v3.26.1
Accounting Policies, by Policy (Policies)
 9 Months Ended
Dec. 31, 2025
Summary of Significant Accounting Policies [Abstract]  
Basis of presentation

(a) Basis of presentation

 

The unaudited condensed consolidated financial statements, including the unaudited condensed consolidated balance sheet as of December 31, 2025, the unaudited condensed consolidated statements of operations and comprehensive loss, and the unaudited condensed consolidated statements of changes in equity for the three and nine months ended December 31, 2025 and 2024, and the unaudited condensed consolidated statements of cash flows for the nine months ended December 31, 2025 and 2024, as well as other information disclosed in the accompanying notes, have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and pursuant to the rules and regulations of the SEC and pursuant to Regulation S-X. The interim unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto, included in the Form 10-K for the fiscal year ended March 31, 2025, which was filed with the SEC on July 10, 2025.

 

The interim unaudited condensed consolidated financial statements and the accompanying notes have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The consolidated results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future years or interim periods.
Restatement to Previously Reported Financial Statements

(b) Restatement to Previously Reported Financial Statements

 

On June 26, 2026, the audit committee of the board of directors of the Company, after discussion with the Company’s management, concluded that the Company’s unaudited condensed consolidated financial statements as of and for the three and nine months ended December 31, 2025 included in the Quarterly Report on Form 10-Q as filed with the SEC on February 13, 2026 should no longer be relied upon due to the misstatements described below.

 

During the preparation of the Company’s consolidated financial statements for the year ended March 31, 2026, management identified the following misstatements to the Company’s financial statements for as of and for the three and nine months ended December 31, 2025:

 

During the three and nine months ended December 31, 2025, pre-funded warrants and November 2025 private placement warrants issued with common stocks in November 2025 were incorrectly classified as equity instruments, while the pre-funded warrants and November 2025 private placement warrants should be classified as liability instruments measured at fair value, with changes in fair value reported each period in earnings. Such error has resulted in the misstatements of “derivative liabilities”, “additional paid-in capital” and “accumulated deficit” as of December 31, 2025, and the misstatements of “change in fair value of derivative liabilities”, “excess of warrant fair value over offering proceeds”, “other income, net”, “net loss from continuing operations” and “net loss” for the three and nine months ended December 31, 2025. Adjustments have been made to the statements of operations as well as the balance sheet, statement of changes in equity (deficit) and statement of cash flows. The amount recorded reflects pre-funded warrants and November 2025 private placement warrants as liability instruments measured at fair value and resulted in increase in other expense, increase in derivative liabilities, and a reduction to additional paid-in capital.

 

This note discloses the nature of the restatement adjustments and discloses the cumulative effects of these adjustments included in Amendment No. 1 to the Original Form 10-Q. The effects of the misstatements have been corrected in all impacted tables and footnotes throughout these unaudited condensed consolidated financial statements.

 

Impact to the unaudited condensed consolidated balance sheet as of December 31, 2025

 

    As reported     Adjustments     As restated  
Derivative liabilities   $ 3     $ 4,924,530     $ 4,924,533  
Total current liabilities     1,935,959       4,924,530       6,860,489  
Total liabilities     1,946,170       4,924,530       6,870,700  
                         
Additional paid-in capital     48,226,206       (2,828,725 )     45,397,481  
Accumulated deficit     (46,959,942 )     (2,095,805 )     (49,055,747 )
Total Senmiao Technology Limited stockholders’ equity (deficit)     397,256       (4,924,530 )     (4,527,274 )
Total equity (deficit)   $ 3,752,054     $ (4,924,530 )   $ (1,172,476 )

 

Impact to the unaudited condensed consolidated statement of operations for the three months ended December 31, 2025

 

    As reported     Adjustments     As restated  
Change in fair value of derivative liabilities   $ 180     $ 813,225     $ 813,405  
Excess of warrant fair value over offering proceeds     —       (2,896,455 )     (2,896,455 )
Other income, net     243,272       (12,575 )     230,697  
Total other (expense) income, net     243,452       (2,095,805 )     (1,852,353 )
Loss before income tax expense     (853,133 )     (2,095,805 )     (2,948,938 )
Net loss from continuing operations     (853,133 )     (2,095,805 )     (2,948,938 )
Net loss     (873,677 )     (2,095,805 )     (2,969,482 )
Net loss attributable to the Company’s stockholders     (1,037,229 )     (2,095,805 )     (3,133,034 )
Comprehensive loss     (1,044,770 )     (2,095,805 )     (3,140,575 )
Total comprehensive loss attributable to stockholders     (1,059,786 )     (2,095,805 )     (3,155,591 )
Loss per share - basic and diluted*     (0.29 )     (0.59 )     (0.88 )
                         
Loss per share - basic and diluted                        
Continuing operations   $ (0.28 )   $ (0.59 )   $ (0.87 )

 

Impact to the unaudited condensed consolidated statement of operations for the nine months ended December 31, 2025

 

    As reported     Adjustments     As restated  
Change in fair value of derivative liabilities   $ 80,489     $ 813,225     $ 893,714  
Excess of warrant fair value over offering proceeds     —       (2,896,455 )     (2,896,455 )
Other income, net     305,068       (12,575 )     292,493  
Total other (expense) income, net     385,557       (2,095,805 )     (1,710,248 )
Loss before income tax expense     (1,771,242 )     (2,095,805 )     (3,867,047 )
Net loss from continuing operations     (1,771,242 )     (2,095,805 )     (3,867,047 )
Net loss     (1,873,845 )     (2,095,805 )     (3,969,650 )
Net loss attributable to the Company’s stockholders     (1,850,369 )     (2,095,805 )     (3,946,174 )
Comprehensive loss     (2,061,870 )     (2,095,805 )     (4,157,675 )
Total comprehensive loss attributable to stockholders     (1,889,577 )     (2,095,805 )     (3,985,382 )
Loss per share - basic and diluted*     (0.90 )     (1.02 )     (1.92 )
                         
Loss per share - basic and diluted                        
Continuing operations   $ (0.85 )   $ (1.02 )   $ (1.87 )

 

Impact to the unaudited condensed consolidated statement of changes in equity for the nine months ended December 31, 2025

 

    As reported     Adjustments     As restated  
Net loss   $ (1,873,845 )   $ (2,095,805 )   $ (3,969,650 )
Additional paid-in capital     48,226,206       (2,828,725 )     45,397,481  
Accumulated deficit     (46,959,942 )     (2,095,805 )     (49,055,747 )
Total equity (deficit)   $ 3,752,054     $ (4,924,530 )   $ (1,172,476 )

 

Impact to the unaudited condensed consolidated statement of cash flows for the nine months ended December 31, 2025

 

    As reported     Adjustments     As restated  
Net loss   $ (1,873,845 )   $ (2,095,805 )   $ (3,969,650 )
Net loss from continuing operations     (1,771,242 )     (2,095,805 )     (3,867,047 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                        
Excess of warrant fair value over offering proceeds     —       2,896,455       2,896,455  
Offering costs allocable to derivative liabilities     —       12,575       12,575  
Change in fair value of derivative liabilities   $ (80,489 )   $ (813,225 )   $ (893,714 )
Comparability and reclassification adjustments

(c) Comparability and reclassification adjustments

 

The Company has reclassified certain comparative balances in the unaudited condensed consolidated balance sheet as of March 31, 2025 and certain comparative amounts in the unaudited condensed consolidated statements of operations and comprehensive loss for the three and nine months ended December 31, 2024 to conform to the current period’s presentation, as a result of the retrospective application of discontinued operations of Yicheng, Senmiao Consulting and its subsidiaries (refer to Note 4) in accordance with ASC 205-20-45. The assets and liabilities of the discontinued operations have been classified as current assets of discontinued operations, other assets of discontinued operations, current liabilities of discontinued operations, and other liabilities of discontinued operations in the Unaudited condensed consolidated balance sheet as of March 31, 2025. The results of discontinued operations for the three and nine months ended December 31, 2024 have been reflected separately in the unaudited condensed consolidated statements of operations and comprehensive loss as a single line item for all periods presented in accordance with U.S. GAAP. Cash flows from discontinued operations of the three categories for the nine months ended December 31, 2024 were separately presented in the unaudited condensed consolidated statements of cash flows for all periods presented in accordance with U.S. GAAP. The reclassifications and retrospective adjustments to the March 31, 2025 balances are unaudited.
Foreign currency translation

(d) Foreign currency translation

 

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing on the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates on the date of the balance sheet. The resulting exchange differences are recorded in the statement of operations.

 

The reporting currency of the Company and its subsidiaries is U.S. dollars (“US$”) and the unaudited condensed consolidated financial statements have been expressed in US$. However, the Company’s PRC subsidiary maintains the books and records in its functional currency, Chinese Renminbi (“RMB”), being the functional currency of the economic environment in which its operations are conducted.

 

In general, for consolidation purposes, assets and liabilities of the Company and its subsidiaries whose functional currency is not the US$, are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of the Company and its subsidiaries are recorded as a separate component of accumulated other comprehensive loss within the unaudited condensed consolidated statements of changes in equity.

 

Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective periods:

 

    December 31,     March 31,  
    2025     2025  
Balance sheet items, except for equity accounts – RMB: US$1:     6.9931       7.2567  

 

    For the Three months ended
December 31,		  
    2025     2024  
Items in the statements of operations and comprehensive loss, and cash flows – RMB: US$1:     7.0889       7.1896  

 

    For the Nine months ended
December 31,		  
    2025     2024  
Items in the statements of operations and comprehensive loss, and cash flows – RMB: US$1:     7.1600       7.1981  
Use of estimates

(e) Use of estimates

 

In presenting the unaudited condensed consolidated financial statements in accordance with U.S. GAAP, management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. The Company bases its estimates on past experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, residual values of property and equipment, determinations of the useful lives and valuation of long-lived assets, estimates of allowances for credit losses for receivables and due from related parties, estimates of impairment of long-lived assets, and valuation of deferred tax assets.
Fair values of financial instruments

(f) Fair values of financial instruments

 

Accounting Standards Codification (“ASC”) Topic 825, Financial Instruments (“Topic 825”) requires disclosure of fair value information of financial instruments, whether or not recognized in the balance sheets, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Topic 825 excludes certain financial instruments and all nonfinancial assets and liabilities from its disclosure requirements. Accordingly, the aggregate fair value amounts do not represent the underlying value of the Company. The three levels of valuation hierarchy are defined as follows:

 

  Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

  Level 2 Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

 

  Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value.

 

The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2025 and March 31, 2025:

 

    Carrying
Value as of		     Fair Value Measurement as of  
    December 31,     December 31, 2025  
    2025     Level 1     Level 2     Level 3  
    (Unaudited)                 (Unaudited)  
Derivative liabilities   $ 4,924,533     $ —     $ —     $ 4,924,533  

 

    Carrying
 Value as of		     Fair Value Measurement as of  
    March 31,     March 31, 2025  
    2025     Level 1     Level 2     Level 3  
Derivative liabilities   $ 84,591     $ —     $ —     $ 84,591  

 

The following is a reconciliation of the beginning and ending balance of the assets and liabilities measured at fair value on a recurring basis for the nine months ended December 31, 2025 and for the year ended March 31, 2025:

 

    August
2020
Underwritten
Public		     February
2021
Registered
Direct		     May 2021
Registered Direct Offering		     November 2021
Private Placement		     November 2025
Private Placement		     November 2025
Registered
Direct
Offering		        
    Offering
Warrants		     Offering
Warrants		     Investors
Warrants		     Placement
Warrants		     Offering
Warrants		     Placement
Warrants		     Investors
Warrants		     Pre-funded Warrant     Total  
BALANCE as of March 31, 2024   $ 3,219     $ 4,333     $ 80,636     $ 6,048     $ 179,520     $ 15,077     $ —     $ —     $ 288,833  
Change in fair value of derivative liabilities     (3,198 )     (4,114 )     (67,813 )     (5,086 )     (114,934 )     (9,097 )     —       —       (204,242 )
BALANCE as of March 31, 2025     21       219       12,823       962       64,586       5,980       —       —       84,591  
Derivative liabilities recognized at grant date                                                     4,724,165       1,013,590       5,737,755  
Change in fair value of derivative liabilities     (21 )     (219 )     (12,823 )     (962 )     (60,485 )     (5,979 )     (767,975 )     (45,250 )     (893,714 )
Exercise     —       —       —       —       (4,099 )     —       —       —       (4,099 )
BALANCE as of December 31, 2025 (Unaudited).   $ —     $ —     $ —     $ —     $ 2     $ 1     $ 3,956,190     $ 968,340     $ 4,924,533  

 

The warrants presented in the table above are not traded in an active securities market; therefore, the Company estimates the fair value to those warrants using the Black-Scholes valuation model as of December 31, 2025 and March 31, 2025.

 

    As of December 31, 2025  
    February 10, 2021     May 13, 2021     November 10, 2021     November     November  
    Placement                 Placement           Placement     14, 2025     17, 2025  
    Agent     ROFR     Investor     Agent     Investor     Agent     Investor     Pre-funded  
Granted Date   Warrants     Warrants     Warrants     Warrants     Warrants     Warrants     Warrants     Warrants  
# of shares exercisable*     3,804       1,522       55,319       4,149       1,341,362       5,515       4,510,000       905,000  
Valuation date     12/31/2025       12/31/2025       12/31/2025       12/31/2025       12/31/2025       12/31/2025       12/31/2025       12/31/2025  
Exercise price*   $ 138.00     $ 172.50     $ 105.00     $ 105.00     $ 1.03     $ 68.00     $ 1.26     $ 0.0001  
Stock price*   $ 1.07     $ 1.07     $ 1.07     $ 1.07     $ 1.07     $ 1.07     $ 1.07     $ 1.07  
Expected term (years)     0.11       0.11       0.36       0.36       0.86       0.86       5.37        **  
Risk-free interest rate     3.67 %     3.67 %     3.59 %     3.59 %     3.51 %     3.51 %     3.77 %     4.78 %
Expected volatility     119 %     119 %     119 %     119 %     119 %     119 %     115 %     119 %

 

    As of March 31, 2025  
    August 4, 2020     February 10, 2021     May 13, 2021     November 10, 2021  
          Placement                 Placement           Placement  
    Underwriters’     Agent     ROFR     Investor     Agent     Investor     Agent  
Granted Date   Warrants     Warrants     Warrants     Warrants     Warrants     Warrants     Warrants  
# of shares exercisable*     3,181       3,804       1,522       55,319       4,149       2,778,315       5,515  
Valuation date     3/31/2025       3/31/2025       3/31/2025       3/31/2025       3/31/2025       3/31/2025       3/31/2025  
Exercise price*   $ 62.50     $ 138.00     $ 172.50     $ 105.00     $ 105.00     $ 2.16     $ 68.00  
Stock price*   $ 8.90     $ 8.90     $ 8.90     $ 8.90     $ 8.90     $ 8.90     $ 8.90  
Expected term (years)     0.35       0.87       0.87       1.12       1.12       1.61       1.61  
Risk-free interest rate     1.39 %     3.49 %     3.49 %     4.01 %     4.01 %     4.21 %     4.21 %
Expected volatility     112 %     112 %     112 %     112 %     112 %     112 %     112 %

 

* Giving retroactive effect to the 1-for-10 reverse stock split effected on July 29, 2025

 

** No fixed termination date is specified in the agreement of November 2025 Pre-funded Warrants, which can be exercised at any time on or after the initial exercise date and until it is exercised in full, yet the Company adopted a 20-year assumption for valuation purposes.

 

As of December 31, 2025 and March 31, 2025, financial instruments of the Company comprised primarily current assets and current liabilities including cash and cash equivalents, accounts receivable, finance lease receivables, prepayments, other receivables and other assets, due from related parties, accounts payable, advance from customers, lease liabilities, accrued expenses and other liabilities, due to related parties, and operating and financing lease liabilities, which approximate their fair values because of the short-term nature of these instruments, and current liabilities of borrowings from a financial institution, which approximate their fair values because of the stated loan interest rate to the rate charged by similar financial institutions.

 

The non-current portion of finance lease receivables, operating and financing lease liabilities were recorded at the gross amount adjusted for the interest using the effective interest rate method. The Company believes that the effective interest rates underlying these instruments approximate their fair values because the Company used its incremental borrowing rate to recognize the present value of these instruments as of December 31, 2025 and March 31, 2025.

 

Other than as listed above, the Company did not identify any assets or liabilities that are required to be presented on the balance sheet at fair value.
Segment reporting

(g) Segment reporting

 

In November 2023, the FASB issued ASU 2023-07, which is an update to Topic 280, Segment Reporting: Improvements to reportable Segment Disclosures (“ASU 2023-07”), which enhances the disclosure required for reportable segments in annual and interim consolidated financial statements, including additional, more detailed information about a reportable segment’s expenses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company adopted ASU 2023-07 for the year ended March 31, 2025, retrospectively to all periods presented in the consolidated financial statement. The adoption of this ASU had no material impact on reportable segments identified and had no effect on the Company’s consolidated financial position, results of operations, or cash flows.

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (the “CODM”), the Company’s CODM has been identified as its CEO, who reviews the consolidated results when making decisions about allocating resources and assessing performance of the Company. The Company evaluated how the CODM manages the businesses of the Company to maximize efficiency in allocating resources and assessing performance. The Company has one operating and reportable segment of automobile transaction and related services as set forth in Note 1, after discontinued the online ride-hailing platform services on August 20, 2024.

Cash and cash equivalents

(h) Cash and cash equivalents

 

Cash and cash equivalents primarily consist of bank deposits with original maturities of three months or less, which are unrestricted as to withdrawal and use. Cash and cash equivalents also consist of funds received from automobile purchasers as payments for automobiles, funds received from automobile lessees as payments for rentals, which were held at the third-party platforms’ fund accounts and which are unrestricted and immediately available for withdrawal and use.
Accounts receivable

(i) Accounts receivable

 

Accounts receivable are recorded at the invoiced amount less an allowance for any uncollectible accounts and do not bear interest, and are due on demand. The carrying value of accounts receivable is reduced by an allowance that reflects the Company’s best estimate of the amounts that will not be collected. An allowance for credit losses is recorded in the period when a loss is probable based on an assessment of specific evidence indicating collection is unlikely, historical bad debt rates, accounts aging, financial conditions of the customer and industry trends. Starting from April 1, 2023, the Company adopted ASU No.2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”). Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company’s management continues to evaluate the reasonableness of the valuation allowance policy and update it if necessary. As of December 31, 2025 and March 31, 2025, the Company determined no allowance for credit losses was necessary for accounts receivable.

Finance lease receivables

(j) Finance lease receivables

 

Finance lease receivables, which result from sales-type leases, are measured at discounted present value of (i) future minimum lease payments, (ii) any residual value not subject to a bargain purchase option as finance lease receivables on its balance sheet and (iii) accrued interest on the balance of the finance lease receivables based on the interest rate inherent in the applicable lease over the term of the lease. Management also periodically evaluates individual customer’s financial condition, credit history and the current economic conditions to make adjustments in the allowance for credit losses when necessary. Finance lease receivables are charged off against the allowance for credit losses after all means of collection have been exhausted and the potential for recovery is considered remote. As of December 31, 2025 and March 31, 2025, the Company determined no allowance for credit losses was necessary for finance lease receivables.

 

As of December 31, 2025 and March 31, 2025, finance lease receivables consisted of the following:

 

    December 31,     March 31,  
    2025     2025  
      (Unaudited)       (Unaudited)  
Minimum lease payments receivable   $ 132,624     $ 293,872  
Less: Unearned interest     (52,905 )     (104,340 )
Financing lease receivables   $ 79,719     $ 189,532  
Finance lease receivables, current   $ 72,543     $ 166,339  
Finance lease receivables, non-current   $ 7,176     $ 23,193  

 

Future scheduled minimum lease payments for investments in sales-type leases as of December 31, 2025 are as follows:

 

    Minimum
future
payments
receivable		  
Twelve months ending December 31, 2026   $ 110,582  
Twelve months ending December 31, 2027     22,042  
Total   $ 132,624  
Property and equipment, net

(k) Property and equipment, net

 

Property and equipment primarily consist of office equipment, fixtures and furniture and automobiles, which are stated at cost less accumulated depreciation less any provision required for impairment in value. Depreciation is computed using the straight-line method with no residual value based on the estimated useful life. The useful life of property and equipment is summarized as follows:

 

Categories   Useful life  
Office equipment, fixture and furniture     3 - 5 years  
Automobiles     3 - 5 years  

 

The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the future net undiscounted cash flows that the asset is expected to generate. If such asset is considered to be impaired, the impairment recognized is the amount by which the carrying amount of the asset, if any, exceeds its fair value determined using a discounted cash flow model. For the three and nine months ended December 31, 2025 and 2024, the Company did not recognize impairment for property and equipment.

 

Costs of repairs and maintenance are expensed as incurred and asset improvements are capitalized. The cost and related accumulated depreciation and amortization of assets disposed of or retired are removed from the accounts, and any resulting gain or loss is reflected in the unaudited condensed consolidated statements of operations and comprehensive loss.
Intangible assets, net

(l) Intangible assets, net

 

Purchased intangible assets are recognized and measured at fair value upon acquisition. Separately identifiable intangible assets that have determinable lives continue to be amortized over their estimated useful lives using the straight-line method as follows:

 

Categories   Useful life  
Software     5-10 years  

 

Separately identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for identifiable intangible assets is based on the amount by which the carrying amount of the assets exceeds the fair value of the assets. For the three and nine months ended December 31, 2025 and 2024, there was no impairment of intangible assets.
Loss per share

(m) Loss per share

 

Basic loss per share is computed by dividing net loss attributable to stockholders by the weighted average number of outstanding shares of common stock, adjusted for outstanding shares of common stock that are subject to repurchase.

 

For the calculation of diluted loss per share, net loss attributable to stockholders for basic loss per share is adjusted by the effect of dilutive securities, including share-based awards, under the treasury stock method and convertible securities under the if-converted method. Potentially dilutive securities, of which the amounts are insignificant, have been excluded from the computation of diluted net loss per share if their inclusion is anti-dilutive.

 

As of December 31, 2025, the Company’s dilutive securities from the outstanding series A convertible preferred stock are convertible into 13,100 shares of common stock. This amount is not included in the computation of dilutive loss per share because their impact is anti-dilutive.

Derivative liabilities

(n) Derivative liabilities

 

A contract is designated as an asset or a liability and is carried at fair value on the Company’s balance sheet, with any changes in fair value recorded in the Company’s results of operations. The Company then determines which options, warrants and embedded features require liability accounting and records the fair value as a derivative liability. The changes in the values of these instruments are shown in the unaudited condensed consolidated statements of operations and comprehensive loss as “change in fair value of derivative liabilities”.
Revenue recognition

(o) Revenue recognition

 

The Company recognized its revenue under Accounting Standards Codification (“ASC”) 842 Leases (“ASC 842”) and Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606).

 

ASC 606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. It also requires the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer.

 

To achieve that core principle, the Company applies the five steps defined under ASC 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

 

The Company accounts for a contract with a customer when the contract is entered into by the parties, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration to collect is substantially probable.

 

Leases - Lessor

 

The Company recognized revenue as lessor in accordance with ASC 842. The two primary accounting provisions the Company uses to classify transactions as sales-type or operating leases are: (i) a review of the lease term to determine if it is for the major part of the economic life of the underlying equipment (defined as greater than 75%); and (ii) a review of the present value of the lease payments to determine if they are equal to or greater than substantially all of the fair market value of the equipment at the inception of the lease (defined as greater than 90%). Automobiles included in arrangements meeting these conditions are accounted for as sales-type leases. Interest income from the lease is recognized in financing revenues over the lease term. Automobile included in arrangements that do not meet these conditions are accounted for as operating leases and revenue is recognized over the term of the lease.

 

The Company excludes from the measurement of its lease revenues any tax assessed by a governmental authority that is both imposed on and concurrent with a specific revenue-producing transaction and collected from a customer.

 

The Company considers the economic life of most of the automobiles to be three to five years, since this represents the most common long-term lease term for its automobiles and the automobiles will be used for online ride-hailing services. The Company believes three to five years is representative of the period during which an automobile is expected to be economically usable, with normal service, for the purpose for which it is intended.

 

The Company’s lease pricing interest rates, which are used in determining customer payments in a bundled lease arrangement, are developed based upon the local prevailing rates in the marketplace where its customer will be able to obtain an automobile loan under similar terms from the bank. The Company reassesses its pricing interest rates quarterly based on changes in the local prevailing rates in the marketplace. As of December 31, 2025, the Company’s pricing interest rate was 6.0% per annum. 

 

Contract liability

 

The Company’s contract liabilities consist of advances from customers, which are the upfront rent received from customers. The revenue recognized for the nine months ended December 31, 2025 and 2024 that was previously included in the advances from customers balances as of March 31, 2025 and March 31, 2024 was $99,780 and $119,128, respectively.

 

The Company’s advances from customers amounted to $82,356 and $103,897 as of December 31, 2025 and March 31, 2025, respectively.

 

Disaggregated information of revenues by business lines are as follows:

 

    For the Three Months Ended     For the Nine Months Ended  
    December 31,     December 31,  
    2025     2024     2025     2024  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
Automobile Transaction and Related Services                        
- Operating lease revenues from automobile rentals   $ 317,153     $ 409,731     $ 1,076,175     $ 1,312,582  
- Financing revenues     15,117       23,668       56,297       72,697  
- Service fees from NEVs leasing     14,799       —       33,341       —  
- Default revenue     5,831       7,711       23,320       27,294  
- Monthly services commissions     3,427       3,828       14,422       16,353  
- Service fees from automobile purchase services     —       2,959       8,936       29,862  
- Other service fees     2,357       3,550       7,137       17,450  
Total Revenues   $ 358,684     $ 451,447     $ 1,219,628     $ 1,476,238  

 

Automobile transaction and related services

 

Operating lease revenues from automobile rentals –The Company generates revenue from leasing its own automobiles. The Company recognizes revenue wherein an automobile is transferred to the lessees and the lessees has the ability to control the asset, is accounted for under ASC Topic 842. Rental transactions are satisfied over the rental period and is recognized over time. As the operating lease revenue are variable in nature which is based on online ride-hailing drivers or third-parties’ performance for a certain period, the Company recognized the revenue from operating lease by using the output method based on periodic settlement between the Company and the online ride-hailing drivers or third-parties when such revenue is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Rental periods are short term in nature, generally are twelve months or less.

 

Financing revenues – Interest income from the lease arising from the Company’s sales-type leases and bundled lease arrangements are recognized as financing revenues over the lease term based on the effective rate of interest in the lease.

 

Service fees from NEVs leasing – Services fees from NEVs leasing are paid by some lessees who rent new energy electric vehicles from the Company, which based on the product solutions. The service content includes: (1) introducing the current situation of the online ride-hailing industry; (2) guiding the lessees to open an account on Partner Platforms; (3) introducing online ride-hailing business and order-taking skills; (4) providing violation handling consultation, insurance claims consultation, and traffic accident legal consultation; etc.

 

Default revenue – The Company charged the lessees default expenses such as early-termination the contracts or other violation behaviors to the contracts. The default punishment is calculated and confirmed by the customers.

 

Monthly services commissions – Commissions from the services generated from the management and related services provided to Partner Platforms and other companies, which are settled on a monthly basis. The Company recognizes revenues at a point in time when performance obligations are completed and the commission amount is confirmed by the Partner Platforms and other companies, based on their evaluations on the services provided by the Company.

 

Service fees from automobile purchase services – Automobile purchase services are paid by automobile purchasers for a series of the services provided to them throughout the purchase process such as credit assessment, installment of GPS devices, ride-hailing driver qualification and other administrative procedures, which is based on the sales price of the automobiles and relevant services provided.

 

The Company recognizes those revenues at a point in time when above mentioned services are completed, and corresponding an automobile is delivered to the lessee or purchaser. The Company recognizes the revenue of service fees from NEVs leasing once the lessees terminate the lease term and confirmed the settlement between the Company and the lessees. Accounts receivable related to automobile purchase services is collected upon the automobiles are delivered to lessees or purchaser. The Company recognizes default revenue at a point in time when performance obligations are completed and the default punishment is calculated and confirmed by the customers, which represent the collectability is probable from the customers.

 

Other revenues – The Company generated other revenues such as miscellaneous service fees charged to its customers for some supporting services provided to online ride-hailing drivers and sales of automobiles. The Company recognizes revenues at a point in time when performance obligations are completed and the collectability is probable from the customers.
Leases – lessee

(p) Leases – lessee

 

The Company accounts for leases in accordance with ASC 842. The Company enters into certain agreements as a lessee to lease automobiles and to conduct its automobiles rental operations. If any of the following criteria are met, the Company classifies the lease as a direct financing or sales-type lease (as a lessee):

 

  ● The lease transfers ownership of the underlying asset to the lessee by the end of the lease term;

 

  ● The lease grants the lessee an option to purchase the underlying asset that the Company is reasonably certain to exercise;

 

  ● The lease term is for 75% or more of the remaining economic life of the underlying asset, unless the commencement date falls within the last 25% of the economic life of the underlying asset;

 

  ● The present value of the sum of the lease payments equals or exceeds 90% of the fair value of the underlying asset; or

 

  ● The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.

 

Leases that do not meet any of the above criteria are accounted for as operating leases.

 

Finance and operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Since the implicit rate for the Company’s leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.

 

The Company considers extension, renewal and termination options at lease inception when calculating the present value of lease payments. However, the Company has determined there is no reasonable certainty that any of these options will be exercised, so such optional periods are generally excluded from the lease terms used for present value of lease payments. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally do not provide a residual guarantee. The finance or operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term for operating lease. Meanwhile, the Company recognizes the finance leases ROU assets and interest on an amortized cost basis. The amortization of finance ROU assets is recognized on a straight-line basis as amortization expense, while the lease liability is increased to reflect interest on the liability and decreased to reflect the lease payments made during the period. Interest expense on the lease liability is determined each period during the lease term as the amount that results in a constant periodic interest rate of the automobile loans on the remaining balance of the liability.

 

The Company’s review on the impairment of its ROU assets is consistent with the approach applied for its other long-lived assets. The Company reviews the recovery ability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of an asset or asset group may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of an asset or asset group from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of finance and operating lease liabilities in any tested asset group and include the associated lease payments in the undiscounted future pre-tax cash flows. For the three and nine months ended December 31, 2025 and 2024, the Company did not recognize impairment loss on its ROU assets.
Stock-Based Compensation

(q) Stock-Based Compensation

 

The Company accounts for share-based payments issued in exchange for employee and non-employee services under ASC 718, Stock Compensation. Share-based payments issued to non-employees for goods or services are measured at the grant-date fair value of the equity instruments issued. For share-based awards that are not subject to vesting, forfeiture, or future service requirements, the full fair value of the awards is recognized as compensation expense on the issuance date.
Discontinued operations

(r) Discontinued operations

 

A discontinued operation may include a component of an entity or a group of components of an entity, or a business or nonprofit activity. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operation if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when any of the following occurs: (1) the component of an entity or group of components of an entity meets the criteria to be classified as held for sale; (2) the component of an entity or group of components of an entity is disposed of by sale; (3) the component of an entity or group of components of an entity is disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spinoff).
Significant risks and uncertainties

(s) Significant risks and uncertainties

 

1) Credit risk

 

  a. Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents. The maximum exposure of these assets to credit risk is their carrying amounts as of the balance sheet dates. As of December 31, 2025 and March 31, 2025, approximately $5,000 and $1,000, respectively, were deposited with a bank in the United States which is insured by the U.S. government up to $250,000. Approximately $2,269,000 was deposited with banks in Hong Kong as of December 31, 2025 which is insured by the Hong Kong government up to $103,000 (HKD800,000). As of December 31, 2025 and March 31, 2025, approximately $1,234,000 and $700,000, respectively, were deposited in financial institutions located in mainland China, which were insured by the government authority. Under the Deposit Insurance System in China, an enterprise’s deposits at one bank are insured for a maximum of approximately $71,000 (RMB500,000). To limit exposure to credit risk relating to deposits, the Company primarily places cash deposits with large financial institutions in China which management believes are of high credit quality.

 

The Company’s operations are carried out entirely in mainland China. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the social, political, economic and legal environments in the PRC as well as by the general state of the PRC economy. In addition, the Company’s business may be influenced by changes in PRC government laws, rules and policies with respect to, among other matters, anti-inflationary measures, currency conversion and remittance of currency outside of China, rates and methods of taxation and other factors.

 

b. In measuring the credit risk of accounts receivable due from the automobile purchasers (the “customers”), the Company mainly reflects the “probability of default” by the customer on its contractual obligations and considers the current financial position of the customer and the risk exposures to the customer and its likely future development.

 

Historically, most of the automobile purchasers would pay the Company their previously defaulted amounts within one to three months. As a result, the Company would provide full provisions on accounts receivable if the customers default on repayments for over three months. As of December 31, 2025 and March 31, 2025, the Company record no allowance for credit losses against accounts receivable.

 

2) Foreign currency risk

 

As of December 31, 2025 and March 31, 2025 substantially all of the Company’s operating activities and major assets and liabilities, except for the cash deposit of approximately $2,275,000 and $1,000, respectively, in U.S. dollars, are denominated in RMB, which are not freely convertible into foreign currencies. All foreign exchange transactions take place through either the People’s Bank of China (the “PBOC”) or other authorized financial institutions at exchange rates quoted by PBOC. Approval of foreign currency payments by the PBOC or other regulatory institutions requires a payment application together with invoices and signed contracts. The value of RMB is subject to change in central government policies and international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. When there is a significant change in value of RMB, the gains and losses resulting from translation of financial statements of a foreign subsidiary will be significantly affected. RMB appreciated from 7.26 RMB into US$1.00 on March 31, 2025 to 6.99 RMB into US$1.00 on December 31, 2025.

Recent accounting pronouncements not yet adopted

(t) Recent accounting pronouncements not yet adopted

 

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact of this accounting standard update on its unaudited condensed consolidated financial statements and related disclosures.

 

Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the unaudited condensed consolidated statements and related disclosures.