Senmiao Technology Reports Fiscal 2021 Second Quarter Financial Results

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Nov 20, 2020, 09:00 ET

CHENGDU, China, Nov. 20, 2020 /PRNewswire/ -- Senmiao Technology Limited ("Senmiao") (Nasdaq: AIHS), a provider of automobile transaction and related services targeting the online ride-hailing industry in China as well as its own online ride-hailing platform, today announced financial results for the fiscal 2021 second quarter ended September 30, 2020.

Xi Wen, Chairman, Chief Executive Officer and President of Senmiao, "We were pleased that the proactive measures taken by our team in the early stages of the COVID-19 pandemic began to gain traction as we progressed through the third quarter. While the negative year-over-year impact on our operations is apparent, we saw considerable improvement in demand for our services during the second quarter and into the current fiscal third quarter. We transitioned many of the vehicles tendered to us by ride-hailing drivers who exited the business in the first quarter into rental vehicles during the past few months, which became a source of revenue as sales options diminished in the first half of the year. We are now starting to see the market recover, and believe we can offer excellent optionality to drivers through sales, leasing, and rental selections."

Mr. Wen continued, "Our goal has been to become a total solution provider for ride-sharing drivers, beginning in our two core markets, Chengdu and Changsha. In recent weeks, we have strengthened this value proposition through cooperation with BYD to offer electric vehicles with financing and leasing options to drivers in our core markets; and a collaboration with Luxingtong for the provision of a wide array of telematics and safety solutions for our drivers. In addition, we recently launched our own ride-hailing platform in Chengdu and have seen the number of riders utilizing the service accelerating daily as we build greater brand recognition."

Mr. Wen concluded, "The impact of COVID-19 on our business model was stark and rapid. We were forced into situations where we needed to ensure the strength of our balance sheet and be adaptable to a new and changing paradigm in the Chinese ride-sharing market. While undertaking these changes was difficult in the short-term, we are now starting to see the benefits of the hard decisions we made. Our focus in the near term will be to improve our online ride-hailing platform with further enhancements for both drivers and riders, while seeking partnerships that can strengthen our value proposition for new drivers. Ultimately, we believe that our efforts will continue to position Senmiao well in Chengdu and Changsha, and position us for potential growth in new markets next year."

Revenues

Total revenues were $1,390,396 for the quarter ended September 30, 2020, compared to $5,885,287 in the same period last year and $1,146,916 for the quarter ended June 30, 2020. The decline from the prior year was largely due to the impact of COVID-19 which resulted in a significant decrease in the number of facilitated new automobile purchases and a significant number of ride-hailing drivers exiting the ride-hailing business and tendering their vehicles to Senmiao for sublease and sale.

As the ride-hailing markets in Chengdu and Changsha gradually recovered from the impact of COVID-19 beginning in April 2020, Senmiao also experienced a decrease in the number of automobiles tendered to it by the ride-hailing drivers exiting the business during the quarter ended September 30, 2020 as compared with prior quarters.

Senmiao also reported an increase in the monthly installments collected from automobile sale and leasing customers in the three months ended September 30, 2020, as compared with the three months ended June 30, 2020. Earlier in 2020, a higher number of ride-hailing drivers delayed their monthly installment payments as a result of the COVID-19 pandemic. However, the Company has seen a gradual improvement in collections throughout the year.

Senmiao strategically shifted its business focus to include automobile rental options for ride-hailing drivers as a measure of creating additional revenue. The automobile rental business generated an income of $787,955 for the quarter ended September 30, 2020.

As a result of the gradual recovery of the ride-hailing industry, coupled with Senmiao's recent partnerships and proactive measures to address the changing market conditions, Senmiao expects revenue to increase in the third and fourth quarters of its fiscal year 2021.

Cost of Revenues

Cost of revenues were $994,515 for the quarter ended September 30, 2020, as compared with $4,709,184 during the same period last year. The decline was primarily due to the decrease in the number of automobiles sold.

Gross Profit

Gross profit was $395,881, or approximately 28.5% gross margin, for the quarter ended September 30, 2020, compared to $1,176,103, or approximately 20.0% gross margin, in the prior year period.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $2,749,209 for the quarter ended September 30, 2020 as compared with $1,137,801 during the same period last year. The increase mainly consists of an increase of $560,274 in amortization of automobiles which were tendered to Senmiao but have not been sub-leased or sold, an increase of $336,158 in salary and employee benefits as Senmiao's employees increased from 158 to 203, an increase of $599,170 in professional service fees such as financial, legal and market consulting, and an increase of $115,806 in advertising and promotion, rental and other office expenses.

Net Loss

Net loss from Senmiao's continuing operations for the quarter ended September 30, 2020 was $2,607,165, compared to net income of $1,862,365 for the quarter ended September 30, 2019, , which mainly resulted from the decrease in revenue, decrease in gross profit and increase in selling, general and administrative expenses as stated in prior section as well as gain in the change of the fair values of derivative liabilities recorded for the three months ended September 30, 2020.

Loss per Share

Loss per share for continuing operations was $0.06 based on a weighted average number of basic and diluted common stock of 37,802,840, as compared to earnings per share of $0.06 based on a weighted average number of basic and diluted common stock of 28,237,430.

Financial Position

As of September 30, 2020, Senmiao had cash and cash equivalents of $4,394,019 as compared with $833,888 as of March 31, 2020 for its continuing operations. Total stockholders' equity was $2,782,424 as of September 30, 2020, compared to $1,472,357 as of March 31, 2020.

Impact of COVID-19

The COVID-19 outbreak continued to materially adversely affect Senmiao's business operations, financial condition and operating results in the quarter ended September 30, 2020, including but not limited to, decrease in revenues, slower collection of accounts receivable 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 during the remainder of its current fiscal year ending March 31, 2021.

Further information regarding Senmiao's results of operations for the quarter ended September 30, 2020 can be found in Senmiao's Quarterly Report on Form 10-Q which will be filed with the Securities and Exchange Commission.

About Senmiao Technology Limited

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. Senmiao also operates Xixingtianxia, its own proprietary online ride-hailing platform. 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. These forward-looking statements (including statements concerning the development of Senmiao's automobile transaction, financing, rental and related services and online ride-hailing platform, 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 are subject to significant risks, uncertainties and assumptions, including those detailed from time to time in the Senmiao's filings with the SEC, and represent Senmiao's views only as of the date they are made and should not be relied upon as representing Senmiao's views as of any subsequent date. 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:
The Equity Group Inc.	In China
Adam Prior, Senior Vice President	Lucy Ma, Associate
(212) 836-9606	+86 10 5661 7012
[email protected]	[email protected]

SENMIAO TECHNOLOGY LIMITED

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

	September 30,		March 31,
	2020		2020
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	4,394,019	$	833,888
Accounts receivable, net, current portion		867,576		660,645
Inventories		812,748		1,000,675
Finance lease receivables, net, current portion		510,044		459,110
Prepayments, other receivables and other assets, net		2,834,601		2,798,780
Due from related parties		96,075		26,461
Current assets - discontinued operations		588,068		826,580
Total current assets		10,103,131		6,606,139

Property and equipment, net
Property and equipment, net		721,723		469,201
Property and equipment, net - discontinued operations		7,412		11,206
Total property and equipment, net		729,135		480,407

Other assets
Operating lease right-of-use assets, net		418,355		473,661
Operating lease right-of-use assets, net, related parties		378,166		236,305
Financing lease right-of-use assets, net		6,304,657		5,440,362
Intangible assets, net		737,008		777,621
Accounts receivable, net, non-current		598,675		882,078
Finance lease receivables, net, non-current		728,995		734,145
Total other assets		9,165,856		8,544,172

Total assets	$	19,998,122	$	15,630,718

LIABILITIES AND EQUITY
Current liabilities
Borrowings from financial institutions	$	594,974	$	226,753
Accounts payable		1,045		4,065
Advances from customers		106,459		90,349
Income tax payable		17,461		16,267
Accrued expenses and other liabilities		3,604,738		2,008,391
Due to related parties and affiliates		299,366		152,679
Operating lease liabilities		169,174		149,582
Operating lease liabilities - related parties		162,215		151,655
Financing lease liabilities		4,715,471		3,473,967
Derivative liabilities		940,728		342,530
Current liabilities - discontinued operations		3,077,506		4,516,292
Total current liabilities		13,689,137		11,132,530

Other liabilities
Borrowings from financial institutions, noncurrent		62,420		64,221
Operating lease liabilities, non-current		197,343		297,167
Operating lease liabilities, non-current - related parties		207,786		88,349
Financing lease liabilities, non-current		3,059,012		2,576,094
Total other liabilities		3,526,561		3,025,831

Total liabilities		17,215,698		14,158,361

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

	September 30,		March 31,
	2020		2020
	(Unaudited)

Commitments and contingencies

Stockholders' equity
Common stock (par value $0.0001 per share, 100,000,000 shares authorized; 43,358,818 and 29,008,818 shares issued and outstanding at September 30 and March 31, 2020, respectively)		4,336		2,901
Additional paid-in capital		33,444,742		27,013,137
Accumulated deficit		(27,866,092)		(23,704,863)
Accumulated other comprehensive loss		(682,398)		(507,478)
Total Senmiao Technology Limited stockholders' equity		4,900,588		2,803,697

Non-controlling interests		(2,118,164)		(1,331,340)

Total equity		2,782,424		1,472,357

Total liabilities and equity	$	19,998,122	$	15,630,718

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

	For the Three Months Ended September 30,				For the Six Months Ended September 30,
		2020		2019		2020		2019
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Revenues	$	1,390,396	$	5,885,287	$	2,537,312	$	10,897,850
Cost of revenues		(994,515)		(4,709,184)		(1,794,771)		(8,731,496)
Gross profit		395,881		1,176,103		742,541		2,166,354

Operating expenses
Selling, general and administrative expenses		(2,749,209)		(1,137,801)		(4,709,634)		(2,013,234)
Bad debts expenses (recovery)		47,540		(115,476)		(81,072)		(128,214)
Impairments of financing lease right-of-use		(80,223)		-		(80,223)		-
assets
Total operating expenses		(2,781,892)		(1,253,277)		(4,870,929)		(2,141,448)

Income (loss) from operations		(2,386,011)		(77,174)		(4,128,388)		24,906

Other income (expense)
Other income (expense), net		135,457		(28,900)		129,381		(15,733)
Interest expense		(14,892)		(25,306)		(35,540)		(62,345)
Interest expense on finance leases		(211,053)		-		(437,230)		-
Change in fair value of derivative liabilities		(129,961)		1,998,202		(412,941)		1,994,806
Total other income (expense), net		(220,449)		1,943,996		(756,330)		1,916,728

Income (loss) before income taxes		(2,606,460)		1,866,822		(4,884,718)		1,941,634

Income tax expense		(705)		(4,457)		(6,977)		(105,598)

Net income (loss) from continuing operations		(2,607,165)		1,862,365		(4,891,695)		1,836,036

Net income (loss) from discontinued operations, net of applicable income taxes		7,875		(721,007)		(77,779)		(1,200,110)

Net income (loss)		(2,599,290)		1,141,358		(4,969,474)		635,926

Net (income) loss attributable to non-controlling interests from continuing operations		418,546		(51,105)		808,245		(124,033)

Net income (loss) attributable to stockholders	$	(2,180,744)	$	1,090,253	$	(4,161,229)	$	511,893

Net income (loss)	$	(2,599,290)	$	1,141,358	$	(4,969,474)	$	635,926

Other comprehensive loss
Foreign currency translation adjustment		(165,216)		(374,191)		(153,499)		(460,414)

Comprehensive income (loss)		(2,764,506)		767,167		(5,122,973)		175,512

Total comprehensive loss attributable to noncontrolling interests		(399,438)		(46,200)		(786,824)		(1,548)

Total comprehensive income (loss) attributable to stockholders	$	(2,365,068)	$	813,367	$	(4,336,149)	$	177,060

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

	For the Three Months Ended September 30,					For the Six Months Ended September 30,
	2020		2019			2020		2019
	(Unaudited)		(Unaudited)			(Unaudited)		(Unaudited)
Weighted average number of common stock
Basic and diluted		37,802,840		28,237,430		33,429,856		27,185,205

Earnings (loss) per share - basic and diluted
Continuing operations	$	(0.06)	$	0.06	$	(0.12)	$	0.06
Discontinued operations	$	0.00	$	(0.03)	$	0.00	$	(0.04)

SENMIAO TECHNOLOGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollar, except for the number of shares)
	For the Six Months Ended September 30,
	2020		2019
	(Unaudited)		(Unaudited)
Cash Flows from Operating Activities:
Net income (loss)	$	(4,969,474)	$	635,926
Net loss from discontinued operations		(77,779)		(1,200,110)
Net (loss) income from continuing operations		(4,891,695)		1,836,036
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization of property and equipment		106,608		50,396
Stock compensation expense		445,000		-
Amortization of right-of-use assets		2,123,901		40,730
Amortization of intangible assets		41,670		98
Bad debts expense		81,072		129,230
Impairment loss of financing lease right-of-use assets		80,223		-
Gain (loss) on disposal of equipment		(412)		4,621
Change in fair value of derivative liabilities		412,941		(1,994,806)
Change in operating assets and liabilities
Accounts receivable		124,198		(2,580,766)
Inventories		278,161		(804,853)
Prepayments, other receivables and other assets		(248,889)		(1,280,566)
Finance lease receivables		(46,913)		(1,109,277)
Accounts payable		(3,097)		167,472
Advances from customers		11,864		60,385
Income tax payable		480		87,469
Accrued expenses and other liabilities		1,355,339		351,653
Operating lease liabilities		(96,436)		(74,875)
Operating lease liabilities - related parties		61,575		-
Net cash used in operating activities from continuing operations		(164,410)		(5,117,053)
Net cash used in operating activities from discontinued operations		(1,131,564)		(947,351)
Net Cash used in Operating Activities		(1,295,974)		(6,064,404)

Cash Flows from Investing Activities:
Purchases of property and equipment		(19,572)		(384,695)
Prepayment of intangible assets		-		(470,000)
Net cash used in investing activities from continuing operations		(19,572)		(854,695)
Net cash used in investing activities from discontinued operations		(71)		-
Net Cash Used in Investing Activities		(19,643)		(854,695)

Cash Flows from Financing Activities:
Net proceeds from issuance of common stock and warrants in a registered direct offering		-		5,142,124
Net proceeds from issuance of common stock and warrants in an underwritten public offering		6,098,297		-
Net proceeds from issuance of common stock upon exercise of warrants		75,000		96
Borrowings from an insurance company		488,932		-
Repayments to stockholders		(28,569)		-
Repayments to third parties		-		(462,370)
Loan to related party		(66,427)		-
Borrowings from related parties and affiliates		-		1,121,435
Repayments to related parties and affiliates		(205,900)		(838,949)
Repayments of current borrowings from financial institutions		(150,999)		(97,306)
Release of escrow receivable		-		600,000
Principal payments of finance lease liabilities		(1,449,554)		-
Net cash provided by financing activities from continuing operations		4,760,780		5,465,030
Net cash provided by (used in) financing activities from discontinued operations		28,569		(814,033)
Net Cash Provided by Financing Activities		4,789,349		4,650,997

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

	For the Six Months Ended September 30,
	2020		2019
	(Unaudited)		(Unaudited)

Effect of exchange rate changes on cash and cash equivalents		76,259		(213,741)

Net (decrease) increase in cash and cash equivalents		3,549,991		(2,481,843)
Cash and cash equivalents, beginning of period		844,028		5,020,510
Cash and cash equivalents, end of period		4,394,019		2,538,667

Less: Cash and cash equivalents from discontinued operations		-		(293,766)

Cash and cash equivalents from continuing operations, end of period	$	4,394,019	$	2,244,901

Supplemental Cash Flow Information
Cash paid for interest expense	$	35,540	$	62,345
Cash paid for income tax	$	-	$	-
Non-cash Transaction in Investing and Financing Activities
Prepayment in exchange of intangible assets	$	-	$	40,457
Recognition of right-of-use assets and lease liabilities	$	2,976,966	$	960,908
Acquisition of equipment through prepayment and financing lease	$	312,864	$	-
Allocation of fair value of derivative liabilities for issuance of common stock proceeds	$	241,919	$	3,150,006
Allocation of fair value of derivative liabilities to additional paid in capital upon warrants exercised	$	56,662	$	961,631
Stock issued on deferred stock compensation	$	445,000	$	-