Senmiao Technology(AIHS) - 2024 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Unaudited Condensed Consolidated Financial Statements Unaudited Q2 2023 financials show a $0.42 million net loss, $13.5 million total assets, and going concern doubts Financial Statements Overview Q2 2023 financials show a $421,347 net loss, total assets of $13.5 million, and a $436,295 net cash outflow Condensed Consolidated Balance Sheet Data (Unaudited) | Balance Sheet Items | June 30, 2023 ($) | March 31, 2023 ($) | | :--- | :--- | :--- | | Total Current Assets | 4,794,779 | 4,854,786 | | Total Assets | 13,540,348 | 14,238,615 | | Total Current Liabilities | 5,263,360 | 5,184,823 | | Total Liabilities | 5,917,954 | 5,741,549 | | Total Equity | 7,379,947 | 8,227,680 | Condensed Consolidated Statements of Operations (Unaudited) | Income Statement Items | Three Months Ended June 30, 2023 ($) | Three Months Ended June 30, 2022 ($) | | :--- | :--- | :--- | | Total Revenues | 2,094,714 | 2,341,796 | | Gross Profit | 581,940 | 459,980 | | Loss from Operations | (788,422) | (1,440,595) | | Net Income (Loss) | (421,347) | 243,920 | | Net Earnings (Loss) Per Share | (0.05) | 0.05 | Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Items | Three Months Ended June 30, 2023 ($) | Three Months Ended June 30, 2022 ($) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | 204,866 | 514,139 | | Net Cash Provided by (Used in) Investing Activities | (330,066) | 24,332 | | Net Cash Provided by (Used in) Financing Activities | (247,322) | 171,073 | | Net (Decrease) in Cash and Cash Equivalents | (436,295) | 669,117 | | Cash and Cash Equivalents, End of Period | 1,173,795 | 1,854,338 | Note 1. Organization and Principal Activities The company operates two segments in China: automobile services for ride-hailing and its Xixingtianxia platform - The company's business is divided into two segments: Automobile transaction and related services focusing on the online ride-hailing industry in China, and Online ride-hailing platform services operating its own platform, Xixingtianxia[25][26] - On March 31, 2022, the company deconsolidated Jinkailong, its former VIE, and now accounts for it as a 35% equity investee company through its subsidiary Hunan Ruixi[38][39] Note 2. Going Concern Substantial doubt about going concern stems from a $0.4M net loss, $38.1M accumulated deficit, and $1.2M purchase commitments - Factors contributing to substantial doubt about the company's ability to continue as a going concern include a net loss of approximately $0.4 million for the quarter, an accumulated deficit of approximately $38.1 million, a working capital deficit of approximately $0.5 million, and purchase commitments totaling approximately $1.2 million[43] - Management is attempting to mitigate going concern risk through equity financing, debt financing, and related-party financial support, though success is not assured[44][45] Note 20. Segment Information The company reports two segments, Automobile Services and Online Ride-hailing, both incurring operational losses in Q2 2023 Segment Performance for Three Months Ended June 30, 2023 | Segment | Revenues ($) | Loss from Operations ($) | | :--- | :--- | :--- | | Automobile Transaction and Related Services | 1,189,108 | (334,966) | | Online Ride-hailing Platform Services | 905,606 | (72,632) | | Unallocated | — | (380,824) | | Consolidated Total | 2,094,714 | (788,422) | Segment Performance for Three Months Ended June 30, 2022 | Segment | Revenues ($) | Loss from Operations ($) | | :--- | :--- | :--- | | Automobile Transaction and Related Services | 1,154,276 | (291,788) | | Online Ride-hailing Platform Services | 1,187,520 | (517,352) | | Unallocated | — | (631,455) | | Consolidated Total | 2,341,796 | (1,440,595) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations MD&A reports an 11% revenue decrease to $2.1M, a $421K net loss, and reiterates going concern doubts Business Overview Core operations include automobile services ($1.19M revenue) and Xixingtianxia ride-hailing platform ($0.9M revenue) Automobile Services Breakdown (Q1 2023 vs Q1 2022) | Service Type | Vehicles (2023) | Revenue (2023) | Vehicles (2022) | Revenue (2022) | | :--- | :--- | :--- | :--- | :--- | | Auto Operating Leasing | >1,000 | $1,056,000 | >1,100 | $853,000 | | Auto Sales | 1 | $5,000 | 13 | $70,000 | | Auto Financing | 148 | $14,000 | 136 | $11,000 | | Other Services | >530 | $114,000 | >770 | $221,000 | - For the three months ended June 30, 2023, the Xixingtianxia ride-hailing platform completed approximately 1.7 million rides with a gross fare of $5.3 million, generating about $0.9 million in platform service fees[220] Results of Operations Q2 2023 revenues decreased 11% to $2.1M, gross profit rose to $582K, resulting in a $421K net loss Comparison of Operations (Three Months Ended June 30) | Metric | 2023 ($) | 2022 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Revenues | 2,094,714 | 2,341,796 | (247,082) | | Gross Profit | 581,940 | 459,980 | 121,960 | | Loss from Operations | (788,422) | (1,440,595) | 652,173 | | Change in fair value of derivative liabilities | 304,173 | 1,628,510 | (1,324,337) | | Net Income (Loss) | (421,347) | 243,920 | (665,267) | - The overall gross profit margin increased to 27.8% in Q1 2023 from 19.6% in Q1 2022, primarily due to the operating leasing business shifting from a gross loss to a 12.4% gross profit margin[273] - Selling, general and administrative expenses decreased by $676,058 (35.2%) year-over-year, mainly due to reduced salary expenses from a lower employee headcount, decreased office expenditures, and lower advertising costs[274] Liquidity and Going Concern Liquidity is precarious with cash at $1.17M, and substantial doubt about going concern persists due to losses and commitments - The company's ability to continue as a going concern is in substantial doubt due to a net loss of ~$0.4M for the quarter, an accumulated deficit of ~$38.1M, a working capital deficit of ~$0.5M, and purchase commitments of ~$1.2M for 120 automobiles[285] Cash Flow Summary (Three Months Ended June 30) | Cash Flow Activity | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 204,866 | 514,139 | | Net Cash from (Used in) Investing Activities | (330,066) | 24,332 | | Net Cash from (Used in) Financing Activities | (247,322) | 171,073 | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is deemed not applicable by the company for the current report - The company states this item is 'Not applicable'[314] Item 4. Controls and Procedures Disclosure controls and procedures were ineffective as of June 30, 2023, due to material weaknesses in U.S. GAAP expertise and IT controls - Disclosure controls and procedures were concluded to be ineffective as of June 30, 2023[315] - Identified material weaknesses include insufficient personnel with adequate U.S. GAAP accounting knowledge, lack of an adequate internal audit function, and deficiencies in IT general controls related to security, change management, and operations[315] PART II – OTHER INFORMATION Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including SOX certifications and XBRL interactive data files - The report includes required certifications from the CEO and CFO under Sarbanes-Oxley Act Sections 302 and 906[319] - Interactive data files (XBRL documents) are also filed as exhibits[319]