Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
The following discussion
and analysis of our results of operations and financial condition should be read together with our consolidated financial statements and
the notes thereto and other financial information, which are included elsewhere in this Report. Our financial statements have been prepared
in accordance with U.S. GAAP. In addition, our financial statements and the financial information included in this Report reflect our
organizational transactions and have been prepared as if our current corporate structure had been in place throughout the relevant periods.
Overview
We are a provider of automobile
transaction and related services, connecting consumers, who are mostly existing and prospective ride-hailing drivers affiliated with different
operators of online ride-hailing platforms in the People’s Republic of China (“PRC” or “China”). We provide
automobile transaction and related services in Hunan Province of China through our majority owned subsidiary, Hunan Ruixi Business Operation
Management Co., Ltd., a PRC limited liability company (“Hunan Ruixi”).
Prior to December 31, 2025,
we provided automobile transaction and related services in Sichuan Province of China through our former majority owned subsidiary, Chengdu
Jiekai Yunli Technology Co., Ltd., a PRC limited liability company and its subsidiary (“Jiekai”) and our former wholly owned
subsidiary, Chengdu Corenel Technology Co., Ltd. a PRC limited liability company (“Corenel”). As discussed below under “–
Automobile Transactions and Related Services”, we ceased our automobile transactions and related services in Sichuan Province of
China on December 31 2025.
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.
During the year ended March
31, 2026, the Company began evaluating opportunities to expand its business into AI infrastructure. In furtherance of this initiative,
the Company appointed David Nichols as a strategic advisor to assist the Company in advancing its strategy across AI infrastructure, digital
infrastructure and new energy initiatives, with a particular focus on power infrastructure origination, capital formation and institutional
partnerships.
Management is currently evaluating several potential AI data center
projects and, with the assistance of its advisors, is conducting commercial, operational and strategic due diligence. The Company expects
to select one of these opportunities for further development if it determines that the project is commercially viable and consistent with
its long-term strategic objectives. As of the date of this Annual Report, the Company has not entered into any definitive agreement with
respect to any AI data center or related infrastructure project, and there can be no assurance that any such opportunity will be consummated
or successfully implemented.
Our Automobile Transactions and Related Services
Our Automobile Transaction
and Related Services are mainly comprised of (i) automobile operating lease where we provide car rental services to individual customers
to meet their personal needs with lease term no more than twelve months (the “Auto Operating Leasing”); (ii) service fees
from new energy vehicles (“NEVs”) leasing where we charge NEVs lessees for a series of the services provided to them based
on the chosen product solutions (the “Service for NEVs Leasing”); (iii)service fees from automobile purchase for a series
of the services provided to purchasers throughout the purchase process based on the sales price of the automobiles and relevant services
provided (the “ Service for Automobile Purchase”) ;(iv) monthly services where we provide management and related services
to other online ride-hailing platforms we cooperated with (“Partner Platforms”) and other companies and earn commission from
them (the “Auto Commissions”); (v) automobile financing where we provide our customers with auto finance solutions through
finance leases (the “Auto Financing”); (vi) default fees we charges to the lessees for early-termination the contracts
or other violation behaviors to the contracts (the “Default Revenue”); and (vii) other supporting services provided to customers,
including auto management and other related services (the “Auto Management Services”) and automobile sales (the “Auto
Sales”). We started our facilitation and supporting services in November 2018, the sale of automobiles in January 2019, and financial
and operating leasing in March 2019, respectively.
Considering the fierce competition
of the online ride-hailing industry and our operating losses in China, in December 2025 the Company
entered into a certain Acquisition Agreement (the “ Sichuan Acquisition Agreement”)
with Hu Mao Sheng Tang Holdings Limited., a non-affiliated Hong Kong company (“HMST”). Pursuant to the Sichuan Acquisition
Agreement, the Company sold all of the equity interests in Sichuan Senmiao Yicheng Assets Management Co., Ltd. (“Yicheng”),
Sichuan Senmiao Zecheng Business Consulting Co., Ltd. (“Senmiao Consulting”) and its subsidiaries, which were our former subsidiaries
in Sichuan Province of China (“former subsidiaries in Sichuan”), to HMST for
nil consideration, while we undertook certain liabilities of $518,388 which were previously assumed by former subsidiaries in Sichuan
(the “Disposition”). On December 31, 2025, the Disposition was completed and we ceased
our automobile Transactions and Related Services in Sichuan Province of China .
70
Since November 22, 2018,
the acquisition date of Hunan Ruixi, and as of March 31, 2026, we have facilitated financing for an aggregate of 312 automobiles with
a total value of approximately $5.4 million, sold an aggregate of 381 automobiles with a total value of approximately $3.7 million and
delivered 470 automobiles under operating leases and 197 automobiles under finance leases to customers, the vast majority of whom are
online ride-hailing drivers.
The table below provides
a breakdown of the number of vehicles sold or delivered under different leasing arrangements or managed by us and corresponding revenue
generated for the years ended March 31, 2026 and 2025, respectively:
For the Years Ended
March 31,
2026
2025
Number of
Number of
Vehicles
Revenue*
Vehicles
Revenue*
Auto Operating Leasing
340
$ 1,349,000
366
$ 1,685,000
Auto Financing
59
$ 68,000
60
$ 93,000
Auto Commissions
—
$ 17,000
—
$ 26,000
Other Services
>370
$ 112,000
>420
$ 92,000
*
The number was rounded to the nearest thousand for disclosure purpose.
During the year ended March
31, 2026, our Auto Operating Leasing, Auto Financing, Auto Commissions, and other services income accounted for approximately 87.2%, 4.4%,
1.1%, and 7.3% of our total revenue from our automobile transactions and related services, respectively, while our Auto Operating Leasing,
Auto Financing, Auto Commissions, and other services income accounted for approximately 88.9%, 4.9%, 1.4%, and 4.8% for the year ended
March 31, 2025, 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 XXTX Acquisition Agreement with the Purchaser, and certain
other parties thereto. Pursuant to the XXTX Acquisition Agreement, the Purchaser acquired all of the equity interests in XXTX at a total
purchase price of zero, while taking over certain liabilities of XXTX as defined in the XXTX Acquisition Agreement. On August 20, 2024,
the Acquisition was completed and we ceased the online ride-hailing platform services.
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Key Factors and Risks Affecting Results of Operations
Ability to Increase Our Automobile Lessee
Our revenue growth has been
largely driven by the expansion of our automobile lessee base and the corresponding revenue generated from operating and finance lease.
We acquire customers for our Automobile Transaction and Related Services through the network of third-party sales teams, referral from
online ride-hailing platforms and our own efforts including online advertising and billboard advertising. We also send out fliers and
participate in trade shows to advertise our services. We plan to maintain the number of our customers by marketing our companies to our
existing and prospective automobile lessees in the cities we now operate in. We expect to keep promoting the growth of our automobile
rental business with automobile rental solutions/incentives specifically targeted at drivers using our Partner Platforms. An effective
cross-selling strategies between our automobile leasing business and our Partner Platforms is important to our expansion and revenue growth.
We also plan to strengthen our marketing efforts through the collaboration with certain automobile dealers and through our own team by
employing more experienced staff, sharing market resources with our equity investee company, and improving the quality and variety of
our services. As of March 31, 2026, we had one employee 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 year ended March 31, 2026. To meet the demand in Changsha, we have purchased automobiles for our operating lease. The daily
management and timely maintenance of leased automobiles will have a significant effect on the stability and potential growth of our income
from leasing automobiles in the next twelve months. The effective management, including maintaining the high turn-over rate of our automobiles
through our proprietary system and experienced auto-management team could provide in-time delivery and qualified automobiles to potential
lessees, either for personal use or providing online ride-hailing services. As of March 31, 2026, for parking and management of automobiles
for operating lease, we had one parking lot and three employees in Changsha. During the years ended March 31, 2026 and 2025, the average
utilization of the automobiles for operating lease was approximately 88.3% and 92.3%, respectively.
Our Service Offerings and Pricing
The growth of our revenue
depends on our ability to improve existing solutions and services provided, continue identifying evolving business needs, refine our collaborations
with business partners and provide value-added services to our customers. The attraction of new automobile leases depends on our leasing
solutions with attractive rental price and flexible leasing terms. We have also adopted a series of pricing formulas to adopt the market
changes, considering the historical and future expenditure, remaining available leasing months and market price to determine our rental
price for varied rental solutions. Furthermore, our product designs affect the type of automobile leases we attract, which in turn affect
our financial performance. The attraction of new customers depends on the comprehensive income they could earn from our own or Partner
Platforms, which is mainly affected by the number of orders distributed to them through our platform and the amount of the incentives
paid to them from platforms. Our revenue growth also depends on our abilities to effectively price our services, which enables us to attract
more customers and improve our profit margin.
Ability to Retain Key Business Cooperators
Historically, we have set
up a series of strategy and business relationships with certain affiliates of some famous and leading companies of NEVs manufacturers,
online ride-hailing platforms, local NEVs leasing companies, and travel service providers to develop our Automobile Transaction and Related
Services. We earned commissions or services fees from them, purchased and leased automobiles for our business at a favorable price. The
close relationships have provided us with the necessary capacity to support the development of our online ride-hailing platform and leasing
business. To retain these valuable cooperators and continuously explore opportunities to collaborate with them in more areas is important
to us to have considerable resources to support the exploration and expansion of our business into new cities.
Meanwhile, in order to strengthen
our market position, Hunan Ruixi has built up cooperation relationships with Partner Platforms, such as Hunan Didi Chuxing Technology
Co., Ltd., whereby the online ride-hailing requests and orders shall be completed on Partner Platforms utilizing the network of cars and
drivers of us while Hunan Ruixi earned rental income from drivers and earned commissions from Partner Platforms.
72
Ability to Collect Receivables on a Timely Basis
For receivables from Auto
Operating Leasing, we usually settle the rental income with each online ride-hailing driver monthly based on the product solutions they
chose. In accordance with the development of the operating lease business, our Partner Platforms, such as Didi, agree to temporarily “lock-up”
the fares of the rides which the driver earned from the platform to ensure the timely collection of our rental receivables from them.
As of March 31, 2026, we had no accounts receivable of operating lease. Besides, during the year ended March 31, 2026, we settled our
commissions with the Partner Platforms for our automobile rental income on a monthly basis.
The efficiency of collection
of the monthly and weekly payments has a material impact on our daily operation. Our risk and asset management department has set up a
series of procedures to monitor the collection from drivers. Our business department has also set up a stable and close relationship with
Partner Platforms to ensure the timely collection of commissions. The accounts receivable and advance payments may increase our liquidity
risk. 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 year ended March 31, 2026. We do this so that we can
evaluate their financial conditions and provide them with assistance including the transfer of automobile to a new driver if they are
no longer interested in providing ride-hailing services or are unable to earn enough income to make monthly lease/loan payments. We also
charge default fees from customers for their behaviors violated to the contracts.
Further, the automobiles
subject to our finance leases are not collateralized by us. As of March 31, 2026, the total value of non-collateralized automobiles was
close to the amount of finance lease receivables since it was on a straight-line basis. We believe our risk exposure of financing leasing
is immaterial as we have experienced limited default cases and we are able to re-lease those automobiles to drivers under finance leases.
Ability to Compete Effectively
Our business and results
of operations depend on our ability to compete effectively. Overall, our competitive position may be affected by, among other things,
our service quality and our ability to price our solutions and services competitively. We will set up and continuously optimize our own
business system to improve our service quality and user experience. Our competitors may have more resources than we do, including financial,
technological, marketing and others and may be able to devote greater resources to the development and promotion of their services. We
will need to continue to introduce new or enhance existing solutions and services to continue to attract automobile dealers, financial
institutions, car buyers, lessees, ride-hailing drivers and other industry participants. Whether and how quickly we can do so will have
a significant impact on the growth of our business.
73
Market Opportunity and Government Regulations in China
The demand for our services
depends on overall market conditions of the online ride-hailing industry in China. The continuous growth of the urban population places
increasing pressure on the urban transportation and the improvement of living standards has increased the market demand for quality travel
in China. Traditional taxi service is limited, and the emerging online platforms have created good opportunities for the development of
the online ride-hailing service market. The market value is expected to increase from RMB354.7 billion in 2024 to RMB751.3 billion in
2028, owing to rising consumer demand for economical mobility options and an amplified penetration of shared mobility services, especially
in lower-tier cities. According to the 57th Statistical report on Internet Development in China published in February 2026 by the China
Internet Network Information Center (the “CNNIC”), the number of online ride-hailing service users had reached 539 million
by the end of December 2025, and took approximately 47.9% of the total number of Chinese internet users. 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 April 30, 2026, approximately 399 online ride-hailing platforms have obtained booking taxi
operating licenses, representing an increase of approximately 4% as compared with the one as of April 30, 2025. And the total volume of
online ride-hailing orders was approximately 727 million in April 30, 2026 in China, representing an increase of approximately 27% as
compared with the one as of April 30, 2025. Meanwhile, approximately 3.21 million online booking taxi transportation certificates and
approximately 7.48 million online booking taxi driver’s licenses were issued nationwide in China as of December 31, 2024, respectively.
Since 2023, the municipal transportation bureaus in a series of cities in China have released operational dynamics and risk warnings for
the online ride-hailing industry, stating that the online ride-hailing market has become saturated. They remind enterprises and practitioners
who intend to engage in online ride-hailing services should have a detailed understanding of relevant regulations, conduct market research,
fully consider changes in operating income due to factors such as supply and demand, market conditions, fluctuations or continuous declines,
objectively evaluate the actual income level of industry practitioners, and make rational and prudent career choices.
The online ride-hailing industry
may also be affected by, among other factors, the general economic conditions in China. The interest rates and unemployment rates may
affect the demand of ride-hailing services and automobile purchasers’ willingness to seek credit from financial institutions. Adverse
economic conditions could also reduce the average income of individual and intensify the competition between platforms. Should any of
those negative situations occur, the volume and value of the automobile transactions we service will decline, and our revenue and financial
condition will be negatively impacted.
On April 1, 2017, the General
Office of Changsha City People’s Government issued the “Detailed Rules for the Administration of Online Car-Hailing Business Services
of Changsha City”, which was abolished and replaced by the updated version issued on July 23, 2018. On August 20, 2025, the Changsha
Municipal Bureau of Transportation further issued “Announcement of Changsha Municipal Bureau of Transportation on Further Improving
the Issuance of Vocational Qualification Certificates for Taxi Drivers and Other Related Matters”. According to these regulations
and guidelines, three licenses /certificates are required for operating the online ride-hailing business in Changsha: (1) the ride-hailing
service platform should obtain the online booking taxi operating license; (2) the automobiles used for online ride-hailing should obtain
the online booking taxi transportation certificate (“automobile certificate”); (3) the drivers should obtain the online booking
taxi driver’s license (“driver’s license”). Besides, all newly added cars used for online ride-hailing in Changsha
shall be NEVs starting from 2027.
As of March 31, 2026, all
ride-hailing drivers who leased our automobiles or used our services have obtained the driver’s license for online ride-hailing
services, and all of the cars used for online ride-hailing services which we provided management services have the automobile certificate.
Without requisite automobile certificate or driver’s license, these drivers may be suspended from providing ride-hailing services,
confiscated their illegal income and subject to fines of up to 10 times of their illegal income. We assisted drivers to obtain the required
certificate and license for our Automobile Transaction and Related Services. However, there was no guarantee that all of the drivers who
run their online ride-hailing business would be able to obtain all the certificates and licenses. These Partner Platforms may not allow
unqualified drivers who lease our automobiles to drive through these platforms, or reduce their commission income, so that they may not
be able to earn enough income from those Partner Platforms to pay our rental fees. Our business and results of operations shall be materially
and adversely affected if we could not serve qualified drivers or our served drivers are suspended from providing ride-hailing services.
74
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
year ended March 31, 2026 Compared to the year ended March 31, 2025
For the Years Ended
March 31,
2026
2025
Change
Revenues
$ 1,546,127
$ 1,896,171
$ (350,044 )
Cost of revenues
(1,335,927 )
(1,324,447 )
(11,480 )
Gross profit
210,200
571,724
(361,524 )
Operating expenses
Selling, general and administrative expenses
(2,426,333 )
(1,864,151 )
(562,182 )
Provision for credit losses
(422,064 )
(697,165 )
275,101
Stock-based compensation
(250,000 )
—
(250,000 )
Total operating expenses
(3,098,397 )
(2,561,316 )
(537,081 )
Loss from operations
(2,888,197 )
(1,989,592 )
(898,605 )
Other income (expense), net
312,792
(121,491 )
434,283
Change in fair value of derivative liabilities
202,959
204,242
(1,283 )
Excess of warrant fair value over offering proceeds
(2,896,455 )
—
(2,896,455 )
Loss before income taxes
(5,268,901 )
(1,906,841 )
(3,362,060 )
Income tax expense
—
—
—
Net loss from continuing operations
$ (5,268,901 )
$ (1,906,841 )
$ (3,362,060 )
Revenues
We started generating
revenue from Automobile Transaction and Related Services from our acquisition of Hunan Ruixi on November 22, 2018. As we focus on our
automobile rental business, we expect revenue from our automobile rental to continuously account for a majority of our revenues. We provide
a series of product solutions to sustain and further increase the number of our automobiles for operating leases.
The following table sets
forth the breakdown of revenues by revenue source for the years ended March 31, 2026 and 2025, respectively:
For the Years Ended
March 31,
2026
2025
Revenue from automobile transactions and related services
- Operating lease revenues from automobile rentals
$ 1,348,542
$ 1,685,112
- Financing revenues
68,011
93,473
- Service fees from NEVs leasing
64,833
—
- Default revenue
26,025
33,050
- Monthly services commissions
17,485
25,799
- Service fees from automobile purchase services
10,046
38,696
- Other service fees
11,185
20,041
Total Revenue
$ 1,546,127
$ 1,896,171
75
Revenue from our automobile
transaction and related services mainly includes operating lease revenues from automobile rentals, financing revenues, service fees from
NEVs leasing, default revenue, monthly services commissions, service fees from automobile purchase services, and other services fees,
which accounted for approximately 87.2%, 4.4%, 4.2%, 1.7%, 1.1%, 0.6% and 0.8%, respectively, of the total revenue during the year ended
March 31, 2026. Meanwhile, operating lease revenues from automobile rentals, financing revenues, default revenue, monthly services commissions,
service fees from automobile purchase services, and other services fees, which accounted for approximately 88.9%, 4.9%, 1.7%, 1.4%, 2.0%
and 1.1%, respectively, of the total revenue during the year ended March 31, 2025.
Operating lease revenues from automobile rentals
We generate revenues from
leasing our own automobiles by online ride-hailing drivers with their authorization, with the majority of lease term of no more than 12
months. The decrease in rental income of $336,570 or approximately 20.0% during the year ended March 31, 2026 was mainly due to the decrease
in the number and average monthly rental of automobiles leased for operating lease. We leased approximately 340 automobiles with an average
monthly rental income of approximately $381 per automobile, resulting in a rental income of $1,348,542 for the year ended March 31, 2026.
While we approximately 366 automobiles with an average monthly rental income of approximately $437 per automobile, resulting in a rental
income of $1,685,112 for the year ended March 31, 2025.
Financing revenues
We started our finance lease
business in March 2019 and began to generate interest income from providing finance lease services to ride-hailing drivers in April 2019.
We also charge the customers of our automobile financing facilitation services interest on their monthly payments which cover purchase
price of automobile and our services fees and facilitation fees for terms of 24 or 48 months. We recognized a total interest income of
$68,011 from an average monthly number of 46 automobiles and $93,473 from an average monthly number of 46 automobiles during the years
ended March 31, 2026 and 2025, respectively. The decrease was due to the decreased outstanding principal finance lease upon periodic rental
payments during the year ended March 31, 2026.
Service fees from NEVs leasing
We generated revenues
of $64,833 and $0 from leasing NEVs by charging leases service fees during the years ended March 31, 2026 and 2025, respectively.
The amount of services fees for NEVs leasing were based on our timely product solutions which adjusted in accordance with different
market conditions.
Default revenue
We generated default revenues
of $26,025 and $33,050 from the automobile lessee’s early-termination of the contracts or other violation behaviors to the contracts
during the years ended March 31, 2026 and 2025, respectively. The decrease was primarily attributable to a lower incidence of early-terminations
and contractual breaches by the automobile lessees, driven by improved credit quality of our lessee base, enhanced risk management and
contract monitoring practices during the year ended March 31, 2026.
Monthly services commissions
We generated revenues of
$17,485 and $25,799 from the monthly management and related services provided to our Partner Platforms and other companies during the
years ended March 31, 2026 and 2025, respectively. The decrease was due to the decrease in the number of automobiles leased to online
ride-hailing drivers for operating lease during the year ended March 31, 2026, which in turn led to lower commission income from the Partner
Platforms related to the monthly management and related services.
Service fees from automobile purchase services and Other Service
fees
We generated revenues of
$10,046 and $38,696 from the automobile purchase services during the years ended March 31, 2026 and 2025, respectively. The decrease was
due to the number of automobiles purchase transactions decreased to 8 during the year ended March 31, 2026 from 28 during the year ended
March 31, 2025.
We generate other revenues
from other miscellaneous service fees charged to our customers during the years ended March 31, 2026 and 2025. Other services fees mainly
include the maintenance fees charged to our customers pursuant to certain new product solutions.
76
Cost of Revenues
Cost of revenues represents
the depreciation and rental cost of automobiles, daily maintenance, insurance and other usage costs of automobiles which related to our
Auto Operating Leasing. Cost of revenues kept relatively stable, primarily due to total number of our own automobiles used for operating
leasing remaining substantially unchanged during the year ended March 31, 2026 as compared with the year ended March
31, 2025.
Gross Profit
We had gross profit of $210,200
and $571,724, respectively, during the years ended March 31, 2026 and 2025. The following table sets forth the breakdown of gross profit
by major revenue source for the years ended March 31, 2026 and 2025:
For the Years Ended
March 31,
2026
2025
- Auto Operating Leasing
$ 12,615
$ 360,665
- Other Automobile transaction and related Services
197,585
211,059
Total Gross Profit
$ 210,200
$ 571,724
We had a gross profit of
$12,615 from our Auto Operating Leasing during the year ended March 31, 2026, which decreased by $348,050 from a gross profit of $360,665
in the year ended March 31, 2025. The decrease was attributable to the average monthly rental of automobiles leased for operating lease
decreased from $437 in the year ended March 31, 2025 to $381 in the year ended March 31, 2026. As the gross margin of the revenues from
our operating leasing decreased, our overall gross profit margin decreased to approximately 13.6% for the year ended March 31, 2026 from
approximately 30.2% for the year ended March 31, 2025.
Selling, General and Administrative Expenses
For the year ended March
31, 2026, selling, general and administrative expenses primarily consist of salary and employee benefits, rental expense, travel expenses,
and other expenses. Selling, general and administrative expenses increased from $1,864,151 for the year ended March 31, 2025 to $2,426,333
for the year ended March 31, 2026, representing an increase of $562,182, or approximately 30.2%. The increase was mainly due to (1) the
increase of $578,703 in professional service fees such as financial, market consulting due to our financing arrangements during the year
ended March 31, 2026; (2) an increase of $42,657 in salary and employee benefits mainly due to the higher compensation scales for current executive officers; and partly offset by (3) the decrease of $25,336 in offices rental and charges
in the year ended March 31, 2026.
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 $422,064 and $697,165 against receivables from Jinkailong for the years ended March 31, 2026 and 2025, respectively.
Stock-based compensation
In November 2025, we entered
into the Consulting Agreement with the Consultant, pursuant to which we engaged the Consultant to provide consulting services. We issued
an 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
did not have similar transaction during the year ended March 31, 2025.
77
Other income (expenses), net
For the year ended March
31, 2026, we had other income, net of $312,792, which primarily consist of the (1) a gain of $170,000 for voluntary waiver of compensation
by the Company’s former directors; (2) penalty income of approximately $75,000 from the customers; (3) a gain of approximately $43,000
from historical debt forgiveness by service providers; (4) income of approximately $22,000 from the disposal of our own automobiles used
for operating leases; (5) the miscellaneous other income of approximately $16,000; partially offset by (6) approximately $13,000 in offering
costs allocable to the derivative liabilities for our pre-funded warrants and November 2025 private placement warrants upon closing.
For the year ended March
31, 2025, we had other expenses, net of $121,491, which primarily consist of (1) a loss of $197,000 from the termination of an automobiles
purchase agreement; (2) the expense of approximately $20,000 from the termination of our right-of-use assets for an exhibition hall we
leased in Changsha; (3) the miscellaneous income, net of approximately $1,000; partially offset by (4) the penalty income of approximately
$97,000 from the customers.
Change in Fair Value of Derivative Liabilities
Warrants issued in our registered
direct offerings that took place in February 2021, May 2021 and November 2025, and the August 2020 underwritten public offering, and the
November 2021 and November 2025 private placement were classified as liabilities under the caption “Derivative Liabilities”
in the 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 years ended March 31, 2026 and 2025 was a gain
of $202,959 and $204,242, respectively. The following table sets forth the breakdown of the gain (loss) in fair value of derivative liabilities
for the years ended March 31, 2026 and 2025:
For the Years Ended
March 31,
2026
2025
- August 2020 underwritten public offering
$ 21
$ 3,198
- February 2021 registered direct offering
219
4,114
- May 2021 registered direct offering
13,785
72,899
- November 2021 private placement
66,467
124,031
- November 2025 Private placement
231,066
—
- November 2025 registered direct offering
(108,599 )
—
Total Change in Fair Value of Derivative Liabilities
$ 202,959
$ 204,242
Excess of warrant fair value over offering proceeds
In November 2025, we issued
common shares, pre-funded warrants and the concurrent private placement warrants, generating aggregate gross proceeds of $2,841,300.
We concluded that these warrants qualify as liability instruments. At the issuance date in November 2025, the fair value of the warrants
was estimated at $5,737,755 using the Black-Scholes valuation model, and the $2,896,455 excess of the warrants’ fair value over
the total offering proceeds was recognized as a loss in the consolidated statements of operations and comprehensive loss.
Income Tax Expense
Generally, our subsidiary
Hunan Ruixi is subject to enterprise income tax on its taxable income in China at a rate of 25%. And the applicable tax rate of our HK
subsidiary, Senmiao HK, for the first HKD$2 million of assessable profits is 8.25% and assessable profits above HKD$2 million will continue
to be subject to the rate of 16.5% for corporations in Hong Kong. The enterprise income tax is calculated based on the entity’s
global income as determined under PRC tax laws and accounting standards. With the exception of Senmiao HK, which generated profits primarily
from tax-exempt interest income on bank deposits, all entities suffered losses. Accordingly, no tax expense was recorded for the years
ended March 31, 2026 and 2025.
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Net loss from continuing operations
As a result of the foregoing,
net loss from continuing operations for the year ended March 31, 2026 was $5,268,901, representing an increase of $3,362,060 from net
loss of $1,906,841 for the year ended March 31, 2025.
Results of Discontinued Operations for the
year ended March 31, 2026 Compared to the year ended March 31, 2025
For the Years Ended
March 31,
2026
2025
Revenues
$ 1,346,873
$ 1,837,142
Cost of revenues
(919,715 )
(1,461,847 )
Gross profit
427,158
375,295
Operating expenses
Selling, general and administrative expenses
(928,071 )
(926,906 )
Provision for credit losses
(253,942 )
(1,569,312 )
Total operating expenses
(1,182,013 )
(2,496,218 )
Loss from operations
(754,855 )
(2,120,923 )
Other income (expenses), net
226,101
(31,816 )
Interest expense
—
(8,372 )
Interest expense on finance leases
(615 )
(15,145 )
Loss before income taxes
(529,369 )
(2,176,256 )
Gain on disposal of discontinued operations
426,766
397,775
Income tax benefit
—
4,510
Net loss from discontinued operations
$ (102,603 )
$ (1,773,971 )
The result of discontinued
operations was the financial figures of our former subsidiary, XXTX and former subsidiaries in Sichuan. As of December 31, 2025, we deconsolidated
former subsidiaries in Sichuan and its business result was included in our automobile transactions and related services before we deconsolidated
its financial figures. 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
The following table sets
forth the breakdown of revenues by revenue source for years ended March 31, 2026 and 2025:
For the Years Ended
March 31,
2026
2025
Revenue from automobile transactions and related services (discontinued operations)
- Operating lease revenues from automobile rentals
$ 1,011,119
$ 1,115,880
- Service fees from NEVs leasing
223,775
184,625
- Monthly services commissions
65,188
119,428
- Default revenue
30,190
71,975
- Other service fees
16,601
993
Total revenue from automobile transactions and related services (discontinued operations)
1,346,873
1,492,901
Revenue from online ride-hailing platform services (discontinued operations)
—
344,241
Total Revenue from discontinued operations
$ 1,346,873
$ 1,837,142
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Revenue from automobile transactions and related
services (discontinued operations)
Revenue from our automobile
transaction and related services (discontinued operations) mainly includes operating lease revenues from automobile rentals, service fees
from NEVs leasing, monthly services commissions, default revenue and other services fees, which accounted for approximately 75.1%, 16.6%,
4.8%, 2.2% and 1.3%, respectively, of the total revenue from automobile transaction and related services from discontinued operations
during the year ended March 31, 2026. Meanwhile, operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly
services commissions, default revenue and other services fees, which accounted for approximately 74.7%,12.4%, 8.0%, 4.8% and 0.1%, respectively,
of the total revenue from automobile transaction and related services from discontinued operations during the year ended March 31, 2025.
Operating lease revenues from automobile rentals
Our former subsidiaries in
Sichuan generated revenues from leasing sub-leasing automobiles leased from third-parties and related parties or rendered by online ride-hailing
drivers with their authorization for a lease term of no more than twelve months. Our former subsidiaries in Sichuan leased over 410 automobiles
with an average monthly rental income of approximately $392 per automobile, resulting in a rental income of $1,011,119, including rental
income of $79,203 from two related parties, for the year ended March 31, 2026. Our former subsidiaries in Sichuan leased approximately
460 automobiles with an average monthly rental income of approximately $373 per automobile, resulting in a rental income of $1,115,880,
including rental income of $46,461 from Jinkailong and other related parties for the year ended March 31, 2025.
Service fees from NEVs leasing
Our former subsidiaries in
Sichuan generated revenues of $223,775 and $184,625 from leasing NEVs by charging leases service fees during the years ended March 31,
2026 and 2025, respectively. The amount of services fees for NEVs leasing were based on our timely product solutions which adjusted in
accordance with different market conditions.
Monthly services commissions
Our former subsidiaries in
Sichuan generated revenues of $65,188 and $119,428 from the monthly management and related services provided to Partner Platforms during
the years ended March 31, 2026 and 2025, respectively.
Default revenue
Our former subsidiaries in
Sichuan generated default revenues of $30,190 and $71,975 from the automobile lessee’s early-termination of the contracts or other
violation behaviors to the contracts during the years ended March 31, 2026 and 2025, respectively.
Other Service fees
Our former subsidiaries in
Sichuan generate other revenues from other miscellaneous service fees charged to our customers during the years ended March 31, 2026 and
2025, which mainly include the maintenance fees charged to our customers pursuant to certain new product solutions.
Revenue from online ride-hailing platform services
(discontinued operations)
XXTX generated revenue from
providing services to online ride-hailing drivers to assist them in providing transportation service to the riders though our 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 since October 2020.
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During the year ended March
31, 2025, 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 ride-hailing drivers completed rides and earned income through Xixingtianxia (the “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.
Cost of Revenues
During the years ended March
31, 2026 and 2025, cost of revenues from discontinued operations of $919,715 and $1,214,822, respectively. These costs represented the
amortization of ROUs, rental cost of automobiles, daily maintenance and insurance expense of automobiles which related to Auto Operating
Leasing, including $110,328 and $114,368 paid to related parties for rental costs of automobiles under operating leases for the years
ended March 31, 2026 and 2025, respectively.
During the year ended March
31, 2025, cost of revenues from discontinued operations of $247,025 represented the technical service charges, insurance and other expenses
which related to Online Ride-Hailing Platform Services.
Selling, General and Administrative Expenses
For the year ended March
31, 2026, selling, general and administrative expenses from discontinued operations related to Auto Operating Leasing, which amounted
to $928,071, primarily consisted of (1) $616,586 in outsourced operating services related to automobile lease; (2) $183,298 in salary
and employee benefits; (3) $86,660 in entertainment, advertising and promotion; and (4) other miscellaneous expenses.
For the year ended March
31, 2025, selling, general and administrative expenses from discontinued operations related to Auto Operating Leasing, which amounted
to $759,969, primarily consisted of (1) $441,499 in salary and employee benefits; (2) $181,646 in outsourced operating services related
to automobile lease; (3) $106,526 in entertainment, advertising and promotion; and (3) other miscellaneous expenses.
For the year ended March
31, 2025, selling, general and administrative expenses from discontinued operations related to Online Ride-Hailing Platform Services,
which amounted to $166,937 primarily consisted of (1) $64,859 in salary and employee benefits; (2) $37,746 in depreciation of office equipment
and amortization of intangible assets; (3) $32,187 in entertainment, advertising and promotion; and (4) other miscellaneous expenses.
Provision for credit losses
For the years ended March
31, 2026 and 2025, our former subsidiaries in Sichuan provided provision for credit losses of $253,942 and $1,396,034 against receivables
from Jinkailong, respectively.
For the year ended March
31, 2025, 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(expense), net
For the year ended March 31, 2026, our former subsidiaries in Sichuan
had other income, net of $226,101 which was primarily due to deconsolidation of Corenel.
For the year ended March 31, 2025, our former subsidiaries in Sichuan
and XXTX had other expense, net of $65,030 and other income, net of $33,214, respectively, which was primarily due to the miscellaneous
income and expense in the daily operations.
Interest Expense and Interest expense on finance leases
There was no interest
expense or interest expense on finance leases from discontinued operations for the year ended March 31, 2026.
Interest expense from discontinued
operations for the year ended March 31, 2025 was resulted from the borrowings of XXTX from a financial institution for its working capital
turnover.
Interest expense on finance
leases from discontinued operations for the year ended March 31, 2025 represented the interest expense accrued under finance leases for
the leased automobiles Corenel leased from a third-party company, and the leased automobiles rendered to us for sublease or sale by the
online ride-hailing drivers who exited the ride-hailing business.
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Gain on disposal of discontinued operations
We had a gain of $426,766
from disposal of our former subsidiaries in Sichuan during the year ended March 31, 2026, and $397,775 from disposal of XXTX during the
year ended March 31, 2025, which was resulted from the net deficit of disposal entities, the realized accumulated other comprehensive
loss upon disposal of disposal entities and the consideration through us undertaking of certain liabilities.
Income Tax Benefit
For the year ended March
31, 2025, XXTX had deferred tax benefit of $4,510, which was resulted from recognition of deferred tax assets.
Net loss from discontinued operations
As a result of the foregoing,
the net losses from discontinued operations for the years ended March 31, 2026 and 2025 was $102,603 and $1,773,971, respectively.
Liquidity and Capital Resources
In assessing liquidity, we monitor and analyze our cash on-hand and
our operating and capital expenditure commitments. Our liquidity needs are to meet its working capital requirements, operating expenses
and capital expenditure obligations. Debt financing from financial institutions and equity financings have been utilized to finance our
working capital requirements.
Our business is capital intensive,
and certain factors show negative trends in its liquidity position, including (1) the net loss of approximately $5.4 million for the year
ended March 31, 2026; (2) accumulated deficit of approximately $50.4 million as of March 31, 2026; (3) $1.1 million of net cash outflows
in operating activities from continuing operations for the year ended March 31, 2026, and (4) the net working capital deficit of approximately
$3.7 million as of March 31, 2026.
However, recent financing
arrangements have materially strengthened our cash position. Management evaluated and concluded that the factors aforementioned did not
raise substantial doubt as to our ability to continue as a going concern.
On April 23, 2026, we entered
into a certain securities purchase agreement with certain purchasers to sell an aggregate of up to 10,000,000 units (the “Units”),
each Unit consisting of one (1) share of its common stock, par value $0.0001 per share, and four (4) warrants, each to purchase one (1)
share of common stock, at a purchase price of $1.10 per Unit (the “April 2026 Units Private Placement”). The aggregate gross
proceeds to the Company from the Offering, all Units are sold, is approximately $11.0 million.
We believe that our cash
balance of approximately $3.6 million as of March 31, 2026, together with the additional gross proceeds of approximately $11.0 million
collected from the April 2026 Units Private Placement, will be sufficient to meet our working capital needs in the next 12 months from
the date the audited consolidated financial statements are issued. If we experienced an adverse operating environment or incurred unanticipated
capital expenditure requirements, or if we determined to accelerate our growth, then additional financing may be required.
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The following table summarizes
our cash flows:
For the Years Ended
March 31,
2026
2025
Net Cash (Used in) Provided by Operating Activities from Continuing Operations
$ (1,136,464 )
$ 325,873
Net Cash (Used in) Provided by Operating Activities from Discontinued Operations
(465,097 )
174,430
Net Cash (Used in) Provided by Operating Activities
(1,601,561 )
500,303
Net Cash (Used in) Provided by Investing Activities from Continuing Operations
(193,939 )
16,346
Net Cash Used in Investing Activities from Discontinued Operations
—
(481,124 )
Net Cash Used in Investing Activities
(193,939 )
(464,778 )
Net Cash Provided by (Used in) Financing Activities from Continuing Operations
4,338,910
(11,940 )
Net Cash Provided by (Used in) Financing Activities from Discontinued Operations
80,100
(111,780 )
Net Cash Provided by (Used in) Financing Activities
4,419,010
(123,720 )
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
142,734
127,136
Cash, Cash Equivalents and Restricted Cash, Beginning of the Year
833,577
794,636
Cash, Cash Equivalents and Restricted Cash, End of the Year
3,599,821
833,577
Less: Cash, Cash Equivalents and Restricted Cash from discontinued operations
(37,602 )
(132,275 )
Cash from continuing operations, End of Year
$ 3,562,219
$ 701,302
Cash Flow in Operating Activities
For the year ended March
31, 2026, net cash used in operating activities was $1,601,561, which consisted of the net outflows of $1,136,464 from continuing operations
and $465,097 from discontinued operations. While for the year ended March 31, 2025, net cash provided by operating activities was $500,303,
which consisted of net cash inflows of $325,873 from continuing operations and $174,430 from discontinued operations.
The increase of
$1,462,337 in net cash used in operating activities from continuing operations for the year ended March 31, 2026 as compared with
the year ended March 31, 2025 was primarily attributable to (1) increase of $3,362,060 in net loss from continuing operations; (2)
decrease of $714,166 in the change of accrued expenses and other liabilities (both third parties and due to a related party); (3)
decrease of $275,101 in the provision for credit losses; (4) non-incurrence of the loss of $196,777 from termination of automobiles
purchase in the year ended March 31, 2026 as compared with it in the same period in 2025; (5) a gain of $170,00 for voluntary waiver
of compensation by the company’s former directors in the year ended March 31, 2026; (6) decrease of $114,171 in the change of
accounts payable; (7) a gain of $42,581 from debt forgiveness by service providers in the year ended March 31, 2026; and partially
offset by (8) a loss of $2,896,455 arising from excess of the warrants’ fair value over the total offering proceeds from the
November 2025 issuance of common shares, pre-funded warrants and concurrent private placement warrants; (9) increase of $318,774 in
the prepayments, other receivables and other assets; (10) $250,000 increased in stock-based compensation in the year ended March 31,
2026.
Cash Flow in Investing Activities
For the year ended March
31, 2026, we had net cash used in investing activities of $193,939 from continuing operations, which consisted of (1) the loan to a related
party of $229,469; partially offset by (2) the proceeds from sales of the used-automobiles of $35,530.
For the year ended March
31, 2025, we had net cash used in investing activities of $464,778, which consisted of the net inflows of $16,346 from continuing operations
and net outflows of $481,124 from discontinued operations. The majority of net cash provided by investing activities from continuing operations
was (1) the proceeds from sales of the used-automobiles of $16,761; partially offset by (2) the purchase furniture for office purpose
of $415.
Cash Flow in Financing Activities
For the year ended March
31, 2026, we had net cash provided by financing activities of $4,419,010, which consisted of the net inflows of $4,338,910 from continuing
operations and net inflows of $80,100 from discontinued operations. The majority of net cash provided by financing activities from continuing
operations consisted of: (1) net proceeds of $659,992 from the exercise of November 2021 Private Placement Warrants from an investor;
(2) net proceeds of $341,251from issuance of common stock in PIPE Offering in November 2025; (3) net proceeds of $2,828,725 from issuance
of common stock and pre-funded warrants in registered direct offering and concurrent private placement of warrants in November 2025; (4)
borrowings from related parties of $778,307; partially offset by (5) repayments to related parties of $269,365.
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For the year ended March
31, 2025, we had net cash used in financing activities of $123,720, which consisted net outflows of $11,940 from continuing operations
and $111,780 from discontinued operations. The net cash used in financing activities financing activities from continuing operations was
repayments to a related party.
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 March
31, 2026, Hunan Ruixi holds 35% of equity interest of Jinkailong and has not made any payments towards the investment amounting to RMB3.5
million (approximately $507,000). 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 consolidated financial
statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these 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 consolidated
financial statements, you should consider our selection of critical accounting policies, the judgment and other uncertainties affecting
the application of such policies and the sensitivity of reported results to changes in conditions and assumptions. Our critical accounting
policies and practices include the following: (i) property and equipment, net; (ii) revenue recognition. See Note 3—Summary of Significant
Accounting Policies to our consolidated financial statements for the disclosure of these accounting policies.
Recent Developments
Private Placement
On November 14, 2025, the
Company entered into a securities purchase agreement with certain accredited investors, providing for (i) the issuance of 1,350,000 shares
of common stock, par value $0.0001 per share, and 905,000 pre-funded warrants to purchase 905,000 shares of the common stock, at a purchase
price of $1.26 per share, in a registered direct offering for aggregate gross proceeds of approximately $2.8 million, and (ii) the concurrent
4,510,000 private placement warrants to purchase up to 4,510,000 shares of common stock (the “November 2025 Private Placement”).
The common stock and pre-funded warrants were issued on November 17, 2025. The 905,000 pre-funded warrants have an exercise price of $0.0001
per share of common stock, are immediately exercisable and remain exercisable until exercised in full. The 4,510,000 private placement
warrants were issued on June 25, 2026, have an exercise price of $1.26 per share of common stock, and have a term of 5.5 years and are
exercisable at any time on or after the initial exercisability date.
On April 23, 2026, we entered
into a certain securities purchase agreement with certain purchasers, pursuant to which we agreed to sell an aggregate of up to 10,000,000
units (the “Units”), each Unit consisting of one (1) share of its common stock, par value $0.0001 per share, and four (4)
warrants, each to purchase one (1) share of common Stock (the “April 2026 Units Private Placement”), at a purchase price of
$1.10 per Unit. The April 2026 Units Private Placement closed on June 25, 2026. All Units were sold, and the aggregate gross proceeds
from the April 2026 Units Private Placement were approximately $11.0 million.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not required for smaller reporting companies.
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