Senmiao Technology(AIHS) - 2021 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements The company presents its unaudited condensed consolidated financial statements for the period ending December 31, 2020 Unaudited Condensed Consolidated Balance Sheets The balance sheet reflects increased total assets and liabilities, alongside a significant decrease in total equity Condensed Consolidated Balance Sheet Data (in USD) | Balance Sheet Items | December 31, 2020 | March 31, 2020 | | :--- | :--- | :--- | | Total Current Assets | $9,276,000 | $6,606,139 | | Total Assets | $18,917,556 | $15,630,718 | | Total Current Liabilities | $14,914,433 | $11,132,530 | | Total Liabilities | $18,177,801 | $14,158,361 | | Total Equity | $739,755 | $1,472,357 | Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss The company's revenue significantly decreased, resulting in a substantial net loss for the nine months ended December 31, 2020 Statement of Operations Highlights (in USD) | Metric | Nine Months Ended Dec 31, 2020 | Nine Months Ended Dec 31, 2019 | | :--- | :--- | :--- | | Revenues | $4,175,862 | $13,643,429 | | Gross Profit | $587,276 | $3,010,528 | | Loss from Operations | ($6,538,979) | ($475,882) | | Net (Loss) Income from Continuing Operations | ($8,565,587) | $867,617 | | Net Loss Attributable to Stockholders | ($7,242,241) | ($4,815,274) | | Loss Per Share (Basic and Diluted) | ($0.19) | $0.03 | Unaudited Condensed Consolidated Statements of Cash Flows Financing activities provided positive cash flow, offsetting cash used in operations and investing activities Cash Flow Summary (in USD) | Cash Flow Activity | Nine Months Ended Dec 31, 2020 | Nine Months Ended Dec 31, 2019 | | :--- | :--- | :--- | | Net Cash used in Operating Activities | ($1,786,674) | ($7,004,080) | | Net Cash Used in Investing Activities | ($194,179) | ($883,136) | | Net Cash Provided by Financing Activities | $4,596,314 | $4,245,775 | | Net Increase (Decrease) in Cash | $2,698,793 | ($3,837,469) | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail accounting policies, going concern doubts, discontinued operations, and significant contingent liabilities - The company provides automobile transaction services and operates an online ride-hailing platform (Xixingtianxia) in the PRC through subsidiaries and Variable Interest Entities (VIEs)[26][27] - Management has substantial doubt about the company's ability to continue as a going concern due to recurring losses, a working capital deficit of approximately $5.6 million, and significant operating cash outflows[51][52] - The company discontinued its online P2P lending services business in October 2019, which is now reported as discontinued operations[149] - In October 2020, the company acquired a 51% equity interest in XXTX, the operator of the Xixingtianxia ride-hailing platform, for an investment of RMB 3.16 million[144] - The company has significant contingent liabilities of approximately $14.9 million related to guarantees on automobile purchasers' loans, with approximately $3.36 million past due as of December 31, 2020[235][364] - Subsequent to the quarter end, on February 10, 2021, the company completed a registered direct offering, raising approximately $5.7 million in net proceeds[241] Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes the business shift to leasing, operational results, and the substantial doubt of its going concern status Overview The company's business includes automobile services and a new online ride-hailing platform, Xixingtianxia - The company's core business is providing automobile transaction and related services, primarily for ride-hailing drivers in China[244][245] - In October 2020, the company launched its own online ride-hailing platform, Xixingtianxia, which generated approximately $0.3 million in revenue by December 31, 2020[249][252] - From its launch to Dec 31, 2020, the Xixingtianxia platform facilitated approximately 1.2 million rides with a gross fare of about $3.3 million[252] Results of Operations Revenues declined sharply due to lower auto sales, leading to significant net losses despite new leasing revenue Comparison of Operations for the Three Months Ended December 31 (in USD) | Metric | 2020 | 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $1,638,550 | $2,745,579 | -40% | | Gross (Loss) Profit | ($155,265) | $844,174 | -118% | | Net Loss | ($3,673,892) | ($962,700) | -282% | Comparison of Operations for the Nine Months Ended December 31 (in USD) | Metric | 2020 | 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $4,175,862 | $13,643,429 | -69% | | Gross Profit | $587,276 | $3,010,528 | -80% | | Net (Loss) Income | ($8,565,587) | $867,617 | -1087% | - The decrease in revenue was primarily due to a sharp decline in automobile sales, which fell from $10.8 million to $0.5 million for the nine-month period year-over-year[328] - The revenue decline was partially offset by new revenue streams: $2.1 million from operating lease revenues and $0.3 million from the new online ride-hailing platform for the nine months ended Dec 31, 2020[325][327] - Selling, general and administrative expenses increased by 118% for the nine-month period, driven by higher amortization, salary expenses, and professional service fees[337] Liquidity and Capital Resources The company faces a significant working capital deficit and relies on equity financing to sustain operations - The company had a working capital deficit of approximately $5.6 million as of December 31, 2020[351] - In August 2020, the company raised approximately $6.1 million in net proceeds from an underwritten public offering[348] - In February 2021, the company raised approximately $5.7 million in net proceeds from a registered direct offering[348] - Management has determined there is substantial doubt about the company's ability to continue as a going concern, citing recurring losses, working capital deficit, and operating cash outflows[351][352] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as per the company's filing - The company states that this item is not applicable[405] Controls and Procedures Management concluded that disclosure controls and procedures were ineffective due to multiple material weaknesses - The CEO and CFO concluded that disclosure controls and procedures were not effective as of December 31, 2020[407] - Material weaknesses identified include insufficient personnel with U.S. GAAP expertise, lack of an adequate internal audit function, and deficiencies in financial system security and backup[407] PART II – OTHER INFORMATION Legal Proceedings The report refers to the MD&A section for details on contingent liabilities related to Jinkailong - The company refers to the 'Contingent liability relating to Jinkailong' section in the MD&A for information on legal proceedings[411] Risk Factors This section is not applicable as per the company's filing - The company states that this item is not applicable[411] Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements and officer certifications