Senmiao Technology(AIHS) - 2019 Q3 - Quarterly Report

Financial Performance - Revenues for the three months ended December 31, 2018, were $209,857, compared to $152,538 for the same period in 2017, representing an increase of approximately 37.5%[10] - The net loss for the nine months ended December 31, 2018, was $2,488,661, compared to a net loss of $1,111,140 for the same period in 2017, indicating a significant increase in losses[11] - Total operating expenses for the nine months ended December 31, 2018, were $2,914,654, up from $1,448,559 in the same period of 2017, reflecting a rise of approximately 101.5%[10] - The company reported a basic and diluted loss per share of $0.10 for the nine months ended December 31, 2018, compared to a loss of $0.05 for the same period in 2017[10] - Net revenue for the nine months ended December 31, 2018, was $406,391, compared to $335,498 for the same period in 2017, representing a growth of approximately 21%[29] - The net loss for the nine months ended December 31, 2018, was $(918,449), an improvement from a net loss of $(1,011,590) in the same period of 2017[29] - For the nine months ended December 31, 2018, the Company reported total revenues of $406,391, with $287,655 from online lending services and $118,736 from automobile transaction financing services[129] Cash Flow and Liquidity - The company reported a net cash used in operating activities of $2,462,092 for the nine months ended December 31, 2018, compared to $417,645 for the same period in 2017, showing a substantial increase in cash outflow[11] - Cash and cash equivalents at the end of the period were $9,291,719, down from $11,141,566 at the beginning of the period, indicating a decrease of approximately 16.7%[11] - Cash and cash equivalents decreased to $5,319,126 as of December 31, 2018, down from $10,961,071 at the beginning of the period[131] - The Company is exposed to liquidity risk and may seek short-term funds from financial institutions and stockholders to meet its commitments[78] Business Segments and Operations - The company operates in two segments: online lending services and automobile transaction and financing services, primarily targeting the Chinese market[13] - The company has experienced significant fluctuations in its operating results due to various market and regulatory factors in China[6] - The Company has undertaken substantial business activities in China through its subsidiaries and variable interest entities[13] - The Company has two operating segments following the acquisition of Hunan Ruixi, which occurred during the three months ended December 31, 2018[45] Investments and Acquisitions - The company plans to invest in its automobile transaction and financing services business, focusing on the ride-hailing industry in China[13] - The Company acquired 60% equity interest in Hunan Ruixi for no consideration and contributed $6,000,000 as working capital on November 22, 2018[16] - Hunan Ruixi is expected to engage in automobile financial leasing services and sales in the first half of 2019[17] - The Company executed a one-for-two reverse stock split, reducing the number of outstanding shares to 22,500,000[140] Financial Position - Total assets of the Company's VIEs as of December 31, 2018, were $10,984,820, while total liabilities were $5,533,128[28] - As of December 31, 2018, total assets amounted to $10,519,524, a decrease from $13,031,597 as of March 31, 2018[132] - The Company had approximately $5,320,000 deposited in a U.S. bank, insured up to $250,000, and $3,980,000 and $180,000 deposited in uninsured financial institutions in mainland China as of December 31, 2018[73] Expenses and Liabilities - Selling, general and administrative expenses primarily consisted of employee salaries and benefits, office rental expenses, and platform maintenance costs[66] - The company's accrued expenses and other liabilities totaled $1,071,516 as of December 31, 2018, significantly up from $404,604 in March 2018[101] - The total borrowings from financial institutions as of December 31, 2018, amounted to $441,862, with $213,877 classified as current liabilities and $227,985 as noncurrent liabilities[99] - The Company has lease commitments totaling $970,869, with rental payments of $300,004 due in 2019[126] Shareholder and Stock Information - The Company issued an aggregate of 45,000,000 shares of common stock to Sichuan Senmiao Shareholders as part of the VIE Agreements on September 18, 2017[15] - The Company closed its IPO on March 16, 2018, selling 3,000,000 shares at $4.00 per share, generating approximately $13.5 million in gross proceeds and $12.2 million in net proceeds after expenses[141] - The board approved the issuance of 25,000 RSUs to five directors, with a total fair value of $117,750, vesting in four equal quarterly installments[142] Tax and Regulatory Matters - The Company accounts for income taxes in accordance with U.S. GAAP, recognizing deferred tax liabilities and assets for expected future tax consequences[67] - The net operating loss for the nine months ended December 31, 2018, was approximately $0.88 million, with a net operating loss carryforward of approximately $1.07 million for U.S. income taxes[112] - The company had net operating loss carryforwards in the PRC of $2,948,285 as of December 31, 2018, which will expire in 2023[114] Miscellaneous - The Company adopted ASC 606 for revenue recognition in the first quarter of 2018, concluding that there were no material changes to the timing and pattern of revenue recognition[56] - There was no impairment charge against intangible assets for the three and nine months ended December 31, 2018 and 2017[52] - The Company recognized no allowance for doubtful accounts as of December 31, 2018, indicating a strong collection performance[47] - The maximum contingent liabilities the Company could face if all automobile purchasers defaulted is $9,784,719, with collateral estimated at approximately $8,497,000, covering about 87% of the contingent liabilities[77]