What happened
Senmiao Technology disclosed on June 30, 2026, that its unaudited financial statements for the quarter ended December 31, 2025, should no longer be relied upon. The company's audit committee, after discussions with management, identified a material accounting error in how it classified certain warrants issued in late 2025.
The restatement stems from a securities purchase agreement dated November 14, 2025, involving a registered direct offering and concurrent private placement. The company issued 905,000 pre-funded warrants (at $1.26 per share) alongside 4,510,000 private placement warrants. Senmiao originally recorded all of these warrants as equity instruments. The correct treatment, the company now acknowledges, is to classify them as derivative liabilities measured at fair value.
The financial impact
The misclassification produced several errors in the December 31, 2025, financial statements:
- Derivative liabilities were understated by $4.925 million, while additional paid-in capital was overstated by $2.829 million.
- Gain on change in fair value of derivative liabilities was understated by $813,000 for both the three-month and nine-month periods.
- Excess of warrant fair value over offering proceeds was understated by $2.896 million for both periods.
- Other income was overstated by $13,000 for both periods.
What comes next
Senmiao intends to file an amended Form 10-Q that restates the affected financial statements and related disclosures, including Management's Discussion and Analysis. The company's independent auditor, Marcum Asia CPAs LLP, has been informed of the matter.
Senmiao also disclosed that management had previously concluded its internal controls over financial reporting were ineffective due to material weaknesses. The company stated those existing weaknesses directly caused the errors now being corrected. No timeline for the amended filing was provided.
Broader context
The restatement adds a new complication to Senmiao's recent efforts to stabilize its Nasdaq listing. The company received a delisting warning in late 2025 for falling below the exchange's $2.5 million minimum stockholders' equity requirement. A year-end spin-off of key subsidiaries was designed to restore positive equity and regain compliance. The warrant misclassification does not appear to directly affect that equity calculation, but it does highlight ongoing financial reporting challenges at the company.