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What changed in Senmiao Technology Ltd's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Senmiao Technology Ltd's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+413 added−579 removedSource: 10-K (2025-07-10) vs 10-K (2024-06-27)

Top changes in Senmiao Technology Ltd's 2025 10-K

413 paragraphs added · 579 removed · 340 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

95 edited+32 added−58 removed205 unchanged
Biggest changeFor violations of these provisions or measures, the competent Chinese authorities may impose administrative regulatory measures, such as orders for correction, warnings, fines, and may pursue legal liability in accordance with law. 25 The Trial Measures, together with the Guidance Rules and Notice prescribe that, amongst others: (1) criteria to determine whether an issuer will be required to go through the filing procedures under the Trial Measures; (2) exemptions from immediate filing requirements for issuers including those that have already been listed in foreign securities markets, including U.S. markets, prior to the effective date of the Trial Measures, but these issuers shall still be subject to filing procedures if they conduct refinancing or are involved in other circumstances that require filing with the CSRC; (3) a negative list of types of issuers banned from listing or offering overseas, such as issuers whose affiliates have been recently convicted of bribery and corruption; (4) issuers’ compliance with web security, data security, and other national security laws and regulations; (5) issuers’ filing and reporting obligations, such as obligation to file with the CSRC after it submits an application for initial public offering to overseas regulators, and obligation after offering or listing overseas to file with the CSRC after it completes subsequent offerings and to report to the CSRC material events including change of control or voluntary or forced delisting of the issuer; and (6) the CSRC’s authority to fine both issuers and their relevant shareholders for failure to comply with the Trial Measures, including failure to comply with filing obligations or committing fraud and misrepresentation.
Biggest changeThe Trial Measures, together with the Guidance Rules and Notice prescribe that, amongst others: (1) criteria to determine whether an issuer will be required to go through the filing procedures under the Trial Measures; (2) exemptions from immediate filing requirements for issuers including those that have already been listed in foreign securities markets, including U.S. markets, prior to the effective date of the Trial Measures, but these issuers shall still be subject to filing procedures if they conduct refinancing or are involved in other circumstances that require filing with the CSRC; (3) a negative list of types of issuers banned from listing or offering overseas, such as issuers whose affiliates have been recently convicted of bribery and corruption; (4) issuers’ compliance with web security, data security, and other national security laws and regulations; (5) issuers’ filing and reporting obligations, such as obligation to file with the CSRC after it submits an application for initial public offering to overseas regulators, and obligation after offering or listing overseas to file with the CSRC after it completes subsequent offerings and to report to the CSRC material events including change of control or voluntary or forced delisting of the issuer; and (6) the CSRC’s authority to fine both issuers and their relevant shareholders for failure to comply with the Trial Measures, including failure to comply with filing obligations or committing fraud and misrepresentation. 23 The Overseas Listing Trial Measures provide that if an issuer meets both of the following criteria, the overseas securities offering and listing conducted by such issuer will be deemed as an indirect overseas offering and listing by PRC domestic companies: (i) 50% or more of any of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main place(s) of business are located in mainland China, or the majority of senior management staff in charge of its business operations and management are PRC citizens or have their usual place(s) of residence located in mainland China.
See “ Risk Factors — Risks Related to Doing Business in China — Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions .” 22 Regulations Related to Enterprise Income Tax Under the PRC Enterprise Income Tax Law (the “EIT Law”), which became effective on January 1, 2008, an enterprise established outside the PRC with “de facto management bodies” within the PRC is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income.
See “ Risk Factors — Risks Related to Doing Business in China — Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions .” Regulations Related to Enterprise Income Tax Under the PRC Enterprise Income Tax Law (the “EIT Law”), which became effective on January 1, 2008, an enterprise established outside the PRC with “de facto management bodies” within the PRC is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income.
In principle, the transition period shall not exceed three years. Provincial local financial supervision departments can appropriately extend the transition period arrangement according to the actual situation of specific industries. 14 The PRC Civil Code promulgated by the National People’s Congress effective from January 1, 2021 regulates the civil contractual relationship among natural persons, legal persons and other organizations.
In principle, the transition period shall not exceed three years. Provincial local financial supervision departments can appropriately extend the transition period arrangement according to the actual situation of specific industries. The PRC Civil Code promulgated by the National People’s Congress effective from January 1, 2021 regulates the civil contractual relationship among natural persons, legal persons and other organizations.
On September 21, 2006, the CSRC published a notice specifying the documents and materials that are required to be submitted for obtaining CSRC approval. The M&A Rules, and other recently adopted regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex.
On September 21, 2006, the CSRC published a notice specifying the documents and materials that are required to be submitted for obtaining CSRC approval. 22 The M&A Rules, and other recently adopted regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex.
The Implementing Rules introduce a see-through principle and further provide that foreign-invested enterprises that invest in the PRC are also governed by the PRC Foreign Investment Law and the Implementing Rules. 17 The Foreign Investment Law and the Implementing Rules provide that a system of pre-entry national treatment and negative list shall be applied for the administration of foreign investment, where “pre-entry national treatment” means that the treatment given to foreign investors and their investments at market entry stage is no less favorable than that given to domestic investors and their investments, and “negative list” means the special administrative measures for foreign investment’s entry to specific fields or industries, which will be proposed by the competent investment department of the State Council in conjunction with the competent commerce department of the State Council and other relevant departments, and be reported to the State Council for promulgation, or be promulgated by the competent investment department or competent commerce department of the State Council after being reported to the State Council for approval.
The Implementing Rules introduce a see-through principle and further provide that foreign-invested enterprises that invest in the PRC are also governed by the PRC Foreign Investment Law and the Implementing Rules. 15 The Foreign Investment Law and the Implementing Rules provide that a system of pre-entry national treatment and negative list shall be applied for the administration of foreign investment, where “pre-entry national treatment” means that the treatment given to foreign investors and their investments at market entry stage is no less favorable than that given to domestic investors and their investments, and “negative list” means the special administrative measures for foreign investment’s entry to specific fields or industries, which will be proposed by the competent investment department of the State Council in conjunction with the competent commerce department of the State Council and other relevant departments, and be reported to the State Council for promulgation, or be promulgated by the competent investment department or competent commerce department of the State Council after being reported to the State Council for approval.
Our Auto Business Entities acquire customers through the network of sales teams from third-party and our related party, cooperated lease companies and our own efforts including online advertising and billboard advertising. Our operating entities also send out fliers and participate in trade shows to advertise our services.
Our Auto Business Entities acquire customers through the network of sales teams from third-party and our related parties, cooperated lease companies and our own efforts including online advertising and billboard advertising. Our Operating Entities also send out fliers and participate in trade shows to advertise our services.
Many of our competitors are well-capitalized and offer discounted services, driver incentives, consumer discounts and promotions, innovative service and product offerings, and alternative pricing models, which may be more attractive to consumers than those that we offer.
Many of our competitors are well-capitalized and offer discounted services, driver incentives, discounts and promotions, innovative service and product offerings, and alternative pricing models, which may be more attractive to consumers than those that we offer.
The Telecom Catalogue was most recently updated in June 2019, categorizing online data and transaction processing, information services, among others, as Class II VATS. 15 The Administrative Measures on Telecommunications Business Operating Licenses, promulgated by the MIIT in 2009 and most recently amended in July 2017, which set forth more specific provisions regarding the types of licenses required to operate VATS, the qualifications and procedures for obtaining such licenses and the administration and supervision of such licenses.
The Telecom Catalogue was most recently updated in June 2019, categorizing online data and transaction processing, information services, among others, as Class II VATS. 13 The Administrative Measures on Telecommunications Business Operating Licenses, promulgated by the MIIT in 2009 and most recently amended in July 2017, which set forth more specific provisions regarding the types of licenses required to operate VATS, the qualifications and procedures for obtaining such licenses and the administration and supervision of such licenses.
Our marketplace is in the process of complying with the new Internet Advertising Measures during our advertising activities. 16 Regulations Related to Company Establishment, Dividend Distribution and Foreign Investment The establishment, operation and management of corporate entities in China is governed by the Company Law of the PRC (the “Company Law”), which was issued by the SCNPC and was last amended in December 2023 and will come into effect as from July 1, 2024.
Our marketplace is in the process of complying with the new Internet Advertising Measures during our advertising activities. 14 Regulations Related to Company Establishment, Dividend Distribution and Foreign Investment The establishment, operation and management of corporate entities in China is governed by the Company Law of the PRC (the “Company Law”), which was issued by the SCNPC and was last amended in December 2023 and will come into effect as from July 1, 2024.
Furthermore, the Interim Measures also provide that competent local governmental authorities may formulate detailed implementing rules for their respective regions in accordance with the Interim Measures and in light of local conditions. 12 Following the promulgation of the Interim Measures, various local governmental authorities have promulgated implementing rules to further stipulate the detailed requirements for online ride hailing service platforms, vehicles and drivers, including the major cities of our operations.
Furthermore, the Interim Measures also provide that competent local governmental authorities may formulate detailed implementing rules for their respective regions in accordance with the Interim Measures and in light of local conditions. 10 Following the promulgation of the Interim Measures, various local governmental authorities have promulgated implementing rules to further stipulate the detailed requirements for online ride hailing service platforms, vehicles and drivers, including the major cities of our operations.
Although Jinkailong was ceased from our consolidation scope since March 31, 2022, Huana Ruixi, Corenel and Jiekai continuously provide automobile transaction and related services similar to Jinkailong in Changsha and Chengdu. In May 2019, Senmiao formed its wholly owned subsidiary, Yicheng, with a registered capital of $50 million in Chengdu City, Sichuan Province, China.
Although Jinkailong was ceased from our consolidation scope since March 31, 2022, Hunan Ruixi, Corenel and Jiekai continuously provide automobile transaction and related services similar to Jinkailong in Changsha and Chengdu. In May 2019, Senmiao formed its wholly owned subsidiary, Yicheng, with a registered capital of $50 million in Chengdu City, Sichuan Province, China.
In addition, the processing of the personal information of a minor under 14 years old must obtain the consent by a parent or a guardian of such minor and the personal information processors must adopt special rules for processing personal information of minors under 14 years old. 11 In the meantime, the PRC regulatory authorities have also enhanced the supervision and regulation on cross-border data transmission.
In addition, the processing of the personal information of a minor under 14 years old must obtain the consent by a parent or a guardian of such minor and the personal information processors must adopt special rules for processing personal information of minors under 14 years old. 9 In the meantime, the PRC regulatory authorities have also enhanced the supervision and regulation on cross-border data transmission.
Pursuant to applicable PRC regulations promulgated by the Ministry of Finance of China and the SAT, we are required to pay a VAT at a rate of 6% for our services and 13% for our automobile sales, operating lease and financial leasing, with respect to revenues derived from the provision of Automobile Transaction and Related Services.
Pursuant to applicable PRC regulations promulgated by the Ministry of Finance of China and the SAT, we are required to pay a VAT at a rate of 6% for our different services and 13% for our automobile, operating lease and financial leasing, with respect to revenues derived from the provision of Automobile Transaction and Related Services.
As of March 31, 2024, most of the Company’s subsidiaries incorporated in the PRC have suffered accumulated loss and the Company concluded all the subsidiaries did not have abilities to transfer a portion of their net assets to the Company either in the form of dividends, loans or advances.
As of March 31, 2025, most of the Company’s subsidiaries incorporated in the PRC have suffered accumulated loss and the Company concluded all the subsidiaries did not have abilities to transfer a portion of their net assets to the Company either in the form of dividends, loans or advances.
In order to manage the rapidly growing online ride-hailing service market and control relevant risks, on July 27, 2016, seven ministries and commissions, including the Ministry of Transport (the “MOT”), jointly promulgated the Interim Measures for the Administration of Online Taxi Booking Business Operations and Services, which was amended on December 28, 2019 and November 30, 2022 , which legalizes online ride-hailing services such as XXTX and requires the online ride-hailing services to meet the requirements set out by the Interim Measures and obtain requisite service licenses and take full responsibility of the ride services to ensure the safety of riders.
In order to manage the rapidly growing online ride-hailing service market and control relevant risks, on July 27, 2016, seven ministries and commissions, including the Ministry of Transport (the “MOT”), jointly promulgated the Interim Measures for the Administration of Online Taxi Booking Business Operations and Services, which was amended on December 28, 2019 and November 30, 2022 , which legalizes online ride-hailing platforms and requires the online ride-hailing services to meet the requirements set out by the Interim Measures and obtain requisite service licenses and take full responsibility of the ride services to ensure the safety of riders.
According to these regulations and guidelines, three licenses or certificates are required for operating the online ride-hailing business: (1) online ride-hailing service platforms such as XXTX is required to obtain the online reservation taxi operating license; (2) automobiles used for online ride-hailing are required to obtain the online reservation taxi transport certificate (the “automobile certificate”); (3) online ride-hailing drivers are required obtain the online reservation taxi driver’s license (the “driver’s license”).
According to these regulations and guidelines, three licenses or certificates are required for operating the online ride-hailing business: (1) online ride-hailing service platforms is required to obtain the online reservation taxi operating license; (2) automobiles used for online ride-hailing are required to obtain the online reservation taxi transport certificate (the “automobile certificate”); (3) online ride-hailing drivers are required obtain the online reservation taxi driver’s license (the “driver’s license”).
Intellectual Property We regard our trademarks, domain names, know-how, proprietary technologies and similar intellectual property as critical to our success, and we rely on PRC trademark and trade secret law and confidentiality, invention assignment and non-compete agreements with our employees and others to protect our proprietary rights. We own 19 software copyrights and 53 trademarks.
Intellectual Property We regard our trademarks, domain names, know-how, proprietary technologies and similar intellectual property as critical to our success, and we rely on PRC trademark and trade secret law and confidentiality, invention assignment and non-compete agreements with our employees and others to protect our proprietary rights. We own 18 software copyrights and 37 trademarks.
However, there is no guarantee that all of the drivers who run their online ride-hailing business through our platform would be able to obtain all the certificates and licenses.
However, there is no guarantee that all of the drivers who run their online ride-hailing business would be able to obtain all the certificates and licenses.
The following chart illustrates the constitution of our automobile transactions and related services: 1 Auto Operating Leasing We, through our subsidiaries, Hunan Ruixi, Corenel, Jiekai and equity investee company, Jinkailong (the “Auto Business Entities”) in China, have generated revenue since March 2019 from operating lease services, where the Auto Business Entities lease their own automobiles, sublease automobiles leased from third-parties or rendered from certain online ride-hailing drivers they served before with their authorization, to other individuals, including new online ride-hailing drivers, for a lease term of no more than twelve months.
Our Operating Entities started the Purchase and NEVs Services and other supporting services in November 2018, the Auto Operating Leasing and Auto Financing in March 2019, respectively. 1 The following chart illustrates the constitution of our automobile transactions and related services: Auto Operating Leasing We, through our subsidiaries, Hunan Ruixi, Jiekai, former subsidiary, Corenel, and equity investee company, Jinkailong (the “Auto Business Entities”) in China, have generated revenue since March 2019 from operating lease services, where the Auto Business Entities lease their own automobiles, sublease automobiles leased from third-parties or rendered from certain online ride-hailing drivers they served before with their authorization, to other individuals, including new online ride-hailing drivers, for a lease term of no more than twelve months.
Since November 22, 2018, the acquisition date of Hunan Ruixi, and as of March 31, 2024, the Auto Business Entities have facilitated financing for an aggregate of 312 automobiles with a total value of approximately $5.3 million, sold an aggregate of 1,516 automobiles with a total value of approximately $14.5 million and delivered 1,892 automobiles under operating leases and 164 automobiles under financing leases to customers, the vast majority of whom are online ride-hailing drivers.
Since November 22, 2018, the acquisition date of Hunan Ruixi, and as of March 31, 2025, the Auto Business Entities have facilitated financing for an aggregate of 312 automobiles with a total value of approximately $5.3 million, sold an aggregate of 1,516 automobiles with a total value of approximately $14.5 million and delivered 2,116 automobiles under operating leases and 191 automobiles under financing leases to customers, the vast majority of whom are online ride-hailing drivers.
As of March 31, 2024, the total respective registered capital of all the Company’s direct subsidiaries was approximately RMB513 million (approximately $71.1 million). In addition, PRC companies may allocate a portion of their after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion.
As of March 31, 2025, the total respective registered capital of all the Company’s direct subsidiaries was approximately RMB515 million (approximately $71.0 million). In addition, PRC companies may allocate a portion of their after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion.
Customers The significant majority of our Operating Entities’ customers are online ride-hailing drivers. Due to the complexity and difficulty of obtaining registration of various licenses required for driving an online ride-hailing car, our customers choose to lease automobile from us or become affiliated with us who offer them a simplified and smooth process to obtain qualified cars for online ride-hailing.
Due to the complexity and difficulty of obtaining registration of various licenses required for driving an online ride-hailing car, our customers choose to lease automobile from us or become affiliated with us who offer them a simplified and smooth process to obtain qualified cars for online ride-hailing.
In December 2020, Senmiao Consulting formed a wholly owned subsidiary, Corenel, with a registered capital of RMB10.0 million (approximately $1.6 million) in Chengdu City, Sichuan Province. Corenel is engaged in automobile operating lease since March 2021. In April 2021, Senmiao formed Senmiao Technology (Hong Kong), Ltd.
In December 2020, Senmiao Consulting formed a wholly owned subsidiary, Corenel, with a registered capital of RMB10.0 million (approximately $1.6 million) in Chengdu City, Sichuan Province. Corenel is engaged in automobile operating lease since March 2021.
(“Senmiao HK”), a limited liability company with a registered capital of $10,000 in Hong Kong. We hold 99.99% of the equity interests of Senmiao HK. As of the date of this Report, Senmiao HK has no operations.
In April 2021, Senmiao formed Senmiao Technology (Hong Kong), Ltd. (“Senmiao HK”), a limited liability company with a registered capital of $10,000 in Hong Kong. We hold 99.99% of the equity interests of Senmiao HK. As of the date of this Report, Senmiao HK has no operations.
Under PRC laws, rules and regulations, including the Social Insurance Law, the Interim Regulations on the Collection and Payment of Social Security Funds and the Regulations on the Administration of Housing Accumulation Funds, employers are required to contribute, on behalf of their employees, to a number of social security funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, maternity leave insurance and housing accumulation funds.
Employees are also required to work in safe and sanitary conditions. 16 Under PRC laws, rules and regulations, including the Social Insurance Law, the Interim Regulations on the Collection and Payment of Social Security Funds and the Regulations on the Administration of Housing Accumulation Funds, employers are required to contribute, on behalf of their employees, to a number of social security funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, maternity leave insurance and housing accumulation funds.
Regulations Related to Labor and Social Security Pursuant to the PRC Labor Law, the PRC Labor Contract Law and the Implementing Regulations of the Employment Contracts Law, labor relationships between employers and employees must be executed in written form. Wages may not be lower than the local minimum wage.
We are subject to these regulatory requirements. Regulations Related to Labor and Social Security Pursuant to the PRC Labor Law, the PRC Labor Contract Law and the Implementing Regulations of the Employment Contracts Law, labor relationships between employers and employees must be executed in written form. Wages may not be lower than the local minimum wage.
The current industry entry clearance requirements governing investment activities in the PRC by foreign investors are set out in two categories, namely the Special Entry Management Measures (Negative List) for the Access of Foreign Investment (2021 version), or the 2021 Negative List, as promulgated by the National Development and Reform Commission (the “NDRC”) and the MOFCOM on December 27, 2021 and taking effect on January 1, 2022, and the Encouraged Industry Catalogue for Foreign Investment (2022 version) as promulgated by the NDRC and the MOFCOM on October 26, 2022 and taking effect on January 1, 2023.
The current industry entry clearance requirements governing investment activities in the PRC by foreign investors are set out in two categories, namely the Special Entry Management Measures (Negative List) for the Access of Foreign Investment (2024 version), or the 2024 Negative List, as promulgated by the National Development and Reform Commission and the MOFCOM on September 6, 2024 and taking effect on November 1, 2024, and the Encouraged Industry Catalogue for Foreign Investment (2022 version) as promulgated by the National Development and Reform Commission and the MOFCOM on October 26, 2022 and taking effect on January 1, 2023.
However, the State Council has not promulgated the list of the non-financial institutions with anti-money laundering obligations. 19 Regulation Related to the Payment Services of Non-financial Institutions According to Measures for the Administration of Payment Services of Non-Financial Institutions which were promulgated by PBOC on June 14, 2010, effective on September 1, 2010 and amended on April 29, 2020, and Implementing Rules for the Measures for the Administration of Payment Services of Non-Financial Institution which were promulgated by the PBOC, effective on December 1, 2010 and amended on June 2, 2020, the payment services provided by non-financial institutions refer to some or all of the following monetary capital transfer services provided by the non-financial institutions as intermediary agencies between payers and payees: (1) payment through the internet; (2) issuance and acceptance of prepaid cards; (3) bankcard acquiring; and (4) other payment services as determined by the PBOC.
Regulation Related to the Payment Services of Non-financial Institutions According to Measures for the Administration of Payment Services of Non-Financial Institutions which were promulgated by PBOC on June 14, 2010, effective on September 1, 2010 and amended on April 29, 2020, and Implementing Rules for the Measures for the Administration of Payment Services of Non-Financial Institution which were promulgated by the PBOC, effective on December 1, 2010 and amended on June 2, 2020, the payment services provided by non-financial institutions refer to some or all of the following monetary capital transfer services provided by the non-financial institutions as intermediary agencies between payers and payees: (1) payment through the internet; (2) issuance and acceptance of prepaid cards; (3) bankcard acquiring; and (4) other payment services as determined by the PBOC.
We also purchase and lease NEVs for subleasing with rental periods of twelve months or less. Excluding Jinkailong, our other Auto Business Entities leased over 1,400 automobiles with an average monthly rental income of approximately $485 per automobile for the year ended March 31, 2024.
We also purchase and lease NEVs for subleasing with rental periods of twelve months or less. Excluding Jinkailong, our other Auto Business Entities leased 826 automobiles with an average monthly rental income of approximately $410 per automobile for the year ended March 31, 2025.
According to the Revised Confidentiality and Archives Administration Provisions, where overseas securities regulators or relevant competent authorities request to inspect, investigate or collect evidence from Chinese domestic companies concerning their overseas offering and listing or their securities firms and securities service providers that undertake securities business for such Chinese domestic companies, such inspection, investigation and evidence collection must be conducted under the cross-border regulatory cooperation mechanism, and the CSRC or competent authorities of the Chinese government will provide necessary assistance pursuant to bilateral and multilateral cooperation mechanism. 26 Human Capital As of the date of this Report, we had a total of 55 full-time employees including three executive officers, 45 employees in our Automobile Transaction and Related Services segment and 7 employees in our Online Ride-hailing Platform Services segment.
According to the Revised Confidentiality and Archives Administration Provisions, where overseas securities regulators or relevant competent authorities request to inspect, investigate or collect evidence from Chinese domestic companies concerning their overseas offering and listing or their securities firms and securities service providers that undertake securities business for such Chinese domestic companies, such inspection, investigation and evidence collection must be conducted under the cross-border regulatory cooperation mechanism, and the CSRC or competent authorities of the Chinese government will provide necessary assistance pursuant to bilateral and multilateral cooperation mechanism. 24 Human Capital As of the date of this Report, we had a total of 35 full-time employees including three executive officers.
SAFE Circular 13 delegates the power to enforce the foreign exchange registration in connection with inbound and outbound direct investments under relevant SAFE rules from local branches of SAFE to banks, thereby further simplifying the foreign exchange registration procedures for inbound and outbound direct investments. 21 On January 26, 2017, SAFE issued the Notice of State Administration of Foreign Exchange on Improving the Check of Authenticity and Compliance to Further Promote Foreign Exchange Control (the “SAFE Circular 3”), which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting the profits.
On January 26, 2017, SAFE issued the Notice of State Administration of Foreign Exchange on Improving the Check of Authenticity and Compliance to Further Promote Foreign Exchange Control (the “SAFE Circular 3”), which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting the profits.
Industries not listed in these two catalogues are generally deemed “permitted” for foreign investment unless specifically restricted by other PRC laws. Neither our Automobile Transaction and Related Services nor our Online Ride-hailing Platform Services is listed in 2021 Negative List.
Industries not listed in these two catalogues are generally deemed “permitted” for foreign investment unless specifically restricted by other PRC laws. Industries not listed in these two catalogues are generally deemed “permitted” for foreign investment unless specifically restricted by other PRC laws. Our Automobile Transaction and Related Services is not listed in 2024 Negative List.
Regulations Related to PRC Value-Added Tax In March 2016, the Ministry of Finance and the State Administration of Taxation further promulgated the Notice on Fully Promoting the Pilot Plan for Replacing Business Tax by Value-Added Tax (“VAT”), which became effective on May 1, 2016.
However, they all suffered tax loss during those calendar years. 21 Regulations Related to PRC Value-Added Tax In March 2016, the Ministry of Finance and the State Administration of Taxation further promulgated the Notice on Fully Promoting the Pilot Plan for Replacing Business Tax by Value-Added Tax (“VAT”), which became effective on May 1, 2016.
The following table sets forth the breakdown of our employees by function in our Automobile Transaction and Related Services segment: Function Number of Employees Management 2 Legal & Risk Management 9 Operations 7 Marketing 4 Drivers & Automobile Management and Services 7 Technology 2 Human Resources & Administration 7 Finance and Accounting 6 Internal Control and Audit 1 Total 45 The following table sets forth the breakdown of our employees by function in our Online Ride-hailing Platform Services segment: Function Number of Employees Management 2 Operations 3 Finance and Accounting 2 Total 7 All of our employees are based in the cities of Chengdu, Changsha and Guangzhou, where our main operations are located.
The following table sets forth the breakdown of our employees by function in our Automobile Transaction and Related Services: Function Number of Employees Management 2 Legal & Risk Management 2 Operations 7 Marketing 2 Drivers & Automobile Management and Services 10 Human Resources & Administration 2 Finance and Accounting 6 Internal Control and Audit 1 Total 32 All of our employees are based in the cities of Chengdu and Changsha, where our main operations are located.
On September 25, 2016, Sichuan Senmiao acquired a P2P platform (including website, internet content provider (“ICP”) registration, operating systems, servers, management system, employees and users) from Sichuan Chenghexin Investment and Asset Management Co., Ltd.
Sichuan Senmiao became the majority owned subsidiary of Senmiao Consulting accordingly. 3 On September 25, 2016, Sichuan Senmiao acquired a P2P platform (including website, internet content provider (“ICP”) registration, operating systems, servers, management system, employees and users) from Sichuan Chenghexin Investment and Asset Management Co., Ltd.
The PBOC and other governmental authorities issued a series of administrative rules and regulations to specify the anti-money laundering obligations of financial institutions and certain non-financial institutions, such as payment institutions.
The PBOC and other governmental authorities issued a series of administrative rules and regulations to specify the anti-money laundering obligations of financial institutions and certain non-financial institutions, such as payment institutions. However, the State Council has not promulgated the list of the non-financial institutions with anti-money laundering obligations.
According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be considered a PRC resident enterprise by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following conditions are met: (a) the senior management and core management departments in charge of its daily operations function have their presence mainly in the PRC; (b) its financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (c) its major assets, accounting books, company seals, and minutes and files of its board of directors and shareholders’ meetings are located or kept in the PRC; and (d) more than half of the enterprise’s directors or senior management with voting rights habitually reside in the PRC.
According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be considered a PRC resident enterprise by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following conditions are met: (a) the senior management and core management departments in charge of its daily operations function have their presence mainly in the PRC; (b) its financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (c) its major assets, accounting books, company seals, and minutes and files of its board of directors and shareholders’ meetings are located or kept in the PRC; and (d) more than half of the enterprise’s directors or senior management with voting rights habitually reside in the PRC. 20 Although SAT Circular 82 and SAT Bulletin 45 only apply to offshore-incorporated enterprises controlled by PRC enterprises or PRC enterprise groups and not those controlled by PRC individuals or foreigners, the determination criteria set forth therein may reflect the SAT’s general position on how the term “de facto management body” could be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, individuals or foreigners.
Personal Information Protection The Several Provisions on Regulating the Market Order of Internet Information Services, issued by the MIIT on December 29, 2011 and effective on March 15, 2012, stipulate that internet information service providers may not collect any user personal information or provide any such information to third parties without the consent of a user, unless otherwise stipulated by laws and administrative regulations.
Any failure to comply with such requirements may subject us to suspension of services, fines, revocation of relevant business permits or business licenses and other penalties. 8 Personal Information Protection The Several Provisions on Regulating the Market Order of Internet Information Services, issued by the MIIT on December 29, 2011 and effective on March 15, 2012, stipulate that internet information service providers may not collect any user personal information or provide any such information to third parties without the consent of a user, unless otherwise stipulated by laws and administrative regulations.
As of the date of this Report, the Company had remitted approximately RMB36.60 million ($5.33 million) to XXTX pertained to above mentioned XXTX Increase Investment Agreement. 4 On October 22, 2021, the Company, Senmiao Consulting, XXTX and its other shareholders further entered into a Share Swap Agreement (the “XXTX Share Swap Agreement”), pursuant to which the Company, through Senmiao Consulting, purchased all of the remaining equity interests the original shareholders held in XXTX at a total purchase price of $3.5 million, payable in the Company’s shares of common stock, par value $0.0001 per share at a per share price of the average closing price of a share of common stock reported on the Nasdaq Capital Market for ten (10) trading days immediately preceding the date of the XXTX Share Swap Agreement.
Senmiao Consulting shall pay another investment amounted to RMB36.84 million (approximately $5.36 million) in cash in exchange of additional 27.74% of XXTX’s equity interest. 4 On October 22, 2021, the Company, Senmiao Consulting, XXTX and its other shareholders further entered into a Share Swap Agreement (the “XXTX Share Swap Agreement”), pursuant to which the Company, through Senmiao Consulting, purchased all of the remaining equity interests the original shareholders held in XXTX at a total purchase price of $3.5 million, payable in the Company’s shares of common stock, par value $0.0001 per share at a per share price of the average closing price of a share of common stock reported on the Nasdaq Capital Market for ten (10) trading days immediately preceding the date of the XXTX Share Swap Agreement.
The automobile purchasers typically become affiliated with Hunan Ruixi through affiliation agreements pursuant to which Hunan Ruixi, as a qualified management company, provide them post-transaction management services during the affiliation period, which is usually the same as the term of the Financing Agreements. The users of Xixingtianxia platform typically use it to view and take customer orders for rides.
The automobile purchasers typically become affiliated with Hunan Ruixi through affiliation agreements pursuant to which Hunan Ruixi, as a qualified management company, provide them post-transaction management services during the affiliation period, which is usually the same as the term of the Financing Agreements.
The safe harbors include qualified group restructurings, public market trades and exemptions under tax treaties. 23 Under SAT Bulletin 7 and other PRC tax regulations, in the case of an indirect transfer, entities or individuals obligated to pay the transfer price to the transferor must act as withholding agents and are required to withhold the PRC tax from the transfer price.
Under SAT Bulletin 7 and other PRC tax regulations, in the case of an indirect transfer, entities or individuals obligated to pay the transfer price to the transferor must act as withholding agents and are required to withhold the PRC tax from the transfer price.
We have completed the development of certain functions such as information entry and delivery which are being tested by us. We launched the system in March 2020 and keep upgrading the system to support our business expansion.
The system comprises modules for procurement, qualification assessment, delivery and post-transaction management which covers the whole transaction process. We have completed the development of certain functions such as information entry and delivery which are being tested by us. We launched the system in March 2020 and keep upgrading the system to support our business expansion.
Internet information service providers that violate these measures may have their licenses revoked and their websites shut down. 9 Cybersecurity and Information Security For description of the historical regulatory landscape of Cybersecurity and Information Security, please refer to pages 15 to 19 in our annual report on Form 10-K for the fiscal year ended March 31, 2023 filed with the SEC on July 13, 2023, which is incorporate by reference herein.
Cybersecurity and Information Security For description of the historical regulatory landscape of Cybersecurity and Information Security, please refer to pages 15 to 19 in our annual report on Form 10-K for the fiscal year ended March 31, 2023 filed with the SEC on July 13, 2023, which is incorporate by reference herein.
Employers must establish a system for labor safety and sanitation, strictly abide by state standards and provide relevant education to its employees. Employees are also required to work in safe and sanitary conditions.
Employers must establish a system for labor safety and sanitation, strictly abide by state standards and provide relevant education to its employees.
See “ Risk—Risks Relating to Our Industry and Business—We are required to obtain certain licenses and permits for our business operations, and we may not be able to obtain or maintain such licenses or permits. ” Regulations Related to Value-Added Telecommunication Business Certificates and Foreign Investment Restrictions Among all of the applicable laws and regulations, the Telecommunications Regulations of the People’s Republic of China, or the Telecom Regulations, promulgated by the PRC State Council in September 25, 2000 and amended on July 29, 2014 and February 6, 2016, respectively, is the primary governing law, and sets out the general framework for the provision of telecommunications services by domestic PRC companies.
Regulations Related to Value-Added Telecommunication Business Certificates and Foreign Investment Restrictions Among all of the applicable laws and regulations, the Telecommunications Regulations of the People’s Republic of China, or the Telecom Regulations, promulgated by the PRC State Council in September 25, 2000 and amended on July 29, 2014 and February 6, 2016, respectively, is the primary governing law, and sets out the general framework for the provision of telecommunications services by domestic PRC companies.
On March 28, 2022, these shareholders further sold a total of 94.5% equity interests of Sichuan Senmiao to Senmiao Consulting with a total consideration of zero due to continuous loss. Sichuan Senmiao became the majority owned subsidiary of Senmiao Consulting accordingly.
On March 23, 2022, shareholders with 94.5% equity interests of Sichuan Senmiao and Senmiao Consulting terminated the VIE Agreements. On March 28, 2022, these shareholders further sold a total of 94.5% equity interests of Sichuan Senmiao to Senmiao Consulting with a total consideration of zero due to continuous loss.
Our business includes Automobile Transaction and Related Services (as defined herein below) and Online Ride-hailing Platform Services, which constituted a series of services as follows: Automobile Transactions and Related Services Our automobile transaction and related services (the “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) monthly services where we provide management and related services to Partner Platforms and other companies and earn commission from them (the “ Auto Commissions” ); (iii) automobile financing where we provide our customers with auto finance solutions through financing leases (the “Auto Financing”); (iv) service fees from new energy vehicles (“NEVs”) leasing, automobile purchase and management services where we charge NEVs lessees or automobile purchasers for a series of the services provided to them throughout the leasing or purchase process based on the chosen product solutions, such as ride-hailing driver training, assisting with a series of administrative procedures and other consulting services (the “NEVs and Purchase Services”); (v) auto management and guarantee services provided to online ride-hailing drivers after the delivery of automobiles (the “Auto Management and Guarantee Services”); (vi) automobile sales where we sell new purchased or used cars to our customers (the “Auto Sales”); and (vii) other supporting services provided to online ride-hailing drivers.
We operate our business in one segment: Automobile Transaction and Related Services (as defined herein below), which constituted a series of services as follows: Automobile Transactions and Related Services Our automobile transaction and related services (the “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 Partner Platforms and other companies and earn commission from them (the “ Auto Commissions” );(v) automobile financing where we provide our customers with auto finance solutions through financing leases (the “Auto Financing”); (vi) default expenses we charge 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 (the “Other Services”).
On the other hand, indirect transfers falling into the scope of the safe harbors under SAT Bulletin 7 may not be subject to PRC tax.
On the other hand, indirect transfers falling into the scope of the safe harbors under SAT Bulletin 7 may not be subject to PRC tax. The safe harbors include qualified group restructurings, public market trades and exemptions under tax treaties.
Any violation of the above decision or order may subject the internet information service provider to warnings, fines, confiscation of illegal gains, revocation of licenses, cancelation of filings, closedown of websites or even criminal liabilities. 10 With respect to the security of information collected and used by mobile apps, pursuant to the Announcement of Conducting Special Supervision against the Illegal Collection and Use of Personal Information by Apps, which was issued by the CAC, the MIIT, the Ministry of Public Security, and the State Administration for Market Regulation on January 23, 2019, app operators shall collect and use personal information in compliance with the Cybersecurity Law and shall be responsible for the security of personal information obtained from users and take effective measures to strengthen personal information protection.
With respect to the security of information collected and used by mobile apps, pursuant to the Announcement of Conducting Special Supervision against the Illegal Collection and Use of Personal Information by Apps, which was issued by the CAC, the MIIT, the Ministry of Public Security, and the State Administration for Market Regulation on January 23, 2019, app operators shall collect and use personal information in compliance with the Cybersecurity Law and shall be responsible for the security of personal information obtained from users and take effective measures to strengthen personal information protection.
However, as Hunan Ruixi still holds 35% equity interests in Jinkailong, Jinkailong is our equity investee company since then. As of March 31, 2024, the paid-in capital of Jinkailong was zero.
However, as Hunan Ruixi still holds 35% equity interests in Jinkailong, Jinkailong is our equity investee company since then. As of March 31, 2025, the paid-in capital of Jinkailong was zero. Customers The majority of our Operating Entities’ customers are online ride-hailing drivers.
A taxpayer is allowed to offset the qualified input VAT paid on taxable purchases against the output VAT chargeable on the revenue from services provided. 24 Regulations Related to Mergers and Acquisitions On August 8, 2006, six PRC regulatory agencies, including China Securities Regulatory Commission (the “CSRC”), promulgated the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”), which became effective on September 8, 2006 and were amended on June 22, 2009.
Regulations Related to Mergers and Acquisitions On August 8, 2006, six PRC regulatory agencies, including China Securities Regulatory Commission (the “CSRC”), promulgated the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”), which became effective on September 8, 2006 and were amended on June 22, 2009.
An automobile buyer/lessee must meet the following preliminary criteria: ● be between 18-65 years old; ● reside in the mainland of China and have the local residential identification; ● have a driving history of at least three years; ● not be subject to on-going legal proceedings or enforcement; ● not be listed on a national delinquent debtor’s list; ● the value of purchased automobile matches the income of the candidate. 7 Additionally, our Operating Entities arrange a simple in-person interview with the applicant where we gather information on marital/family status, income, assets, borrowing history and default history, if any.
An automobile buyer/lessee must meet the following preliminary criteria: ● be between 18-65 years old; ● reside in the mainland of China and have the local residential identification; 6 ● have a driving history of at least three years; ● not be subject to on-going legal proceedings or enforcement; ● not be listed on a national delinquent debtor’s list; ● the value of purchased automobile matches the income of the candidate.
After a car is repossessed, our Auto Business Entities store it in a warehouse and later re-lease it to new customers or dispose of the automobile in accordance with law and relevant contracts. If our Auto Business Entities are unable to repossess collateral from a delinquent automobile purchaser/lessee, they may commence a lawsuit against such purchaser/lessee.
After a car is repossessed, our Auto Business Entities store it in a warehouse and later re-lease it to new customers or dispose of the automobile in accordance with law and relevant contracts.
The SCNPC amended the Copyright Law in 2001, 2010 and 2020 to widen the scope of works and rights that are eligible for copyright protection. The amended, the Copyright Law extends copyright protection to Internet activities, products disseminated over the Internet and software products. In addition, there is a voluntary registration system administered by the China Copyright Protection Center.
The amended, the Copyright Law extends copyright protection to Internet activities, products disseminated over the Internet and software products. In addition, there is a voluntary registration system administered by the China Copyright Protection Center.
We also charge automobile purchasers services fees 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. The amount of services fees for NEVs leasing and purchase is based on the product solutions.
Service for Automobile Purchase Automobile purchase services are paid by automobile purchasers for a series of the services we 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.
In addition, such PRC residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating to any change of basic information (including change of such PRC citizens or residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions.
In addition, such PRC residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating to any change of basic information (including change of such PRC citizens or residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. 19 SAFE Circular 37 was issued to replace SAFE Circular 75 (the Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments via Overseas Special Purpose Vehicles).
At the end of the lease term, the customer will pay a minimal price and obtain full title of the automobile after the financing lease is repaid in full. In connection with the financing lease, the customer will enter into a service agreement with Hunan Ruixi.
Hunan Ruixi will obtain title to the automobile upfront and retain such title during the term of the financing lease, as lessor. At the end of the lease term, the customer will pay a minimal price and obtain full title of the automobile after the financing lease is repaid in full.
According to this notice, the joint supervision mechanism shall apply to certain violations of laws and regulations by online ride hailing platforms, which include (i) engaging in online ride hailing business or in a disguised form without obtaining the permit for online ride hailing business; (ii) failing to secure that the vehicles and drivers providing services have relevant licenses and professional qualifications, dispatching orders to drivers and vehicles that have not obtained the corresponding licenses, failing to transmit relevant data information to online ride hailing supervision information exchange platform as required or other serious violations of laws and regulations occurring in the process of operating online ride hailing business; (iii) low-price dumping, fraud, and unreasonably differential treatment of individuals in terms of transaction conditions; (iv) endangering network security, data security, or infringing on the rights and interests of users’ personal information; (v) illegal operation of payment and settlement business; (vi) serious infringement of the labor security rights and interests of the drivers; (vii) failure to pay taxes in accordance with the law; and (viii) other serious violations that endanger public interests, disrupt social order, and affect social security and stability. 13 Regulations Related to Financial Leasing In September 2013, the Ministry of Commerce of the People’s Republic of China (the “MOFCOM”) issued the Administration Measures of Supervision on Financing Lease Enterprises (the “Leasing Measures”), to regulate and administer the business operations of financial leasing enterprises.
According to this notice, the joint supervision mechanism shall apply to certain violations of laws and regulations by online ride hailing platforms, which include (i) engaging in online ride hailing business or in a disguised form without obtaining the permit for online ride hailing business; (ii) failing to secure that the vehicles and drivers providing services have relevant licenses and professional qualifications, dispatching orders to drivers and vehicles that have not obtained the corresponding licenses, failing to transmit relevant data information to online ride hailing supervision information exchange platform as required or other serious violations of laws and regulations occurring in the process of operating online ride hailing business; (iii) low-price dumping, fraud, and unreasonably differential treatment of individuals in terms of transaction conditions; (iv) endangering network security, data security, or infringing on the rights and interests of users’ personal information; (v) illegal operation of payment and settlement business; (vi) serious infringement of the labor security rights and interests of the drivers; (vii) failure to pay taxes in accordance with the law; and (viii) other serious violations that endanger public interests, disrupt social order, and affect social security and stability. 11 Regulations Relating to Vehicle Rental Services Pursuant to the Administration Measures for Operations and Services of Small and Micro Passenger Vehicles issued by the Ministry of Transport on December 20, 2020 and last amended on August 11, 2021, rental business operators of small and micro passenger vehicles shall carry out record-filing procedures with the city or county level counterparts of the Ministry of Transport where the business operations are conducted, within 60 days after completing the relevant registration formalities with the local counterparts of the State Administration for Market Regulation, or within 60 days after establishing new service agencies to carry out relevant business activities.
Other seasonal trends that may affect us or China’s online ride-hailing industry generally may develop, and current seasonal trends may become more extreme, all of which would contribute to fluctuations in our results of operations.
For example, we expect to experience higher user traffic during the Chinese National holiday due to the strong demand in the tourism. Other seasonal trends that may affect us or China’s online ride-hailing industry generally may develop, and current seasonal trends may become more extreme, all of which would contribute to fluctuations in our results of operations.
On March 18, 2022, the SAT issued Announcement on the Further Implementation of the Preferential Income Tax Reduction Policy for Small and Low Profit Enterprises (the “SAT 2022 Circular 13”). Pursuant to SAT 2022 Circular 13, the preferential income tax reduction policy for small low profit enterprise shall be expanded from January 1, 2022 to December 31, 2024.
Pursuant to SAT 2022 Circular 13 and SAT 2023 Circular 12, the preferential income tax reduction policy for small low profit enterprise shall be expanded from January 1, 2022 to December 31, 2024 and January 1, 2023 to December 31, 2027, respectively.
Our Drivers Management monitor the daily gross income of our served online ride-hailing drivers through our cooperated online ride-hailing platforms as well as trace the location of each car at least every day.
Every car purchased or leased through us has a GPS device installed, which helps us locate the car. Our Drivers Management monitor the daily gross income of our served online ride-hailing drivers through our Partner Platforms as well as trace the location of each car at least every day.
We provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance and medical insurance for our employees. We do no maintain any property insurance policies, business interruption insurance or general third-party liability insurance, nor do we maintain product liability insurance or key-man insurance. We consider our insurance coverage to be sufficient for our business operations in China. 28
We do not maintain any property insurance policies, business interruption insurance or general third-party liability insurance, nor do we maintain product liability insurance or key-man insurance. We consider our insurance coverage to be sufficient for our business operations in China. 26
The new regulations appropriately relax the conditions for cross-border flow of data and narrow the scope of data outbound security assessment, so as to facilitate cross-border flow of data and reduce the compliance costs of enterprises.
The new regulations appropriately relax the conditions for cross-border flow of data and narrow the scope of data outbound security assessment, so as to facilitate cross-border flow of data and reduce the compliance costs of enterprises. On September 24, 2024, the CAC promulgated the Regulations for the Administration of Network Data Security, which came into effect on January 1, 2025.
However, approximately 25% of our online ride-hailing drivers had not obtained the driver’s license as of March 31, 2024 while all of the cars used for online ride-hailing services which we provided management services to have the automobile certificate.
Those regulations also stipulate a series of detailed requirements for the online ride-hailing platforms, drivers and automobiles in different cities. However, approximately 43% of our online ride-hailing drivers had not obtained the driver’s license as of March 31, 2025 while all of the cars used for online ride-hailing services which we provided management services to have the automobile certificate.
The Auto Business Entities have obtained accident insurance and commercial liability insurance, which are mandatory, on all the automobiles they purchased for sales, leasing or financing and pass on the costs of such insurance to their customers in the sale/leasing/financing transaction. We also maintain the mandatory insurance with respect to carrier’s liability in connection with our Online Ride-hailing services.
The Auto Business Entities have obtained accident insurance and commercial liability insurance, which are mandatory, on all the automobiles they purchased for sales, leasing or financing and pass on the costs of such insurance to their customers in the sale/leasing/financing transaction. We provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance and medical insurance for our employees.
The Financial Leasing Measures clarify and enumerate the scopes of the financing lease business activities, the leased properties and the activities prohibited to be conducted by the financing lease companies, and set forth the regulatory indexes applicable to financing lease companies including, among others, (i) the assets for financial leasing and other lease arrangements accounting for not less than 60% of the total assets of a financial leasing company; (ii) the risk assets of a financing lease company not exceeding eight times of its total net assets, and the term “risk assets” of a financing lease company refers to its total assets, net of cash, bank deposits, Chinese treasury bonds; (iii) the fixed-income securities investment business carried out by a financial leasing company not exceeding 20% of its net assets.
Financial leasing companies shall not conduct the following businesses or activities: (1) illegal fund-raising, acceptance or disguised acceptance of deposits; (2) extension of loans or entrusted loans; (3) placements with or from other financial leasing companies or in disguise; (4) financing or transferring assets through Internet Lending Information Intermediaries, private equity funds; (5) other businesses or activities prohibited by laws and regulations, the NFRAC and local financial regulatory authorities in provinces, autonomous regions and municipalities. 12 The Financial Leasing Measures clarify and enumerate the scopes of the financing lease business activities, the leased properties and the activities prohibited to be conducted by the financing lease companies, and set forth the regulatory indexes applicable to financing lease companies including, among others, (i) the assets for financial leasing and other lease arrangements accounting for not less than 60% of the total assets of a financial leasing company; (ii) the risk assets of a financing lease company not exceeding eight times of its total net assets, and the term “risk assets” of a financing lease company refers to its total assets, net of cash, bank deposits, Chinese treasury bonds; (iii) the fixed-income securities investment business carried out by a financial leasing company not exceeding 20% of its net assets.
See “ Regulations – Regulations Related to Labor and Social Security .” We enter into standard labor and confidentiality agreements with each of our employees.
See “ Regulations – Regulations Related to Labor and Social Security .” We enter into standard labor and confidentiality agreements with each of our employees. We believe that we maintain a good working relationship with our employees, and we have not experienced any major labor disputes.
From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources. In addition, third parties may initiate litigations against us alleging infringement of their proprietary rights or respond to our litigations declaring their non-infringement of our intellectual property rights.
In addition, third parties may initiate litigations against us alleging infringement of their proprietary rights or respond to our litigations declaring their non-infringement of our intellectual property rights.
Applicants with any of the follow attributes will be rejected: ● engaging in illegal or criminal activities; ● involvement in pornography, gambling, drug dealing and gangster activities and experiences; ● engaging in usury lending; or ● providing fraudulent information. Our Operating Entities also conduct an assessment and evaluation when they receive an application from a prospective online ride-hailing driver.
Applicants with any of the follow attributes will be rejected: ● engaging in illegal or criminal activities; ● involvement in pornography, gambling, drug dealing and gangster activities and experiences; ● engaging in usury lending; or ● providing fraudulent information.
In a self-operated financing transaction, Hunan Ruixi is a lessor and a customer (i.e., online ride-hailing driver) is a lessee. Hunan Ruixi offers to the customer a selection of automobiles that were purchased by Hunan Ruixi in advance. The customer will choose the desirable automobile to be purchased and enter into a financing lease with Hunan Ruixi.
Hunan Ruixi offers to the customer a selection of automobiles that were purchased by Hunan Ruixi in advance. The customer will choose the desirable automobile to be purchased and enter into a financing lease with Hunan Ruixi. During the term of the financing lease, the customer will have use rights with respect to the automobile.
During the calendar years ended December 31, 2022 and 2023, all our subsidiaries in China met the three criteria and enjoyed the preferential tax rates.
During the calendar years ended December 31, 2024, our subsidiaries, Senmiao Consulting and Yicheng, and former subsidiary, Corenel, met the three criteria and enjoyed the preferential tax rates. During the calendar year ended December 31, 2023, our subsidiary, Yicheng, and former subsidiary, Corenel, met the three criteria and enjoyed the preferential tax rates.
Our results of operations in future quarters or years may fluctuate and deviate from the expectations of our investors, and any occurrence that disrupts our business during any particular quarters could have a disproportionately material adverse effect on our liquidity and results of operations.
Our results of operations in future quarters or years may fluctuate and deviate from the expectations of our investors, and any occurrence that disrupts our business during any particular quarters could have a disproportionately material adverse effect on our liquidity and results of operations. 25 Research and Development With an aim to standardize our transaction process and achieve higher operating efficiency, we are developing an integrated information system for our Automobile Transaction and Related Services.
XXTX earns 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 (the “Online Ride-hailing Platform Services”). XXTX settles its commissions with the aggregation platforms on a weekly basis.
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.
As of June 2024, there were approximately 100 companies who operate their own online ride-hailing platforms and have established business relationships with Gaode in Chengdu and Changsha, our major operation cities and are engaged in the same business as ours.
Meanwhile, Didi Chuxing Technology Co., Ltd. (“Didi”) takes over 80% market share of the online ride-hailing platforms in China according to the public information. As of June 2025, there were approximately 100 companies who operate their own online ride-hailing platforms and have established business relationships with Gaode in Chengdu and Changsha, our major operation cities.
SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises (“Circular 19”), effective on June 1, 2015, in replacement of SAFE Circular 142 (the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises.
By contrast, approval from or registration with appropriate PRC authorities or banks authorized by appropriate PRC authorities is required where RMB capital is to be converted into foreign currency and remitted out of China to pay capital expenses. 18 SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises (“Circular 19”), effective on June 1, 2015, in replacement of SAFE Circular 142 (the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises.
Auto Commissions Our Auto Business Entities generated monthly revenues from the management and related services provided to our Partner Platforms and other companies. We generated revenues of $196,099 from the monthly services commissions during the year ended March 31, 2024. Auto Financing Hunan Ruixi began offering auto financing services in March 2019.
Excluding Jinkailong, our other Auto Business Entities generated revenues of $38,696 from automobile purchase for the year ended March 31, 2025. Auto Commissions Our Auto Business Entities generated monthly revenues from the management and related services provided to our Partner Platforms and other companies.
Without requisite automobile certificate or driver’s license, these drivers may be suspended from providing online ride-hailing services, confiscated their illegal income and subject to fines of up to 10 times of their illegal income. Furthermore, according to the Interim Measures, no enterprise or individual is allowed to provide information form online ride-hailing services to unqualified vehicles and drivers.
Without requisite automobile certificate or driver’s license, these drivers may be suspended from providing online ride-hailing services, confiscated their illegal income and subject to fines of up to 10 times of their illegal income. We are in the process of assisting the drivers to obtain the required certificate and license, such as providing registered and training services.
Regulations on Intellectual Property The PRC has adopted legislation governing intellectual property rights, including copyrights, trademarks and patents. The PRC is a signatory to major international conventions on intellectual property rights and is subject to the Agreement on Trade Related Aspects of Intellectual Property Rights as a result of its accession to the World Trade Organization in December 2001.
The PRC is a signatory to major international conventions on intellectual property rights and is subject to the Agreement on Trade Related Aspects of Intellectual Property Rights as a result of its accession to the World Trade Organization in December 2001. 17 The SCNPC amended the Copyright Law in 2001, 2010 and 2020 to widen the scope of works and rights that are eligible for copyright protection.
In addition, if a registered trademark is recognized as a well-known trademark, the protection of the proprietary right of the trademark holder may reach beyond the specific class of the relevant products or services. 20 The Patent Law of the PRC and its Implementation Rules provide for three types of patents: invention, utility model and design.
Trademark license agreements shall be filed with the Trademark Office for record. In addition, if a registered trademark is recognized as a well-known trademark, the protection of the proprietary right of the trademark holder may reach beyond the specific class of the relevant products or services.
We have two trademark applications pending at the PRC Trademark Office. We have also registered numerous domain names, including www.51ruixi.com, www.91xixing.com/, 91xixingcd.com, www.coreneltech.com, www.senmiaotech.com and senmiaotechir.com. The information on our websites is not part of, or incorporated in, this Report.
We have also registered numerous domain names, including www.51ruixi.com, www.senmiaotech.com and senmiaotechir.com. The information on our websites is not part of, or incorporated in, this Report. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk Factors Summary Risks Related to Our Business and Industry ● We face intense competition, which could lead to our inability to secure market share or cause us to lose market share to our competitors, any of which could materially and adversely affect our business, results of operations and financial condition. ● If we fail to cost-effectively attract and retain online ride-hailing drivers, or to increase the profitability of our platform by existing users, our business, results of operations and financial condition could be materially and adversely affected. ● Relationship between us, our affiliates and Gaode Maps and other cooperated partners is crucial to our ability to grow our business, results of operations and financial condition. ● Our customers’ failure to fully comply with PRC online ride-hailing-related laws may expose us to potential penalties and negatively affect our operations. ● We are exposed to credit risk in our auto financing and prior auto financing facilitation businesses. ● Our failure to lease cars that we purchased from dealers or leased from other automobile rental companies with a satisfied utilization may have a material and adverse effect on our business, financial condition and results of operations. ● If data provided by automobile lessees and other third-party sources or collected by us are inaccurate, customer trust in us could decline. ● We may be subject to product liability claims if people or property are harmed by vehicles purchased through us. ● If our safety system fails to ensure user safety while using our online ride-hailing platform, our business, results of operations and financial condition could be materially and adversely affected. ● Changes to pricing for our online ride-hailing services could materially and adversely affect our ability to attract or retain riders and qualified drivers. ● Any significant disruption in our IT systems could materially and adversely affect our business. ● If we fail to obtain and maintain the requisite licenses and approvals required for our online ride-hailing business, our business may be materially and adversely affected. ● We rely primarily on a third-party insurance policy to insure our auto-related risks. ● We rely on third-party payment processors to process payments made by our business partners. ● Government policies on automobile purchases and usage in the online ride-hailing industry may materially affect our results of operations. ● Our business is subject to laws, regulations and regulatory policies that are being continuously amended and improved, and the interpretation and implementation of newly established policies may remain uncertain, which could have an adverse impact on our business and future prospects. ● We have identified material weaknesses in our internal control over financial reporting. ● Our common stock will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCA Act, in the future if the PCAOB is unable to inspect or investigate completely our auditors.
Biggest changeRisk Factors Summary Risks Related to Our Business and Industry ● We face intense competition, which could lead to our inability to secure market share or cause us to lose market share to our competitors, any of which could materially and adversely affect our business, results of operations and financial condition. ● Relationship between us, our affiliates and Gaode Maps and other cooperated partners is crucial to our ability to grow our business, results of operations and financial condition. ● Illegal, improper or otherwise inappropriate activities of customers while receiving our services could expose us to liabilities and harm our reputation, business, results of operations and financial condition. ● Our customers’ failure to fully comply with PRC online ride-hailing-related laws may expose us to potential penalties and negatively affect our operations. ● If we fail to effectively manage the behaviors of disintermediation and other misconduct and fraud by our users, our business, results of operations and financial condition could be materially and adversely affected. ● If we are unable to collect our revenue, repossess or sub-lease the cars held by the defaulted customers in a cost-effective manner, our business and results of operations would be materially and adversely affected. ● We are exposed to credit risk in our Auto Businesses ● We are required to obtain licenses and permits related to financing and lending in China for our business operations, and we may not be able to obtain or maintain such licenses or permits. ● Our failure to lease cars that we purchased from dealers or leased from other automobile rental companies with a satisfied utilization may have a material and adverse effect on our business, financial condition and results of operations. ● If data provided by automobile lessees and other third-party sources or collected by us are inaccurate, customer trust in us could decline. ● We may be subject to product liability claims if people or property are harmed by vehicles purchased through us. ● We may be considered as conducting payment services as a non-financial institution without a Payment Business Permit. ● Any significant disruption in our IT systems could materially and adversely affect our business. ● If we fail to obtain and maintain the requisite licenses and approvals required for our business, our business may be materially and adversely affected. ● We rely primarily on a third-party insurance policy to insure our auto-related risks. ● Government policies on automobile purchases and usage in the online ride-hailing industry may materially affect our results of operations. 27 ● Our business is subject to laws, regulations and regulatory policies that are being continuously amended and improved, and the interpretation and implementation of newly established policies may remain uncertain, which could have an adverse impact on our business and future prospects. ● Our business is subject to risks related to China’s automobile leasing and financing industry, including industry-wide and macroeconomic risks. ● We have incurred net losses and may continue to incur net losses in the future. ● Our operations depend on the performance of the internet infrastructure and fixed telecommunications networks in China. ● We have identified material weaknesses in our internal control over financial reporting. ● We have limited business insurance coverage. ● Our common stock will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCA Act, in the future if the PCAOB is unable to inspect or investigate completely our auditors.
Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms and thus are at risk of such suspensions in the future. As of the date of this annual report, our auditor is not subject to the determinations announced by the PCAOB on December 16, 2021.
Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms and thus are at risk of such suspensions in the future. As of the date of this Report, our auditor is not subject to the determinations announced by the PCAOB on December 16, 2021.
In addition to the above factors, the price and trading volume of our common stock may be highly volatile due to multiple factors, including the following: ● regulatory developments affecting us, our customers, or our industry; ● announcements of studies and reports relating to our loan products and service offerings or those of our competitors; ● changes in the economic performance or market valuations of other online finance marketplaces; ● actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; ● changes in financial estimates by securities research analysts; ● conditions in the automobile finance and ride-hailing industries in China; 58 ● announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures or capital commitments; ● additions to or departures of our senior management; ● detrimental negative publicity about us, our management or our industry; ● fluctuations of exchange rates between the RMB and the U.S. dollar; ● release or expiry of lock-up or other transfer restrictions on our outstanding shares of common stock; and ● sales or perceived potential sales of additional shares of common stock.
In addition to the above factors, the price and trading volume of our common stock may be highly volatile due to multiple factors, including the following: ● regulatory developments affecting us, our customers, or our industry; ● announcements of studies and reports relating to our loan products and service offerings or those of our competitors; ● changes in the economic performance or market valuations of other online finance marketplaces; ● actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; ● changes in financial estimates by securities research analysts; ● conditions in the automobile finance and ride-hailing industries in China; 56 ● announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures or capital commitments; ● additions to or departures of our senior management; ● detrimental negative publicity about us, our management or our industry; ● fluctuations of exchange rates between the RMB and the U.S. dollar; ● release or expiry of lock-up or other transfer restrictions on our outstanding shares of common stock; and ● sales or perceived potential sales of additional shares of common stock.
Accordingly, the return on your investment in our common stock will likely depend entirely upon any future price appreciation of our common stock. Other General Risk Factors We may need additional capital to pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances, and financing may not be available on terms acceptable to us, or at all.
Accordingly, the return on your investment in our common stock will likely depend entirely upon any future price appreciation of our common stock. 58 Other General Risk Factors We may need additional capital to pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances, and financing may not be available on terms acceptable to us, or at all.
We currently maintain valid third-party liability insurance and product liability insurance in relation to vehicles purchased through us, and also ensure that appropriate insurances have covered automobiles leased from rental companies. As a result, any material product liability claim or litigation could have a material and adverse effect on our business, financial condition and results of operations.
We currently maintain valid third-party liability insurance and product liability insurance in relation to vehicles purchased or rented through us, and also ensure that appropriate insurances have covered automobiles leased from rental companies. As a result, any material product liability claim or litigation could have a material and adverse effect on our business, financial condition and results of operations.
In addition, fluctuations in currencies relative to the periods in which the earnings are generated may make it more difficult to perform period-to-period comparisons of our reported results of operations. The value of the RMB against the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economic conditions and China’s foreign exchange policies.
In addition, fluctuations in currencies relative to the periods in which the earnings are generated may make it more difficult to perform period-to-period comparisons of our reported results of operations. 52 The value of the RMB against the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economic conditions and China’s foreign exchange policies.
We cannot assure you that the PRC government will continue to pursue policies favoring a market oriented economy or that existing policies will not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting political, economic and social life in the PRC. 48 Accordingly, given the PRC government’s significant oversight and discretion over the conduct of our operating subsidiaries’ business, it may intervene or influence the operations of our PRC subsidiaries at any time and to exert control over an offering of securities conducted overseas and/or foreign investment in China-based issuers, which may cause us to make material changes to the operations of our PRC subsidiaries and could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.
We cannot assure you that the PRC government will continue to pursue policies favoring a market oriented economy or that existing policies will not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting political, economic and social life in the PRC. 45 Accordingly, given the PRC government’s significant oversight and discretion over the conduct of our operating subsidiaries’ business, it may intervene or influence the operations of our PRC subsidiaries at any time and to exert control over an offering of securities conducted overseas and/or foreign investment in China-based issuers, which may cause us to make material changes to the operations of our PRC subsidiaries and could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.
Lastly, the draft contains proposals for significant fines for serious violations of up to RMB50 million or 5% of annual revenues from the prior year. 50 Interpretation, application and enforcement of these laws, rules and regulations evolve from time to time and their scope may continually change, through new legislation, amendments to existing legislation and changes in enforcement.
Lastly, the draft contains proposals for significant fines for serious violations of up to RMB50 million or 5% of annual revenues from the prior year. Interpretation, application and enforcement of these laws, rules and regulations evolve from time to time and their scope may continually change, through new legislation, amendments to existing legislation and changes in enforcement.
The strategic relationship between us, our affiliates and Gaode Maps, the leading aggregation platform, and other local online ride-hailing platforms is crucial to our business as most of customers we provide services to are online ride-hailing drivers. Those drivers earn income on our platform from the trip orders distributed from Gaode Maps, or directly from other platforms.
The strategic relationship between us, our affiliates and Gaode Maps, the leading aggregation platform, and other local online ride-hailing platforms is crucial to our business as most of customers we provide services to are online ride-hailing drivers. Those drivers earn income on our Partner Platforms from the trip orders distributed from Gaode Maps, or directly from other platforms.
The models and algorithms that we use for our platform and services may also contain design or performance defects that are not detectable even after extensive internal testing. We cannot assure you that we would be able to detect and resolve all such defects and issues through our quality control measures.
The models and algorithms that we use for our services may also contain design or performance defects that are not detectable even after extensive internal testing. We cannot assure you that we would be able to detect and resolve all such defects and issues through our quality control measures.
If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our stockholders. 55 Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties.
If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our stockholders. Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties.
If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements, and the quality of our services and our ability to serve borrowers and investors could diminish, resulting in a material adverse effect to our business. 66 Increases in labor costs in the PRC may adversely affect our business and results of operations.
If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements, and the quality of our services and our ability to serve borrowers and investors could diminish, resulting in a material adverse effect to our business. Increases in labor costs in the PRC may adversely affect our business and results of operations.
We cannot assure you that the internet infrastructure and the fixed telecommunications networks in China will be able to support the demands associated with the continued growth in internet usage. In addition, we have no control over the costs of the services provided by telecommunication service providers.
We cannot assure you that the internet infrastructure and the fixed telecommunications networks in China will be able to support the demands associated with the continued growth in internet usage. 38 In addition, we have no control over the costs of the services provided by telecommunication service providers.
Any adverse change to these factors could reduce demand for used cars and hence demand for our services, and our results of operations and financial condition could be materially and adversely affected. 41 We have incurred net losses and may continue to incur net losses in the future.
Any adverse change to these factors could reduce demand for used cars and hence demand for our services, and our results of operations and financial condition could be materially and adversely affected. We have incurred net losses and may continue to incur net losses in the future.
As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be in violation of applicable laws and regulations. 52 The evolving PRC regulatory system for the internet industry may lead to the establishment of new regulatory agencies.
As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be in violation of applicable laws and regulations. The evolving PRC regulatory system for the internet industry may lead to the establishment of new regulatory agencies.
Our business and results of operations will be materially affected if our affiliated drivers are suspended from providing ride-hailing services or receive substantial fines. We are in the process of assisting the drivers to obtain the required certificates and licenses.
Our business and results of operations will be materially affected if our affiliated drivers are suspended from providing ride-hailing services or receive substantial fines. 31 We are in the process of assisting the drivers to obtain the required certificates and licenses.
In addition, we may incur losses from various types of fraud by our users, including use of stolen or fraudulent credit card data, attempted payments by riders with insufficient funds and fraud committed by riders in concert with online ride-hailing drivers.
We may incur losses from various types of fraud by our users, including use of stolen or fraudulent credit card data, attempted payments by riders with insufficient funds and fraud committed by riders in concert with online ride-hailing drivers.
However, it is uncertain whether any of our business are defined as the operation of a value-added telecommunication business in the future and we do not obtain such certificate, we may be subject to the sanctions described above. 47 According to the Provisions on the Administration of Foreign-Invested Telecommunication Enterprises, the ratio of investment by foreign investors in a foreign-invested telecommunication enterprise that engages in the operation of a value-added telecommunication business shall not exceed 50%.
However, it is uncertain whether any of our business are defined as the operation of a value-added telecommunication business in the future and we do not obtain such certificate, we may be subject to the sanctions described above. 44 According to the Provisions on the Administration of Foreign-Invested Telecommunication Enterprises, the ratio of investment by foreign investors in a foreign-invested telecommunication enterprise that engages in the operation of a value-added telecommunication business shall not exceed 50%.
We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law. 56 PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law.
We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law. 54 PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law.
On March 26, 2024, we received a letter from the Nasdaq notifying us that we have regained compliance with the Nasdaq Capital Market’s minimum bid price requirement and the matter is closed. 57 If our common stock were no longer listed on The Nasdaq Capital Market, investors might only be able to trade on one of the over-the-counter markets.
On March 26, 2024, we received a letter from the Nasdaq notifying us that we have regained compliance with the Nasdaq Capital Market’s minimum bid price requirement and the matter is closed. 55 If our common stock were no longer listed on The Nasdaq Capital Market, investors might only be able to trade on one of the over-the-counter markets.
And any negative publicity related to the foregoing, whether such incident occurred on our platform or on our competitors’ platforms, could materially and adversely affect our reputation and brand and more importantly, public perception of the online ride-hailing industry as a whole, which could negatively affect the demand for platforms like ours, and potentially lead to increased regulatory or litigation exposure.
And any negative publicity related to the foregoing, whether such incident occurred on our Partner Platforms or on our competitors’ platforms, could materially and adversely affect our reputation and brand and more importantly, public perception of the online ride-hailing industry as a whole, which could negatively affect the demand for platforms like ours, and potentially lead to increased regulatory or litigation exposure.
Our financial position could be materially and adversely affected if Sichuan Senmiao’s tax liabilities increase or if it is required to pay late payment fees and other penalties. 45 If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC stockholders.
Our financial position could be materially and adversely affected if Sichuan Senmiao’s tax liabilities increase or if it is required to pay late payment fees and other penalties. 42 If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC stockholders.
If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our common stock to decline. 68 Item 1B. Unresolved Staff Comments Not Applicable.
If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our common stock to decline. 67 Item 1B. Unresolved Staff Comments Not Applicable.
If we or drivers or vehicles on our platform fail to obtain or maintain any required licenses, permits or approvals or make any necessary filings in a timely matter or at all, we may be subject to a variety of penalties, including fines or potentially being forced to suspend, terminate or significantly reduce our operations in the city or jurisdiction.
If we or drivers or vehicles fail to obtain or maintain any required licenses, permits or approvals or make any necessary filings in a timely matter or at all, we may be subject to a variety of penalties, including fines or potentially being forced to suspend, terminate or significantly reduce our operations in the city or jurisdiction.
As of the date of this Report, we are unable to assess the full impact of the outbreak on our business, results of operations and financial condition. 63 Our ability to protect the confidential information of our customers may be adversely affected by cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions.
As of the date of this Report, we are unable to assess the full impact of the outbreak on our business, results of operations and financial condition. 61 Our ability to protect the confidential information of our customers may be adversely affected by cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions.
We are in the process of taking measures to detect and prevent fraudulent transactions by our users, such as cross-checking a driver’s travel path against the proposed itinerary to verify the authenticity of an order. 33 Despite our efforts, our measures may not eliminate order skipping, disintermediation, and other user misconducts and fraud.
We are in the process of taking measures to detect and prevent fraudulent transactions by our users, such as cross-checking a driver’s travel path against the proposed itinerary to verify the authenticity of an order. Despite our efforts, our measures may not eliminate disintermediation, and other user misconducts and fraud.
A large number of proposals are before various regional, and local legislative bodies and regulatory entities regarding issues related to our industry or our business model. As of March 31, 2024, we had not been subject to any material fines or other penalties under any PRC laws or regulations as to our business operations.
A large number of proposals are before various regional, and local legislative bodies and regulatory entities regarding issues related to our industry or our business model. As of March 31, 2025, we had not been subject to any material fines or other penalties under any PRC laws or regulations as to our business operations.
Even if you are successful in bringing an action of this kind, the laws of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. 59 Our articles of incorporation and by-laws could deter a change of our management, which could discourage or delay offers to acquire us.
Even if you are successful in bringing an action of this kind, the laws of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. 57 Our articles of incorporation and by-laws could deter a change of our management, which could discourage or delay offers to acquire us.
GAAP; (ii) be lacking adequate policies and procedures in internal audit function to ensure that our policies and procedures have been carried out as planned; and (iii) had deficiencies in our IT general control regarding to the Logical Access Security, Change Management, IT Operations and Cybersecurity of our financial system and key application system.
GAAP; (ii) be lacking adequate policies and procedures in internal audit function to ensure that our policies and procedures have been carried out as planned; and (iii) had deficiencies in our IT general control regarding to the Logical Access Security, Change Management, IT Operations and Cybersecurity of our financial system.
The proposed rule was adopted by the PCAOB on September 22, 2021 and approved by the SEC on November 5, 2021. 43 On June 22, 2021, the U.S.
The proposed rule was adopted by the PCAOB on September 22, 2021 and approved by the SEC on November 5, 2021. On June 22, 2021, the U.S.
If any of the foregoing takes place, our business and results of operations could be materially and adversely affected. 62 Our reputation may be harmed if information supplied by customers is inaccurate, misleading or incomplete. Our customers supply a variety of information that is in the applications to financing partners.
If any of the foregoing takes place, our business and results of operations could be materially and adversely affected. 60 Our reputation may be harmed if information supplied by customers is inaccurate, misleading or incomplete. Our customers supply a variety of information that is in the applications to financing partners.
In addition, our results of operations could be adversely affected to the extent that any of these epidemics harms the Chinese economy in general. 44 Risks Related to Doing Business in China 1. Corporate Structure Our current corporate structure and business operations may be affected by the Foreign Investment Law.
In addition, our results of operations could be adversely affected to the extent that any of these epidemics harms the Chinese economy in general. 41 Risks Related to Doing Business in China 1. Corporate Structure Our current corporate structure and business operations may be affected by the Foreign Investment Law.
In addition, we cannot guarantee that we will not be subject to tightened regulatory review and we could be exposed to government interference in China. 49 Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China.
In addition, we cannot guarantee that we will not be subject to tightened regulatory review and we could be exposed to government interference in China. 46 Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China.
Any failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations. 64 We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.
Any failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations. 62 We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.
Factors that may cause fluctuations in our quarterly financial results include: ● our ability to attract new customers and maintain relationships with existing customers; ● our ability to maintain existing relationship with existing business partners and establish new relationships with additional partners for our Automobile Transaction and Related Services and Online Ride-hailing Platform Services; ● the revenue generated from automobile leasing and online ride-hailing platform services; ● overdue ratios of automobile financing transactions we serve; ● financial institutions’ willingness and ability to fund financing transactions through us on reasonable terms; ● changes in our services and introduction of new products and services; ● the amount and timing of operating expenses related to acquiring customers and the maintenance and expansion of our business, operations and infrastructure; ● our ability to manage transaction volume growth during the period; ● the timing of expenses related to the development or acquisition of technologies or businesses; ● network outages or security breaches; 61 ● general economic, industry and market conditions; ● our emphasis on customer experience instead of near-term growth; and ● the timing of expenses related to the development or acquisition of technologies or businesses.
Factors that may cause fluctuations in our quarterly financial results include: ● our ability to attract new customers and maintain relationships with existing customers; ● our ability to maintain existing relationship with existing business partners and establish new relationships with additional partners for our Automobile Transaction and Related Services; ● the revenue generated from automobile leasing; ● overdue ratios of automobile financing transactions we serve; ● financial institutions’ willingness and ability to fund financing transactions through us on reasonable terms; ● changes in our services and introduction of new products and services; 59 ● the amount and timing of operating expenses related to acquiring customers and the maintenance and expansion of our business, operations and infrastructure; ● our ability to manage transaction volume growth during the period; ● the timing of expenses related to the development or acquisition of technologies or businesses; ● network outages or security breaches; ● general economic, industry and market conditions; ● our emphasis on customer experience instead of near-term growth; and ● the timing of expenses related to the development or acquisition of technologies or businesses.
If we fail to effectively manage the behaviors of order skipping, disintermediation and other misconduct and fraud by our users, our business, results of operations and financial condition could be materially and adversely affected.
If we fail to effectively manage the behaviors of disintermediation and other misconduct and fraud by our users, our business, results of operations and financial condition could be materially and adversely affected.
If the relevant authorities determine that our platform has not obtained the requisite licenses or our operations are not in compliance with the relevant regulations, we may be required to suspend our operations, which may cause significant loss of our users and materially and adversely affect our business, results of operations and financial condition.
If the relevant authorities determine that we have not obtained the requisite licenses or our operations are not in compliance with the relevant regulations, we may be required to suspend our operations, which may cause significant loss of our users and materially and adversely affect our business, results of operations and financial condition.
To date, inflation in China has not materially impacted our results of operations. According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December 2021, 2022 and 2023 were increases of 0.9%, 2.0% and 0.2%, respectively.
To date, inflation in China has not materially impacted our results of operations. According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December 2022, 2023 and 2024 were increases of 2.0%, 0.2% and 0.2%, respectively.
If we fail to obtain and maintain the requisite licenses and approvals required for our online ride-hailing business, or if we are required to take compliance actions that are time-consuming or costly, our business, results of operations and financial condition may be materially and adversely affected.
If we fail to obtain and maintain the requisite licenses and approvals required for our business, or if we are required to take compliance actions that are time-consuming or costly, our business, results of operations and financial condition may be materially and adversely affected.
As of the date of this Report, there were 6,045,663 shares of common stock issuable upon exercise of outstanding warrants at a weighted average exercise price of $2.25 per share, and we may issue additional options, warrants and other types of equity in the future as part of stock-based compensation, capital raising transactions or other strategic transactions.
As of the date of this Report, there were 5,845,663 shares of common stock issuable upon exercise of outstanding warrants at a weighted average exercise price of $2.25 per share, and we may issue additional options, warrants and other types of equity in the future as part of stock-based compensation, capital raising transactions or other strategic transactions.
For example, foreign investors are not allowed to own more than 50% of the equity interests in a value-added telecommunication service provider (except e-commerce, domestic multiparty communication, store-and-forward and call center) in accordance with the Provisions on the Administration of Foreign-invested Telecommunication Enterprises and the Special Administrative Measures for Entrance of Foreign Investment (Negative List) (2021 Version) (which came into force and replaced the 2020 Version on January 1, 2022).
For example, foreign investors are not allowed to own more than 50% of the equity interests in a value-added telecommunication service provider (except e-commerce, domestic multiparty communication, store-and-forward and call center) in accordance with the Provisions on the Administration of Foreign-invested Telecommunication Enterprises and the Special Administrative Measures for Entrance of Foreign Investment (Negative List) (2024 Version) (which came into force and replaced the 2021 Version on November 1, 2024).
Our business and results of operations will be materially and adversely affected if our affiliated drivers are suspended from providing ride-hailing services or imposed substantial fines or if we are found to be in serious violation of the Interim Measures due to the drivers’ failure to obtain requite licenses and/or automobile certificates in connection with providing services through our platform.
Our business and results of operations will be materially and adversely affected if our affiliated drivers are suspended from providing ride-hailing services or imposed substantial fines or if we are found to be in serious violation of the Interim Measures due to the drivers’ failure to obtain requite licenses and/or automobile certificates.
Our annual cooperative arrangements with Didi on Automobile Transaction and Related Services are non-exclusive basis, and Didi may have cooperative arrangements with our competitors. We also cooperate with local automobile dealers, automobile leasing companies, financial institutions and others to attract online ride-hailing drivers to run their business through our platform and provide automobile transaction and financing services.
Our annual cooperative arrangements with Didi on Automobile Transaction and Related Services are non-exclusive basis, and Didi may have cooperative arrangements with our competitors. 30 We also cooperate with local automobile dealers, automobile leasing companies, financial institutions and others to attract online ride-hailing drivers to run their business through our Partner Platforms and provide automobile transaction and financing services.
For example, if we cannot complete background checks of potential online ride-hailing drivers who apply to utilize our platform on a timely basis, we may not be able to onboard potential online ride-hailing drivers in time and, as a result, our platform may be less attractive to qualified online ride-hailing drivers.
For example, if we cannot complete background checks of potential online ride-hailing drivers who apply to lease our automobiles on a timely basis, we may not be able to onboard potential online ride-hailing drivers in time and, as a result, our qualified automobiles may be less attractive to qualified online ride-hailing drivers.
If we are unable to collect the lease/loan payments we facilitated or repossess the car collateral due to inaccurate or fraudulent information, our results of operations and profitability would be harmed. We may be subject to product liability claims if people or property are harmed by vehicles purchased through us. Vehicles purchased through us may be defectively designed or manufactured.
If we are unable to collect the lease/loan payments we facilitated or repossess the car collateral due to inaccurate or fraudulent information, our results of operations and profitability would be harmed. 34 We may be subject to product liability claims if people or property are harmed by vehicles purchased or rented through us.
Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including: ● difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired business; ● inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits; ● difficulties in retaining, training, motivating and integrating key personnel; ● diversion of management’s time and resources from our normal daily operations; 65 ● difficulties in successfully incorporating licensed or acquired technology and rights into our business; ● difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; ● difficulties in retaining relationships with customers, employees and suppliers of the acquired business; ● risks of entering markets in which we have limited or no prior experience; ● regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; ● assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; ● failure to successfully further develop the acquired technology; ● liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; ● potential disruptions to our ongoing businesses; and ● unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.
If we are able to identify an appropriate business opportunity, we may not be able to successfully consummate the transaction and, even if we do consummate such a transaction, we may be unable to obtain the benefits or avoid the difficulties and risks of such transaction. 63 Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including: ● difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired business; ● inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits; ● difficulties in retaining, training, motivating and integrating key personnel; ● diversion of management’s time and resources from our normal daily operations; ● difficulties in successfully incorporating licensed or acquired technology and rights into our business; ● difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; ● difficulties in retaining relationships with customers, employees and suppliers of the acquired business; ● risks of entering markets in which we have limited or no prior experience; ● regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; ● assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; ● failure to successfully further develop the acquired technology; ● liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; ● potential disruptions to our ongoing businesses; and ● unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.
We are exposed to credit risk in our Auto Businesses. Our current risk management system may not be able to accurately assess and mitigate all risks to which we are exposed, including credit risk.
Our current risk management system may not be able to accurately assess and mitigate all risks to which we are exposed, including credit risk.
Any perception that our collection practices are aggressive and not compliant with the relevant laws and regulations in the PRC may result in harm to our reputation and business, decrease in the willingness of prospective customers to apply for and utilize our service, or fines and penalties imposed by the relevant regulatory authorities, any of which may have a material adverse effect on our business, financial condition and results of operations.
Any perception that our collection practices are aggressive and not compliant with the relevant laws and regulations in the PRC may result in harm to our reputation and business, decrease in the willingness of prospective customers to apply for and utilize our service, or fines and penalties imposed by the relevant regulatory authorities, any of which may have a material adverse effect on our business, financial condition and results of operations. 32 We are exposed to credit risk in our Auto Businesses.
We regard our trademarks, domain names, know-how, proprietary technologies and similar intellectual property as critical to our success, and we rely on a combination of intellectual property laws and contractual arrangements, including confidentiality and non-compete agreements with our employees and others to protect our proprietary rights.
We regard our trademarks, domain names, know-how, proprietary technologies and similar intellectual property as critical to our success, and we rely on a combination of intellectual property laws and contractual arrangements, including confidentiality and non-compete agreements with our employees and others to protect our proprietary rights. We have 18 software copyrights, 37 trademarks.
We have been developing strategic collaboration with BYD, a leading NEV manufacturer in China, and other automobile rental companies who are able to lease us qualified NEVs.
We had strategic collaboration with BYD, a leading NEV manufacturer in China, and other automobile rental companies who are able to lease us qualified NEVs.
Additionally, the inability of the PCAOB to conduct inspections of our auditors would deprive our investors of the benefits of such inspections. ● We face risks related to natural disasters, health epidemics and other outbreaks, such as COVID-19, which could significantly disrupt our operations. 29 Risks Related to Doing Business in China ● Our current corporate structure and business operations may be affected by the Foreign Investment Law. ● Our previous contractual arrangements in relation to Sichuan Senmiao may be subject to scrutiny by the PRC tax authorities and they may determine that we or Sichuan Senmiao owe additional taxes, which could negatively affect our financial condition and the value of your investment. ● If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC stockholders. ● Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future. ● We are required to obtain a value-added telecommunication business certificate and be subject to foreign investment restrictions. ● Substantial uncertainties and restrictions with respect to the political and economic policies of the PRC government and PRC laws and regulations could have a significant impact upon the business that we may be able to conduct in the PRC and accordingly on the results of our operations and financial condition. ● Adverse regulatory developments in China may subject us to additional regulatory review, and additional disclosure requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in China may impose additional compliance requirements for companies like us with significant China-based operations, all of which could increase our compliance costs, subject us to additional disclosure requirements. ● Compliance with China’s new Data Security Law, Measures on Cybersecurity Review, Personal Information Protection Law, regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations may entail significant expenses and could materially affect our business. ● Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering. ● We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations. ● PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of from our public offerings to make loans to or make additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business. ● We rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business. ● Fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your investment. ● Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the value of your investment. ● Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties. ● The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of PRC companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China. ● PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law.
Risks Related to Doing Business in China ● Our current corporate structure and business operations may be affected by the Foreign Investment Law. ● Our previous contractual arrangements in relation to Sichuan Senmiao may be subject to scrutiny by the PRC tax authorities and they may determine that we or Sichuan Senmiao owe additional taxes, which could negatively affect our financial condition and the value of your investment. ● If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC stockholders. ● Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future. ● We are required to obtain a value-added telecommunication business certificate and be subject to foreign investment restrictions. ● Substantial uncertainties and restrictions with respect to the political and economic policies of the PRC government and PRC laws and regulations could have a significant impact upon the business that we may be able to conduct in the PRC and accordingly on the results of our operations and financial condition. ● Adverse regulatory developments in China may subject us to additional regulatory review, and additional disclosure requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in China may impose additional compliance requirements for companies like us with significant China-based operations, all of which could increase our compliance costs, subject us to additional disclosure requirements. ● Compliance with China’s new Data Security Law, Measures on Cybersecurity Review, Personal Information Protection Law, regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations may entail significant expenses and could materially affect our business. ● Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering. ● We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations. ● PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of from our public offerings to make loans to or make additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business. ● We rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business. 28 ● Fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your investment. ● Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the value of your investment. ● Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties. ● The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of PRC companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China. ● If the chops of our PRC subsidiaries are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised. ● Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions. ● PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law.
We have been financing our Automobile Transaction and Related Services and Online Ride-hailing Platform Services through proceeds from our IPO and follow-on public offerings, and borrowing from third parties and related parties.
We have been financing our Automobile Transaction and Related Services through proceeds from our IPO and follow-on public offerings, and borrowing from third parties and related parties.
We have in the past failed to repossess one car as the GPS trackers failed to function properly or had been disabled, and we cannot assure you that this incident will not happen again the future.
We cannot assure you that we will be able to successfully locate and recover the cars. We have in the past failed to repossess one car as the GPS trackers failed to function properly or had been disabled, and we cannot assure you that this incident will not happen again the future.
Further, there is no assurance that each of the drivers who use our platform or the cars used by such drivers in providing ride-hailing services possesses the requisite license or certificate.
Further, there is no assurance that each of the drivers who we serve or the cars used by such drivers in providing ride-hailing services possesses the requisite license or certificate.
We may become subject to claims arising primarily from our online ride-hailing platform services and automobile operating leasing for automobile-related incidents, including bodily injury, property damage and uninsured and underinsured liability.
We may become subject to claims arising primarily from our automobile operating leasing for automobile-related incidents, including bodily injury, property damage and uninsured and underinsured liability.
Repayment of the debts may divert a substantial portion of cash flow to repay principal and service interest on such debt, which would reduce the funds available for expenses, capital expenditures, acquisitions and other general corporate purposes; and we may suffer default and foreclosure on our assets if our operating cash flow is insufficient to service debt obligations, which could in turn result in acceleration of obligations to repay the indebtedness and limit our sources of financing. 60 Volatility in the credit markets may also have an adverse effect on our ability to obtain debt financing.
Repayment of the debts may divert a substantial portion of cash flow to repay principal and service interest on such debt, which would reduce the funds available for expenses, capital expenditures, acquisitions and other general corporate purposes; and we may suffer default and foreclosure on our assets if our operating cash flow is insufficient to service debt obligations, which could in turn result in acceleration of obligations to repay the indebtedness and limit our sources of financing.
Illegal, improper or otherwise inappropriate activities by customers while utilizing our online ride-hailing platform or receiving our services could expose us to liabilities and materially and adversely affect our reputation, business, results of operations and financial condition.
Illegal, improper or otherwise inappropriate activities of customers while receiving our services could expose us to liabilities and harm our reputation, business, results of operations and financial condition. Illegal, improper or otherwise inappropriate activities by customers while receiving our services could expose us to liabilities and materially and adversely affect our reputation, business, results of operations and financial condition.
During the year ended March 31, 2024, our average utilization of the automobiles for operating lease, including the ones leased to Jinkailong, was approximately 79.7%, as compared with 64.9% in the year ended March 31, 2023.
During the year ended March 31, 2025, our average utilization of the automobiles for operating lease, including the ones leased to Jinkailong, was approximately 89.0%, as compared with 79.7% in the year ended March 31, 2024.
A prolonged interruption in the availability or reduction in the availability, speed or other functionality of our services could adversely affect our business and reputation and could result in the loss of users.
These events could result in material losses of revenue. A prolonged interruption in the availability or reduction in the availability, speed or other functionality of our services could adversely affect our business and reputation and could result in the loss of users.
As a result, we may be exposed to product liability claims relating to personal injury or property damage. Third parties subject to such injury or damage may bring claims or legal proceedings against us because we facilitate the financing/purchase of the product.
Vehicles purchased or rented through us may be defectively designed or manufactured. As a result, we may be exposed to product liability claims relating to personal injury or property damage. Third parties subject to such injury or damage may bring claims or legal proceedings against us because we facilitate the financing/purchase of the product.
However, we have limited experience in the operating lease of automobiles, and there is no assurance that we will be able to do so effectively and the utilization of automobiles held for operating lease is satisfied to generate sufficient profit and cash.
However, the competition in the operating lease of automobiles is tough in Chengdu and Changsha, and there is no assurance that we will be able to do so effectively and the utilization of automobiles held for operating lease is satisfied to generate sufficient profit and cash.
As such, substantial uncertainties exist with respect to the enactment timetable, final content, interpretation and implementation of such regulations. 51 We have made our determinations based on Yuantai Law Offices, our PRC counsel, to the extent that the discussion relates to matters of CSRC, CAC and other government authorities on our PRC subsidiaries’ operations and concluded that: as of the date of this Report, we, our PRC subsidiaries and equity investee company, (i) are not required to obtain permissions from the CSRC, CAC or any other government authorities on our PRC subsidiaries’ operations, and (ii) have not received or were denied such permissions by any PRC government authorities.
We have made our determinations based on prior discussion with Yuantai Law Offices, our former PRC counsel, to the extent that the discussion relates to matters of CSRC, CAC and other government authorities on our PRC subsidiaries’ operations and concluded that: as of the date of this Report, we, our PRC subsidiaries and equity investee company, (i) are not required to obtain permissions from the CSRC, CAC or any other government authorities on our PRC subsidiaries’ operations, and (ii) have not received or were denied such permissions by any PRC government authorities.
Furthermore, on July 16, 2021, the Ministry of Human Resources and Social Security, the NDRC, the Ministry of Transport, together with several other governmental authorities jointly promulgated Guiding Opinions on Safeguarding the Rights and Interests of Labors in New Forms of Employment, which require, among others, platform enterprises adopting labor outsourcing and other cooperative labor methods to undertake corresponding responsibilities in accordance with laws and regulations when labors’ rights and interests are damaged, call for organizing and launching pilot programs for occupational injury protection of flexible employment personnel, focusing on platform enterprises in industries such as mobility, takeout, instant delivery and intra-city freight, and encourage platform enterprises to improve the protection for flexible employment personnel on the platform by purchasing personal accident, employer liability and other commercial insurances.
Unless we are able to control our labor costs or pass on these increased labor costs to our customers by increasing the fees of our services, our financial condition and results of operations may be adversely affected. 65 Furthermore, on July 16, 2021, the Ministry of Human Resources and Social Security, the NDRC, the Ministry of Transport, together with several other governmental authorities jointly promulgated Guiding Opinions on Safeguarding the Rights and Interests of Labors in New Forms of Employment, which require, among others, platform enterprises adopting labor outsourcing and other cooperative labor methods to undertake corresponding responsibilities in accordance with laws and regulations when labors’ rights and interests are damaged, call for organizing and launching pilot programs for occupational injury protection of flexible employment personnel, focusing on platform enterprises in industries such as mobility, takeout, instant delivery and intra-city freight, and encourage platform enterprises to improve the protection for flexible employment personnel on the platform by purchasing personal accident, employer liability and other commercial insurances.
SAT Bulletin 7 has introduced a new tax regime that is significantly different from that under Circular 698. SAT Bulletin 7 extends its tax jurisdiction to not only indirect transfers set forth under Circular 698 but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company.
SAT Bulletin 7 extends its tax jurisdiction to not only indirect transfers set forth under Circular 698 but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company.
We may seek additional capital through a combination of public and private equity offerings, debt financings, collaborations and licensing arrangements. To the extent that we raise additional capital through the sale of equity or debt securities, your ownership interest will be diluted and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder.
To the extent that we raise additional capital through the sale of equity or debt securities, your ownership interest will be diluted and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder.
Our business, results of operations and financial condition could be adversely affected if cost per claim, premiums or the number of claims significantly exceeds our historical experience and coverage limits, we experience a claim in excess of our coverage limits, our insurance providers fail to pay on our insurance claims, we experience a claim for which coverage is not provided, or the number of claims under our deductibles differs from historic averages.
Our business, results of operations and financial condition could be adversely affected if cost per claim, premiums or the number of claims significantly exceeds our historical experience and coverage limits, we experience a claim in excess of our coverage limits, our insurance providers fail to pay on our insurance claims, we experience a claim for which coverage is not provided, or the number of claims under our deductibles differs from historic averages. 36 Government policies on automobile purchases and usage in the online ride-hailing industry may materially affect our results of operations.
On March 26, 2019, the PRC governmental authorities updated government subsidy policy for NEVs which raises the threshold for the subsidy and reduces the amount of subsidies.
In December 2016, relevant PRC governmental authorities further adjusted the subsidy policy for NEVs. On March 26, 2019, the PRC governmental authorities updated government subsidy policy for NEVs which raises the threshold for the subsidy and reduces the amount of subsidies.
Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than the fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the transaction. 46 In February 2015, the SAT issued SAT Bulletin 7 to replace the rules relating to indirect transfers in Circular 698.
Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than the fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the transaction.
Meanwhile, compliance with existing and future rules, laws and regulations can be costly and if our practice is deemed to violate any existing or future rules, laws and regulations, it may face injunctions, including orders to cease non-compliant activities, and may be exposed to other penalties as determined by the relevant government authorities as well.
Meanwhile, compliance with existing and future rules, laws and regulations can be costly and if our practice is deemed to violate any existing or future rules, laws and regulations, it may face injunctions, including orders to cease non-compliant activities, and may be exposed to other penalties as determined by the relevant government authorities as well. 37 Our business is subject to risks related to China’s automobile leasing and financing industry, including industry-wide and macroeconomic risks.
PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of from our public offerings to make loans to or make additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
Any of these actions by the PRC government may have a material adverse effect on our business and results of operations. 50 PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of from our public offerings to make loans to or make additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
Any such penalties may disrupt our business operations and materially and adversely affect our business, results of operations and financial condition. 38 We rely primarily on a third-party insurance policy to insure our auto-related risks relating to our online ride-hailing platform services.
Any such penalties may disrupt our business operations and materially and adversely affect our business, results of operations and financial condition. We rely primarily on a third-party insurance policy to insure our auto-related risks relating to our automobile operating leasing.
As of March 31, 2024 and 2023, we did not make adequate employee benefit contributions in the amount of $1,137,887 and $1,086,526, respectively, for our continuing operations. We accrued the amount in accrued payroll and welfare. We may be required to make up the contributions for these plans as well as to pay late fees and fines.
As of March 31, 2025 and 2024, we did not make adequate employee benefit contributions in the amount of $965,756 and $928,943, respectively, for our continuing operations. We accrued the amount in accrued payroll and welfare. We may be required to make up the contributions for these plans as well as to pay late fees and fines.
China’s credit infrastructure is still at an early stage of development. The Credit Reference Center established by the PBOC in 2002 has been the only credit reporting system in China. This centrally managed nationwide credit database operated by the Credit Reference Center only records limited credit information, such as tax payments, civil lawsuits, foreclosures and bankruptcies.
The Credit Reference Center established by the PBOC in 2002 has been the only credit reporting system in China. This centrally managed nationwide credit database operated by the Credit Reference Center only records limited credit information, such as tax payments, civil lawsuits, foreclosures and bankruptcies.
It is possible that automobile retail transactions may decline significantly upon expiration of the existing government subsidies if consumers have become used to such incentives and delay purchase decisions in the absence of new incentives.
It is possible that automobile retail transactions may decline significantly upon expiration of the existing government subsidies if consumers have become used to such incentives and delay purchase decisions in the absence of new incentives. If automobile retail transactions indeed decline, our revenues may fluctuate and our results of operations may be materially and adversely affected.
Our success in a given geographic market significantly depends on our ability to maintain or increase the scale of our network in that geographic market by attracting and keeping drivers to engage their ride-hailing business through our platform or leasing automobiles provided by us.
Our success in a given geographic market significantly depends on our ability to maintain or increase the scale of our network in that geographic market by attracting and keeping drivers to engage their ride-hailing business through our Partner Platforms or leasing automobiles provided by us. We face intense competition in the Automobile Transaction and Financing Services.
These capital contributions must be approved by the MOFCOM or its local counterpart. In addition, SAFE issued a circular in September 2008, SAFE Circular 142, regulating the conversion by a foreign-invested enterprise of foreign currency registered capital into RMB by restricting how the converted RMB may be used.
In addition, SAFE issued a circular in September 2008, SAFE Circular 142, regulating the conversion by a foreign-invested enterprise of foreign currency registered capital into RMB by restricting how the converted RMB may be used.
While we have implemented various measures to anticipate, identify and address risks associated with these activities, we may not adequately address or prevent all illegal, improper or otherwise inappropriate activities by our users, which could damage our brand and the viability of this business. 32 At the same time, if the measures we have taken to guard against these illegal, improper or otherwise inappropriate activities are too restrictive and inadvertently prevent qualified online ride-hailing drivers otherwise in good standing from using our platform and services, or if we are unable to implement and communicate these measures fairly and transparently or are perceived to have failed to do so, the growth and retention of our users and their utilization of our online ride-hailing platform could be negatively impacted.
At the same time, if the measures we have taken to guard against these illegal, improper or otherwise inappropriate activities are too restrictive and inadvertently prevent qualified online ride-hailing drivers otherwise in good standing from using our services, or if we are unable to implement and communicate these measures fairly and transparently or are perceived to have failed to do so, the growth and retention of our users and their utilization of our online ride-hailing platform could be negatively impacted.
Our business could also be adversely affected by the effects of other epidemics. Our business operations could be disrupted if any of our employees is infected, since it could require our employees to be quarantined and/or our offices to be disinfected.
Our business operations could be disrupted if any of our employees is infected, since it could require our employees to be quarantined and/or our offices to be disinfected.
The statutory limit for the total amount of foreign debts of a foreign-invested company is the difference between the amount of total investment as approved by the MOFCOM or its local counterpart and the amount of registered capital of such foreign-invested company or 2.5 times of the net assets of such foreign-invested company. 53 We have financed and expect to continue to finance our PRC subsidiaries by means of capital contributions.
The statutory limit for the total amount of foreign debts of a foreign-invested company is the difference between the amount of total investment as approved by the MOFCOM or its local counterpart and the amount of registered capital of such foreign-invested company or 2.5 times of the net assets of such foreign-invested company.
Our business is subject to risks related to China’s automobile leasing and financing industry, including industry-wide and macroeconomic risks. We operate in China’s automobile leasing and financing industry. We cannot assure you that this market will continue to grow rapidly in the future.
We operate in China’s automobile leasing and financing industry. We cannot assure you that this market will continue to grow rapidly in the future.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor example, the servers of the system of XXTX are housed at third-party data centers, and its operations depend on the service providers’ ability to protect such systems in their facilities as well as their own systems.
Biggest changeFor example, the servers of the system of Hunan Ruixi are housed at third-party data centers, and its operations depend on the service providers’ ability to protect such systems in their facilities as well as their own systems.
Since in cooperation with third-party service providers may involve data outbound, we desensitize sensitive information before transferring such data. 69 Our Chinese subsidiaries and affiliates have incurred, and will continue to incur, significant expenses in an effort to comply with cybersecurity and information security standards and protocols imposed by law, regulation, industry standards or contractual obligations to the date of this Report in all material respects.
Since in cooperation with third-party service providers may involve data outbound, we desensitize sensitive information before transferring such data. 68 Our Chinese subsidiaries and affiliates have incurred, and will continue to incur, significant expenses in an effort to comply with cybersecurity and information security standards and protocols imposed by law, regulation, industry standards or contractual obligations to the date of this Report in all material respects.
Risk Factors—Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering. ” For the year ended March 31, 2024, the Company was not subject to material fines or penalties in connection with cybersecurity, and there were no material cybersecurity incidents arising from cybersecurity or personal data protection.
Risk Factors—Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering. ” For the year ended March 31, 2025, the Company was not subject to material fines or penalties in connection with cybersecurity, and there were no material cybersecurity incidents arising from cybersecurity or personal data protection.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease a parking lot for automobiles and an exhibition hall in Changsha, with total areas of 2,500 square meters. The monthly rent for the parking lot and the exhibition hall is approximately $1,400 and approximately $1,800, respectively. We consider our current facilities adequate for our current operations.
Biggest changeThe Company had signed a renewal lease agreement subsequently on April 21, 2025 with lease term started from June 1, 2025 to May 31, 2027. We also lease a parking lot for automobiles in Changsha, with an area of 1,800 square meters and the monthly rent for the parking lot is approximately $1,400.
We maintain another office for our Automobile Transaction and Related Services and Online Ride-hailing Platform Services in the city of Changsha, China, comprising an aggregate of 650 square meters. We lease the office for a monthly rent of approximately $3,700 under a lease agreement that expires in May 2025.
We maintain another office for our Automobile Transaction and Related Services in the city of Changsha, China, comprising an aggregate of 650 square meters. We lease the office for a monthly rent of approximately $3,600 under a lease agreement that expired in May 2025.
Item 2. Properties We currently maintain our principal executive office at 16F, Shihao Square, Middle Jiannan Blvd., High-Tech Zone, Chengdu, Sichuan, People’s Republic of China 610000, comprising an aggregate of 143 square meters under a lease agreement that expires on June 30, 2024. The cost for the office is approximately $1,520 per month in aggregate.
Item 2. Properties We currently maintain our principal executive office at 16F, Shihao Square, Middle Jiannan Blvd., High-Tech Zone, Chengdu, Sichuan, People’s Republic of China 610000, comprising an aggregate of 143 square meters under a lease agreement that expires on July 31, 2025 with a rent-free period from July 2024 to July 2025.
Removed
The Company previously entered into two office lease agreements in the same building, comprising an aggregate of 965 square meters with a monthly rental cost of approximately $10,700. The leasing term was from April 1, 2023 to March 31, 2026 while such lease was terminated in December 2023.
Added
We consider our current facilities adequate for our current operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeLitigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management’s time and attention. Please see “ Risk Factors .”
Biggest changeLitigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management’s time and attention. Please see “ Risk Factors .” Item 4. Mine Safety Disclosures Not applicable. 69 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIf we or our subsidiary and affiliates are unable to receive all of the revenues from our operations through the current contractual arrangements, we may be unable to pay dividends on our common stock.
Biggest changeIf we or our subsidiary and affiliates are unable to receive all of the revenues from our operations through the current contractual arrangements, we may be unable to pay dividends on our common stock. 70 Purchases of Our Equity Securities None. Recent Sales of Unregistered Securities None. Use of Proceeds Not applicable. Item 6. [Reserved]
And as of March 31, 2024, most of the Company’s subsidiaries incorporated in the PRC have suffered accumulated loss and the Company concluded none of subsidiaries has ability to transfer a portion of their net assets to the Company either in the form of dividends, loans or advances.
And as of March 31, 2025, most of the Company’s subsidiaries incorporated in the PRC have suffered accumulated loss and the Company concluded none of subsidiaries has ability to transfer a portion of their net assets to the Company either in the form of dividends, loans or advances.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock trades on the Nasdaq Capital Market under the symbol “AIHS.” Holders Based upon information furnished by our transfer agent, as of June 24, 2024, the Company had approximately 32 stockholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock trades on the Nasdaq Capital Market under the symbol “AIHS.” Holders Based upon information furnished by our transfer agent, as of July 7, 2025, the Company had approximately 33 stockholders of record.
As of March 31, 2024, the total respective registered capital of all the Company’s direct subsidiaries was approximately RMB513 million (approximately $71.1 million).
As of March 31, 2025, the total respective registered capital of all the Company’s direct subsidiaries was approximately RMB515 million (approximately $71.0 million).
Removed
Equity Compensation Plan Information In September 2018, our board of directors adopted and in November 2018, our stockholders approved, the 2018 Equity Incentive Plan, pursuant to which a maximum of 200,000 (2,000,000 pre-reverse stock split) shares of common stock were reserved for issuance to our employees, officers, directors, consultants.
Removed
The plan permits the grant of nonqualified stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, stock bonus awards, and performance compensation awards.
Removed
In March 2023 and April 2024, our annual meetings of stockholders for the years ended March 31, 2022 and 2023 further approved the amendments to the 2018 Equity Incentive Plan, to increase the number of shares of common stock reserved under the Plan to 1,500,000 shares and 1,800,000 shares, respectively.
Removed
As of the date of this Report, the Company has granted an aggregate of 30,379 RSUs (after reverse split) , among which, 26,447 RSUs were issued, 3,182 RSUs were vested but have not been issued while 750 RSUs were forfeited due to two directors ceased to serve on the board of the Company since November 8, 2018 . 71 The following table provides information as of March 31, 2024 with respect to the shares of our common stock that may be issued under our existing equity incentive plan: Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) 2018 Equity Incentive Plan — — 1,770,371 Purchases of Our Equity Securities None.
Removed
Recent Sales of Unregistered Securities None. Use of Proceeds Not applicable. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSubstantially all of our operations are conducted in China. 72 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) monthly services where we provide management and related services to Partner Platforms and other companies and earn commission from them (the “ Auto Commissions” ); (iii) automobile financing where we provide our customers with auto finance solutions through financing leases (the “Auto Financing”); (iv) service fees from new energy vehicles (“NEVs”) leasing, automobile purchase services where we charge NEVs lessees or automobile purchasers for a series of the services provided to them throughout the leasing or purchase process based on the chosen product solutions, such as ride-hailing driver training, assisting with a series of administrative procedures and other consulting services (the “NEVs and Purchase Services”); (v) auto management and guarantee services provided to online ride-hailing drivers after the delivery of automobiles (the “Auto Management and Guarantee Services”); (vi) automobile sales where we sell new purchased or used cars to our customers (the “Auto Sales”); and (vii) other supporting services provided to online ride-hailing drivers.
Biggest changeOur Automobile Transactions and Related Services Our Automobile Transaction and Related Services are mainly comprised of (i) automobile operating lease where we provide car rental services to individual customers to meet their personal needs with lease term no more than twelve months (the “Auto Operating Leasing”); (ii) service fees from new energy vehicles (“NEVs”) leasing where we charge NEVs lessees for a series of the services provided to them based on the chosen product solutions (the “Service for NEVs Leasing”); (iii)service fees from automobile purchase for a series of the services provided to purchasers throughout the purchase process based on the sales price of the automobiles and relevant services provided (the “ Service for Automobile Purchase”) ;(iv) monthly services where we provide management and related services to other online ride-hailing platforms we cooperated with (“Partner Platforms”) and other companies and earn commission from them (the “Auto Commissions”); (v) automobile financing where we provide our customers with auto finance solutions through financing leases (the “Auto Financing”); (vi) default expenses we charges to the lessees for early-termination the contracts or other violation behaviors to the contracts (the “Default Revenue”); and (vii) other supporting services provided to customers, including auto management and other related services (the “Auto Management Services”) and automobile sales (the “Auto Sales”).
We do not believe that the proceeds from our public offerings and our anticipated cash flows would be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next 12 months from the date of this Report.
We do not believe that the proceeds from our future public offerings and our anticipated cash flows would be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next 12 months from the date of this Report.
Change in Fair Value of Derivative Liabilities Warrants issued in our registered direct offerings that took place in September 2019, February 2021 and May 2021, and the August 2020 underwritten public offering, and the November 2021 private placement were classified as liabilities under the caption “Derivative Liabilities” in the consolidated balance sheet and recorded at estimated fair value at each reporting date, computed using the Black-Scholes valuation model.
Change in Fair Value of Derivative Liabilities Warrants issued in our registered direct offerings that took place in June 2019, February 2021 and May 2021, and the August 2020 underwritten public offering, and the November 2021 private placement were classified as liabilities under the caption “Derivative Liabilities” in the consolidated balance sheet and recorded at estimated fair value at each reporting date, computed using the Black-Scholes valuation model.
Operating lease revenues from automobile rentals We generate revenues from leasing our own automobiles, sub-leasing automobiles leased from third-parties or rendered by online ride-hailing drivers with their authorization for a lease term of no more than twelve months.
Operating lease revenues from automobile rentals We generate revenues from leasing our own automobiles and sub-leasing automobiles leased from third-parties and related parties or rendered by online ride-hailing drivers with their authorization for a lease term of no more than twelve months.
Overview We are a provider of automobile transaction and related services, connecting auto dealers and 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”).
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”).
Our critical accounting policies and practices include the following: (i) fair values of financial instruments, including derivative liabilities; (ii) accounts receivable, net; (iii) property and equipment, net; (iv) intangible assets, net; (v) revenue recognition; and (vi) leases - lessee. See Note 3—Summary of Significant Accounting Policies to our consolidated financial statements for the disclosure of these accounting policies.
Our critical accounting policies and practices include the following: (i) fair values of financial instruments, including derivative liabilities; (ii) accounts receivable, net; (iii) property and equipment, net; (iv) revenue recognition; and (v) leases - lessee. See Note 3—Summary of Significant Accounting Policies to our consolidated financial statements for the disclosure of these accounting policies.
According to these regulations and guidelines, three licenses /certificates are required for operating the online ride-hailing business in Chengdu and Guangzhou: (1) the ride-hailing service platform such as XXTX 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”).
According to these regulations and guidelines, three licenses /certificates are required for operating the online ride-hailing business in Chengdu and Guangzhou: (1) the ride-hailing service platform should obtain the online booking taxi operating license; (2) the automobiles used for online ride-hailing should obtain the online booking taxi transportation certificate (“automobile certificate”); (3) the drivers should obtain the online booking taxi driver’s license (“driver’s license”).
We acquire customers for our Automobile Transaction and Related Services, as well as for our Online Ride-hailing Platform 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 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.
However, there is no assurance that we will be successful in implementing the foregoing plans or that additional capitals will be available to us on commercially reasonable terms, or at all.
In addition, there is no assurance that we will be successful in implementing the foregoing plans or that additional capitals will be available to us on commercially reasonable terms, or at all.
We provide automobile transaction and related services through our wholly owned subsidiary, Chengdu Corenel Technology Limited, a PRC limited liability company (“Corenel”), and our majority owned subsidiaries, Chengdu Jiekai Technology Ltd. (“Jiekai”), and Hunan Ruixi Financial Leasing Co., Ltd. (“Hunan Ruixi”), a PRC limited liability company.
We provide automobile transaction and related services through our majority owned subsidiaries, Chengdu Jiekai Yunli Technology Co., Ltd., a PRC limited liability company and its subsidiary (“Jiekai”), and Hunan Ruixi Financial Leasing Co., Ltd., a PRC limited liability company (“Hunan Ruixi”), and our former wholly owned subsidiary, Chengdu Corenel Technology Co., Ltd. a PRC limited liability company (“Corenel”).
We earned commission or services fee 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.
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.
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 cooperated platform to ensure the timely collection of commissions. The accounts receivable and advance payments may increase our liquidity risk.
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.
Revenue from online ride-hailing platform services We generate revenue from providing services to online ride-hailing drivers to assist them in providing transportation service to the riders though our platform and earn 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.
Revenues 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.
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 online ride-hailing platform during the year ended March 31, 2024.
Our risk department continuously monitors the payment by each purchaser and sends them payment reminders. We also keep monitoring the daily gross fare earned by the online ride-hailing drivers, who are our majority customers and run their business through our Partner Platforms during the year ended March 31, 2025.
Interest expense on finance leases for the years ended March 31, 2024 and 2023 was $29,088 and $25,675, respectively, representing the interest expense accrued under financing 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.
Interest expense on finance leases for the years ended March 31, 2025 and 2024 was $15,145 and $29,088, respectively, representing the interest expense accrued under financing 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.
Since November 22, 2018, the acquisition date of Hunan Ruixi, and as of March 31, 2024, we have facilitated financing for an aggregate of 312 automobiles with a total value of approximately $5.3 million, sold an aggregate of 1,516 automobiles with a total value of approximately $14.5 million and delivered 1,892 automobiles under operating leases and 164 automobiles under financing leases to customers, the vast majority of whom are online ride-hailing drivers.
Since November 22, 2018, the acquisition date of Hunan Ruixi, and as of March 31, 2025, we have facilitated financing for an aggregate of 312 automobiles with a total value of approximately $5.3 million, sold an aggregate of 1,516 automobiles with a total value of approximately $14.5 million and delivered 2,116 automobiles under operating leases and 191 automobiles under financing leases to customers, the vast majority of whom are online ride-hailing drivers.
The attraction of new Active Drivers depends on the comprehensive income they could earn from our own or cooperated platform, 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.
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.
(“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.
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.
The effective management 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.
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.
However, there is no guarantee that all of the drivers who run their online ride-hailing business through our platform would be able to obtain all the certificates and licenses.
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.
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.
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.
As of March 31, 2024, for parking and management of automobiles for operating lease, we had one parking lot, an exhibition hall and 4 employees in Changsha, and we also share the parking lot with our equity investee company, Jinkailong in Chengdu.
As of March 31, 2025, for parking and management of automobiles for operating lease, we had one parking lot and 3 employees in Changsha, and we also share the parking lot with our equity investee company, Jinkailong in Chengdu.
Provision for credit losses For the year ended March 31, 2024, we re-evaluated the possibility of collection of unsettled balances from customers/suppliers of our automobile transactions and related services, and provided provision for credit losses of $1,703,563 against receivables from Jinkailong, $17,974 against the security deposit not returned for over one year after the end of the cooperation, and $1,557 and $2,652 against receivable and other receivable for unsettled balances from a historical customer, respectively.
We provided provision for credit losses of $1,703,563 against receivables from Jinkailong, $17,974 against the security deposit not returned for over one year after the end of the cooperation, and $1,557 and $2,652 against receivable and other receivable for unsettled balances from a historical customer, respectively, for the year ended March 31, 2024.
Our current income tax of $20,206 represented the provision of enterprise income tax resulting from the taxable income from Jiekai, while all other subsidiaries in China suffered losses thus no income tax expense was recorded for the year ended March 31, 2024.
All the subsidiaries in China suffered losses and no tax expense was recorded for the years ended March 31, 2025, while we had current income tax of $20,206 represented the provision of enterprise income tax resulting from the taxable income from Jiekai for the year ended March 31, 2024.
However, approximately 25% of our ride-hailing drivers have not obtained the driver’s license for online ride-hailing services as of March 31, 2024 while all of the cars used for online ride-hailing services which we provided management services have the automobile certificate.
However, approximately 43% of ride-hailing drivers who leased our automobiles or used our services have not obtained the driver’s license for online ride-hailing services as of March 31, 2025 while all of the cars used for online ride-hailing services which we provided management services have the automobile certificate.
According to the 53th Statistical report on Internet Development in China published in March 2024 by the China Internet Network Information Center (the “CNNIC”), the number of online ride-hailing service users had reached 528 million by the end of December 2023, and took approximately 48.3% of the total number of Chinese internet users.
According to the 55th Statistical report on Internet Development in China published in January 2025 by the China Internet Network Information Center (the “CNNIC”), the number of online ride-hailing service users had reached 539 million by the end of December 2024, and took approximately 48.7% of the total number of Chinese internet users.
We have considered whether there is substantial doubt about our ability to continue as a going concern due to (1) the net loss of approximately $4.2 million for the year ended March 31, 2024; (2) accumulated deficit of approximately $41.4 million as of March 31, 2024; (3) the working capital deficit of approximately $2.7 million as of March 31, 2024; and (4) a purchase commitment of approximately $0.9 million for 100 automobiles.
We have considered whether there is substantial doubt about our ability to continue as a going concern due to (1) the net loss of approximately $3.7 million for the year ended March 31, 2025; (2) accumulated deficit of approximately $45.1 million as of March 31, 2025; (3) the working capital deficit of approximately $3.0 million as of March 31, 2025.
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.
We also plan to strengthen our marketing efforts through the collaboration with certain automobile dealers and through our own team by employing more experienced staff, sharing market resources with our equity investee company, and improving the quality and variety of our services. As of March 31, 2025, we had 3 employees in our own sales department.
The decrease was attributable to our continuous control on costs and streamline expenses during the year ended March 31, 2024.
The decrease was attributable to our continuous control on costs and streamlined expenses structure during the year ended March 31, 2025.
During the years ended March 31, 2024 and 2023, the average utilization of the automobiles for operating lease was approximately 79.7% and 64.9%, respectively.
During the years ended March 31, 2025 and 2024, the average utilization of the automobiles for operating lease was approximately 89.0% and 79.7%, respectively.
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. have filed their prospectuses to the Stock Exchange of Hong Kong Limited in March 2024 and April 2024, respectively. However, the participants in the online ride-hailing industry are facing the increasingly fierce competitions.
The online ride-hailing industry is also facing increasing competition in China and is attracting more capital investment. For example, Dida Inc. and Chenqi Technology Limited were listed on the Hong Kong Stock Exchange in June 2024, and CaoCao Inc. have filed their prospectuses again to the Stock Exchange of Hong Kong Limited April 2025.
Estimates are used when accounting for items and matters including, but not limited to the critical accounting estimates as follows. 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.
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.
To pay for the expenditure in advance will enhance the stability of our daily operation and lower the liquidity risk, and attract more customers. 75 Ability to Manage Defaults and Potential Guarantee Liability 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.
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.
The following table sets forth the breakdown of the gain in fair value of derivative liabilities for the years ended March 31, 2024 and 2023: For the Years Ended March 31, 2024 2023 - June 2019 registered direct offering $ 6 $ 12,432 - August 2020 underwritten public offering 5,231 36,131 - February 2021 registered direct offering 7,158 54,052 - May 2021 registered direct offering 87,424 662,767 - November 2021 private placement 113,130 946,507 Total Change in Fair Value of Derivative Liabilities $ 212,949 $ 1,711,889 Income Tax benefit Generally, our subsidiaries are subject to enterprise income tax on their taxable income in China at a rate of 25%.
The following table sets forth the breakdown of the gain in fair value of derivative liabilities for the years ended March 31, 2025 and 2024: For the Years Ended March 31, 2025 2024 - June 2019 registered direct offering $ — $ 6 - August 2020 underwritten public offering 3,198 5,231 - February 2021 registered direct offering 4,114 7,158 - May 2021 registered direct offering 72,899 87,424 - November 2021 private placement 124,031 113,130 Total Change in Fair Value of Derivative Liabilities $ 204,242 $ 212,949 Income Tax Expense Generally, our subsidiaries are subject to enterprise income tax on their taxable income in China at a rate of 25%.
The table below provides a breakdown of the number of vehicles sold or delivered under different leasing arrangements or managed/guaranteed by us and corresponding revenue generated for the years ended March 31, 2024 and 2023: For the Years Ended March 31 ， 2024 2023 Number of Number of Vehicles Revenue* Vehicles Revenue* Auto Operating Leasing 1,492 $ 3,831,000 1,802 $ 3,453,000 Auto Commissions — $ 196,000 — $ 179,000 Auto Financing 164 $ 58,000 144 $ 42,000 Auto Sales 2 $ 9,000 43 $ 243,000 Other Services >860 $ 226,000 >1,000 $ 456,000 During the year ended March 31, 2024, our Auto Operating Leasing, Auto Commissions, Auto Financing, Auto Sales and other services income accounted for approximately 88.7%, 4.5%, 1.3%, 0.2% and 5.3% of our total revenue from our automobile transactions and related services, respectively, while our Auto Operating Leasing, Auto Commissions, Auto Financing, Auto Sales, and other services income accounted for approximately 79.0%, 4.1%, 1.0%, 5.6% and 10.3% for the year ended March 31, 2023, respectively.
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, 2025 and 2024, respectively: For the Years Ended March 31, 2025 2024 Number of Number of Vehicles Revenue* Vehicles Revenue* Auto Operating Leasing 826 2,801,000 1,492 $ 3,831,000 Auto Commissions — 145,000 — $ 196,000 Auto Financing 60 93,000 60 $ 58,000 Other Services >870 350,000 >860 $ 235,000 During the year ended March 31, 2025, our Auto Operating Leasing, Auto Commissions, Auto Financing and other services income accounted for approximately 82.6%, 4.3%, 2.8%, and 10.3% of our total revenue from our automobile transactions and related services, respectively, while our Auto Operating Leasing, Auto Commissions, Auto Financing, and other services income accounted for approximately 88.7%, 4.5%, 1.3%, and 5.5% for the year ended March 31, 2024, respectively.
Meanwhile, operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, financing revenues, service fees from automobile purchase services, service fees from automobile management and guarantee services, sales revenue of automobiles and other services fees, which accounted for approximately 79.0%, 8.0%, 4.1%, 1.0%, 0.8%, 0.9%, 5.6% and 0.6%, respectively, of the total revenue from automobile transaction and related services during the year ended March 31, 2023.
Meanwhile, operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, default revenue, financing revenues, service fees from automobile purchase services and other services fees, which accounted for approximately 88.7%, 1.0%, 4.5%, 2.3%, 1.3%, 0.8% and 1.4%, respectively, of the total revenue during the year ended March 31, 2024.
During the year ended March 31, 2024, approximately 4.9 million rides with gross fare of approximately $15.1 million were completed through our Xixingtianxia platform and we earned online ride-hailing platform service fees of $2,494,397, after netting off approximately $0.3 million incentives paid to Active Drivers.
XXTX earned online ride-hailing platform service fees of $344,241, after netting off approximately $32,000 incentives paid to Active Drivers. During the year ended March 31, 2024, approximately 4.9 million rides with gross fare of approximately $15.1 million were completed through our Xixingtianxia platform and an average of over 5,000 Active Drivers each month.
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 and Online Ride-hailing Platform Services.
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. 73 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.
During the year ended March 31, 2024, approximately 4.9 million rides with gross fare of approximately $15.1 million were completed through Xixingtianxia and an average of approximately 5,000 ride-hailing drivers completed rides and earned income through Xixingtianxia (the “Active Drivers”) each month.
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.
Meanwhile, approximately 2.93 million online booking taxi transportation certificates and approximately 6.96 million online booking taxi driver’s licenses were issued nationwide in China. 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.
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.
We issued an aggregate of 1,500,000 shares of our common stock in November 2023 to settle the compensation for the services and recorded $444,300 service expense during the year ended March 31, 2024.
We issued an aggregate of 1,500,000 shares of our common stock in November 2023 to settle the compensation for the services. We did not have similar transaction during the year ended March 31, 2025.
We leased over 1,400 automobiles with an average monthly rental income of approximately $485 per automobile, resulting in a rental income of $3,831,037, including rental income of $34,742 from Jinkailong, for the year ended March 31, 2024.
We leased over 1,400 automobiles with an average monthly rental income of approximately $485 per automobile, resulting in a rental income of $3,831,037, including rental income of $34,742 from Jinkailong, for the year ended March 31, 2024. 77 Service fees from NEVs leasing We generated revenues of $184,625 and $45,231 from leasing NEVs by charging leases service fees during the year ended March 31, 2025 and 2024, respectively.
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.
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.
Based on the above considerations, we are of the opinion that we will probably not have sufficient funds to meet our working capital requirements and debt obligations as they become due one year from the filing date of this Report, if we are unable to obtain additional financing.
We are trying to alleviate the going concern risk through the following sources: ● equity financing to support our working capital; ● other available sources of financing (including debt) from PRC banks and other financial institutions; and ● financial support and credit guarantee commitments from our related parties. 82 Based on the above considerations, we are of the opinion that we will probably not have sufficient funds to meet our working capital requirements and debt obligations as they become due one year from the filing date of this Report, if we are unable to obtain additional financing.
To meet the demand in Chengdu and Changsha, we have purchased and leased automobiles from third parties for our operating lease. The daily management and timely maintenance of leased automobiles will have a significant effect on the growth of our income from leasing automobiles in the next twelve months.
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.
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.
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.
On November 5, 2016, the Municipal Communications Commission of Chengdu City and a number of municipal departments jointly issued the “Implementation Rules for the Administration of Online Booking Taxi Management Services for Chengdu”, which was abolished and replaced by the updated version issued on July 26, 2021.
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. 75 On November 5, 2016, the Municipal Communications Commission of Chengdu City and a number of municipal departments jointly issued the “Implementation Rules for the Administration of Online Booking Taxi Management Services for Chengdu”, which was abolished and replaced by the updated version issued on July 26, 2021.
Cash Flow in Financing Activities For the year ended March 31, 2024, we had net cash used in financing activities of $168,340, which primarily consisted of: (1) loans to related parties and affiliates of $505,630, (2) principal payments made for finance lease liabilities of $215,443, (3) repayments of current borrowings from a financial institution of $35,613, partially offset by (4) borrowings from a financial institution of $249,297; and (5) repayment from a related party of $339,049.
The net cash used in financing activities from continuing operations primarily consisted of: (1) principal payments made for finance lease liabilities of $215,443; (2) repayments to related parties and affiliates of $506,766; and (3) repayment of current borrowings to a financial institution of $8,445; partially offset by (4) repayment from a related party of $339,049.
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.
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.
Key Factors and Risks Affecting Results of Operations Ability to Increase Our Automobile Lessee and Active Driver Base Our revenue growth has been largely driven by the expansion of our automobile lessee base and the corresponding revenue generated from operating and financial leasing, as well as the number of completed online ride-hailing orders on our platform, which largely depends on the number of Active Drivers who complete ride-hailing transactions on our platform.
Key Factors and Risks Affecting Results of Operations Ability to Increase Our Automobile Lessee Our revenue growth has been largely driven by the expansion of our automobile lessee base and the corresponding revenue generated from operating and financial leasing.
Selling, General and Administrative Expenses Selling, general and administrative expenses primarily consist of salary and employee benefits, office rental expense, travel expenses, and other costs. Selling, general and administrative expenses decreased from $6,142,447 for the year ended March 31, 2023 to $4,115,436 for the year ended March 31, 2024, representing a decrease of $2,027,011, or approximately 33.0%.
Selling, General and Administrative Expenses Selling, general and administrative expenses primarily consist of salary and employee benefits, office rental expense, travel expenses, and other costs. Selling, general and administrative expenses decreased from $3,130,213 for the year ended March 31, 2024 to $2,624,120 for the year ended March 31, 2025, representing a decrease of $506,093, or approximately 16.2%.
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. Starting in December 2019, Didi began to enforce such limitation on drivers in Chengdu who have a driver’s license but operate automobiles without 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.
In accordance with the development of the operating lease business, our Partner Platforms, such as Gaode, agree to temporarily “lock-up” the fares of the rides which Active Drivers earn from the platform to ensure the timely collection of its rental receivables from those Active Drivers.
In accordance with the development of the operating lease business, our Partner Platforms, such as Gaode, agree to temporarily “lock-up” the fares of the rides which the driver earned from the platform to ensure the timely collection of our rental receivables from them. As of March 31, 2025, we had accounts receivable of operating lease of approximately $20,000 in total.
Meanwhile, in order to strengthen our market position in certain cities, during the year ended March 31, 2024, our subsidiaries, Hunan Ruixi and Jiekai, cooperated with other online ride-hailing platforms (“Partner Platforms”), such as Hunan DiDi Technology Co., Ltd., Chengdu Anma Zhixing Technology Co., Ltd. , Sichuan Peitu Kuaixing Technology Co., Ltd. and Chongqing Yiqizhao Technology Co., Ltd.
Meanwhile, in order to strengthen our market position in certain cities, our subsidiaries, Hunan Ruixi and Jiekai, have built up cooperation relationships with Partner Platforms, such as Hunan Didi Technology Co., Ltd., Chengdu Anma Zhixing Technology Co., Ltd., Sichuan Peitu Kuaixing Technology Co., Ltd. And Chongqing Yiqizhao Technology Co., Ltd.
XXTX generates 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 earns 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.
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. 72 Due to the fierce competition of the online ride-hailing industry, XXTX had suffered loss in the past.
The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. For the year ended March 31, 2024, we had deferred tax benefit of $29,222.
The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.
The majority of net cash used in investing activities was for purchase of automobiles for operating lease purpose of $671,679, which was partially offset by the proceeds from sales of the used-automobiles and rendered automobiles of $102,071. For the year ended March 31, 2023, we had net cash provided by investing activities of $320,528.
The majority of net cash used in investing activities was $671,679 paid for the purchase of automobiles for operating lease purpose, and partially offset by the proceeds from sales of the used automobiles and rendered automobiles of $101,912. 83 Cash Flow in Financing Activities For the year ended March 31, 2025, we had net cash used in financing activities of $123,720, which consisted of net cash outflows of $42,427 from continuing operations and net cash outflows of $81,293 from discontinued operations.
Impairments of inventories For the years ended March 31, 2024 and 2023, we evaluated the net realizable value of our inventories and recognized an impairment loss of $0 and $3,085, respectively, for certain automobiles for sale based on their selling price in the market. 82 Stock-based compensation In October 2023, we entered into three different consulting and services agreements (the “Consulting Agreements”) with three consultants (the “Consultants”), pursuant to which we engaged the Consultant to provide certain merger and acquisition consulting service, market research and business development advisory services, and financial consulting services, respectively.
Stock-based compensation In October 2023, we entered into three different consulting and services agreements (the “Consulting Agreements”) with three consultants (the “Consultants”), pursuant to which we engaged the Consultant to provide certain merger and acquisition consulting service, market research and business development advisory services, and financial consulting services, respectively.
As of March 31, 2024, the total value of non-collateralized automobiles was approximately $255,000. We believe our risk exposure of financing leasing is immaterial as we have experienced limited default cases and we are able to re-lease those automobiles to drivers under financing leases.
We believe our risk exposure of financing leasing is immaterial as we have experienced limited default cases and we are able to re-lease those automobiles to drivers under financing leases. Ability to Compete Effectively Our business and results of operations depend on our ability to compete effectively.
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 On September 23, 2022, we entered into a purchase contract with an automobile dealer to purchase a total of 100 automobiles for the amount of approximately $1.5 million, of which approximately $0.6 million has been remitted as purchase prepayments, and we expect to fulfill the purchase commitment before March 31, 2025. ● Contingent Liabilities As of March 31, 2024, Jinkailong is required by certain financial institutions to provide guarantee on the lease/loan payments (including principal and interests) of the automobile purchasers referred by it in prior years.
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 On September 23, 2022, we entered into an automobile purchase agreement with a third party to purchase a total of 100 automobiles for the amount of approximately $1.5 million, and we have terminated the purchase agreement on March 31, 2025.
As of March 31, 2024, we had accounts receivable of operating lease of approximately $19,000 in total. Besides, during the year ended March 31, 2024, we settled our commissions with the Partner Platforms for our online ride-hailing platform services and automobile rental income on a monthly basis.
Besides, during the year ended March 31, 2025, we settled our commissions with the Partner Platforms for our online ride-hailing platform services and automobile rental income on a monthly basis. The efficiency of collection of the monthly and weekly payments has a material impact on our daily operation.
We had cash and cash equivalents of $792,299 as of March 31, 2024 as compared to $1,610,090 as of March 31, 2023. We primarily hold our excess unrestricted cash in short-term interest-bearing bank accounts at financial institutions. Our business is capital intensive.
We primarily hold our excess unrestricted cash in short-term interest-bearing bank accounts at financial institutions. Our business is capital intensive.
As of March 31, 2024, we had 5 employees in our own sales department. 74 Management of Automobile Rentals Due to the fierce competition of online ride-hailing industry in those cities we operate in, we have witnessed a high turn-over rate on the short-term car rentals during the year ended March 31, 2024.
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, 2025. To meet the demand in Chengdu and Changsha, we have purchased and leased automobiles from third parties for our operating lease.
We recognized a total interest income of $57,677 from an average monthly number of 33 automobiles and $41,738 from an average monthly number of 44 automobiles during the years ended March 31, 2024 and 2023, respectively. The increase was due to the monthly payment we charged to customers for financial leasing increased during the year ended March 31, 2024.
The increase was due to the monthly payment we charged to customers and the average number of automobiles served for financial leasing increased during the year ended March 31, 2025.
While we leased over 1,800 automobiles with an average monthly rental income of approximately $478 per automobile, resulting in a rental income of $3,453,392, including rental income of $344,120 from Jinkailong, for the year ended March 31, 2023.
We leased 826 automobiles with an average monthly rental income of approximately $410 per automobile, resulting in a rental income of $2,800,992, including rental income of $46,461 from Jinkailong and other related parties, for the year ended March 31, 2025.
The change in fair value of derivative liabilities for the year ended March 31, 2024 was a gain of $212,949 in total as our stock price as of March 31, 2024 was lower than the price as of March 31, 2023.
The change in fair value of derivative liabilities for the years ended March 31, 2025 and 2024 was a gain of $204,242 and $212,949, respectively.
Other income, net For the year ended March 31, 2024, we had other income, net of $315,450, which primarily consist of the (1) penalty income of approximately $215,000 from the customers; (2) income of approximately $35,000 from the disposal of our right-of-use assets and our own vehicles used for operating leases, (3) aggregate subsidy from the local governments in Changsha and Chengdu of approximately $23,000; and the miscellaneous income of approximately $42,000.
For the year ended March 31, 2024, we had other income, net of $358,192, which primarily consist of (1) penalty income of approximately $215,000 from the customers; (2) the income of approximately $35,000 from the disposal of our right-of-use assets and our own vehicles used for operating leases; (3) commission income of approximately $34,000 from an automobile supplier; (4) aggregate subsidy from the local governments in Changsha and Chengdu of approximately $23,000; (5) income of approximately $18,000 from the additional deductions for input tax; and (6) the miscellaneous income of approximately $33,000. 79 Interest Expense and Interest Expense on Finance Leases We had no interest expense for the year ended March 31, 2025, while the interest expense for the year ended March 31, 2024 was resulted from the borrowings of Corenel from a financial institution for its automobile commercial insurance by installment.
Since October 2020, we also operate an online ride-hailing platform through Hunan Xixingtianxia Technology Co., Ltd. (“XXTX”), a wholly-owned subsidiary of Sichuan Senmiao Zecheng Business Consulting Co., Ltd., our wholly-owned subsidiary (“Senmiao Consulting”). Our platform enables qualified ride-hailing drivers to provide application-based transportation services mainly in Chengdu, Changsha and other 20 cities in China.
Substantially all of our operations are conducted in China. 71 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”).
For the Years Ended March 31, 2024 2023 Net Cash Provided by Operating Activities $ 7,241 $ 557,837 Net Cash Provided by (Used in) Investing Activities (569,608 ) 320,528 Net Cash Used in Financing Activities (168,340 ) (373,834 ) Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash (84,747 ) (79,662 ) Cash, Cash Equivalents and Restricted Cash at Beginning of the Year 1,610,090 1,185,221 Cash, Cash Equivalents and Restricted Cash at End of the Year $ 794,636 $ 1,610,090 Cash Flow in Operating Activities For the years ended March 31, 2024 and 2023, net cash provided by operating activities was $7,241 and $557,837, respectively.
For the Years Ended March 31, 2025 2024 Net Cash Provided by Operating Activities $ 500,303 $ 7,241 Net Cash Used in Investing Activities (464,778 ) (569,608 ) Net Cash Used in Financing Activities (123,720 ) (168,340 ) Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash 127,136 (84,747 ) Cash, Cash Equivalents and Restricted Cash at Beginning of the Year 794,636 1,610,090 Cash, Cash Equivalents and Restricted Cash at End of the Year 833,577 794,636 Less: Cash and cash equivalents from discontinued operations — (54,580 ) Cash, Cash equivalents and Restricted Cash from continuing operations, End of Year $ 833,577 $ 740,056 Cash Flow in Operating Activities For the year ended March 31, 2025, net cash provided by operating activities was $500,303, which consisted of net cash inflows of $574,072 from continuing operations and net cash outflows of $73,769 from discontinued operations.
Monthly services commissions We generated revenues of $196,099 and $179,241 from the monthly management and related services provided to our Partner Platforms and other companies during the years ended March 31, 2024 and 2023, respectively.
The amount of services fees for NEVs leasing were based on our product solutions timely in accordance which adjusted with different market conditions. Monthly services commissions We generated revenues of $145,227 and $196,099 from the monthly management and related services provided to our Partner Platforms and other companies during the years ended March 31, 2025 and 2024, respectively.
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.
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.
The increase of $16,858 or approximately 9% was due to that we improved our qualities of services and we had more Partner Platforms during the year ended March 31, 2024. Financing revenues We started our financial leasing business in March 2019 and began to generate interest income from providing financial leasing services to ride-hailing drivers in April 2019.
Financing revenues We started our financial leasing business in March 2019 and began to generate interest income from providing financial leasing services to ride-hailing drivers in April 2019.
We plan to maintain the number of our Active Drivers by marketing our platform to our existing and prospective automobile lessees in the cities we now operate in.
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.
According to the Ministry of Transportation (the “MOT”) of the People’s Republic of China, as of April 30, 2024, approximately 349 online ride-hailing platforms have obtained booking taxi operating licenses and the total volume of online ride-hailing orders was approximately 897 million in April 2024 in China.
However, the participants in the online ride-hailing industry are facing increasingly fierce competitions. According to the Ministry of Transportation (the “MOT”) of the People’s Republic of China, as of April 30, 2025, approximately 382 online ride-hailing platforms have obtained booking taxi operating licenses, representing an increase of approximately 9% as compared with the one as of April 30, 2024.
Interest Expense and Interest Expense on Finance Leases Interest expense for the year ended March 31, 2024 was resulted from the borrowings of XXTX from a financial institution for its working capital turnover and Corenel from a financial institution for its automobile commercial insurance by installment.
Interest Expense Interest expense from discontinued operations was resulted from the borrowings of XXTX from a financial institution for its working capital turnover.
During the years ended March 31, 2024 and 2023, the costs of automobiles under operating leases with amount of $472,848 and $509,904, respectively, was from one of our related parties. 81 Gross Profit We had gross profit of $1,559,463 and $1,492,513, respectively, during the years ended March 31, 2024 and 2023.
During years ended March 31, 2025 and 2024, we paid $114,368 and $472,848, respectively, to related parties for costs of automobiles under operating leases. Gross Profit We had gross profit of $849,803 and $924,731, respectively, during the years ended March 31, 2025 and 2024.
As we have focused on our automobile rental and Online Ride-hailing Platform Services business, we expect revenue from our online ride-hailing platform services and automobile rental to continuously account for a majority of our revenues.
As we focus on our automobile rental business, we expect revenue from our automobile rental to continuously account for a majority of our revenues. We plan to provide a series of product solutions to sustain and further increase the number of our automobiles for operating leases.
Meanwhile, during the year ended March 31, 2024, Gaode conducted several rounds of compliance checks in Chengdu and other cities. Gaode reduced the number of orders dispatched to XXTX platform as it found certain drivers who provide their online ride-hailing services through our platform without obtaining the driver’s licenses during the checking time.
Meanwhile, during the year ended March 31, 2025, Gaode conducted several rounds of compliance checks in Chengdu and other cities and reduced the number of orders dispatched platforms that allowed drivers to provide services without appropriate licenses or certificates. We assisted drivers to obtain the required certificate and license for our Automobile Transaction and Related Services.
We plan to provide a series of product solutions to sustain and further increase the number of our automobiles for operating leases. 79 The following table sets forth the breakdown of revenues by revenue source for the years ended March 31, 2024 and 2023: For the Years Ended March 31, 2024 2023 Revenue from automobile transactions and related services $ 4,320,031 $ 4,372,569 - Operating lease revenues from automobile rentals 3,831,037 3,453,392 - Monthly services commissions 196,099 179,241 - Financing revenues 57,677 41,738 - Service fees from NEVs leasing 45,231 350,510 - Service fees from automobile purchase services 36,637 33,585 - Service fees from management and guarantee services 16,246 40,158 - Revenues from sales of automobiles 8,822 243,065 - Other service fees 128,282 30,880 Revenue from online ride-hailing platform services 2,494,397 3,709,945 Total Revenue $ 6,814,428 $ 8,082,514 Revenue from Automobile Transactions and Related Services Revenue from our automobile transaction and related services mainly includes operating lease revenues from automobile rentals, monthly services commissions, financing revenues, service fees from NEVs leasing, service fees from automobile purchase services, service fees from automobile management and guarantee services, sales revenue of automobiles, and other services fees, which accounted for approximately 88.7%, 4.5%, 1.3%, 1.0%, 0.8%, 0.4%, 0.2% and 3.1%, respectively, of the total revenue from automobile transaction and related services during the year ended March 31, 2024.
The following table sets forth the breakdown of revenues by revenue source for the years ended March 31, 2025 and 2024, respectively: For the Years Ended March 31, 2025 2024 Revenue from automobile transactions and related services - Operating lease revenues from automobile rentals $ 2,800,992 $ 3,831,037 - Service fees from NEVs leasing 184,625 45,231 - Monthly services commissions 145,227 196,099 - Default revenue 105,025 100,763 - Financing revenues 93,473 57,677 - Service fees from automobile purchase services 38,696 36,637 - Other service fees 21,034 52,587 Total Revenue $ 3,389,072 $ 4,320,031 Revenue from our automobile transaction and related services mainly includes operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, default revenue, financing revenues, service fees from automobile purchase services, and other services fees, which accounted for approximately 82.6%, 5.4%, 4.3%, 3.1%, 2.8%, 1.1% and 0.7%, respectively, of the total revenue during the year ended March 31, 2025.
Cost of revenues decreased by $1,336,144 or approximately 20% during the year ended March 31, 2024 as compared with the same period in 2023, mainly due to the decrease of $591,096 in costs of automobiles under operating leases due to the decrease in the average daily maintenance and insurance expense of the automobiles for operating lease as we used more NEVs in the year ended March 31, 2024, decrease of $436,676 in direct expense and technical service fees of online ride-hailing platform services due to the decrease in the number of completed orders, and decrease of $308,372 in costs of our Auto Sales as the number of automobiles sold decreased from 43 to 2.
During the year ended March 31, 2025, cost of revenues decreased as compared with the year ended March 31, 2024, mainly due to the decrease in direct expense and technical service fees of online ride-hailing platform services due to the decrease in the number of completed orders.

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