance including the transfer of automobile to a new driver if they are no longer interested in providing ride-hailing services or are unable to earn enough income to make monthly lease/loan payments. We also charge default expensesfees from customers for their behaviors violated to the contracts.

Further, the automobiles subject to our financingfinance leases are not collateralized by us. As of DecemberJune 31,30, 2025,2026, the total value of non-collateralized automobiles was close to the amount of finance lease receivables since it was on a straight-line basis. We believe our risk exposure of financing leasing is immaterial as we have experienced limited default cases and we are able to re-lease those automobiles to drivers under financing finance leases.

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 56th57th Statistical report on Internet Development in China published in JulyFebruary 20252026 by the China Internet Network Information Center (the “CNNIC”), the number of online ride-hailing service users had reached 511539 million by the end of JuneDecember 2025, and took approximately 45.6%47.9% of the total number of Chinese internet users. InWe addition,cooperate with DiDi, the dominant player in recentChina’s years,ride-hailing market. Benefiting from DiDi’s leading market share, massive driver and passenger network, advanced AI intelligent dispatching technology, standardized compliance control system and high user loyalty, our business is well-positioned to capture the incremental growth brought by the rapid expansion of aggregation platforms haveride-hailing gained rising significanceorders in the sharedcoming mobilityyears. industry.In According to Frost & Sullivan,addition, 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.competition and the platforms for passengers and providing services together with online ride-hailing platform companies (“Aggregation Platforms”) have gained rising significance in the shared mobility industry. According to the Ministry of Transportation (the “MOT”) of the People’s Republic of China, as of DecemberJune 31,30, 2025,2026, approximately 395401 online ride-hailing platformsplatform companies have obtained booking taxi operating licenses, representing an increase of approximately 5%3% as compared with the one as of MarchJune 31,30, 2025. And the total volume ofTotal online ride-hailing ordersorder volume was approximately 963979 million in DecemberJune 20252026 in China, representing aan decreaseincrease of approximately 28%29% as compared with the one asin June 2025. Of this volume, orders completed by Aggregation Platforms amounted to 327 million, accounting for approximately 33.4% of Octoberthe 31,industry’s 2024.total orders in June 2026 in China, representing an increase of 17.6% as compared with the one in June 2025. Meanwhile, approximately 3.21 million online booking taxi transportation certificates and approximately 7.48 million online booking taxi driver’s licenses were issued nationwide in China as of December 31, 2024, respectively. Since 2023, the municipal transportation bureaus in a series of cities in China have released operational dynamics and risk warnings for the online ride-hailing industry, stating that the online ride-hailing market has become saturated. They remind enterprises and practitioners who intend to engage in online ride-hailing services should have a detailed understanding of relevant regulations, conduct market research, fully consider changes in operating income due to factors such as supply and demand, market conditions, fluctuations or continuous declines, objectively evaluate the actual income level of industry practitioners, and make rational and prudent career choices.

On NovemberApril 5,1, 2016,2017, the Municipal CommunicationsGeneral CommissionOffice of ChengduChangsha City andPeople’s a number of municipal departments jointlyGovernment issued the “ImplementationDetailed Rules for the Administration of Online BookingCar-Hailing Taxi ManagementBusiness Services forof ChengduChangsha City”, which was abolished and replaced by the updated version issued on July 26,23, 2021.2018. On August 10,20, 2017,2025, the TransportationChangsha CommissionMunicipal Bureau of ChengduTransportation further issued the“Announcement guidelinesof Changsha Municipal Bureau of Transportation on compliance requirementsFurther for online ride-hailing businesses, including Working Process forImproving the Online AppointmentIssuance of Vocational Qualification Certificates for Taxi Drivers Qualification Examination and IssuanceOther andRelated 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.Matters”. According to these regulations and guidelines, three licenses /certificates are required for operating the online ride-hailing business in Chengdu and GuangzhouChangsha: (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 newnewly added cars used for online ride-hailing in ChengduChangsha shouldshall be NEVs sincestarting Julyfrom 2021.2027.

As of DecemberJune 31,30, 2025, 2026, all ride-hailing drivers who leased our automobiles or used our services have obtained the driver’s license for online ride-hailing services, and all of the cars used for online ride-hailing services which we provided management services have the automobile certificate. Without requisite automobile certificate or driver’s license, these drivers may be suspended from providing ride-hailing services, confiscated their illegal income and subject to fines of up to 10 times of their illegal income. We assisted drivers to obtain the required certificate and license for our Automobile Transaction and Related Services. However, there was no guarantee that all of the drivers who run their online ride-hailing business would be able to obtain all the certificates and licenses. These Partner Platforms may not allow unqualified drivers who lease our automobiles to drive through these platforms, or reduce their commission income, so that they may not be able to earn enough income from those Partner Platforms to pay our rental fees. Our business and results of operations shall be materially and adversely affected if we could not serve qualified drivers or our served drivers are suspended from providing ride-hailing services.

Results of Continuing Operations for the three months ended DecemberJune 31,30, 20252026 Compared to the three months ended DecemberJune 31,30, 20242025

The following table sets forth the breakdown of revenues by revenue source for the three months ended DecemberJune 31,30, 20252026 and 2024,2025, respectively:

Revenue from our automobile transaction and related services mainly includes operating lease revenues from automobile rentals, service fees from NEVs leasing, financing revenues, service fees from NEVs leasing,automobile purchase services, default revenue, monthly services commissions, and other services fees, which accounted for approximately 88.4%,86.8%, 4.2%,5.9%, 4.1%, 1.6%,3.3%, 1.0%1.3%, 1.0%, 0.3% and 0.7%,1.4%, respectively, of the total revenue during the three months ended DecemberJune 31,30, 2025.2026. Meanwhile, operating lease revenues from automobile rentals, financing revenues, service fees from automobile purchase services, default revenue, monthly services commissions, service fees from automobile purchase services and other services fees, which accounted for approximately 90.8%,90.3%, 5.2%, 0.3%, 1.7%, 0.8%, 0.7%1.9% and 0.8%,0.6%, respectively, of the total revenue during the three months ended DecemberJune 31,30, 2024.2025.

We generate revenues from leasing our own automobiles by online ride-hailing drivers with their authorizationauthorization, forwith athe majority of lease term of no more than twelve12 months. The decrease in rental income of $92,578$72,931, or approximately 22.6%18.9% during the three months ended DecemberJune 31,30, 20252026 was mainly due to the decrease in the number and average monthly rental of automobiles leased for operating lease. We leased over 322 automobiles with an average monthly rental income of approximately $319 per automobile, resulting in a rental income of $317,153 for the three months ended December 31, 2025. We leased approximately 346329 automobiles with an average monthly rental income of approximately $394$344 per automobile, resulting in a rental income of $409,731$313,335 for the three months ended DecemberJune 31,30, 2024.2026. While we leased 339 automobiles with an average monthly rental income of approximately $398 per automobile, resulting in a rental income of $386,266 for the three months ended June 30, 2025.

We started our financial leasingfinance lease business in March 2019 and began to generate interest income from providing financialfinance leasinglease 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 3624 or 48 months. We recognized a total interest income of $15,117$11,813 from an average monthly number of 4426 automobiles and $23,668$22,331 from an average monthly number of 4952 automobiles during the three months ended DecemberJune 31,30, 20252026 and 2024,2025, respectively. The decrease was due to the average number andof monthlyautomobiles paymentserved wefor chargedfinancial to customersleasing decreased during the three months ended DecemberJune 31,30, 2025.2026.

Service fees from automobile purchase services and Other Service fees

We generated revenues of $0 $4,670 and $1,270 from the automobile purchase services during the three months ended DecemberJune 31,30, 2026 and 2025, andrespectively. The increase was due to the number of $2,959 for two automobiles purchase transactions from theincreased automobileto purchase services4 during the three months ended DecemberJune 31,30, 2024.2026 from 1 during the three months ended June 30, 2025.

We generate other revenues from other miscellaneous service fees charged to our customers during the three months ended DecemberJune 31,30, 20252026 and 2024.2025. Other services fees mainly include the maintenance fees charged to our customers pursuant to certain new productionproduct solutions.

Cost of revenues represents the depreciation and rental cost of automobiles, daily maintenancemaintenance, insurance and insuranceother expenseusage costs of automobiles which related to our Auto Operating Leasing. CostThe decrease of revenues decreased by $36,314$46,634, or approximately 10.5%13.5% was primarily due to decreased in the depreciation of automobiles. Although the total number of our own automobiles used for operating leasing remaining substantially unchanged during the three months ended DecemberJune 31,30, 20252026 as compared with the three months ended December 31, 2024, mainly due to the decrease in the number of the automobiles leased for operating lease from 346 in the three months ended DecemberJune 31,30, 20242025, these automobiles were fully depreciated in or prior to 322 in the three months ended DecemberJune 31,30, 2025.2026.

We had gross profit of $49,480$61,692 and $105,929,$81,867, respectively, during the three months ended DecemberJune 31,30, 20252026 and 2024. The decrease of $56,449 was mainly due to the decrease in gross profit from Auto Operating Leasing.2025. The following table sets forth the breakdown of gross profit by major revenue source for the three months ended DecemberJune 31, 202530, 2026 and 20242025:

We had a gross profit of $7,949 $14,138 from our Auto Operating Leasing during the three months ended DecemberJune 31,30, 2025,2026, which decreased by $56,264$26,297 from a gross lossprofit of $64,213 $40,435 in the three months ended DecemberJune 31,30, 2024.2025. The decrease was attributable to the average monthly rental of automobiles leased for operating lease decreased from 394$389 in the three months ended DecemberJune 31,30, 20242025 to 319$344 in the three months ended DecemberJune 31,30, 2025. 2026. As the gross margin of the revenues from our operating leasing decreased during the three months ended December 31, 2025,decreased, our overall gross profit margin decreased to approximately 13.8%17.1% from approximately 23.5% duringfor the three months ended DecemberJune 31,30, 2024.2026 from approximately 19.1% for the three months ended June 30, 2025.

Selling,For the three months ended June 30, 2026, 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 $412,270$500,829 for three months ended June 30, 2025 to $692,472 for the three months ended DecemberJune 31,30, 2024 to $651,157 for the three months ended December 31, 2025,2026, representing an increase of $238,887,$191,643, or approximately 57.9%.38.3%. The increase was mainly due to (1) the increase of $227,060 $160,178 in professional service fees such as financial, market consulting fordue to our financing transactionsarrangements during the three months ended December 31,June 2025.30, 2026; (2) an increase of $52,699 in salary and employee benefits mainly due to the higher compensation scales for current executive officers.

For the three months ended December 31,June 2025,30, 2026, we had other income,expense, net of $243,272,$737,700, which primarily consist of the (1) a$770,000 gainin offering costs allocable to the derivative liabilities for our June 2026 Units Warrants; partially offset by (2) income of $213,000approximately $15,000 from historical debt forgiveness by service providers and the company’sdisposal formerof directorsour own automobiles used for operating leases; (23) penalty income of approximately $17,000$12,000 from the customers; and (34) the miscellaneous other income, netincome of approximately $13,000.$5,000.

For the three months ended December 31,June 2024,30, 2025, we had other income, net of $32,232,$29,087, which primarily consist of (1) penalty income of approximately $20,000$15,000 from the customers; and (2) the miscellaneous income,other netincome of approximately $12,000.$14,000.

Warrants issued in our registered direct offerings that took place in February 2021, May 2021 and MayNovember 2021,2025, and the August 2020 underwritten public offering, and the November 20212021, November 2025 and June 2026 private placement were classified as liabilities under the caption “Derivative Liabilities” in the unaudited condensed consolidated balance sheet and recorded at estimated fair value at each reporting date, computed using the Black-Scholes valuation model. The change in fair value of derivative liabilities for the three months ended DecemberJune 31,30, 20252026 and 20242025 was a gain of $180$2,732,106 and $121,314,$77,182, respectively. The following table sets forth the breakdown of the gain (loss) in fair value of derivative liabilities for the three months ended DecemberJune 31,30, 20252026 and 20242025:

Generally, our subsidiary Hunan Ruixi and Senmiao HK areis subject to enterprise income tax on its taxable income in China at a rate of 25%25%. And the applicable tax rate of our HK subsidiary, Senmiao HK, for the first HKD$2 million of assessable profits is 8.25% and assessable profits above HKD$2 million will continue to be subject to the rate of 16.5% for corporations in Hong Kong, China at a rate of 8.25%, respectively.Kong. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. AllWith the subsidiaries exception of Senmiao HK, which generated profits primarily from tax-exempt interest income on bank deposits, all entities suffered losseslosses. andAccordingly, no tax expense was recorded for the three months ended DecemberJune 31,30, 20252026 and 2024.2025.

As a result of the foregoing, net loss from continuing operations for the three months ended DecemberJune 31,30, 20252026 was $853,133,$32,786,087, representing an increase in loss of $595,638$32,473,394 from net loss of $257,495$312,693 for the three months ended DecemberJune 31,30, 2024.2025.

Results of ContinuingDiscontinued Operations for the nine three months ended DecemberJune 31,30, 20252026 Compared to the ninethree months ended DecemberJune 31,30, 20242025