Senmiao Technology Announces Unaudited Financial Results for its Third Fiscal Quarter Ended December 31, 2019

Senmiao Technology's Automobile Business Expands Through First Nine Months of Fiscal Year as Company Discontinues P2P Business

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Senmiao Technology Limited

Feb 14, 2020, 17:37 ET

CHENGDU, China, Feb. 14, 2020 /PRNewswire/ -- Senmiao Technology Limited (NASDAQ: AIHS) ("Senmiao"), a provider of automobile transaction and related services in China, today announced its unaudited financial results for its third fiscal quarter ended December 31, 2019.

Third Quarter of Fiscal 2020 Highlights

Total revenues increased by 2,212% year-over-year to $2,745,579 from $118,736
Revenue from automobile transaction and related services business expanded to $13,643,429 in first nine months of fiscal 2020
Earnings per share of $0.03 for continuing operations in first nine months of fiscal 2020 versus loss per share of $0.04 in the same period last year

"The discontinuation of our online peer-to-peer lending operations will allow us to effectively focus our resources on the current automobile financing facilitation and transaction business, which remained profitable through the first nine months of this fiscal year," commented Xi Wen, Chairman, Chief Executive Officer and President of Senmiao. "Due to a general industry year-end slowdown, there was a seasonal decrease in our facilitation of new automobile purchases this quarter but we continued to capitalize on strategic opportunities in cities like Chengdu and Changsha where we are expanding our business. Looking ahead, in light of the Chinese New Year holidays and the current coronavirus outbreak in China, we anticipate that the fourth fiscal quarter will be a challenging one. However, despite extensive restrictions being put in place to combat the nationwide coronavirus outbreak, we believe that the long-term market opportunity for ride-hailing services in China remains compelling. We are developing ways to assist our ride-hailing drivers contend with the challenges posed by the outbreak. This is a difficult time for the industry and our nation, but we are confident that our company will overcome the challenges in the short-term, continue to expand our automobile business and create long-term sustainable value for our shareholders."

Revenues

Total revenue was $2,745,579 for the quarter ended December 31, 2019, an increase of $2,626,843, or 2,212% as compared with the quarter ended December 31, 2018, primarily due to Senmiao's significant shift in operations to the automobile transaction and related services business (the "Auto Business"). Total revenue excludes $4,294 in revenue from online lending services that is now a discontinued business.

Because of the Chinese National Day holiday in October and general industry year end slowdown, there was a seasonal decrease in the number of Senmiao's facilitated new automobile purchases for the three months ended December 31, 2019 as compared with the prior quarters in current year. However, due to the expansion of the Auto Business in Chengdu and Changsha, Senmiao's revenue increased as compared with the same period in the prior year.

In response to the changing regulatory environment in China, Senmiao discontinued operations of its online peer-to-peer lending business in third fiscal quarter to proactively restructured operations in order to position itself for future sustainable growth.

Cost of Revenues

Cost of revenues was $1,901,405 for the quarter ended December 31, 2019. Senmiao did not incur cost of revenues during the same period last year as it only provided online lending services which did not incur any cost of revenues.

Gross Profit

Gross profit was $844,174. Gross profit increased by $725,438 mainly due to the increase in the number of facilitated new automobile purchases from the Auto Business.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $1,339,238 for the quarter ended December 31, 2019 as compared to $529,913 during the same period last year, representing an increase of $809,325. The increase was mainly attributable to the selling, general and administrative expenses of $966,771 incurred by the expansion of the Auto Business.

Change in Fair Value of Derivative Liabilities

The change in fair value of derivative liabilities resulted in a loss $485,400, derived from change of the fair values between December 31, 2019 and September 30, 2019 of the warrants issued in Senmiao's registered direct offering in June 2019.

Net Loss

Total net loss for the quarter ended December 31, 2019 was $5,361,936 as compared to a net loss of $768,292 during the same period last year. Net loss from continuing operations and discontinued operations for the quarter ended December 31, 2019 was $962,700 and $4,399,236 as compared to a net loss of $406,631 and $361,661, respectively, during the same period last year.

Earnings / loss per share

Loss per share for continuing operations was $0.03 and $0.02 and loss per share for discontinued operations was $0.15 and $0.01, respectively, for the quarters ended December 31, 2019 and 2018. Earnings per share was $0.03 for continuing operations in the nine months ended December 31, 2019 as compared with loss per share of $0.04 in the same period last year. Loss per share was $0.20 for discontinued operations in the nine months ended December 31, 2019 as compared with $0.06 in the same period last year.

Financial Position

As of December 31, 2019, Senmiao had cash and cash equivalents of $1,173,521 as compared to $3,967,980 as of March 31, 2019 for its continuing operations. Senmiao also had cash and cash equivalents of $9,520 as of December 31, 2019 as compared to $1,052,430 as of March 31, 2019 for its discontinued operations.

For additional related information, please see Senmiao's Quarterly Report on Form 10-Q for the quarter ended December 31, 2019, which is being filed with the U.S. Securities and Exchange Commission today.

About Senmiao

Headquartered in Chengdu, Sichuan Province, Senmiao provides automobile transaction and related services including sales of automobiles, facilitation and services for automobile purchase and financing, management, guarantee and other automobile transaction services aimed principally at the growing ride-sharing market in Senmiao's areas of operation in China. For more information about Senmiao, please visit: http://www.senmiaotech.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning the development of Senmiao's Auto Business, the Chinese ride-sharing and automobile financial leasing markets, and Senmiao's plans, objectives, goals, strategies, and performance, as well as the assumptions such statements and other statements that are not statements of historical facts. When Senmiao uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause actual results to differ materially from Senmiao's expectations, including, but not limited to, risks and uncertainties relating to the following: the risk that the anticipated growth of Senmiao's Auto Business may not be realized; the risks associated with the discontinuance of Senmiao's online lending business; Senmiao's future business development; product and service demand and acceptance; the risks and impact of the ongoing coronavirus outbreak in China; changes in technology; economic conditions; reputation and brand; the impact of competition and pricing; the impact of government regulations; fluctuations in general economic and business conditions in China and other risks expressed in reports filed by Senmiao with the U.S. Securities and Exchange Commission. For these reasons, among others, investors are cautioned not to place undue reliance on any forward-looking statements. Senmiao's filings with the U.S. Securities and Exchange Commission are available for review at www.sec.gov. Senmiao undertakes no obligation to publicly revise any forward-looking statements to reflect changes in events or circumstances.

For more information, please contact:

At the Company:
Yiye Zhou
Email: [email protected]
Phone: +86 28 6155 4399

Investor Relations:
Linda Bergkamp
Christensen
Email: [email protected]
Phone: +1 480 614 3004

SENMIAO TECHNOLOGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollar, except for the number of shares)

					December 31,		March 31,
					2019		2019
					(Unaudited)
ASSETS
Current Assets
	Cash and cash equivalents			$	1,173,521	$	3,967,980
	Accounts receivable, net, current portion				2,009,589		199,909
	Inventories				1,526,077		1,508,244
	Finance lease receivables, net, current portion				428,958		10,254
	Prepayments, receivables and other assets, net				4,701,683		3,787,254
	Escrow receivable due within one year				-		600,000
	Due from related parties				107,855		140,498
	Current assets - discontinued operations				920,085		1,185,016
		Total Current Assets			10,867,768		11,399,155

Property and equipment, net
	Property and equipment, net				417,141		100,680
	Property and equipment, net - discontinued operations				13,883		25,205
		Total Property and equipment, net			431,024		125,885

Other Assets
	Right-of-use assets				659,961		-
	Intangible assets, net				1,372		1,627
	Prepayment for intangible assets				750,000		280,000
	Accounts receivable, noncurrent				1,090,787		-
	Finance lease receivables, net, noncurrent				748,249		22,298
	Other assets of discontinued operations				161,881		485,170
		Total Other Assets			3,412,250		789,095

			Total Assets	$	14,711,042	$	12,314,135

LIABILITIES AND EQUITY
Current Liabilities
	Borrowings from financial institutions			$	211,248	$	219,157
	Borrowings from third parties				-		476,765
	Accounts payable				55,453		-
	Advance from customers				60,317		31,776
	Income tax payable				26,975		21,905
	Accrued expenses and other liabilities				1,482,933		962,291
	Due to related parties and affiliates				212,144		415,931
	Lease liabilities				209,188		-
	Derivative liabilities				629,848		-
	Current liabilities of discontinued operations				4,954,400		1,625,779
		Total Current Liabilities			7,842,506		3,753,604

Other Liabilities
	Borrowings from financial institutions, noncurrent				41,696		177,789
	Lease liabilities, noncurrent				421,109		-
		Total Other Liabilities			462,805		177,789

			Total liabilities		8,305,311		3,931,393

Commitments and Contingencies

Stockholders' Equity
	Common stock (par value $0.0001 per share, 100,000,000 shares authorized; 28,839,803 and 25,945,255 shares issued and outstanding at December 31, 2019 and March 31, 2019, respectively)				2,884		2,595
	Additional paid-in capital				26,835,804		23,833,112
	Accumulated deficit				(19,846,811)		(15,031,538)
	Accumulated other comprehensive loss				(621,957)		(428,771)
		Total Senmiao Technology Limited Stockholders' Equity			6,369,920		8,375,398

Noncontrolling interests					35,811		7,344

		Total Equity			6,405,731		8,382,742

			Total Liabilities and Equity	$	14,711,042	$	12,314,135

SENMIAO TECHNOLOGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in U.S. dollar, except for the number of shares)

				For the Three Months Ended December 31,				For the Nine Months Ended December 31,
				2019		2018		2019		2018
				(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)

Revenues			$	2,745,579	$	118,736	$	13,643,429	$	118,736
Cost of revenues				(1,901,405)		-		(10,632,901)		-
Gross profit				844,174		118,736		3,010,528		118,736

Operating expenses
	Selling, general and administrative expenses			(1,339,238)		(529,913)		(3,486,410)		(1,028,314)
		Total operating expenses		(1,339,238)		(529,913)		(3,486,410)		(1,028,314)

Loss from operations				(495,064)		(411,177)		(475,882)		(909,578)

Other income (expense)
	Other income (expense), net			(37,636)		10,785		(53,364)		10,786
	Interest expense			(17,248)		(6,239)		(79,593)		(6,239)
	Change in fair value of derivative liabilities			(485,400)		-		1,509,406		-
		Total other income, net		(540,284)		4,546		1,376,449		4,547

Income (loss) before income taxes				(1,035,348)		(406,631)		900,567		(905,031)

Income tax benefits (expenses)				72,648		-		(32,950)		-

Income (Loss) from continuing operations, net of applicable income taxes				(962,700)		(406,631)		867,617		(905,031)

Net loss from discontinued operations				(4,399,236)		(361,661)		(5,593,627)		(1,583,630)

Net loss				(5,361,936)		(768,292)		(4,726,010)		(2,488,661)

Less: Net income (loss) attributable to noncontrolling interests from continuing operations				34,769		(3,041)		(89,264)		(3,041)

Net loss attributable to stockholders			$	(5,327,167)	$	(771,333)	$	(4,815,274)	$	(2,491,702)

Net loss			$	(5,361,936)	$	(768,292)	$	(4,726,010)	$	(2,488,661)

Other comprehensive income (loss)
	Foreign currency translation adjustment			206,432		(26,063)		(253,983)		(132,763)

Comprehensive loss				(5,155,504)		(794,355)		(4,979,993)		(2,621,424)

Less: Total comprehensive (income) loss attributable to noncontrolling interests				30,015		(3,041)		28,467		-

Total comprehensive loss attributable to stockholders			$	(5,185,519)	$	(791,314)	$	(5,008,460)	$	(2,621,424)

Weighted average number of common stock
	Basic and diluted			28,825,281		25,879,400		27,733,885		25,879,400

Earnings (loss) per share - basic and diluted
	Continuing operations		$	(0.03)	$	(0.02)	$	0.03	$	(0.04)
	Discontinued operations		$	(0.15)	$	(0.01)	$	(0.20)	$	(0.06)

SENMIAO TECHNOLOGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollar, except for the number of shares)

						For the Nine Months Ended December 31,
						2019		2018
						(Unaudited)		(Unaudited)
Cash Flows from Operating Activities:
	Net loss				$	(4,726,010)	$	(2,488,661)
	Net loss from discontinued operations					(5,593,627)		(1,583,630)
		Net income (loss) from continuing operations				867,617		(905,031)
	Adjustments to reconcile net loss to net cash used in operating activities:
			Depreciation and amortization of property and equipment			82,672		947
			Amortization of right-of-use assets			89,095		-
			Amortization of intangible assets			197		14
			Provision for doubtful accounts			228,249		-
			Loss on disposal of equipment			4,593		-
			Change in fair value of derivative liabilities			(1,509,406)		-
	Change in operating assets and liabilities
			Accounts receivable			(2,985,722)		309
			Inventories			(72,278)		-
			Prepayments, receivables and other assets			(1,226,099)		(280,402)
			Finance lease receivables			(1,146,021)		-
			Accounts payable			55,464		-
			Advances from customers			29,693		-
			Income tax payable			5,860		-
			Accrued expenses and other liabilities			548,545		(3,179)
			Lease liabilities			(80,297)		-
			Net cash used in operating activities from continuing operations			(5,107,838)		(1,187,342)
			Net cash used in operating activities from discontinued operations			(1,896,242)		(1,273,309)
				Net Cash Used in Operating Activities		(7,004,080)		(2,460,651)



Cash Flows from Investing Activities:
	Proceeds from sales of equipment
	Purchases of property and equipment					(414,958)		(688)
	Prepayment of intangible assets					(470,000)		-
	Net cash used in investing activities from continuing operations					(884,958)		(688)
	Net cash provided by (used in) investing activities from discontinued operations					1,822		(448,575)
				Net Cash Used in Investing Activities		(883,136)		(449,263)

Cash Flows from Financing Activities:
	Net proceeds from issuance of common stock in registered direct offering					5,142,124		-
	Net proceeds from issuance of common stock upon warrants exercised					111		-
	Repayments to stockholders					(90,000)		(1,900,000)
	Repayments to third parties					(459,635)		-
	Repayments from (loans to) related parties					27,577		(1,441)
	Borrowings from related parties and affiliates					555,616		290,183
	Repayments to related parties and affiliates					(1,554,423)		-
	Repayments of current borrowings from financial institutions					(129,698)		-
	Repayments of noncurrent borrowings from financial institutions					-		(16,929)
	Release of escrow receivable					600,000		600,000
	Cash acquired from acquisition							213,644
	Net cash provided by (used in) financing activities from continuing operations					4,091,672		(814,543)
	Net cash provided by financing activities from discontinued operations					154,103		1,974,617
				Net Cash Provided by Financing Activities		4,245,775		1,160,074

Effect of exchange rate changes on cash and cash equivalents						(196,028)		(100,007)

Net decrease in cash and cash equivalents						(3,837,469)		(1,849,847)
Cash and cash equivalents, beginning of period						5,020,510		11,141,566
Cash and cash equivalents, end of period						1,183,041		9,291,719

Less: Cash and cash equivalents from discontinued operations						(9,520)		(1,839,722)

Cash and cash equivalents from continuing operations, end period					$	1,173,521	$	7,451,997

Supplemental Cash Flow Information
	Cash paid for interest expense				$	79,593	$	6,239
	Cash paid for income tax				$	-	$	-
Non-cash Transaction in Investing and Financing Activities
	IPO expenses paid by the Company's stockholders				$	-	$	70,687
	Right-of-use assets obtained in exchange of operating lease liabilities				$	957,472	$	-
	Allocation of fair value of derivative liabilities for issuance of common stock proceeds				$	3,150,006	$	-
	Allocation of fair value of derivative liabilities to additional paid in capital upon warrants exercised				$	1,010,752	$	-