Senmiao Technology Ltd
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
VAI$2.19+30.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-09.
0001213900-24-012085
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001213900-24-069107
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 184 previous paragraphs and 127 current paragraphs.
55 unchanged; 57 reworded; 14 added; 54 removed; 18 previous and 1 current paragraphs rearranged.
Tables are not compared: 20 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Ability to Cut down the Loss from Ride-Hailing Platform Services
Current report
The growth of our online ride-hailing platform depends in part on our ability to cost-effectively attract and retain online ride-hailing drivers who satisfy our screening criteria and procedures, and to increase their utilization of our platform. However, to attract and retain qualified drivers, we have, among other things, offered incentives for drivers, which would adversely affecting the liquidity and financial performance. Our Ride-Hailing Platform Services has suffered accumulated loss during the past years. Due to the fierce competition of online ride-hailing industry in Chengdu and Changsha, and in order to improve the efficiency of the daily operation and profitability of our platform, we have engaged Anhui Lianma to co-operate the online ride-hailing platform by outsourcing certain daily operation work to it in most of cities our platform operates in Since December 2023. We also reduced the incentives paid to the drivers and had witnessed both the number of Active Drivers on our platform and the total number of the completed orders decreased accordingly. However, both the revenue and the operation loss of the Ride-Hailing Platform Services decreased.
Current report
However, the participants in the online ride-hailing industry are facing increasingly fierce competitions. According to the Ministry of Transportation (the “MOT”) of the People’s Republic of China, as of June 30, 2024, approximately 354 online ride-hailing platforms have obtained booking taxi operating licenses and the total volume of online ride-hailing orders was approximately 971 million in June 2024 in China, representing an increase of approximately 11% and 27% as compared with the ones as of June 30, 2023, respectively. Meanwhile, approximately 3.01 million online booking taxi transportation certificates and approximately 7.13 million online booking taxi driver’s licenses were issued nationwide in China, representing an increase of approximately 24% and 23% as compared with the ones as of June 30, 2023, respectively. Since 2023, the municipal transportation bureaus in a series of cities in China have released operational dynamics and risk warnings for the online ride-hailing industry, stating that the online ride-hailing market has become saturated. They remind enterprises and practitioners who intend to engage in online ride-hailing services should have a detailed understanding of relevant regulations, conduct market research, fully consider changes in operating income due to factors such as supply and demand, market conditions, fluctuations or continuous declines, objectively evaluate the actual income level of industry practitioners, and make rational and prudent career choices.
Current report
Monthly services commissions
Current report
We generated revenues of $26,254 and $50,590 from the monthly management and related services provided to our Partner Platforms and other companies during the three months ended June 30, 2024 and 2023, respectively. The decrease of $24,336 or approximately 48.1% was due to decrease in the number of the automobiles and drivers we served, who ran their business through the Partner Platforms.
Current report
We generate other revenues from other miscellaneous service fees charged to our customers. Other services fees mainly include the maintenance fees charged to our customers pursuant to certain new production solutions.
Current report
We had a gross profit of $67,565 in our online ride-hailing platform services during the three months ended June 30, 2024, which decreased by $241,318 from a gross profit of $308,883 in the three months ended June 30, 2023. The decrease was attributable to the decrease of gross fare of rides completed through our Xixingtianxia platform from approximately $5.3 million for the three months ended June 30, 2023 to approximately $1.3 million for the three months ended June 30, 2024, respectively. As the gross margin of the revenues from our Auto Business increased during the three months ended June 30, 2024, our overall gross profit margin of slightly increased to approximately 28.6% from approximately 27.8% during the three months ended June 30, 2023.
Current report
Income Tax Benefit
Current report
The decrease $188,104 in net cash provided by operating activities for the three months ended June 30, 2024 as compared with the three months ended June 30, 2023 was primarily attributable to (1) decrease of $240,859 in the change of accrued expenses and other liabilities (both third parties and due to a related party); (2) increase of $341,471 in net loss; and (3) decrease of $89,937 in the change of accounts payable; partially offset by (4) increase of $312,460 in change of fair value of derivative liabilities (from a gain to a loss); (5) increase of $179,503 in the change of prepayments, other receivables and other assets (both third parties and related party).
Current report
Critical Accounting Estimates
Current report
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”(“ASC Topic 326”), which requires us to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. We adopted this guidance effective April 1, 2023. ASC Topic 326 introduces an approach based on expected losses to estimate the allowance for credit losses, which replaces the previous incurred loss impairment model. The adoption of this guidance did not have a material impact on our consolidated financial statements. Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for credit losses. We estimate the allowance for credit losses based on an analysis of the aging of accounts receivable, assessment of collectability, including any known or anticipated economic conditions, customer-specific circumstances, recent payment history and other relevant factors.
Current report
The balance of other receivables is unsecured and is reviewed periodically to determine whether their carrying value has become impaired. We consider the balances to be impaired if the collectability of the balances becomes doubtful. We use theindividual specific valuation method to estimate the allowance for uncollectible balances. The allowance is also based on management’s best estimate of specific losses on individual exposures, as well as a provision on historical trends of collections and utilizations. Actual amounts received or utilized may differ from management’s estimate of credit worthiness and the economic environment.
Current report
As of June 30, 2024 and March 31, 2024, the allowance for credit losses represented approximately 7.1% and 4.3% of gross accounts receivable balances, respectively. The provision is recorded against accounts receivable balances, with a corresponding charge recorded in the unaudited condensed consolidated statements of operations and comprehensive loss. Delinquent account balances are written-off against the allowance for credit losses after management has determined that the likelihood of collection is not probable. Allowance for credit losses balances amounted to $1,535 and $1,545 as of June 30, 2024 and March 31, 2024, respectively for accounts receivable. Allowance for credit losses balances amounted to $20,342 and $20,474 as of June 30, 2024 and March 31, 2024, respectively for deposits and other receivables. Allowance for credit losses balances amounted to $3,252,513 and $3,099,701 as of June 30, 2024 and March 31, 2024, respectively, for amount due from a related party.
Current report
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. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
Removed paragraphs (54)
Previous report
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.
Previous report
As of December 31, 2023, Jinkailong, the equity investee company and former VIE, is exposed to credit risk as Jinkailong is required by certain financial institutions to provide guarantee on the lease/loan payments (including principal and interests) of the automobile purchasers referred by it. If a default occurs, Jinkailong is required to make the monthly payments on behalf of the defaulted purchasers to the financial institution. As of December 31, 2023, Hunan Ruixi did not have any guarantee liabilities due to financial institutions.
Previous report
In addition, automobiles are used as collateral to secure purchasers’ payment obligations under the financing arrangement. In the event of a default, Hunan Ruixi and Jinkailong can track the automobile through an installed GPS system and repossess and handover the automobile over to the financial institution so that they can be released from their guarantee liability. However, if a financial institution initiates a legal proceeding to collect payments due from a defaulted automobile purchaser, Jinkailong may be required to repay the defaulted amount as a guarantor. If it is unable to undertake the responsibility as a guarantor, its 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.
Previous report
As of December 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. Our risk management department typically starts to interact with overdue purchasers if they have missed one monthly installment payment. 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 allowance for credit losses against receivables from those purchasers. As of December 31, 2023, we recognized an accumulated allowance for credit losses against receivables of $366,542 from these purchasers served by Hunan Ruixi. For the three and nine months ended December 31, 2023, we recognized approximately$0 and $500 respectively, 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 three and nine months ended December 31, 2023, we sub-leased approximately 17 and 19 respectively, rendered automobiles in total to other customers. By subleasing automobiles from these drivers, we believe we can cope with the defaults and control associated risks.
Previous report
Actual Impact of Coronavirus (COVID-19) in China on Our Business
Previous report
Our Automobile Transactions and Related Services have been gradually recovering from the adverse impact of COVID-19 pandemic. As of December 31, 2023, 108 online ride-hailing drivers we serviced rendered their automobiles to Hunan Ruixi. As a result, we recorded accumulated allowance for credit losses of $366,542 for them. As most of the leasing term of the automobiles we delivered in Changsha in prior periods has come to the end, during the nine months ended December 31, 2023, the number of newly rendered automobiles decreased to 0 as compared with 7 during the nine months ended December 31, 2022. Meanwhile, over 1,200 online ride-hailing drivers rendered their automobiles to Jinkailong as of December 31, 2023. On the other hand, the number of the completed orders through our online ride-hailing platform had significant decrease in December 2022 due to the infection peak after China lifted the prevention and control of COVID-19.
Previous report
Our cash flow had been adversely impacted by local resurgences of COVID-19 in Chengdu, Changsha and Guangzhou while the COVID-19 measures in China kept 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.
Previous report
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.
Previous report
Ability to Manage and Maintain Ride-Hailing Business
Previous report
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. 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. We generate revenue from commissions earned from each completed order, which represent 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. As the aggregation platforms distribute the demand orders to different online ride-hailing platforms, the flow of drivers in our area of operations is enhanced, leading to a higher probability that more ride orders will be distributed to our platform, which in turn will increase the revenue of the drivers who use our platform (and our revenue). This also allows us to attract more drivers to engage their online ride-hailing business on our platform. Through a series of promotion and effective daily management and training services, we expect our own online ride-hailing platform will offer us a stable revenue source which can also help grow our automobile financing and leasing business. Besides, we are dealing with other trip platforms to attract more riders choosing their trip through our platform.
Previous report
Service fees from automobile purchase services and Service fees from automobile management and guarantee services
Previous report
The majority of our customers are online ride-hailing drivers. 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. The decrease of $7,144 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. We had management and guarantee services for over 12 and 91 automobiles during the three months ended December 31, 2023 and 2022, respectively.
Previous report
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 68.9%, and 31.1% of revenues from other service fees during the three months ended December 31, 2023, respectively. The commissions from Partner Platforms and other companies, and other miscellaneous service fees charged to our customers, which accounted for approximately 65.6%, and 34.4% of revenues from other service fees during the three months ended December 31, 2022, respectively.
Previous report
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. During the three months ended December 31, 2023, approximately 1.2 million rides with gross fare of approximately $3.6 million were completed through our Xixingtianxia platform and we earned online ride-hailing platform service fees of $510,203, after netting off approximately $40,000 incentives paid to Active Drivers. The decrease was mainly due to fewer completed orders as a result of increased competition and compliance checks conducted by our platform partner Gaode in Chengdu, during the three months ended December 31, 2023.
Previous report
We had a gross profit of $172,314 in our automobile operating leasing during the three months ended December 31, 2023, which increased by $446,207 from a gross loss of $273,893 in the same period in 2022. The increase was mainly due to the increase in the average utilization of the automobiles for operating lease from approximately 42.9% to 80.6% and the decrease in the average daily maintenance and insurance expense of the automobiles for operating lease as we used more NEVs in three months ended December 31, 2023 as compared with the same period in 2022. We had a gross profit of $129,118 in our online ride-hailing platform services during the three months ended December 31, 2023, which decreased by $178,110 from a gross profit of $307,228 in the same period in 2022. The decrease was attributable to the gross fare of rides completed through our Xixingtianxia platform decreased from approximately $4.4 million to approximately $3.6 million for the three months ended December 31, 2022 and 2023, respectively, and the decrease in average rate of commission earned from Active Drivers from approximately 16.8% to approximately 10.7% for the three months ended December 31, 2022 and 2023, respectively. The decrease of $33,279 in profit of other services was mainly due to the decrease of services fees for NEVs leasing pursuant to our adjustment on product solutions.
Previous report
Consequently, the overall gross profit margin increased to 25.8% during the three months ended December 31, 2023 as compared with 10.5% during the three months ended December 31, 2022. The increase was mainly due to the operating leasing had a gross profit margin of 17.4% during the three months ended December 31, 2023 as compared with a gross loss in the same period in 2022. It was partially offset by the decrease in the gross profit margin of online ride-hailing platform services from 37.9% during the three months ended December 31, 2022 to 25.3% during the three months ended December 31, 2023.
Previous report
Stock-based compensation
Previous report
In October 2023, we entered into three different consulting and services agreements (the “Consulting Agreements”) with three consultants (the “Consultants”), pursuant to which we engaged the Consultant to provide certain merger and acquisition consulting service, market research and business development advisory services, and financial consulting services, respectively. We issued an aggregate of 1,500,000 shares of our common stock in November 2023 to settle the compensation for the services and the recorded $444,300 service expense during the three months ended December 31, 2023.
Previous report
Income Tax Expense
Previous report
Revenues
Previous report
Revenue for the nine months ended December 31, 2023 decreased by $783,843, or approximately 12.4%, as compared with nine months ended December 31, 2022. The decrease was mainly due to the decrease of revenues from online ride-hailing platform services due to the decrease in orders caused by the market competition, and partly offset by the increase of operating lease revenues from automobile rentals as a result of the expansion and our continuous “efficiency - improving” strategy of this business.
Previous report
Financing revenues
Previous report
Service fees from NEVs leasing
Previous report
We generated revenues of $33,309 and $291,675 from leasing NEVs by charging leases service fees during the nine months ended December 31, 2023 and 2022, respectively. The amount of services fees for NEVs leasing is based on its product solutions. The decrease of $258,366 was mainly due to that we adjusted our product solutions during the nine months ended December 31, 2023, and more customers chose the solutions with no services fees for NEVs leasing.
Previous report
Service fees from automobile purchase services and Service fees from automobile management and guarantee services
Previous report
The majority of our customers are online ride-hailing drivers. 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. The decrease of $16,698 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. We had management and guarantee services for over 26 and 130 automobiles during the nine months ended December 31, 2023 and 2022, respectively.
Previous report
Other service fees
Previous report
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 58.9% and 41.1% of revenues from other service fees during the nine months ended December 31, 2023, respectively. The commissions from Partner Platforms and other companies, and other miscellaneous service fees charged to our customers, which accounted for approximately 60.2% and 39.8% of revenues from other service fees during the nine months ended December 31, 2022, respectively. The increase of $104,364 was due to the increase of commissions from Partner Platforms, which was a result of the increase in operating lease revenues from automobile rentals.
Previous report
During the nine months ended December 31, 2022, approximately 4.8 million rides with gross fare of approximately $15.7 million were completed through our Xixingtianxia platform and we earned online ride-hailing platform service fees of $2,970,518, after netting off approximately $0.4 million incentives paid to Active Drivers.
Previous report
Cost of Revenues
Previous report
Cost of revenues represents (1) the amortization, daily maintenance and insurance expense related to our Auto Operating Leasing of $2,728,151; (2) technical service charges, insurance and other expenses related to our Online Ride-Hailing Platform Services of $1,427,766; and (3) costs of our Auto Sales of $10,539. Cost of revenues decreased by $1,205,914 during the nine months ended December 31, 2023 as compared with the same period in 2022, mainly due to (1) the decrease of $514,888 in costs of automobiles under operating leases due to and the decrease in the average daily maintenance and insurance expense of the automobiles for operating lease as we used more NEVs in the nine months ended December 31, 2023; (2) the decrease of $392,822 in direct expense and technical service fees of online ride-hailing platform services due to the decrease in the number of completed orders; and (3) $298,204 in costs of automobile sold as the number of automobiles sold decreased from 41 to 2. During the nine months ended December 31, 2023 and 2022, the costs of automobiles under operating leases with amount of $473,317 and $333,756, respectively, was from one of our related parties.
Previous report
Gross Profit
Previous report
We had gross profit of $1,373,619 and $951,548, respectively, during the nine months ended December 31, 2023 and 2022. The increase of $422,071 was mainly due to the increase in profit in our operating lease, partially offset by the decrease in profit from online ride-hailing platform services and other services. The following table sets forth the breakdown of gross profit (loss) by major revenue source for the nine months ended December 31, 2023 and 2022:
Previous report
We had a gross profit of $341,307 in our automobile operating leasing during the nine months ended December 31, 2023, which increased by $1,013,387 from a gross loss of $672,080 in the same period in 2022. The increase was mainly due to the increase in the average utilization of the automobiles for operating lease from approximately 65.0% to 77.6% and the decrease in the average daily maintenance and insurance expense of the automobiles for operating lease as we used more NEVs in nine months ended December 31, 2023. We had a gross profit of $631,856 in our online ride-hailing platform services during the nine months ended December 31, 2023, which decreased by $518,074 from a gross profit of $1,149,930 in the same period in 2022. The decrease was attributable to the gross fare of rides completed through our Xixingtianxia platform decreased from approximately $15.7 million to approximately $12.5 million for the nine months ended December 31, 2022 and 2023, respectively, and the decrease in average rate of commission earned from Active Drivers from approximately 17.3% to approximately 13.9% for the nine months ended December 31, 2022 and 2023, respectively. The decrease of $153,563 in profit of other services was mainly due to the decrease of services fees for NEVs leasing pursuant to our adjustment on product solutions.
Previous report
Consequently, the overall gross profit margin increased to 24.8% during the nine months ended December 31, 2023 as compared with 15.0% during the nine months ended December 31, 2022. The increase was mainly due to the operating leasing had a gross profit margin of 11.1% during the nine months ended December 31, 2023 as compared with a gross loss in the same period in 2022. It was partially offset by the decrease in the gross profit margin of online ride-hailing platform services from 38.7% during the nine months ended December 31, 2022 to 30.7% during the nine months ended December 31, 2023.
Previous report
Selling, General and Administrative Expenses
Previous report
Selling, general and administrative expenses primarily consist of salary and employee benefits, office rental expense, travel expenses, and other costs. Selling, general and administrative expenses decreased from $4,832,658 for the nine months ended December 31, 2022 to $3,398,997 for the nine months ended December 31, 2023, representing a decrease of $1,433,661, or approximately 29.7%. The decrease was attributable to our continuous control on costs and streamline expenses during the nine months ended December 31, 2023. The decrease mainly consists of (1) a decrease of $773,239 in salary and employee benefits as the average monthly number of our employees decreased from 186 to 111; (2) a decrease of $292,419 in offices expenditure as a result of reducing office rental and insurance charges; (3) a decrease of $158,869 in professional service fees such as financial, legal and market consulting; (4) a decrease of $204,661 in amortization of intangible assets and automobiles which were rendered to us but have not been sub-leased as our ROUs have been fully amortized; and (5) a liquidated damages compensation of $86,250 for investors in November 2021 Private Placement incurred during the nine months ended December 31, 2022 while no similar expenses during the nine months ended December 31, 2023.
Previous report
Provision for credit losses
Previous report
We re-evaluated the possibility of collection of unsettled balances from customers of our automobile transactions and related services, and provided provision for credit losses of $680,396 against receivables from Jinkailong during the nine months ended December 31, 2023. While we provided provision for credit losses of $467,590 and $3,392, respectively, against receivables from Jinkailong and a customer we serviced who purchased our automobiles from Yicheng, during the nine months ended December 31, 2022.
Previous report
Impairments of inventories
Showing the first 40 of 54 passages. Open the source sections for the rest.
Reworded paragraphs (57)
Previous wording
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”). We provide automobile transaction and related services through our wholly owned subsidiaries, Sichuan Senmiao Yicheng Assets Management 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. (“Jiekai”), and Hunan Ruixi Financial Leasing Co., Ltd. (“Hunan Ruixi”), a PRC limited liability company, and equity investee company, Sichuan Jinkailong Automobile Leasing Co., Ltd. (“Jinkailong”). Since October 2020, we also operate an online ride-hailing platform through Hunan Xixingtianxia Technology Co., Ltd. (“XXTX”), a wholly-owned subsidiary of Sichuan Senmiao Zecheng Business Consulting Co., Ltd., our wholly-owned subsidiary (“Senmiao Consulting”). Our platform enables qualified ride-hailing drivers to provide application-based transportation services mainly in Chengdu, Changsha and other 24 cities in China. Substantially all of our operations are conducted in China.
Current wording
We are a provider of automobile transaction and related services, connecting 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”). We provide automobile transaction and related services through our wholly owned subsidiary, Chengdu Corenel Technology Limited, a PRC limited liability company (“Corenel”), and our majority owned subsidiaries, Chengdu Jiekai Technology Ltd. (“Jiekai”), and Hunan Ruixi Financial Leasing Co., Ltd. (“Hunan Ruixi”), a PRC limited liability company. Since October 2020, we also operate an online ride-hailing platform through Hunan Xixingtianxia Technology Co., Ltd. (“XXTX”), a wholly-owned subsidiary of Sichuan Senmiao Zecheng Business Consulting Co., Ltd., our wholly-owned subsidiary (“Senmiao Consulting”). Our platform enables qualified ride-hailing drivers to provide application-based transportation services mainly in Chengdu, Changsha and other 20 cities in China. Substantially all of our operations are conducted in China.
Previous wording
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”); (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”); (iv) automobile financing where we provide our customers with auto finance solutions through financing leases (the “Auto Financing”); (v) auto management and guarantee services provided to online ride-hailing drivers after the delivery of automobiles (the “Auto Management and Guarantee Services”); and (vi) other supporting services provided to online ride-hailing drivers. 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.
Current wording
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”); (ii) monthly services where we provide management and related services to Partner Platforms and other companies and earn commission from them (the “Auto Commissions”); (iii) automobile financing where we provide our customers with auto finance solutions through financing leases (the “Auto Financing”); (iv) service fees from new energy vehicles (“NEVs”) leasing, automobile purchase 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 “NEVs and Purchase Services”); and (v) automobile sales (the “Auto Sales”) and other supporting services provided to online ride-hailing drivers, including auto management and guarantee services (the “Auto Management and Guarantee Services”). 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.
Previous wording
Since November 22, 2018, the acquisition date of Hunan Ruixi, and as of December 31, 2023, we and our former VIEs have facilitated financing for an aggregate of 1,687 automobiles with a total value of approximately $23.5 million, sold an aggregate of 1,468 automobiles with a total value of approximately $14.1 million and delivered approximately 3,310 automobiles under operating leases (including 1,826 automobiles used to be delivered by Jinkailong before March 31, 2022) and 161 automobiles under financing leases to customers, the vast majority of whom are online ride-hailing drivers.
Current wording
Since November 22, 2018, the acquisition date of Hunan Ruixi, and as of June 30, 2024, we have facilitated financing for an aggregate of 312 automobiles with a total value of approximately $5.3 million, sold an aggregate of 1,516 automobiles with a total value of approximately $14.5 million and delivered 1,892 automobiles under operating leases and 178 automobiles under financing leases to customers, the vast majority of whom are online ride-hailing drivers.
Previous wording
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 three and nine months ended December 31, 2023 and 2022:
Current wording
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 three months ended June 30, 2024 and 2023:
Previous wording
As of March 31, 2022, we deconsolidated Jinkailong and its operation result was not included in our consolidated statements of operations and comprehensive loss since then. 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’s business operations in Changsha and Chengdu. During the three months ended December 31, 2023, our Auto Operating Leasing, Auto Financing and other services income accounted for approximately 89.5%, 1.1% and 9.4% of our total revenue from our automobile transactions and related services, respectively, while our Auto Operating Leasing, Auto Financing and other services income accounted for approximately 83.9%, 0.9% and 15.2% for the three months ended December 31, 2022, respectively. During the nine months ended December 31, 2023, our Auto Operating Leasing, Auto Sales, Auto Financing and other services income accounted for approximately 88.2%, 0.3%,1.1% and 10.4% 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 76.7%, 6.7%, 0.9% and 15.7% for the nine months ended December 31, 2022, respectively.
Current wording
During the three months ended June 30, 2024, our Auto Operating Leasing, Auto Commissions, Auto Financing and other services income accounted for approximately 86.0%, 3.0%, 2.5%, and 8.5% of our total revenue from our automobile transactions and related services, respectively, while our Auto Operating Leasing, Auto Commissions, Auto Financing, Auto Sales, and other services income accounted for approximately 88.8%, 4.3%, 1.1%, 0.4% and 5.4% for the three months ended June 30, 2023, respectively.
Previous wording
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. 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. As of the filing date of this Report, Senmiao Consulting has made accumulated capital contribution of RMB40.41 million (approximately $5.69 million) to XXTX and the remaining amount is expected to be paid before December 31, 2025.
Current wording
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. 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. As of the filing date of this Report, Senmiao Consulting has made accumulated capital contribution of RMB40.3 million (approximately $5.55 million) to XXTX.
Previous wording
XXTX operates Xixingtianxia and holds a national online reservation taxi operating license. The platform is presently servicing online ride-hailing drivers in 26 cities in China, including Chengdu, Changsha and so on, providing them with a platform to view and take customer orders for rides. We currently collaborate with Gaode Map, a well-known aggregation platform in China on our ride-hailing platform services. 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. 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. XXTX earns commissions for each completed order as 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. XXTX settles its commissions with the aggregation platforms on a weekly basis.
Current wording
XXTX operates Xixingtianxia and holds a national online reservation taxi operating license. The platform is presently servicing online ride-hailing drivers in 22 cities in China, including Chengdu, Changsha and so on, providing the drivers in these cities with a platform to view and take customer orders for rides. We currently collaborate with Gaode Map, a well-known aggregation platform in China on our ride-hailing platform services. 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. 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. XXTX earns commissions for each completed order as 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. XXTX settles its commissions with the aggregation platforms on a weekly basis. Since December 2023, in order to improve the efficiency of XXTX’s daily operation and profitability, XXTX has engaged Anhui Lianma Technology Co., Ltd. (“Anhui Lianma”), a third-party to co-operate the online ride-hailing platform by outsourcing certain daily operation work to Anhui Lianma in most of cities it operates platform in XXTX and Anhui Lianma will jointly share the operational profits, with the specific calculation method being defined in the cooperation agreement.
Previous wording
Meanwhile, in order to strengthen our market position in certain cities, during the nine months ended December 31, 2023, our subsidiary, Jiekai, and our equity investee company and former VIE, Jinkailong, cooperated with other online ride-hailing platforms (“Partner Platforms”), such as Chengdu Anma Zhixing Technology Co., Ltd. and Sichuan Peitu Kuaixing 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. Jiekai and Jinkailong earned rental income from drivers and earned commissions from Partner Platforms.
Current wording
Meanwhile, in order to strengthen our market position in certain cities, during the three months ended June 30, 2024, our subsidiaries, Hunan Ruixi and Jiekai, cooperated with other online ride-hailing platforms (“Partner Platforms”), such as Hunan DiDi Technology Co., Ltd., Chengdu Anma Zhixing Technology Co., Ltd., Sichuan Peitu Kuaixing Technology Co., Ltd. and Chongqing Yiqizhao Technology Co., Ltd. Chengdu Branch, whereby the online ride-hailing requests and orders shall be completed on Partner Platforms utilizing the network of cars and drivers of us while Hunan Ruixi and Jiekai earned rental income from drivers and earned commissions from Partner Platforms.
Previous wording
During the nine months ended December 31, 2023, approximately 4.1 million rides with gross fare of approximately $12.5 million were completed through Xixingtianxia and an average of approximately 5,400 ride-hailing drivers completed rides and earned income through Xixingtianxia (the “Active Drivers”) each month. During the nine months ended December 31, 2023, we earned online ride-hailing platform service fees of approximately $2.1 million, after netting off approximately $0.2 million incentives paid to Active Drivers.
Current wording
During the three months ended June 30, 2024, approximately 0.4 million rides with gross fare of approximately $1.3 million were completed through Xixingtianxia and the platform had an average of approximately 2,300 ride-hailing drivers completed rides and earned income through Xixingtianxia (the “Active Drivers”) each month. During the three months ended June 30, 2024, we earned online ride-hailing platform service fees of approximately $0.2 million, after netting off approximately $24,000 incentives paid to Active Drivers.
Previous wording
During the nine months ended December 31, 2022, approximately 4.8 million rides with gross fare of approximately $15.7 million were completed through Xixingtianxia and an average of over 5,200 Active Drivers each month. During the nine months ended December 31, 2022, we earned online ride-hailing platform service fees of approximately $3.0 million, netting off approximately $0.4 million incentives paid to Active Drivers.
Current wording
During the three months ended June 30, 2023, approximately 1.7 million rides with gross fare of approximately $5.3 million were completed through Xixingtianxia and the platform had an average of over 6,200 Active Drivers each month. During the three months ended June 30, 2023, we earned online ride-hailing platform service fees of approximately $0.9 million, netting off approximately $0.1 million incentives paid to Active Drivers.
Previous wording
Our revenue growth has been largely driven by the expansion of our automobile lessee base and the corresponding revenue generated from operating and financial leasing. After the acquisition of XXTX, our revenue growth also depends on the number of completed online ride-hailing orders on our platform, which largely depends on the number of Active Drivers who complete ride-hailing transactions on our platform. We acquire customers for our Automobile Transaction and Related Services, as well as for our Online Ride-hailing Platform Services, through the network of third-party sales teams, referral from online ride-hailing platforms and our own efforts including online advertising and billboard advertising. We also send out fliers and participate in trade shows to advertise our services. We plan to maintain the number of our Active Drivers by marketing our platform to our existing and prospective automobile lessees in the cities we now operate in. We expect the expansion of our Active Driver base to promote the growth of our automobile rental business because we offer automobile rental solutions/incentives specifically targeted at drivers using our platform and the Partner Platforms. An effective cross-selling strategies between our automobile leasing business and Online Ride-hailing Platform Services business is important to our expansion and revenue growth. We also plan to strengthen our marketing efforts through the collaboration with certain automobile dealers and through our own team by employing more experienced staffs and improving the quality and variety of our services. As of December 31, 2023, we had 5 and 38 employees in our own sales department and sales department of our equity investee company, Jinkailong, respectively.
Current wording
Our revenue growth has been largely driven by the expansion of our automobile lessee base and the corresponding revenue generated from operating and financial leasing, as well as the number of completed online ride-hailing orders on our platform, which largely depends on the number of Active Drivers who complete ride-hailing transactions on our platform. We acquire customers for our Automobile Transaction and Related Services, as well as for our Online Ride-hailing Platform Services, through the network of third-party sales teams, referral from online ride-hailing platforms and our own efforts including online advertising and billboard advertising. We also send out fliers and participate in trade shows to advertise our services. We plan to maintain the number of our Active Drivers by marketing our platform to our existing and prospective automobile lessees in the cities we now operate in. We expect the expansion of our Active Driver base to promote the growth of our automobile rental business because we offer automobile rental solutions/incentives specifically targeted at drivers using our platform and the Partner Platforms. An effective cross-selling strategies between our automobile leasing business and Online Ride-hailing Platform Services business is important to our expansion and revenue growth. We also plan to strengthen our marketing efforts through the collaboration with certain automobile dealers and through our own team by employing more experienced staff, sharing market resources with our equity investee company, and improving the quality and variety of our services. As of June 30, 2024, we had 5 employees in our own sales department.
Previous wording
Due to the fierce competition of online ride-hailing industry in Chengdu, the demand for short-term car rentals remained stable during the three months ended December 31, 2023. To meet the demand in Chengdu and Changsha, we purchased and leased automobiles from third parties for our operating lease. 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. 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. As of December 31, 2023, we had one parking lot, an exhibition hall and 4 employees in Changsha, and our equity investee company, Jinkailong, had one parking lot and 17 employees in Chengdu, for parking and management of automobiles for operating lease. During the three months ended December 31, 2023 and 2022, the average utilization of the automobiles for operating lease was approximately 80.6% and 42.9%, respectively. During the nine months ended December 31, 2023 and 2022, the average utilization of the automobiles for operating lease was approximately 77.6% and 65.0%, respectively.
Current wording
Due to the fierce competition of online ride-hailing industry in those cities we operate in, we have witnessed a high turn-over rate on the short-term car rentals during the three months ended June 30, 2024. To meet the demand in Chengdu and Changsha, we have purchased and leased automobiles from third parties for our operating lease. 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. The effective management of our automobiles through our proprietary system and experienced auto-management team could provide in-time delivery and qualified automobiles to potential lessees, either for personal use or providing online ride-hailing services. As of June 30, 2024, for parking and management of automobiles for operating lease, we had one parking lot, an exhibition hall and 3 employees in Changsha, and we also share the parking lot with our equity investee company, Jinkailong in Chengdu. During the three months ended June 30, 2024 and 2023, the average utilization of the automobiles for operating lease was approximately 90.4% and 79.8%, respectively.
Previous wording
The growth of our revenue depends on our ability to improve existing solutions and services provided, continue identifying evolving business needs, refine our collaborations with business partners and provide value-added services to our customers. The attraction of new automobile leases depends on our leasing solutions with attractive rental price and flexible leasing terms. We have also adopted a stable pricing formula, considering the historical and future expenditure, remaining available leasing months and market price to determine our rental price for varied rental solutions. Furthermore, our product designs affect the type of automobile leases we attract, which in turn affect our financial performance. 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.
Current wording
The growth of our revenue depends on our ability to improve existing solutions and services provided, continue identifying evolving business needs, refine our collaborations with business partners and provide value-added services to our customers. The attraction of new automobile leases depends on our leasing solutions with attractive rental price and flexible leasing terms. We have also adopted a series of pricing formulas to adopt the market changes, considering the historical and future expenditure, remaining available leasing months and market price to determine our rental price for varied rental solutions. Furthermore, our product designs affect the type of automobile leases we attract, which in turn affect our financial performance. 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.
Previous wording
We used to advance the purchase price of automobiles and all service expenses when we provide related services to the purchasers. We collect the receivables due from automobile purchasers from their monthly installment payments and repay financial institutions on behalf of the purchasers every month. As of December 31, 2023, we had accounts receivable of approximately $11,000 and advanced payments of approximately $5,000 due from the historical automobile purchasers which will be collected through installment payments on a monthly basis during the relevant affiliation periods. 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. 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. Besides, during the nine months ended December 31, 2023, we settled our commissions with the Partner Platforms for our online ride-hailing platform services and automobile rental income on a monthly basis. As of December 31, 2023, we had accounts receivable of online ride-hailing service fees of approximately $10,000 in total.
Current wording
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. 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. As of June 30, 2024, we had accounts receivable of operating lease of approximately $12,000 in total. Besides, during the three months ended June 30, 2024, we settled our commissions with the Partner Platforms for our online ride-hailing platform services and automobile rental income on a monthly basis. As of June 30, 2024, we had accounts receivable of online ride-hailing service fees of approximately $8,000 in total. We used to advance the purchase price of automobiles and all service expenses when we provide related services to the purchasers. We collect the receivables due from automobile purchasers from their monthly installment payments during the relevant affiliation periods. As of June 30, 2024, we had accounts receivable of approximately $2,000 and advanced payments of approximately $3,000 due from the historical automobile purchasers.
Previous wording
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. 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 nine months ended December 31, 2023. 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.
Current wording
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. 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 three months ended June 30, 2024. 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.
Previous wording
Further, the automobiles subject to our financing leases are not collateralized by us. As of December 31, 2023, the total value of non-collateralized automobiles was approximately $285,000. 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.
Current wording
Further, the automobiles subject to our financing leases are not collateralized by us. As of June 30, 2024, the total value of non-collateralized automobiles was approximately $255,000. 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.
Previous wording
Pursuant to the cooperation agreement signed with Didi Chuxing Technology Co., Ltd. (“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. However, the service fees we earned from Didi for automobile transaction and related services currently represent less than 0.1% of our total revenue. Therefore, we believe that the risk of termination of cooperation with Didi on automobile transaction and related services will not have a material influence on our business or results of operations.
Current wording
Meanwhile, pursuant to the cooperation agreement signed with Didi Chuxing Technology Co., Ltd. (“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. However, the service fees we earned from Didi for automobile transaction and related services currently represent less than 0.1% of our total revenue. Therefore, we believe that the risk of termination of cooperation with Didi on automobile transaction and related services will not have a material influence on our business or results of operations.
Previous wording
The demand for our services depends on overall market conditions of the online ride-hailing industry in China. The continuous growth of the urban population places increasing pressure on the urban transportation and the improvement of living standards has increased the market demand for quality travel in China. Traditional taxi service is limited, and the emerging online platforms have created good opportunities for the development of the online ride-hailing service market. According to the 52th Statistical report on Internet Development in China published in August 2023 by the China Internet Network Information Center (the “CNNIC”), the number of online ride-hailing service users had reached 472 million by the end of June 2023, and took approximately 43.8% 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. According to the Ministry of Transportation (the “MOT”) of the People’s Republic of China, as of December 31, 2023, approximately 337 online ride-hailing platforms have obtained booking taxi operating licenses and the total volume of online ride-hailing orders was approximately 894 million in December 2023 in China. Meanwhile, approximately 2.79 million online booking taxi transportation certificates and approximately 6.57 million online booking taxi driver’s licenses were issued nationwide in China. Since 2019, in addition to the traditional online ride-hailing platforms, automobile manufacturers, offline operation service companies, financial and map service providers, among others, have built cooperation relationships with each other to make the online ride-hailing industry a more aggregated industry.
Current wording
The demand for our services depends on overall market conditions of the online ride-hailing industry in China. The continuous growth of the urban population places increasing pressure on the urban transportation and the improvement of living standards has increased the market demand for quality travel in China. Traditional taxi service is limited, and the emerging online platforms have created good opportunities for the development of the online ride-hailing service market. The market value is expected to increase from RMB354.7 billion in 2024 to RMB751.3 billion in 2028, owing to rising consumer demand for economical mobility options and an amplified penetration of shared mobility services, especially in lower-tier cities. According to the 53th Statistical report on Internet Development in China published in March 2024 by the China Internet Network Information Center (the “CNNIC”), the number of online ride-hailing service users had reached 528 million by the end of December 2023, and took approximately 48.3% of the total number of Chinese internet users. In addition, in recent years, aggregation platforms have gained rising significance in the shared mobility industry. According to Frost & Sullivan, the portion of ride hailing orders fulfilled through aggregation platforms increased from 3.5% in 2018 to 30.0% in 2023, and is expected to further increase to 49.0% by 2028. The online ride-hailing industry is also facing increasing competition in China and is attracting more capital investment. For example, Dida Inc., Chenqi Technology Limited and CaoCao Inc. have filed their prospectuses to the Stock Exchange of Hong Kong Limited in March 2024 and April 2024, respectively.
Previous wording
The online ride-hailing industry may also be affected by, among other factors, the general economic conditions in China. The interest rates and unemployment rates may affect the demand of ride-hailing services and automobile purchasers’ willingness to seek credit from financial institutions. Adverse economic conditions could also reduce the number of qualified automobile purchasers and online ride-hailing drivers seeking credit from the financial institutions, as well as their ability to make payments. 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.
Current wording
The online ride-hailing industry may also be affected by, among other factors, the general economic conditions in China. The interest rates and unemployment rates may affect the demand of ride-hailing services and automobile purchasers’ willingness to seek credit from financial institutions. Adverse economic conditions could also reduce the average income of individual and intensify the competition between platforms. The platforms may spend more incentives and increase promotion activities to attract more riders and maintain sufficient online ride-hailing drivers to provide transportation services to riders. 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.
Previous wording
In addition to the national online reservation taxi operating license, XXTX and its subsidiaries also obtained the online reservation taxi operating license 33 cities, including Chengdu, Changsha, Guangzhou, Tianjin, Shenyang, Harbin, Changchun, Wenzhou, Nanchang, Haikou, Xining, two cities in Shandong, and Guangxi Province, respectively, three cities in Guizhou Province, seven cities in Jiangsu Province, other two cities in Hunan and Guangdong Province, respectively, and other four cities in Sichuan Province from June 2020 to July 2023, to operate the online ride-hailing platform services.
Current wording
In addition to the national online reservation taxi operating license, XXTX and its subsidiaries also obtained the online reservation taxi operating license in 29 cities, including Chengdu, Changsha, Tianjin, six cities in Jiangsu Province, five cities in Sichuan Province, three cities in Guizhou Province, and 12 cities in other 10 provinces from June 2020 to October 2023, to operate the online ride-hailing platform services.
Previous wording
However, approximately 19% of our ride-hailing drivers have not obtained the driver’s license for online ride-hailing services as of December 31, 2023 while all of the cars used for online ride-hailing services which we provided management services have the automobile certificate. Without requisite automobile certificate or driver’s license, these drivers may be suspended from providing ride-hailing services, confiscated their illegal income and subject to fines of up to 10 times of their illegal income. Starting in December 2019, Didi began to enforce such limitation on drivers in Chengdu who have a driver’s license but operate automobiles without the automobile certificate.
Current wording
However, approximately 32% of our ride-hailing drivers have not obtained the driver’s license for online ride-hailing services as of June 30, 2024 while all of the cars used for online ride-hailing services which we provided management services have the automobile certificate. Without requisite automobile certificate or driver’s license, these drivers may be suspended from providing ride-hailing services, confiscated their illegal income and subject to fines of up to 10 times of their illegal income. Starting in December 2019, Didi began to enforce such limitation on drivers in Chengdu who have a driver’s license but operate automobiles without the automobile certificate. Meanwhile, during the three months ended June 30, 2024, Gaode conducted several rounds of compliance checks in Chengdu and other cities. Gaode reduced the number of orders dispatched to XXTX platform as it found certain drivers who provide their online ride-hailing services through our platform without obtaining the driver’s licenses during the check. Accordingly, we have strengthened the drivers’ qualification check, and the decrease in the number of drivers without licenses further resulted to the decrease in the number of orders completed through XXTX platform. Thus, our revenue from online ride-hailing platform services decreased during the three months ended June 30, 2024 as compared with last year.
Previous wording
Furthermore, according to the Interim Measures, no enterprise or individual is allowed to provide information for conducting online ride-hailing services to unqualified vehicles and drivers. Pursuant to the Interim Measures, XXTX and its subsidiaries may be fined between RMB5,000 to RMB30,000 (approximately $700 to $4,225) for violations of the Interim Measures, including providing online ride-hailing platform services to unqualified drivers or vehicles. During the three and nine months ended December 31, 2023, we have been fined by approximately $18,000 and $44,000 by Traffic Management Bureaus in Chengdu and Changsha, of which, approximately $14,000 and $30,000 respectively, was further compensated by drivers or cooperated third parties. 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.
Current wording
Furthermore, according to the Interim Measures, no enterprise or individual is allowed to provide information for conducting online ride-hailing services to unqualified vehicles and drivers. Pursuant to the Interim Measures, XXTX and its subsidiaries may be fined between RMB5,000 to RMB30,000 ($688 to $4,128) for violations of the Interim Measures, including providing online ride-hailing platform services to unqualified drivers or vehicles. During the three months ended June 30, 2024, we have been fined by approximately $3,000 by Traffic Management Bureaus in Changsha. 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.
Previous wording
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. 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 shall 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. For example, from September 2023 to December 2023, Gaode has performed a series of compliance check aiming at driver’s license in several cities, including Chengdu and Guangzhou, which caused the decrease in the number of completed orders through our platform and the decrease in our online ride-hailing platform services accordingly.
Current wording
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. 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 shall 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.
Previous wording
Revenue for the three months ended December 31, 2023 decreased by 122,510, or approximately 7%, as compared with three months ended December 31, 2022. The decrease was mainly due to the decrease of revenues from online ride-hailing platform services resulted from the decrease in orders caused by the market competition, and partly offset by the increase of operating lease revenues from automobile rentals as a result of the expansion and our continuous “efficiency - improving” strategy of this business.
Current wording
Revenue for the three months ended June 30, 2024 decreased by $972,314, or approximately 46%, as compared with the three months ended June 30, 2023. The decrease was mainly due to the decrease of $662,215 of revenues from online ride-hailing platform services resulted from the decrease in orders caused by the market competition, and the decrease of $300,079 of operating lease revenues from automobile rentals resulted from the decrease number of the automobiles for operating lease.
Previous wording
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 continuously account for a majority of our revenues. We plan to provide a series of product solutions to sustain and further increase the number of our automobiles for operating leases.
Current wording
As we focus on our automobile rental business currently, we expect revenue from our automobile rental to continuously account for a majority of our revenues. We plan to provide a series of product solutions to sustain and further increase the number of our automobiles for operating leases.
Previous wording
Revenue from our automobile transaction and related services mainly includes operating lease revenues from automobile rentals, service fees from automobile purchase services, financing revenues, service fees from NEVs leasing, service fees from automobile management and guarantee services and other services fees, which accounted for approximately 89.5%, 1.7%, 1.1%, 0.8%, 0.2% and 6.7%, respectively, of the total revenue from automobile transaction and related services during the three months ended December 31, 2023. Meanwhile, operating lease revenues from automobile rentals, financing revenues, service fees from NEVs leasing, service fees from automobile management and guarantee services and other services fees, which accounted for approximately 83.9%, 0.9%, 5.3%, 1.0% and 8.9%, respectively, of the total revenue from automobile transaction and related services during the three months ended December 31, 2022.
Current wording
Revenue from our automobile transaction and related services mainly includes operating lease revenues from automobile rentals, monthly services commissions, financing revenues, service fees from NEVs leasing, service fees from automobile purchase services, and other services fees, which accounted for approximately 86.0%, 3.0%, 2.5%, 2.5%, 2.5%, and 3.5%, respectively, of the total revenue from automobile transaction and related services during the three months ended June 30, 2024. Meanwhile, operating lease revenues from automobile rentals, monthly services commissions, financing revenues, service fees from NEVs leasing, service fees from automobile purchase services, sales revenue of automobiles and other services fees, which accounted for approximately 88.8%, 4.3%, 1.1%, 1.7%, 1.0%, 0.4% and 2.7%, respectively, of the total revenue from automobile transaction and related services during the three months ended June 30, 2023.
Previous wording
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. The increase of rental income of $210,861 during the three months ended December 31, 2023 was mainly due to the increased average utilization of the automobiles for operating lease increased from approximately 42.9% to 80.6%. We leased over 870 automobiles with an average monthly rental income of approximately $477 per automobile, resulting in a rental income of $992,071, including rental income of $7,133 from Jinkailong, for the three months ended December 31, 2023. While we leased over 800 automobiles with an average monthly rental income of approximately $474 per automobile, resulting in a rental income of $781,210, including rental income of $30,748 from Jinkailong, for the three months ended December 31, 2022.
Current wording
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. The decrease of rental income of $300,079 or approximately 28.4% during the three months ended June 30, 2024 was mainly due to the decrease in the number of the automobiles leased for operating lease. We leased approximately 640 automobiles with an average monthly rental income of approximately $413 per automobile, resulting in a rental income of $756,315, including rental income of $5,243 from Jinkailong, for the three months ended June 30, 2024. While we leased over 1,000 automobiles with an average monthly rental income of approximately $491 per automobile, resulting in a rental income of $1,056,394, including rental income of $13,748 from Jinkailong, for the three months ended June 30, 2023.
Previous wording
We started our financial leasing business in March 2019 and began to generate interest income from providing financial leasing services to ride-hailing drivers in April 2019. 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. We recognized a total interest income of $12,195 from an average monthly number of 26 automobiles and $8,606 from an average monthly number of 37 automobiles during the three months ended December 31, 2023 and 2022, respectively. The increase was due to the monthly payment we charged to customers for financial leasing increased during the three months ended December 31, 2023.
Current wording
We started our financial leasing business in March 2019 and began to generate interest income from providing financial leasing services to ride-hailing drivers in April 2019. 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. We recognized a total interest income of $22,176 from an average monthly number of 38 automobiles and $13,600 from an average monthly number of 41 automobiles during the three months ended June 30, 2024 and 2023, respectively. The increase was due to the monthly payment we charged to customers for financial leasing increased during the three months ended June 30, 2024.
Previous wording
We generated revenues of $8,412 and $49,002 from leasing NEVs by charging leases service fees during the three months ended December 31, 2023 and 2022, respectively. The amount of services fees for NEVs leasing is based on its product solutions. The decrease of $40,590 was mainly due to that we adjusted our product solutions since January 2023, and more customers chose the solutions with no services fees for NEVs leasing.
Current wording
We generated revenues of $22,094 and $20,271 from leasing NEVs by charging leases service fees during the three months ended June 30, 2024 and 2023, respectively. The amount of services fees for NEVs leasing is based on its product solutions.
Previous wording
We generate revenues from providing a series of automobile purchase services throughout the automobile purchase transaction process, including sales-type lease. We had revenue from 14 automobiles purchase transaction during the three months ended December 31, 2023 while we had no revenue from automobile purchase services during the three months ended December 31, 2022. As a result, the related service fees generated increased $19,122 from the three months ended December 31, 2022 to the three months ended December 31, 2023.
Current wording
We generate revenues from providing a series of automobile purchase services throughout the automobile purchase transaction process, including sales-type lease. We had revenue from 16 automobiles purchase transaction during the three months ended June 30, 2024 while we had revenue from 5 automobile purchase services during the three months ended June 30, 2023. As a result, the related service fees generated increased $9,506 from $12,232 during the three months ended June 30, 2023 to $21,738 during the three months ended June 30, 2024.
Previous wording
We sold two used-automobile with income of $8,822 during the nine months ended December 31, 2023. Meanwhile, we sold 41 used-automobiles with income of $225,900 during the nine months ended December 31, 2022.
Current wording
We had no income from sales of automobiles during the three months ended June 30, 2024. Meanwhile, we sold one used automobile with income of $5,044 during the three months ended June 30, 2023.
Previous wording
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. During the nine months ended December 31, 2023, approximately 4.1 million rides with gross fare of approximately $12.5 million were completed through our Xixingtianxia platform and we earned online ride-hailing platform service fees of $2,059,622, after netting off approximately $0.2 million incentives paid to Active Drivers.
Current wording
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. During the three months ended June 30, 2024, approximately 0.4 million rides with gross fare of approximately $1.3 million were completed through our Xixingtianxia platform and we earned online ride-hailing platform service fees of $243,391, after netting off approximately $24,000 incentives paid to Active Drivers.
Previous wording
During the three months ended December 31, 2022, approximately 1.4 million rides with gross fare of approximately $4.4 million were completed through our Xixingtianxia platform and we earned online ride-hailing platform service fees of $810,295, after netting off approximately $0.1 million incentives paid to Active Drivers.
Current wording
During the three months ended June 30, 2023, approximately 1.7 million rides with gross fare of approximately $5.3 million were completed through our Xixingtianxia platform and we earned online ride-hailing platform service fees of $905,606, after netting off approximately $0.1 million incentives paid to Active Drivers. The decrease was mainly due to fewer completed orders as a result of increased competition and we have shrunk our investment in the Online Ride-hailing Platform Services.
Previous wording
Cost of revenues represents (1) the amortization, daily maintenance and insurance expense related to our Auto Operating Leasing of $819,757; and (2) technical service charges, insurance and other expenses related to our Online Ride-Hailing Platform Services of $381,085. Cost of revenues decreased by $357,328 during the three months ended December 31, 2023 as compared with the same period in 2022, mainly due to the decrease of $235,346 in costs of automobiles under operating leases due to the decrease in the average daily maintenance and insurance expense of the automobiles for operating lease as we used more NEVs in the three months ended December 31, 2023, and $121,982 in direct expense and technical service fees of online ride-hailing platform services due to the decrease in the number of completed orders. During the three months ended December 31, 2023 and 2022, the costs of automobiles under operating leases with amount of $80,973 and $185,254, respectively, was from one of our related parties.
Current wording
Cost of revenues represents (1) the amortization of ROUs, depreciation and rental cost of automobiles, daily maintenance and insurance expense of automobiles which related to our Auto Operating Leasing of $626,039; and (2) technical service charges, insurance and other expenses related to our Online Ride-Hailing Platform Services of $175,826. Cost of revenues decreased by $710,909 or approximately 47% during the three months ended June 30, 2024 as compared with the same period in 2023, mainly due to the decrease of $283,472 in costs of automobiles under operating leases due to the decrease in the number of the automobiles leased for operating lease in the three months ended June 30, 2024, decrease of $420,897 in direct expense and technical service fees of online ride-hailing platform services due to the decrease in the number of completed orders, and the decrease of $6,540 in costs of our Auto Sales. During the three months ended June 30, 2024 and 2023, the costs of automobiles under operating leases with amount of $1,627 and $210,179, respectively, was from a related party.
Previous wording
We had gross profit of $417,568 and $182,750, respectively, during the three months ended December 31, 2023 and 2022. The increase of $234,818 was mainly due to the increase in profit in our operating lease, partially offset by the decrease in profit from online ride-hailing platform services and other services. The following table sets forth the breakdown of gross profit (loss) by major revenue source for the three months ended December 31, 2023 and 2022:
Current wording
We had gross profit of $320,535 and $581,940, respectively, during the three months ended June 30, 2024 and 2023. The decrease of $261,405 was mainly due to the decrease in profit from online ride-hailing platform services. The following table sets forth the breakdown of gross profit (loss) by major revenue source for the three months ended June 30, 2024 and 2023:
Previous wording
Selling, general and administrative expenses primarily consist of salary and employee benefits, office rental expense, travel expenses, and other costs. Selling, general and administrative expenses decreased from $1,385,580 for the three months ended December 31, 2022 to $1,052,975 for the three months ended December 31, 2023, representing a decrease of $332,605, or approximately 24.0%. The decrease was attributable to our continuous control on costs and streamline expenses during the three months ended December 31, 2023. The decrease mainly consists of (1) a decrease of $186,482 in salary and employee benefits as the average monthly number of our employees decreased from 174 to 106; and (2) a decrease of $156,092 in offices expenditure as a result of reducing office rental and insurance charges during the three months ended December 31, 2023.
Current wording
Selling, general and administrative expenses primarily consist of salary and employee benefits, office rental expense, travel expenses, and other costs. Selling, general and administrative expenses decreased from $1,243,289 for the three months ended June 30, 2023 to $940,268 for the three months ended June 30, 2024, representing a decrease of $303,021, or approximately 24.4%. The decrease was attributable to our continuous control on costs and streamline expenses during the three months ended June 30, 2024. The decrease mainly consists of (1) a decrease of $184,677 in salary and employee benefits as the average monthly number of our employees decreased from 116 to 67; and (2) a decrease of $117,963 in entertainment, advertising and promotion as we cut down market promotion expenditure in accordance with the market change in the three months ended June 30, 2024.
Previous wording
We re-evaluated the possibility of collection of unsettled balances from customers of our automobile transactions and related services, and did not provide additional provision for credit losses against receivables from Jinkailong during the three months ended December 31, 2023. While we provided provision for credit losses of $123,154 and $3,392 against receivables from Jinkailong and a customer we serviced who purchased our automobiles from Yicheng, respectively, during the three months ended December 31, 2022.
Current wording
We re-evaluated the possibility of collection of unsettled balances from customers/suppliers of our automobile transactions and related services, and provided provision for credit losses of $173,441 and $127,073 against receivables from Jinkailong for the three months ended June 30, 2024 and 2023, respectively.
Previous wording
For the three months ended December 31, 2023, we had other income, net of $154,234, which primarily consist of the income of approximately $5,000 from the disposal of our right-of-use assets and our own vehicles used for operating leases; and the miscellaneous income of approximately $149,000. For the three months ended December 31, 2022, we had other income, net of $320,151, which primarily consist of the income of approximately $240,000 from the disposal of our right-of-use assets and our own vehicles used for operating leases; and miscellaneous income of approximately $80,000.
Current wording
For the three months ended June 30, 2024, we had other income, net of $47,656, which primarily consist of the (1) penalty income of approximately $32,000 from the customers; (2) income of approximately $3,000 from the disposal of our own vehicles used for operating leases; and (3) the miscellaneous income of approximately $13,000. For the three months ended June 30, 2023, we had other income, net of $72,149, which primarily consist of the (1) income of approximately $23,000 from the disposal of our right-of-use assets and our own vehicles used for operating leases; (2) penalty income of approximately $23,000 from the customers; and (3) the miscellaneous income of approximately $26,000.
Previous wording
Interest expense for the three months ended December 31, 2023 resulted from the borrowings of XXTX from a financial institution for its working capital turnover.
Current wording
Interest expense for the three months ended June 30, 2024 was resulted from the borrowings of XXTX from a financial institution for its working capital turnover.
Previous wording
Interest expense on finance leases for the three months ended December 31, 2023 and 2022 was $6,791 and $626, respectively, representing the interest expense accrued under financing leases for the leased automobiles Corenel leased from a third-party company, and the leased automobiles rendered to us for sublease or sale by the online ride-hailing drivers who exited the ride-hailing business.
Current wording
Interest expense on finance leases for the three months ended June 30, 2024 and 2023 was $5,088 and $8,722, respectively, representing the interest expense accrued under financing leases for the leased automobiles Corenel leased from a third-party company, and the leased automobiles rendered to us for sublease or sale by the online ride-hailing drivers who exited the ride-hailing business.
Showing the first 40 of 57 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Service fees from automobile purchase services
Rearranged previous paragraphs (18)
Previous report — wording carried elsewhere
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. As of the filing 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 and other 24 cities through cooperation with certain local car rental companies and through offering attractive incentives and awards to drivers. Since December 2023, in order to improve the efficiency of XXTX’s daily operation and profitability, XXTX has engaged Anhui Lianma Technology Co., Ltd. (“Anhui Lianma”), a third-party to co-operate the online ride-hailing platform by outsourcing certain daily operation work to Anhui Lianma in most of cities it operates platform in XXTX and Anhui Lianma will jointly share the operational profits, with the specific calculation method being defined in the cooperation agreement.
Previous report — wording carried elsewhere
Results of Operations for the nine months ended December 31, 2023 Compared to the nine months ended December 31, 2022
Previous report — wording carried elsewhere
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 continuously account for a majority of our revenues. We plan to provide a series of product solutions to sustain and further increase the number of our automobiles for operating leases.
Previous report — wording carried elsewhere
The following table sets forth the breakdown of revenues by revenue source for the nine months ended December 31, 2023 and 2022:
Previous report — wording carried elsewhere
Revenue from Automobile Transactions and Related Services
Previous report — wording carried elsewhere
Revenue from our automobile transaction and related services mainly includes operating lease revenues from automobile rentals, financing revenues, service fees from NEVs leasing, service fees from automobile purchase services, service fees from automobile management and guarantee services, sales revenue of automobiles and other services fees, which accounted for approximately 88.2%, 1.1%, 1.0%, 0.9%, 0.4%, 0.3% and 8.1%, respectively, of the total revenue from automobile transaction and related services during the nine months ended December 31, 2023. Meanwhile, operating lease revenues from automobile rentals, financing revenues, service fees from NEVs leasing, service fees from automobile purchase services, service fees from automobile management and guarantee services, sales revenue of automobiles and other services fees, which accounted for approximately 76.7%, 0.9%, 8.7%, 0.6%, 0.9%, 6.7% and 5.5%, respectively, of the total revenue from automobile transaction and related services during the nine months ended December 31, 2022.
Previous report — wording carried elsewhere
Operating lease revenues from automobile rentals
Previous report — wording carried elsewhere
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. The increase of rental income of $498,499 during the nine months ended December 31, 2023 was mainly due to the increased average utilization of the automobiles for operating lease increased from approximately 65.0% to 77.6%, and the increased average monthly rental income of the automobiles for operating lease. We leased over 1,400 automobiles with an average monthly rental income of approximately $485 per automobile, resulting in a rental income of $3,069,458, including rental income of $29,280 from Jinkailong, for the nine months ended December 31, 2023. While we leased over 1,600 automobiles with an average monthly rental income of approximately $389 per automobile, resulting in a rental income of $2,570,959, including rental income of $323,321 from Jinkailong, for the nine months ended December 31, 2022.
Previous report — wording carried elsewhere
We started our financial leasing business in March 2019 and began to generate interest income from providing financial leasing services to ride-hailing drivers in April 2019. 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. We recognized a total interest income of $37,135 from an average monthly number of 34 automobiles and $30,965 from an average monthly number of 46 automobiles during the nine months ended December 31, 2023 and 2022, respectively. The increase was due to the monthly payment we charged to customers for financial leasing increased during the nine months ended December 31, 2023.
Previous report — wording carried elsewhere
We generate revenues from providing a series of automobile purchase services throughout the automobile purchase transaction process, including sales-type lease. We had revenue from 19 automobiles purchase transactions during the nine months ended December 31, 2023 while we had revenue from 10 automobile purchase services during the nine months ended December 31, 2022. As a result, the related service fees generated increased $10,162 from the nine months ended December 31, 2022 to the nine months ended December 31, 2023.
Previous report — wording carried elsewhere
Revenue from online ride-hailing platform services
Previous report — wording carried elsewhere
For the nine months ended December 31, 2023, we had other income, net of $251,037, which primarily consist of the income of approximately $32,000 from the disposal of our right-of-use assets and our own vehicles used for operating leases; and the miscellaneous income of approximately $219,000. For the nine months ended December 31, 2022, we had other income, net of $807,276, which primarily consist of the income of approximately $597,000 from the disposal of our right-of-use assets and our own vehicles used for operating leases; and the miscellaneous income of approximately $210,000.
Previous report — wording carried elsewhere
Interest Expense and Interest Expense on Finance Leases
Previous report — wording carried elsewhere
Interest expense for the nine months ended December 31, 2023 resulted from the borrowings of Corenel from a financial institution for its automobile commercial insurance by installment and XXTX from a financial institution for its working capital turnover.
Previous report — wording carried elsewhere
Interest expense on finance leases for the nine months ended December 31, 2023 and 2022 was $23,107 and $8,927, respectively, representing the interest expense accrued under financing leases for the leased automobiles leased by Corenel automobiles from a third-party company, and the leased automobiles rendered to us for sublease or sale by the online ride-hailing drivers who exited the ride-hailing business.
Previous report — wording carried elsewhere
Change in Fair Value of Derivative Liabilities
Previous report — wording carried elsewhere
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. The change in fair value of derivative liabilities for the nine months ended December 31, 2023 was a gain of $410,027 in total as our stock price as of December 31, 2023 was lower than the price as of March 31, 2023. The following table sets forth the breakdown of the gain in fair value of derivative liabilities for the nine months ended December 31, 2023 and 2022:
Previous report — wording carried elsewhere
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. All subsidiaries in China incurred cumulative losses and no tax expense was recorded for the nine months ended December 31, 2023 and 2022.