AZI — H1 FY2026 Financial Report Analysis

Overview

Autozi Internet Technology (Global) Ltd. sells auto parts and accessories (mainly lubricating oils, tires and batteries) to parts dealers and repair shops across China through its online supply platform. In the first half of its fiscal year 2026, the six months ended March 31, 2026, revenue fell 63% to $29.5 million while the net loss attributable to shareholders grew five-fold to $26.3 million. Most of the loss came from $18.8 million of share-based compensation, which is pay in shares rather than cash. The cash flow statement shows a second problem: $40.0 million of cash went out through operations, more than the $32.0 million the company raised from new shares in the period. Most of that outflow was prepayments for consulting and professional services, not spending on the parts business. Autozi's fiscal year ends September 30, so this "H1 2026" covers October 2025 through March 2026.

At a glance

• Revenue $29.5M, down 63.0%. All of it now comes from auto parts and accessories. New car sales, $0.9 million a year earlier, fell to zero.
• Gross margin 0.8%, down from 1.7%. Gross margin is the share of revenue left after paying for the goods sold. Autozi kept $238 thousand from $29.5 million of sales, which is not enough to cover even its $318 thousand selling budget.
• Prepaid expenses rose from $1.4M to $34.1M in six months. Management says these are prepayments for "professional services for strategic transactions, capital operations and corporate governance initiatives", to be expensed over the next 12 months. That is roughly the whole $32.0 million share placement.

Results in figures

All figures are in US$ millions except per-share amounts. Fiscal H1 means the six months ended March 31.

Sources: unaudited interim condensed consolidated statements of operations and cash flows (Exhibit 99.1) and the MD&A (Exhibit 99.2) of the 6-K/A furnished August 20, 2026.

What drove the revenue drop

Revenue fell by $50.3 million. Almost all of the drop came from the parts business, which went from $78.9 million to $29.5 million. New car sales, a small line, went from $0.9 million to zero. The filing gives two different explanations:

• The MD&A in the filing says the decline was "mainly due to lower business volume as the Company continued to adjust its business structure and focus on core automotive service offerings."
• The company's May 29 earnings press release blamed "the conflict between the US and Iran," which it said disrupted oil supply and raised lubricant prices, and a "strategic shift" toward new energy vehicles (NEVs, meaning electric and plug-in hybrid cars).

Neither document gives volume or price figures by product, so it is not possible to say how much of the drop came from lubricant prices, how much from a deliberate exit, and how much from lost customers. Gross margin fell to 0.8%, which the MD&A puts down to "intensified market competition that compressed product margins." At these margins Autozi is working as a thin distributor: on every $100 of parts sold, about 80 cents is left before any overhead.

Where the loss came from

Operating expenses rose 162% to $24.9 million, even though the business shrank. The increase came from general and administrative (G&A) costs, which rose from $7.3 million to $24.4 million:

• Share-based compensation of $18.8 million (vs $3.5 million in G&A a year earlier). During the half the company granted 700,000 restricted share units (RSUs, shares awarded to people for their work) with an average grant-date value of $26.69. All 702,651 RSUs on the books vested during the period, so no compensation cost remained unrecognized at March 31. The plan covers employees, officers, directors and "external persons". The notes also mention share grants to an external consultant.
• Cash G&A also rose. G&A without share-based compensation was about $5.5 million, up from about $3.8 million, while revenue fell by almost two-thirds. Management attributes the increase to "professional service fees incurred for strategic development and capital operations, corporate governance upgrades, and related advisory engagements."

Selling expenses (-80%) and R&D (-73%) were both cut sharply. In effect, money moved out of selling parts and into corporate advisory work.

Below the operating line, the comparison is also less favorable than it looks. A year earlier the company booked $4.4 million of litigation-related income, which did not recur. This half had $1.6 million of other expenses, partly offset by $0.8 million of investment income. Interest expense fell to $0.8 million from $1.9 million.

What the headline numbers hide

• The first results release understated the loss by almost half. The May 29 press release, which the company called "unreviewed", reported a net loss attributable to shareholders of $13.8 million and operating expenses of $15.6 million. The financial statements furnished in August show $26.3 million and $24.9 million. The gap is consistent with the $18.8 million of share-based compensation that appears in the later statements. The August filing was itself amended twice, the second time to add the missing statement of changes in equity and to correct a $1 thousand balance-sheet discrepancy. Between the two releases, on June 4, the company dismissed its auditor, Marcum Asia, and appointed Assentsure PAC for fiscal 2026. The company says there were no disagreements. On April 15 the CFO resigned, and the COO took on the CFO role.
• Cash conversion is very weak. Operating cash outflow was $40.0 million against a $26.3 million net loss. Because $18.8 million of that loss was a non-cash share expense, the cash burn was much larger than the loss: about $32.7 million went into increased prepaid expenses. Those prepayments sit on the balance sheet as a $34.1 million asset. If they are expensed over the next 12 months as management says, they will add roughly that amount to future G&A. That is about 140 times this half's gross profit.
• Receivables and deferred revenue grew while sales fell. Accounts receivable rose from $0.13 million to $1.89 million. Deferred revenue, which is cash received before goods are delivered, rose from $1.57 million to $4.80 million. On a smaller revenue base, both deserve watching in the next filing.
• The share count makes per-share figures hard to compare. Loss per share "improved" from $(24.70) to $(5.86) only because weighted average shares grew from 212,120 to 4,489,164 (both restated for a 1-for-50 share consolidation in December 2025 and a 1-for-10 consolidation in March 2026). Dilution has since sped up. By August 31, 2026, the company reported 66.35 million ordinary shares outstanding, about 14.7 times the 4.52 million at March 31.
• Equity turned positive only because of new shares. Shareholders' equity attributable to Autozi went from a $40.0 million deficit to a $7.3 million deficit. The $26.3 million loss was more than offset by $57.8 million of new paid-in capital, most of it the $32.0 million placement and the $18.8 million of share awards. The accumulated deficit reached $172.3 million.
• Going-concern warning and near-term debt. The notes state that recurring losses "raise substantial doubt about the Group's ability to continue as a going concern." At March 31 the company held $0.43 million of cash against $9.1 million of short-term bank borrowings, $6.0 million of convertible bonds and notes, $6.2 million of unpaid interest on older convertible bonds whose repayment or conversion is still being negotiated with holders and $3.0 million owed to related parties.

After the period: more capital, more control with the CEO

The MD&A lists three June 22, 2026 agreements:

• A sale of up to 50 million Class A shares at $0.60 each (about $30.0 million) to non-U.S. investors. The company may accept payment in cryptocurrency "at the Company's discretion."
• A convertible note facility of up to $5.25 million at 9.25% interest. The first $2.75 million was issued June 23 and is due June 2027.
• Conversion of a $7.0 million interest-free loan from CEO and Chairman Houqi Zhang into 10 million Class B shares, with a three-year lock-up. In November 2025 shareholders raised the voting power of each Class B share to 200 votes. As a result, this conversion gives the CEO far more voting weight than the cash the company received would suggest.

Takeaway

Takeaway: The parts business is shrinking and earns less than 1% gross margin. Meanwhile, almost all of the $32 million raised from new shareholders went into prepaid advisory and "capital operations" fees, not the operating business. Those prepayments will become expenses over the next year. Until a filing shows revenue stabilising and cash going back into the core business, the main risks here are dilution and going concern, not operating results.

Outlook

Management gives no revenue or earnings guidance. Its stated plan is to extend existing debts, cut costs and raise more debt and equity. The June share sale, if it fully closes, would bring in about $30 million, enough to deal with the near-term liabilities on paper. The pattern from this half, though, is that new money left as prepayments rather than funding the parts business.

The next data point is the fiscal 2026 annual report on Form 20-F (year ended September 30, 2026), which will be audited by the new auditor. Last year the company filed a late-filing notice (NT 20-F) and published its 20-F on February 12. Things to watch:

1. Whether second-half revenue stabilises or keeps falling from the first half's $29.5 million.
2. How much of the $34.1 million of prepayments is expensed, and what services the company says it received for them.
3. How much of the June share sale was actually paid, and in what form (cash or cryptocurrency).
4. Whether the going-concern language and the unresolved convertible bonds are settled.