UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-38426

SENMIAO TECHNOLOGY LIMITED

(Exact name of registrant as specified in its charter)

Nevada

35-2600898

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

16F, Shihao Square, Middle Jiannan Blvd.,

High-Tech Zone Chengdu,

Sichuan, People’s Republic of China

610000

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: +86 28 61554399

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:		Trading Symbol		Name of each exchange on which registered:
Common Stock, par value $0.0001 per share		AIHS		The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b 2 of the Exchange Act). Yes ☐ No ☒

As of August 12, 2024, there were 10,518,040 shares of issuer’s common stock, par value $0.0001 per share, issued and outstanding.

TABLE OF CONTENTS

Cautionary Note Regarding Forward-Looking Statements		ii

PART I – FINANCIAL INFORMATION		1

Item 1.	Unaudited Condensed Consolidated Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45

PART II – OTHER INFORMATION		46

Item 6.	Exhibits	46

SIGNATURES		47

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Report”), including, without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continues,” or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating to our ability to consummate any acquisition or other business combination and any other statements that are not statements of current or historical facts. These statements are based on management’s current expectations, but actual results may differ materially due to various factors, including, but not limited to:

●

our goals and strategies, including our ability to maintain our automobile transaction and related services business and our online ride-hailing platform services business in China;

●

our management’s ability to properly develop and achieve any future business growth and any improvements in our financial condition and results of operations;

●

the regulations and the impact by public health epidemics in China on the industries we operate in and our business, results of operations and financial condition;

●

the growth or lack of growth in China of disposable household income and the availability and cost of credit available to finance car purchases;

●

the growth or lack of growth of China’s online ride-hailing, automobile financing and leasing industries;

●

changes in online ride-hailing, transportation networks, and other fundamental changes in transportation pattern in China;

●

our expectations regarding demand for and market acceptance of our products and services;

●

our expectations regarding our customer base;

●

our ability to maintain positive relationships with our business partners;

●

competition in the online ride-hailing, automobile financing and leasing industries in China;

●

macro-economic and political conditions affecting the global economy generally and the market in China specifically; and

●

relevant Chinese government policies and regulations relating to the industries in which we operate.

You should read this Report and the documents that we refer to in this Report with the understanding that our actual future results may be materially different from and worse than what we expect. Other sections of this Report and our other reports filed with the Securities and Exchange Commission (the “SEC”) include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This Report also contains statistical data and estimates that we obtained from industry publications and reports generated by third-parties. Although we have not independently verified the data, we believe that the publications and reports are reliable. The market data contained in this Report involves a number of assumptions, estimates and limitations. The ride-hailing and automobile financing markets in China may not grow at the rates projected by market data, or at all. The failure of these markets to grow at the projected rates may have a material adverse effect on our business and the market price of our common stock. If any one or more of the assumptions underlying the market data turns out to be incorrect, actual results may differ from the projections based on these assumptions. In addition, projections, assumptions and estimates of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described herein or our other reports filed with the SEC. You should not place undue reliance on these forward-looking statements.

PART I – FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

SENMIAO TECHNOLOGY LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. dollar, except for the number of shares)

	June 30,			March 31,
	2024			2024
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	748,869		$	792,299
Restricted cash		2,588			2,337
Accounts receivable, net		20,156			34,013
Accounts receivable, a related party		1,878			—
Finance lease receivables, current		179,356			144,166
Prepayments, other receivables and other current assets, net		1,001,171			1,022,813
Due from related parties, net, current		319,679			655,532
Total current assets		2,273,697			2,651,160

Property and equipment, net		2,341,445			2,676,524

Other assets
Operating lease right-of-use assets, net		51,489			60,862
Operating lease right-of-use assets, net, a related party		37,060			47,128
Financing lease right-of-use assets, net		294,241			355,383
Intangible assets, net		548,671			590,727
Finance lease receivable, non-current		102,192			92,524
Due from a related party, net, non-current		2,922,894			2,747,313
Other non-current assets		635,733			639,863
Total other assets		4,592,280			4,533,800

Total assets	$	9,207,422		$	9,861,484

LIABILITIES, MEZZANNIE EQUITY AND EQUITY
Current liabilities
Borrowings from a financial institution, current	$	141,536		$	142,456
Accounts payable		152,784			140,532
Advances from customers		123,350			122,461
Income tax payable		19,889			20,019
Accrued expenses and other liabilities		3,803,459			3,648,407
Due to related parties		194,707			170,986
Operating lease liabilities, current		14,104			14,007
Operating lease liabilities, a related party		51,993			51,741
Financing lease liabilities, current		331,462			279,768
Derivative liabilities		297,120			288,833
Current liabilities - discontinued operations		461,005			464,000
Total current liabilities		5,591,409			5,343,210

Other liabilities
Borrowings from a financial institution, non-current		35,384			71,228
Operating lease liabilities, non-current		15,334			20,430
Financing lease liabilities, non-current		63,368			126,637
Deferred tax liability		9,413			11,611
Total other liabilities		123,499			229,906

Total liabilities		5,714,908			5,573,116

Commitments and contingencies (note 19)

Mezzanine Equity
Series A convertible preferred stock (par value $1,000 per share, 5,000 shares authorized; 991 shares issued and outstanding at June 30, 2024 and March 31, 2024, respectively)		234,364			234,364

Stockholders’ equity
Common stock (par value $0.0001 per share, 500,000,000 shares authorized; 10,518,040 shares issued and outstanding at June 30, 2024 and March 31, 2024, respectively)		1,051			1,051
Additional paid-in capital		43,950,123			43,950,123
Accumulated deficit		(42,057,688	)		(41,384,268	)
Accumulated other comprehensive loss		(1,734,325	)		(1,672,005	)
Total Senmiao Technology Limited stockholders’ equity		159,161			894,901

Non-controlling interests		3,098,989			3,159,103

Total equity		3,258,150			4,054,004

Total liabilities, mezzanine equity and equity	$	9,207,422		$	9,861,484

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

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 June 30,
	2024			2023
	(Unaudited)			(Unaudited)
Revenues
Revenues	$	1,117,157		$	2,080,966
Revenues, a related party		5,243			13,748
Total revenues		1,122,400			2,094,714

Cost of revenues
Cost of revenues		(800,238	)		(1,302,595	)
Cost of revenues, a related party		(1,627	)		(210,179	)
Total cost of revenues		(801,865	)		(1,512,774	)

Gross profit		320,535			581,940

Operating expenses
Selling, general and administrative expenses		(940,268	)		(1,243,289	)
Provision for credit losses		(173,441	)		(127,073	)
Total operating expenses		(1,113,709	)		(1,370,362	)

Loss from operations		(793,174	)		(788,422	)

Other (expense) income
Other income, net		47,656			72,149
Interest expense		(5,860	)		(525	)
Interest expense on finance leases		(5,088	)		(8,722	)
Change in fair value of derivative liabilities		(8,287	)		304,173
Total other income, net		28,421			367,075

Loss before income taxes		(764,753	)		(421,347	)

Income tax benefit		1,935			—

Net Loss		(762,818	)		(421,347	)

Net loss (income) attributable to non-controlling interests		89,398			(6,481	)

Net loss attributable to the Company’s stockholders	$	(673,420	)	$	(427,828	)

Net loss	$	(762,818	)	$	(421,347	)

Other comprehensive loss
Foreign currency translation adjustment		(33,036	)		(453,325	)

Comprehensive loss		(795,854	)		(874,672	)

less: Total comprehensive income (loss) attributable to noncontrolling interests		(60,114	)		49,293

Total comprehensive loss attributable to the Company’s stockholders	$	(735,740	)	$	(923,965	)

Weighted average number of common stock
Basic and diluted		10,518,040			7,891,392
Net loss per share - basic and diluted	$	(0.06	)	$	(0.05	)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

SENMIAO TECHNOLOGY LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three Months Ended June 30, 2024 and 2023

(Expressed in U.S. dollar, except for the number of shares)

	For the Three Months Ended June 30, 2023
										Accumulated
					Additional					other			Non-
	Common stock				paid-in		Accumulated			comprehensive			controlling		Total
	Shares		Par value		capital		deficit			loss			interest		equity
BALANCE, March 31, 2023		7,743,040	$	773	$	43,355,834	$	(37,715,294	)	$	(1,247,099	)	$	3,833,466	$	8,227,680
Net income (loss)		—		—		—		(427,828	)		—			6,481		(421,347	)
Conversion of preferred stock into common stock		250,000		25		26,914		—			—			—		26,939
Foreign currency translation adjustment		—		—		—		—			(496,137	)		42,812		(453,325	)
BALANCE, June 30, 2023 (Unaudited)		7,993,040	$	798	$	43,382,748	$	(38,143,122	)	$	(1,743,236	)	$	3,882,759	$	7,379,947

	For the Three Months Ended June 30, 2024
										Accumulated
					Additional					other			Non-
	Common stock				paid-in		Accumulated			comprehensive			controlling			Total
	Shares		Par value		capital		deficit			loss			interest			equity
BALANCE, March 31, 2024		10,518,040	$	1,051	$	43,950,123	$	(41,384,268	)	$	(1,672,005	)	$	3,159,103		$	4,054,004
Net loss		—		—		—		(673,420	)		—			(89,398	)		(762,818	)
Foreign currency translation adjustment		—		—		—		—			(62,320	)		29,284			(33,036	)
BALANCE, June 30, 2024 (Unaudited)		10,518,040	$	1,051	$	43,950,123	$	(42,057,688	)	$	(1,734,325	)	$	3,098,989		$	3,258,150

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

SENMIAO TECHNOLOGY LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S. dollar, except for the number of shares)

	For the Three Months Ended June 30,
	2024			2023
	(Unaudited)			(Unaudited)
Cash Flows from Operating Activities:
Net loss	$	(762,818	)	$	(421,347	)

Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of property and equipment		235,133			234,972
Amortization of right-of-use assets		77,873			109,620
Amortization of intangible assets		39,294			34,837
Provision for credit losses		173,441			127,073
Gain on disposal of equipment		(2,558	)		(22,665	)
Change in fair value of derivative liabilities		8,287			(304,173	)
Change in operating assets and liabilities
Accounts receivable		13,687			24,083
Accounts receivable, a related party		(1,885	)		1,476
Inventories		—			6,540
Finance lease receivables		32,499			50,441
Prepayments, other receivables and other assets		15,291			(11,895	)
Prepayment - a related party		—			(152,317	)
Accounts payable		13,210			103,147
Advances from customers		1,686			31,977
Accrued expenses and other liabilities		173,311			418,687
Due to a related party		4,517			—
Operating lease liabilities		(4,794	)		(37,238	)
Operating lease liabilities - related parties		588			11,648
Net Cash Provided by Operating Activities		16,762			204,866

Cash Flows from Investing Activities:
Purchases of property and equipment		(1,183	)		(379,658	)
Cash received from disposal of property and equipment		8,433			49,592
Net Cash Provided by (Used in) Investing Activities		7,250			(330,066	)

Cash Flows from Financing Activities:
Borrowings from a related party		20,244			—
Repayments from a related party		13,810			—
Repayments to related parties and affiliates		(43,264	)		(160,850	)
Repayments to financial institutions		(35,512	)		(5,805	)
Principal payments of finance lease liabilities		(8,985	)		(80,667	)
Net Cash Used in Financing Activities		(53,707	)		(247,322	)

Effect of exchange rate changes on cash, cash equivalents and restricted cash		(13,484	)		(63,773	)

Net decrease in cash, cash equivalents and restricted cash		(43,179	)		(436,295	)
Cash, cash equivalents and restricted cash, beginning of the period		794,636			1,610,090
Cash, cash equivalents and restricted cash, end of the period		751,457			1,173,795

Supplemental Cash Flow Information
Cash paid for interest expense	$	5,860		$	525
Cash paid for income tax	$	—		$	—

Non-cash Transaction in Investing and Financing Activities
Recognition of right-of-use assets and lease liabilities, related parties	$	—		$	356,859

The following tables provides a reconciliation of cash, cash equivalent and restricted cash reported within the unaudited condensed consolidated balance sheets that sum to the total of the same amounts shown in the unaudited condensed consolidated statements of cash flows:

	June 30,		June 30,
	2024		2023
	(Unaudited)		(Unaudited)
Cash, cash equivalent, end of the period	$	748,869	$	1,173,795
Restricted cash, end of the period		2,588		—
Total cash, cash equivalent and restricted cash shown in the unaudited condensed consolidated statements of cash flows, end of the period	$	751,457	$	1,173,795

	June 30,		June 30,
	2024		2023
	(Unaudited)		(Unaudited)
Cash, cash equivalent, beginning of the period	$	792,299	$	1,610,090
Restricted cash, beginning of the period		2,337		—
Total cash, cash equivalent and restricted cash shown in the unaudited condensed consolidated statements of cash flows, beginning of the period	$	794,636	$	1,610,090

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

SENMIAO TECHNOLOGY LIMITED

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND PRINCIPAL ACTIVITIES

Senmiao Technology Limited (the “Company”) is a U.S. holding company incorporated in the State of Nevada on June 8, 2017. The Company operates its business in two segments:

(i) automobile transaction and related services focusing on the online ride-hailing industry in the People’s Republic of China (“PRC” or “China”) through the Company’s wholly owned subsidiary, Chengdu Corenel Technology Co., Ltd., a PRC limited liability company (“Corenel”), and its majority owned subsidiaries, Chengdu Jiekai Yunli Technology Co., Ltd. (“Jiekai”), and Hunan Ruixi Financial Leasing Co., Ltd., a PRC limited liability company (“Hunan Ruixi”), and its equity investee company (an entity 35% owned by Hunan Ruixi), Sichuan Jinkailong Automobile Leasing Co., Ltd., a PRC limited liability company (“Jinkailong”).

(ii) online ride-hailing platform services through its own platform (known as Xixingtianxia) as described further below, since October 2020, through Hunan Xixingtianxia Technology Co., Ltd., a PRC limited liability company (“XXTX”), which is a wholly owned subsidiary of Sichuan Senmiao Zecheng Business Consulting Co., Ltd. (“Senmiao Consulting”), a PRC limited liability company and wholly-owned subsidiary of the Company. The Company’s ride hailing platform enables qualified ride-hailing drivers to provide transportation services in Chengdu, Changsha and other 20 cities in China as of the filing date of these unaudited condensed consolidated financial statements.

Hunan Ruixi holds a business license for automobile sales and financial leasing and has been engaged in automobile financial leasing services and automobile sales since March 2019 and January 2019, respectively. The Company also has been engaged in operating leasing services through Hunan Ruixi, Jiekai and its equity investee company, Jinkailong since March 2019. Jinkailong used to facilitate automobile sales and financing transactions for its clients, who are primarily ride-hailing drivers and provides them operating lease and relevant after-transaction services.

As of the filing date of these unaudited condensed consolidated financial statements, Senmiao Consulting has made a cumulative capital contribution of RMB40.30 million (approximately $5.55 million) to XXTX. As of June 30, 2024, XXTX had seven wholly owned subsidiaries and two of them have operations.

The following diagram illustrates the Company’s corporate structure as of the filing date of these unaudited condensed consolidated financial statements:

Former Voting Agreements with Jinkailong’s Other Shareholders

Hunan Ruixi entered into two voting agreements signed in August 2018 and February 2020, respectively, as amended (the “Voting Agreements”), with Jinkailong and other Jinkailong’s shareholders holding an aggregate of 65% equity interests. Pursuant to the Voting Agreements, all other Jinkailong’s shareholders will vote in concert with Hunan Ruixi on all fundamental corporate transactions in the event of a disagreement for periods of 20 years and 18 years, respectively, ending on August 25, 2038.

SENMIAO TECHNOLOGY LIMITED

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On March 31, 2022, Hunan Ruixi entered into an Agreement for the Termination of the Agreement for Concerted Action by Shareholders of Jinkailong (the “Termination Agreement”), pursuant to which the Voting Agreements mentioned above was terminated as of the date of the Termination Agreement. The termination will not impair the past and future legitimate rights and interests of all parties in Jinkailong. Starting from April 1, 2022, the parties no longer maintain a concerted action relationship with respect to the decision required to take concerted action at its shareholders meetings as stipulated in the Voting Agreements. Each party shall independently express opinions and exercise various rights such as voting rights and perform relevant obligations in accordance with the provisions of laws, regulations, normative documents and the Jinkailong’s articles of association.

As a result of the Termination Agreement, the Company no longer has a controlling financial interest in Jinkailong and has determined that Jinkailong was deconsolidated from the Company’s Unaudited condensed consolidated financial statements effective as of March 31, 2022. However, as Hunan Ruixi still holds 35% equity interests in Jinkailong, Jinkailong is the equity investee company of the Company since then. As of June 30, 2024 and March 31, 2024, the paid-in capital of Jinkailong is zero.

As of June 30, 2024, the Company has outstanding balance due from Jinkailong amounted to $3,088,018, net of allowance for credit losses, of which, $2,922,894 is to be repaid over a period from July 2025 to December 2026, classified as due from a related party, net, non-current. As of March 31, 2024, the Company has outstanding balance due from Jinkailong amounted to $3,245,907, net of allowance for credit losses, of which, $2,747,313 is to be repaid over a period from April 2025 to December 2026, classified as due from a related party, net, non-current. (refer to Note 17).

As of June 30, 2024 and March 31, 2024, allowance for credit losses due from Jinkailong amounted to $3,252,513 and $3,099,701, respectively. During the three months ended June 30, 2024 and 2023, the Company recorded provision for credit losses against the balance due from Jinkailong of $173,441 and $127,073, respectively.

2. GOING CONCERN

In assessing the Company’s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. Debt financing from financial institutions and equity financings have been utilized to finance the working capital requirements of the Company.

The Company’s business is capital intensive. The Company’s management has considered whether there is substantial doubt about its ability to continue as a going concern due to (1) the net loss of approximately $0.8 million for the three months ended June 30, 2024; (2) accumulated deficit of approximately $42.1 million as of June 30, 2024; (3) the working capital deficit of approximately $3.3 million as of June 30, 2024; and (4) one purchase commitment of approximately $0.9 million for 100 automobiles. As of the filing date of these unaudited condensed consolidated financial statements, the Company has entered into one purchase contract with an automobile dealer to purchase a total of 100 automobiles in the amount of approximately $1.5 million, of which approximately $0.6 million has been remitted as purchase prepayments. The remaining purchase commitment of approximately $0.9 million shall be remitted in installment to be completed before March 31, 2025.

Management has determined there is substantial doubt about its ability to continue as a going concern. If the Company is unable to generate significant revenue, the Company may be required to curtail or cease its operations. Management is trying to alleviate the going concern risk through the following sources:

●

Equity financing to support its working capital;

●

Other available sources of financing (including debt) from PRC banks and other financial institutions; and

●

Financial support and credit guarantee commitments from the Company’s related parties.

SENMIAO TECHNOLOGY LIMITED

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

There is no assurance that the Company will be successful in implementing the foregoing plans or that additional financing will be available to the Company on commercially reasonable terms, or at all. There are a number of factors that could potentially arise that could undermine the Company’s plans, such as (i) changes in the demand for the Company’s services, (ii) PRC government policies, (iii) economic conditions in China and worldwide, (iv) competitive pricing in the automobile transaction and related service and ride-hailing industries, (v) changes in the Company’s relationships with key business partners, (vi) the ability of financial institutions in China to provide continued financial support to the Company’s customers, and (vii) the perception of PRC-based companies in the U.S. capital markets. The Company’s inability to secure needed financing when required could require material changes to the Company’s business plans and could have a material adverse effect on the Company’s ability to continue as a going concern and results of operations. The unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of such uncertainties.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of presentation

The unaudited condensed consolidated financial statements, including the unaudited condensed consolidated balance sheets as of June 30, 2024, the unaudited condensed consolidated statements of operations and comprehensive loss, the unaudited condensed consolidated statements of changes in equity, and the unaudited condensed consolidated statements of cash flows for the three months ended June 30, 2024 and 2023, as well as other information disclosed in the accompanying notes, have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and pursuant to the rules and regulations of the SEC and pursuant to Regulation S-X. The interim unaudited condensed financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto, included in the Form 10-K for the fiscal year ended March 31, 2024, which was filed with the SEC on June 27, 2024.

The unaudited condensed consolidated financial statements and the accompanying notes have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The consolidated results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future years or interim periods.

(b) Foreign currency translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing on the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates on the date of the balance sheet. The resulting exchange differences are recorded in the statement of operations.

The reporting currency of the Company and its subsidiaries is U.S. dollars (“US$”) and the unaudited condensed consolidated financial statements have been expressed in US$. However, the Company maintains the books and records in its functional currency, Chinese Renminbi (“RMB”), being the functional currency of the economic environment in which its operations are conducted.

In general, for consolidation purposes, assets and liabilities of the Company and its subsidiaries whose functional currency is not the US$, are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of the Company and its subsidiaries are recorded as a separate component of accumulated other comprehensive loss within the unaudited condensed consolidated statements of changes in stockholders’ equity.

Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective periods:

	June 30,		March 31,
	2024		2024
Balance sheet items, except for equity accounts – RMB: US$1:		7.2672		7.2203

	For the three months ended June 30,
	2024		2023
Items in the statements of operations and comprehensive loss, and cash flows – RMB: US$1:		7.2410		7.0130

SENMIAO TECHNOLOGY LIMITED

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(c) Use of estimates

In presenting the unaudited condensed consolidated financial statements in accordance with U.S. GAAP, management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. The Company bases its estimates on past experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, residual values of property and equipment, lease liabilities, right-of-use assets, determinations of the useful lives and valuation of long-lived assets, estimates of allowances for credit losses for receivables and due from related parties, estimates of impairment of long-lived assets, valuation of deferred tax assets and valuation of derivative liabilities.

(d) Fair values of financial instruments

Accounting Standards Codification (“ASC”) Topic 825, Financial Instruments (“Topic 825”) requires disclosure of fair value information of financial instruments, whether or not recognized in the balance sheets, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Topic 825 excludes certain financial instruments and all nonfinancial assets and liabilities from its disclosure requirements. Accordingly, the aggregate fair value amounts do not represent the underlying value of the Company. The three levels of valuation hierarchy are defined as follows:

Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value.

The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2024 and March 31, 2024:

	Carrying Value as of		Fair Value Measurement as of
	June 30,		June 30, 2024
	2024		Level 1		Level 2		Level 3
	(Unaudited)
Derivative liabilities	$	297,120	$	—	$	—	$	297,120

	Carrying Value as of		Fair Value Measurement as of
	March 31,		March 31, 2024
	2024		Level 1		Level 2		Level 3

Derivative liabilities	$	288,833	$	—	$	—	$	288,833

SENMIAO TECHNOLOGY LIMITED

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following is a reconciliation of the beginning and ending balance of the assets and liabilities measured at fair value on a recurring basis for three months ended June 30, 2024 and for the year ended March 31, 2024:

2019
Registered Direct
Offering

August
2020
Underwritten
Public

February
2021
Registered
Direct

May 2021
Registered Direct
Offering

November 2021
Private Placement

Series A
Warrants

Placement
Warrants

SEC Form 10-Q filed by Senmiao Technology Limited