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We are a provider of automobile transaction and related services, connecting auto dealers, financial institutions, and consumers, who are mostly existing and prospective ride-hailing drivers affiliated with different operators of online ride-hailing platforms in the People’s Republic of China (“PRC” or “China”).
−Removed: We provide automobile transaction and related services through our wholly owned subsidiaries, Yicheng Financial Leasing Co., Ltd., a PRC limited liability company (“Yicheng”), Chengdu Corenel Technology Limited, a PRC limited liability company (“Corenel”), and Hunan Ruixi Financial Leasing Co., Ltd.
−Removed: (“Hunan Ruixi”), a PRC limited liability company, and its equity-investment, also its former variable interest entity (“VIE”), Sichuan Jinkailong Automobile Leasing Co., Ltd.
+Added: We provide automobile transaction and related services through our wholly owned subsidiaries, Yicheng Financial Leasing Co., Ltd., a PRC limited liability company (“Yicheng”), Chengdu Corenel Technology Limited, a PRC limited liability company (“Corenel”), and our majority owned subsidiaries, Chengdu Jiekai Technology Ltd.
+Added: (“Jiekai”), and Hunan Ruixi Financial Leasing Co., Ltd.
+Added: (“Hunan Ruixi”), a PRC limited liability company, and equity investee company, Sichuan Jinkailong Automobile Leasing Co., Ltd.
(“Jinkailong”).
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Our Automobile Transaction And Related Services are mainly comprised of (i) automobile operating lease where we provide car rental services to individual customers to meet their personal needs with lease term no more than twelve months (the “Auto Operating Leasing”);
−Removed: (ii) automobile financing where we provide our customers with auto finance solutions through financing leases (the “Auto Financing”);
+Added: (ii) service fees from new energy vehicles (“NEVs”) leasing, automobile purchase and management services where we charge NEVs lessees or automobile purchasers for a series of the services provided to them throughout the leasing or purchase process based on the chosen product solutions, such as ride-hailing driver training, assisting with a series of administrative procedures and other consulting services (the “Purchase and NEVs Services”);
(iii) automobile sales where we sell new purchased or used cars to our customers (the “Auto Sales”);
−Removed: (iv) facilitation of automobile transaction and financing where we used to connect the prospective ride-hailing drivers to financial institutions to buy, or get financing on the purchase of, cars to be used to provide online ride-hailing services (the “Auto Financing and Transaction Facilitation”);
−Removed: and (v) other supporting services provided to online ride-hailing drivers.
+Added: (iv) automobile financing where we provide our customers with auto finance solutions through financing leases (the “Auto Financing”);
+Added: (v) auto management and guarantee services provided to online ride-hailing drivers after the delivery of automobiles (the “Auto Management and Guarantee Services”);
+Added: and (vi) other supporting services provided to online ride-hailing
We started our facilitation and supporting services in November 2018, the sale of automobiles in January 2019, and financial and operating leasing in March 2019, respectively.
−Removed: Since November 22, 2018, the acquisition date of Hunan Ruixi, and as of March 31, 2022, we have facilitated financing for an aggregate of 1,687 automobiles with a total value of approximately $26.1 million, sold an aggregate of 1,423 automobiles with a total value of approximately $13.8 million and delivered approximately 2,321 automobiles under operating leases (including 1,826 automobiles delivered by Jinkailong) and 131 automobiles under financing leases to customers, the vast majority of whom are online ride-hailing drivers.
+Added: Since November 22, 2018, the acquisition date of Hunan Ruixi, and as of March 31, 2023, we and our former VIEs have facilitated financing for an aggregate of 1,687 automobiles with a total value of approximately $24.4 million, sold an aggregate of 1,466 automobiles with a total value of approximately $14.1 million and delivered approximately 2,936 automobiles under operating leases (including 1,826 automobiles used to be delivered by Jinkailong before March 31, 2022) and 144 automobiles under financing leases to customers, the vast majority of whom are online ride-hailing drivers.
The table below provides a breakdown of the number of vehicles sold or delivered under different leasing arrangements or managed/guaranteed by us and corresponding revenue generated for the years ended March 31, 2023 and 2022:
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Auto Financing
−Removed: Auto Financing and Transaction Facilitation
Other Services
−Removed: * The number included operation information of our former VIE and was rounded to the nearest thousand for disclosure purpose.
−Removed: As of March 31, 2022, we deconsolidated Jinkailong and its operation result was separately disclosed in our consolidated statements of operations and comprehensive loss.
−Removed: However, although Jinkailong was ceased from our consolidation scope since March 31, 2022, Huana Ruixi, Corenel and Jiekai continuously provide automobile transaction and related services, mainly Auto Operating Leasing, similar to Jinkailong in Changsha and Chengdu.
−Removed: During the year ended March 31, 2022, our Auto Operating Leasing, Auto Financing, automobile management services, and Auto Sales accounted for approximately 76.6%, 4.5%, 3.3% and 1.2% of our total revenue from our automobile transactions and related services, respectively, for the year ended March 31, 2022, while our Auto Sales, Auto Operating Leasing, Auto Financing and Transaction Facilitation, Auto Financing and automobile management services accounted for approximately 38.0%, 17.5%, 14.7%, 14.3% and 6.2% for the year ended March 31, 2021, respectively, excluding the income which Jinkailong generated.
+Added: * The number excluded operation information of our former VIEs and was rounded to the nearest thousand for disclosure purpose.
+Added: As of March 31, 2022, we deconsolidated Jinkailong and its operation result was not included in our consolidated statements of operations and comprehensive income (loss) during the year ended March 31, 2023.
+Added: However, although Jinkailong ceased to be within our consolidation scope since March 31, 2022, Hunan Ruixi, Corenel and Jiekai continuously provide automobile transaction and related services, mainly Auto Operating Leasing, similar to Jinkailong in Changsha and Chengdu.
+Added: During the year ended March 31, 2023, our Auto Operating Leasing, Auto Sales, Auto Financing and other services income accounted for approximately 79.0%, 5.6%, 1.0% and 14.4% of our total revenue from our automobile transactions and related services, respectively, while our Auto Operating Leasing, Auto Sales, Auto Financing and other services income accounted for approximately 76.6%, 1.2%, 4.5% and 17.7% for the year ended March 31, 2022, respectively, excluding the income which Jinkailong generated.
Our Ride-Hailing Platform S ervices
As part of our goal to provide an all-round solution for online ride-hailing drivers as well as to increase our competitive power in an increasingly competitive online ride-hailing industry and to take advantage of the market potential, in October 2020, we began operating our own online ride-hailing platform in Chengdu.
−Removed: The platform (called Xixingtianxia) was owned and operated by XXTX, of which Senmiao Consulting acquired a 78.74% equity interest pursuant to a supplementary agreement to XXTX Investment Agreement with all the original shareholders of XXTX on February 5, 2021 (the “XXTX Increase Investment Agreement”).
−Removed: Pursuant to the XXTX Increase Investment Agreement, Senmiao Consulting agreed to make an investment of RMB40 million (approximately $6 million) in XXTX in cash in exchange for a 78.74% equity interest in XXTX.
−Removed: The registration procedures for the change in shareholders and registered capital of XXTX were completed on March 19, 2021.
−Removed: After the transaction, the total registered capital of XXTX increased to RMB50.8 million (approximately $7.8 million).
−Removed: On October 22, 2021, Senmiao Consulting further entered into a Share Swap Agreement (the “Share Swap Agreement”), pursuant to which the Senmiao Consulting shall acquire all of the remaining equity interests the original shareholders hold in XXTX at a total purchase price of $3.5 million, payable in the Company’s shares of common stock, par value $0.0001 per share (the “Common Stock”) at a per share price of the average closing price of a share of Common Stock reported on the Nasdaq Capital Market for ten (10) trading days immediately preceding the date of the Share Swap Agreement.
−Removed: On November 9, 2021, the issuance of 5,331,667 shares of the Company’s common stock for this transaction has been completed and on December 31, 2021, the registration procedures for the change in shareholders and thee record-filing of the local PRC government have been completed.
−Removed: Upon the completion of the transaction, Senmiao Consulting holds 100% equity interest in XXTX.
−Removed: As of the date of this Report, Senmiao Consulting has made capital contribution of RMB36.86 million (approximately $5.81 million) to XXTX and the remaining amount is expected to be paid before December 31, 2025.
+Added: The platform (called Xixingtianxia) was owned and operated by XXTX, of which Senmiao Consulting acquired the 100% equity interest pursuant to a series of investment and supplementary agreements.
+Added: As of the date of this Report, Senmiao Consulting has made accumulated capital contribution of RMB39.76 million (approximately $5.79 million) to XXTX and the remaining amount is expected to be paid before December 31, 2025.
XXTX operates Xixingtianxia and holds a national online reservation taxi operating license.
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Under our collaboration, when a rider uses the platform to search for taxi/ride-hailing services on the aggregation platform, the platform provides such rider a number of online ride-hailing platforms for selection, including ours and if our platform is selected by the rider, the order will then be distributed to registered drivers on our platform for viewing and acceptance.
−Removed: rider may also simultaneously select multiple online ride-hailing platforms in which case, the aggregation platform will distribute the requests to different online ride-hailing platforms which they cooperate with, based on the number of available drivers using the platform in a certain area and these drivers’ historical performance, among other things.
+Added: The rider may also simultaneously select multiple online ride-hailing platforms in which case, the aggregation platform will distribute the requests to different online ride-hailing platforms which they cooperate with, based on the number of available drivers using the platform in a certain area and these drivers’ historical performance, among other things.
XXTX generates revenue from providing services to online ride-hailing drivers to assist them in providing transportation services to the riders looking for taxi/ride-hailing services.
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Meanwhile, in order to strengthen our market position in certain cities, our collaboration model with Meituan has been changed from the one same as Gaode, to the one focusing on automobile operating lease and drivers’ management services since August 2021.
−Removed: Since early August 2021, our equity investee company and former VIE, Jinkailong, signed a new contract with an affiliate of Meituan, whereby the online ride-hailing requests and orders shall be completed on Meituan’s platform utilizing our network of cars and drivers.
−Removed: Jinkailong earned rental income from drivers and earned commissions from Meituan.
+Added: During the year ended March 31, 2023, our subsidiary, Jiekai, and equity investee company and former VIE, Jinkailong, signed cooperation contracts with other online ride-hailing platforms (“Partner Platforms”), such as Chengdu Anma Zhixing Technology Co., Ltd.
+Added: and Hangzhou Xiehua Network Technology Co., Ltd., whereby the online ride-hailing requests and orders shall be completed on Partner Platforms utilizing the network of cars and drivers of us and Jinkailong.
+Added: Jiekai and Jinkailong earned rental income from drivers and earned commissions from Partner Platforms.
The acquisition of XXTX has brought us a new stream of revenue and enhanced our goal of providing an all-round solution for online ride-hailing drivers.
We launched Xixingtianxia in specific markets within Chengdu in late October 2020, focusing on current driver customers.
−Removed: During the year ended March 31, 2022, we have expanded marketing of our ride-hailing platform to a larger pool of potential drivers and riders in Chengdu, Changsha, Guangzhou and other 16 cities through cooperation with certain local car rental companies and through offering attractive incentives and awards to drivers.
−Removed: During the year ended March 31, 2022, approximately 11.5 million rides with gross fare of approximately $37.3 million were completed through Xixingtianxia and an average of over 9,500 ride-hailing drivers completed rides and earned income through Xixingtianxia (the “Active Drivers”) each month.
−Removed: During the year ended March 31, 2022, we earned online ride-hailing platform service fees of approximately $2.7 million, netting off approximately $3.4 million incentives paid to Active Drivers.
−Removed: During the period from the acquisition date to March 31, 2021, approximately 4.4 million rides with gross fare of approximately $12.4 million were completed through Xixingtianxia and an average of over 6,000 ride-hailing drivers completed rides and earned income through Xixingtianxia each month.
−Removed: During the period since the acquisition date to March 31, 2021, we achieved revenue of approximately $0.9 million from our Online Ride-hailing Platform Services, after taking into account approximately $1.8 million incentives paid by us to Active Drivers, which were recorded as a reduction to our revenue.
+Added: As of the date of this Report, we have expanded marketing of our ride-hailing platform to a larger pool of potential drivers and riders in Chengdu, Changsha, Guangzhou and other 23 cities through cooperation with certain local car rental companies and through offering attractive incentives and awards to drivers.
+Added: During the year ended March 31, 2023, approximately 6.1 million rides with gross fare of approximately $19.9 million were completed through Xixingtianxia and an average of over 5,100 Active Drivers each month.
+Added: During the year ended March 31, 2023, we earned online ride-hailing platform service fees of approximately $3.7 million, after netting off approximately $0.5 million incentives paid to Active Drivers.
+Added: During the year ended March 31, 2022, approximately 11.5 million rides with gross fare of approximately $37.3 million were completed through Xixingtianxia and an average of over 9,500 Active Drivers each month.
+Added: During the year ended March 31, 2022, we earned online ride-hailing platform service fees of $2.7 million, after netting off approximately $3.4 million incentives paid to Active Drivers.
We plan to expand our driver base for the platform and automobile rental business while strengthening the royalty of the drivers who both lease our cars and use our platform while expanding, but our platform is available to others.
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Due to the fierce competition of online ride-hailing industry in Chengdu and the adverse impact from COVID-19 pandemic across mainland China, a significant number of online ride-hailing drivers exited the ride-hailing business and rendered their automobiles to us for sublease or sales in order to generate income/proceeds to cover their payments owed to the financial institutions and us.
−Removed: We have seen an increasing demand for short-term car rentals since the end of 2019, which remained stable during the three months and year ended March 31, 2022.
+Added: The demand for short-term car rentals increased accordingly, which remained stable during the year ended March 31, 2023.
To meet the demand of business expansion in Chengdu, Changsha, and Guangzhou, we also purchased and leased automobiles from third parties for our operating lease.
−Removed: The daily management and timely maintenance of leased automobiles will have a significant effect on the growth of our income from leasing automobiles in the next twelve months.
+Added: The daily management and timely maintenance of leased automobiles will have a significant effect on the growth of
+Added: our income from leasing automobiles in the next twelve months.
The effective management of our automobiles through our proprietary system and experienced auto-management team could provide qualified automobiles to potential lessees, either for personal use or providing online ride-hailing services.
−Removed: As of March 31, 2022, we had one parking lot and 4 employees in Guangzhou, and one parking lot, and an exhibition hall and 6 employees in Changsha, and our equity investee company, Jinkailong, had one parking lot and 10 employees in Chengdu, for parking and management of automobiles for operating lease.
−Removed: During the year ended March 31, 2022, our average utilization of the automobiles for operating lease, including the ones operated by Jinkailong, was approximately 56.3%.
−Removed: During the year ended March 31, 2021, the average utilization of the automobiles for operating lease was approximately 79.1%.
+Added: As of March 31, 2023, we had one parking lot, an exhibition hall and 6 employees in Changsha, and our equity investee company, Jinkailong, had one parking lot and 12 employees in Chengdu, for parking and management of automobiles for operating lease.
+Added: During the years ended March 31, 2023 and 2022, the average utilization of the automobiles for operating lease was approximately 64.9% and 56.3%, respectively.
Our Service Offerings and Pricing
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Furthermore, our product designs affect the type of automobile leases we attract, which in turn affect our financial performance.
−Removed: The attraction of new Active Drivers depends on the comprehensive income they could earn from our own or cooperated platform, which is mainly affected by the number orders distributed to them through our platform and the amount of the incentives paid to them from platforms.
+Added: The attraction of new Active Drivers depends on the comprehensive income they could earn from our own or cooperated platform, which is mainly affected by the number of orders distributed to them through our platform and the amount of the incentives paid to them from platforms.
Our revenue growth also depends on our abilities to effectively price our services, which enables us to attract more customers and improve our profit margin.
−Removed: Ability to Retain and Key Business Cooperators
−Removed: Historically, we have set up a series of strategy and business relationships with certain affiliates of some famous and leading companies of new energy vehicles (“NEVs”) manufacturers, online ride-hailing platforms and travel service providers to develop our Automobile Transaction and Related Services and Online Ride-hailing Platform Services.
+Added: Ability to Retain Key Business Cooperators
+Added: Historically, we have set up a series of strategy and business relationships with certain affiliates of some famous and leading companies of NEVs manufacturers, online ride-hailing platforms, local NEVs leasing companies, and travel service providers to develop our Automobile Transaction and Related Services and Online Ride-hailing Platform Services.
We earned commission or services fee from them, purchased and leased automobiles for our business at a favorable price.
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To retain these valuable cooperators and continuously explore opportunities to collaborate with them in more areas is important to us to have considerable resources to support the exploration and expansion of our business into new cities.
−Removed: Ability to Retain Existing Financial Institutions and Engage New Financial Institutions
−Removed: Historically, the growth of our business is dependent on our ability to retain existing financial institutions and engage new financial institutions.
−Removed: During the year ended March 31, 2022, we did not generate revenue from automobile financing facilitation transactions because of the shift of our business focus to automobile rental.
−Removed: Despite such decrease, we are exploring new collaboration methods with financial institutions in connection with our automobile rental business and for our purchase of NEVs in the next twelve months.
−Removed: Our collaborations with financial institutions may be affected by factors beyond our control, such as perception of automobile financing as an attractive asset, stability of financial institutions, general economic conditions and regulatory environment.
−Removed: To increase the number of our cooperative financial institutions and the availability of financing for our existing and new businesses will enhance the overall stability and sufficiency of funding for automobile transactions.
Ability to Collect Receivables on a Timely Basis
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We collect the receivables due from automobile purchasers from their monthly installment payments and repay financial institutions on behalf of the purchasers every month.
−Removed: As of March 31, 2022, we had accounts receivable, net of allowance of approximately $0.3 million
−Removed: and advanced payments of approximately $0.2 million due from the automobile purchasers, net of allowance, which will be collected through installment payments on a monthly basis during the relevant affiliation periods.
−Removed: In accordance with the development of the operating lease business, our cooperated platforms, such as Meituan, agree to temporarily “lock-up” the fares of the rides which Active Drivers earn from the platform to ensure the timely collection of our rental receivables from those Active Drivers.
−Removed: We settle the rental income with each online ride-hailing driver monthly based on the product solutions they chose.
−Removed: Besides, during the year ended March 31, 2022, we settle our commissions with the aggregation platforms on a weekly basis for our online ride-hailing platform services and automobile rental income on a monthly basis.
−Removed: As of March 31, 2022, we had accounts receivable of online ride-hailing service fees of approximately $0.1 million in total.
+Added: As of March 31, 2023, we had accounts receivable, net of allowance of approximately $76,000 and advanced payments of approximately $45,000 due from the historical automobile purchasers, net of allowance, which will be collected through installment payments on a monthly basis during the relevant affiliation periods.
+Added: For receivables from Auto Operating Leasing, we usually settle the rental income with each online ride-hailing driver monthly based on the product solutions they chose.
+Added: In accordance with the development of the operating lease business, our Partner Platforms, such as Gaode, agree to temporarily “lock-up” the fares of the rides which Active Drivers earn from the platform to ensure the timely collection of its rental receivables from those Active Drivers.
+Added: Besides, during the year ended March 31, 2023, we settle our commissions with the Partner Platforms for our online ride-hailing platform services and automobile rental income on a monthly basis.
+Added: As of March 31, 2023, we had accounts receivable of online ride-hailing service fees of approximately $51,000 in total.
The efficiency of collection of the monthly and weekly payments has a material impact on our daily operation.
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Ability to Manage Defaults and Potential Guarantee Liability Effectively
−Removed: Our subsidiary, Hunan Ruixi, and its equity investee company and former VIE, Jinkailong are exposed to credit risk as they are required by certain financial institutions to provide guarantee on the lease/loan payments (including principal and interests) of the automobile purchasers referred by us.
+Added: Our subsidiary, Hunan Ruixi, and its equity investee company and former VIE, Jinkailong are exposed to credit risk as they are required by certain financial institutions to provide guarantee on the lease/loan payments (including principal and interests) of the
+Added: automobile purchasers referred by us.
If a default occurs, they are required to make the monthly payments on behalf of the defaulted purchasers to the financial institution.
−Removed: We manage the credit risk arising from the default of automobile purchasers by performing credit checks on each automobile purchaser based on the credit reports from People’s Bank of China and third-party credit rating companies, and personal information including residence, ethnicity group, driving history and involvement in legal proceeding.
+Added: We manage the credit risk arising from the default of automobile purchasers and lessees by performing credit checks on each automobile purchaser or lessee based on the credit reports from People’s Bank of China and third-party credit rating companies, and personal information including residence, ethnicity group, driving history and involvement in legal proceeding.
Our risk department continuously monitors the payment by each purchaser and sends them payment reminders.
−Removed: We also keep close communication with our purchasers in particular the online ride-hailing drivers so that we can evaluate their financial conditions and provide them with assistance including the transfer of automobile to a new driver if they are no longer interested in providing ride-hailing services or are unable to earn enough income to make monthly lease/loan payments.
+Added: We also keep monitoring the daily gross fare earned by the online ride-hailing drivers, who are our majority customers and run their business through our online ride-hailing platform During the year ended March 31, 2023.
+Added: We do this so that we can evaluate their financial conditions and provide them with assistance including the transfer of automobile to a new driver if they are no longer interested in providing ride-hailing services or are unable to earn enough income to make monthly lease/loan payments.
In addition, automobiles are used as collateral to secure purchasers’ payment obligations under the financing arrangement.
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If they are unable to undertake the responsibility as a guarantor, their own assets, such as cash and cash equivalents, may be frozen by the court if the financial institution successfully requests for an order to freeze our assets or bank accounts, which may adversely affect our operations.
−Removed: As of March 31, 2022, 100 and 1,227 online ride-hailing drivers we serviced rendered their automobiles to Hunan Ruixi and Jinkailong, respectively, for sublease or sale.
+Added: As of March 31, 2023, 108 online ride-hailing drivers we serviced rendered their automobiles to Hunan Ruixi for sublease or sale.
In general, most of the defaulted automobile purchasers who want to remain in online ride-hailing business would pay the default amounts within one to three months.
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However, if the balances are overdue for more than two months or the purchasers decide to exit the online ride-hailing business and sublease or sell their automobiles, we would fully record an allowance against receivables from those purchasers.
−Removed: As of March 31, 2022, we recognized an accumulated allowance against receivables of approximately $411,528 and $3,374,064 from these purchasers served by Hunan Ruixi and Jinkailong, respectively.
−Removed: For the year ended March 31, 2022, we provided additional allowance for doubtful accounts of $123,744 and $11,746, respectively, based on re-evaluation collection from those drivers served by Hunan Ruixi and Jinkailong.
−Removed: We also recognized approximately $8,000 expenses for the guarantee services as the drivers exited the online ride-hailing business and would no longer make the monthly repayments to us.
+Added: As of March 31, 2023, we recognized an accumulated allowance against receivables of $378,941 from these purchasers served by Hunan Ruixi.
+Added: For the year ended March 31, 2023, we recognized approximately $7,300 expenses for the guarantee services as the drivers exited the online ride-hailing business and would no longer make the monthly repayments to us.
During the year ended March 31, 2023, we sub-leased approximately 49 rendered automobiles in total to other customers.
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We believe our risk exposure of financing leasing is immaterial as we have experienced limited default cases and we are able to re-lease those automobiles to drivers under financing leases.
−Removed: Actual and Potential Impact of Ongoing Coronavirus (COVID-19) in China on Our Business
−Removed: Due to the lockdown policy and travel restrictions in our areas of operation in China where local resurgences of COVID-19 cases, our Automobile Transaction and Related Services and Online Ride-hailing Platform Services have been adversely impacted.
−Removed: See “Business — Actual and Potential Impact of Ongoing Coronavirus (COVID 19) in China on Our Business.”
+Added: Actual and Potential Impact of Coronavirus (COVID-19) in China on Our Business
+Added: Impact on the Automobile Transactions and Related Services
+Added: Our Automobile Transactions and Related Services have been gradually recovering from the adverse impact of COVID-19 pandemic.
+Added: As of March 31, 2023, 108 online ride-hailing drivers we serviced rendered their automobiles to Hunan Ruixi.
+Added: As a result, we recorded accumulated allowance for doubtful accounts of approximately $378,941 for them.
+Added: As most of the leasing term of the automobiles we delivered in Changsha in prior periods has come to the end, during the year ended March 31, 2023, the number of newly rendered automobiles decreased to 8 as compared with 25 during the year ended March 31, 2022.
+Added: Meanwhile, over 1,200 online ride-hailing drivers rendered their automobiles to Jinkailong as of March 31, 2023.
+Added: However, our daily cash flow will be adversely impacted as a result of the unsatisfied collection from the online ride-hailing drivers and our potential guarantee expenditure pursuant to the financing agreements we guaranteed.
+Added: Our cash flow has been adversely impacted by local resurgences of COVID-19 in Chengdu, Changsha and Guangzhou while the COVID-19 measures in China keep applying the current control and prevention measures especially from September to November 2022, which had negative impact on the online ride-hailing market accordingly due to travel restriction.
+Added: In addition, our automobile purchasers and lessees may be unable to generate sufficient income to make their monthly installment payments, which may create a significant risk of continuing default from our automobile purchasers or lessees.
+Added: As a result, we may have to repay the defaulted amount as a guarantor or lose the monthly rental revenue.
+Added: If we experience a widespread default by our automobile purchasers/lessees, our cash flow and results of operations will be
+Added: materially and adversely affected.
+Added: As a consequence, we could face shortfalls in liquidity without extra financing resources for the foreseeable future and lose the ability to grow our business or may even be required to scale down or restructure our operations.
+Added: Impact on the Ride-Hailing Platform Services
+Added: XXTX commenced the operation of its online ride-hailing platform since late October 2020 and have witnessed the decrease in online ride-hailing orders in July 2021, November 2021, February 2022, September 2022 and December 2022, when Chengdu, Changsha and Guangzhou reported several confirmed COVID-19 cases.
+Added: Under the zero-tolerance approach to smothering Covid outbreaks in China, the local government usually ensured concrete and effective measures to fight against the resurgence, including suspending some traffic activities in certain medium-risk and high-risk areas.
+Added: Fewer people took ride-hailing trips as a result and the average daily rides completed through our platform decreased and our income decreased accordingly.
+Added: The average daily rides completed through our platform decreased by approximately 20% to 30% compared to that before the reporting of the new COVID-19 cases in these cities and recovered one to two weeks later as the new confirmed cases were fully under control.
+Added: Furthermore, the online ride-hailing services in Chengdu was temporally suspended by the Municipal Communications Commission of Chengdu from September 1 to September 18, 2022, when Chengdu reported accumulated over 1,000 COVID-19 cases since late August 2022.
+Added: We also had no income from the online ride-hailing platform services in Chengdu during those periods.
+Added: The total number of rides completed through our platform in September 2022 decreased by approximately 35% compared with the prior months.
+Added: Consequently, the income of our Automobile Transaction and Related Services customers who ran their business through the online ride-hailing platforms also decreased during this period.
+Added: Since March 2022, major outbreaks of the Omicron variant of COVID-19 occurred in many cities of China.
+Added: These outbreaks resulted in lockdowns, highway closures and other restrictive measures across China, which caused severe hardships to countless dealers and consumers.
+Added: Furthermore, Chengdu suffered an infection peak in the middle of December, after China shifted the prevention and control of COVID-19 infection strategy in December 2022.
+Added: Base on the surveys released from Sichuan Provincial Center for Disease Control and Prevention, the actual infection rate of the surveyed population was estimated to be over 80 percent.
+Added: And the peak of positive detection in the whole province was concentrated from December 12 to 23, which caused significant decreasing orders for online ride-hailing in December.
+Added: The central government of China has adjusted the prevention and control measures of COVID-19, and gradually restored the order of production and life, which would bring optimism for us to operate our online ride-hailing platform in the next 12 months.
+Added: We may have a larger cash outflow in our daily operations in the next twelve months as we expand our Online Ride-hailing Platform Services in more cities in China and incur more marketing and promotion expenses.
+Added: Our cash flow situation may worsen if the economy in China does not improve as expected.
+Added: Any of these factors related to COVID-19 and other similar or currently unforeseen factors beyond our control could have an adverse effect on our overall business environment, causing uncertainties in the regions in China where we conduct business, and causing our business to suffer in ways that we cannot predict and materially and adversely impact our business, financial condition and results of operations.
Ability to Manage and Grow New Ride-Hailing Business
−Removed: Due to the fierce competition of online ride-hailing industry in Chengdu and Changsha, our ability to increase our revenue over time may be limited if we focus only on our current Automobile Transaction and Related Services business model.
+Added: Due to the fierce competition of online ride-hailing industry in Chengdu, Changsha and Guangzhou, our ability to increase our revenue over time may be limited if we focus only on our current Automobile Transaction and Related Services business model.
As part of our strategy to provide an all-encompassing solution for online ride-hailing drivers, we have expanded our services to drivers through the operation of Xixingtianxia, our own online ride-hailing platform, which has brought us a new stream of revenue.
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Pursuant to the cooperation agreement signed with Didi Chuxing Technology Co., Ltd.
−Removed: (“Didi”) for our Automobile Transaction and Related Services, we may be penalized by Didi, or our partnership with Didi may be terminated as we now operate a business competitive with Didi.
+Added: (“Didi”) for our Automobile Transaction and Related Services, we may be penalized by Didi, or our partnership with Didi may be terminated as we now operate a business
+Added: competitive with Didi.
However, the service fees we earned from Didi for automobile transaction and related services currently represent less than 0.1% of our total revenue.
11 unchanged sentences
Traditional taxi service is limited, and the emerging online platforms have created good opportunities for the development of the online ride-hailing service market.
−Removed: According to the 49 th Statistical report on Internet Development in China published in February 2022 by the China Internet Network Information Center (CNNIC), the number of online ride-hailing service users had reached 452 million by the end of 2021, increased by 24% from 2020, and took approximately 43.9% of the total number of Chinese internet users.
+Added: According to the 51th Statistical report on Internet Development in China published in March 2023 by the China Internet Network Information Center (the “CNNIC”), the number of online ride-hailing service users had reached 473 million by the end of December 2022, and took approximately 40.9% of the total number of Chinese internet users.
The online ride-hailing industry is facing increasing competition in China and is attracting more capital investment.
−Removed: According to the MOT of the People’s Republic of China, as of March 31, 2022, approximately 267 online ride-hailing platforms have obtained booking taxi operating licenses and the total volume of online ride-hailing orders was approximately 539 million in March 2022 in China.
+Added: According to the Ministry of Transportation (the “MOT”) of the People’s Republic of China, as of May 31, 2023, approximately 313 online ride-hailing platforms have obtained booking taxi operating licenses and the total volume of online ride-hailing orders was approximately 735 million in May 2023 in China.
Meanwhile, approximately 2.36 million online booking taxi transportation certificates and approximately 5.58 million online booking taxi driver’s licenses were issued nationwide in China.
4 unchanged sentences
Should any of those negative situations occur, the volume and value of the automobile transactions we service will decline, and our revenue and financial condition will be negatively impacted.
−Removed: In order to manage the rapidly growing ride-hailing service market and control relevant risks, on July 27, 2016, seven ministries and commissions in China, including the MOT, jointly promulgated the “Interim Measures for the Administration of Online Taxi Booking Business Operations and Services” (“Interim Measures”) and amended it on December 28, 2019, which legalizes online ride-hailing services such as Didi and requires the online ride-hailing services to meet the requirements set out by the measures and obtain taxi-booking service licenses and take full responsibility of the ride services to ensure the safety of riders.
+Added: In order to manage the rapidly growing ride-hailing service market and control relevant risks, on July 27, 2016, seven ministries and commissions in China, including the MOT, jointly promulgated the “Interim Measures for the Administration of Online Taxi Booking Business Operations and Services” (“Interim Measures”) and amended it on December 28, 2019 and November 30, 2022, which legalizes online ride-hailing services such as XXTX and requires the online ride-hailing services to meet the requirements set out by the measures and obtain taxi-booking service licenses and take full responsibility of the ride services to ensure the safety of riders.
On November 5, 2016, the Municipal Communications Commission of Chengdu City and a number of municipal departments jointly issued the “Implementation Rules for the Administration of Online Booking Taxi Management Services for Chengdu”, which was abolished and replaced by the updated version issued on July 26, 2021.
−Removed: On August 10, 2017, the Transportation Commission of Chengdu further issued the detailed guidance “Working Process for the Online Booking Taxi Drivers Qualification Examination and Issuance” and the “Online Booking Taxi Transportation Certificate Issuance Process”.
+Added: On August 10, 2017, the Transportation Commission of Chengdu further issued the guidelines on compliance requirements for online ride-hailing businesses, including Working Process for the Online Appointment of Taxi Drivers Qualification Examination and Issuance and Online Appointment Taxi Transportation Certificate Issuance Process.
On November 28, 2016, Guangzhou Municipal People’s Government promulgated Interim Measures for the Management of Online Ride Hailing Operation and Service in Guangzhou, as amended on November 14, 2019.
−Removed: According to these regulations and guidelines, three licenses /certificates are required for operating the online ride-hailing business in Chengdu:
−Removed: (1) the ride-hailing service platform such as Didi should obtain the online booking taxi operating license;
+Added: According to these regulations and guidelines, three licenses /certificates are required for operating the online ride-hailing business in Chengdu and Guangzhou:
+Added: (1) the ride-hailing service platform such as XXTX should obtain the online booking taxi operating license;
(2) the automobiles used for online ride-hailing should obtain the online booking taxi transportation certificate (“automobile certificate”);
the drivers should obtain the online booking taxi driver’s license (“driver’s license”).
−Removed: Besides, all the new cars used for online ride-hailing should be NEVs.
+Added: Besides, all the new cars used for online ride-hailing in Chengdu should be NEVs since July 2021.
On July 23, 2018, the General Office of Changsha Municipal People’s Government issued the “Detailed Rules for the Administration of Online Booking Taxi Management Services for Changsha.” On June 12, 2019, the Municipal Communications Commission of Changsha City further issued “Transfer and Registration Procedures of Changsha Online Booking of Taxi.” According to the regulations and guidelines, to operate a ride-hailing business in Changsha requires similar licenses in Chengdu, except those automobiles used for online ride-hailing services are required to meet certain standards, including that the sales price (including taxes) is over RMB120,000 (approximately $17,000).
In practice, Hunan Ruixi is also required to employ a safety administrator for every 50 automobiles used for online ride-hailing services and submit daily operation information of these automobiles such as traffic violation to the Transport Management Office of the Municipal Communications Commission of Changsha City every month.
−Removed: In addition to the national online reservation taxi operating license, XXTX and its subsidiaries also obtained the online reservation taxi operating license in 25 cities, including Chengdu, Changsha, Guangzhou, Tianjin, Shenyang, Harbin, Nanchang, Haikou, Hezhou, two cities in Zhejiang, Shandong, and Guizhou Province, respectively, five cities in Jiangsu Province and other five cities in Sichuan Province from June 2020 to April 2022, to operate the online ride-hailing platform services.
+Added: On November 28, 2016, Guangzhou Municipal People’s Government also promulgated Interim Measures for the Management of Online Ride Hailing Operation and Service in Guangzhou, as amended on November 14, 2019.
+Added: In addition to the national online reservation taxi operating license, XXTX and its subsidiaries also obtained the online reservation taxi operating license in 31 cities, including Chengdu, Changsha, Guangzhou, Tianjin, Shenyang, Harbin, Nanchang, Haikou, Xining, two cities in Zhejiang, Shandong, and Guangxi Province, respectively, three cities in Guizhou Province, five cities in Jiangsu Province, other two cities in Hunan and Guangdong Province, respectively, and other four cities in Sichuan Province from June 2020 to May 2023, to operate the online ride-hailing platform services.
However, approximately 57% of our ride-hailing drivers have not obtained the driver’s license as of March 31, 2023 while all of the cars used for online ride-hailing services which we provided management services have the automobile certificate.
3 unchanged sentences
Pursuant to the Interim Measures, XXTX and its subsidiaries may be fined between RMB5,000 to RMB30,000 (approximately $728 to $4,370) for violations of the Interim Measures, including providing online ride-hailing platform services to unqualified drivers or vehicles.
−Removed: During the year ended March 31, 2022, we have been fined by approximately $178,000 by Traffic Management Bureaus in Chengdu and Changsha, of which, approximately $16,000 was further compensated by drivers or cooperated third parties.
+Added: During the year ended December 31, 2023, we have been fined by approximately $19,000 by Traffic Management Bureaus in Chengdu and Changsha, of which, approximately $4,000, respectively, was further compensated by drivers or cooperated third parties, respectively.
If we are deemed in serious violation of the Interim Measures, our Online Ride-hailing Platform Services may be suspended and the relevant licenses may be revoked by certain government authorities.
We are in the process of assisting the drivers to obtain the required certificate and license both for our Automobile Transaction and Related Services and our Online Ride-hailing Platform Services.
−Removed: However, there is no guarantee that all of the drivers affiliated with us
−Removed: would be able to obtain all the certificates and licenses.
−Removed: Further, there is no assurance that each of the drivers who uses our platform or the cars can possess the requisite license or certificate.
+Added: However, there is no guarantee that all of the drivers who run their online ride-hailing business through our platform would be able to obtain all the certificates and licenses.
Our business and results of operations will be materially and adversely affected if our affiliated drivers are suspended from providing ride-hailing services or imposed substantial fines or if we are found to be in serious violation of the Interim Measures due to the drivers’ failure to obtain requite licenses and/or automobile certificates in connection with providing services through our platform.
9 unchanged sentences
Selling, general and administrative expenses
−Removed: Provision for doubtful accounts
+Added: Provision for doubtful accounts, net of recovery
Impairments of inventories
−Removed: Impairments of long-lived assets
+Added: Impairments of long-lived assets and goodwill
Total operating expenses
4 unchanged sentences
Change in fair value of derivative liabilities
−Removed: Issuance costs for issuing series A convertible preferred stock
+Added: Issuance cost incurred for issuing series A convertible preferred stock
Loss before income taxes
3 unchanged sentences
Revenue for the year ended March 31, 2023 increased by $3,169,412, or approximately 65%, as compared with the year ended March 31, 2022.
−Removed: The increase was mainly due to the increase of operating lease revenues from automobile rentals and revenues from online ride-hailing platform services.
−Removed: In an effort to mitigate the negative impact on our daily cash flow resulting from the rendering of automobiles from drivers who exited the ride-hailing business due to the COVID-19 pandemic in China and develop the new business, we shifted our business focus to automobile rentals from facilitation of automobile transaction and financing since the fiscal year 2021.
−Removed: The online ride-hailing market has gradually recovered since April 15, 2020 as COVID-19 is generally under control in our operation areas in China and the sporadic local resurgences of COVID-19 did not have material impact on the local market.
−Removed: As a result, the number of additional automobiles rendered to us by the ride-hailing drivers exiting the business kept decreasing while the number of automobiles for operating leases increased during the year ended march 31, 2022 as compared with the year ended March 31, 2021.
−Removed: We had revenue of $1,722,480 from automobile rental and $2,665,457 from online ride-hailing platform services during the year ended March 31, 2022, which offset the negative impact of the decrease in our revenue in automobile sales and facilitation of automobile transaction and financing.
−Removed: As we plan to focus more on our automobile rental and Online Ride-hailing Platform Services business, we expect revenue from our Online Ride-hailing Platform Services to keep stable and our revenue from automobile rental income to increase over the next twelve months.
+Added: The increase was mainly due to the increase of operating lease revenues from automobile rentals and revenues from online ride-hailing platform services, as a result of the expansion and our continuous “efficiency - improving” strategy of those two businesses.
+Added: As we have focused on our automobile rental and Online Ride-hailing Platform Services business, we expect revenue from our online ride-hailing platform services and automobile rental to keep stable over the next twelve months.
We also expect them to continuously account for a majority of our revenues.
−Removed: We plan to provide a series of product solutions to increase the number of our automobiles for operating leases.
+Added: We plan to provide a series of product solutions to sustain and further increase the number of our automobiles for operating leases.
The following table sets forth the breakdown of revenues by revenue source for the years ended March 31, 2023 and 2022:
3 unchanged sentences
- Service fees from NEVs leasing
+Added: - Revenues from sales of automobiles
- Financing revenues
1 unchanged sentence
- Service fees from automobile purchase services
−Removed: - Revenues from sales of automobiles
- Other service fees
2 unchanged sentences
Revenue from Automobile Transactions and Related Services
−Removed: Revenue from our automobile transaction and related services mainly includes operating lease revenues from automobile rentals, service fees from NEVs leasing, financing revenues (representing interest income from financial leasing), service fees from automobile management and guarantee services, sales revenue of automobiles, and other services fees, which accounted for approximately 76.6%, 5.6%, 4.5%, 3.3%, 1.2% and 8.8%, respectively, of the total revenue from automobile transaction and related services during the year ended March 31, 2022.
−Removed: Meanwhile, sales revenue of automobiles, operating lease revenues from automobile rentals, financing revenues, service fees from automobile purchase services, service fees from automobile management and guarantee services, and other services fees, which accounted for approximately 38.0%, 17.5%, 14.3%, 14.7%, 6.2% and 9.3%, respectively, of the total revenue from Automobile Transaction and Related Services during the year ended March 31, 2021.
+Added: Revenue from our automobile transaction and related services mainly includes operating lease revenues from automobile rentals, service fees from NEVs leasing, sales revenue of automobiles, financing revenues, service fees from automobile management and guarantee services, service fees from automobile purchase services, and other services fees, which accounted for approximately 79.0%, 8.0%, 5.6%, 1.0%, 0.9%, 0.8% and 4.7%, respectively, of the total revenue from automobile transaction and related services during the year ended March 31, 2023.
+Added: Meanwhile, operating lease revenues from automobile rentals, service fees from NEVs leasing, financing revenues, service fees from automobile management and guarantee services, sales revenue of automobiles, and other services fees, which accounted for approximately 76.6%, 5.6%, 4.5%, 3.3%, 1.2% and 8.8%, respectively, of the total revenue from automobile transaction and related services during the year ended March 31, 2022.
Operating lease revenues from automobile rentals
We generate revenues from leasing our own automobiles, sub-leasing automobiles leased from third-parties or rendered by online ride-hailing drivers with their authorization for a lease term of no more than twelve months.
−Removed: The increase of rental income was due to the increased number of leased automobiles.
−Removed: We leased over 480 automobiles with an average monthly rental income of $485 per automobile, resulting in a rental income of $1,722,480, for the year ended March 31, 2022.
+Added: The increase of rental income of $1,730,912 during the year ended March 31, 2023 was due to the increased number of leased automobiles.
+Added: We leased over 1,800 automobiles with an average monthly rental income of $478 per automobile, resulting in a rental income of $3,453,392, including rental income of $344,120 from Jinkailong, for the year ended March 31, 2023.
While we leased over 480 automobiles with an average monthly rental income of $485 per automobile, resulting in a rental income of $1,722,480, for the year ended March 31, 2022.
+Added: Meanwhile, the rental income of approximately $1.28 million generated from Jinkailong was eliminated in the revenue of continuing operations while the sub-leasing income from these automobiles of approximately $1.8 million was recorded in the revenue of discontinued operations for the year ended March 31, 2022.
Service fees from NEVs leasing
−Removed: We generate revenues of $126,227 from leasing NEVs by charging leases service fees during the year ended March 31, 2022 in accordance with the increasing demand for NEVs in the online ride-hailing industry.
−Removed: The amount of services fees for NEVs leasing is based on our product solutions.
−Removed: We did not have this kind of revenue during the year ended March 31, 2021.
+Added: We generated revenues of $350,510 and $126,227 from leasing NEVs by charging leases service fees during the years ended March 31, 2023 and 2022, respectively, in accordance with the increasing demand for NEVs in the online ride-hailing industry in Chengdu, Changsha and Guangzhou.
+Added: The amount of services fees for NEVs leasing is based on its product solutions.
+Added: The increase of $224,283 was mainly due to the increase in the number of NEVs we own and lease to drivers.
+Added: Sales of automobiles
+Added: As we have shifted our business focus to automobile leasing, we sold one new and 42 used automobiles with income of $243,065 during the year ended March 31, 2023.
+Added: Meanwhile, we sold one new and five used automobiles with income of $26,019 during the year ended March 31, 2022.
Financing revenues
1 unchanged sentence
We also charge the customers of our automobile financing facilitation services interest on their monthly payments which cover purchase price of automobile and our services fees and facilitation fees for terms of 36 or 48 months.
−Removed: We recognized a total interest income of $101,828 from an average monthly number of 75 automobiles and $184,115 from an average monthly number of 89 automobiles during the year ended March 31, 2022 and 2021, respectively.
+Added: We recognized a total interest income of $41,738 from an average monthly number of 44 automobiles and $101,828 from an average monthly number of 75 automobiles during the years ended March 31, 2023 and 2022, respectively.
The decrease was further aggravated by the decrease in the monthly amortization of interest income for automobiles leased in prior periods.
−Removed: Service fees from automobile management and guarantee services
+Added: Service fees from automobile management and guarantee services and Service fees from automobile purchase services
The majority of our customers are online ride-hailing drivers.
−Removed: They also entered into affiliation service agreements with Hunan Ruixi in Changsha and Jinkailong in Chengdu, pursuant to which Hunan Ruixi provides and Jinkailong provided them post-transaction management services and guarantee services.
−Removed: The slight decrease of $6,011 was due to there was no significant change in the accumulated number of rendered automobiles which were subsequently rented to ride-hailing drivers whom Hunan Ruixi charges rent rather than charging management and guarantee services fee.
−Removed: Hunan Ruixi had management and guarantee services for over 210 and 230 automobiles during the year ended March 31, 2022 and 2021, respectively.
−Removed: Service fees from automobile purchase services
−Removed: Service fees from automobile purchase services decreased by $187,354 during the year ended March 31, 2022, mainly due to the decrease in the number of new automobile purchases facilitated by Hunan Ruixi.
−Removed: Hunan Ruixi generates and Jinkailong generated revenues from providing a series of automobile purchase services throughout the automobile purchase transaction process.
−Removed: Hunan Ruixi had revenue from only two new automobile transactions during the year ended March 31, 2022 while it serviced 62 new automobile transactions, including purchase, financial leasing and operating leases, with service fees ranging from approximately $140 to $3,550 per automobile during the year ended March 31, 2021.
−Removed: Sales of automobiles
−Removed: As we have shifted our business focus to automobile leasing, we sold one new and five used automobile with income of $26,019 during the year ended March 31, 2022.
−Removed: Meanwhile, we sold an aggregate of 36 new automobiles and earned income of $487,947 during the year ended March 31, 2021.
+Added: Some of them also entered into affiliation service agreements in prior periods with us pursuant to which we provide them post-transaction management services and guarantee services.
+Added: The decrease of $33,396 was due to the decrease in the accumulated number of rendered automobiles which were subsequently rented to ride-hailing drivers whom we charge rent rather than charging management and guarantee services fee.
+Added: We had management and guarantee services for over 110 and 200 automobiles during the years ended March 31, 2023 and 2022, respectively.
+Added: We generate revenues from providing a series of automobile purchase services throughout the automobile purchase transaction process, including sales-type lease.
+Added: We had revenue from 15 new automobiles purchase transactions during the year ended March 31, 2023 while we had revenue from only two new automobile purchase services during the year ended March 31, 2022.
Other service fees
−Removed: We generate other revenues such as monthly services commissions from insurance companies and other companies and other miscellaneous service fees charged to our customers, which accounted for approximately 53.4% and 46.6% of revenues from other service fees during the year ended March 31, 2022, respectively.
−Removed: The commissions from insurance companies and other miscellaneous service fees charged to the automobile purchasers, which accounted for approximately 78.3%, and 21.7% of revenues from other service fees during the year ended March 31, 2021, respectively.
−Removed: Other service fees increased by $75,522 mainly due to the increase of $70,711 in other miscellaneous service fees also increased in accordance with the expansion of our operating lease.
+Added: We generate other revenues such as monthly services commissions from Partner Platforms and other companies, and other miscellaneous service fees charged to our customers, which accounted for approximately 85.3%, and 14.7% of revenues from other service fees during the year ended March 31, 2023, respectively.
+Added: The commissions from insurance companies, Ride-hailing platform companies and other companies, and other miscellaneous service fees charged to the automobile purchasers, which accounted for approximately 53.4%, and 46.6% of revenues from other service fees during the year ended March 31, 2022, respectively.
Revenue from online ride-hailing platform services
We generate revenue from providing services to online ride-hailing drivers to assist them in providing transportation service to the riders though our platform and earn commissions for each completed order equal to the difference between an upfront quoted fare and the amount earned by a driver based on actual time and distance for the ride charged to the rider since October 2020.
−Removed: During the year ended March 31, 2022, approximately 11.5 million rides with gross fare of approximately $37.3 million were completed through our Xixingtianxia platform and we earned online ride-hailing platform service fees of $2,665,457, netting off approximately $3.4 million incentives paid to Active Drivers.
+Added: During the year ended March 31, 2023, approximately 6.1 million rides with gross fare of approximately $19.9 million were completed through our Xixingtianxia platform and we earned online ride-hailing platform service fees of $3,709,945, after netting off approximately $0.5 million incentives paid to Active Drivers.
+Added: During the year ended March 31, 2022, approximately 11.5 million rides with gross fare of approximately $37.3 million were completed through our Xixingtianxia platform and we earned online ride-hailing platform service fees of $2,665,457, after netting off approximately $3.4 million incentives paid to Active Drivers.
+Added: We paid excess driver incentives to attract drivers to our platform during the year ended March 31, 2022 based on the historical market strategy while reduced the expenditure in the year ended March 31, 2023 in accordance with the market change.
Cost of Revenues
−Removed: Cost of revenues represents the amortization, daily maintenance and insurance expense of automobiles leased to online ride-hailing drivers of $2,667,332, technical service charges, insurance and other expenses of online ride-hailing platform services of $3,806,143 and costs of automobiles sold of $37,556.
−Removed: Cost of revenues increased by $4,526,952, or approximately 228%, during the year ended March 31, 2022 as compared with last year, mainly due to the increase of $2,463,990 in costs of automobiles under operating leases and $2,482,999 in direct expense and technical service fees of Online Ride-hailing Platform Services, respectively, as a result of the expansion of those two businesses, partially offset by the decrease in costs of automobile sold of $420,036 as the number of automobiles sold decreased from 36 to 6.
+Added: Cost of revenues represents (1) the amortization, daily maintenance and insurance expense related to our Auto Operating Leasing of $3,975,857;
+Added: (2) technical service charges, insurance and other expenses related to our Online Ride-Hailing Platform Services of $2,295,233;
+Added: and (3) costs of our Auto Sales of $318,911.
+Added: Cost of revenues decreased by $411,296 during the year ended March 31, 2023 as compared with the last year, mainly due to the decrease of $1,510,910 in direct expense and technical service fees of online ride-hailing platform services due to the decrease in the number of completed orders, partially offset by the increase of $818,259 in costs of automobiles under operating leases as a result of business expansion and $281,355 in costs of automobile sold as the number of automobiles sold increased from 5 to 43.
+Added: During the year ended March 31, 2023, the costs of automobiles under operating leases with amount of $509,904 was from one of our related parties.
Gross Profit (Loss)
−Removed: We had gross loss of $1,597,929 during the year ended March 31, 2022 as compared with the gross profit of $204,761 in the last year mainly due to the decreased number of automobile sales and facilitated new automobile purchases.
−Removed: The gross loss from automobile
−Removed: rentals from operating lease was $944,852 during the year ended March 31, 2022 as compared with the gross profit of $21,478 in the last year.
−Removed: The main reason was the Company leased and sub-leased approximately 400 automobiles to online ride-haling drivers through its former VIE, Jinkailong during the year ended March 31, 2022.
−Removed: The rental income amounted to approximately $1.3 million from Jinkailong was eliminated in the consolidated financial statements while the sub-leasing income from these automobiles of approximately $1.8 million was recorded in the loss of discontinued operations.
−Removed: The gross loss from our Online Ride-hailing Platform Services was $1,140,686, increased by $720,796 due to we paid excess driver incentives to attractive drivers to our platform in the six months ended September 30, 2022, especially from April to June 2021.
−Removed: Meanwhile, the gross profit generated from sales of automobiles and other revenues with no cost of revenues decreased by $115,565 during the year ended March 31, 2022 as compared with the same period in 2021.
+Added: We had gross profit of $1,492,513 during the year ended March 31, 2023 as compared with the gross loss of $2,088,195 in the last year.
+Added: The change of $3,580,708 was mainly due to the increase in profit in our online ride-hailing platform services and operating lease, partially offset by the gross loss of $75,846 from sales of automobiles.
+Added: The following table sets forth the breakdown of gross profit (loss) by major revenue source for the years ended March 31, 2023 and 2022:
+Added: For the Years Ended
+Added: - Auto Operating Leasing
+Added: - Other Services
+Added: - Online Ride-Hailing Platform Services
+Added: Total Gross Profit (Loss)
+Added: We had a gross profit of $1,414,712 in our online ride-hailing platform services during the year ended March 31, 2023, which increased by $2,555,398 from a gross loss of $1,140,686 in the same period in 2022.
+Added: We paid excess driver incentives to attract drivers to our platform during the year ended March 31, 2022 based on the historical market strategy while reduced the driver incentives in the year ended March 31, 2023 in accordance with the market change.
+Added: We had a gross loss of $522,465 in our automobile operating leasing during the year ended March 31, 2023, which decreased by $912,653 from a gross loss of $1,435,118 in the same period in 2022.
+Added: The decrease was mainly due to the increase in the average utilization and the decrease in the average daily maintenance and insurance expense of the automobiles for operating lease as we used more NEVs in the year ended March 31, 2023.
Selling, General and Administrative Expenses
Selling, general and administrative expenses primarily consist of salary and employee benefits, office rental expense, travel expenses, and other costs.
−Removed: Selling, general and administrative expenses increased from $5,905,579 for the year ended March 31, 2021 to $9,525,408 for the year ended March 31, 2022, representing an increase of $3,619,829, or approximately 61.3%.
−Removed: The increase was attributable to more employees hired for business expansion for our new online ride-hailing platform services, the daily operations of our automobile transaction and related services business and the management of the increasing number of automobiles for sublease.
−Removed: The increase mainly consists of an increase of $1,510,876 in salary and employee benefits as the number of our employee increased from 120 to 199, an increase of $945,974 in offices rental and charges, an increase of $589,098 in advertising and promotion for the new online ride-hailing platform services, an increase of $165,851 in amortization of intangible assets and automobiles which were rendered to us but have not been sub-leased as we leased more automobiles, an increase of $159,084 in professional service fees such as financial, legal and market consulting, a liquidated damages compensation of $161,250 for investors in November 2021 Private Placement Warrants and a slight increase of $87,696 in other miscellaneous expenses during the year ended March 31, 20221 as compared with the same period in last year.
−Removed: Provision for doubtful accounts
−Removed: As a result of the fierce competition in the online ride-hailing markets in Chengdu and Changsha, and the negative impact of COVID-19, additional 25 online ride-hailing drivers we serviced rendered their automobiles to us for sublease or sale during the year ended March 31, 2022, which decreased by 75 as compared with the same period in 2021.
−Removed: We re-evaluated the possibility of collection of unsettled balances from those drivers and provided additional allowance for doubtful accounts of $123,744 for those receivables during the year ended March 31, 2022, decreased by $175,914 as compared with the same period in 2021.
−Removed: Besides, the Company also recognized allowance of $111,536 for a historical business cooperator who did not settle its balance on time.
+Added: Selling, general and administrative expenses decreased from $9,035,142 for the year ended March 31, 2022 to $6,142,447 for the year ended March 31, 2023, representing a decrease of $2,892,695, or approximately 32.0%.
+Added: The decrease was attributable to that our continuous control on costs and streamline expenses during the year ended March 31, 2023.
+Added: The decrease mainly consists of (1) a decrease of $912,317 in professional service fees such as financial, legal and market consulting as we incurred a consulting fee of approximately $653,000 for certain market research and business development advisory services during the year ended March 31, 2022;
+Added: (2) a decrease of $704,955 in salary and employee benefits as the average monthly number of our employee decreased from 199 to 175;
+Added: (3) a decrease of $782,337 in advertising and promotion for the online ride-hailing platform services as the number of completed orders decreased and we cut down market promotion expenditure in accordance with the market change in the year ended March 31, 2023;
+Added: (4) a decrease of $526,646 in offices expenditure as a result of reducing office rental and insurance charges;
+Added: (5) a decrease of $51,598 in amortization of intangible assets and automobiles which were rendered to us but have not been sub-leased as we leased more automobiles;
+Added: and partially offset by (6) a liquidated damages compensation of $86,250 for investors in November 2021 Private Placement during the year ended March 31, 2023.
+Added: Provision for doubtful accounts, net of recovery
+Added: We re-evaluated the possibility of collection of unsettled balances from customers of our automobile transactions and related services, and provided bad debt expense for the receivables of $1,484,495 and $3,394, respectively, against receivables from Jinkailong and an automobile purchaser during the year ended March 31, 2023.
+Added: While we provided additional allowance for doubtful accounts of $123,744 for unsettled balances from historical customers, allowance of $111,536 for a historical business cooperator who did not settle its balance on time, respectively, during the year ended March 31, 2022.
Impairments of inventories
−Removed: For the year ended March 31, 2022, we evaluated the net realizable value of our inventories and recognized an impairment loss of $60,398 for certain automobiles for sale based on their selling price in the market.
−Removed: For the year ended March 31, 2021, we did not recognized impairment for inventories.
+Added: For the year ended March 31, 2023 and 2022, we evaluated the net realizable value of our inventories and recognized an impairment loss of $3,085 and $60,398, respectively, for certain automobiles for sale based on their selling price in the market.
Impairments of Long-lived Assets and Goodwill
−Removed: For the year ended March 31, 2022, we evaluated the future cash flow of our right-of-use assets and our own vehicles used for operating leases during their remaining useful life and recognized an additional impairment loss of $3,044 for those assets that could not generate sufficient cash.
−Removed: Meanwhile, we performed impairment test on goodwill and fully recognized impairment of $139,930 against goodwill.
−Removed: We recognized the impairment loss due to regulatory changes in the online ride hailing industry, and forecast an insufficient future cashflow to support the valuation of our goodwill.
−Removed: For the year ended March 31, 2021, we recognized an impairment loss of $10,953 for certain right-of-use assets that could not generate sufficient cash.
−Removed: Other income (expenses), net
+Added: For the years ended March 31, 2023, we evaluated the future cash flow of our right-of-use assets and our own vehicles used for operating leases during their remaining useful life.
+Added: We did not recognize any impairment loss for the year ended March 31, 2023.
+Added: While we recognized an impairment loss of $3,044 for certain right-of-use assets and our own vehicles as property and equipment that could not generate sufficient cash, and fully recognized impairment of $139,930 against goodwill during the year ended March 31, 2022.
+Added: Other income, net
+Added: For the year ended March 31, 2023, we had other income, net of $664,001, which primarily consist of the income of approximately $453,000 from the disposal of our right-of-use assets and our own vehicles used for operating leases;
+Added: and the miscellaneous income of approximately $211,000.
For the year ended March 31, 2022, we had other expenses, net of $107,444, primarily consist of:
2 unchanged sentences
which was offset by (2) income of approximately $198,000 from some leases.
−Removed: For the year ended March 31, 2021, we had other income, net of $301,269, mainly as a result
−Removed: of the receipt of a government subsidy of $147,000 from Sichuan Economic and Information Department for our initial public offering in 2018, and a special support fund of $80,000 for government industrial development from Chengdu Municipal people’s Government.
Interest Expense and Interest Expense on Finance Leases
−Removed: Interest expense for the year ended March 31, 2022 was $5,893, resulting from the borrowings of Corenel from a financial institution for its automobile commercial insurance by installment.
+Added: Interest expense for the year ended March 31 2022 resulted from the borrowings of Corenel from a financial institution for its automobile commercial insurance by installment.
Interest expense on finance leases for the year ended March 31, 2023 was $25,675, representing the interest expense accrued under financing leases for the leased automobiles rendered to us for sublease or sale by the online ride-hailing drivers who exited the ride-hailing business.
−Removed: Interest expense on finance leases increased by $9,326, or approximately 20%, as compared with the year ended March 31, 2021, mainly due to the weighted average number of rendered automobiles during the year ended March 31, 2022 increased.
+Added: Interest expense on finance leases decreased by $30,169, or approximately 54%, as compared with the year ended March 31, 2022, mainly due to the decreased weighted average number of rendered automobiles during the year ended March 31, 2023.
Change in Fair Value of Derivative Liabilities
−Removed: Warrants issued in our registered direct offerings that took place in June 2019, February 2021 and May 2021, and the August 2020 underwritten public offering were classified as liabilities under the caption “Derivative Liabilities” in the consolidated balance sheet and recorded at estimated fair value at each reporting date, computed using the Black-Scholes valuation model.
−Removed: The change in fair value of derivative liabilities the year ended March 31, 2022 was a gain of $6,951,482 in total as our stock price as of March 31, 2022 was lower than the price on March 31, 2021.
+Added: Warrants issued in our registered direct offerings that took place in June 2019, February 2021 and May 2021, and the August 2020 underwritten public offering, and November 2021 private placement were classified as liabilities under the caption “Derivative Liabilities” in the consolidated balance sheet and recorded at estimated fair value at each reporting date, computed using the Black-Scholes valuation model.
+Added: The change in fair value of derivative liabilities for the year ended March 31, 2023 was a gain of $1,711,889 in total as our stock price as of March 31, 2023 was lower than the price on March 31, 2022.
The gain consists of a gain of $12,432 for the warrants issued in our June 2019 registered direct offering, a gain of $36,131 for the warrants issued in our August 2020 underwritten public offering, a gain of $54,052 for the warrants issued in our February 2021 registered direct offering, a gain of $662,767 for the warrants issued in our May 2021 registered direct offering, and a gain of $946,507 for the warrants issued in our November 2021 private placement.
−Removed: The change in fair value of derivative liabilities for the year ended March 31, 2021 was a loss of $1,710,415 in total, mainly due to our stock price as of March 31, 2021 was higher than the price on March 31, 2020, resulting a loss of $1,372,966 for the warrants issued in our June 2019 registered direct offering, a loss of $455,162 for the warrants issued in our August 2020 underwritten public offering.
−Removed: It was offset by a gain of $117,713 for the warrants issued in our February 2021 underwritten public offering.
−Removed: Issuance costs for issuing series A convertible preferred stock
−Removed: Issuance costs for the series A convertible preferred stock in our November 2021 private placement in connection with the placement agent warrants, placement commission and other direct costs were expensed.
−Removed: Total issuance costs charged to expense for the year ended March 31, 2022 were $821,892.
−Removed: Issuance costs allocated to the series A convertible preferred (Mezzanie Equity) were recorded as a reduction of the share balance.
−Removed: Gain on termination of a VIE
−Removed: As fully described above, we terminated series of VIE agreements with other shareholders of our former VIEs.
−Removed: We had a gain of $23,554 from the termination of Youlu as it suffered loss during the year ended March 31, 2022.
−Removed: On March 23, 2022, Senmiao Consulting and other shareholders with 94.5% equity interests of Sichuan Senmiao terminated the VIE Agreements and purchased Sichuan Senmiao’s 94.5% equity interests with total consideration of zero.
−Removed: The gain of non-controlling interest from acquired equity interest of Sichuan Senmiao amounted to $366,604 was recognized in the consolidated statements of changes in stockholders’ equity.
+Added: The change in fair value of derivative liabilities for the year ended March 31, 2022 was a gain of $6,951,482 in total, which consists of a gain of $185,727 for the warrants issued in our June 2019 registered direct offering, a gain of $352,944 for the warrants issued in our August 2020 underwritten public offering, a gain of $572,018 for the warrants issued in our February 2021 registered direct offering, a gain of $2,725,530 for the warrants issued in our May 2021 registered direct offering, and a gain of $3,115,263 for the warrants issued in our November 2021 private placement.
Income Tax Expense
−Removed: Generally, our subsidiaries and former VIEs in China are subject to enterprise income tax on their taxable income in China at a rate of 25%.
+Added: Generally, our subsidiaries are subject to enterprise income tax on their taxable income in China at a rate of 25%.
The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.
−Removed: Income tax expense of $4,566 and $8,332 for the year ended March 31, 2022 and 2021, respectively, mainly represented the provision of enterprise income tax resulting from the taxable income of $18,264 from Hunan Ruixi and $33,328 from Hunan Ruixi, and Yicheng, respectively.
−Removed: Other subsidiaries in China incurred cumulative losses and no tax expense were recorded.
+Added: All subsidiaries in China incurred cumulative losses and no tax expense was recorded for the year ended March 31, 2023, while for the year ended March 31, 2022, income tax expense of $4,566 mainly represented the provision of enterprise income tax resulting from the taxable income of $18,264 from Hunan Ruixi.
+Added: Net loss from continuing operations
As a result of the foregoing, net loss from our continuing operations for the year ended March 31, 2023 was $3,790,693, representing a decrease of $1,815,452 from net loss of $5,606,145 for the year ended March 31, 2022.
−Removed: Results of D iscontinued Operations for the Year Ended March 31, 2022 Compared to the Year Ended March 31, 2021
−Removed: For the Years Ended
+Added: Results of Discontinued Operations for the year ended March 31, 2022
+Added: For the Year Ended
+Added: March 31, 2022
Cost of revenues
−Removed: Gross profit (loss)
Operating expenses
Selling, general and administrative expenses
−Removed: Recovery of (Provision for) doubtful accounts
+Added: Provision for doubtful accounts
Impairments of long-lived assets
1 unchanged sentence
Loss from operations
−Removed: Other income (expenses), net
+Added: Other income, net
Interest expense
4 unchanged sentences
Net gain from deconsolidation of VIEs - discontinued operations
−Removed: Gain (loss) from discontinued operations
+Added: Gain from discontinued operations
The results of discontinued operations mainly consist of the financial figures of our former VIE, Jinkailong.
−Removed: Its business result was included in our Automobile Transaction and Related Services before we deconsolidated its financial figures.
−Removed: Revenue for the year ended March 31, 2022 increased by $2,851,269, or approximately 71.7%, as compared with the year ended March 31, 2021.
−Removed: The increase was mainly due to the increase of operating lease revenues.
−Removed: The following table sets forth the breakdown of revenues by revenue source for the years ended March 31, 2022 and 2021:
−Removed: For the Years Ended
−Removed: Revenue from automobile transactions and related services (discontinued operations)
+Added: As of March 31, 2022, we deconsolidated Jinkailong and its operation result was not included in our consolidated statements of operations and comprehensive income (loss) during the year ended March 31, 2023.
+Added: The following table sets forth the breakdown of revenues by revenue source for the year ended March 31, 2022:
+Added: For the Year Ended
+Added: March 31, 2022
- Operating lease revenues from automobile rentals
−Removed: - Commissions from online ride-hailing platforms
+Added: - Commission from an online ride-hailing platform
- Service fees from NEVs leasing
1 unchanged sentence
- Financing revenues
−Removed: - Facilitation fees from automobile transactions
- Other service fees
−Removed: Revenue from Online Lending Services (discontinued operations)
−Removed: - Transaction fee
−Removed: - Service and others fees
Total revenues from discontinued operations
−Removed: Revenue from Automobile Transactions and Related Services (discontinued operations)
Revenue from the automobile transaction and related services (discontinued operations) mainly included operating lease revenues from automobile rentals, commissions from online ride-hailing platforms, service fees from NEVs leasing, service fees from automobile management and guarantee services, and other revenues, which accounted for approximately 79.8%, 5.9%, 3.4%, 3.2% and 7.7%, respectively, of the total revenue from discontinued operations during the year ended March 31, 2022.
−Removed: Meanwhile, operating lease revenues from automobile rentals, service fees from automobile management and guarantee services, and other revenues accounted for 80.6%, 5.2% and 12.9%, respectively, of the total revenue during the year ended March 31, 2021.
−Removed: Operating lease revenues from automobile rentals
−Removed: Jinkailong generated revenues from leasing its own automobiles, sub-leasing automobiles leased from other companies or from rendered by online ride-hailing drivers with their authorization for a lease term of no more than twelve months.
−Removed: The increase of rental income of $2,244,707 was due to the increased number of leased automobiles.
Jinkailong leased over 1,700 automobiles with an average monthly rental income of $442 per automobile, resulting in a rental income of $5,452,483, for the year ended March 31, 2022.
Among them, approximately 400 automobiles were leased or sub-leased from Cornel, which brought rental income of approximately $1.8 million to Jinkailong.
−Removed: And the leasing costs of approximately $1.3 million was recorded as costs of revenue in the consolidated financial statements.
−Removed: Jinkailong leased over 1,100 automobiles with an average monthly rental income of $435 per automobile, resulting in a rental income of $3,207,781, for the year ended March 31, 2021.
−Removed: Commissions from online ride-hailing platforms
−Removed: Jinkailong earned commissions from online ride-hailing platforms, such as Meituan and XXTX for drivers serviced and introduced by Jinkailong, who ran their business through these platforms.
+Added: And the leasing costs of approximately $1.3 million was recorded as costs of revenue in the loss of discontinued operations of the consolidated financial statements.
+Added: Jinkailong earned commissions from online ride-hailing platforms, such as Meituan, a leading aggregation platform before, and XXTX for drivers serviced and introduced by Jinkailong, who ran their business through these platforms.
During the year ended March 21, 2022, Jinkailong earned commissions of $399,600 from Meituan.
Meanwhile, it earned commissions of $553,760 from XXTX, which was eliminated in the loss of discontinued operations of the consolidated financial statements.
−Removed: During the year ended March 21, 2021, Jinkailong earned commissions of $32,797 from XXTX, before our acquisition of XXTX.
−Removed: Service fees from NEVs leasing
Jinkailong generated revenues of $232,295 from leasing NEVs by charging leases service fees during the year ended March 31, 2022 in accordance with the increasing demand for NEVs in the online ride-hailing industry in Chengdu.
The amount of services fees for NEVs leasing is based on its product solutions.
−Removed: Jinkailong did not have this kind of revenue during the year ended March 31, 2021.
−Removed: Service fees from automobile management and guarantee services
−Removed: The majority of Jinkailong’s customers were online ride-hailing drivers.
−Removed: They also entered into affiliation service agreements with Jinkailong pursuant to which Jinkailong provided them post-transaction management services and guarantee services.
−Removed: The service fees from automobile management and guarantee services remained stable mainly attributed because the average number of automobiles which Jinkailong provided management and guarantee services for remained stable during the year ended March 31, 2022 and 2021 as the number of newly rendered automobiles did not increase significantly during the year ended March 31, 2022.
−Removed: Other service fees
−Removed: Jinkailong generated other revenues such as monthly services commissions from insurance companies, and other miscellaneous service fees charged to our customers, which accounted for approximately 41.1 and 58.9% of revenues from other service fees during the year ended March 31, 2022, respectively.
−Removed: The commissions from insurance companies and other miscellaneous service fees charged to the automobile purchasers, which accounted for approximately 77.7%, and 22.3% of revenues from other service fees during the year ended March 31, 2021, respectively.
−Removed: Other service fees increased by $32,586 mainly due to the increase of $194,743 of miscellaneous fees charged to leasees as Jinkailong tightened the daily management of them.
−Removed: If was offset by the decrease of $162,157 of commissions from insurance companies due to the unit commission for used automobiles decreased as compared with the year ended March 31, 2021.
+Added: Jinkailong also generated other revenues such as monthly services commissions from insurance companies, and other miscellaneous service fees charged to our customers, which accounted for approximately 41.1% and 58.9% of revenues from services commissions from insurance companies, and other miscellaneous service fees during the year ended March 31, 2022, respectively.
Cost of Revenues
−Removed: Cost of revenues represents the amortization and depreciation, daily maintenance and insurance expense, and rental costs of automobiles leased to online ride-hailing drivers.
−Removed: Cost of revenues increased by $1,198,393, or approximately 30.1%, during the year
−Removed: ended March 31, 2022 as compared with the same period of 2021, mainly due to the increase of $658,092 in daily maintenance and insurance expense as the average insurance premium and maintenance costs increased for automobiles with longer used ages.
−Removed: The rental costs increased by $341,434, mainly due to Jinkailong leased approximately another 500 automobiles, including 400 from Cornel, to expand leasing scale during the year ended March 31, 2022.
−Removed: Meanwhile, the rental costs of approximately $1.3 million belong to Corenel was eliminated in the loss of discontinued operations of the consolidated financial statements.
−Removed: Amortization and depreciation increased by $198,867, due to the utilization of rendered automobiles increased during the year ended March 31, 2022.
+Added: Cost of revenues represents the amortization and depreciation of $2,590,277, daily maintenance and insurance expense, and rental costs of automobiles leased to online ride-hailing drivers of $2,593,529 during the year ended March 31, 2022.
+Added: Jinkailong leased approximately another 500 automobiles, including approximately 400 from Corenel and Yicheng, to expand leasing scale during the year ended March 31, 2022.
+Added: Meanwhile, the rental costs of approximately $1.3 million belong to Corenel and Yicheng was eliminated in the loss of discontinued operations of the consolidated financial statements during the year ended March 31, 2022.
Selling, General and Administrative Expenses
−Removed: Selling, general and administrative expenses primarily consist of salary and employee benefits, office rental expense, travel expenses, and other costs.
−Removed: Selling, general and administrative expenses decreased from $4,455,967 for the year ended March 31, 2021 to $4,139,800 for the year ended March 31, 2022, representing a decrease of $316,167, or approximately 7.1%.
−Removed: The decrease mainly consists of a decrease of $880,375 in amortization of rendered automobiles.
−Removed: The number of automobiles which were rendered to Jinkailong but have not been sub-leased decreased as Jinkailong sub-leased more automobiles during the year ended March 31, 2022 as compared with the same period in last year.
−Removed: The offices rental and charges also decreased by $258,104 due to costs control, which was offset by an increase of $822,312 in salary and employee benefits attributable to more employees with higher salary hired for expansion for the rental business.
−Removed: Recovery of (Provision for) doubtful accounts
+Added: Selling, general and administrative expenses primarily consist of $2,334,672 in salary and employee benefits, $712,949 in amortization of rendered automobiles which were rendered to Jinkailong but have not been sub-leased, $558,840 in office rental and charges, and $191,371 in advertising and promotion, during the year ended March 31, 2022.
+Added: Provision for doubtful accounts
Jinkailong re-evaluated the possibility of collection of unsettled balances from additional 13 online ride-hailing drivers who rendered their automobiles and provided additional allowance for doubtful accounts of $11,746 for those receivables during the year ended March 31, 2022.
−Removed: While during year ended March 31, 2021, Jinkailong recovered allowance for doubtful accounts of $328,016 for those receivables during the year ended March 31, 2021 as some drivers who postpone the monthly installment at the beginning of year 2020 and repaid them in the first half of the year ended March 31, 2021 as the online ride-hailing market recovered since then.
−Removed: So Jinkailong re-evaluated and updated the provision amount.
Impairments of Long-lived Assets
For the year ended March 31, 2022, Jinkailong evaluated the future cash flow of our right-of-use assets and its own vehicles used for operating leases during their remaining useful life and recognized an additional impairment loss of $32,479 for those assets that could not generate sufficient cash.
−Removed: For the year ended March 31, 2021, Jinkailong recognized an impairment loss of $119,886 for certain right-of-use assets that could not generate sufficient cash.
−Removed: Other income (expenses), net
+Added: Other income, net
For the year ended March 31, 2022, Jinkailong had other income, net of $118,344, primarily consist of the penalty income amounted to $302,131 from some online ride-hailing drivers for their violence on the contracts, which was offset by expenditures of approximately $159,000 such as penalty fines for served drivers who failed to obtain the ride-hailing driver’s licenses.
−Removed: The increase of $310,260 during the year ended March 31, 2022 as compared with the same period in 2021, was mainly due to the increase in penalty income of $158,728, a decrease of $79,927 in penalty fines and a $95,183 in guarantee expenses for drivers who rendered their automobiles as a result of the improvement in the daily management of drivers.
Interest Expense and Interest Expense on Finance Leases
−Removed: Interest expense for the year ended March 31, 2022 was $50,472, resulting from the borrowings from financial institutions, which had no significant change as compared with the same period in 2021.
+Added: Interest expense for the year ended March 31, 2022 was $50,472, resulting from the borrowings from financial institutions.
Interest expense on finance leases for the year ended March 31, 2022 was $277,366, representing the interest expense accrued under financing leases for the leased automobiles rendered to Jinkailong for sublease or sale by the online ride-hailing drivers who exited the ride-hailing business.
−Removed: Interest expense on finance leases decreased by $409,318 as compared with the year ended March 31, 2021, mainly due to the number of rendered automobiles decreasing over 90% during the year ended March 31, 2022, as well as the decrease in the number of automobiles which were rendered to us but have not been sub-leased as we leased more automobiles.
Loss from discontinued operations, net of applicable income taxes
−Removed: As a result of the foregoing, net loss from our discontinued operations, net of applicable income taxes, for the year ended March 31, 2022 was $2,747,209, representing a decrease of $2,440,005 from net loss of $5,187,214 for the year ended March 31, 2021.
+Added: As a result of the foregoing, net loss from our discontinued operations, net of applicable income taxes, for the year ended March 31, 2022 was $2,747,209.
Net gain from deconsolidation of VIEs - discontinued operations
−Removed: As fully described above, we terminated series of VIE agreements with other shareholders of our former VIEs.
+Added: As fully described above, we had terminated series of VIE agreements with other shareholders of our former VIEs as of March 31, 2022.
We had a gain of $10,951,545 from the termination of Jinkailong due to its accumulated loss in historical period.
We had a gain of $23,556 from the termination of Youlu as it suffered loss during the year ended March 31, 2022.
−Removed: On March 23, 2022, Senmiao Consulting and other shareholders with 94.5% equity interests of Sichuan Senmiao terminated the VIE Agreements and purchased Sichuan Senmiao’s 94.5% equity interests with total consideration of zero.
+Added: On March 23, 2022, Senmiao
+Added: Consulting and other shareholders with 94.5% equity interests of Sichuan Senmiao terminated the VIE Agreements and purchased Sichuan Senmiao’s 94.5% equity interests with total consideration of zero.
The gain of non-controlling interest from acquired equity interest of Sichuan Senmiao amounted to $366,604 was recognized in the consolidated statements of changes in stockholders’ equity.
The detailed analysis were in Note 3 to our consolidated financial statements.
−Removed: Liquidity and Capital Resources
+Added: Liquidity and Going Concern
We have financed our operations primarily through proceeds from our equity offerings, stockholder loans, commercial debt and cash flow from operations.
1 unchanged sentence
We primarily hold our excess unrestricted cash in short-term interest-bearing bank accounts at financial institutions.
−Removed: On May 13, 2021, we closed a registered direct offering of 5,531,916 shares of our common stock at $1.175 per share, pursuant to a securities purchase agreement with certain accredited investors.
−Removed: As a result, we raised approximately $5.8 million, net of placement agent fees and offering expenses, to support our working capital requirements.
−Removed: On November 10, 2021, we completed a private placement of 5,000 shares of our series A convertible preferred stock at $1,000 per share, pursuant to a securities purchase agreement with certain institutional investor.
−Removed: As a result, we raised approximately $4.4 million, net of placement agent fees and offering expenses, to support our working capital requirements.
Our business is capital intensive.
−Removed: We have considered whether there is substantial doubt about our ability to continue as a going concern due to (1) net loss of approximately $5.6 million from continuing operations for the year ended March 31, 2022;
+Added: We have considered whether there is substantial doubt about our ability to continue as a going concern due to (1) the net loss of approximately $3.8 million for the year ended March 31, 2023;
(2) accumulated deficit of approximately $37.7 million as of March 31, 2023;
(3) the working capital deficit of approximately $0.4 million as of March 31, 2023;
−Removed: (4) net operating cash outflows of approximately $9.0 million and $0.1 million from continuing operations and discontinued operations, respectively, for the year ended March 31, 2022;
−Removed: and (5) the purchase commitment of approximately $1.7 million.
−Removed: As of March 31, 2022, we have entered into a purchase contract with an automobile dealer to purchase a total of 200 automobiles for the amount of approximately $3.4 million.
−Removed: As of the date of this Report, 100 automobiles of approximately $1.7 million have been purchased in cash and delivered to us and the remaining purchase commitment of approximately $1.7 million shall be completed with financing option through the dealer’s designated financial institutions.
+Added: and (4) two purchase commitments of approximately $1.36 million for 120 automobiles.
+Added: As of the date of this Report, we have entered into two purchase contracts with two automobile dealers to purchase a total of 150 automobiles in the amount of approximately $2.4 million, of which, 30 automobiles amounted to approximately $0.34 million have been purchased in cash and delivered to us, and approximately $0.7 million has been remitted as purchase prepayments.
+Added: The remaining purchase commitment of approximately $1.36 million shall be remit in installment to be completed before December 31, 2023.
+Added: We do not believe that the proceeds from our public offerings and our anticipated cash flows would be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next 12 months from the date of this Report.
We have determined there is substantial doubt about our ability to continue as a going concern.
1 unchanged sentence
We are trying to alleviate the going concern risk through the following sources:
−Removed: ● will continue to seek equity financing to support our working capital;
+Added: ● equity financing to support our working capital;
● other available sources of financing (including debt) from PRC banks and other financial institutions;
● financial support and credit guarantee commitments from our related parties.
−Removed: Based on the above considerations, we are of the opinion that we will probably not have sufficient funds to meet its working capital requirements and debt obligations as they become due one year from the date of this Report, if we are unable to obtain additional financing.
−Removed: In addition, the maximum contingent liabilities for automobile purchasers we would be exposed to was approximately $0.8 million as of March 31, 2022, assuming all the automobile purchasers were in default.
−Removed: There is no assurance that we will be successful
−Removed: in implementing the foregoing plans or that additional financial will be available to us on commercially reasonable terms, or at all.
−Removed: There are a number of factors that could potentially arise and undermine our plans, such as (i) the impact of the COVID-19 pandemic on our business and areas of operations in China;
−Removed: (ii) changes in the demand for our services;
−Removed: (iii) PRC government policies;
−Removed: (iv) economic conditions in China and worldwide;
−Removed: (v) competitive pricing in the automobile transaction and related service and ride-hailing industries;
−Removed: (vi) changes in our relationships with key business partners;
−Removed: (vii) that financial institutions in China may not able to provide continued financial support to our customers;
−Removed: and (viii) the perception of PRC-based companies in the U.S.
+Added: Based on the above considerations, we are of the opinion that we will probably not have sufficient funds to meet our working capital requirements and debt obligations as they become due one year from the filing date of this Report, if we are unable to obtain additional financing.
+Added: However, there is no assurance that we will be successful in implementing the foregoing plans or that additional financial will be available to us on commercially reasonable terms, or at all.
+Added: There are a number of factors that could potentially arise that could undermine our plans, such as (i) the impact of the COVID-19 pandemic on our business and areas of operations in China, (ii) changes in the demand for our services, (iii) PRC government policies, (iv) economic conditions in China and worldwide, (v) competitive pricing in the automobile transaction and related service and ride-hailing industries, (vi) changes in our relationships with key business partners, (vii) that financial institutions in China may not able to provide continued financial support to our customers, and (viii) the perception
+Added: of PRC-based companies in the U.S.
capital markets.
1 unchanged sentence
For the Years Ended
−Removed: Net Cash Used in Operating Activities
−Removed: Net Cash Used in Investing Activities
−Removed: Net Cash Provided by Financing Activities
+Added: Net Cash Provided by (Used in) Operating Activities
+Added: Net Cash Provided by (Used in) Investing Activities
+Added: Net Cash Provided by (Used in) Financing Activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
−Removed: Cash and Cash Equivalents at Beginning of Period
−Removed: Cash and Cash Equivalents at End of Period
−Removed: Cash and cash equivalents from discontinued operations
−Removed: Cash and cash equivalents from continuing operations, end of years
+Added: Cash and Cash Equivalents at Beginning of Year
+Added: Cash and cash equivalents at End of year
Cash Flow in Operating Activities
−Removed: For the year ended March 31, 2022, net cash used in operating activities was $9,159,281, which consists of outflows of $9,036,114 from continuing operations and $123,167 discontinued operations.
−Removed: While for the year ended March 31, 2021, net cash used in operating activities was $3,936,067, which consists of $3,196,138 from continuing operations and $739,929 from discontinued operations.
−Removed: The total net cash used in operating activities from continuing operations primarily comprised of the payment of salary and employee benefits of $3,372,130, other operating costs of $5,505,972, and maintenance fees, insurance and other costs for automobiles and related transactions of $5,697,763, partially offset by revenue received of $4,905,648 and the net collection of $634,103 on automobiles used for financial lease to be collected within the lease terms.
−Removed: The increase of $5,839,976 in net cash used in operating activities from continuing operations for the year ended March 31, 2022 was primarily attributable to (1) decrease of $8,661,897 in the change of fair value of derivative liabilities as our stock price is running below our stock warrant’s exercise price;
−Removed: (2) decrease of $2,500,975 in the change of accrued expenses and other liabilities;
−Removed: (3) increase of $433,090 in the change of inventories;
−Removed: offset by (4) decrease of $1, 869,280 in net loss;
−Removed: (5) increase of $1,481,087 in depreciation and amortization of long-lived assets;
−Removed: (6) issuance cost for issuing series A convertible preferred stock of $821,892 in November 2021 private placement;
−Removed: (7) decrease of $1,394,978 in the change of prepayments, other receivables and other assets;
−Removed: and (8) increase of $192,419 in impairments of inventories and long-lived assets.
+Added: For the year ended March 31, 2023, net cash provided by operating activities was $557,837.
+Added: While for the year ended March 31, 2022, net cash used in operating activities was $9,159,281, which consists of outflows of $9,036,114 from continuing operations and $123,167 discontinued operations.
+Added: The total net cash provided by operating activities from continuing operations for the year ended March 31, 2023 primarily comprised of the revenue received of $8,361,688, and the net collection of $258,932 on automobiles used for financial lease to be collected within the lease terms, partially offset by the payment of salary and employee benefits of $1,977,230, maintenance fees, insurance and other costs for automobiles and related transactions of $4,952,281, and other operating costs of $1,133,272.
+Added: The change of $9,593,951 in net cash provided by operating activities from continuing operations for the year ended March 31, 2023 as compared with last year was primarily attributable to (1) decrease of $1,815,452 in net loss;
+Added: (2) decrease of $5,239,593 in change in fair value of derivative liabilities;
+Added: (3) increase of $1,548,475 in the change of accrued expenses and other liabilities;(4) increase of $1,252,610 in the change of provision for doubtful accounts;
+Added: (5) increase of $1,018,211 in the change of prepayments, other receivables and other assets;
+Added: (6) increase of $576,603 in the change of inventories, and partially offset by (7) decrease in the issuance cost of $821,892 which incurred for issuing series A convertible preferred stock in the year ended March 31, 2022;
+Added: (8) decreased of the stock compensation expense of $653,000 which incurred in the year ended March 31, 2022, and (9) gain on disposal of long-lived assets of $452,522 in the year ended March 31, 2023.
For the year ended March 31, 2022, net cash used in operating activities from discontinued operation was primarily the payment to investors of the discontinued P2P platform of $1.7 million, offset by the net cash inflow of approximately $1.6 million for the year ended March 31, 2022.
Cash Flow in Investing Activities
−Removed: For the year ended March 31, 2022, we had net cash used in investing activities of $3,477,125, which consisted of the net cash used in investing activities of $3,365,915 from continuing operations and $111,210 from discontinued operations.
−Removed: The majority net cash used in investing was for the purchase of automobiles for operating lease purpose and expenditures on the licenses of online ride-hailing platforms in different cities in China.
+Added: For the year ended March 31, 2023, we had net cash provided by investing activities of $320,528.
+Added: The majority net cash provided by investing was for the proceeds from sales of the used-automobiles and rendered automobiles of $1,498,024, which was offset by the expenditures on the licenses of $26,420 for online ride-hailing platforms in different cities in China and purchase of automobiles for operating lease purpose of $1,151,076.
For the year ended March 31, 2022, we had net cash used in investing activities of $3,477,125, which consisted of the net cash used in investing activities of $3,365,915 from continuing operations and $111,210 from discontinued operations.
−Removed: The majority net cash used in investing was for the purchase of automobiles for operating lease purpose.
+Added: The majority net cash used in investing was for the purchase of automobiles for operating lease purpose of $3,223,992 and expenditures on the licenses of $141,730 for online ride-hailing platforms in different cities in China.
Cash Flow in Financing Activities
+Added: For the year ended March 31, 2023, we had net cash used in financing activities of $373,834, which primarily consisted of:
+Added: (1) principal payments made for finance lease liabilities of $392,145, (2) repayments of current borrowings from a financial institution of $125,840, partially offset by (3) repayment from related parties and affiliates of $144,151.
For the year ended March 31, 2022, we had net cash provided by financing activities of $9,755,410, which primarily consisted of:
−Removed: (1) total net proceeds of approximately $5.8 million from our registered public offering in May 2021, approximately $4.4 million from our private placement in November 2021, and $22,015 from exercised warrants from investors, respectively;
+Added: (1) total net proceeds of approximately $5.8 million from our registered public offering in May 2021, approximately $4.4 million from
+Added: our private placement in November 2021, and $22,015 from exercised warrants from investors, respectively;
(2) borrowings from a financial institution of $183,390, partially offset by (3) principal payments made for finance lease liabilities of $433,611, and (4) repayments to related parties and the financial institution of $157,374.
−Removed: For the year ended March 31, 2021, we had net cash provided by financing activities of $10,259,777, which primarily consisted of:
−Removed: (1) total net proceeds of $11.8 million from our underwritten public offering in August 2020 and registered public offering in February 2021;
−Removed: (2) $683,046 from exercised warrants from investors, respectively;
−Removed: partially offset by (3) principal payments made for finance lease liabilities of $2,230,765, (5) repayments to related parties of $138,587;
−Removed: and (5) Net cash received from borrowings from financial institutions of discontinued operations of $103,881.
Off-Balance Sheet Arrangements
1 unchanged sentence
● Purchase Commitments
−Removed: On February 22, 2021, we entered into one purchase contract with an automobile dealer to purchase a total of 200 automobiles for the amount of approximately $3.4 million.
+Added: On February 22, 2021, we entered into a purchase contract with an automobile dealer to purchase a total of 200 automobiles for the amount of approximately $3.4 million.
Pursuant to the contract, we are required to purchase 100 automobiles in cash with the amount of approximately $1.7 million.
1 unchanged sentence
As of the date of this Report, 100 automobiles of the contract signed in February 2021 have been purchased in cash and delivered to us.
−Removed: As we are in process of getting approval from the dealer’s designated financial institutions in financing the 100 automobiles’ purchase, there is no clear timing schedule for completing the remaining purchase commitment with this automobile dealer.
−Removed: However, we expect the purchase to be completed by December 31, 2022.
+Added: And on May 15, 2023, both parties decided to terminate the remaining 100 automobiles purchase through a termination agreement.
+Added: On September 23, 2022, we entered into a purchase contract with an automobile dealer to purchase a total of 100 automobiles for the amount of approximately $1.6 million, of which approximately $0.7 million has been remitted as purchase prepayments, and we expect to fulfill the purchase commitment before December 31, 2023.
+Added: On March 28, 2023, we entered into another purchase contract with an automobile dealer to purchase a total of 50 automobiles for the amount of approximately $0.8 million, of which 30 automobiles of approximately $0.34 million have been purchased in cash and delivered to us, and we expect to fulfill the purchase commitment before December 31, 2023.
● Contingent Liabilities
−Removed: Hunan Ruixi is exposed to credit risk as we are required by certain financial institutions to provide guarantee on the lease/loan payments (including principal and interests) of the automobile purchasers referred by us.
−Removed: As of March 31, 2022, the maximum contingent liabilities Hunan Ruixi would be exposed to was approximately $0.8 million, assuming all the automobile purchasers were in default, which may cause an increase in guarantee expense and cash outflow in financing activities.
+Added: We are exposed to credit risk as we are required by certain financial institutions to provide guarantee on the lease/loan payments (including principal and interests) of the automobile purchasers referred by us.
+Added: As of March 31, 2023, the maximum contingent liabilities we would be exposed to was approximately $9,691, assuming all the automobile purchasers were in default, which may cause an increase in guarantee expense and cash outflow in financing activities.
Besides, the maximum contingent liabilities our former VIE, Jinkailong, would be exposed to was approximately $3.9 million, assuming all the automobile purchasers were in default, which may cause an increase in guarantee expense and cash outflow in its own financing activities.
1 unchanged sentence
We do not believe our business and operations have been materially affected by inflation.
−Removed: Critical Accounting Policies
−Removed: We prepare our consolidated financial statements in accordance with U.S GAAP.
−Removed: These accounting principles require us to make judgments, estimates and assumptions on the reported amounts of assets and liabilities at the end of each fiscal period, and the reported amounts of revenues and expenses during each fiscal period.
−Removed: We continually evaluate these judgments and estimates based on our past experience, knowledge and assessments of current business and other conditions, our expectations regarding the future based on available information and assumptions.
−Removed: The selection of critical accounting policies, the judgments and other uncertainties affecting the application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors that should be considered when reviewing our
−Removed: financial statements.
−Removed: We believe the following accounting policies involve the most significant assumptions and estimates used in the preparation of our consolidated financial statements.
−Removed: Use of estimates
+Added: Critical Accounting Estimates
+Added: Our consolidated financial statements and accompanying notes have been prepared in accordance with U.S.
+Added: The preparation of these consolidated financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
+Added: We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
+Added: We have identified certain accounting estimates that are significant to the preparation of our financial statements.
+Added: These estimates are important for an understanding of our financial condition and results of operation.
+Added: Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.
+Added: We believe the following critical accounting estimates involve the most significant estimates and judgments used in the preparation of our financial statements.
In presenting the consolidated financial statements in accordance with U.S.
5 unchanged sentences
we base our 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.
−Removed: Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, residual values, lease classification and liabilities, finance lease receivables, inventory obsolescence, right-of-use assets, determinations of the useful lives and valuation of long-lived assets, estimates of allowances for doubtful accounts and prepayments, estimates of impairment of long-lived assets and goodwill, valuation of deferred tax assets, estimated fair value used in business acquisitions, valuation of derivative liabilities, allocation of fair value of derivative liabilities, issuance of common stock and warrants exercised and other provisions and contingencies.
−Removed: Fair values of financial instruments
−Removed: 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.
−Removed: In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.
−Removed: Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.
−Removed: Topic 825 excludes certain financial instruments and all nonfinancial assets and liabilities from its disclosure requirements.
−Removed: Accordingly, the aggregate fair value amounts do not represent the underlying value of us.
−Removed: The three levels of valuation hierarchy are defined as follows:
−Removed: Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
−Removed: 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.
−Removed: Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value.
−Removed: Property and equipment
−Removed: Property and equipment primarily consist of automobiles, leasehold improvements, computers and other equipment, which is stated at cost less accumulated depreciation less any provision required for impairment in value.
−Removed: Depreciation is computed using the straight-line method with no residual value based on the estimated useful life.
−Removed: Mezzanine Equity (redeemable)
−Removed: We evaluate our convertible preferred stock in accordance with ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):
−Removed: Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to determine if its convertible preferred stock should be treated as a liability or an equity.
−Removed: As a result, the convertible preferred stock should be treated as an equity as it did not meet the definition of liability instrument.
−Removed: In accordance with ASC 480-10-s99, the convertible preferred stock should be classified as a mezzanine equity, since it contained a change of control redemption right feature which is not solely within our control.
+Added: Estimates are used when accounting for items and matters including, but not limited to the critical accounting estimates as follows.
+Added: When reading our consolidated financial statements, you should consider our selection of critical accounting policies, the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions.
+Added: Our critical accounting policies and practices include the following:
+Added: (i) fair values of financial instruments, including derivative liabilities;
+Added: (ii) accounts receivable, net;
+Added: (iii) inventories;
+Added: (iv) property and equipment, net;
+Added: (v) intangible assets, net;
+Added: (vi) goodwill;
+Added: (vii) revenue recognition;
+Added: and (viii) leases - lessee.
+Added: See Note 2—Summary of Significant Accounting Policies to our consolidated financial statements for the disclosure of these accounting policies.
+Added: We believe the following accounting estimates involve the most significant judgments used in the preparation of our financial statements.
Derivative liabilities
A contract is designated as an asset or a liability and is carried at fair value on a company’s balance sheet, with any changes in fair value recorded in a company’s results of operations.
−Removed: We then determine which options, warrants and embedded features require liability accounting and records the fair value as a derivative liability.
−Removed: The changes in the values of these instruments are shown in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss as “change in fair value of derivative liabilities”.
+Added: We then determine which options, warrants and embedded features require liability accounting and records the fair value as a derivative liability by using Black-Scholes model.
+Added: The changes in the values of these instruments are shown in the accompanying consolidated statements of operations and comprehensive income (loss) as “change in fair value of derivative liabilities”.
Revenue recognition
−Removed: We recognize our revenue under ASC 606.
−Removed: ASC 606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers.
−Removed: The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.
−Removed: It also requires us to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer.
−Removed: To achieve that core principle, we apply the five steps defined under ASC 606:
−Removed: (i) identify the contract(s) with a customer;
−Removed: (ii) identify the performance obligations in the contract;
−Removed: (iii) determine the transaction price;
−Removed: (iv) allocate the transaction price to the performance obligations in the contract;
−Removed: and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
−Removed: We account for a contract with a customer when the contract is committed in writing, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration to collect is substantially probable.
−Removed: We have assessed the impact of the guidance by reviewing our existing customer contracts and current accounting policies and practices to identify differences that will result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control and principal versus agent considerations.
−Removed: Based on the assessment, we concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of ASC 606 and therefore there was no material changes to our unaudited condensed consolidated financial statements upon adoption of ASC 606.
−Removed: Automobile Transaction and Related Services
−Removed: Operating lease revenues from automobile rentals – We generate revenue from sub-leasing automobiles from some online ride-hailing drivers or leasing our own automobiles.
−Removed: We recognize revenue wherein an automobile is transferred to the lessee and the lessee has the ability to control the asset, is accounted for under ASC Topic 842.
−Removed: Rental transactions are satisfied over the rental period.
−Removed: Rental periods are short term in nature, generally are twelve months or less.
−Removed: Financing revenues – Interest income from the lease arising from our sales-type leases and bundled lease arrangements is recognized in financing revenues over the lease term based on the effective rate of interest in the lease.
−Removed: Service fees from management and guarantee services – Over 95% of our customers are online ride-hailing drivers.
−Removed: The drivers sign affiliation agreements with us, pursuant to which we provide them with management and guarantee services during the affiliation period.
−Removed: Service fees for management and guarantee services are paid by such automobile purchasers on a monthly basis for the management and guarantee services provided during the affiliation period.
−Removed: We recognize revenue over the affiliation period when performance obligations are completed.
−Removed: Sales of automobiles – We generate revenue from sales of automobiles to the customers of Jinkailong and Hunan Ruixi.
−Removed: The control over the automobile is transferred to the purchaser along with the delivery of automobiles.
−Removed: The amount of the revenue is based on the sale price agreed by Hunan Ruixi or Jinkailong and their customers.
−Removed: We recognize revenues when an automobile is delivered and control is transferred to the purchaser.
−Removed: Accounts receivable related to the revenue are being collected over 36 to 48 months.
−Removed: The interest component is included in the non-current portion of the accounts receivable.
−Removed: Service fees from NEVs leasing and automobile purchase services – Services fees from NEVs leasing and automobile purchase services are paid by lessees who rent new energy electric vehicles from us or automobile purchasers for a series of the services provided to them throughout the purchase process such as credit assessment, preparation of financing application materials, assistance with closing of financing transactions, license and plate registration, payment of taxes and fees, purchase of insurance, installment of GPS devices, ride-hailing driver qualification and other administrative procedures.
−Removed: The amount of services fees for NEVs leasing is based on the product solutions while these fees for purchase is based on the sales price of the automobiles and relevant services provided.
−Removed: We recognize revenue when all the services are completed and an automobile is delivered to the purchaser at a point in time.
−Removed: Accounts receivable related to the revenue from NEVs leasing is collected upon the NEVs are delivered to lessees while accounts receivables from purchase services are being collected over 36 to 48 months.
−Removed: The interest component is included in the non-current portion of the accounts receivable.
−Removed: Online ride-hailing platform service revenue
−Removed: We generate revenue from providing services to online ride-hailing drivers (“Drivers”) to assist them in providing transportation services to riders (“Riders”) looking for taxi/ride-hailing services.
−Removed: We earn commissions for each completed order in an amount equal to the difference between an upfront quoted fare and the amount earned by a Driver based on actual time and distance for the ride charged to the Rider.
−Removed: As a result, we bear a single performance obligation in the transaction of connecting Drivers with Riders to facilitate the completion of a successful transportation service for Riders.
−Removed: We recognize revenue upon completion of a ride as the single performance obligation is satisfied and we have the right to receive payment for the services rendered upon the completion of the ride.
−Removed: We evaluate the presentation of revenue on a gross or net basis based on whether we control the service provided to the Rider and are the principal (i.e., “gross”), or we arrange for other parties to provide the service to the Rider and are an agent (i.e., “net”).
−Removed: Since we are not primarily responsible for ride-hailing services provided to Riders, nor do we have inventory risk related to the services, we recognize revenue at net basis.
−Removed: We account for leases in accordance with ASC 842.
−Removed: The two primary accounting provisions we use to classify transactions as sales-type or operating leases are:
−Removed: (i) a review of the lease term to determine if it is for the major part of the economic life of the underlying equipment (defined as greater than 75%);
−Removed: and (ii) a review of the present value of the lease payments to determine if they are equal to or greater than substantially all of the fair market value of the equipment at the inception of the lease (defined as greater than 90%).
−Removed: Automobiles included in arrangements meeting these conditions are accounted for as sales-type leases.
+Added: Leases - Lessor
+Added: We recognized revenue as lessor in accordance with ASC 842.
+Added: We recognized sales from sales-type leases equal to the present value of the minimum lease payments discounted using the implicit interest rate in the lease and cost of sales equal to carrying amount of the asset being leased and any initial direct costs incurred, less the present value of the unguaranteed residual.
Interest income from the lease is recognized in financing revenues over the lease term.
−Removed: Automobiles included in arrangements that do not meet these conditions are accounted for as operating leases and revenue is recognized over the term of the lease.
+Added: Operating leases and revenue is recognized over the term of the lease.
+Added: The basis of the amount of revenue that is recognized since it isn’t straight-line basis
We exclude from the measurement of our lease revenues any tax assessed by a governmental authority that is both imposed on and concurrent with a specific revenue-producing transaction and collected from a customer.
−Removed: We consider the economic life of most of automobile to be three to four years, since this represents the most frequent contractual lease term for its automobile and the automobile will be used for Didi driving services.
−Removed: We believe three to four years is representative of the period during which the automobile is expected to be economically usable, with normal service, for the purpose for which it is intended.
−Removed: A portion of our direct sales of automobile to end customers are made through bundled lease arrangements which typically include automobile, services (automobile purchase services, facilitation fees, and management and guarantee services) and financing components where the customer pays a single negotiated fixed minimum monthly payment for all elements over the contractual lease term.
−Removed: Revenues under these bundled lease arrangements are allocated considering the relative standalone selling prices of the lease and non-lease deliverables included in the bundled arrangement and the financing components.
−Removed: Lease deliverables include the automobile and financing, while the non-lease deliverables generally consist of the services and repayment of advanced fees made on behalf of its customers.
−Removed: We consider the fixed payments for purposes of allocation to the lease elements of the contract.
−Removed: The fixed minimum monthly payments are multiplied by the number of months in the contract term to arrive at the total fixed lease payments that the customer is obligated to make over the lease term.
−Removed: Amounts allocated to the automobile and financing elements are then subjected to the accounting estimates under ASC 842 to ensure the values reflect standalone selling prices.
−Removed: The remainder of any fixed payments are allocated to non-lease elements (automobile purchase services, facilitation fees, and management and guarantee services), for which these revenues are recognized in a manner consistent with the guidance for service fees from automobile purchase services, facilitation fees from automobile transactions, and service fees from management and guarantee services as discussed above.
+Added: We consider the economic life of most of automobile to be three to five years, since this represents the most common long-term lease term for our automobile and the automobile will be used for online ride-hailing services.
+Added: We believe three to five years is representative of the period during which the automobile is expected to be economically usable, with normal service, for the purpose for which it is intended.
Our lease pricing interest rates, which are used in determining customer payments in a bundled lease arrangement, are developed based upon the local prevailing rates in the marketplace where its customer will be able to obtain an automobile loan under similar terms from the bank.
We reassess our pricing interest rates quarterly based on changes in the local prevailing rates in the marketplace.
−Removed: As of March 31, 2022, our pricing interest rate was 6.0% per annum.
+Added: As of March 31, 2023, our pricing interest rate is 6.0% per annum.
Share-based awards
−Removed: Share-based awards granted to our employees are measured at fair value on grant date and share-based compensation expense is recognized (i) immediately at the grant date if no vesting conditions are required, or (ii) using the accelerated attribution method, net of
−Removed: estimated forfeitures, over the requisite service period.
+Added: Share-based awards are measured at fair value on grant date and share-based compensation expense is recognized (i) immediately at the grant date if no vesting conditions are required, or (ii) using the straight-line basis, net of estimated forfeitures, over the requisite service period.
The fair value of restricted shares is determined with reference to the fair value of the underlying shares.
At each date of measurement, we review internal and external sources of information to assist in the estimation of various attributes to determine the fair value of the share-based awards granted by us, including but not limited to the fair value of the underlying shares, expected life, expected volatility and expected forfeiture rates.
−Removed: We are required to consider many factors and make certain assumptions during this assessment.
+Added: We are required to consider many factors and make certain assumptions
+Added: during this assessment.
If any of the assumptions used to determine the fair value of the share-based awards changes significantly, share-based compensation expense may differ materially in the future from that recorded in the current reporting period.
−Removed: We account for leases in accordance with ASC 842.
−Removed: Beginning in the year ended March 31, 2020, we entered into certain agreements as a lessor under which we lease automobiles to short-term (usually under twelve months) car service drivers.
−Removed: We also enter into certain agreements as a lessee to lease automobiles and to conduct our automobiles rental operations.
−Removed: If any of the following criteria are met, we classify the lease as a finance lease (as a lessee) or as a direct financing or sales-type lease (both as a lessor):
−Removed: ● The lease transfers ownership of the underlying asset to the lessee by the end of the lease term;
−Removed: ● The lease grants the lessee an option to purchase the underlying asset that the Company is reasonably certain to exercise;
−Removed: ● The lease term is for 75% or more of the remaining economic life of the underlying asset, unless the commencement date falls within the last 25% of the economic life of the underlying asset;
−Removed: ● The present value of the sum of the lease payments equals or exceeds 90% of the fair value of the underlying asset;
−Removed: ● The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.
−Removed: Leases that do not meet any of the above criteria are accounted for as operating leases.
−Removed: We combine lease and non-lease components in its contracts under Topic 842, when permissible.
+Added: Leases - Lessee
Finance and operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.
6 unchanged sentences
The leases generally do not provide a residual guarantee.
−Removed: The operating lease ROU asset also excludes lease incentives.
−Removed: Lease expense is recognized on a straight-line basis over the lease term.
+Added: The finance or operating lease ROU asset also excludes lease incentives.
+Added: Lease expense is recognized on a straight-line basis over the lease term for operating lease.
+Added: Meanwhile, we recognize the finance leases ROU assets and interest on an amortized cost basis.
+Added: The amortization of finance ROU assets is recognized on a straight-line basis as amortization expense, while the lease liability is increased to reflect interest on the liability and decreased to reflect the lease payments made during the period.
+Added: Interest expense on the lease liability is determined each period during the lease term as the amount that results in a constant periodic interest rate of the automobile loans on the remaining balance of the liability.
We review the impairment of our ROU assets consistent with the approach applied for our other long-lived assets.
2 unchanged sentences
We have elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows.
+Added: Business acquisitions
+Added: The Company accounts for its business combinations using the acquisition method of accounting in accordance with ASC 805 “Business Combinations.” The cost of an acquisition is measured at the aggregate of the acquisition date fair value of the assets transferred to the sellers and liabilities incurred by the Company and equity instruments issued.
+Added: Transaction costs directly attributable to the acquisition are expensed as incurred.
+Added: Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests.
+Added: Impairment of long-lived assets and goodwill
+Added: Long-lived assets
+Added: Long-lived assets, including property and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable.
+Added: We assess the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset.
+Added: If an impairment is identified, we would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values.
+Added: We review the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist annually or more frequently if events and circumstances indicate that it is more likely than not that an impairment has occurred.
+Added: The Company assesses qualitative factors to determine whether it is necessary to perform the two-step in accordance with ASC 350-20.
+Added: If the Company believes, as a result of the qualitative carrying amount, the two-step quantitative impairment test described below is required.
+Added: The first step compares the fair values of each reporting unit to its carrying amount, including goodwill.
+Added: If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required.
+Added: If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill.
+Added: The implied fair value of goodwill is determined in a manner similar to accounting for a business acquisition with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit.
+Added: The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill.
+Added: Estimating fair value is performed by utilizing various valuation techniques, with the primary technique being a discounted cash flow.
+Added: For the year ended March 31, 2023, we did not record impairment against goodwill.
+Added: For the year ended March 31, 2022, we recorded an impairment of $139,930 against goodwill.
+Added: (g) Allowances for doubtful accounts
+Added: Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of account receivable, finance receivable, prepayment, other receivables and other assets, and due from related parties.
+Added: Management also periodically evaluates above mentioned account’s corresponding parties’ financial condition, credit history and the current economic conditions to make adjustments in the allowance when necessary.
+Added: Above mentioned account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
+Added: (h) Inventory obsolescence
+Added: Inventories consist of automobiles which are held primarily for sale and for leasing purposes, and are stated at lower of cost or net realizable value, as determined using the weighted average cost method.
+Added: Management compares the cost of inventories with the net realizable value and if applicable, an allowance is made for writing down the inventory to its net realizable value, if lower than cost.
+Added: On an ongoing basis, inventories are reviewed for potential write-down for estimated obsolescence or unmarketable inventories which equals the difference between the costs of inventories and the estimated net realizable value based upon forecasts for future demand and market conditions.
+Added: When inventories are written-down to the lower of cost or net realizable value, it is not marked up subsequently based on changes in underlying facts and circumstances.
+Added: (i) Valuation of deferred tax assets
+Added: Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
+Added: Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
Quantitative and Qualitative Disclosures about Market Risk
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.