Senmiao Technology Announces Financial Results for Fiscal Year Ended March 31, 2020

Online Ride-hailing Related Automobile Business Continues to Expand

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Jul 09, 2020, 08:57 ET

CHENGDU, China, July 9, 2020 /PRNewswire/ -- Senmiao Technology Limited (NASDAQ: AIHS) ("Senmiao"), a provider of automobile transaction and related services targeting the ride-hailing industry in China, today announced its financial results for its full fiscal year ended March 31, 2020.

Fiscal Year 2020 Highlights

Revenue from automobile transaction and related services business increased by 514% year-over-year to $15,655,575 from $2,551,107;
Revenue from sales of automobiles expanded to $11,536,691, up 535% from $1,815,425 in the prior year;
Gross profit from automobile transaction and related services business increased by 357% year-over-year to $3,375,337 from $738,920;
Number of facilitated new automobile purchase increased by 323% year-over-year to 1,315 from 311;
In Fiscal Year 2020, there were over 2,300 new drivers joining Senmiao's online ride-sharing business

"Although we faced a significantly weaker operating environment as a result of COVID-19 in our fiscal fourth quarter after maintaining profitability through the first nine months, we grew our streamlined automobile transaction and related services revenue by five-fold" commented Xi Wen, Chairman, Chief Executive Officer and President of Senmiao. "We continue to believe in the huge long-term market opportunity resulting from the rapid development of the online ride-hailing service industry in China. Our near-term strategic business focus has shifted from the facilitation of automobile transactions and financing to providing more rentals of automobiles, and we are also streamlining expenses while the business environment improves. We are also actively exploring opportunities for new capital, such as our recently announced US$7 million financing transaction into our auto business operating entity in China, that will increase our ability to weather the downturn resulting from COVID-19 as well as competition and continue to expand our business in southwestern China. To summarize, we believe we are executing on our goal in becoming an outstanding and leading provider of automobile transaction and related services to the growing online ride-hailing eco-system in China."

Revenues

Total revenue from Senmiao's automobile transaction and related services business (the "Auto Business") was $15,655,575 for the full fiscal year ended March 31, 2020, an increase of $13,104,468, or 514% as compared with the fiscal year ended March 31, 2019, primarily due to Senmiao's significant expansion of the Auto Business. The revenue excludes $112,440 in revenue from online lending services that is now a discontinued business.

The increase is attributed to Senmiao's business expansion in Chengdu and Changsha. Although, Senmiao believes there is huge market opportunity resulting from the rapid development of the online ride-hailing service market in China, due to impact of measures and restrictions to combat the COVID-19 nationwide epidemic in China, Senmiao experienced a decrease in its revenue from its Auto Business for the three months ended March 31, 2020 as compared with the prior year.

Cost of Revenues

Cost of revenues was $12,280,238 for the full fiscal year ended March 31, 2020. Cost of revenues increased by $10,468,051, or 578% during the year ended March 31, 2020 as compared with the prior year and was attributed to the increase in the number of automobiles sold that increased from 212 to 1,176 as well as operating lease expenses in the year ended March 31, 2020.

Gross Profit

Gross profit was $3,375,337. Gross profit from Auto Business increased by $2,636,417 or 357% during the year ended March 31, 2020 as compared with the prior year mainly due to the business expansion and the increase in the number of facilitated new automobile purchases from the Auto Business.

Selling, General and Administrative Expenses

Selling, general and administrative expenses from Auto Business were $5,567,939 for the fiscal year ended March 31, 2020 as compared to $1,776,690 during the prior year, representing an increase of $3,791,249. The increase was mainly attributable to the increased salary and employee benefits, advertising and promotion, amortization of automobiles, rental and other office expenses by the expansion of the Auto Business. Meanwhile, the selling, general and administrative expenses for the discontinued online lending services decreased to $1,365,733 for the fiscal year ended March 31, 2020 from $2,242,905 for the fiscal year ended March 31, 2019.

Change in Fair Value of Derivative Liabilities

The change in fair value of derivative liabilities resulted in a gain of $1,796,724, derived from change of the fair value between March 31, 2020 and June 20, 2019 of the warrants issued in Senmiao's registered direct offering in June 2019.

Net Loss

Total net loss for the full fiscal year ended March 31, 2020 was $9,935,803 as compared to a net loss of $4,542,525 in the prior year. Net loss from Auto Business and discontinued online lending services for the full fiscal year ended March 31, 2020 was $4,348,776 and $5,587,027 as compared with a net loss of $1,155,775 and $3,386,750, respectively, during the prior year.

Loss per share

Loss per share for Auto Business was $0.11 and $0.05 and loss per share for discontinued online lending services was $0.20 and $0.13, respectively, for the full fiscal years ended March 31, 2020 and 2019.

Financial Position

As of March 31, 2020, Senmiao had cash and cash equivalents of $833,888 as compared to $3,967,980 as of March 31, 2019 for its Auto Business. Senmiao also had cash and cash equivalents of $10,139 as of March 31, 2020 as compared with $1,052,530 as of March 31, 2019 for its discontinued online lending services.

Impact of COVID-19

The COVID-19 outbreak in China adversely and materially affected Senmiao's business operations, financial condition and operating results in the quarter ended March 31, 2020, including but not limited to temporary closure of offices, decrease in revenues, slower collection of accounts receivables and additional allowance for doubtful accounts. However, as the ride-hailing markets in Chengdu and Changsha are gradually recovering from the impact of COVID-19, Senmiao expects its business to improve in the second half of 2020.

For additional related information, please see Senmiao's Annual Report on Form 10-K for the fiscal year ended March 31, 2020, 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, operating lease, 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, Senmiao's plans, objectives, goals, strategies, and performance, and the impact of COVID-19 on Senmiao's business, 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 any reoccurrence of the COVID-19 pandemic 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:
Rene Vanguestaine
Christensen
Email: [email protected]
Phone: +86 178 1749 0483

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

SENMIAO TECHNOLOGY LIMITED
CONSOLIDATED BALANCE SHEETS
As of March 31, 2020 and 2019
(Expressed in U.S. dollar, except for the number of shares)

	March 31,		March 31,
	2020		2019
ASSETS
Current Assets
Cash and cash equivalents	$	833,888	$	3,967,980
Accounts receivable, net, current portion		660,645		199,909
Inventories		1,000,675		1,508,244
Finance lease receivables, net, current portion		459,110		10,254
Prepayments, other receivables and other assets, net		2,798,780		3,787,254
Escrow receivable due within one year		-		600,000
Due from related parties		26,461		140,498
Current assets - discontinued operations		826,580		1,185,016
Total Current Assets		6,606,139		11,399,155

Property and equipment, net
Property and equipment, net		469,201		100,680
Property and equipment, net - discontinued operations		11,206		25,205
Total Property and equipment, net		480,407		125,885

Other Assets
Operating lease right-of-use assets, net		473,661		-
Operating lease right-of-use assets, net, related parties		236,305		-
Financing lease right-of-use assets, net		5,440,362		-
Intangible assets, net		777,621		1,627
Prepayment for intangible assets		-		280,000
Accounts receivable, net, noncurrent		882,078		-
Finance lease receivables, net, noncurrent portion		734,145		22,298
Other assets - discontinued operations		-		485,170
Total Other Assets		8,544,172		789,095

Total Assets	$	15,630,718	$	12,314,135

LIABILITIES AND EQUITY
Current Liabilities
Borrowings from financial institutions	$	226,753	$	219,157
Borrowings from third parties		-		476,765
Accounts payable		4,065		-
Advance from customers		90,349		31,776
Income tax payable		16,267		21,905
Accrued expenses and other liabilities		2,008,391		962,291
Due to related parties and affiliates		152,679		415,931
Operating lease liabilities		149,582		-
Operating lease liabilities - related parties		151,655		-
Financing lease liabilities		3,473,967		-
Derivative liabilities		342,530		-
Current liabilities - discontinued operations		4,516,292		1,625,779
Total Current Liabilities		11,132,530		3,753,604

Other Liabilities
Borrowings from financial institutions, noncurrent		64,221		177,789
Operating lease liabilities, noncurrent		297,167		-
Operating lease liabilities, noncurrent - related parties		88,349		-
Financing lease liabilities, noncurrent		2,576,094		-
Total Other Liabilities		3,025,831		177,789

Total liabilities		14,158,361		3,931,393

Commitments and Contingencies

Stockholders' Equity
Common stock (par value $0.0001 per share, 100,000,000 shares authorized; 29,008,818 and 25,945,255 shares issued and outstanding at March 31, 2020 and 2019, respectively)		2,901		2,595
Additional paid-in capital		27,013,137		23,833,112
Accumulated deficit		(23,704,863)		(15,031,538)
Accumulated other comprehensive loss		(507,478)		(428,771)
Total Senmiao Technology Limited Stockholders' Equity		2,803,697		8,375,398

Noncontrolling interests		(1,331,340)		7,344

Total Equity		1,472,357		8,382,742

Total Liabilities and Equity	$	15,630,718	$	12,314,135

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

	For the Years Ended March 31,
	2020		2019
Revenues	$	15,655,575	$	2,551,107
Cost of revenues		(12,280,238)		(1,812,187)
Gross profit		3,375,337		738,920

Operating expenses
Selling, general and administrative expenses		(5,567,939)		(1,776,690)
Bad debt expense		(3,404,336)		(5,077)
Total operating expenses		(8,972,275)		(1,781,767)

Loss from operations		(5,596,938)		(1,042,847)

Other income (expense)
Other expense, net		(45,347)		(57,145)
Interest expense		(96,624)		(33,878)
Interest expense on finance leases		(373,407)		-
Change in fair value of derivative liabilities		1,796,724		-
Total other income (expense), net		1,281,346		(91,023)

Loss before income taxes		(4,315,592)		(1,133,870)

Income tax expenses		(33,184)		(21,905)

Net loss from continuing operations		(4,348,776)		(1,155,775)

Net loss from discontinued operations, net of applicable income taxes		(5,587,027)		(3,386,750)

Net loss		(9,935,803)		(4,542,525)

Net loss (income) attributable to noncontrolling interests from continuing operations		1,262,478		(7,344)

Net loss attributable to stockholders	$	(8,673,325)	$	(4,549,869)

Net loss	$	(9,935,803)	$	(4,542,525)

Other comprehensive loss
Foreign currency translation adjustment		(154,913)		(175,010)

Comprehensive loss		(10,090,716)		(4,717,535)

Total comprehensive loss (income) attributable to noncontrolling interests		1,338,684		(7,344)

Total comprehensive loss attributable to stockholders	$	(8,752,032)	$	(4,724,879)

Weighted average number of common stock
Basic and diluted		28,023,498		25,882,287

Loss per share - basic and diluted
Continuing operations	$	(0.11)	$	(0.05)
Discontinued operations	$	(0.20)	$	(0.13)

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

	For the Years Ended March 31,
	2020		2019
Cash Flows from Operating Activities:
Net loss	$	(9,935,803)	$	(4,542,525)
Net loss from discontinued operations		(5,587,027)		(3,386,750)
Net loss from continuing operations		(4,348,776)		(1,155,775)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of property and equipment		103,009		12,247
Stock compensation expense		133,150		44,200
Amortization of right-of-use assets		1,553,523		-
Amortization of intangible assets		283		-
Bad debt expense		3,404,336		5,077
Impairment loss of right-of-use assets		70,984		-
Loss on disposal of equipment		3,608		-
Change in fair value of derivative liabilities		(1,796,724)		-
Change in operating assets and liabilities
Accounts receivable		(3,047,955)		(148,249)
Inventories		437,012		(1,491,928)
Prepayments, other receivables and other assets		(964,889)		(1,952,696)
Finance lease receivables		(1,185,031)		-
Accounts payable		4,144		-
Advances from customers		61,409		12,725
Income tax payable		(4,582)		21,905
Accrued expenses and other liabilities		1,138,316		99,515
Operating lease liabilities		(94,235)		-
Operating lease liabilities - related parties		2,125		-
Net cash used in operating activities from continuing operations		(4,530,293)		(4,552,979)
Net cash used in operating activities from discontinued operations		(1,917,371)		(1,703,247)
Net Cash Used in Operating Activities		(6,447,664)		(6,256,226)

Cash Flows from Investing Activities:
Purchases of property and equipment		(495,241)		(1,365)
Purchase of intangible assets		(470,000)		(280,869)
Addition in finance lease receivable		-		(32,200)
Net cash used in investing activities from continuing operations		(965,241)		(314,434)
Net cash provided by (used in) investing activities from discontinued operations		1,825		(218,191)
Net Cash Used in Investing Activities		(963,416)		(532,625)

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		-
Borrowings from financial institutions		55,159		-
Repayments to stockholders		-		(1,900,000)
Repayments to third parties		(604,562)		-
Repayments from related parties		108,566		-
Borrowings from related parties and affiliates		1,305,166		471,608
Repayments to related parties and affiliates		(1,405,356)		(487,115)
Repayments of current borrowings from financial institutions		(145,048)		-
Repayments of noncurrent borrowings from financial institutions		-		(175,581)
Release of escrow receivable		600,000		600,000
Principal payments of finance lease liabilities		(975,958)		-
Cash acquired from acquisition		-		218,816
Net cash provided by (used in) financing activities from continuing operations		4,080,202		(1,272,272)
Net cash (used in) provided by financing activities from discontinued operations		(648,405)		1,973,479
Net Cash Provided by Financing Activities		3,431,797		701,207

Effect of exchange rate changes on cash and cash equivalents		(197,200)		(33,412)

Net decrease in cash and cash equivalents		(4,176,483)		(6,121,056)
Cash and cash equivalents, beginning of year		5,020,510		11,141,566
Cash and cash equivalents, end of year		844,027		5,020,510

Less: Cash and cash equivalents from discontinued operations		(10,139)		(1,052,530)

Cash and cash equivalents from continuing operations, end period	$	833,888	$	3,967,980

Supplemental Cash Flow Information
Cash paid for interest expense	$	96,624	$	33,878
Cash paid for income tax	$	-	$	-
Non-cash Transaction in Investing and Financing Activities
IPO expenses paid by the Company's stockholders	$	-	$	70,687
Assume of net liabilities of Ruixi, excluding cash and cash equivalents	$	-	$	149,680
Prepayment in exchange of intangible assets	$	280,000	$	-
Right-of-use assets obtained in exchange of lease liabilities	$	549,679	$	-
Right-of-use assets obtained in exchange of lease liabilities - related parties	$	343,819	$	-
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	$	-
Issuance of restricted stock units from accrued expenses and other liabilities	$	44,200	$	-