Senmiao Technology Ltd

Previous wording

Since November 22, 2018, the acquisition date of Hunan Ruixi, and as of September 30, 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 1,935 automobiles under operating leases and 180 automobiles under financing leases to customers, the vast majority of whom are online ride-hailing drivers.

Current wording

Since November 22, 2018, the acquisition date of Hunan Ruixi, and as of December 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 1,977 automobiles under operating leases and 182 automobiles under financing leases to customers, the vast majority of whom are online ride-hailing drivers.

Previous wording

The table below provides a breakdown of the number of vehicles sold or delivered under different leasing arrangements or managed by us and corresponding revenue generated for the three and six months ended September 30, 2024 and 2023:

Current wording

The table below provides a breakdown of the number of vehicles sold or delivered under different leasing arrangements or managed by us and corresponding revenue generated for the three and nine months ended December 31, 2024 and 2023:

Previous wording

During the three months ended September 30, 2024, our Auto Operating Leasing, Auto Commissions, Auto Financing and other services income accounted for approximately 78.4%, 4.1%, 3.6%, and 13.9% 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 86.3%, 5.6%, 1.0%, and 7.1% for the three months ended September 30, 2023, respectively. During the six months ended September 30, 2024, our Auto Operating Leasing, Auto Commissions, Auto Financing and other services income accounted for approximately 82.5%, 3.5%, 3.0%, and 11.0% 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 87.6%, 4.9%, 1.1%, and 6.4% for the six months ended September 30, 2023, respectively.

Current wording

During the three months ended December 31, 2024, our Auto Operating Leasing, Auto Commissions, Auto Financing and other services income accounted for approximately 81.2%, 4.8%, 2.6%, and 11.4% 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 89.5%, 4.6%, 1.1%, and 4.8% for the three months ended December 31, 2023, respectively. During the nine months ended December 31, 2024, our Auto Operating Leasing, Auto Commissions, Auto Financing and other services income accounted for approximately 82.1%, 4.0%, 2.9%, and 11.0% 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 88.2%, 4.8%, 1.1%, and 5.9% for the nine months ended December 31, 2023, respectively.

Previous wording

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 six months ended September 30, 2024. To meet the demand in Chengdu and Changsha, we have purchased and leased automobiles from third parties for our operating lease. The daily management and timely maintenance of leased automobiles will have a significant effect on the stability and potential growth of our income from leasing automobiles in the next twelve months. The effective management, including maintaining the high turn-over rate of our automobiles through our proprietary system and experienced auto-management team could provide in-time delivery and qualified automobiles to potential lessees, either for personal use or providing online ride-hailing services. As of September 30, 2024, for parking and management of automobiles for operating lease, we had one parking lot, an exhibition hall and 3 employees in Changsha, and we also share the parking lot with our equity investee company, Jinkailong in Chengdu. During the three months ended September 30, 2024 and 2023, the average utilization of the automobiles for operating lease was approximately 80.4% and 72.6%, respectively. During the six months ended September 30, 2024 and 2023, the average utilization of the automobiles for operating lease was approximately 85.2% and 76.1%, respectively.

Current wording

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 nine months ended December 31, 2024. To meet the demand in Chengdu and Changsha, we have purchased and leased automobiles from third parties for our operating lease. The daily management and timely maintenance of leased automobiles will have a significant effect on the stability and potential growth of our income from leasing automobiles in the next twelve months. The effective management, including maintaining the high turn-over rate of our automobiles through our proprietary system and experienced auto-management team could provide in-time delivery and qualified automobiles to potential lessees, either for personal use or providing online ride-hailing services. As of December 31, 2024, for parking and management of automobiles for operating lease, we had one parking lot, an exhibition hall and 3 employees in Changsha, and we also share the parking lot with our equity investee company, Jinkailong in Chengdu. During the three months ended December 31, 2024 and 2023, the average utilization of the automobiles for operating lease was approximately 85.9% and 80.6%, respectively. During the nine months ended December 31, 2024 and 2023, the average utilization of the automobiles for operating lease was approximately 84.8% and 77.6%, respectively.

Previous wording

Meanwhile, in order to strengthen our market position in certain cities, during the six months ended September 30, 2024, our subsidiaries, Hunan Ruixi and Jiekai, cooperated 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. Chengdu Branch, whereby the online ride-hailing requests and orders shall be completed on Partner Platforms utilizing the network of cars and drivers of us while Hunan Ruixi and Jiekai earned rental income from drivers and earned commissions from Partner Platforms.

Current wording

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. Chengdu Branch, whereby the online ride-hailing requests and orders shall be completed on Partner Platforms utilizing the network of cars and drivers of us while Hunan Ruixi and Jiekai earned rental income from drivers and earned commissions from Partner Platforms.

Previous wording

For receivables from Auto Operating Leasing, we usually settle the rental income with each online ride-hailing driver monthly based on the product solutions they chose. In accordance with the development of the operating lease business, our Partner Platforms, such as Gaode, agree to temporarily “lock-up” the fares of the rides which the driver earned from the platform to ensure the timely collection of our rental receivables from them. As of September 30, 2024, we had accounts receivable of operating lease of approximately $22,000 in total. Besides, during the six months ended September 30, 2024, we settled our commissions with the Partner Platforms for our online ride-hailing platform services and automobile rental income on a monthly basis.

Current wording

For receivables from Auto Operating Leasing, we usually settle the rental income with each online ride-hailing driver monthly based on the product solutions they chose. In accordance with the development of the operating lease business, our Partner Platforms, such as Gaode, agree to temporarily “lock-up” the fares of the rides which the driver earned from the platform to ensure the timely collection of our rental receivables from them. As of December 31, 2024, we had accounts receivable of operating lease of approximately $40,000 in total. Besides, during the nine months ended December 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.

Previous wording

We manage the credit risk arising from the default of automobile purchasers and lessees by performing credit checks on each automobile purchaser or lessee based on the credit reports from People’s Bank of China and third-party credit rating companies, and personal information including residence, ethnicity group, driving history and involvement in legal proceeding. Our risk department continuously monitors the payment by each purchaser and sends them payment reminders. We also keep monitoring the daily gross fare earned by the online ride-hailing drivers, who are our majority customers and run their business through our online ride-hailing platform during the six months ended September 30, 2024. We do this so that we can evaluate their financial conditions and provide them with assistance including the transfer of automobile to a new driver if they are no longer interested in providing ride-hailing services or are unable to earn enough income to make monthly lease/loan payments.

Current wording

We manage the credit risk arising from the default of automobile purchasers and lessees by performing credit checks on each automobile purchaser or lessee based on the credit reports from People’s Bank of China and third-party credit rating companies, and personal information including residence, ethnicity group, driving history and involvement in legal proceeding. Our risk department continuously monitors the payment by each purchaser and sends them payment reminders. We also keep monitoring the daily gross fare earned by the online ride-hailing drivers, who are our majority customers and run their business through our online ride-hailing platform during the nine months ended December 31, 2024. We do this so that we can evaluate their financial conditions and provide them with assistance including the transfer of automobile to a new driver if they are no longer interested in providing ride-hailing services or are unable to earn enough income to make monthly lease/loan payments.

Previous wording

Further, the automobiles subject to our financing leases are not collateralized by us. As of September 30, 2024, the total value of non-collateralized automobiles was approximately $260,000. 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.

Current wording

Further, the automobiles subject to our financing leases are not collateralized by us. As of December 31, 2024, the total value of non-collateralized automobiles was approximately $216,000. 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.

Previous wording

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 August 31, 2024, approximately 359 online ride-hailing platforms have obtained booking taxi operating licenses and the total volume of online ride-hailing orders was approximately 1,029 million in August 2024 in China, representing an increase of approximately 10% and 25% as compared with the ones as of August 31, 2023, respectively. Meanwhile, approximately 3.10 million online booking taxi transportation certificates and approximately 7.30 million online booking taxi driver’s licenses were issued nationwide in China, representing an increase of approximately 21% and 20% as compared with the ones as of September 30, 2023, respectively. Since 2023, the municipal transportation bureaus in a series of cities in China have released operational dynamics and risk warnings for the online ride-hailing industry, stating that the online ride-hailing market has become saturated. They remind enterprises and practitioners who intend to engage in online ride-hailing services should have a detailed understanding of relevant regulations, conduct market research, fully consider changes in operating income due to factors such as supply and demand, market conditions, fluctuations or continuous declines, objectively evaluate the actual income level of industry practitioners, and make rational and prudent career choices.

Current wording

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 October 30, 2024, approximately 362 online ride-hailing platforms have obtained booking taxi operating licenses and the total volume of online ride-hailing orders was approximately 1,007 million in October 2024 in China, representing an increase of approximately 8% and 24% as compared with the ones as of October 30, 2023, respectively. Meanwhile, approximately 3.21 million online booking taxi transportation certificates and approximately 7.48 million online booking taxi driver’s licenses were issued nationwide in China, both representing an increase of approximately 18% as compared with the ones as of December 31, 2023. Since 2023, the municipal transportation bureaus in a series of cities in China have released operational dynamics and risk warnings for the online ride-hailing industry, stating that the online ride-hailing market has become saturated. They remind enterprises and practitioners who intend to engage in online ride-hailing services should have a detailed understanding of relevant regulations, conduct market research, fully consider changes in operating income due to factors such as supply and demand, market conditions, fluctuations or continuous declines, objectively evaluate the actual income level of industry practitioners, and make rational and prudent career choices.

Previous wording

However, approximately 36% of our ride-hailing drivers have not obtained the driver’s license for online ride-hailing services as of September 30, 2024 while all of the cars used for online ride-hailing services which we provided management services have the automobile certificate. Without requisite automobile certificate or driver’s license, these drivers may be suspended from providing ride-hailing services, confiscated their illegal income and subject to fines of up to 10 times of their illegal income. 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. Meanwhile, during the six months ended September 30, 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 check. We had assisted the drivers to obtain the required certificate and license for our Automobile Transaction and Related Services. However, there was no guarantee that all of the drivers who run their online ride-hailing business would be able to obtain all the certificates and licenses. These Partner Platforms may not allow unqualified drivers who lease our automobiles to drive through these platforms, or reduce their commission income, so that they may not be able to earn enough income from those Partner Platforms to pay our rental fees. Our business and results of operations shall be materially and adversely affected if we could not serve qualified drivers or our served drivers are suspended from providing ride-hailing services.

Current wording

However, approximately 41% of our ride-hailing drivers have not obtained the driver’s license for online ride-hailing services as of December 31, 2024 while all of the cars used for online ride-hailing services which we provided management services have the automobile certificate. Without requisite automobile certificate or driver’s license, these drivers may be suspended from providing ride-hailing services, confiscated their illegal income and subject to fines of up to 10 times of their illegal income. 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. Meanwhile, during the nine months ended December 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 check. We had assisted the drivers to obtain the required certificate and license for our Automobile Transaction and Related Services. However, there was no guarantee that all of the drivers who run their online ride-hailing business would be able to obtain all the certificates and licenses. These Partner Platforms may not allow unqualified drivers who lease our automobiles to drive through these platforms, or reduce their commission income, so that they may not be able to earn enough income from those Partner Platforms to pay our rental fees. Our business and results of operations shall be materially and adversely affected if we could not serve qualified drivers or our served drivers are suspended from providing ride-hailing services.

Previous wording

Furthermore, according to the Interim Measures, no enterprise or individual is allowed to provide information for conducting online ride-hailing services to unqualified vehicles and drivers. Pursuant to the Interim Measures, during the three and six months ended September 30, 2024, XXTX had been fined by approximately $3,000 by Traffic Management Bureaus in Changsha for providing online ride-hailing platform services to unqualified drivers. Since October 2020, XXTX had been fined by approximately $323,000 by Traffic Management Bureaus in Changsha, Chengdu, Guangzhou and other cities, of which, approximately $65,000 was further compensated by drivers or cooperated third parties.

Current wording

Furthermore, according to the Interim Measures, no enterprise or individual is allowed to provide information for conducting online ride-hailing services to unqualified vehicles and drivers. Pursuant to the Interim Measures, during the nine months ended December 31, 2024, XXTX was fined by approximately $3,000 by Traffic Management Bureaus in Changsha for providing online ride-hailing platform services to unqualified drivers. Since October 2020, XXTX had been fined by approximately $311,000 by Traffic Management Bureaus in Changsha, Chengdu, Guangzhou and other cities, of which, approximately $62,000 was further compensated by drivers or cooperated third parties.

Previous wording

We started generating revenue from Automobile Transaction and Related Services from our acquisition of Hunan Ruixi on November 22, 2018. Revenue for the three months ended September 30, 2024 decreased by $437,258, or approximately 37.0%, as compared with the three months ended September 30, 2023. The decrease was mainly due to the decrease number of the automobiles for operating lease.

Current wording

We started generating revenue from Automobile Transaction and Related Services from our acquisition of Hunan Ruixi on November 22, 2018. Revenue for the three months ended December 31, 2024 decreased by $188,371, or approximately 17.0%, as compared with the three months ended December 31, 2023. The decrease was mainly due to the decrease number of the automobiles for operating lease.

Previous wording

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, and other services fees, which accounted for approximately 78.4%, 4.1%, 3.6%, 6.9%, 0.7% and 6.3%, respectively, of the total revenue from automobile transaction and related services during the three months ended September 30, 2024. Meanwhile, operating lease revenues from automobile rentals, monthly services commissions, financing revenues, service fees from NEVs leasing, sales revenue of automobiles and other services fees, which accounted for approximately 86.3%, 5.6%, 1.0%, 0.4%, 0.3% and 6.4%, respectively, of the total revenue from automobile transaction and related services during the three months ended September 30, 2023.

Current wording

Revenue from our automobile transaction and related services mainly includes operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, financing revenues, service fees from automobile purchase services, and other services fees, which accounted for approximately 81.2%, 7.5%, 4.8%, 2.6%, 0.3% and 3.6%, respectively, of the total revenue from automobile transaction and related services during the three months ended December 31, 2024. Meanwhile, operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, financing revenues, sales revenue of automobiles and other services fees, which accounted for approximately 89.5%, 0.8%, 4.6%, 1.1%, 1.7% and 2.3%, respectively, of the total revenue from automobile transaction and related services during the three months ended December 31, 2023.

Previous wording

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. The decrease of rental income of $436,575 or approximately 42.8% during the three months ended September 30, 2024 was mainly due to the decrease in the number of the automobiles leased for operating lease as well as average monthly rental income per automobile. We leased approximately 596 automobiles with an average monthly rental income of approximately $405 per automobile, resulting in a rental income of $584,418, including rental income of $3,622 from Jinkailong, for the three months ended September 30, 2024. While we leased over 960 automobiles with an average monthly rental income of approximately $491 per automobile, resulting in a rental income of $1,020,993, including rental income of $8,399 from Jinkailong, for the three months ended September 30, 2023.

Current wording

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. The decrease of rental income of $244,818 or approximately 24.7% during the three months ended December 31, 2024 was mainly due to the decrease in the number of the automobiles leased for operating lease as well as average monthly rental income per automobile. We leased approximately 662 automobiles with an average monthly rental income of approximately $383 per automobile, resulting in a rental income of $747,253, including rental income of $2,882 from Jinkailong, for the three months ended December 31, 2024. While we leased over 870 automobiles with an average monthly rental income of approximately $477 per automobile, resulting in a rental income of $992,071, including rental income of $7,133 from Jinkailong, for the three months ended December 31, 2023.

Previous wording

We generated revenues of $51,694 and $4,626 from leasing NEVs by charging leases service fees during the three months ended September 30, 2024 and 2023, respectively. The amount of services fees for NEVs leasing is based on our product solutions in accordance which adjusted with different market conditions.

Current wording

We generated revenues of $68,963 and $8,412 from leasing NEVs by charging leases service fees during the three months ended December 31, 2024 and 2023, respectively. The amount of services fees for NEVs leasing were based on our product solutions in accordance which adjusted with different market conditions.

Previous wording

We generated revenues of $30,681 and $66,221 from the monthly management and related services provided to our Partner Platforms and other companies during the three months ended September 30, 2024 and 2023, respectively. The decrease of $35,540 or approximately 53.7% was due to decrease in the number of the automobiles and drivers we served, who ran their business through the Partner Platforms.

Current wording

We generated revenues of $43,755 and $51,388 from the monthly management and related services provided to our Partner Platforms and other companies during the three months ended December 31, 2024 and 2023, respectively. The decrease of $7,633 or approximately 14.9% was due to decrease in the number of the automobiles and drivers we served, who ran their business through the Partner Platforms.

Previous wording

We started our financial leasing business in March 2019 and began to generate interest income from providing financial leasing services to ride-hailing drivers in April 2019. We also charge the customers of our automobile financing facilitation services interest on their monthly payments which cover purchase price of automobile and our services fees and facilitation fees for terms of 36 or 48 months. We recognized a total interest income of $26,853 from an average monthly number of 48 automobiles and $11,340 from an average monthly number of 33 automobiles during the three months ended September 30, 2024 and 2023, respectively. 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 three months ended September 30, 2024.

Current wording

We started our financial leasing business in March 2019 and began to generate interest income from providing financial leasing services to ride-hailing drivers in April 2019. We also charge the customers of our automobile financing facilitation services interest on their monthly payments which cover purchase price of automobile and our services fees and facilitation fees for terms of 36 or 48 months. We recognized a total interest income of $23,668 from an average monthly number of 49 automobiles and $12,195 from an average monthly number of 26 automobiles during the three months ended December 31, 2024 and 2023, respectively. 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 three months ended December 31, 2024.

Previous wording

We generate other revenues from other miscellaneous service fees charged to our customers. Other services fees mainly include the maintenance fees charged to our customers pursuant to certain new production solutions.

Current wording

We generated revenues of $2,959 and $19,122 from the automobile purchase services during the three months ended December 31, 2024 and 2023, respectively. The decrease was due to the number of the automobiles purchase transactions decreased to 2 during the three months ended December 31, 2024 from 14 in the same period in 2023. We generate other revenues from other miscellaneous service fees charged to our customers. Other services fees mainly include the maintenance fees charged to our customers pursuant to certain new production solutions.

Previous wording

Cost of revenues represents the amortization of ROUs, depreciation and rental cost of automobiles, daily maintenance and insurance expense of automobiles which related to our Auto Operating Leasing. Cost of revenues decreased by $353,901 or approximately 35% during the three months ended September 30, 2024 as compared with the same period in 2023, mainly due to the decrease of $349,902 in costs of automobiles under operating leases due to the decrease in the number of the automobiles leased for operating lease in the three months ended September 30, 2024, and the decrease of $3,999 in costs of our Auto Sales. During the three months ended September 30, 2024 and 2023, the costs of automobiles under operating leases with amount of $17,334 and $182,165, respectively, was from a related party.

Current wording

Cost of revenues represents the amortization of ROUs, depreciation and rental cost of automobiles, daily maintenance and insurance expense of automobiles which related to our Auto Operating Leasing. Cost of revenues decreased by $76,308 or approximately 9.3% during the three months ended December 31, 2024 as compared with the same period in 2023, mainly due to the monthly average number of the automobiles leased for operating lease decreased to 324 in the three months ended December 31, 2024 from 444 in the three months ended December 31, 2023. During the three months ended December 31, 2024 and 2023, the costs of automobiles under operating leases with amount of $44,479 and $80,973, respectively, was from a related party.

Previous wording

We had gross profit of $96,899 and $180,256, respectively, during the three months ended September 30, 2024 and 2023. The decrease of $83,357 was mainly due to the decrease in profit from Auto Operating Leasing. The following table sets forth the breakdown of gross profit (loss) by major revenue source for the three months ended September 30, 2024 and 2023:

Current wording

We had gross profit of $176,387 and $288,450, respectively, during the three months ended December 31, 2024 and 2023. The decrease of $112,063 was mainly due to the decrease in gross profit from Auto Operating Leasing. The following table sets forth the breakdown of gross profit by major revenue source for the three months ended December 31, 2024 and 2023:

Previous wording

We had a gross loss of $64,563 in our Auto Operating Leasing during the three months ended September 30, 2024, which decreased by $86,673 from a gross profit of $22,110 in the three months ended September 30, 2023. The decrease was attributable to the average monthly rental income decreased from approximately $491 for the three months ended September 30, 2023 to approximately $405 for the three months ended September 30, 2024, respectively. As the gross margin of the revenues from our Auto Business decreased during the three months ended September 30, 2024, our overall gross profit margin slightly decreased to approximately 13.0% from approximately 15.2% during the three months ended September 30, 2023.

Current wording

We had a gross profit of $3,804 in our Auto Operating Leasing during the three months ended December 31, 2024, which decreased by $168,510 from a gross profit of $172,314 in the three months ended December 31, 2023. The decrease was attributable to the average monthly rental income decreased from approximately $477 for the three months ended December 31, 2023 to approximately $383 for the three months ended December 31, 2024 while the related cost did not decrease that much. As a result, the gross profit margin of the revenues from our Auto Business decreased from approximately 17.4% to approximately 0.5% during the three months ended December 31, 2024, led our overall gross profit margin decreased to approximately 19.2% from approximately 26.0% during the three months ended December 31, 2023 since the revenue generated from auto operating lease accounted over 80% of our total revenues.

Previous wording

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 $799,188 for the three months ended September 30, 2023 to $530,651 for the three months ended September 30, 2024, representing a decrease of $268,537, or approximately 33.6%. The decrease was attributable to our continuous control on costs and streamline expenses during the three months ended September 30, 2024. The decrease mainly consisted of (1) a decrease of $140,224 in offices rental and charges; and (2) a decrease of $122,919 in professional service fees such as financial, legal and market consulting in the three months ended September 30, 2024.

Current wording

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 $746,514 for the three months ended December 31, 2023 to $515,366 for the three months ended December 31, 2024, representing a decrease of $231,148, or approximately 31.0%. The decrease was attributable to our continuous control on costs and streamline expenses during the three months ended December 31, 2024. The decrease mainly consisted of (1) a decrease of $158,567 in offices rental and charges; and (2) a decrease of $87,303 in in salary and employee benefits as the average monthly number of our employees decreased from 65 for the three months ended December 31, 2023 to 46 for the three months ended December 31, 2024.

Previous wording

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 $181,995 and $553,323 against receivables from Jinkailong for the three months ended September 30, 2024 and 2023, respectively.

Current wording

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 $367,245 against receivables from Jinkailong for the three months ended December 31, 2024. While we did not provide additional provision for credit losses against receivables during the three months ended December 31, 2023.

Previous wording

For the three months ended September 30, 2024, we had other income, net of $388,405, which primarily consist of (1) a gain of $397,775 from deconsolidation of XXTX; (2) penalty income of approximately $28,000 from the customers; (3) income of approximately $3,000 from the disposal of our own vehicles used for operating leases; partially offset by (4) the expense of approximately $20,000 from the termination of our right-of-use assets for an exhibition hall we leased in Changsha; and (5) the miscellaneous expense of approximately $20,000.

Current wording

For the three months ended December 31, 2024, we had other income, net of $4,897, which primarily consist of (1) penalty income of approximately $20,000 from the customers; partially offset by (2) the loss of approximately $2,000 from the disposal of our own fixture and furniture used for operating leases;(3) the miscellaneous expense of approximately $13,000.

Previous wording

For the three months ended September 30, 2023, we had other income, net of $37,782, which primarily consist of (1) the income of approximately $4,500 from the disposal of our right-of-use assets and our own vehicles used for operating leases; (2) penalty income of approximately $29,000 from the customers; and (3) the miscellaneous income of approximately $4,000.

Current wording

For the three months ended December 31, 2023, we had other income, net of $159,933, which primarily consist of (1) the income of approximately $5,000 from the disposal of our right-of-use assets and our own vehicles used for operating leases; (2) penalty income of approximately $102,000 from the customers; and (3) the miscellaneous income of approximately $53,000.

Previous wording

Interest expense on finance leases for the three months ended September 30, 2024 and 2023 was $4,270 and $7,594, 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.

Current wording

Interest expense on finance leases for the three months ended December 31, 2024 and 2023 was $3,365 and $6,791, 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.

Previous wording

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. The change in fair value of derivative liabilities for the three months ended September 30, 2024 and 2023 was a loss of $7,127 and a gain of $59,666, respectively. The following table sets forth the breakdown of the gain (loss) in fair value of derivative liabilities for the three months ended September 30, 2024 and 2023:

Current wording

Warrants issued in our registered direct offerings that took place in February 2021 and May 2021, and the August 2020 underwritten public offering, and the November 2021 private placement were classified as liabilities under the caption “Derivative Liabilities” in the consolidated balance sheet and recorded at estimated fair value at each reporting date, computed using the Black-Scholes valuation model. The change in fair value of derivative liabilities for the three months ended December 31, 2024 and 2023 was a gain of $121,314 and $46,188, respectively. The following table sets forth the breakdown of the gain in fair value of derivative liabilities for the three months ended December 31, 2024 and 2023:

Previous wording

Generally, our subsidiaries are subject to enterprise income tax on their taxable income in China at a rate of 25%. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. All the subsidiaries in China suffered losses and no tax expense was recorded for the six months ended September 30, 2024 and 2023.

Current wording

Generally, our subsidiaries are subject to enterprise income tax on their taxable income in China at a rate of 25%. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. All the subsidiaries in China suffered losses and no tax expense was recorded for the three months ended December 31, 2024 and 2023.

Previous wording

As a result of the foregoing, net loss from continuing operations for the three months ended September 30, 2024 was $238,739, representing a decrease of $843,662 from net loss of $1,082,401 for the three months ended September 30, 2023.

Current wording

As a result of the foregoing, net loss from continuing operations for the three months ended December 31, 2024 was $583,378, representing a decrease of $119,656 from net loss of $703,034 for the three months ended December 31, 2023.

Previous wording

Results of Continuing Operations for the six months ended September 30, 2024 Compared to the six months ended September 30, 2023

Current wording

Results of Continuing Operations for the nine months ended December 31, 2024 Compared to the nine months ended December 31, 2023

Previous wording

Revenue for the six months ended September 30, 2024 decreased by $747,357, or approximately 31.5%, as compared with the six months ended September 30, 2023. The decrease was mainly due to the decrease of $736,654 of operating lease revenues from automobile rentals resulted from the decrease number of the automobiles for operating lease.

Current wording

Revenue for the nine months ended December 31, 2024 decreased by $935,728, or approximately 26.9%, as compared with the nine months ended December 31, 2023. The decrease was mainly due to the decrease of $981,472 of operating lease revenues from automobile rentals resulted from the decrease number of the automobiles for operating lease.

Previous wording

The following table sets forth the breakdown of revenues by revenue source for the six months ended September 30, 2024 and 2023:

Current wording

The following table sets forth the breakdown of revenues by revenue source for the nine months ended December 31, 2024 and 2023:

Previous wording

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, and other services fees, which accounted for approximately 82.5%, 3.5%, 3.0%,4.5%, 1.7%, and 4.8%, respectively, of the total revenue from automobile transaction and related services during the six months ended September 30, 2024. Meanwhile, operating lease revenues from automobile rentals, monthly services commissions, financing revenues, service fees from NEVs leasing, service fees from automobile purchase services, sales revenue of automobiles and other services fees, which accounted for approximately 87.6%, 4.9%, 1.1%, 1.0%, 0.5%, 0.4% and 4.5%, respectively, of the total revenue from automobile transaction and related services during the six months ended September 30, 2023.

Current wording

Revenue from our automobile transaction and related services mainly includes operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, financing revenues, service fees from automobile purchase services, and other services fees, which accounted for approximately 82.1%, 5.6%, 4.0%, 2.9%, 1.2%, and 4.2%, respectively, of the total revenue from automobile transaction and related services during the nine months ended December 31, 2024. Meanwhile, operating lease revenues from automobile rentals, service fees from NEVs leasing, monthly services commissions, financing revenues, service fees from automobile purchase services, and other services fees, which accounted for approximately 88.2%, 1.0%, 4.8%, 1.1%, 0.9%, and 4.0%, respectively, of the total revenue from automobile transaction and related services during the nine months ended December 31, 2023.

Previous wording

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. The decrease of rental income of $736,654 or approximately 35.5% during the six months ended September 30, 2024 was mainly due to the decrease in the number of the automobiles leased for operating lease as well as average monthly rental income per automobile. We leased approximately 627 automobiles with an average monthly rental income of approximately $413 per automobile, resulting in a rental income of $1,340,733, including rental income of $8,865 from Jinkailong, for the six months ended September 30, 2024. While we leased over 1,200 automobiles with an average monthly rental income of approximately $490 per automobile, resulting in a rental income of $2,077,387, including rental income of $22,147 from Jinkailong, for the six months ended September 30, 2023.

Current wording

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. The decrease of rental income of $981,472 or approximately 32.0% during the nine months ended December 31, 2024 was mainly due to the decrease in the number of the automobiles leased for operating lease as well as average monthly rental income per automobile. We leased approximately 704 automobiles with an average monthly rental income of approximately $409 per automobile, resulting in a rental income of $2,087,986, including rental income of $11,747 from Jinkailong, for the nine months ended December 31, 2024. While we leased over 1,400 automobiles with an average monthly rental income of approximately $485 per automobile, resulting in a rental income of $3,069,458, including rental income of $29,280 from Jinkailong, for the nine months ended December 31, 2023.

Previous wording

We generated revenues of $73,788 and $24,897 from leasing NEVs by charging leases service fees during the six months ended September 30, 2024 and 2023, respectively. The amount of services fees for NEVs leasing is based on our product solutions which adjusted in accordance with different market conditions.

Current wording

We generated revenues of $142,751and $33,309 from leasing NEVs by charging leases service fees during the nine months ended December 31, 2024 and 2023, respectively. The amount of services fees for NEVs leasing is based on our product solutions which adjusted in accordance with different market conditions.

Previous wording

We generated revenues of $56,935 and $116,811 from the monthly management and related services provided to our Partner Platforms and other companies during the six months ended September 30, 2024 and 2023, respectively. The decrease of $59,876 or approximately 51.3% was due to decrease in the number of the automobiles and drivers we served, who ran their business through the Partner Platforms.

Current wording

We generated revenues of $100,690 and $168,199 from the monthly management and related services provided to our Partner Platforms and other companies during the nine months ended December 31, 2024 and 2023, respectively. The decrease of $67,509 or approximately 40.1% was due to decrease in the number of the automobiles and drivers we served, who ran their business through the Partner Platforms.

Previous wording

We started our financial leasing business in March 2019 and began to generate interest income from providing financial leasing services to ride-hailing drivers in April 2019. We also charge the customers of our automobile financing facilitation services interest on their monthly payments which cover purchase price of automobile and our services fees and facilitation fees for terms of 36 or 48 months. We recognized a total interest income of $49,029 from an average monthly number of 43 automobiles and $24,940 from an average monthly number of 37 automobiles during the six months ended September 30, 2024 and 2023, respectively. 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 six months ended September 30, 2024.

Current wording

We started our financial leasing business in March 2019 and began to generate interest income from providing financial leasing services to ride-hailing drivers in April 2019. We also charge the customers of our automobile financing facilitation services interest on their monthly payments which cover purchase price of automobile and our services fees and facilitation fees for terms of 36 or 48 months. We recognized a total interest income of $72,697 from an average monthly number of 45 automobiles and $37,135 from an average monthly number of 34 automobiles during the nine months ended December 31, 2024 and 2023, respectively. 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 nine months ended December 31, 2024.

Previous wording

We generate revenues from providing a series of automobile purchase services throughout the automobile purchase transaction process, including sales-type lease. We had revenue from 19 automobiles purchase transaction during the six months ended September 30, 2024 while we had revenue from 5 automobile purchase services during the six months ended September 30, 2023. As a result, the related service fees generated increased $14,671 from $12,232 during the six months ended September 30, 2023 to $26,903 during the six months ended September 30, 2024.

Current wording

We generate revenues from providing a series of automobile purchase services throughout the automobile purchase transaction process, including sales-type lease. We had revenue from 21 and 19 automobiles purchase transaction during the nine months ended December 31, 2024 and 2023, respectively. The related service fees income slightly decreased $1,492 from $31,354 during the nine months ended December 31, 2023 to $29,862 during the nine months ended December 31, 2024 due to the different services we provided.

Previous wording

Cost of revenues represents the amortization of ROUs, depreciation and rental cost of automobiles, daily maintenance and insurance expense of automobiles which related to our Auto Operating Leasing. Cost of revenues decreased by $643,913 or approximately 33.6% during the six months ended September 30, 2024 as compared with the same period in 2023, mainly due to the decrease of $633,374 in costs of automobiles under operating leases due to the decrease in the number of the automobiles leased for operating lease in the six months ended September 30, 2024, and the decrease of $10,539 in costs of our Auto Sales. During the six months ended September 30, 2024 and 2023, the costs of automobiles under operating leases with amount of $18,961 and $392,344, respectively, was from a related party.

Current wording

Cost of revenues represents the amortization of ROUs, depreciation and rental cost of automobiles, daily maintenance and insurance expense of automobiles which related to our Auto Operating Leasing. Cost of revenues decreased by $720,221 or approximately 26.3% during the nine months ended December 31, 2024 as compared with the same period in 2023, mainly due to the monthly average number of the automobiles leased for operating lease decreased to 293 in the nine months ended December 31, 2024 from 513 in the nine months ended December 31, 2023. During the nine months ended December 31, 2024 and 2023, the costs of automobiles under operating leases with amount of $63,440 and $473,317, respectively, was from a related party.

Previous wording

We had gross profit of $349,869 and $453,313, respectively, during the six months ended September 30, 2024 and 2023. The decrease of $103,444 was mainly due to the decrease in profit from Auto Operating Leasing. The following table sets forth the breakdown of gross profit (loss) by major revenue source for the six months ended September 30, 2024 and 2023:

Current wording

We had gross profit of $526,256 and $741,763, respectively, during the nine months ended December 31, 2024 and 2023. The decrease of $215,507 was mainly due to the decrease in profit from Auto Operating Leasing. The following table sets forth the breakdown of gross profit by major revenue source for the nine months ended December 31, 2024 and 2023: