Senmiao Technology (AIHS) risk factors, FY2026 10-K

Risks Related to Our Business and Industry

1. 01We face intense competition, which could lead to our inability to secure market share or cause us to lose market share to our competitors, any of which could materially and adversely affect our business, results of operations and financial condition
2. 02The relationship between us, our affiliates and Gaode Maps, the leading aggregation platform in China, and other cooperated partners is crucial to our ability to grow our business, results of operations and financial condition
3. 03Illegal, improper or otherwise inappropriate activities of customers while receiving our services could expose us to liabilities and harm our reputation, business, results of operations and financial condition
4. 04Our customers’ failure to fully comply with PRC online ride-hailing-related laws may expose us to potential penalties and negatively affect our operations
5. 05If we fail to effectively manage the behaviors of disintermediation and other misconduct and fraud by our users, our business, results of operations and financial condition could be materially and adversely affected
6. 06If we are unable to collect our revenue, repossess or sub-lease the cars held by the defaulted customers in a cost-effective manner, our business and results of operations would be materially and adversely affected
7. 07We are exposed to credit risk in our Auto Businesses. Our current risk management system may not be able to accurately assess and mitigate all risks to which we are exposed, including credit risk26% rewritten
8. 08We are required to obtain licenses and permits related to financing and lending in China for our business operations, and we may not be able to obtain or maintain such licenses or permits
9. 09Our failure to lease cars that we purchased from dealers or leased from other automobile rental companies with a satisfied utilization may have a material and adverse effect on our business, financial condition and results of operations
10. 10If data provided by automobile lessees and other third-party sources or collected by us are inaccurate, incomplete or fraudulent, the accuracy of our credit assessment could be compromised, customer trust in us could decline, and our business, financial position and results of operations would be harmed
11. 11We may be subject to product liability claims if people or property are harmed by vehicles purchased or rented through us
12. 12We may be considered as conducting payment services as a non-financial institution without a Payment Business Permit
13. 13If we fail to obtain and maintain the requisite licenses and approvals required for our business, or if we are required to take compliance actions that are time-consuming or costly, our business, results of operations and financial condition may be materially and adversely affected
14. 14Government policies on automobile purchases and usage in the online ride-hailing industry may materially affect our results of operations
15. 15Our business is subject to laws, regulations and regulatory policies that are being continuously amended and improved, and the interpretation and implementation of newly established policies may remain uncertain, which could have an adverse impact on our business and future prospects37% rewritten
16. 16Our business is subject to risks related to China’s automobile leasing and financing industry, including industry-wide and macroeconomic risks
17. 17We have incurred net losses and may continue to incur net losses in the future23% rewritten
18. 18Our operations depend on the performance of the internet infrastructure and fixed telecommunications networks in China
19. 19We have identified material weaknesses in our internal control over financial reporting. If we fail to develop and maintain an effective system of internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud30% rewritten
20. 20We have limited business insurance coverage21% rewritten
21. 21We face risks related to natural disasters, health epidemics and other outbreaks, such as COVID-19, which could significantly disrupt our operations
22. 22Our operations are entirely concentrated in a single city in China, which exposes us to heightened geographic risk that could have a company-wide adverse effect on our business, results of operations and financial conditionNew
23. 23We are subject to a mandatory new energy vehicle requirement for newly added vehicles in Changsha beginning in 2027, which may require significant capital expenditure and expose us to supply, operational and transition risks that could adversely affect our businessNew
24. 24Our entire continuing business depends on a single PRC operating subsidiary, and any adverse regulatory, legal or operational development affecting Hunan Ruixi specifically would have a total impact on our revenue and businessNew

Risks Related to Doing Business in China

1. 25Our Previous Contractual arrangements in relation to Sichuan Senmiao may be subject to scrutiny by the PRC tax authorities and they may determine that we or Sichuan Senmiao owe additional taxes, which could negatively affect our financial condition and the value of your investment
2. 26If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC stockholders
3. 27Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future
4. 28We are required to obtain a value-added telecommunication business certificate and be subject to foreign investment restrictions
5. 29Substantial uncertainties and restrictions with respect to the political and economic policies of the PRC government and PRC laws and regulations could have a significant impact upon the business that we may be able to conduct in the PRC and accordingly on the results of our operations and financial condition
6. 30Compliance with China’s new Data Security Law, Measures on Cybersecurity Review, Personal Information Protection Law, regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations may entail significant expenses and could materially affect our business
7. 31Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering
8. 32We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations
9. 33Under PRC laws and regulations, we are permitted to utilize the proceeds from our public offerings to fund our PRC subsidiary by making loans to or additional capital contributions to our PRC subsidiary, subject to applicable government registration and approval requirements26% rewritten
10. 34As March 31, 2026, the Company has made accumulated capital contributions of $6.0 million directly to the subsidiary. The contributions were generated from our historical offering proceedsNew
11. 35We rely on dividends and other distributions on equity paid by our PRC subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiary to make payments to us could have a material adverse effect on our ability to conduct our business22% rewritten
12. 36Fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your investment
13. 37Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the value of your investment
14. 38Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties
15. 39The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of PRC companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China
16. 40If the chops of our PRC subsidiary are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised
17. 41Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions
18. 42PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiary’s ability to increase their registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law
19. 43To our knowledge, all of our pre-IPO PRC stockholders who are subject to the registration requirements of Circular 37 have completed the required foreign exchange registrations

Risks Related to Our Securities

1. 44Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock41% rewritten
2. 45The market price for our common stock may be volatile
3. 46Certain judgments obtained against us by our stockholders may not be enforceable
4. 47Our articles of incorporation and by-laws could deter a change of our management, which could discourage or delay offers to acquire us
5. 48Because we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our common stock for return on your investment
6. 49We may need additional capital to pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances, and financing may not be available on terms acceptable to us, or at all
7. 50Fluctuations in interest rates could negatively affect our results of operations
8. 51Our operating results may fluctuate significantly and may not fully reflect the underlying performance of our business
9. 52If we fail to promote and maintain our brands in an effective and cost-efficient way, our business and results of operations may be harmed
10. 53Any harm to our brands or reputation or any damage to the reputation of our business partners or other third parties, or the automobile financing or ride-hailing industries in China may materially and adversely affect our business and results of operations
11. 54Our reputation may be harmed if information supplied by customers is inaccurate, misleading or incomplete
12. 55Misconduct, errors and failure to function by our employees and third-party service providers could harm our business and reputation
13. 56A severe or prolonged downturn in the Chinese or global economy could materially and adversely affect our business and financial condition
14. 57Our ability to protect the confidential information of our customers may be adversely affected by cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions
15. 58We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position
16. 59We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations
17. 60Some aspects of our digital operations include open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business
18. 61From time to time, we may evaluate and potentially consummate strategic investments or acquisitions, which could require significant management attention, disrupt our business and adversely affect our financial results
19. 62Our business depends on the continued efforts of our senior management. If one or more of our key executives were unable or unwilling to continue in their present positions, our business may be severely disrupted87% rewritten
20. 63Competition for employees is intense, and we may not be able to attract and retain the qualified and skilled employees needed to support our business
21. 64Increases in labor costs in the PRC may adversely affect our business and results of operations
22. 65If we cannot maintain our corporate culture as we grow, we could lose the innovation, collaboration and focus that contribute to our business
23. 66Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies
24. 67We will incur increased costs as a result of operating as a smaller reporting public company after we no longer qualify to be an emerging growth company, and our management will be required to devote substantial time to new compliance initiatives
25. 68If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price for our common stock and trading volume could decline
26. 69Escalating tensions between the United States and China, including tariff measures, export controls, and US legislative actions targeting Chinese-linked public companies, could adversely affect our Nasdaq listing, our ability to access US capital markets, and investor sentiment toward our common stockNew