Valor Energy Inc: Form 10-Q for the period ended Sep 30, 2025
Filed with the SEC on Nov 19, 2025 and accepted by EDGAR at Nov 19, 2025, 21:02 ET.
Management's discussion and analysis
As filed, 67,166 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
The following discussion and analysis of our results of operations and financial condition should be read together with our unaudited condensed consolidated financial statements and the notes thereto, which are included elsewhere in this Report and our Annual Report on Form 10-K for the year ended March 31, 2025 (the “Annual Report”) filed with the SEC. Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Overview
We are a provider of automobile transaction and related services, connecting consumers, who are mostly existing and prospective ride-hailing drivers affiliated with different operators of online ride-hailing platforms in the People’s Republic of China (“PRC” or “China”). We provide automobile transaction and related services through our majority owned subsidiaries, Chengdu Jiekai Yunli Technology Co., Ltd., a PRC limited liability company and its subsidiary (“Jiekai”), and Hunan Ruixi Financial Leasing Co., Ltd., a PRC limited liability company (“Hunan Ruixi”), and our former wholly owned subsidiary, Chengdu Corenel Technology Co., Ltd. a PRC limited liability company (“Corenel”). Substantially all of our operations are conducted in China.
From October 2020 to August 2024, we also operated an online ride-hailing platform through Hunan Xixingtianxia Technology Co., Ltd. (“XXTX”), a former wholly-owned subsidiary of Sichuan Senmiao Zecheng Business Consulting Co., Ltd., our wholly-owned subsidiary (“Senmiao Consulting”). The platform enabled qualified ride-hailing drivers to provide application-based transportation services mainly in Chengdu, Changsha and other 20 cities in China. As more fully discussed below under “– Our Discontinued Ride-Hailing Platform Services,” we ceased our online ride-hailing Platform Services on August 20, 2024.
Our Automobile Transactions and Related Services
Our Automobile Transaction and Related Services are mainly comprised of (i) automobile operating lease where we provide car rental services to individual customers to meet their personal needs with lease term no more than twelve months (the “Auto Operating Leasing”); (ii) service fees from new energy vehicles (“NEVs”) leasing where we charge NEVs lessees for a series of the services provided to them based on the chosen product solutions (the “Service for NEVs Leasing”); (iii) service fees from automobile purchase for a series of the services provided to purchasers throughout the purchase process based on the sales price of the automobiles and relevant services provided (the “Service for Automobile Purchase”) ;(iv) monthly services where we provide management and related services to other online ride-hailing platforms we cooperated with (“Partner Platforms”) and other companies and earn commission from them (the “Auto Commissions”); (v) automobile financing where we provide our customers with auto finance solutions through financing leases (the “Auto Financing”); (vi) default expenses we charges to the lessees for early-termination the contracts or other violation behaviors to the contracts (the “Default Revenue”); and (vii) other supporting services provided to customers, including auto management and other related services (the “Auto Management Services”) and automobile sales (the “Auto Sales”). We started our facilitation and supporting services in November 2018, the sale of automobiles in January 2019, and financial and operating leasing in March 2019, respectively.
Since November 22, 2018, the acquisition date of Hunan Ruixi, and as of September 30, 2025, we have facilitated financing for an aggregate of 312 automobiles with a total value of approximately $5.3 million, sold an aggregate of 1,516 automobiles with a total value of approximately $14.5 million and delivered 2,234 automobiles under operating leases and 197 automobiles under financing leases to customers, the vast majority of whom are online ride-hailing drivers.
The table below provides a breakdown of the number of vehicles sold or delivered under different leasing arrangements or managed by us and corresponding revenue generated for the three and six months ended September 30, 2025 and 2024, respectively:
| Three Months Ended September 30, 2025 Number of Vehicles | Revenue* | 2024 Number of Vehicles | Revenue* | Six Months Ended September 30, 2025 Number of Vehicles | Revenue* | 2024 Number of Vehicles | Revenue* | |
|---|---|---|---|---|---|---|---|---|
| Auto Operating Leasing | 715 | $748,000 | 596 | $584,000 | 751 | 1,443,000 | 627 | $1,341,000 |
| Auto Commissions | — | $24,000 | — | $31,000 | — | 60,000 | — | $57,000 |
| Auto Financing | 53 | $19,000 | 51 | $27,000 | 59 | 41,000 | 51 | $49,000 |
| Other Services | >730 | $145,000 | >600 | $104,000 | >790 | 252,000 | >610 | $178,000 |
* The number was rounded to the nearest thousand for disclosure purpose.
During the three months ended September 30, 2025, our Auto Operating Leasing, Auto Commissions, Auto Financing and other services income accounted for approximately 79.8%, 2.6%, 2.0% and 15.6% of our total revenue from our automobile transactions and related services, respectively, while our Auto Operating Leasing, Auto Commissions, Auto Financing, and other services income accounted for approximately 78.4%, 4.1%, 3.6%, and 13.9% for the three months ended September 30, 2024, respectively. During the six months ended September 30, 2025, our Auto Operating Leasing, Auto Commissions, Auto Financing and other services income accounted for approximately 80.3%, 3.3%, 2.3%, and 14.1% of our total revenue from our automobile transactions and related services, respectively, while our Auto Operating Leasing, Auto Commissions, Auto Financing, and other services income accounted for approximately 82.5%, 3.5%, 3.0%, and 11.0% for the six months ended September 30, 2024, respectively.
Our Discontinued Online Ride-Hailing Platform Services
From October 2020 to August 2024, we operated our own online ride-hailing platform in China. The platform (called Xixingtianxia) was owned and operated by XXTX, of which Senmiao Consulting acquired the 100% equity interest pursuant to a series of investment and supplementary agreements. XXTX operated Xixingtianxia and held a national online reservation taxi operating license, which served online ride-hailing drivers in 22 cities in China, providing them with a platform to view and take customer orders for rides. XXTX generated revenue from providing services to online ride-hailing drivers to assist them in providing transportation services to the riders looking for taxi/ride-hailing services. XXTX earned commissions for each completed order as the difference between an upfront quoted fare and the amount earned by a driver based on actual time and distance for the ride charged to the rider.
Due to the fierce competition of the online ride-hailing industry, XXTX had suffered loss in the past. Since December 2023, XXTX had engaged Anhui Lianma Technology Co., Ltd. (“Anhui Lianma”), a third-party to co-operate the online ride-hailing platform by outsourcing certain daily operation work to Anhui Lianma in most of cities it operates platform in XXTX and Anhui Lianma will jointly share the operational profits, with the specific calculation method being defined in the cooperation agreement. However, considering the changes in online ride-hailing industry and development plan of the Company, on August 8, 2024, we entered into the Acquisition Agreement with the Purchaser, and certain other parties thereto. Pursuant to the Acquisition Agreement, the Purchaser acquired all of the equity interests the XXTX at a total purchase price of zero, while taking over certain liabilities of XXTX as defined in the Acquisition Agreement. On August 20, 2024, the acquisition was completed and we ceased the online ride-hailing platform services.
Key Factors and Risks Affecting Results of Operations
Ability to Increase Our Automobile Lessee
Our revenue growth has been largely driven by the expansion of our automobile lessee base and the corresponding revenue generated from operating and financial leasing. We acquire customers for our Automobile Transaction and Related Services through the network of third-party sales teams, referral from online ride-hailing platforms and our own efforts including online advertising and billboard advertising. We also send out fliers and participate in trade shows to advertise our services. We plan to maintain the number of our customers by marketing our companies to our existing and prospective automobile lessees in the cities we now operate in. We expect to keep promoting the growth of our automobile rental business with automobile rental solutions/incentives specifically targeted at drivers using our Partner Platforms. An effective cross-selling strategies between our automobile leasing business and our Partner Platforms is important to our expansion and revenue growth. We also plan to strengthen our marketing efforts through the collaboration with certain automobile dealers and through our own team by employing more experienced staff, sharing market resources with our equity investee company, and improving the quality and variety of our services. As of September 30, 2025, we had two employees in our own sales department.
Management of Automobile Rentals
Due to the fierce competition of online ride-hailing industry in those cities we operated in, we have witnessed a high turn-over rate on the short-term car rentals during the three and six months ended September 30, 2025. To meet the demand in Chengdu and Changsha, we have purchased and leased automobiles from third parties for our operating lease. The daily management and timely maintenance of leased automobiles will have a significant effect on the stability and potential growth of our income from leasing automobiles in the next twelve months. The effective management, including maintaining the high turn-over rate of our automobiles through our proprietary system and experienced auto-management team could provide in-time delivery and qualified automobiles to potential lessees, either for personal use or providing online ride-hailing services. As of September 30, 2025, for parking and management of automobiles for operating lease, we had one parking lot and three employees in Changsha, and we also share the parking lot with our equity investee company, Jinkailong in Chengdu. During the three months ended September 30, 2025 and 2024, the average utilization of the automobiles for operating lease was approximately 91.9% and 80.4%, respectively. During the six months ended September 30, 2025 and 2024, the average utilization of the automobiles for operating lease was approximately 89.9% and 85.2%, respectively.
Our Service Offerings and Pricing
The growth of our revenue depends on our ability to improve existing solutions and services provided, continue identifying evolving business needs, refine our collaborations with business partners and provide value-added services to our customers. The attraction of new automobile leases depends on our leasing solutions with attractive rental price and flexible leasing terms. We have also adopted a series of pricing formulas to adopt the market changes, considering the historical and future expenditure, remaining available leasing months and market price to determine our rental price for varied rental solutions. Furthermore, our product designs affect the type of automobile leases we attract, which in turn affect our financial performance. The attraction of new customers depends on the comprehensive income they could earn from our own or Partner Platforms, which is mainly affected by the number of orders distributed to them through our platform and the amount of the incentives paid to them from platforms. Our revenue growth also depends on our abilities to effectively price our services, which enables us to attract more customers and improve our profit margin.
Ability to Retain Key Business Cooperators
Historically, we have set up a series of strategy and business relationships with certain affiliates of some famous and leading companies of NEVs manufacturers, online ride-hailing platforms, local NEVs leasing companies, and travel service providers to develop our Automobile Transaction and Related Services. We earned commissions or services fees from them, purchased and leased automobiles for our business at a favorable price. The close relationships have provided us with the necessary capacity to support the development of our online ride-hailing platform and leasing business. To retain these valuable cooperators and continuously explore opportunities to collaborate with them in more areas is important to us to have considerable resources to support the exploration and expansion of our business into new cities.
Meanwhile, in order to strengthen our market position in certain cities, our subsidiaries, Hunan Ruixi and Jiekai, have built up cooperation relationships with Partner Platforms, such as Hunan Didi Technology Co., Ltd., Chengdu Anma Zhixing Technology Co., Ltd., Sichuan Peitu Kuaixing Technology Co., Ltd. and Nanjing Lingxing Technology Co., Ltd.(i.e.,“T3”), whereby the online ride-hailing requests and orders shall be completed on Partner Platforms utilizing the network of cars and drivers of us while Hunan Ruixi and Jiekai earned rental income from drivers and earned commissions from Partner Platforms.
Ability to Collect Receivables on a Timely Basis
For receivables from Auto Operating Leasing, we usually settle the rental income with each online ride-hailing driver monthly based on the product solutions they chose. In accordance with the development of the operating lease business, our Partner Platforms, such as Gaode, agree to temporarily “lock-up” the fares of the rides which the driver earned from the platform to ensure the timely collection of our rental receivables from them. As of September 30, 2025, we had accounts receivable of operating lease of approximately $26,000 in total. Besides, during the three and six months ended September 30, 2025, we settled our commissions with the Partner Platforms for our online ride-hailing platform services and automobile rental income on a monthly basis.
The efficiency of collection of the monthly and weekly payments has a material impact on our daily operation. Our risk and asset management department has set up a series of procedures to monitor the collection from drivers. Our business department has also set up a stable and close relationship with Partner Platforms to ensure the timely collection of commissions. The accounts receivable and advance payments may increase our liquidity risk. We have used the majority of the proceeds from our equity offerings and plan to seek equity and/or debt financings to pay for the expenditure related to the automobile purchase. To pay for the expenditure in advance will enhance the stability of our daily operation and lower the liquidity risk, and attract more customers.
Ability to Manage Defaults Effectively
We manage the credit risk arising from the default of automobile purchasers and lessees by performing credit checks on each automobile purchaser or lessee based on the credit reports from People’s Bank of China and third-party credit rating companies, and personal information including residence, ethnicity group, driving history and involvement in legal proceeding. Our risk department continuously monitors the payment by each purchaser and sends them payment reminders. We also keep monitoring the daily gross fare earned by the online ride-hailing drivers, who are our majority customers and run their business through our Partner Platforms during the three and six months ended September 30, 2025. We do this so that we can evaluate their financial conditions and provide them with assistance including the transfer of automobile to a new driver if they are no longer interested in providing ride-hailing services or are unable to earn enough income to make monthly lease/loan payments. We also charge default expenses from customers for their behaviors violated to the contracts.
Further, the automobiles subject to our financing leases are not collateralized by us. As of September 30, 2025, the total value of non-collateralized automobiles was close to the amount of finance lease receivables since it was on a straight-line basis. We believe our risk exposure of financing leasing is immaterial as we have experienced limited default cases and we are able to re-lease those automobiles to drivers under financing leases.
Ability to Compete Effectively
Our business and results of operations depend on our ability to compete effectively. Overall, our competitive position may be affected by, among other things, our service quality and our ability to price our solutions and services competitively. We will set up and continuously optimize our own business system to improve our service quality and user experience. Our competitors may have more resources than we do, including financial, technological, marketing and others and may be able to devote greater resources to the development and promotion of their services. We will need to continue to introduce new or enhance existing solutions and services to continue to attract automobile dealers, financial institutions, car buyers, lessees, ride-hailing drivers and other industry participants. Whether and how quickly we can do so will have a significant impact on the growth of our business.
Market Opportunity and Government Regulations in China
The demand for our services depends on overall market conditions of the online ride-hailing industry in China. The continuous growth of the urban population places increasing pressure on the urban transportation and the improvement of living standards has increased the market demand for quality travel in China. Traditional taxi service is limited, and the emerging online platforms have created good opportunities for the development of the online ride-hailing service market. The market value is expected to increase from RMB354.7 billion in 2024 to RMB751.3 billion in 2028, owing to rising consumer demand for economical mobility options and an amplified penetration of shared mobility services, especially in lower-tier cities. According to the 56th Statistical report on Internet Development in China published in July 2025 by the China Internet Network Information Center (the “CNNIC”), the number of online ride-hailing service users had reached 511 million by the end of June 2025, and took approximately 45.6% of the total number of Chinese internet users. In addition, in recent years, aggregation platforms have gained rising significance in the shared mobility industry. According to Frost & Sullivan, the portion of ride hailing orders fulfilled through aggregation platforms increased from 3.5% in 2018 to 30.0% in 2023, and is expected to further increase to 49.0% by 2028. The online ride-hailing industry is also facing increasing competition in China and is attracting more capital investment. For example, Dida Inc. Chenqi Technology Limited and CaoCao Inc. were listed on the Hong Kong Stock Exchange in June 2024 and June 2025, respectively.
However, the participants in the online ride-hailing industry are facing increasingly fierce competitions. According to the Ministry of Transportation (the “MOT”) of the People’s Republic of China, as of September 30, 2025, approximately 393 online ride-hailing platforms have obtained booking taxi operating licenses, representing an increase of approximately 9% as compared with the one as of September 30, 2024. And the total volume of online ride-hailing orders was approximately 758 million in September 2025 in China, representing a decrease of approximately 26% as compared with the one as of September 30, 2024. Meanwhile, approximately 3.21 million online booking taxi transportation certificates and approximately 7.48 million online booking taxi driver’s licenses were issued nationwide in China as of December 31, 2024, respectively. Since 2023, the municipal transportation bureaus in a series of cities in China have released operational dynamics and risk warnings for the online ride-hailing industry, stating that the online ride-hailing market has become saturated. They remind enterprises and practitioners who intend to engage in online ride-hailing services should have a detailed understanding of relevant regulations, conduct market research, fully consider changes in operating income due to factors such as supply and demand, market conditions, fluctuations or continuous declines, objectively evaluate the actual income level of industry practitioners, and make rational and prudent career choices.
The online ride-hailing industry may also be affected by, among other factors, the general economic conditions in China. The interest rates and unemployment rates may affect the demand of ride-hailing services and automobile purchasers’ willingness to seek credit from financial institutions. Adverse economic conditions could also reduce the average income of individual and intensify the competition between platforms. Should any of those negative situations occur, the volume and value of the automobile transactions we service will decline, and our revenue and financial condition will be negatively impacted.
On November 5, 2016, the Municipal Communications Commission of Chengdu City and a number of municipal departments jointly issued the “Implementation Rules for the Administration of Online Booking Taxi Management Services for Chengdu”, which was abolished and replaced by the updated version issued on July 26, 2021. On August 10, 2017, the Transportation Commission of Chengdu further issued the guidelines on compliance requirements for online ride-hailing businesses, including Working Process for the Online Appointment of Taxi Drivers Qualification Examination and Issuance and Online Appointment Taxi Transportation Certificate Issuance Process. On November 28, 2016, Guangzhou Municipal People’s Government promulgated Interim Measures for the Management of Online Ride Hailing Operation and Service in Guangzhou, as amended on November 14, 2019. According to these regulations and guidelines, three licenses /certificates are required for operating the online ride-hailing business in Chengdu and Guangzhou: (1) the ride-hailing service platform should obtain the online booking taxi operating license; (2) the automobiles used for online ride-hailing should obtain the online booking taxi transportation certificate (“automobile certificate”); (3) the drivers should obtain the online booking taxi driver’s license (“driver’s license”). Besides, all the new cars used for online ride-hailing in Chengdu should be NEVs since July 2021.
However, approximately 40% of ride-hailing drivers who leased our automobiles or used our services have not obtained the driver’s license for online ride-hailing services as of September 30, 2025 while all of the cars used for online ride-hailing services which we provided management services have the automobile certificate. Without requisite automobile certificate or driver’s license, these drivers may be suspended from providing ride-hailing services, confiscated their illegal income and subject to fines of up to 10 times of their illegal income. Meanwhile, during the three and six months ended September 30, 2025, Gaode conducted several rounds of compliance checks in Chengdu and other cities and reduced the number of orders dispatched platforms that allowed drivers to provide services without appropriate licenses or certificates. We assisted drivers to obtain the required certificate and license for our Automobile Transaction and Related Services. However, there was no guarantee that all of the drivers who run their online ride-hailing business would be able to obtain all the certificates and licenses. These Partner Platforms may not allow unqualified drivers who lease our automobiles to drive through these platforms, or reduce their commission income, so that they may not be able to earn enough income from those Partner Platforms to pay our rental fees. Our business and results of operations shall be materially and adversely affected if we could not serve qualified drivers or our served drivers are suspended from providing ride-hailing services.
The Chinese government has exercised and continued to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. For example, the Chinese cybersecurity regulator announced on July 2, 2021 that it had begun an investigation of Didi and two days later ordered that the company’s app be removed from smartphone app stores. We believe that our current operations are in compliance with the laws and regulations of the Chinese cybersecurity regulator. However, the Company’s operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to its business or industry.
Results of Continuing Operations for the three months ended September 30, 2025 Compared to the three months ended September 30, 2024
(unaudited)
(unaudited)
| For the Three Months Ended September 30, 2025 | 2024 | Change | |
|---|---|---|---|
| Revenues | $936,344 | $745,880 | $190,464 |
| Cost of revenues | (662,256) | (648,981) | (13,275) |
| Gross profit | 274,088 | 96,899 | 177,189 |
| Operating expenses | |||
| Selling, general and administrative expenses | (907,255) | (530,651) | (376,604) |
| Provision for credit losses | (125,046) | (181,995) | 56,949 |
| Total operating expenses | (1,032,301) | (712,646) | (319,655) |
| Loss from operations | (758,213) | (615,747) | (142,466) |
| Other income, net | 31,356 | 388,405 | (357,049) |
| Interest expense on finance leases | — | (4,270) | 4,270 |
| Change in fair value of derivative liabilities | 3,127 | (7,127) | 10,254 |
| Loss before income taxes expense | (723,730) | (238,739) | (484,991) |
| Income tax expense | — | — | — |
| Net loss from continuing operations | $(723,730) | $(238,739) | $(484,991) |
Revenues
We started generating revenue from Automobile Transaction and Related Services from our acquisition of Hunan Ruixi on November 22, 2018. As we focus on our automobile rental business, we expect revenue from our automobile rental to continuously account for a majority of our revenues. We plan to provide a series of product solutions to sustain and further increase the number of our automobiles for operating leases.
The following table sets forth the breakdown of revenues by revenue source for the three months ended September 30, 2025 and 2024, respectively:
(unaudited)
(unaudited)
| Revenue from automobile transactions and related services | For the Three Months Ended September 30, 2025 | 2024 |
|---|---|---|
| - Operating lease revenues from automobile rentals | $747,515 | $584,418 |
| - Service fees from NEVs leasing | 111,115 | 51,694 |
| - Monthly services commissions | 24,058 | 30,681 |
| - Default revenue | 21,291 | 24,931 |
| - Financing revenues | 18,849 | 26,853 |
| - Service fees from automobile purchase services | 7,666 | 5,165 |
| - Other service fees | 5,850 | 22,138 |
| Total Revenue | $936,344 | $745,880 |
Revenue from our automobile transaction and related services mainly includes operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, default revenue, financing revenues, service fees from automobile purchase services, and other services fees, which accounted for approximately 79.8%, 11.9%, 2.6%, 2.3%, 2.0%, 0.8% and 0.6%, respectively, of the total revenue during the three months ended September 30, 2025. Meanwhile, operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, financing revenues, default revenue, service fees from automobile purchase services and other services fees, which accounted for approximately 78.4%, 6.9%, 4.1%, 3.6%, 3.3%, 0.7% and 3.0%, respectively, of the total revenue during the three months ended September 30, 2024.
Operating lease revenues from automobile rentals
We generate revenues from leasing our own automobiles and sub-leasing automobiles leased from third-parties and related parties or rendered by online ride-hailing drivers with their authorization for a lease term of no more than twelve months. The increase in rental income of $163,097 or approximately 27.9% during the three months ended September 30, 2025 was mainly due to the increase in number of automobiles leased for operating lease. We leased over 710 automobiles with an average monthly rental income of approximately $402 per automobile, resulting in a rental income of $747,515, including rental income of $29,842 from a related party, for the three months ended September 30, 2025. We leased approximately 596 automobiles with an average monthly rental income of approximately $405 per automobile, resulting in a rental income of $584,418, including rental income of $3,622 from another related party, for the three months ended September 30, 2024.
Service fees from NEVs leasing
We generated revenues of $111,115 and $51,694 from leasing NEVs by charging leases service fees during the three months ended September 30, 2025 and 2024, respectively. The amount of services fees for NEVs leasing were based on our timely product solutions in accordance which adjusted with different market conditions.
Monthly services commissions
We generated revenues of $24,058 and $30,681 from the monthly management and related services provided to our Partner Platforms and other companies during the three months ended September 30, 2025 and 2024, respectively.
Default revenue
We generated default revenues of $21,291 and $24,931 from the automobile lessee’s early-termination of the contracts or other violation behaviors to the contracts during the three months ended September 30, 2025 and 2024, respectively.
Financing revenues
We started our financial leasing business in March 2019 and began to generate interest income from providing financial leasing services to ride-hailing drivers in April 2019. We also charge the customers of our automobile financing facilitation services interest on their monthly payments which cover purchase price of automobile and our services fees and facilitation fees for terms of 36 or 48 months. We recognized a total interest income of $18,849 from an average monthly number of 50 automobiles and $26,853 from an average monthly number of 48 automobiles during the three months ended September 30, 2025 and 2024, respectively. The decrease was due to the monthly payment we charged to customers decreased during the three months ended September 30, 2025.
Service fees from automobile purchase services and Other Service fees
We generated revenues of $7,666 and $5,165 from the automobile purchase services during the three months ended September 30, 2025 and 2024, respectively. The increase was due to the number of automobiles purchase transactions increased to 6 during the three months ended September 30, 2025 from 3 in the same period in 2024.
We generate other revenues from other miscellaneous service fees charged to our customers during the three months ended September 30, 2025 and 2024. Other services fees mainly include the maintenance fees charged to our customers pursuant to certain new production solutions.
Cost of Revenues
Cost of revenues represents the amortization of ROUs, depreciation and rental cost of automobiles, daily maintenance and insurance expense of automobiles which related to our Auto Operating Leasing. Cost of revenues increased by $13,275 or approximately 2.0% during the three months ended September 30, 2025 as compared with the three months ended September 30, 2024, mainly due to an increase in the monthly average number of the automobiles leased for operating lease from 292 in the three months ended September 30, 2024 to 343 in the three months ended September 30, 2025. During the three months ended September 30, 2025 and 2024, we paid $30,633 and $17,334, respectively, to related parties for costs of automobiles under operating leases.
Gross Profit
We had gross profit of $274,088 and $96,899, respectively, during the three months ended September 30, 2025 and 2024. The increase of $177,189 was mainly due to the increase in gross profit from Auto Operating Leasing. The following table sets forth the breakdown of gross profit (loss) by major revenue source for the three months ended September 30, 2025 and 2024:
(unaudited)
(unaudited)
| For the Three Months Ended September 30, 2025 | 2024 | |
|---|---|---|
| - Auto Operating Leasing | $85,259 | $(64,563) |
| - Other Automobile transaction and related Services | 188,829 | 161,462 |
| Total Gross Profit | $274,088 | $96,899 |
We had a gross profit of $85,259 from our Auto Operating Leasing during the three months ended September 30, 2025, which increased by $149,822 from a gross loss of $64,563 in the three months ended September 30, 2024. The increase was attributable to the average utilization of the automobiles for operating lease increased from 80.4% in the three months ended September 30, 2024 to 91.9% in the three months ended September 30, 2025. As the gross margin of the revenues from our Auto Business increased during the three months ended September 30, 2025, our overall gross profit margin increased to approximately 29.3% from approximately 13.0% during the three months ended September 30, 2024.
Selling, General and Administrative Expenses
Selling, general and administrative expenses primarily consist of salary and employee benefits, office rental expense, travel expenses, and other expenses. Selling, general and administrative expenses increased from $530,651 for the three months ended September 30, 2024 to $907,255 for the three months ended September 30, 2025, representing an increase of $376,604, or approximately 71.0%. The increase mainly consisted of (1) the increase of $413,362 in professional service fees such as financial, market consulting and outsourced operating services related to automobile lease, mainly attributable to the streamlining of the workforce in Chengdu, thereby sharing venue and personnel resources with Jinkailong, which resulted in the corresponding service fee obligations; and (2) an increase of $35,802 in miscellaneous expense for the three months ended September 30, 2025; partly offset by (3) a decrease of $72,560 in salary and employee benefits as the average monthly number of our employees decreased from 60 for the three months ended September 30, 2024 to 36 for the three months ended September 30, 2025.
Provision for credit losses
We re-evaluated the possibility of collection of unsettled balances from customers/suppliers of our automobile transactions and related services, and we provided provision for credit losses of $125,046 and $181,995 against receivables from Jinkailong for the three months ended September 30, 2025 and 2024, respectively.
Other income, net
For the three months ended September 30, 2025, we had other income, net of $31,356, which primarily consist of the (1) penalty income of approximately $20,000 from the customers; and (2) the miscellaneous other income, net of approximately $11,000.
For the three months ended September 30, 2024, we had other income, net of $388,405, which primarily consist of (1) a gain of $397,775 from deconsolidation of XXTX; (2) penalty income of approximately $28,000 from the customers; (3) income of approximately $3,000 from the disposal of our own vehicles used for operating leases; partially offset by (4) the expense of approximately $20,000 from the termination of our right-of-use assets for an exhibition hall we leased in Changsha; and (5) the miscellaneous expense of approximately $20,000.
Interest Expense on Finance Leases
Interest expense on finance leases for the three months ended September 30, 2025 and 2024 was $0 and $4,270, respectively, representing the interest expense accrued under financing leases for the leased automobiles Corenel, our former subsidiary, leased from a third-party company.
Change in Fair Value of Derivative Liabilities
Warrants issued in our registered direct offerings that took place in February 2021 and May 2021, and the August 2020 underwritten public offering, and the November 2021 private placement were classified as liabilities under the caption “Derivative Liabilities” in the unaudited condensed consolidated balance sheet and recorded at estimated fair value at each reporting date, computed using the Black-Scholes valuation model. The change in fair value of derivative liabilities for the three months ended September 30, 2025 and 2024 was a gain of $3,127 and a loss of $7,127, respectively. The following table sets forth the breakdown of the gain (loss) in fair value of derivative liabilities for the three months ended September 30, 2025 and 2024:
(unaudited)
(unaudited)
| For the Three Months Ended September 30, 2025 | 2024 | |
|---|---|---|
| - August 2020 underwritten public offering | $— | $599 |
| - February 2021 registered direct offering | — | 597 |
| - May 2021 registered direct offering | 166 | 2,985 |
| - November 2021 private placement | 2,961 | (11,308) |
| Total Change in Fair Value of Derivative Liabilities | $3,127 | $(7,127) |
Income Tax Expense
Generally, our subsidiaries are subject to enterprise income tax on their taxable income in China at a rate of 25%. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. All the subsidiaries in China suffered losses and no tax expense was recorded for the three months ended September 30, 2025 and 2024.
Net loss from continuing operations
As a result of the foregoing, net loss from continuing operations for the three months ended September 30, 2025 was $723,730, representing an increase of $484,991 from net loss of $238,739 for the three months ended September 30, 2024.
Results of Continuing Operations for the six months ended September 30, 2025 Compared to the six months ended September 30, 2024
(unaudited)
(unaudited)
| For the Six Months Ended September 30, 2025 | 2024 | Change | |
|---|---|---|---|
| Revenues | $1,796,443 | $1,624,889 | $171,554 |
| Cost of revenues | (1,325,400) | (1,275,020) | (50,380) |
| Gross profit | 471,043 | 349,869 | 121,174 |
| Operating expenses | |||
| Selling, general and administrative expenses | (1,715,500) | (1,384,149) | (331,351) |
| Provision for credit losses | (125,046) | (355,436) | 230,390 |
| Total operating expenses | (1,840,546) | (1,739,585) | (100,961) |
| Loss from operations | (1,369,503) | (1,389,716) | 20,213 |
| Other income, net | 289,641 | 439,864 | (150,223) |
| Interest expense on finance leases | (615) | (9,358) | 8,743 |
| Change in fair value of derivative liabilities | 80,309 | (15,414) | 95,723 |
| Loss before income taxes expense | (1,000,168) | (974,624) | (25,544) |
| Income tax expense | — | — | — |
| Net loss from continuing operations | $(1,000,168) | $(974,624) | $(25,544) |
41
Revenues
We started generating revenue from Automobile Transaction and Related Services from our acquisition of Hunan Ruixi on November 22, 2018. As we focus on our automobile rental business, we expect revenue from our automobile rental to continuously account for a majority of our revenues. We plan to provide a series of product solutions to sustain and further increase the number of our automobiles for operating leases.
The following table sets forth the breakdown of revenues by revenue source for the six months ended September 30, 2025 and 2024, respectively:
(unaudited)
(unaudited)
| Revenue from automobile transactions and related services | For the Six Months Ended September 30, 2025 | 2024 |
|---|---|---|
| - Operating lease revenues from automobile rentals | $1,442,918 | $1,340,733 |
| - Service fees from NEVs leasing | 194,559 | 73,788 |
| - Monthly services commissions | 59,883 | 56,935 |
| - Financing revenues | 41,180 | 49,029 |
| - Default revenue | 31,520 | 47,695 |
| - Service fees from automobile purchase services | 8,936 | 26,903 |
| - Other service fees | 17,447 | 29,806 |
| Total Revenue | $1,796,443 | $1,624,889 |
Revenue from our automobile transaction and related services mainly includes operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, financing revenues, default revenue, service fees from automobile purchase services, and other services fees, which accounted for approximately 80.3%, 10.8%, 3.3%, 2.3%, 1.8%, 0.5% and 1.0%, respectively, of the total revenue during the six months ended September 30, 2025. Meanwhile, operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, financing revenues, default revenue, service fees from automobile purchase services and other services fees, which accounted for approximately 82.5%, 4.5%, 3.5%, 3.0%, 2.9%, 1.7% and 1.9%, respectively, of the total revenue during the six months ended September 30, 2024.
Operating lease revenues from automobile rentals
We generate revenues from leasing our own automobiles and sub-leasing automobiles leased from third-parties and related parties or rendered by online ride-hailing drivers with their authorization for a lease term of no more than twelve months. The increase in rental income of $102,185 or approximately 7.6% during the six months ended September 30, 2025 was mainly due to the increase in number of automobiles leased for operating lease. We leased over 750 automobiles with an average monthly rental income of approximately $401 per automobile, resulting in a rental income of $1,442,918, including rental income of $53,899 from a related party, for the six months ended September 30, 2025. While we leased approximately 627 automobiles with an average monthly rental income of approximately $413 per automobile, resulting in a rental income of $1,340,733, including rental income of $8,865 from another related party, for the six months ended September 30, 2024.
Service fees from NEVs leasing
We generated revenues of $194,559 and $73,788 from leasing NEVs by charging leases service fees during the six months ended September 30, 2025 and 2024, respectively. The amount of services fees for NEVs leasing were based on our timely product solutions in accordance which adjusted with different market conditions.
Monthly services commissions
We generated revenues of $59,883 and $56,935 from the monthly management and related services provided to our Partner Platforms and other companies during the six months ended September 30, 2025 and 2024, respectively.
Financing revenues
We started our financial leasing business in March 2019 and began to generate interest income from providing financial leasing services to ride-hailing drivers in April 2019. We also charge the customers of our automobile financing facilitation services interest on their monthly payments which cover purchase price of automobile and our services fees and facilitation fees for terms of 36 or 48 months. We recognized a total interest income of $41,180 from an average monthly number of 51 automobiles and $49,029 from an average monthly number of 43 automobiles during the six months ended September 30, 2025 and 2024, respectively. The decrease was due to the monthly payment we charged to customers decreased during the six months ended September 30, 2025.
Default revenue
We generated default revenues of $31,520 and $47,695 from the automobile lessee’s early-termination of the contracts or other violation behaviors to the contracts during the six months ended September 30, 2025 and 2024, respectively.
Service fees from automobile purchase services and Other Service fees
We generated revenues of $8,936 and $26,903 from the automobile purchase services during the six months ended September 30, 2025 and 2024, respectively. The decrease was due to the number of automobiles purchase transactions decreased to 7 during the six months ended September 30, 2025 from 19 in the same period in 2024.
We generate other revenues from other miscellaneous service fees charged to our customers during the six months ended September 30, 2025 and 2024. Other services fees mainly include the maintenance fees charged to our customers pursuant to certain new production solutions.
Cost of Revenues
Cost of revenues represents the amortization of ROUs, depreciation and rental cost of automobiles, daily maintenance and insurance expense of automobiles which related to our Auto Operating Leasing. Cost of revenues increased by $50,380 or approximately 4.0% during the six months ended September 30, 2025 as compared with the six months ended September 30, 2024, mainly due to an increase in the monthly average number of the automobiles leased for operating lease from 279 in the six months ended September 30, 2024 to 333 in the six months ended September 30, 2025. During the six months ended September 30, 2025 and 2024, we paid $90,272 and $18,961, respectively, to related parties for costs of automobiles under operating leases.
Gross Profit
We had gross profit of $471,043 and $349,869, respectively, during the six months ended September 30, 2025 and 2024. The following table sets forth the breakdown of gross profit by major revenue source for the six months ended September 30, 2025 and 2024:
(unaudited)
(unaudited)
| For the Six Months Ended September 30, 2025 | 2024 | |
|---|---|---|
| - Auto Operating Leasing | $117,518 | $65,713 |
| - Other Automobile transaction and related Services | 353,525 | 284,156 |
| Total Gross Profit | $471,043 | $349,869 |
43
We had a gross profit of $117,518 from our Auto Operating Leasing during the six months ended September 30, 2025, which increased by $51,805 from a gross profit of $65,713 in the six months ended September 30, 2024. The increase was attributable to the average utilization of the automobiles for operating lease increased from 85.2% in the six months ended September 30, 2024 to 89.9% in the six months ended September 30, 2025. We had a gross profit of $353,525 from our Other Automobile transaction and related Services during the six months ended September 30, 2025, which increased by $69,369 from a gross profit of $284,156 in the six months ended September 30, 2024. The increase was attributable to our Service fees from NEVs leasing increased in the six months ended September 30, 2025 based on our timely product solutions in accordance which adjusted with different market conditions. As a result, our overall gross profit margin for the six months ended September 30, 2025 increased to approximately 26.2% from approximately 21.5% for the six months ended September 30, 2024.
Selling, General and Administrative Expenses
Selling, general and administrative expenses primarily consist of salary and employee benefits, office rental expense, travel expenses, and other expenses. Selling, general and administrative expenses increased from $1,384,149 for the six months ended September 30, 2024 to $1,715,500 for the six months ended September 30, 2025, representing an increase of $331,351, or approximately 23.9%. The decrease mainly consisted of (1) the increase of $553,279 in professional service fees such as financial, market consulting and outsourced operating services related to automobile lease, mainly attributable to the streamlining of the workforce in Chengdu, thereby sharing venue and personnel resources with Jinkailong, which resulted the corresponding service fee obligations; partly offset by (2) a decrease of $177,153 in salary and employee benefits as the average monthly number of our employees decreased from 62 for the six months ended September 30, 2024 to 37 for the six months ended September 30, 2025; and (3) a decrease of $44,775 in other miscellaneous expenses for the six months ended September 30, 2025.
Provision for credit losses
We re-evaluated the possibility of collection of unsettled balances from customers/suppliers of our automobile transactions and related services, and we provided provision for credit losses of $125,046 and $355,436 against receivables from Jinkailong for the six months ended September 30, 2025 and 2024, respectively.
Other income, net
For the six months ended September 30, 2025, we had other income, net of $289,641, which primarily consist of the (1) a gain of approximately $240,000 from disposal of Corenel; (2) penalty income of approximately $35,000 from the customers; (3) the miscellaneous other income, net of approximately $30,000; partially offset by (4) the expense of approximately $16,000 for processing automobile violation fines.
For the six months ended September 30, 2024, we had other income, net of $439,864, which primarily consist of the (1) a gain of $397,775 from deconsolidation of XXTX; (2) penalty income of approximately $60,000 from the customers; (3) income of approximately $6,000 from the disposal of our own vehicles used for operating leases; partially offset by (4) the expense of approximately $20,000 from the termination of our right-of-use assets for an exhibition hall we leased in Changsha, and (5) the miscellaneous expense of approximately $4,000.
Interest Expense on Finance Leases
Interest expense on finance leases for the six months ended September 30, 2025 and 2024 was $615 and $9,358, respectively, representing the interest expense accrued under financing leases for the leased automobiles Corenel, our former subsidiary, leased from a third-party company.
Change in Fair Value of Derivative Liabilities
Warrants issued in our registered direct offerings that took place in February 2021 and May 2021, and the August 2020 underwritten public offering, and the November 2021 private placement were classified as liabilities under the caption “Derivative Liabilities” in the unaudited condensed consolidated balance sheet and recorded at estimated fair value at each reporting date, computed using the Black-Scholes valuation model. The change in fair value of derivative liabilities for the six months ended September 30, 2025 and 2024 was a gain of $80,309 and a loss of $15,414, respectively. The following table sets forth the breakdown of the gain (loss) in fair value of derivative liabilities for the six months ended September 30, 2025 and 2024:
(unaudited)
(unaudited)
| For the Six Months Ended September 30, 2025 | 2024 | |
|---|---|---|
| - August 2020 underwritten public offering | $21 | $1,024 |
| - February 2021 registered direct offering | 219 | 1,048 |
| - May 2021 registered direct offering | 13,775 | 4,422 |
| - November 2021 private placement | 66,294 | (21,908) |
| Total Change in Fair Value of Derivative Liabilities | $80,309 | $(15,414) |
44
Income Tax Expense
Generally, our subsidiaries are subject to enterprise income tax on their taxable income in China at a rate of 25%. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. All the subsidiaries in China suffered losses and no tax expense was recorded for the six months ended September 30, 2025 and 2024.
Net loss from continuing operations
As a result of the foregoing, net loss from continuing operations for the six months ended September 30, 2025 was $1,000,168, representing an increase of $25,544 from net loss of $974,624 for the six months ended September 30, 2024.
Results of Discontinued Operations for the three and six months ended September 30, 2025 Compared to the three and six months ended September 30, 2024
(unaudited)
(unaudited)
(unaudited)
(unaudited)
| For the Three Months Ended September 30, 2025 | 2024 | For the Six Months Ended September 30, 2025 | 2024 | |
|---|---|---|---|---|
| Revenues | $— | $100,850 | $— | $344,241 |
| Cost of revenues | — | (71,199) | — | (247,025) |
| Gross profit | — | 29,651 | — | 97,216 |
| Operating expenses | ||||
| Selling, general and administrative expenses | — | (80,167) | — | (166,937) |
| Provision for credit losses | — | (173,278) | — | (173,278) |
| Total operating expenses | — | (253,445) | — | (340,215) |
| Loss from operations | — | (223,794) | — | (242,999) |
| Other income, net | — | 37,017 | — | 33,214 |
| Interest expense | — | (2,512) | — | (8,372) |
| Loss before income taxes | — | (189,289) | — | (218,157) |
| Income tax benefit | — | 2,575 | — | 4,510 |
| Net loss from discontinued operations | $— | $(186,714) | $— | $(213,647) |
The result of discontinued operations was the financial figures of our former subsidiary, XXTX. As of August 20, 2024, we deconsolidated XXTX and its business result was included in our online ride-hailing platform services before we deconsolidated its financial figures.
Revenues
XXTX generated revenue from providing services to online ride-hailing drivers to assist them in providing transportation service to the riders though Xixingtianxia platform and earned commissions for each completed order equal to the difference between an upfront quoted fare and the amount earned by a driver based on actual time and distance for the ride charged to the rider.
During the three months ended September 30, 2024, approximately 0.2 million rides with gross fare of approximately $0.5 million were completed through Xixingtianxia platform and an average of over 1,700 ride-hailing drivers completed rides and earned income through Xixingtianxia (the “Active Drivers”) each month. XXTX earned online ride-hailing platform service fees of $100,850, after netting off approximately $7,000 incentives paid to Active Drivers.
During the six months ended September 30, 2024, approximately 0.6 million rides with gross fare of approximately $1.8 million were completed through our Xixingtianxia platform and an average of over 2,100 Active Drivers each month. XXTX earned online ride-hailing platform service fees of $344,241, after netting off approximately $32,000 incentives paid to Active Drivers.
Selling, General and Administrative Expenses
Selling, general and administrative expenses from discontinued operations primarily consisted of (1) $29,081 in salary and employee benefits; (2) $15,186 in depreciation of office equipment and amortization of intangible assets; (3) $9,868 in entertainment, advertising and promotion; and (4) other miscellaneous expenses in the three months ended September 30, 2024.
Selling, general and administrative expenses from discontinued operations primarily consisted of (1) $64,859 in salary and employee benefits; (2) $37,733 in depreciation of office equipment and amortization of intangible assets; (3) $32,187 in entertainment, advertising and promotion; and (4) other miscellaneous expenses in the six months ended September 30, 2024.
Provision for credit losses
For the three and six months ended September 30, 2024, XXTX provided provision for credit losses of $173,278 against receivables from a prepaid software development fee and a deposit due to the termination on the development which resulting from the discontinuing of the business.
Other income, net
For the three and six months ended September 30, 2024, XXTX had other income, net of $37,017 and $33,214, respectively, which primarily due to the miscellaneous income in its daily operations.
Interest Expense
Interest expense from discontinued operations was resulted from the borrowings of XXTX from a financial institution for its working capital turnover.
Income Tax Benefit
For the three and six months ended September 30, 2024, XXTX had deferred tax benefit of $2,575 and $4,510, respectively, resulted from deferred tax.
Net loss from discontinued operations
As a result of the foregoing, the net loss from discontinued operations for the three and six months ended September 30, 2024 was $186,714 and $213,647, respectively.
Liquidity and Going Concern
We have financed our operations primarily through proceeds from our equity offerings, stockholder loans, commercial debt, borrowings from financial institutions and cash flow from operations.
We had cash and cash equivalents of $676,980 as of September 30, 2025 as compared to $833,577 as of March 31, 2025. We primarily hold our excess unrestricted cash in short-term interest-bearing bank accounts at financial institutions.
Our business is capital intensive. We have considered whether there is substantial doubt about our ability to continue as a going concern due to (1) the net loss of approximately $1.0 million for the six months ended September 30, 2025; (2) accumulated deficit of approximately $45.9 million as of September 30, 2025; (3) the working capital deficit of approximately $2.6 million as of September 30, 2025.
Although we have completed one financing transaction with gross proceeds of $0.66 million as of the filing date of this Report and expect to complete another with gross proceeds of $2.8 million by November 21, 2025, we still determine there is substantial doubt about our ability to continue as a going concern. This is due to the cost incurred to obtain the financing and the planned settlement of payables, which result in the financing obtained not being sufficient for us to maintain a net working capital position for a reasonable period of time (i.e., one year from the filing date of these unaudited condensed consolidated financial statements). Given we are expected to sustain operating cash outflow, there is still substantial doubt on going concern. If we are unable to generate significant revenue, we may be required to curtail or cease its operations. We are trying to alleviate the going concern risk through the following sources:
- equity financing to support our working capital;
- other available sources of financing (including debt) from PRC banks and other financial institutions; and
- financial support and credit guarantee commitments from our related parties.
Based on the above considerations, we are of the opinion that we will probably not have sufficient funds to meet our working capital requirements and debt obligations as they become due one year from the filing date of this Report, if we are unable to obtain additional financing. In addition, there is no assurance that we will be successful in implementing the foregoing plans or that additional capitals will be available to us on commercially reasonable terms, or at all. There are a number of factors that could potentially arise that could undermine our plans, such as (i) changes in the demand for our services, (ii) PRC government policies, (iii) economic conditions in China and worldwide, (iv) competitive pricing in the automobile transaction and related service and ride-hailing industries, (v) changes in our relationships with key business partners, (vi) that financial institutions in China may not able to provide continued financial support to our customers, and (vii) the perception of PRC-based companies in the U.S. capital markets. Our inability to secure needed financing when required could require material changes to our business plans and could have a material adverse effect on our viability and results of operations.
(unaudited)
(unaudited)
| For the Six Months Ended September 30, 2025 | 2024 | |
|---|---|---|
| Net Cash (Used in) Provided by Operating Activities | $(392,547) | $192,349 |
| Net Cash Used in Investing Activities | (224,174) | (271,201) |
| Net Cash Provided by (Used in) Financing Activities | 416,008 | (46,293) |
| Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash | 44,173 | 122,534 |
| Cash, Cash Equivalents and Restricted Cash at Beginning of the Period | 833,577 | 794,636 |
| Cash, Cash equivalents and Restricted Cash, end of Period | $677,037 | $792,025 |
Cash Flow in Operating Activities
For the six months ended September 30, 2025, net cash used in operating activities was $392,547 from continuing operations. While for the six months ended September 30, 2024, net cash provided by operating activities was $192,349, which consisted of net cash inflows of $265,827 from continuing operations and net cash outflows of $73,478 from discontinued operations.
The increase of $658,374 in net cash used in operating activities from continuing operations for the six months ended September 30, 2025 as compared with the six months ended September 30, 2024 was primarily attributable to (1) decrease of $390,149 in the change of accrued expenses and other liabilities; (2) decrease of $230,390 in the provision for credit losses; (3) decrease of $111,901 in amortization of right-of-use assets; (4) $95,723 in change in fair value of derivative liabilities from a loss of $15,414 for the six months ended September 30, 2024 to a gain of $80,309 for the six months ended September 30, 2025; (5) decrease of $66,451 in the change of accounts payable; and partially offset by (6) $151,397 in change of the gain from disposal of a subsidiary. Specifically, there was a one-off gain of $246,378 from disposal of Corenel during the six months ended September 30, 2025, whereas a gain of $397,775 from deconsolidation of XXTX during the six months ended September 30, 2024; (7) decrease of $106,858 in the change of prepayments, other receivables and other assets (included third parties and a related party).
Cash Flow in Investing Activities
For the six months ended September 30, 2025, we had net cash used in investing activities of $224,174, which consisted of: (1) the loan to a related party of $229,469; (2) the cash of $388 released upon disposal of Corenel; partially offset by (3) the proceeds from sales of the used-automobiles of $5,683.
For the six months ended September 30, 2024, we had net cash used in investing activities of $271,201, which consisted of the net outflows of $271,250 from continuing operations and net inflows of $49 from discontinued operations. The majority of net cash used in investing activities from continuing operations was (1) a loan to a related party of $137,897; (2) the cash of $148,481 released upon disposal of XXTX; (3) the purchase furniture for office purpose of $1,189; partially offset by (4) the proceeds from sales of the used-automobiles of $16,317.
Cash Flow in Financing Activities
For the six months ended September 30, 2025, we had net cash provided by financing activities of $416,008 from continuing operations, which consisted of: (1) net proceeds of $341,251 from the exercise of November 2021 Private Placement Warrants from an investor; (2) borrowings from a related party of $119,150; (3) repayments from a related party of $83,272; partially offset by (4) repayments to a related party of $127,665.
For the six months ended September 30, 2024, we had net cash used in financing activities of $46,293, which consisted net inflows of $35,733 from continuing operations and net outflows of $82,026 from discontinued operations. The majority of net cash provided by financing activities financing activities from continuing operations was consisted of: (1) borrowings from a related party of $33,582; and (2) repayments from a related party of $13,884; partially offset by (3) principal payments made for finance lease liabilities of $11,733.
Off-Balance Sheet Arrangements
As of the filing date of this Report, we have the following off-balance sheet arrangements that are likely to have a future effect on our financial condition, revenues or expenses, results of operations and liquidity:
- Purchase Commitments
As of the filing date of this Report, we have no purchase commitment.
- Contingent Liabilities
Pursuant to the Regulations of the State Council on Implementing the Management System for Registered Capital Registration in the Company Law of the People’s Republic of China issued on July 1, 2024 (the “Registered Capital Registration Implementing Rules”), as Jinkailong was registered and established before June 30, 2024, its shareholders should fully pay their unpaid subscribed capital before June 30, 2032. As of September 30, 2025, Hunan Ruixi holds 35% of equity interest of Jinkailong and has not made any payments towards to the investment amounted to RMB3.5 million (approximately $492,000). According to the Registered Capital Registration Implementing Rules, Hunan Ruixi shall pay the subscribed capital of Jinkailong before June 30, 2032.
Inflation
We do not believe our business and operations have been materially affected by inflation.
Critical Accounting Estimates
Our unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application. The management determined there were no critical accounting estimates.
When reading our unaudited condensed consolidated financial statements, you should consider our selection of critical accounting policies, the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions. Our critical accounting policies and practices include the following: (i) accounts receivable, net; (ii) property and equipment, net; (iii) revenue recognition. See Note 3—Summary of Significant Accounting Policies to our consolidated financial statements in our 2025 Form 10-K for the disclosure of these accounting policies.
Controls and procedures
As filed, 2,117 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Evaluation of Disclosure Controls and Procedures
Based on an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of September 30, 2025, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective due to the following material weaknesses in our internal control over financial reporting:
- We did not have sufficient personnel with appropriate levels of accounting knowledge and experience to address complex U.S. GAAP accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP. Specifically, our control did not operate effectively to ensure the appropriate and timely analysis of and accounting for unusual and non-routine transactions and certain financial statement accounts;
- We are lacking adequate policies and procedures in internal audit function to ensure that our policies and procedures have been carried out as planned; and
- We had deficiencies in our IT general controls regarding to the Logical Access Security, Change Management, IT Operations and Cybersecurity of our financial system, etc.
We are improving our IT environment and daily management to ensure network and information security. In addition, we plan to address the weaknesses identified above by implementing the following measures:
(i) Continuously hiring additional accounting staffs with comprehensive knowledge of U.S. GAAP and SEC reporting requirements;
(ii) Ameliorating our internal audit to assist with assessment of Sarbanes-Oxley compliance requirements and improvement of internal controls related to financial reporting; and
(iii) improving our IT environment and daily management.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting that occurred during the quarter ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Figures reported in this filing
Standardized line items from the XBRL in this filing, for the period ended 2025-09-30. Comparative periods it repeats are left out.
| Line item | Period | Value | XBRL concept |
|---|---|---|---|
| Revenue | 3 months2025-07-01 to 2025-09-30 | $906.5k | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months2025-04-01 to 2025-09-30 | $1.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months2025-07-01 to 2025-09-30 | $662.3k | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months2025-04-01 to 2025-09-30 | $1.3m | us-gaap:CostOfRevenue |
| Gross profit | 3 months2025-07-01 to 2025-09-30 | $274.1k | us-gaap:GrossProfit |
| Gross profit | 6 months2025-04-01 to 2025-09-30 | $471.0k | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months2025-07-01 to 2025-09-30 | $907.3k | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months2025-04-01 to 2025-09-30 | $1.7m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months2025-07-01 to 2025-09-30 | −$758.2k | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months2025-04-01 to 2025-09-30 | −$1.4m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months2025-07-01 to 2025-09-30 | −$648.7k | us-gaap:NetIncomeLoss |
| Net income | 6 months2025-04-01 to 2025-09-30 | −$813.1k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months2025-07-01 to 2025-09-30 | −$0.43 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months2025-04-01 to 2025-09-30 | −$0.63 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months2025-07-01 to 2025-09-30 | −$0.43 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months2025-04-01 to 2025-09-30 | −$0.63 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months2025-07-01 to 2025-09-30 | 1,499,154 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months2025-04-01 to 2025-09-30 | 1,292,115 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months2025-04-01 to 2025-09-30 | −$392.5k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | At period end2025-09-30 | $677.0k | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | At period end2025-09-30 | $2.1m | us-gaap:AssetsCurrent |
| Total assets | At period end2025-09-30 | $4.7m | us-gaap:Assets |
| Current liabilities | At period end2025-09-30 | $4.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | At period end2025-09-30 | $4.8m | us-gaap:Liabilities |
| Shareholders' equity | At period end2025-09-30 | −$3.1m | us-gaap:StockholdersEquity |
Source: SEC EDGAR, the filing index for accession 0001213900-25-112606. Last ingested by Listed: Oct 24, 2026, 15:15 ET. Listed shows no prices and gives no investment advice.