{"url_path":"/sec/aihs/10-q/2026/item-2","section_key":"item-2","section_title":"Item 2 Management’s Discussion and Analysis of Financial","topic":"sec","document":{"doc_type":"10-Q/A","doc_date":"2026-06-30","source_url":"https://www.sec.gov/Archives/edgar/data/1711012/0001213900-26-073678-index.html","accession_number":"0001213900-26-073678","cik":"0001711012","ticker":"AIHS","issuer_name":"Senmiao Technology Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1711012/0001213900-26-073678-index.html","primary_entity_key":"0001711012","primary_entity_name":"Senmiao Technology Ltd"},"word_count":11913,"has_tables":true,"body_markdown":"Item 2. Management’s Discussion and Analysis of Financial\nCondition and Results of Operations\n\n* *\n\n(As\nRestated)\n\n \n\n*The following discussion\nand analysis of our results of operations and financial condition should be read together with our unaudited condensed consolidated financial\nstatements and the notes thereto, which are included elsewhere in this Report and our Annual Report on Form 10-K for the year ended March\n31, 2025 (the “Annual Report”) filed with the SEC. Our unaudited condensed consolidated financial statements have been prepared\nin accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).*\n\n \n\nOverview\n\n \n\nWe are a provider of automobile\ntransaction and related services, connecting consumers, who are mostly existing and prospective ride-hailing drivers affiliated with different\noperators of online ride-hailing platforms in the People’s Republic of China (“PRC” or “China”). We provide\nautomobile transaction and related services in Hunan Province of China through our majority owned subsidiary, Hunan Ruixi Business Operation\nManagement Co., Ltd., a PRC limited liability company (“Hunan Ruixi”).\n\n \n\nPrior to December 31, 2025,\nwe provided automobile transaction and related services in Sichuan Province of China through our former majority owned subsidiary, Chengdu\nJiekai Yunli Technology Co., Ltd., a PRC limited liability company and its subsidiary (“Jiekai”) and our former wholly owned\nsubsidiary, Chengdu Corenel Technology Co., Ltd. a PRC limited liability company (“Corenel”). As discussed below under “–\nAutomobile Transactions and Related Services”, we ceased our automobile transactions and related services in Sichuan Province of\nChina on December 31 2025.\n\n \n\nFrom October 2020 to August\n2024, we also operated an online ride-hailing platform through Hunan Xixingtianxia Technology Co., Ltd. (“XXTX”), a former\nwholly-owned subsidiary of Sichuan Senmiao Zecheng Business Consulting Co., Ltd., our wholly-owned subsidiary (“Senmiao Consulting”).\nThe platform enabled qualified ride-hailing drivers to provide application-based transportation services mainly in Chengdu, Changsha and\nother 20 cities in China. As more fully discussed below under “– Our Discontinued Ride-Hailing Platform Services”, we\nceased our online ride-hailing Platform Services on August 20, 2024.\n\n \n\nOur Automobile Transactions and Related Services\n\n \n\nOur Automobile Transaction\nand Related Services are mainly comprised of (i) automobile operating lease where we provide car rental services to individual customers\nto meet their personal needs with lease term no more than twelve months (the “Auto Operating Leasing”); (ii) service fees\nfrom new energy vehicles (“NEVs”) leasing where we charge NEVs lessees for a series of the services provided to them based\non the chosen product solutions (the “Service for NEVs Leasing”); (iii) service fees from automobile purchase for a series\nof the services provided to purchasers throughout the purchase process based on the sales price of the automobiles and relevant services\nprovided (the “Service for Automobile Purchase”) ;(iv) monthly services where we provide management and related services to\nother online ride-hailing platforms we cooperated with (“Partner Platforms”) and other companies and earn commission from\nthem (the “Auto Commissions”); (v) automobile financing where we provide our customers with auto finance solutions through\nfinancing leases (the “Auto Financing”); (vi) default expenses we charges to the lessees for early-termination the contracts\nor other violation behaviors to the contracts (the “Default Revenue”); and (vii) other supporting services provided to customers,\nincluding auto management and other related services (the “Auto Management Services”) and automobile sales (the “Auto\nSales”). We started our facilitation and supporting services in November 2018, the sale of automobiles in January 2019, and financial\nand operating leasing in March 2019, respectively.\n\n \n\nConsidering\nthe fierce competition of the online ride-hailing industry and our operating losses in China, in\nDecember 2025 the Company entered into a certain Acquisition Agreement (the “Sichuan Acquisition\nAgreement”) with Hu Mao Sheng Tang Holdings Limited., a non-affiliated Hong Kong company (“HMST”). Pursuant to the\nSichuan Acquisition Agreement, the Company sold all of the equity interests in Sichuan\nSenmiao Yicheng Assets Management Co., Ltd. (“Yicheng”), Sichuan Senmiao Zecheng Business Consulting Co., Ltd. (“Senmiao\nConsulting”) and its subsidiaries, which were our former subsidiaries in Sichuan Province of China (“former subsidiaries\nin Sichuan”), to HMST for nil consideration,\nwhile we undertook certain liabilities of $518,388 which were previously assumed by former subsidiaries in Sichuan (the\n“Disposition”). On December 31, 2025, the Disposition was completed and we ceased our automobile Transactions and\nRelated Services in Sichuan Province of China.\n\n \n\n36\n\n \n\n \n\nSince November 22, 2018,\nthe acquisition date of Hunan Ruixi, and as of December 31, 2025, we have facilitated financing for an aggregate of 312 automobiles with\na total value of approximately $5.3 million, sold an aggregate of 1,516 automobiles with a total value of approximately $14.5 million\nand delivered 2,300 automobiles under operating leases and 197 automobiles under financing leases to customers, the vast majority of whom\nare online ride-hailing drivers.\n\n \n\nThe table below provides\na breakdown of the number of vehicles sold or delivered under different leasing arrangements or managed by us and corresponding revenue\ngenerated for the three and nine months ended December 31, 2025 and 2024, respectively:\n\n \n\n  \nThree Months Ended  \nNine Months Ended \n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024  \n2025  \n2024 \n\n  \nNumber of  \n   \nNumber of  \n   \nNumber of  \n   \nNumber of  \n  \n\n  \nVehicles  \nRevenue*  \nVehicles  \nRevenue*  \nVehicles  \nRevenue*  \nVehicles  \nRevenue* \n\nAuto Operating Leasing \n 322  \n$317,000  \n 346  \n$410,000  \n 340  \n 1,076,000  \n 367  \n$1,313,000 \n\nAuto Commissions \n —  \n$3,000  \n —  \n$4,000  \n —  \n 14,000  \n —  \n$16,000 \n\nAuto Financing \n 50  \n$15,000  \n 51  \n$24,000  \n 59  \n 56,000  \n 53  \n$73,000 \n\nOther Services \n >340  \n$24,000  \n >360  \n$13,000  \n >370  \n 74,000  \n >420  \n$74,000 \n\n \n\n*\nThe number was rounded to the nearest thousand for disclosure purpose.\n\n \n\nDuring the three months\nended December 31, 2025, our Auto Operating Leasing, Auto Commissions, Auto Financing and other services income accounted for approximately\n88.4%, 1.0%, 4.2% and 6.4% of our total revenue from our automobile transactions and related services, respectively, while our Auto Operating\nLeasing, Auto Commissions, Auto Financing, and other services income accounted for approximately 90.8%, 0.8%, 5.2%, and 3.2% for the three\nmonths ended December 31, 2024, respectively. During the nine months ended December 31, 2025, our Auto Operating Leasing, Auto Commissions,\nAuto Financing and other services income accounted for approximately 88.2%, 1.2%, 4.6% and 6.0% of our total revenue from our automobile\ntransactions and related services, respectively, while our Auto Operating Leasing, Auto Commissions, Auto Financing, and other services\nincome accounted for approximately 88.9%, 1.1%, 4.9%, and 5.1% for the nine months ended December 31, 2024, respectively.\n\n \n\nOur Discontinued Online Ride-Hailing Platform Services\n\n \n\nFrom October 2020 to August\n2024, we operated our own online ride-hailing platform in China. The platform (called Xixingtianxia) was owned and operated by XXTX, of\nwhich Senmiao Consulting acquired the 100% equity interest pursuant to a series of investment and supplementary agreements. XXTX operated\nXixingtianxia and held a national online reservation taxi operating license, which served online ride-hailing drivers in 22 cities in\nChina, providing them with a platform to view and take customer orders for rides. XXTX generated revenue from providing services to online\nride-hailing drivers to assist them in providing transportation services to the riders looking for taxi/ride-hailing services. XXTX earned\ncommissions for each completed order as the difference between an upfront quoted fare and the amount earned by a driver based on actual\ntime and distance for the ride charged to the rider.\n\n \n\nDue to the fierce competition\nof the online ride-hailing industry, XXTX had suffered loss in the past. Since December 2023, XXTX had engaged Anhui Lianma Technology\nCo., Ltd. (“Anhui Lianma”), a third-party to co-operate the online ride-hailing platform by outsourcing certain daily operation\nwork to Anhui Lianma in most of cities it operates platform in XXTX and Anhui Lianma will jointly share the operational profits, with\nthe specific calculation method being defined in the cooperation agreement. However, considering the changes in online ride-hailing industry\nand development plan of the Company, on August 8, 2024, we entered into the XXTX Acquisition Agreement with the Purchaser, and certain\nother parties thereto. Pursuant to the XXTX Acquisition Agreement, the Purchaser acquired all of the equity interests in XXTX at a total\npurchase price of zero, while taking over certain liabilities of XXTX as defined in the XXTX Acquisition Agreement. On August 20, 2024,\nthe Acquisition was completed and we ceased the online ride-hailing platform services.\n\n \n\n37\n\n \n\n \n\nKey Factors and Risks Affecting Results of Operations\n\n \n\nAbility to Increase Our Automobile Lessee\n\n \n\nOur revenue growth has been\nlargely driven by the expansion of our automobile lessee base and the corresponding revenue generated from operating and financial leasing.\nWe acquire customers for our Automobile Transaction and Related Services through the network of third-party sales teams, referral from\nonline ride-hailing platforms and our own efforts including online advertising and billboard advertising. We also send out fliers and\nparticipate in trade shows to advertise our services. We plan to maintain the number of our customers by marketing our companies to our\nexisting and prospective automobile lessees in the cities we now operate in. We expect to keep promoting the growth of our automobile\nrental business with automobile rental solutions/incentives specifically targeted at drivers using our Partner Platforms. An effective\ncross-selling strategies between our automobile leasing business and our Partner Platforms is important to our expansion and revenue growth.\nWe also plan to strengthen our marketing efforts through the collaboration with certain automobile dealers and through our own team by\nemploying more experienced staff, sharing market resources with our equity investee company, and improving the quality and variety of\nour services. As of December 31, 2025, we had one employee in our own sales department.\n\n \n\nManagement of Automobile Rentals\n\n \n\nDue to the fierce competition\nof online ride-hailing industry in those cities we operated in, we have witnessed a high turn-over rate on the short-term car rentals\nduring the three and nine months ended December 31, 2025. To meet the demand in Changsha, we have purchased automobiles for our operating\nlease. The daily management and timely maintenance of leased automobiles will have a significant effect on the stability and potential\ngrowth of our income from leasing automobiles in the next twelve months. The effective management, including maintaining the high turn-over\nrate of our automobiles through our proprietary system and experienced auto-management team could provide in-time delivery and qualified\nautomobiles to potential lessees, either for personal use or providing online ride-hailing services. As of December 31, 2025, for parking\nand management of automobiles for operating lease, we had one parking lot and three employees in Changsha. During the three months ended\nDecember 31, 2025 and 2024, the average utilization of the automobiles for operating lease was approximately 85.7% and 91.4%, respectively.\nDuring the nine months ended December 31, 2025 and 2024, the average utilization of the automobiles for operating lease was approximately\n92.2% and 92.3%, respectively.\n\n \n\nOur Service Offerings and Pricing\n\n \n\nThe growth of our revenue\ndepends on our ability to improve existing solutions and services provided, continue identifying evolving business needs, refine our collaborations\nwith business partners and provide value-added services to our customers. The attraction of new automobile leases depends on our leasing\nsolutions with attractive rental price and flexible leasing terms. We have also adopted a series of pricing formulas to adopt the market\nchanges, considering the historical and future expenditure, remaining available leasing months and market price to determine our rental\nprice for varied rental solutions. Furthermore, our product designs affect the type of automobile leases we attract, which in turn affect\nour financial performance. The attraction of new customers depends on the comprehensive income they could earn from our own or Partner\nPlatforms, which is mainly affected by the number of orders distributed to them through our platform and the amount of the incentives\npaid to them from platforms. Our revenue growth also depends on our abilities to effectively price our services, which enables us to attract\nmore customers and improve our profit margin.\n\n \n\n38\n\n \n\n \n\nAbility to Retain Key Business Cooperators\n\n \n\nHistorically, we have set\nup a series of strategy and business relationships with certain affiliates of some famous and leading companies of NEVs manufacturers,\nonline ride-hailing platforms, local NEVs leasing companies, and travel service providers to develop our Automobile Transaction and Related\nServices. We earned commissions or services fees from them, purchased and leased automobiles for our business at a favorable price. The\nclose relationships have provided us with the necessary capacity to support the development of our online ride-hailing platform and leasing\nbusiness. To retain these valuable cooperators and continuously explore opportunities to collaborate with them in more areas is important\nto us to have considerable resources to support the exploration and expansion of our business into new cities.\n\n \n\nMeanwhile, in order to strengthen\nour market position, Hunan Ruixi has built up cooperation relationships with Partner Platforms, such as Hunan Didi Technology Co., Ltd.,\nwhereby the online ride-hailing requests and orders shall be completed on Partner Platforms utilizing the network of cars and drivers\nof us while Hunan Ruixi earned rental income from drivers and earned commissions from Partner Platforms.\n\n \n\nAbility to Collect Receivables on a Timely Basis\n\n \n\nFor receivables from Auto\nOperating Leasing, we usually settle the rental income with each online ride-hailing driver monthly based on the product solutions they\nchose. In accordance with the development of the operating lease business, our Partner Platforms, such as Gaode, agree to temporarily\n“lock-up” the fares of the rides which the driver earned from the platform to ensure the timely collection of our rental receivables\nfrom them. As of December 31, 2025, we had accounts receivable of operating lease of approximately $1,000 in total. Besides, during the\nthree and nine months ended December 31, 2025, we settled our commissions with the Partner Platforms for our online ride-hailing platform\nservices and automobile rental income on a monthly basis.\n\n \n\nThe efficiency of collection\nof the monthly and weekly payments has a material impact on our daily operation. Our risk and asset management department has set up a\nseries of procedures to monitor the collection from drivers. Our business department has also set up a stable and close relationship with\nPartner Platforms to ensure the timely collection of commissions. The accounts receivable and advance payments may increase our liquidity\nrisk. 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\nexpenditure related to the automobile purchase. To pay for the expenditure in advance will enhance the stability of our daily operation\nand lower the liquidity risk, and attract more customers.\n\n \n\nAbility to Manage Defaults Effectively\n\n \n\nWe manage the credit risk\narising from the default of automobile purchasers and lessees by performing credit checks on each automobile purchaser or lessee based\non the credit reports from People’s Bank of China and third-party credit rating companies, and personal information including residence,\nethnicity group, driving history and involvement in legal proceeding. Our risk department continuously monitors the payment by each purchaser\nand sends them payment reminders. We also keep monitoring the daily gross fare earned by the online ride-hailing drivers, who are our\nmajority customers and run their business through our Partner Platforms during the three and nine months ended December 31, 2025. We do\nthis so that we can evaluate their financial conditions and provide them with assistance including the transfer of automobile to a new\ndriver if they are no longer interested in providing ride-hailing services or are unable to earn enough income to make monthly lease/loan\npayments. We also charge default expenses from customers for their behaviors violated to the contracts.\n\n \n\nFurther, the automobiles\nsubject to our financing leases are not collateralized by us. As of December 31, 2025, the total value of non-collateralized automobiles\nwas close to the amount of finance lease receivables since it was on a straight-line basis. We believe our risk exposure of financing\nleasing is immaterial as we have experienced limited default cases and we are able to re-lease those automobiles to drivers under financing\nleases.\n\n \n\nAbility to Compete Effectively\n\n \n\nOur business and results\nof operations depend on our ability to compete effectively. Overall, our competitive position may be affected by, among other things,\nour service quality and our ability to price our solutions and services competitively. We will set up and continuously optimize our own\nbusiness system to improve our service quality and user experience. Our competitors may have more resources than we do, including financial,\ntechnological, marketing and others and may be able to devote greater resources to the development and promotion of their services. We\nwill need to continue to introduce new or enhance existing solutions and services to continue to attract automobile dealers, financial\ninstitutions, car buyers, lessees, ride-hailing drivers and other industry participants. Whether and how quickly we can do so will have\na significant impact on the growth of our business.\n\n \n\n39\n\n \n\n \n\nMarket Opportunity and Government Regulations in China\n\n \n\nThe demand for our services\ndepends on overall market conditions of the online ride-hailing industry in China. The continuous growth of the urban population places\nincreasing pressure on the urban transportation and the improvement of living standards has increased the market demand for quality travel\nin China. Traditional taxi service is limited, and the emerging online platforms have created good opportunities for the development of\nthe online ride-hailing service market. The market value is expected to increase from RMB354.7 billion in 2024 to RMB751.3 billion in\n2028, owing to rising consumer demand for economical mobility options and an amplified penetration of shared mobility services, especially\nin lower-tier cities. According to the 56th Statistical report on Internet Development in China published in July 2025 by the China Internet\nNetwork Information Center (the “CNNIC”), the number of online ride-hailing service users had reached 511 million by the end\nof June 2025, and took approximately 45.6% of the total number of Chinese internet users. In addition, in recent years, aggregation platforms\nhave gained rising significance in the shared mobility industry. According to Frost & Sullivan, the portion of ride hailing orders\nfulfilled through aggregation platforms increased from 3.5% in 2018 to 30.0% in 2023, and is expected to further increase to 49.0% by\n2028. The online ride-hailing industry is also facing increasing competition in China and is attracting more capital investment. For example,\nDida Inc. Chenqi Technology Limited and CaoCao Inc. were listed on the Hong Kong Stock Exchange in June 2024 and June 2025, respectively.\n\n \n\nHowever, the participants\nin the online ride-hailing industry are facing increasingly fierce competitions. According to the Ministry of Transportation (the “MOT”)\nof the People’s Republic of China, as of December 31, 2025, approximately 395 online ride-hailing platforms have obtained booking\ntaxi operating licenses, representing an increase of approximately 5% as compared with the one as of March 31, 2025. And the total volume\nof online ride-hailing orders was approximately 963 million in December 2025 in China, representing a decrease of approximately 28% as\ncompared with the one as of October 31, 2024. Meanwhile, approximately 3.21 million online booking taxi transportation certificates and\napproximately 7.48 million online booking taxi driver’s licenses were issued nationwide in China as of December 31, 2024, respectively.\nSince 2023, the municipal transportation bureaus in a series of cities in China have released operational dynamics and risk warnings for\nthe online ride-hailing industry, stating that the online ride-hailing market has become saturated. They remind enterprises and practitioners\nwho intend to engage in online ride-hailing services should have a detailed understanding of relevant regulations, conduct market research,\nfully consider changes in operating income due to factors such as supply and demand, market conditions, fluctuations or continuous declines,\nobjectively evaluate the actual income level of industry practitioners, and make rational and prudent career choices.\n\n \n\nThe online ride-hailing industry\nmay also be affected by, among other factors, the general economic conditions in China. The interest rates and unemployment rates may\naffect the demand of ride-hailing services and automobile purchasers’ willingness to seek credit from financial institutions. Adverse\neconomic conditions could also reduce the average income of individual and intensify the competition between platforms. Should any of\nthose negative situations occur, the volume and value of the automobile transactions we service will decline, and our revenue and financial\ncondition will be negatively impacted.\n\n \n\nOn November 5, 2016, the\nMunicipal Communications Commission of Chengdu City and a number of municipal departments jointly issued the “Implementation Rules\nfor the Administration of Online Booking Taxi Management Services for Chengdu”, which was abolished and replaced by the updated\nversion issued on July 26, 2021. On August 10, 2017, the Transportation Commission of Chengdu further issued the guidelines on compliance\nrequirements for online ride-hailing businesses, including Working Process for the Online Appointment of Taxi Drivers Qualification Examination\nand Issuance and Online Appointment Taxi Transportation Certificate Issuance Process. On November 28, 2016, Guangzhou Municipal People’s\nGovernment promulgated Interim Measures for the Management of Online Ride Hailing Operation and Service in Guangzhou, as amended on November\n14, 2019. According to these regulations and guidelines, three licenses /certificates are required for operating the online ride-hailing\nbusiness in Chengdu and Guangzhou: (1) the ride-hailing service platform should obtain the online booking taxi operating license; (2)\nthe automobiles used for online ride-hailing should obtain the online booking taxi transportation certificate (“automobile certificate”);\n(3) the drivers should obtain the online booking taxi driver’s license (“driver’s license”). Besides, all the\nnew cars used for online ride-hailing in Chengdu should be NEVs since July 2021.\n\n \n\n40\n\n \n\n \n\nAs of December 31, 2025,\nall ride-hailing drivers who leased our automobiles or used our services have obtained the driver’s license for online ride-hailing\nservices, and all of the cars used for online ride-hailing services which we provided management services have the automobile certificate.\nWithout requisite automobile certificate or driver’s license, these drivers may be suspended from providing ride-hailing services,\nconfiscated their illegal income and subject to fines of up to 10 times of their illegal income. We assisted drivers to obtain the required\ncertificate and license for our Automobile Transaction and Related Services. However, there was no guarantee that all of the drivers who\nrun their online ride-hailing business would be able to obtain all the certificates and licenses. These Partner Platforms may not allow\nunqualified drivers who lease our automobiles to drive through these platforms, or reduce their commission income, so that they may not\nbe able to earn enough income from those Partner Platforms to pay our rental fees. Our business and results of operations shall be materially\nand adversely affected if we could not serve qualified drivers or our served drivers are suspended from providing ride-hailing services.\n\n \n\nThe Chinese government has\nexercised and continued to exercise substantial control over virtually every sector of the Chinese economy through regulation and state\nownership. For example, the Chinese cybersecurity regulator announced on July 2, 2021 that it had begun an investigation of Didi and two\ndays later ordered that the company’s app be removed from smartphone app stores. We believe that our current operations are in compliance\nwith the laws and regulations of the Chinese cybersecurity regulator. However, the Company’s operations could be adversely affected,\ndirectly or indirectly, by existing or future laws and regulations relating to its business or industry.\n\n \n\n*Results of Continuing Operations for the\nthree months ended December 31, 2025 Compared to the three months ended December 31, 2024*\n\n \n\n  \nFor the Three Months Ended  \n  \n\n  \nDecember 31,  \n  \n\n  \n2025  \n2024  \nChange \n\n  \n(unaudited)  \n(unaudited)  \n  \n\nRevenues \n$358,684  \n$451,447  \n$(92,763)\n\nCost of revenues \n (309,204) \n (345,518) \n 36,314 \n\nGross profit \n 49,480  \n 105,929  \n (56,449)\n\nOperating expenses \n    \n    \n   \n\nSelling, general and administrative expenses \n (651,157) \n (412,270) \n (238,887)\n\nProvision for credit losses \n (244,908) \n (104,700) \n (140,208)\n\nStock-based compensation \n (250,000) \n —  \n (250,000)\n\nTotal operating expenses \n (1,146,065) \n (516,970) \n (629,095)\n\nLoss from operations \n (1,096,585) \n (411,041) \n (685,544)\n\nOther income, net \n 230,697  \n 32,232  \n 198,465 \n\nChange in fair value of derivative liabilities \n 813,405  \n 121,314  \n 692,091 \n\nExcess of warrant fair value over offering proceeds \n (2,896,455) \n —  \n (2,896,455)\n\nLoss before income taxes expense \n (2,948,938) \n (257,495) \n (2,691,443)\n\nIncome tax expense \n —  \n —  \n — \n\nNet loss from continuing operations \n$(2,948,938) \n$(257,495) \n$(2,691,443)\n\n \n\n41\n\n \n\n \n\n*Revenues*\n\n \n\nWe started generating revenue\nfrom Automobile Transaction and Related Services from our acquisition of Hunan Ruixi on November 22, 2018. As we focus on our automobile\nrental business, we expect revenue from our automobile rental to continuously account for a majority of our revenues. We provide a series\nof product solutions to sustain and further increase the number of our automobiles for operating leases.\n\n \n\nThe following table sets\nforth the breakdown of revenues by revenue source for the three months ended December 31, 2025 and 2024, respectively:\n\n \n\n  \nFor the Three Months Ended \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n(unaudited)  \n(unaudited) \n\nRevenue from automobile transactions and related services \n   \n  \n\n- Operating lease revenues from automobile rentals \n$317,153  \n$409,731 \n\n- Financing revenues \n 15,117  \n 23,668 \n\n- Service fees from NEVs leasing \n 14,799  \n — \n\n- Default revenue \n 5,831  \n 7,711 \n\n- Monthly services commissions \n 3,427  \n 3,828 \n\n- Service fees from automobile purchase services \n —  \n 2,959 \n\n- Other service fees \n 2,357  \n 3,550 \n\n  \n    \n   \n\nTotal Revenue \n$358,684  \n$451,447 \n\n \n\nRevenue from our automobile\ntransaction and related services mainly includes operating lease revenues from automobile rentals, financing revenues, service fees from\nNEVs leasing, default revenue, monthly services commissions, and other services fees, which accounted for approximately 88.4%, 4.2%, 4.1%,\n1.6%, 1.0% and 0.7%, respectively, of the total revenue during the three months ended December 31, 2025. Meanwhile, operating lease revenues\nfrom automobile rentals, financing revenues, default revenue, monthly services commissions, service fees from automobile purchase services\nand other services fees, which accounted for approximately 90.8%, 5.2%, 1.7%, 0.8%, 0.7% and 0.8%, respectively, of the total revenue\nduring the three months ended December 31, 2024.\n\n \n\n*Operating lease revenues from automobile rentals*\n\n \n\nWe generate revenues from\nleasing our own automobiles by online ride-hailing drivers with their authorization for a lease term of no more than twelve months. The\ndecrease in rental income of $92,578 or approximately 22.6% during the three months ended December 31, 2025 was mainly due to the decrease\nin the number and average monthly rental of automobiles leased for operating lease. We leased over 322 automobiles with an average monthly\nrental income of approximately $319 per automobile, resulting in a rental income of $317,153 for the three months ended December 31, 2025.\nWe leased approximately 346 automobiles with an average monthly rental income of approximately $394 per automobile, resulting in a rental\nincome of $409,731 for the three months ended December 31, 2024.\n\n \n\n*Financing revenues*\n\n \n\nWe started our financial\nleasing business in March 2019 and began to generate interest income from providing financial leasing services to ride-hailing drivers\nin April 2019. We also charge the customers of our automobile financing facilitation services interest on their monthly payments which\ncover purchase price of automobile and our services fees and facilitation fees for terms of 36 or 48 months. We recognized a total interest\nincome of $15,117 from an average monthly number of 44 automobiles and $23,668 from an average monthly number of 49 automobiles during\nthe three months ended December 31, 2025 and 2024, respectively. The decrease was due to the number and monthly payment we charged to\ncustomers decreased during the three months ended December 31, 2025.\n\n \n\n*Service fees from NEVs leasing*\n\n \n\nWe generated revenues of\n$14,799 and $0 from leasing NEVs by charging leases service fees during the three months ended December 31, 2025 and 2024, respectively.\nThe amount of services fees for NEVs leasing were based on our timely product solutions in accordance which adjusted with different market\nconditions.\n\n \n\n42\n\n \n\n \n\n*Default revenue*\n\n \n\nWe generated default revenues\nof $5,831 and $7,711 from the automobile lessee’s early-termination of the contracts or other violation behaviors to the contracts\nduring the three months ended December 31, 2025 and 2024, respectively. The decrease was primarily attributable to a lower incidence of\nearly-terminations and contractual breaches by the automobile lessees, driven by improved credit quality of our lessee base, enhanced\nrisk management and contract monitoring practices during the three months ended December 31, 2025.\n\n \n\n*Monthly services commissions*\n\n \n\nWe generated revenues of\n$3,427 and $3,828 from the monthly management and related services provided to our Partner Platforms and other companies during the three\nmonths ended December 31, 2025 and 2024, respectively. The decrease was due to the decrease in the number of automobiles leased to online\nride-hailing drivers for operating lease during the three months ended December 31, 2025, which in turn led to lower commission income\nfrom the Partner Platforms related to the monthly management and related services.\n\n \n\n*Service fees from automobile purchase services and Other Service\nfees*\n\n \n\nWe generated revenues of\n$0 from the automobile purchase services during the three months ended December 31, 2025, and of $2,959 for two automobiles purchase transactions\nfrom the automobile purchase services during the three months ended December 31, 2024.\n\n \n\nWe generate other revenues\nfrom other miscellaneous service fees charged to our customers during the three months ended December 31, 2025 and 2024. Other services\nfees mainly include the maintenance fees charged to our customers pursuant to certain new production solutions.\n\n \n\n*Cost of Revenues*\n\n \n\nCost of revenues represents\ndepreciation and rental cost of automobiles, daily maintenance and insurance expense of automobiles which related to our Auto Operating\nLeasing. Cost of revenues decreased by $36,314 or approximately 10.5% during the three months ended December 31, 2025 as compared with\nthe three months ended December 31, 2024, mainly due to the decrease in the number of the automobiles leased for operating lease from\n346 in the three months ended December 31, 2024 to 322 in the three months ended December 31, 2025.\n\n \n\n*Gross Profit*\n\n \n\nWe had gross profit of $49,480\nand $105,929, respectively, during the three months ended December 31, 2025 and 2024. The decrease of $56,449 was mainly due to the decrease\nin gross profit from Auto Operating Leasing. The following table sets forth the breakdown of gross profit by major revenue source for\nthe three months ended December 31, 2025 and 2024:\n\n \n\n  \nFor the Three Months Ended \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n(unaudited)  \n(unaudited) \n\n- Auto Operating Leasing \n$7,949  \n$64,213 \n\n- Other Automobile transaction and related Services \n 41,531  \n 41,716 \n\nTotal Gross Profit \n$49,480  \n$105,929 \n\n \n\nWe had a gross profit of\n$7,949 from our Auto Operating Leasing during the three months ended December 31, 2025, which decreased by $56,264 from a gross loss of\n$64,213 in the three months ended December 31, 2024. The decrease was attributable to the average monthly rental of automobiles leased\nfor operating lease decreased from 394 in the three months ended December 31, 2024 to 319 in the three months ended December 31, 2025.\nAs the gross margin of the revenues from our operating leasing decreased during the three months ended December 31, 2025, our overall\ngross profit margin decreased to approximately 13.8% from approximately 23.5% during the three months ended December 31, 2024.\n\n \n\n43\n\n \n\n \n\n*Selling, General and Administrative Expenses*\n\n \n\nSelling, general and administrative\nexpenses primarily consist of salary and employee benefits, office rental expense, travel expenses, and other expenses. Selling, general\nand administrative expenses increased from $412,270 for the three months ended December 31, 2024 to $651,157 for the three months ended\nDecember 31, 2025, representing an increase of $238,887, or approximately 57.9%. The increase was mainly due to the increase of $227,060\nin professional service fees such as financial, market consulting for our financing transactions during the three months ended December\n31, 2025.\n\n \n\n*Provision for credit losses*\n\n \n\nWe re-evaluated the possibility\nof collection of unsettled balances from customers/suppliers of our automobile transactions and related services, and we provided provision\nfor credit losses of $244,908 and $104,700 against receivables from Jinkailong for the three months ended December 31, 2025 and 2024,\nrespectively.\n\n \n\n*Stock-based compensation*\n\n \n\nIn November 2025, we entered\ninto a consulting services agreement (the “Consulting Agreement”) with a consultant (“the Consultant”), pursuant\nto which we engaged the Consultant to provide consulting services. We issued an aggregate of 200,000 shares of our common stock in November\n2025 at $1.25 per share to settle the compensation for the services. We did not have similar transaction during the three months ended\nDecember 31, 2024.\n\n \n\n*Other income, net*\n\n \n\nFor the three months ended December 31, 2025, we had other income,\nnet of $230,697, which primarily consist of the (1) a gain of $213,000 from historical debt forgiveness by service providers and the company’s\nformer directors; (2) penalty income of approximately $17,000 from the customers; and (3) the miscellaneous other income, net of approximately\n$13,000 which offset by $12,575 of offering costs allocable to the derivative liabilities for our pre-funded warrant and private placement\nwarrant upon closing.\n\n \n\nFor the three months ended\nDecember 31, 2024, we had other income, net of $32,232, which primarily consist of (1) penalty income of approximately $20,000 from the\ncustomers; and (2) the miscellaneous income, net of approximately $12,000.\n\n \n\n*Change in Fair Value of Derivative Liabilities*\n\n \n\nWarrants issued in our\nregistered direct offerings that took place in February 2021, May 2021 and November 2025, and the August 2020 underwritten public offering,\nand the November 2021 and November 2025 private placement were classified as liabilities under the caption “Derivative Liabilities”\nin the unaudited condensed consolidated balance sheet and recorded at estimated fair value at each reporting date, computed using the\nBlack-Scholes valuation model. The change in fair value of derivative liabilities for the three months ended December 31, 2025 and 2024\nwas a gain of $813,405 and $121,314, respectively. The following table sets forth the breakdown of the gain in fair value of derivative\nliabilities for the three months ended December 31, 2025 and 2024:\n\n \n\n  \nFor the Three Months Ended \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n(unaudited)  \n(unaudited) \n\n- August 2020 underwritten public offering \n$—  \n$1,630 \n\n- February 2021 registered direct offering \n —  \n 2,077 \n\n- May 2021 registered direct offering \n 10  \n 40,663 \n\n- November 2021 private placement \n 170  \n 76,944 \n\n- November 2025 Private placement \n 767,975  \n — \n\n- November 2025 registered direct offering \n 45,250  \n — \n\nTotal Change in Fair Value of Derivative Liabilities \n$813,405  \n$121,314 \n\n \n\n44\n\n \n\n \n\n*Excess of warrant fair value over offering proceeds*\n\n* *\n\nIn\nNovember 2025, we issued common shares, pre-funded warrants and the concurrent private placement\nwarrants, generating aggregate gross proceeds of $2,841,300. We concluded that these warrants qualify as liability instruments. At the\nissuance date in November 2025, the fair value of the warrants was estimated at $5,737,755 using the Black-Scholes valuation model, and\n$2,896,455 excess of the warrants’ fair value over the total offering proceeds was recognized as a loss in the unaudited condensed\nconsolidated statements of operations and comprehensive loss.\n\n \n\n*Income Tax Expense*\n\n \n\nGenerally, our subsidiary\nHunan Ruixi and Senmiao HK are subject to enterprise income tax on its taxable income in China at a rate of 25% and in Hong Kong, China\nat a rate of 8.25%, respectively. The enterprise income tax is calculated based on the entity’s global income as determined under\nPRC tax laws and accounting standards. All the subsidiaries suffered losses and no tax expense was recorded for the three months ended\nDecember 31, 2025 and 2024.\n\n \n\n*Net loss from continuing operations*\n\n \n\nAs a result of the foregoing,\nnet loss from continuing operations for the three months ended December 31, 2025 was $2,948,938, representing an increase of $2,691,443\nfrom net loss of $257,495 for the three months ended December 31, 2024.\n\n \n\n*Results of Continuing Operations for the\nnine months ended December 31, 2025 Compared to the nine months ended December 31, 2024*\n\n \n\n  \nFor the Nine Months Ended  \n  \n\n  \nDecember 31,  \n  \n\n  \n2025  \n2024  \nChange \n\n  \n(unaudited)  \n(unaudited)  \n  \n\nRevenues \n$1,219,628  \n$1,476,238  \n$(256,610)\n\nCost of revenues \n (994,987) \n (1,020,326) \n 25,339 \n\nGross profit \n 224,641  \n 455,912  \n (231,271)\n\nOperating expenses \n    \n    \n   \n\nSelling, general and administrative expenses \n (1,703,676) \n (1,420,370) \n (283,306)\n\nProvision for credit losses \n (427,764) \n (199,365) \n (228,399)\n\nStock-based compensation \n (250,000) \n —  \n (250,000)\n\nTotal operating expenses \n (2,381,440) \n (1,619,735) \n (761,705)\n\nLoss from operations \n (2,156,799) \n (1,163,823) \n (992,976)\n\nOther income, net \n 292,493  \n 65,737  \n 226,756 \n\nChange in fair value of derivative liabilities \n 893,714  \n 105,900  \n 787,814 \n\nExcess of warrant fair value over offering proceeds \n (2,896,455) \n —  \n (2,896,455)\n\nLoss before income taxes expense \n (3,867,047) \n (992,186) \n (2,874,861)\n\nIncome tax expense \n —  \n —  \n — \n\nNet loss from continuing operations \n$(3,867,047) \n$(992,186) \n$(2,874,861)\n\n \n\n45\n\n \n\n \n\n*Revenues*\n\n \n\nWe started generating revenue\nfrom Automobile Transaction and Related Services from our acquisition of Hunan Ruixi on November 22, 2018. As we focus on our automobile\nrental business, we expect revenue from our automobile rental to continuously account for a majority of our revenues. We provide a series\nof product solutions to sustain and further increase the number of our automobiles for operating leases.\n\n \n\nThe following table sets\nforth the breakdown of revenues by revenue source for the nine months ended December 31, 2025 and 2024, respectively:\n\n \n\n  \nFor the Nine Months Ended \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n(unaudited)  \n(unaudited) \n\nRevenue from automobile transactions and related services \n   \n  \n\n- Operating lease revenues from automobile rentals \n$1,076,175  \n$1,312,582 \n\n- Financing revenues \n 56,297  \n 72,697 \n\n- Service fees from NEVs leasing \n 33,341  \n — \n\n- Default revenue \n 23,320  \n 27,294 \n\n- Monthly services commissions \n 14,422  \n 16,353 \n\n- Service fees from automobile purchase services \n 8,936  \n 29,862 \n\n- Other service fees \n 7,137  \n 17,450 \n\n  \n    \n   \n\nTotal Revenue \n$1,219,628  \n$1,476,238 \n\n \n\nRevenue from our automobile\ntransaction and related services mainly includes operating lease revenues from automobile rentals, financing revenues, service fees from\nNEVs leasing, default revenue, monthly services commissions, service fees from automobile purchase services, and other services fees,\nwhich accounted for approximately 88.2%, 4.6%, 2.7%, 1.9%, 1.2%, 0.7% and 0.7%, respectively, of the total revenue during the nine months\nended December 31, 2025. Meanwhile, operating lease revenues from automobile rentals, financing revenues, default revenue, monthly services\ncommissions, service fees from automobile purchase services, and other services fees, which accounted for approximately 88.9%, 4.9%, 1.8%,\n1.1%, 2.0% and 1.3%, respectively, of the total revenue during the nine months ended December 31, 2024.\n\n \n\n*Operating lease revenues from automobile rentals*\n\n \n\nWe generate revenues from\nleasing our own automobiles by online ride-hailing drivers with their authorization for a lease term of no more than twelve months. The\ndecrease in rental income of $236,407 or approximately 18.0% during the nine months ended December 31, 2025 was mainly due to the decrease\nin the number and average monthly rental of automobiles leased for operating lease. We leased approximately 340 automobiles with an average\nmonthly rental income of approximately $359 per automobile, resulting in a rental income of $1,076,175 for the nine months ended December\n31, 2025. While we approximately 367 automobiles with an average monthly rental income of approximately $414 per automobile, resulting\nin a rental income of $1,312,582 for the nine months ended December 31, 2024. \n\n \n\n*Financing revenues*\n\n \n\nWe started our financial\nleasing business in March 2019 and began to generate interest income from providing financial leasing services to ride-hailing drivers\nin April 2019. We also charge the customers of our automobile financing facilitation services interest on their monthly payments which\ncover purchase price of automobile and our services fees and facilitation fees for terms of 36 or 48 months. We recognized a total interest\nincome of $56,297 from an average monthly number of 48 automobiles and $72,697 from an average monthly number of 45 automobiles during\nthe nine months ended December 31, 2025 and 2024, respectively. The decrease was due to the monthly payment we charged to customers decreased\nduring the nine months ended December 31, 2025.\n\n \n\n46\n\n \n\n \n\n*Service fees from NEVs leasing*\n\n \n\nWe generated revenues of\n$33,341 and $0 from leasing NEVs by charging leases service fees during the nine months ended December 31, 2025 and 2024, respectively.\nThe amount of services fees for NEVs leasing were based on our timely product solutions in accordance which adjusted with different market\nconditions.\n\n \n\n*Default revenue*\n\n \n\nWe generated default revenues\nof $23,320 and $27,294 from the automobile lessee’s early-termination of the contracts or other violation behaviors to the contracts\nduring the nine months ended December 31, 2025 and 2024, respectively. The decrease was primarily attributable to a lower incidence of\nearly-terminations and contractual breaches by the automobile lessees, driven by improved credit quality of our lessee base, enhanced\nrisk management and contract monitoring practices during the nine months ended December 31, 2025.\n\n \n\n*Monthly services commissions*\n\n \n\nWe generated revenues of\n$14,422 and $16,353 from the monthly management and related services provided to our Partner Platforms and other companies during the\nnine months ended December 31, 2025 and 2024, respectively. The decrease was due to the decrease in the number of automobiles leased to\nonline ride-hailing drivers for operating lease during the nine months ended December 31, 2025, which in turn led to lower commission\nincome from the Partner Platforms related to the monthly management and related services.\n\n \n\n*Service fees from automobile purchase services and Other Service\nfees*\n\n \n\nWe generated revenues of\n$8,936 and $29,862 from the automobile purchase services during the nine months ended December 31, 2025 and 2024, respectively. The decrease\nwas due to the number of automobiles purchase transactions decreased to 7 during the nine months ended December 31, 2025 from 21 in the\nsame period in 2024.\n\n \n\nWe generate other revenues\nfrom other miscellaneous service fees charged to our customers during the nine months ended December 31, 2025 and 2024. Other services\nfees mainly include the maintenance fees charged to our customers pursuant to certain new production solutions.\n\n \n\n*Cost of Revenues*\n\n \n\nCost of revenues represents\nthe depreciation and rental cost of automobiles, daily maintenance and insurance expense of automobiles which related to our Auto Operating\nLeasing. Cost of revenues decreased by $25,339 or approximately 2.5% during the nine months ended December 31, 2025 as compared with the\nnine months ended December 31, 2024, mainly due to the decrease in the number of the automobiles leased for operating lease from 367 in\nthe nine months ended December 31, 2024 to 340 in the nine months ended December 31, 2025.\n\n \n\n*Gross Profit*\n\n \n\nWe had gross profit of $224,641\nand $455,912, respectively, during the nine months ended December 31, 2025 and 2024. The following table sets forth the breakdown of gross\nprofit by major revenue source for the nine months ended December 31, 2025 and 2024:\n\n \n\n  \nFor the Nine Months Ended \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n(unaudited)  \n(unaudited) \n\n- Auto Operating Leasing \n$81,188  \n$292,256 \n\n- Other Automobile transaction and related Services \n 143,453  \n 163,656 \n\nTotal Gross Profit \n$224,641  \n$455,912 \n\n \n\nWe had a gross profit of\n$81,188 from our Auto Operating Leasing during the nine months ended December 31, 2025, which decreased by $211,068 from a gross loss\nof $292,256 in the nine months ended December 31, 2024. The decrease was attributable to the average monthly rental of automobiles leased\nfor operating lease decreased from 414 in the three months ended December 31, 2024 to 359 in the three months ended December 31, 2025.\nAs the gross margin of the revenues from our operating leasing decreased during the three months ended December 31, 2025, our overall\ngross profit margin decreased to approximately 18.4% from approximately 30.9% during the three months ended December 31, 2024.\n\n \n\n47\n\n \n\n \n\n*Selling, General and Administrative Expenses*\n\n \n\nFor the nine months ended\nDecember 31, 2025, selling, general and administrative expenses primarily consist of salary and employee benefits, office rental expense,\ntravel expenses, and other expenses. Selling, general and administrative expenses increased from $1,420,370 for the nine months ended\nDecember 31, 2024 to $1,703,676 for the nine months ended December 31, 2025, representing an increase of $283,306, or approximately 19.9%.\nThe increase was mainly due to (1) the increase of $347,273 in professional service fees such as financial, market consulting during the\nnine months ended December 31, 2025; and partly offset by (2) a decrease of $28,088 in salary and employee benefits as the average monthly\nnumber of our employees decreased from 26 for the nine months ended December 31, 2024 to 23 for the nine months ended December 31, 2025;\nand (3) a decrease of $30,907 in entertainment and travel expenses.\n\n \n\n*Provision for credit losses*\n\n \n\nWe re-evaluated the possibility\nof collection of unsettled balances from customers/suppliers of our automobile transactions and related services, and we provided provision\nfor credit losses of $427,764 and $199,365 against receivables from Jinkailong for the nine months ended December 31, 2025 and 2024, respectively.\n\n \n\n*Stock-based compensation*\n\n \n\nIn November 2025, we entered\ninto the Consulting Agreement with the Consultant, pursuant to which we engaged the Consultant to provide consulting services. We issued\nan aggregate of 200,000 shares of our common stock in November 2025 at $1.25 per share to settle the compensation for the services. We\ndid not have similar transaction during the nine months ended December 31, 2024.\n\n \n\n*Other income, net*\n\n \n\nFor the nine months ended December 31, 2025, we had other income, net\nof $292,493, which primarily consist of the (1) a gain of $213,000 from historical debt forgiveness by service providers and the company’s\nformer directors; (2) penalty income of approximately $52,000 from the customers; and (3) the miscellaneous other income, net of approximately\n$40,000 which offset by $12,575 of offering costs allocable to the derivative liabilities for our pre-funded warrant and private placement\nwarrant upon closing.\n\n \n\nFor the nine months ended\nDecember 31, 2024, we had other income, net of $65,737, which primarily consist of (1) the penalty income of approximately $80,000 from\nthe customers; partially offset by (2) the expense of approximately $20,000 from the termination of our right-of-use assets for an exhibition\nhall we leased in Changsha, and (5) the miscellaneous income, net of approximately $6,000.\n\n \n\n*Change in Fair Value of Derivative Liabilities*\n\n \n\nWarrants issued in our\nregistered direct offerings that took place in February 2021, May 2021 and November 2025, and the August 2020 underwritten public offering,\nand the November 2021 and November 2025 private placement were classified as liabilities under the caption “Derivative Liabilities”\nin the unaudited condensed consolidated balance sheet and recorded at estimated fair value at each reporting date, computed using the\nBlack-Scholes valuation model. The change in fair value of derivative liabilities for the nine months ended December 31, 2025 and 2024\nwas a gain of $893,714 and $105,900, respectively. The following table sets forth the breakdown of the gain in fair value of derivative\nliabilities for the nine months ended December 31, 2025 and 2024:\n\n \n\n  \nFor the Nine Months Ended \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n(unaudited)  \n(unaudited) \n\n- August 2020 underwritten public offering \n$21  \n$2,654 \n\n- February 2021 registered direct offering \n 219  \n 3,125 \n\n- May 2021 registered direct offering \n 13,785  \n 45,085 \n\n- November 2021 private placement \n 66,464  \n 55,036 \n\n- November 2025 Private placement \n 767,975  \n — \n\n- November 2025 registered direct offering \n 45,250  \n — \n\nTotal Change in Fair Value of Derivative Liabilities \n$893,714  \n$105,900 \n\n \n\n48\n\n \n\n \n\n*Excess of warrant fair value over offering proceeds*\n\n* *\n\nIn November 2025, we issued common\nshares, pre-funded warrants and the concurrent private placement warrants, generating aggregate gross proceeds of $2,841,300. We\nconcluded that these warrants qualify as liability instruments. At the issuance date in November 2025, the fair value of the warrants\nwas estimated at $5,737,755 using the Black-Scholes valuation model, and $2,896,455 excess of the warrants’ fair value over the\ntotal offering proceeds was recognized as a loss in the unaudited condensed consolidated statements of operations and comprehensive loss.\n\n \n\n*Income Tax Expense*\n\n \n\nGenerally, our subsidiary\nHunan Ruixi and Senmiao HK are subject to enterprise income tax on its taxable income in China at a rate of 25% and in Hong Kong, China\nat a rate of 8.25%, respectively. The enterprise income tax is calculated based on the entity’s global income as determined under\nPRC tax laws and accounting standards. All the subsidiaries suffered losses and no tax expense was recorded for the nine months ended\nDecember 31, 2025 and 2024.\n\n \n\n*Net loss from continuing operations*\n\n \n\nAs a result of the foregoing,\nnet loss from continuing operations for the nine months ended December 31, 2025 was $3,867,047, representing an increase of $2,874,861\nfrom net loss of $992,186 for the nine months ended December 31, 2024.\n\n \n\n*Results of Discontinued Operations for the\nthree months ended December 31, 2025 Compared to the three months ended December 31, 2024*\n\n \n\n  \nFor the Three Months Ended  \n  \n\n  \nDecember 31,  \n  \n\n  \n2025  \n2024  \nChange \n\n  \n(unaudited)  \n(unaudited)  \n  \n\nRevenues \n$411,374  \n$468,389  \n$(57,015)\n\nCost of revenues \n (280,098) \n (397,931) \n 117,833 \n\nGross profit \n 131,276  \n 70,458  \n 60,818 \n\nOperating expenses \n    \n    \n   \n\nSelling, general and administrative expenses \n (265,090) \n (103,096) \n (161,994)\n\nProvision for credit losses \n (311,752) \n (262,545) \n (49,207)\n\nTotal operating expenses \n (576,842) \n (365,641) \n (211,201)\n\nLoss from operations \n (445,566) \n (295,183) \n (150,383)\n\nOther expenses, net \n (1,744) \n (27,335) \n 25,591 \n\nInterest expense on finance leases \n —  \n (3,365) \n 3,365 \n\nLoss before income taxes expense \n (447,310) \n (325,883) \n (121,427)\n\nGain on disposal of discontinued operations \n 426,766  \n —  \n 426,766 \n\nIncome tax expense \n —  \n —  \n — \n\nNet loss from discontinued operations \n$(20,544) \n$(325,883) \n$305,339 \n\n \n\nThe result of discontinued\noperations was the financial figures of our former subsidiaries in Sichuan. As of December 31, 2025, we deconsolidated former subsidiaries\nin Sichuan and its business result was included in our automobile transactions and related services before we deconsolidated its financial\nfigures.\n\n \n\n49\n\n \n\n \n\n*Revenues*\n\n \n\n The following table\nsets forth the breakdown of revenues by revenue source for the three months ended December 31, 2025 and 2024:\n\n \n\n  \nFor the Three Months Ended \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n(unaudited)  \n(unaudited) \n\nRevenue from automobile transactions and related services (discontinued operations) \n   \n  \n\n- Operating lease revenues from automobile rentals \n$327,223  \n$337,523 \n\n- Service fees from NEVs leasing \n 47,758  \n 68,606 \n\n- Monthly services commissions \n 16,300  \n 39,927 \n\n- Default revenue \n 16,159  \n 18,675 \n\n- Other service fees \n 3,934  \n 3,658 \n\n  \n    \n   \n\nTotal Revenue from discontinued operations \n$411,374  \n$468,389 \n\n \n\nRevenue from automobile transactions and related\nservices (discontinued operations)\n\n \n\nRevenue from automobile transaction\nand related services (discontinued operations) mainly included operating lease revenues from automobile rentals, service fees from NEVs\nleasing, monthly services commissions, default revenue and other services fees, which accounted for approximately 79.5%, 11.6%, 4.0%,\n3.9% and 1.0%, respectively, of the total revenue from discontinued operations during the three months ended December 31, 2025. Meanwhile,\noperating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, default revenue, and other\nservices fees, which accounted for approximately 72.1%, 14.6%, 8.5%, 4.0% and 0.8%, respectively, of the total revenue from discontinued\noperations during the three months ended December 31, 2024.\n\n \n\n*Operating lease revenues from automobile rentals*\n\n \n\nOur former subsidiaries in\nSichuan generated revenues from leasing sub-leasing automobiles leased from third-parties and related parties or rendered by online ride-hailing\ndrivers with their authorization for a lease term of no more than twelve months. Our former subsidiaries in Sichuan leased over 370 automobiles\nwith an average monthly rental income of approximately $356 per automobile, resulting in a rental income of $327,223, including rental\nincome of $25,304 from two related parties, for the three months ended December 31, 2025. Our former subsidiaries in Sichuan leased approximately\n316 automobiles with an average monthly rental income of approximately $325 per automobile, resulting in a rental income of $337,523,\nincluding rental income of $2,882 from a related party, for the three months ended December 31, 2024.\n\n \n\n*Service fees from NEVs leasing*\n\n \n\nOur former subsidiaries in\nSichuan generated revenues of $47,758 and $68,606 from leasing NEVs by charging leases service fees during the three months ended December\n31, 2025 and 2024, respectively. The amount of services fees for NEVs leasing were based on our timely product solutions in accordance\nwhich adjusted with different market conditions.\n\n \n\n50\n\n \n\n \n\n*Monthly services commissions*\n\n \n\nOur former subsidiaries in\nSichuan generated revenues of $16,300 and $39,927 from the monthly management and related services provided to our Partner Platforms during\nthe three months ended December 31, 2025 and 2024, respectively.\n\n \n\n*Default revenue*\n\n \n\nOur former subsidiaries in\nSichuan generated default revenues of $16,159 and $18,675 from the automobile lessee’s early-termination of the contracts or other\nviolation behaviors to the contracts during the three months ended December 31, 2025 and 2024, respectively.\n\n \n\n*Other Service fees*\n\n \n\nOur former subsidiaries in\nSichuan generated other revenues from other miscellaneous service fees charged to our customers during the three months ended December\n31, 2025 and 2024. Other services fees mainly include the maintenance fees charged to our customers pursuant to certain new production\nsolutions.\n\n \n\n*Cost of Revenues*\n\n \n\nDuring the three months ended\nDecember 31, 2025 and 2024, cost of revenues from discontinued operations of $280,098 and $397,931, respectively, represented the amortization\nof ROUs, rental cost of automobiles, daily maintenance and insurance expense of automobiles which related to Auto Operating Leasing. The\ndecrease was mainly due to a decrease in the monthly rental costs of the automobiles leased for operating lease from $409 in the three\nmonths ended December 31, 2024 to $288 in the three months ended December 31, 2025. During the three months ended December 31, 2025 and\n2024, our former subsidiaries in Sichuan paid $20,056 and $44,479, respectively, to related parties for costs of automobiles under operating\nleases.\n\n \n\n*Selling, General and Administrative Expenses*\n\n \n\nFor the three months ended\nDecember 31, 2025, selling, general and administrative expenses from discontinued operations related to Auto Operating Leasing, which\namounted to $265,090, primarily consisted of (1) $165,284 in outsourced operating services related to automobile lease, mainly attributable\nto the streamlining of the workforce in Chengdu, thereby sharing venue and personnel resources with Jinkailong, which resulted the corresponding\nservice fee obligations; (2) $61,753 in salary and employee benefits; (3) $21,749 in entertainment, advertising and promotion; and (4)\nother miscellaneous expenses.\n\n \n\nFor the three months ended\nDecember 31, 2024, selling, general and administrative expenses from discontinued operations related to Auto Operating Leasing, which\namounted to $103,096, primarily consisted of (1) $76,949 in salary and employee benefits; (2) $15,846 in entertainment, advertising and\npromotion; and (3) other miscellaneous expenses.\n\n \n\n*Provision for credit losses*\n\n \n\nOur former subsidiaries in\nSichuan provided provision for credit losses of $311,752 and $262,545 against receivables from Jinkailong for the three months ended December\n31, 2025 and 2024, respectively.\n\n \n\n*Other expenses, net*\n\n \n\nFor the three months ended\nDecember 31, 2025 and 2024, our former subsidiaries in Sichuan had other expenses, net of $1,744 and $27,335, respectively, which primarily\ndue to the miscellaneous expenses in its daily operations.\n\n \n\n*Interest Expense on Finance Leases*\n\n \n\nInterest expense on finance\nleases from discontinued operations for the three months ended December 31, 2025 and 2024 was $0 and $3,365, respectively, representing\nthe interest expense accrued under financing leases for the leased automobiles Corenel leased from a third-party company, and the leased\nautomobiles rendered to us for sublease or sale by the online ride-hailing drivers who exited the ride-hailing business.\n\n \n\n51\n\n \n\n \n\n*Gain on disposal of discontinued operations*\n\n \n\nAs fully described above,\nwe had a gain of $426,766 from disposal of our former subsidiaries in Sichuan during the three months ended December 31, 2025.\n\n \n\n*Income Tax expense*\n\n \n\nOur former subsidiaries in\nSichuan are subject to enterprise income tax on its taxable income in China at a rate of 25%. All of our former subsidiaries in Sichuan\nsuffered losses and no tax expense was recorded for the three months ended December 31, 2025 and 2024.\n\n \n\n*Net loss from discontinued operations*\n\n \n\nAs a result of the foregoing,\nthe net loss from discontinued operations for the three months ended December 31, 2025 and 2024 was $20,544 and $325,883, respectively.\n\n \n\n*Results of Discontinued Operations for the\nnine months ended December 31, 2025 Compared to the nine months ended December 31, 2024*\n\n \n\n  \nFor the Nine Months Ended  \n  \n\n  \nDecember 31,  \n  \n\n  \n2025  \n2024  \nChange \n\n  \n(unaudited)  \n(unaudited)  \n  \n\nRevenues \n$1,346,873  \n$1,412,728  \n$(65,855)\n\nCost of revenues \n (919,715) \n (1,245,168) \n 325,453 \n\nGross profit \n 427,158  \n 167,560  \n 259,598 \n\nOperating expenses \n    \n    \n   \n\nSelling, general and administrative expenses \n (928,071) \n (646,082) \n (281,989)\n\nProvision for credit losses \n (253,942) \n (696,594) \n 442,652 \n\nTotal operating expenses \n (1,182,013) \n (1,342,676) \n 160,663 \n\nLoss from operations \n (754,855) \n (1,175,116) \n 420,261 \n\nOther income, net \n 226,101  \n 14,463  \n 211,638 \n\nInterest expense \n —  \n (8,372) \n 8,372 \n\nInterest expense on finance leases \n (615) \n (12,723) \n 12,108 \n\nLoss before income taxes expense \n (529,369) \n (1,181,748) \n 652,379 \n\nGain on disposal of discontinued operations \n 426,766  \n 397,775  \n 28,991 \n\nIncome tax Benefit \n —  \n 4,510  \n (4,510)\n\nNet loss from continuing operations \n$(102,603) \n$(779,463) \n$676,860 \n\n \n\nThe result of discontinued\noperations was the financial figures of our former subsidiary, XXTX and former subsidiaries in Sichuan. As of December 31, 2025, we deconsolidated\nformer subsidiaries in Sichuan and its business result was included in our automobile transactions and related services before we deconsolidated\nits financial figures. As of August 20, 2024, we deconsolidated XXTX and its business result was included in our online ride-hailing platform\nservices before we deconsolidated its financial figures.\n\n \n\n52\n\n \n\n \n\n*Revenues*\n\n \n\nThe following table sets\nforth the breakdown of revenues by revenue source for nine months ended December 31, 2025 and 2024:\n\n \n\n  \nFor the Nine Months Ended \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n(unaudited)  \n(unaudited) \n\nRevenue from automobile transactions and related services (discontinued operations) \n   \n  \n\n- Operating lease revenues from automobile rentals \n$1,011,119  \n$775,405 \n\n- Service fees from NEVs leasing \n 223,775  \n 142,751 \n\n- Monthly services commissions \n 65,188  \n 84,337 \n\n- Default revenue \n 30,190  \n 46,786 \n\n- Other service fees \n 16,601  \n 19,208 \n\n Total revenue from automobile transactions and related services (discontinued operations) \n 1,346,873  \n 1,068,487 \n\n  \n    \n   \n\nRevenue from online ride-hailing platform services (discontinued operations) \n —  \n 344,241 \n\n  \n    \n   \n\nTotal Revenue from discontinued operations \n$1,346,873  \n$1,412,728 \n\n \n\nRevenue from automobile transactions and related\nservices (discontinued operations)\n\n* *\n\nRevenue from our automobile\ntransaction and related services (discontinued operations) mainly includes operating lease revenues from automobile rentals, service fees\nfrom NEVs leasing, monthly services commissions, default revenue and other services fees, which accounted for approximately 75.1%, 16.6%,\n4.8%, 2.2% and 1.3%, respectively, of the total revenue from discontinued operations during the nine months ended December 31, 2025. Meanwhile,\noperating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, default revenue and other\nservices fees, which accounted for approximately 72.6%,13.4%, 7.9%, 4.4% and 1.7%, respectively, of the total revenue from discontinued\noperations during the nine months ended December 31, 2024.\n\n \n\n*Operating lease revenues from automobile rentals*\n\n \n\nOur former subsidiaries in\nSichuan generated revenues from leasing sub-leasing automobiles leased from third-parties and related parties or rendered by online ride-hailing\ndrivers with their authorization for a lease term of no more than twelve months. Our former subsidiaries in Sichuan leased over 410 automobiles\nwith an average monthly rental income of approximately $418 per automobile, resulting in a rental income of $1,011,119, including rental\nincome of $79,203 from two related parties, for the nine months ended December 31, 2025. Our former subsidiaries in Sichuan leased approximately\n337 automobiles with an average monthly rental income of approximately $361 per automobile, resulting in a rental income of $775,405,\nincluding rental income of $11,747 from a related party, for the nine months ended December 31, 2024.\n\n \n\n*Service fees from NEVs leasing*\n\n \n\nOur former subsidiaries in\nSichuan generated revenues of $223,775 and $142,751 from leasing NEVs by charging leases service fees during the nine months ended December\n31, 2025 and 2024, respectively. The amount of services fees for NEVs leasing were based on our timely product solutions in accordance\nwhich adjusted with different market conditions.\n\n \n\n*Monthly services commissions*\n\n \n\nOur former subsidiaries in\nSichuan generated revenues of $65,188 and $84,337 from the monthly management and related services provided to Partner Platforms during\nthe nine months ended December 31, 2025 and 2024, respectively.\n\n \n\n53\n\n \n\n \n\n*Default revenue*\n\n \n\nOur former subsidiaries in\nSichuan generated default revenues of $30,190 and $46,786 from the automobile lessee’s early-termination of the contracts or other\nviolation behaviors to the contracts during the nine months ended December 31, 2025 and 2024, respectively.\n\n \n\n*Other Service fees*\n\n \n\nOur former subsidiaries in\nSichuan generate other revenues from other miscellaneous service fees charged to our customers during the nine months ended December 31,\n2025 and 2024. Other services fees mainly include the maintenance fees charged to our customers pursuant to certain new production solutions.\n\n \n\nRevenue from online ride-hailing platform services\n(discontinued operations)\n\n \n\nXXTX generated revenue from\nproviding services to online ride-hailing drivers to assist them in providing transportation service to the riders though Xixingtianxia\nplatform and earned commissions for each completed order equal to the difference between an upfront quoted fare and the amount earned\nby a driver based on actual time and distance for the ride charged to the rider.\n\n \n\n During the nine months\nended December 31, 2024, approximately 0.6 million rides with gross fare of approximately $1.8 million were completed through our Xixingtianxia\nplatform and an average of over 2,100 Active Drivers each month. XXTX earned online ride-hailing platform service fees of $344,241, after\nnetting off approximately $32,000 incentives paid to Active Drivers.\n\n \n\n*Cost of Revenues*\n\n \n\n During the nine months\nended December 31, 2025 and 2024, cost of revenues from discontinued operations of $919,715 and $998,143, respectively, represented the\namortization of ROUs, rental cost of automobiles, daily maintenance and insurance expense of automobiles which related to Auto Operating\nLeasing. The decrease was mainly due to a decrease in the monthly rental costs of the automobiles leased for operating lease from $372\nin the nine months ended December 31, 2024 to $310 in the nine months ended December 31, 2025. During the nine months ended December 31,\n2025 and 2024, our former subsidiaries in Sichuan paid $110,328 and $63,440 to related parties for costs of automobiles under operating\nleases, respectively.\n\n \n\nDuring the nine months ended\nDecember 31, 2024, cost of revenues from discontinued operations of $247,025 represented the technical service charges, insurance and\nother expenses which related to Online Ride-Hailing Platform Services.\n\n \n\n*Selling, General and Administrative Expenses*\n\n \n\nFor the nine months ended\nDecember 31, 2025, selling, general and administrative expenses from discontinued operations related to Auto Operating Leasing, which\namounted to $928,071, primarily consisted of (1) $616,586 in outsourced operating services related to automobile lease; (2) $183,298 in\nsalary and employee benefits; (3) $86,660 in entertainment, advertising and promotion; and (4) other miscellaneous expenses.\n\n \n\nFor the nine months ended\nDecember 31, 2024, selling, general and administrative expenses from discontinued operations related to Auto Operating Leasing, which\namounted to $479,145, primarily consisted of (1) $365,320 in salary and employee benefits; (2) $70,070 in entertainment, advertising and\npromotion; and (3) other miscellaneous expenses.\n\n \n\nFor the nine months ended\nDecember 31, 2024, selling, general and administrative expenses from discontinued operations related to Online Ride-Hailing Platform Services,\nwhich amounted to $166,937 primarily consisted of (1) $64,859 in salary and employee benefits; (2) $37,746 in depreciation of office equipment\nand amortization of intangible assets; (3) $32,187 in entertainment, advertising and promotion; and (4) other miscellaneous expenses.\n\n \n\n54\n\n \n\n \n\n*Provision for credit losses*\n\n \n\nFor the three months ended\nDecember 31, 2025 and 2024, our former subsidiaries in Sichuan provided provision for credit losses of $253,942 and $523,316 against receivables\nfrom Jinkailong, respectively.\n\n \n\nFor the nine months ended\nDecember 31, 2024, XXTX provided provision for credit losses of $173,278 against receivables from a prepaid software development fee and\na deposit due to the termination on the development which resulting from the discontinuing of the business.\n\n \n\n*Other income, net*\n\n \n\nFor the nine months ended\nDecember 31, 2025, our former subsidiaries in Sichuan had other income, net of $226,101 which primarily due to deconsolidation of Corenel.\n\n \n\nFor the nine months ended\nDecember 31, 2024, our former subsidiaries in Sichuan and XXTX had other expense, net of $18,751 and other income, net of $33,214, respectively,\nwhich primarily due to the miscellaneous income and expense in the daily operations.\n\n \n\n*Interest Expense and Interest expense on finance leases*\n\n \n\nInterest expense from discontinued\noperations for the nine months ended December 31, 2024 was resulted from the borrowings of XXTX from a financial institution for its working\ncapital turnover.\n\n \n\nInterest expense on finance\nleases from discontinued operations for the nine months ended December 31, 2024 represented the interest expense accrued under financing\nleases for the leased automobiles Corenel leased from a third-party company, and the leased automobiles rendered to us for sublease or\nsale by the online ride-hailing drivers who exited the ride-hailing business.\n\n \n\n*Gain on disposal of discontinued operations*\n\n \n\nWe had a gain of $426,766\nfrom disposal of our former subsidiaries in Sichuan during the three months ended December 31, 2025, and $397,775 from disposal of XXTX\nduring the three months ended December 31, 2024.\n\n \n\n*Income Tax Benefit*\n\n \n\nFor the nine months ended\nDecember 31, 2024, XXTX had deferred tax benefit of $4,510, which resulted from recognition of deferred tax assets.\n\n \n\n*Net loss from discontinued operations*\n\n \n\nAs a result of the foregoing,\nthe net loss from discontinued operations for the nine months ended December 31, 2025 and 2024 was $102,603 and $779,463, respectively.\n\n \n\n55\n\n \n\n \n\n*Liquidity and Capital Resources*\n\n \n\nIn assessing liquidity,\nwe monitor and analyze our cash on-hand and our operating and capital expenditure commitments. Our liquidity needs are to meet its working\ncapital requirements, operating expenses and capital expenditure obligations. Debt financing from financial institutions and equity financings\nhave been utilized to finance our working capital requirements.\n\n  \n\nOur business is capital intensive, and certain factors show negative\ntrends in our liquidity position, including (1) the net loss of approximately $4.0 million for the nine months ended December 31, 2025;\n(2) accumulated deficit of approximately $49.1 million as of December 31, 2025; (3) $0.8 million of net cash outflows in operating activities\nfrom continuing operations for the nine months ended December 31, 2025, and (4) the net working capital deficit of approximately $2.5\nmillion as of December 31, 2025.\n\n \n\nHowever, the Company’s\nliquidity position has been substantially improved by two financing transactions completed in November 2025. Specifically, the Company\nreceived net cash proceeds of approximately $0.66 million from issuance of common stock in PIPE Offering and $2.8 million from\nissuance of common stock and pre-funded warrants in registered direct offering. As a result, the Company’s cash and cash equivalents\nas of December 31, 2025 increased by approximately $2.8 million as compared with that of September 30, 2025.\n\n \n\nManagement evaluated\nthe Company’s current liquidity and operating forecasts for the twelve months following the issuance of these unaudited condensed\nconsolidated financial statements and has concluded that, as a result of the recent financing and improved cash flows, there was no substantial\ndoubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance of unaudited condensed\nconsolidated financial statements for the quarterly period ended December 31, 2025.\n\n \n\nThe following table summarizes\nour cash flows:\n\n \n\n  \nFor the Nine Months Ended \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n(unaudited)  \n(unaudited) \n\nNet Cash (Used in) Provided by Operating Activities \n$(1,258,193) \n$548,442 \n\nNet Cash Used in Investing Activities \n (223,759) \n (448,208)\n\nNet Cash Provided by (Used in) Financing Activities \n 4,059,719  \n (17,528)\n\nEffect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash \n 134,484  \n 71,882 \n\nCash, Cash Equivalents and Restricted Cash at Beginning of the Period \n 833,577  \n 794,636 \n\nCash, Cash equivalents and Restricted Cash, end of Period \n 3,545,828  \n 949,224 \n\nLess: Cash, Cash equivalents and Restricted Cash from discontinued operations \n (37,602) \n (95,503)\n\nCash and Cash equivalents from continuing operations, end of Period \n$3,508,226  \n$853,721 \n\n \n\n*Cash Flow in Operating Activities*\n\n \n\nFor the nine months ended\nDecember 31, 2025, net cash used in operating activities was $1,258,193, which consisted of the net outflows of $793,096 from continuing\noperations and $465,097 from discontinued operations. While for the nine months ended December 31, 2024, net cash provided by operating\nactivities was $548,442, which consisted of net cash inflows of $318,996 from continuing operations and $229,446 from discontinued operations.\n\n \n\nThe increase of $1,112,092 in net cash used in operating activities\nfrom continuing operations for the nine months ended December 31, 2025 as compared with the nine months ended December 31, 2024 was primarily\nattributable to (1) increase of $2,874,861 in net loss from continuing operations; (2) increase of $787,814 in the change in fair value\nof derivative liabilities; (3) decrease of $529,591 in the change of accrued expenses and other liabilities; (4) the gain of $212,581\nfrom debt forgiveness by service providers and the company’s directors in the nine months ended December 31, 2025; (5) decrease\nof $105,043 in the change of accounts payable; and partially offset by (6) a loss of $2,896,455 arising from excess of the warrants’\nfair value over the total offering proceeds from the November 2025 issuance of common shares, pre-funded warrants and concurrent private\nplacement warrants; (7) $250,000 in stock-based compensation in the nine months ended December 31, 2025; (8) increase of $228,399 in the\nprovision for credit losses.\n\n \n\n*Cash Flow in Investing Activities*\n\n \n\nFor the nine months ended\nDecember 31, 2025, we had net cash used in investing activities of $223,759, which consisted of: (1) the loan to a related party of $229,469;\npartially offset by (2) the proceeds from sales of the used-automobiles of $5,710.\n\n \n\nFor the nine months ended\nDecember 31, 2024, we had net cash used in investing activities of $448,208, which consisted of the net inflows of $16,386 from continuing\noperations and net outflows of $464,594 from discontinued operations. The majority of net cash provided by investing activities from continuing\noperations was (1) the proceeds from sales of the used-automobiles of $16,804; partially offset by (2) the purchase furniture for office\npurpose of $418.\n\n \n\n56\n\n \n\n \n\n*Cash Flow in Financing Activities*\n\n \n\nFor the nine months ended\nDecember 31, 2025, we had net cash provided by financing activities of $4,059,719, which consisted of the net inflows of $3,979,619 from\ncontinuing operations and net inflows of $80,100 from discontinued operations. The majority of net cash provided by financing activities\nfrom continuing operations consisted of: (1) net proceeds of $659,992 from the exercise of November 2021 Private Placement Warrants from\nan investor; (2) net proceeds of $341,251from issuance of common stock in PIPE Offering in November 2025; (3) net proceeds of $2,828,725\nfrom issuance of common stock and pre-funded warrants in registered direct offering and concurrent private placement of warrants in November\n2025; (4) borrowings from related parties of $277,165; partially offset by (5) repayments to a related party of $127,514.\n\n \n\nFor the nine months ended\nDecember 31, 2024, we had net cash used in financing activities of $17,528, which consisted net inflows of $79,872 from continuing operations\nand net outflows of $97,400 from discontinued operations. The majority of net cash provided by financing activities financing activities\nfrom continuing operations was borrowings from a related party.\n\n \n\n*Off-Balance Sheet Arrangements *\n\n \n\nAs of the filing date of\nthis Report, we have the following off-balance sheet arrangements that are likely to have a future effect on our financial condition,\nrevenues or expenses, results of operations and liquidity:\n\n \n\n \n●\n*Purchase Commitments*\n\n \n\nAs of the filing date of\nthis Report, we have no purchase commitment.\n\n \n\n \n●\n*Contingent Liabilities*\n\n \n\nPursuant to the Regulations\nof the State Council on Implementing the Management System for Registered Capital Registration in the Company Law of the People’s\nRepublic of China issued on July 1, 2024 (the “Registered Capital Registration Implementing Rules”), as Jinkailong was registered\nand established before June 30, 2024, its shareholders should fully pay their unpaid subscribed capital before June 30, 2032. As of December\n31, 2025, Hunan Ruixi holds 35% of equity interest of Jinkailong and has not made any payments towards the investment amounting to RMB3.5\nmillion (approximately $500,000). According to the Registered Capital Registration Implementing Rules, Hunan Ruixi shall pay the subscribed\ncapital of Jinkailong before June 30, 2032.\n\n \n\n*Inflation*\n\n \n\nWe do not believe our business\nand operations have been materially affected by inflation.\n\n \n\n*Critical Accounting Estimates*\n\n \n\nOur unaudited condensed consolidated\nfinancial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed\nconsolidated financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts\nof assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical\nexperience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the\nbasis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.\n\n \n\nSince the use of estimates\nis an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting\npolicies require a higher degree of judgment than others in their application. The management determined there were no critical accounting\nestimates.\n\n \n\nWhen reading our unaudited\ncondensed consolidated financial statements, you should consider our selection of critical accounting policies, the judgment and other\nuncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions.\nOur critical accounting policies and practices include the following: (i) property and equipment, net; (ii) revenue recognition. See Note\n3—Summary of Significant Accounting Policies to our consolidated financial statements in our 2025 Form 10-K for the disclosure of\nthese accounting policies.\n\n \n\n57"}