What changed in this filing

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Item 1. Business

2021-07-08 compared with 2020-07-09 · 1392 added, 1322 removed, 151 unchanged (95% of the section changed)

Senmiao Technology

Limited (the “Company,”

Senmiao Technology Limited

(the “Company,”

“we,”

2 unchanged sentences

or similar terminology) is a U.S.

company incorporated in the State of Nevada.

We currently facilitate automobile transaction and related services focusing on the

ride-hailing industry in People’s Republic of China (the “PRC”

or “China”) through our majority owned

subsidiary, Hunan Ruixi Financial Leasing Co., Ltd., a PRC limited liability company (“Hunan Ruixi”), its wholly owned

subsidiary, Hunan Ruixi Automobile Leasing Co., Ltd.

(“Ruixi Leasing”) and variable interest entity (“VIE”),

Sichuan Jinkailong Automobile Leasing Co., Ltd.

(“Jinkailong”) (the “Automobile Transaction and Related Services”).

holding company incorporated

in the State of Nevada on June 8, 2017.

We provide automobile transaction and related services focusing on the online ride-hailing

industry in the People’s Republic of China (“PRC”

or “China”) through our wholly owned subsidiaries, Yicheng

Financial Leasing Co., Ltd., a PRC limited liability company (“Yicheng”), Chengdu Corenel Technology Limited, a PRC limited

liability company (“Corenel”), and its majority owned subsidiary, Hunan Ruixi Financial Leasing Co., Ltd., a PRC limited

liability company (“Hunan Ruixi”), its wholly owned subsidiary, Hunan Ruixi Automobile Leasing Co., Ltd., a PRC limited

liability company (“Ruixi Leasing”), and its variable interest entity (“VIE”), Sichuan Jinkailong Automobile Leasing

Co., Ltd., a PRC limited liability company (“Jinkailong”).

As described further below, since October 2020, we have

been operating an online ride-hailing platform through Hunan Xixingtianxia Technology Co., Ltd., a PRC limited liability company

(“XXTX”), which is a majority owned subsidiary of Sichuan Senmiao Zecheng Business Consulting Co., Ltd., a PRC limited

liability company and wholly-owned subsidiary of us (“Senmiao Consulting”).

Our automobile transaction

and Related Services are mainly comprised of (i) facilitation of automobile transaction and financing where we connect the prospective

ride-hailing drivers to financial institutions to buy, or get financing on the purchase of, cars to be used to provide ride-hailing

services (the “auto financing and transaction facilitation”);

(ii) automobile sales where we procure new cars from

dealerships and sell them to our customers in the automobile financing facilitation business (the “auto sales”);

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 leasing”);

and (iv) automobile financing where we provide our customers

with auto finance solutions through financing leases (the “auto financing”).

We previously operated

an online peer-to-peer (“P2P”) lending platform through Sichuan Senmiao Ronglian Technology Co., Ltd., another VIE

of our company (“Sichuan Senmiao”), and in connection therewith facilitated loan transactions between Chinese investors

and individual and small-to-medium-sized enterprise (“SME”) borrowers (our “Online Lending Services”).

Our Online Lending Services were discontinued in October 2019 as we determined that the continued operation of our online lending

business was not viable given that the online peer-to-peer lending industry in China had been experiencing a continuous decline

in total transaction volume and facing an increasingly tighter regulatory environment.

Since we ceased our

Online Lending Services, we have reallocated our resources to focus on our Automobile Transaction and Related Services segment

of our business.

During the year ended March 31, 2020, we generated revenue of $15.6 million from our Automobile Transaction and

Related Services and $0.11 million from our Online Lending Services.

Our executive offices

are located in Chengdu City, Sichuan Province, China.

and related services (the “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 leasing”);

(ii) automobile sales where we procure new cars from dealerships and sell them to our customers

in the automobile financing facilitation business (the “auto sales”);

(iii) facilitation of automobile transaction and

financing where we connect the prospective ride-hailing drivers to financial institutions to buy, or get financing on the purchase of,

cars to be used to provide online ride-hailing services (the “auto financing and transaction facilitation”);

and (iv) automobile

financing where we provide our customers with auto finance solutions through financing leases (the “auto financing”).

Our ride hailing platform enables

qualified ride-hailing drivers to provide application based transportation services in China.

XXTX holds a national online reservation

taxi operating license and operates our platform by collaborating with two well-known aggregation platforms in China.

The platform is

presently servicing ride-hailing drivers in Chengdu City, Neijiang City, Nanchong City and Panzhihua City in Sichuan Province, Changsha

City in Hunan Province, and Guangzhou City in Guangdong Province, China, providing them a platform to view and take customer orders for

We earn 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 (the “Online Ride-hailing Platform Services”).

We previously operated an online

lending platform in China through our VIE, Sichuan Senmiao Ronglian Technology Co., Ltd.

(“Sichuan Senmiao”), which facilitated

peer-to-peer (“P2P”) loan transactions between Chinese investors and individual and small-to-medium-sized enterprise borrowers.

We ceased our online lending services business in October 2019.

Our executive offices are located

in Chengdu City, Sichuan Province, China.

Substantially all of our operations are conducted in China.

Our Corporate History

We were incorporated

in the State of Nevada on June 8, 2017.

We established a wholly owned subsidiary, Sichuan Senmiao Zecheng Business Consulting Co.,

(“Senmiao Consulting”), in China in July 2017.

As of the date of this Report, Senmiao Consulting provides services

to Sichuan Senmiao, one of our VIEs, pursuant to the VIE Agreements as defined below.

Sichuan Senmiao was

established in China in June 2014.

We have entered into a series of contractual arrangements (the “VIE Agreements”)

with Sichuan Senmiao and each of its equity holders through Senmiao Consulting to obtain control and become the primary beneficiary

of Sichuan Senmiao.

We were incorporated in the

State of Nevada on June 8, 2017.

We established a wholly owned subsidiary, Senmiao Consulting in China in July 2017.

date of this Report, Senmiao Consulting provides services to Sichuan Senmiao, one of our VIEs, pursuant to the VIE Agreements as defined

Sichuan Senmiao was established

in China in June 2014.

We have entered into a series of contractual arrangements (the “VIE Agreements”) with Sichuan

Senmiao and each of its equity holders through Senmiao Consulting to obtain control and become the primary beneficiary of Sichuan Senmiao.

The contractual arrangements have been in place since the establishment of Senmiao Consulting (the “Restructuring”).

On September 25, 2016,

2016, Sichuan Senmiao acquired a P2P platform (including website, internet content provider (“ICP”) registration, operating

systems, servers, management system, employees and users) from Sichuan Chenghexin Investment and Asset Management Co., Ltd.

Sichuan Senmiao acquired a P2P platform (including website, internet content provider (“ICP”) registration, operating systems,

servers, management system, employees and users) from Sichuan Chenghexin Investment and Asset Management Co., Ltd.

(“Chenghexin”),

which had established and operated the platform for two years prior to our acquisition (the “Acquisition”), for a total

cash consideration of RMB69,690,000 (approximately US$10.1 million).

Prior to the Acquisition,

Sichuan Senmiao was a holding company that owned a 60% equity interest in an equity investment fund management company.

Senmiao sold its 60% equity interest for a cash consideration of RMB 60 million (approximately US$8.9 million) immediately following

the Acquisition, in order to focus on the online marketplace lending business.

which had established and operated the platform for two years prior to our acquisition (the “Acquisition”), for a total cash

consideration of RMB69,690,000 (approximately US$10.1 million).

Prior to the Acquisition, Sichuan Senmiao was a holding company that owned

a 60% equity interest in an equity investment fund management company.

Sichuan Senmiao sold its 60% equity interest for a cash consideration

of RMB60 million (approximately US$8.9 million) immediately following the Acquisition, in order to focus on the online marketplace lending

On November 21, 2018,

we entered into an Investment and Equity Transfer Agreement (the “Investment Agreement”) with Hunan Ruixi and all the

shareholders of Hunan Ruixi, pursuant to which we acquired an aggregate of 60% of the equity interest of Hunan Ruixi for no consideration.

We closed the acquisition on November 22, 2018 and agreed to make a cash contribution of $6,000,000 to Hunan Ruixi, representing

60% of its registered capital, in accordance with the Investment Agreement.

We have made the full cash contributions (in the aggregate

amount of $6,000,000) to Hunan Ruixi.

we entered into an Investment and Equity Transfer Agreement (the “Investment Agreement”) with Hunan Ruixi and all the shareholders

of Hunan Ruixi, pursuant to which we acquired an aggregate of 60% of the equity interest of Hunan Ruixi for no consideration.

the acquisition on November 22, 2018 and agreed to make a cash contribution of $6,000,000 to Hunan Ruixi, representing 60% of its

registered capital, in accordance with the Investment Agreement.

We have made the full cash contributions (in the aggregate amount of

$6,000,000) to Hunan Ruixi.

Hunan Ruixi holds a business license for automobile sales and financial leasing and has been engaged in automobile

financial leasing services and automobile sales since March 2019 and January 2019, respectively.

Hunan Ruixi has a wholly

1 unchanged sentence

(approximately US$1.5 million).

Ruixi Leasing is licensed to engage in automobile sales and leasing and has not commenced operations

as of the date of this Report.

Ruixi Leasing is licensed to engage in automobile sales and leasing and has not commenced operations as

of the date of this Report.

Hunan Ruixi also owns 35%

35% equity interest in Jinkailong and control the remaining 65% equity interest through two voting agreements with another four

shareholders of Jinkailong.

Jinkailong is an automobile transaction and related services company in Chengdu City, Sichuan Province,

China, which primarily targets drivers in the ride-hailing service sector and facilitates automobile sales and financing transactions

equity interest in Jinkailong and control the remaining 65% equity interest through two voting agreements with another four shareholders

of Jinkailong.

Jinkailong is an automobile transaction and related services company in Chengdu City, Sichuan Province, China, which primarily

targets drivers in the ride-hailing service sector, focus on automobile operating lease, and facilitates sales and financing transactions

for its clients and provides relevant after-transaction services to them.

1 unchanged sentence

Yicheng Financial Leasing Co., Ltd.

(“Yicheng”), a PRC limited liability company and wholly owned subsidiary of our

company, with a registered capital of $50 million in Chengdu City, Sichuan Province, China.

Yicheng obtained its business licenses

for automobiles sale and financial leasing and has engaged in the sales of automobiles since June 2019.

As of the date of this

Report, we have made contributions in the aggregate amount of $4,250,000 to Yicheng.

(“Yicheng”), a PRC limited liability company and wholly owned subsidiary of us, with

a registered capital of $50 million in Chengdu City, Sichuan Province, China.

Yicheng obtained its business licenses for automobiles sale

and financial leasing and has engaged in the sales of automobiles since June 2019.

As of the date of this Report, we have made contributions

in the aggregate amount of $5,450,000 to Yicheng.

On September 11, 2020,

Senmiao Consulting entered into an Investment Agreement relating to XXTX with all the original shareholders of XXTX, pursuant to which

Senmiao Consulting would make an investment of RMB3.16 million (approximately $0.5 million) in XXTX in cash and obtain a 51% equity interest

On October 23, 2020, the registration procedures for the change in shareholders and registered capital were completed

and XXTX became a majority owned subsidiary of Senmiao Consulting.

In February 2021, the registered capital of XXTX is increased

to RMB50.8 million (approximately $7.8 million) pursuant to a supplemental agreement signed by all shareholders of XXTX.

Senmiao Consulting

shall pay another investment amounted to RMB36.84 million (approximately $5.7 million) in cash in exchange of additional 27.74% of XXTX’s

equity interest.

As of the date of this Report, Senmiao Consulting has made a capital contribution of RMB19.8 million (approximately

$3.0 million) to XXTX and the remaining amount is expected to be paid before December 31, 2025.

As of March 31, 2021, XXTX

had eight wholly owned subsidiaries and only one of them has operations.

In December 2020, Senmiao

Consulting formed a wholly owned subsidiary, Corenel, with a registered capital of RMB10.0 million (approximately $1.6 million) in Chengdu

City, Sichuan Province.

Corenel has engaged in automobile operating lease since March 2021.

In December 2020, Hunan

Ruixi and a third party jointly formed a subsidiary, Chengdu Xichuang Technology Service Co., Ltd.

(“Xichuang”), with

a registered capital of RMB200,000 (approximately $32,000) in Chengdu City, Sichuan Province.

Hunan Ruixi holds 70% of the equity interests

In April 2021, we formed Senmiao Technology (Hong Kong), Ltd.

(“Senmiao HK”), a limited liability company

with a registered capital of $10,000 in Hong Kong.

We hold 99.99% of the equity interests of Senmiao HK.

Our Corporate Structure

The following diagram illustrates our corporate

structure, including our subsidiaries and our VIEs as of the date of this Report:

The following diagram illustrates the Company’s

corporate structure, including its subsidiaries, and VIEs, as of the date of this Report:

VIE Agreements with Sichuan Senmiao

According to the VIE

Agreements, Sichuan Senmiao is obligated to pay Senmiao Consulting service fees equal to its net income.

Sichuan Senmiao’s

entire operations are controlled by the Company.

According to the VIE Agreements,

Sichuan Senmiao is obligated to pay Senmiao Consulting service fees equal to its net income.

Sichuan Senmiao’s entire operations

are controlled by the Company.

There are no unrecognized revenue-producing assets that are held by Sichuan Senmiao.

Although we discontinued

Sichuan Senmiao’s Online Lending Services commencing in October 2019, the VIE Agreements remain in place, and such agreements

are described in detail below:

Although the Company

discontinued Sichuan Senmiao’s online P2P lending services business commencing in October 2019, the VIE Agreements remain in

place, and such agreements are described in detail below:

Equity Interest Pledge Agreement

Senmiao Consulting,

Sichuan Senmiao and all the shareholders of Sichuan Senmiao (the “Sichuan Senmiao Shareholders”) entered into an Equity

Interest Pledge Agreement, pursuant to which the Sichuan Senmiao Shareholders pledged all of their equity interest in Sichuan Senmiao

to Senmiao Consulting in order to guarantee the performance of Sichuan Senmiao’s obligations under the Exclusive Business

Cooperation Agreement as described below.

During the term of the pledge, Senmiao Consulting is entitled to receive any dividends

declared on the pledged equity interest of Sichuan Senmiao.

The Equity Interest Pledge Agreement terminates when all contractual

obligations under the Exclusive Business Cooperation Agreement have been fully performed.

Senmiao Consulting, Sichuan

Senmiao and all the shareholders of Sichuan Senmiao (the “Sichuan Senmiao Shareholders”) entered into an Equity Interest Pledge

Agreement, pursuant to which the Sichuan Senmiao Shareholders pledged all of their equity interest in Sichuan Senmiao to Senmiao Consulting

in order to guarantee the performance of Sichuan Senmiao’s obligations under the Exclusive Business Cooperation Agreement as described

During the term of the pledge, Senmiao Consulting is entitled to receive any dividends declared on the pledged equity interest

of Sichuan Senmiao.

The Equity Interest Pledge Agreement terminates when all contractual obligations under the Exclusive Business Cooperation

Agreement have been fully performed.

Exclusive Business Cooperation Agreement

Pursuant to an Exclusive

Business Cooperation Agreement entered by and among the Company, WFOE, Sichuan Senmiao and each of Sichuan Senmiao Shareholders,

Senmiao Consulting will provide Sichuan Senmiao with complete technical support, business support and related consulting services

for 10 years ended September 18, 2027.

The Sichuan Senmiao Shareholders and Sichuan Senmiao will not engage any third party for

the same or similar consultation services without Senmiao Consulting’s prior consent.

Further, the Sichuan Senmiao Shareholders

are entitled to receive an aggregate of 20,250,000 shares of common stock of the Company under the Exclusive Business Cooperation

Senmiao Consulting may terminate the Exclusive Business Cooperation Agreement at any time upon prior written notice

to Sichuan Senmiao and the Sichuan Senmiao Shareholders.

Pursuant to an Exclusive Business

Cooperation Agreement entered by and among the Company, Senmiao Consulting, Sichuan Senmiao and each of Sichuan Senmiao Shareholders,

Senmiao Consulting will provide Sichuan Senmiao with complete technical support, business support and related consulting services for

10 years ended September 18, 2027.

The Sichuan Senmiao Shareholders and Sichuan Senmiao will not engage any third party for the same

or similar consultation services without Senmiao Consulting’s prior consent.

Further, the Sichuan Senmiao Shareholders are entitled

to receive an aggregate of 20,250,000 shares of common stock of the Company under the Exclusive Business Cooperation Agreement.

Consulting may terminate the Exclusive Business Cooperation Agreement at any time upon prior written notice to Sichuan Senmiao and the

Sichuan Senmiao Shareholders.

Exclusive Option Agreement

Pursuant to an Exclusive

Option Agreement entered by and among Senmiao Consulting, Sichuan Senmiao and the Sichuan Senmiao Shareholders, the Sichuan Senmiao

Shareholders have granted Senmiao Consulting an exclusive option to purchase at any time their equity interests in Sichuan Senmiao

at a purchase price equal to the capital paid by the Sichuan Senmiao Shareholders in whole or at a pro-rated price for any partial

The Exclusive Option Agreement terminates after 10 years ending September 18, 2027 but can be renewed by Senmiao Consulting

at its discretion.

Pursuant to an Exclusive Option

Agreement entered by and among Senmiao Consulting, Sichuan Senmiao and the Sichuan Senmiao Shareholders, the Sichuan Senmiao Shareholders

have granted Senmiao Consulting an exclusive option to purchase at any time their equity interests in Sichuan Senmiao at a purchase price

equal to the capital paid by the Sichuan Senmiao Shareholders in whole or at a pro-rated price for any partial purchase.

The Exclusive

Option Agreement terminates after 10 years ending September 18, 2027 but can be renewed by Senmiao Consulting at its discretion.

Powers of Attorney

Each of the Sichuan

Senmiao Shareholders has signed a power of attorney (the “Power of Attorney”), pursuant to which, each of the Sichuan

Senmiao Shareholders has authorized Senmiao Consulting to act as his or her exclusive agent and attorney with respect to all rights

of such individual as a shareholder of Sichuan Senmiao, including but not limited to:

Each of the Sichuan Senmiao

Shareholders has signed a power of attorney (the “Power of Attorney”), pursuant to which, each of the Sichuan Senmiao Shareholders

has authorized Senmiao Consulting to act as his or her exclusive agent and attorney with respect to all rights of such individual as a

shareholder of Sichuan Senmiao, including but not limited to:

(a) attending shareholders’

(b) exercising all the shareholder’s rights that shareholders are entitled to under PRC laws and the Articles of Association

of Sichuan Senmiao, including but not limited to voting, sale, transfer, pledge and disposition of the equity interests of Sichuan

and (c) designating and appointing the legal representative, chairperson, director, supervisor, chief executive officer

and other senior management members of Sichuan Senmiao.

(b) exercising all

the shareholder’s rights that shareholders are entitled to under PRC laws and the Articles of Association of Sichuan Senmiao, including

but not limited to voting, sale, transfer, pledge and disposition of the equity interests of Sichuan Senmiao;

and (c) designating

and appointing the legal representative, chairperson, director, supervisor, chief executive officer and other senior management members

of Sichuan Senmiao.

The Power of Attorney has the same term as the Exclusive Option Agreement.

Timely Report Agreement

The Company and Sichuan

Senmiao entered into a Timely Report Agreement, pursuant to which, Sichuan Senmiao agrees to make its officers and directors available

to the Company and promptly provide all information required by the Company so that the Company can make necessary filings to the

Securities and Exchange Commission (“SEC”) and other regulatory reports in a timely fashion.

The Company has concluded

that it should consolidate the financial statements with Sichuan Senmiao because it is Sichuan Senmiao’s primary beneficiary

based on the Power of Attorney from the Sichuan Senmiao Shareholders, who assigned their rights as shareholders of Sichuan Senmiao

to Senmiao Consulting, the Company’s wholly-owned subsidiary.

The Company and Sichuan Senmiao

entered into a Timely Report Agreement, pursuant to which, Sichuan Senmiao agrees to make its officers and directors available to the

Company and promptly provide all information required by the Company so that the Company can make necessary filings to the U.S.

and Exchange Commission (“SEC”) and other regulatory reports in a timely fashion.

The Company has concluded that

it should consolidate the financial statements with Sichuan Senmiao because it is Sichuan Senmiao’s primary beneficiary based on

the Power of Attorney from the Sichuan Senmiao Shareholders, who assigned their rights as shareholders of Sichuan Senmiao to Senmiao Consulting,

the Company’s wholly-owned subsidiary.

These rights include, but are not limited to, attending shareholders’

meetings, voting on matters submitted for shareholder approval and appointing legal representatives, directors, supervisors and

senior management of Sichuan Senmiao.

As a result, the Company, through Senmiao Consulting, is deemed to hold all of the voting

equity interests in Sichuan Senmiao.

Pursuant to Exclusive Business Cooperation Agreement, Senmiao Consulting shall provide complete

technical support, business support and related consulting services for 10 years.

Though not explicit in the VIE Agreements, the

Company may provide financial support to Sichuan Senmiao to meet its working capital requirements and capitalization purposes.

The terms of the VIE Agreements and the Company’s plan to provide financial support to Sichuan Senmiao were considered in

determining that the Company is the primary beneficiary of Sichuan Senmiao.

Accordingly, the financial statements of Sichuan Senmiao

are consolidated in the Company’s consolidated financial statements.

Voting Agreement with Jinkailong’s

meetings, voting

on matters submitted for shareholder approval and appointing legal representatives, directors, supervisors and senior management of Sichuan

As a result, the Company, through Senmiao Consulting, is deemed to hold all of the voting equity interests in Sichuan Senmiao.

Pursuant to Exclusive Business Cooperation Agreement, Senmiao Consulting shall provide complete technical support, business support and

related consulting services for 10 years.

Though not explicit in the VIE Agreements, the Company may provide financial support to Sichuan

Senmiao to meet its working capital requirements and capitalization purposes.

The terms of the VIE Agreements and the Company’s

plan to provide financial support to Sichuan Senmiao were considered in determining that the Company is the primary beneficiary of Sichuan

Accordingly, the financial statements of Sichuan Senmiao are consolidated in the accompanying consolidated financial statements.

Voting Agreements with Jinkailong’s

Other Shareholders

In addition to

obtaining a 35% equity interest in Jinkailong, Hunan Ruixi, Jinkailong and another four shareholders of Jinkailong holding an

aggregate of 65% equity interests entered into two voting agreements on August 26, 2018 and February 13, 2020, respectively

(as amended, collectively, the “Voting Agreement”), pursuant to which all other Jinkailong’s shareholders

will vote in concert with Hunan Ruixi on numerous corporate matters including all fundamental corporate transactions in the

event of a disagreement, ending on August 25, 2038.

We have consolidated

the financial statements of Jinkailong into our financial statements because we are Jinkailong’s primary beneficiary based

on the Voting Agreement.

Though not explicit in the business cooperation agreement by and among Jinkailong, Hunan Ruixi, and other

shareholders of Hunan Ruixi, we may provide financial support to Jinkailong to meet its working capital requirements and required

capitalization purposes.

The terms of the Voting Agreement and our plan to provide financial support to Jinkailong were considered

in determining that we are the primary beneficiary of Jinkailong.

Accordingly, the financial statements of Jinkailong are consolidated

in our consolidated financial statements.

Although we are able to consolidate the financial statements of Jinkailong, we are only

entitled to distribution of dividends and assets based on our ownership of 35% of the equity interest of Jinkailong.

Hunan Ruixi entered into two

voting agreements signed in August 2018 and February 2020, respectively, as amended (the “Voting Agreements”), with

Jinkailong and other Jinkailong’s shareholders holding an aggregate of 65% equity interests and obtained 35% equity interests in

Pursuant to the Voting Agreements, all other Jinkailong’s shareholders will vote in concert with Hunan Ruixi on all

fundamental corporate transactions in the event of a disagreement for periods of 20 years and 18 years, respectively, ending on August 25,

We have consolidated the financial

statements of Jinkailong into our financial statements because we are Jinkailong’s primary beneficiary based on the Voting Agreements.

Though not explicit in the Voting Agreements by and among Jinkailong, Hunan Ruixi, and other shareholders of Hunan Ruixi, we may provide

financial support to Jinkailong to meet its working capital requirements and capitalization purposes.

The terms of the Voting Agreements

and our plan to provide financial support to Jinkailong were considered in determining that we are the primary beneficiary of Jinkailong.

Accordingly, we have determined that Jinkailong is a VIE and the financial statements of Jinkailong are consolidated in our consolidated

financial statements.

Although we are able to consolidate the financial statements of Jinkailong, we are only entitled to distribution

of dividends and assets based on our ownership of 35% of the equity interest of Jinkailong.

Recent Developments

June 2019 Registered Offering

On June 17, 2019,

we entered into a securities purchase agreement with certain accredited investors (the “Investors”) in connection

with a registered direct public offering (the “June 2019 Offering”) of 1,781,361 shares of our common stock at a

price of $3.38 per share (the “Share Purchase Price”) for a purchase price of approximately $6,000,000.

21, 2019, we closed the June 2019 Offering.

In connection with the June 2019 Offering, we also issued to the Investors for no

consideration, Series A common stock purchase warrants (the “Series A Warrants”) and for nominal consideration,

pre-funded Series B common stock purchase warrants (the “Series B Warrants”;

and together with the Series A

Warrants, the “Warrants”).

The shares and warrants

sold in the June 2019 Offering were issued pursuant to a prospectus supplement filed with the SEC on June 20, 2019 to our effective

Information relating to our

recent developments is incorporated by reference from our Prospectus Supplement filed with the SEC on May 11, 2021 pursuant to Rule 424(b)(5)

“Recent Developments.”

The updates relating to our recent developments after May 11, 2021 are as follows:

May 2021 Offering

On May 11, 2021, we

entered into a securities purchase agreement with certain accredited investors (the “Investors”) in connection with a registered

direct offering (the “May 2021 Offering”) of 5,531,916 shares of our common stock at a price of $1.175 per share for

a purchase price of approximately $6,500,000.

On May 13, 2021, we closed the May 2021 Offering.

In connection with the May 2021

Offering, we also issued warrants to the Investors to purchase a total of 5,531,916 shares of common stock at an exercise price of $1.05

The warrants have a term of five years and are exercisable at any time on or after the issue date.

The shares and warrants sold

in the May 2021 Offering were issued pursuant to a prospectus supplement filed with the SEC on May 11, 2021 to our effective

shelf registration statement on Form S-3 (Registration No.

1 unchanged sentence

2019, and was declared effective on April 15, 2019.

We used all of the

proceeds for general corporate purposes, including automobile purchases, the costs of providing leasing and other automobile transaction

services, including financial leasing, costs of developing other types of financing businesses, investments in other entities,

costs of technology development, costs of new hires, capital expenditures, working capital and the costs of operating as a public

Global Capital, Inc.

(“FT Global”) acted as the exclusive placement agent for the June 2019 Offering.

Pursuant to an

engagement letter between our company and FT Global, FT Global received cash compensation of approximately $480,000 and

warrants which are exercisable into 142,509 shares of common stock at an exercise price of $3.38 per share and will expire on the

four year anniversary of their issuance.

We used all of the net proceeds

for general corporate purposes, including automobile purchases, the costs of providing leasing and other automobile transaction services,

including financial leasing, costs of developing other types of financing businesses, investments in other entities, costs of technology

development, costs of new hires, capital expenditures, working capital and the costs of operating as a public company.

FT Global Capital, Inc.

(“FT Global”) acted as the exclusive placement agent for the May 2021 Offering.

Pursuant to a placement agency agreement

between our company and FT Global dated May 11, 2021, FT Global received cash commission of approximately $487,500 and warrants which

are exercisable into 414,894 shares of common stock at an exercise price of $1.05 per share and will expire on the fifth year anniversary

of their issuance.

Cooperation with other Well-known Platforms

In April 2020 and June 2020,

XXTX has signed cooperation agreements with two well-known aggregation platforms in China, Gaode Map, a map application owned and operated

by AutoNavi Software, Co., Ltd.

and Meituan, an e-commerce platform for services.

In June 2021, XXTX signed a cooperation agreement

with a top online ride-hailing platform in China.

We have similar business model but different technology in data sharing and transforming

in our cooperation with these platforms.

We earn commissions for each completed order based on a certain percentage of the value of the

order and settle its commissions with these platforms on a weekly basis.

Coronavirus (COVID-19) Update

Beginning in late 2019,

an outbreak of a novel strain of coronavirus and related respiratory illness (which we refer to as COVID-19) was first identified

in China and has since spread rapidly globally.

The COVID-19 pandemic has resulted in quarantines, travel restrictions, and the

temporary closure of stores and business facilities in China and globally.

In March 2020, the World Health Organization (the “WHO”)

declared COVID-19 a pandemic.

Given the rapidly expanding nature of the COVID-19 pandemic, and because all of our business operations

and our workforce are concentrated in China, our business, results of operations and financial condition have been and will continue

to be adversely affected.

The extent of the potential going forward impact to our results of operations will also depend on future

developments and new information that may emerge regarding the duration and severity of the COVID-19 pandemic (or any recurrences

of the pandemic, as have been experienced in China and elsewhere) and the actions taken by government authorities and other entities

to contain COVID-19 or mitigate its impact, almost all of which are beyond our control.

The impacts of COVID-19

on our business, financial condition, and results of operations include, but are not limited to, the following (for more background

information on our business generally, see “

Our Automobile Transaction and Related Services ”

We temporally closed our corporate headquarters and other offices

to adhere to the lockdown policy in China from January 19 to February 23, 2020, as required by relevant PRC regulatory authorities.

A large number of our employees were in mandatory self-quarantine and our entire business operations were restricted during such

We reopened our offices in both Chengdu and Changsha on February 24, 2020, but only resumed full operations beginning

near the end of March 2020.

Due to the lockdown policy and travel restrictions, the demand for ride-hailing services has been materially and adversely impacted in our areas of operation in China, which reduced the demand of our Automobile Transaction and Related Services.

As a result, our revenue and income for the three months ended March 31, 2020 has been negatively impacted to a significant extent.

Our ability to collect the monthly installment payments we receive from ride-hailing drivers during February and March 2020 was adversely impacted.

As of March 31, 2020, approximately 840 drivers exited the online ride-hailing business and tendered their automobiles to us for sublease or sales, while approximately 380 drivers postponed their monthly installment payments.

As a result, we recorded bad debt expenses of $3,406,215.

This situation may worsen if the COVID-19 pandemic reoccurs in China.

We will continue to closely monitor our collections throughout 2020.

Our daily cash flow has also been adversely impacted as a result of the unsatisfied collection from the online ride-hailing drivers and our potential guarantee expenditure pursuant to the financial leasing agreements or the loan agreements (the “Financing Agreements”) we guaranteed.

Our cash flow will continue to be adversely impacted if the online ride-hailing market in China recovers slower than anticipated.

This compromised cash flow situation is likely to continue during our first and second quarters of the fiscal year ending March 31, 2021 and may worsen if the COVID-19 pandemic reoccurs.

We cannot foresee whether

the outbreak of COVID-19 will continue to be effectively contained in China, nor can we predict the severity and duration of its

If the outbreak of COVID-19 is not effectively and timely controlled, our business operations and financial condition may

continue to be materially and adversely affected as a result of the deteriorating market outlook, the slowdown in regional and

national economic growth in China, weakened liquidity and financial conditions of our customers or other factors that we may not

be able to foresee.

Any of these factors and other factors beyond our control could have an adverse effect on our overall business

environment, cause uncertainties in the regions in China where we conduct business, cause our business to suffer in ways that we

cannot predict and materially and adversely impact our business, financial condition and results of operations.

Beginning in late 2019, an

outbreak of a novel strain of coronavirus and related respiratory illness (which we refer to as COVID-19) was first identified in China

and has since spread rapidly globally.

The COVID-19 pandemic has resulted in quarantines, travel restrictions, and the temporary closure

of stores and business facilities in China and globally.

In March 2020, the World Health Organization (the “WHO”) declared

COVID-19 a pandemic.

Given the rapidly expanding nature of the COVID-19 pandemic, and because all of our business operations and our workforce

are concentrated in China, our business, results of operations and financial condition have been adversely affected.

Due to the lockdown policy

and travel restrictions, the demand for ride-hailing services has been materially and adversely impacted in our areas of operation in

China, which reduced the demand of our Automobile Transaction and Related Services.

we experienced a significant number of online ride-hailing

drivers who exited the online ride-hailing business and tendered their automobiles to us in the three months ended March 31, 2020

as a result of less demand due to the public travel restrictions.

As a result, our revenue and income for the first half of 2020 was negatively

impacted to a significant extent.

In an effort to mitigate the negative impact on our daily cash flow resulting from the tendering of

automobiles from drivers who exited the online ride-hailing business during the epidemic period and develop a new income resource, we

shifted our business focus to automobile rentals from facilitation of automobile transaction and financing.

Since April 2020, the

COVID-19 epidemic in China has been effectively controlled and the online ride-hailing markets in Chengdu and Changsha have been recovering.

We have witnessed a quarterly increase in our revenue during the year ended March 31, 2021.

Recent local resurgences

of COVID-19 cases in some areas have brought uncertainties to future economic recovery of China, but we anticipate that the impact may

be limited as China has established plans to rapidly contain the spread of COVID-19 cases and minimize related economic losses.

we have witnessed the decrease in online ride-hailing orders in mid- December 2020 and mid-May to June 2021, when Chengdu and

Guangzhou reported over 10 and over 100 confirmed COVID-19 cases, respectively.

The average daily rides completed through our platform

decreased significantly compared to that before the reporting of the new COVID-19 cases due to the lockdown policy and travel restrictions

in these cities.

The number of orders recovered after the resurgences were fully under control.

Consequently, the income of our online

ride-hailing services also decreased during this period.

Any of these factors and

other factors beyond our control could have an adverse effect on our overall business environment, cause uncertainties in the regions

in China where we conduct business, cause our business to suffer in ways that we cannot predict and materially and adversely impact our

business, financial condition and results of operations.

JKL Investment Agreement

On July 4, 2020, Hunan

Ruixi, Jinkailong and the other shareholders of Jinkailong entered into an agreement (the “JKL Investment Agreement”)

with Hongyi Industrial Group Co., Ltd.

(“Hongyi”), an affiliate of the largest shareholder of Chengdu Road & Bridge

Engineering Co., Ltd., a construction engineering company publicly listed on the A-Share market in China.

Pursuant to the JKL

Investment Agreement, Jinkailong agreed to issue and Hongyi agreed to subscribe for a 27.03% equity interest in Jinkailong in consideration

of RMB50 million (approximately $7.0 million) (the “Investment”).

The Investment will be made in two payments:

the first payment of RMB10 million (approximately $1.4 million) is due no later than September 30, 2020 and (ii) the remaining

RMB40 million (approximately $5.6 million) is due within 30 days after the record-filing of the Investment has been made with the

local PRC government and the other shareholders of Jinkailong having made their respective capital contributions in full in cash,

but no later than December 31, 2020.

As a result, Hunan Ruixi will be required to pay RMB3.5 million (approximately $0.5 million)

to Jinkailong as a capital contribution.

Upon the full payment of the consideration, the Investment will be deemed to be closed

(the “Closing”).

As a result of the

Investment, the original shareholders’

ownership percentage will be proportionally diluted but Hunan Ruixi will continue

to control Jinkailong pursuant to the Voting Agreements.

The JKL Investment

Agreement sets performance targets for Jinkailong during a three-year performance commitment period following the Closing.

the performance commitment period, Jinkailong has agreed, and its original shareholders have agreed to cause Jinkailong, to seek

to achieve annual revenue for Jinkailong of no less than RMB52 million (approximately $7.4 million), RMB90 million (approximately

$12.7 million) and RMB110 million (approximately $15.6 million), respectively, and annual net profit of no less than RMB10 million

(approximately $1.4 million), RMB20 million (approximately $2.8 million) and RMB25 million (approximately $3.5 million), respectively,

during the first, second and third year of the performance commitment period.

The JKL Investment

Agreement also provides Hongyi certain shareholder rights, including, but not limited to, the right to receive any undistributed

dividends, a right of first refusal for any equity transfer from the other shareholders of Jinkailong, a tag-along right during

the performance commitment period, anti-dilution rights, redemption rights, subscription rights and priority in liquidation or

dissolution of Jinkailong.

Specifically, pursuant to the redemption right provision in the JKL Investment Agreement, in the event

that Jinkailong (i) fails to become public through an IPO for a valuation of no less than RMB350 million (approximately $49.5 million)

or merge with a public company for a valuation of no less than RMB300 million (approximately $42.5 million) within the six months

following the performance commitment period, (ii) fails to achieve an accumulated net profit of RMB24 million (approximately $3.4

million) for the first two years of the performance commitment period or a net profit of RMB20 million (approximately $2.9 million)

for the third year of the performance commitment period, or (iii) has any material and adverse change to its core business, including

but not limited to being included in the list of dishonest persons and loss of over one third of its online ride-hailing taxi operating

licenses, as well as bankruptcy, liquidation or cessation of operations, Hongyi shall have the right to require certain shareholders

of Jinkailong (including Hunan Ruixi) to repurchase all of its equity interest in Jinkailong.

Based on a repurchase formula provided

for in the JKL Investment Agreement, the maximum repurchase amount that Hunan Ruixi would be subject to is RMB28,320,000 (approximately

$4.0 million).

Under the JKL Investment

Agreement, the other shareholders of Jinkailong, except one individual shareholder, are prohibited from disposing of their equity

interest in Jinkailong until six months after the performance commitment period.

In addition, all parties have acknowledged and

agreed to comply with relevant U.S.

securities regulations on confidentiality of material nonpublic information regarding the Company

that they may receive on account of their ownership of Jinkailong.

The principal use of

proceeds from the Investment will be to support Jinkailong’s automobile purchase and finance business, provided that Hongyi’s

prior consent is required if the proceeds are to be used for any automobile business investment that exceeds RMB1 million (approximately

$0.7 million) or for any non-automobile business investment (regardless of the amount).

Jinkailong plans to use the proceeds from

the Investment to expand its auto business in Chengdu, China.

Specifically, Jinkailong plans to purchase more automobiles for its

car rental business and open additional retail stores to provide auto financing and transaction facilitation services to ride-hailing

drivers in Chengdu.

Our Automobile Transaction and Related

We started our auto

financing and transaction facilitation business in November 2018.

The auto sales business began in January 2019, and auto leasing

business and auto-financing business in March 2019.

As of March 31, 2020, we have provided auto financing and transaction

facilitation services for an aggregate of 1,626 automobiles with a total value of approximately $23.2 million, sold an aggregate

of 1,388 automobiles with a total value of approximately $13.4 million and delivered 557 automobiles under operating leases and

97 automobiles under financing leases, respectively, to customers, the vast majority of whom are ride-hailing drivers.

fiscal year ended March 31, 2020, our auto financing and transaction facilitation business, auto sales business and operating leases

accounted for 12.3%, 73.7% and 8.3% % of our total revenue from our Automobile Transaction and Related Services, respectively,

for the year ended March 31, 2020 while our auto financial leasing business generated about 1.1% of our revenue from our Automobile

Transaction and Related Services, respectively.

As fully disclosed in the

10-K for the year ended March 31, 2020, on July 4, 2020, Hunan Ruixi, Jinkailong and the other shareholders of Jinkailong entered

into an agreement (the “JKL Investment Agreement”) with Hongyi Industrial Group Co., Ltd.

(“Hongyi”).

to the JKL Investment Agreement, Jinkailong agreed to issue and Hongyi agreed to subscribe for a 27.03% equity interest in Jinkailong

in consideration of RMB50 million (approximately $7.0 million) (the “Investment”).

As Hongyi did not make the payment in accordance

with the investment, Hunan Ruixi, other shareholders of Jinkailong and Hongyi decided to terminate the investment by Hongyi with a termination

agreement signed on July 2, 2021.

We are a provider of automobile

transaction and related services targeting the online ride-hailing industry in China, as well as an operator of our own online ride-hailing

Our business includes Automobile Transaction and Related Services and Online Ride-hailing Platform Services, which is constituted

with a series of services as follows:

Automobile Transaction and Related Services

Auto Operating Leasing

We have generated revenue

since March 2019 from operating lease services, where we lease our own automobiles or sublease automobiles from certain online ride-hailing

drivers we served before to other individuals, including new online ride-hailing drivers.

With the authorization from online ride-hailing

drivers who exited the online ride-hailing business, we sublease their automobiles to new online ride-hailing drivers for a lease term

no more than twelve months.

Due to the intense competition and the COVID-19 pandemic, as of March 31, 2021, approximately 1,289 online

ride-hailing drivers (primarily in Chengdu City) have exited the online ride-hailing business.

We are authorized to sublease or sell these

drivers’

automobiles in order to offset the repayments those drivers owed to us and the financial institutions.

We sub-leased over

1,100 automobiles from these ride-hailing drivers and approximately 80 of our own automobiles with an average monthly rental income of

$441 per automobile, resulting in a rental income of $3,434,615 for the year ended March 31, 2021.

Auto Financial Leasing

We began offering auto financing

services in March 2019.

In our self-operated financing, we act as a lessor and a customer (i.e., online ride-hailing driver) acts

We offer to the lessee a selection of automobiles that were purchased by us in advance.

The lessee will choose the desirable

automobile to be purchased and enter into a financing lease with us.

During the term of the financing lease, the lessee will have use

rights with respect to the automobile.

We will obtain title to the automobile upfront and retain such title during the term of the financing

lease, as lessor.

At the end of the lease term, the lessee will pay a minimal price and obtain full title to the automobile after the

financing lease is repaid in full.

In connection with the financing lease, the lessee will enter into a service agreement with us.

to this service agreement, the lessee will pay us a service fee ranging from approximately $1,600 to approximately $2,300 for our services,

which covers, among others, payment of purchase taxes and insurance, license and plate registration, and training of ride-hailing drivers.

We are also engaged in the

sales of automobiles through Hunan Ruixi and Yicheng.

As we are targeting to sell cars to online ride-hailing drivers, Hunan Ruixi and

Yicheng procure new cars of model and specification acceptable to online ride-hailing industry in Chengdu and Changsha.

Hunan Ruixi and

Yicheng typically sets up periodic procurement plans based on the estimated transaction volume of Hunan Ruixi and Jinkailong and buy in

bulk to obtain better pricing.

Hunan Ruixi and Yicheng will then mark up the price and sell the cars to the online ride-hailing drivers

who are typically customers in our auto financing facilitation services.

However, due to the increased competition in the online ride-hailing

markets in Chengdu and Changsha, and the adverse impact of COVID-19 across mainland China, we have shifted our business focus to automobile

leasing so the sales of automobiles has significantly decreased in the year ended March 31, 2021.

Auto Financing and Transaction Facilitation

Leveraging the growing

popularity of ride-hailing services in China, we facilitate the auto financing transactions between the ride-hailing drivers and

financial institutions.

As of the date of this Report, over 95% of the ride-hailing drivers we service are affiliated Didi Chuxing

Technology Co., Ltd., a major transportation company operating the largest ride-hailing platform in China (“Didi”).

Our services simplify the transaction process for both the Didi drivers and the financial institutions.

Specifically, our facilitation

services include purchase services and management and guarantee services.

Our purchase services

cover a wide range of services provided to Didi drivers during the process of an automobile financing transaction, including but

not limited to (i) credit assessment, (ii) preparation of financing application materials, (iii) assistance with closing of financing

transactions, (iv) license and plate registration, (v) payment of taxes and fees, (vi) purchase of insurance, (vii) installment

of GPS devices, (viii) ride-hailing driver qualification and (ix) other administrative procedures.

Our service fees are based on

the sales price of the automobiles and relevant services provided.

Our service fees for automobiles purchase services ranged from

$89 to $3,600 per vehicle during the year ended March 31, 2020.

Our management and

guarantee services are provided to Didi drivers after the delivery of automobiles, covering (i) management services including,

without limitation, ride-hailing driver training, assisting with purchase of insurances, insurance claims and after-sale automobile

services, handling traffic violations and other consulting services;

and (ii) guarantee services for the obligations of Didi drivers

under their financing arrangement with financial institutions.

As of March 31, 2020, the maximum contingent liabilities we would be exposed to was approximately $18.6 million (including

approximately $497,400 related to the discontinued P2P business), assuming all the automobile purchasers were in default, which may cause an increase in guarantee expense and cash outflow in financing activities.

March 31, 2020, approximately $1.4million, including interests of $84,000, due to financial institutions, of all the automobile

purchases we serviced were past due because of the COVID-19 epidemic in China.

Leveraging the growing popularity

of ride-hailing services in China, we facilitate the auto financing transactions between the online ride-hailing drivers and financial

institutions.

As of the date of this Report, over 95% of the customers we service are online ride-hailing drivers.

Our services simplify

the transaction process for both these drivers and the financial institutions.

Specifically, our facilitation services include purchase

services and management and guarantee services for new automobile transactions.

As a result of the fierce competition of online ride-hailing

industry in Chengdu and Changsha and the adverse impact from COVID-19 pandemic across the mainland China, we experienced a decrease of

over 90% in the number of newly facilitated automobiles during the year ended March 31, 2021 as compared with last year.

Our purchase services cover

a wide range of services provided to online ride-hailing drivers during the process of an automobile financing transaction, including

but not limited to (i) credit assessment, (ii) preparation of financing application materials, (iii) assistance with closing

of financing transactions, (iv) license and plate registration, (v) payment of taxes and fees, (vi) purchase of insurance,

(vii) installment of GPS devices, (viii) ride-hailing driver qualification and (ix) other administrative procedures.

service fees are based on the sales price of the automobiles and relevant services provided.

Our service fees for automobiles purchase

services ranged from $140 to $3,550 per vehicle during the year ended March 31, 2021.

Our management and guarantee

services are provided to online ride-hailing drivers after the delivery of automobiles, covering (i) management services including,

without limitation, ride-hailing driver training, assisting with purchase of insurances, insurance claims and after-sale automobile services,

handling traffic violations and other consulting services;

and (ii) guarantee services for the obligations of online ride-hailing

drivers under their financing arrangement with financial institutions.

As of March 31, 2021,

the maximum contingent liabilities we would be exposed to was approximately $12.8 million (including approximately $68,000 related to

the discontinued P2P business), assuming all the automobile purchasers were in default, which may cause an increase in guarantee expense

and cash outflow in financing activities.

As of March 31, 2021, approximately $3.9 million, including interests of $233,000, due

to financial institutions, of all the automobile purchases we serviced were past due.

Our management and guarantee fees are based on the

costs of our services and the results of our credit assessment of the automobile purchasers.

Our fees average approximately $583

per automobile for the affiliation period and are paid by the Didi drivers on a monthly basis during the affiliation period during

the year ended March 31, 2020.

The following chart

illustrates our typical process of auto financing facilitation.

Financing Partners

established collaborations with a number of financial institutions in China, including commercial banks, financial leasing

companies as well as online peer-to-peer lending platforms, which finance the purchase of automobiles by our automobile

purchasers through the Financing Agreements.

Under our arrangements with our financing partners, we refer

prospective automobile purchasers and are generally responsible for collecting information on such purchasers, conducting

credit assessment of them, registration of the cars as collateral with government and providing guarantee on their payments

under the Financing Agreements.

To secure the interests of the financing partners, each automobile is mortgaged in favor of

the financing partner which is registered with relevant local government agencies.

We typically prepay

the purchase price and expenses on behalf of the automobile purchasers when we provide purchase services and collect all the advance

payment and relevant services fees from the proceeds disbursed by the financial institutions upon the closing of the financing

and/or when the monthly installment payment made by automobile purchasers during the term of the Financing Agreements.

We are required

under our arrangements with the financing partners to make payments on behalf of the automobile purchasers in the event of default.

As of March 31, 2020, the outstanding payments we made on behalf of approximately 146 defaulted purchasers who remained in the

online ride-hailing business even after the COVID-19 epidemic were approximately $109,000, all of which were due within two months

from the default date.

For the year ended March 31, 2020, we recognized estimated provisions loss of approximately $225,000 for

the guarantee services we provided to the online ride-hailing drivers who exited the industry.

After we make payments,

we request the defaulted purchasers to pay us back.

If we are unable to recover the payments within a certain period of time, we

commence a collection process.

During the year ended

March 31, 2020, our top three financing partners were Haitong Unitrust International Leasing Co., Ltd., Fengbang Financial Leasing

(Shanghai) Co., Ltd.

and Cherry HuiYin Motor Finance Service Co., Ltd., which collectively financed an aggregate of 1,118 cars

with a total value of approximately $12.1 million, representing approximately 83.8% of the transaction value financed by our financing

partners as of March 31, 2020.

All of these financing partners are unaffiliated third parties.

To capitalize on the

large and rapidly expanding fleet of Didi, we have established collaboration with Didi through both Hunan Ruixi and Jinkailong.

Under Jinkailong’s consulting service agreement with Didi, which was renewed in March 2019, Jinkailong provides automobile

financing and leasing solutions and consulting services to Didi drivers in Chengdu City, Sichuan Province.

Hunan Ruixi also entered

into cooperation agreements with Didi in December 2018 (which was renewed in December 2019) pursuant to which Hunan Ruixi agreed

to source automobiles for and provide automobile financing/leasing solutions to Didi drivers in Changsha City, Hunan Province.

Our relationship with Didi is crucial to our business as it enables us to attract more automobile purchasers who are interested

in working as Didi drivers and becoming affiliated with us.

We have established collaborations

with a number of financial institutions in China, including commercial banks, financial leasing companies as well as online peer-to-peer

lending platforms, which finance the purchase of automobiles by our automobile purchasers through the Financing Agreements.

year ended March 31, 2021, due to our shift on business focus, we did not engage new financial institutions for our Auto have Financing

and Transaction Facilitation.

Auto Transaction Facilitation Services

Through Hunan Ruixi

and Jinkailong, we also facilitate automobile purchase transactions between dealers, our cooperative third party sales teams and

the automobile purchasers, primarily Didi drivers.

Through Hunan Ruixi and Jinkailong,

we also facilitate automobile purchase transactions between dealers, our cooperative third party sales teams and the automobile purchasers,

primarily online ride-hailing drivers.

We provide sales venue and vehicle sourcing for the transactions.

third party sales teams and automobile purchasers a facilitation fee based on the type of vehicle and negotiation with each dealer,

third party sales team and purchaser, generally no more than $2,000 per automobile from third party sales team and $2,160 from

the purchaser.

We charge third party sales teams

and automobile purchasers a facilitation fee based on the type of vehicle and negotiation with each dealer, third party sales team and

purchaser, generally no more than $2,000 per automobile from third party sales team and $2,160 from the purchaser.

We also provide a series

of services for the purchasers throughout the automobile purchase transaction process, including registration of license plates

and permits from the relevant government authorities, insurance facilitation and assistance with applications to financial institutions

to finance the purchase.

of services for the purchasers throughout the automobile purchase transaction process, including registration of license plates and permits

from the relevant government authorities, insurance facilitation and assistance with applications to financial institutions to finance

the purchase.

Our service fees are based on the sales price of the automobiles and relevant services provided.

fees ranged from approximately $89 to $3,600 per vehicle.

As of March 31, 2020, we provided facilitation services for an aggregate

of 1,626 automobiles.

During the year ended March 31, 2020, we provided facilitation services for 1,315 automobiles.

We are also engaged

in the sales of automobiles through Hunan Ruixi and Yicheng.

As we are targeting to sell cars to Didi drivers, Hunan Ruixi and

Yicheng procure new cars of model and specification acceptable to Didi.

Hunan Ruixi and Yicheng typically sets up periodic procurement

plans based on the estimated transaction volume of Hunan Ruixi and Jinkailong and buy in bulk to obtain better pricing.

and Yicheng will then mark up the price and sell the cars to the ride-hailing drivers who are typically customers in our auto financing

facilitation services.

All the new cars Ruixi and Yicheng procured are parked in our warehouses in Chengdu or Changsha City.

Substantially all of

the cars are sold through a financing arrangement, under which we will receive a majority of the purchase price (ranging from approximately

58% to 100%) from the financing proceeds and the remainder from monthly installment payments of the Didi drivers.

We have also generated

revenue since March 2019 from operating lease services, where we lease our own automobiles or sublease automobiles from certain

online ride-hailing drivers we served before to other individuals, including new online ride-hailing drivers.

With the authorization

from ride-hailing drivers who exited the online ride-hailing business, we sublease their automobiles to new ride-hailing drivers

for a lease term no more than twelve months.

Due to the intense competition and the COVID-19 pandemic, during the year ended March

31, 2020, approximately 840 online ride-hailing drivers (primarily in Chengdu City) exited the online ride-hailing business.

are authorized to sublease or sell these drivers’

automobiles in order to offset the repayments those drivers owed to us

and the financial institutions.

We subleased approximately 540 automobiles from these ride-hailing drivers and 19 of our own automobiles

with an average monthly rental income of $475 per automobile, resulting in a rental income of $1,303,639 for the year ended March

Auto Financing

We began offering auto

financing services in March 2019.

In our self-operated financing, we act as a lessor and a customer (i.e., Didi driver) acts as

We offer to the lessee a selection of automobiles that were purchased by us in advance.

The lessee will choose the desirable

automobile to be purchased and enter into a financing lease with us.

During the term of the financing lease, the lessee will have

use rights with respect to the automobile.

We will obtain title to the automobile upfront and retain such title during the term

of the financing lease, as lessor.

At the end of the lease term, the lessee will pay a minimal price and obtain full title to the

automobile after the financing lease is repaid in full.

In connection with the financing lease, the lessee will enter into a service

agreement with us.

Pursuant to this service agreement, the lessee will pay us a service fee ranging from approximately $790 to

approximately $1,900 for our services, which covers, among others, payment of purchase taxes and insurance, license and plate registration,

and training of ride-hailing drivers.

As of March 31, 2021,

we have financed the purchase of 97 automobiles with an average financing amount per customer of approximately $15,000 and lease

terms ranging from 36 to 48 months.

The interest rates of our auto financing are fixed and range from 5.5 % to 16.0 % per annum.

No down payment is required under our financing leases.

we provided facilitation services for an aggregate of 1,687 automobiles.

During the year ended March 31, 2021, we provided facilitation

services for 61 automobiles.

Online Ride-hailing Platform Services

part of our goal to provide an all-encompassing solution for online ride-hailing drivers as well as to increase our competitive strengths

in an increasing competitive online ride-hailing industry and to take advantage 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.

As the date of this

Report, the platform is presently servicing online ride-hailing drivers in Chengdu, Changsha, Neijiang, Guangzhou, Nanchong and Panzhihua,

China, providing them a platform to view and take customer orders for rides.

currently collaborate with two well-known aggregation platforms in China, Gaode Map, a map application owned and operated by AutoNavi

Software, Co., Ltd.

and Meituan, an e-commerce platform for services.

Under our collaboration, when a rider using the platform

searches 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 specifically 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.

We generate 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.

We earn 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.

We settle our commissions

with the aggregation platforms on a weekly basis.

October 23, 2020, the acquisition date, to March 31, 2021, we have expanded marketing of our online ride-hailing platform to

a larger pool of potential drivers and riders in Chengdu, Changsha, Neijiang and Guangzhou through cooperation with certain local car

rental companies and through offering attractive incentives and awards to drivers.

During the period from the acquisition date to March 31,

2021, approximately 4.4 million rides with gross fare of approximately $12.4 million were completed through our platform and an average

of over 6,000 ride-hailing drivers completed rides and earned income through our platform (the “Active Drivers”) each month.

Among the Active Drivers, approximately 6% also leased automobiles from us, which is in line with our strategy to cross sell our core

ride-hailing focused automobile finance and leasing business with the newer online ride-hailing platform business.

During the period since

the acquisition date to March 31, 2021, we achieved revenue of approximately $0.9 million from our Online Ride-hailing Platform Services,

after taking into account approximately $1.8 million incentives paid by us to Active Drivers, which were recorded as a reduction to our

Transaction Process

The following chart illustrates

our typical process of our ride-hailing platform services:

The significant majority

of our customers are Didi drivers.

of our customers are online ride-hailing drivers.

Due to the complexity and difficulty of obtaining registration of various licenses required

for driving a ride-hailing car, our customers choose to become affiliated with us who offer them a simplified and smooth process

to become qualified.

Our automobile purchasers, who are mostly Didi drivers, typically become affiliated with us through affiliation

agreements pursuant to which we, as a qualified management company, provide them post-transaction management services during the

affiliation period, which is usually the same as the term of the Financing Agreements.

We acquire customers

for our Automobile Transaction and Related Services through the network of third-party sales teams, referral from Didi and our

own efforts including online advertising and billboard advertising.

We also send out fliers and participate in trade shows to advertise

our services.

Since our acquisition of Hunan Ruixi through the date of this Report, we have serviced approximately 3,200 customers,

including approximately 3,100 Didi drivers.

for driving an online ride-hailing car, our customers choose to lease automobile from us or become affiliated with us who offer them a

simplified and smooth process to become qualified.

Our automobile leasees typically lease automobiles which meet the criteria of cars

used for online ride-hailing for their own business in the industry.

Our automobile purchasers typically become affiliated with us through

affiliation agreements pursuant to which we, as a qualified management company, provide them post-transaction management services during

the affiliation period, which is usually the same as the term of the Financing Agreements.

Our platform users typically use our online

ride-hailing platform to view and take customer orders for rides.

We acquire customers through

the network of third-party sales teams, cooperated lease companies and our own efforts including online advertising and billboard advertising.

We also send out fliers and participate in trade shows to advertise our services.

During the year ended March 31, 2021, we have serviced

over 2,500 customers for our Automobile Transaction and Related Services.

From the acquisition date of our platform to March 31,

2021, approximately 4.4 million rides with gross fare of approximately $12.4 million were completed through our platform orders.

Risk Management

To mitigate risk associate

with our Automobile Transaction and Related Services, we conduct an assessment and evaluation of prospective Didi drivers or leasees.

In our auto financing facilitation

business, assessment on a prospective buyer typically involves three parties:

financial institutions, Didi and us.

As the financial

institution makes the ultimate decision on the financing application and the financing terms, and Didi determines the outcome of

the driver qualification process, we do not maintain our own a credit grading system.

We believe our manual review and verification

process is sufficient for the requirements of our current operations.

We conduct an initial

screening when we receive an application from a prospective Didi driver based on credit reports from People’s Bank of China

(“PBOC”) and third party credit rating companies, and personal information including residence, ethnicity group, driving

history and involvement in legal proceeding.

An automobile buyer must meet the following preliminary criteria:

with our Automobile Transaction and Related Services and Online Ride-hailing Platform Services, we conduct assessments and evaluations

of prospective online ride-hailing drivers and leases separately, including identity verification and background checks.

For an online

ride-hailing platform driver who uses our platform as well as purchases or leases automobile from us, our assessments typically involve

two rounds from our subsidiaries who operate Automobile Transaction and Related Services and Online Ride-hailing Platform Services, respectively.

We believe our manual review and verification process is sufficient for the requirements of our current operations.

We conduct an initial screening

when we receive an application from a prospective automobile buyer/leasee based on credit reports from People’s Bank of China (“PBOC”)

and third party credit rating companies, and personal information including residence, ethnicity group, driving history and involvement

in legal proceeding.

An automobile buyer/leasee must meet the following preliminary criteria:

be between 18-65 years old;

reside in the mainland of China;

reside in the mainland of China and have the local residential identification;

have a driving history of at least three years;

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not be listed on a national delinquent debtor’s list;

have a demonstrated intention to purchase an automobile;

the value of purchased automobile matches the income of the candidate.

An automobile leasee

must meet the following preliminary criteria:

be between 22-60 years old;

reside in the mainland of China;

have a driving history of at least three years;

have a demonstrated intention to lease an automobile;

the value of lease obligations matches the income of the candidate.

Additionally, we arrange

a simple in-person interview with the applicant where we gather information on marital/family status, income, assets, borrowing

history and default history, if any.

This interview is typically conducted by our risk management staff who will verify the accuracy

of information on the prospective driver by cross-checking information provided by the applicant with other sources.

assess the prospective driver’s potential repayment ability.

Applicants with any

of the follow attributes will be rejected for:

a simple in-person interview with the applicant where we gather information on marital/family status, income, assets, borrowing history

and default history, if any.

This interview is typically conducted by our risk management staff who will verify the accuracy of information

on the prospective driver by cross-checking information provided by the applicant with other sources.

We will also assess the prospective

customer’s potential repayment ability.

Applicants with any of the

follow attributes will be rejected for:

engaging in illegal or criminal activities;

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providing fraudulent information.

Once we have completed

our risk assessments on the applicant, we recommend qualified applicants to the financial institution who proactively reviews and

makes final credit decisions on the applications we recommend.

Specifically, the financial institution is ultimately responsible

for, reviewing applications and verifying applicants’

personal information collected by us through various procedures.

We also share the driver’s

personal information with Didi, who requires all the drivers to be qualified under their own standard and conduct a background

check on each driver applicant.

Under Didi’s standards, a qualified driver must meet certain minimum criteria:

be 21 to 60 years old for males;

We also conduct an assessment

and evaluation when we receive an application from a prospective online ride-hailing driver.

Under our online ride-hailing platform’s

standards, a qualified driver must meet certain minimum criteria:

have obtained online booking taxi driver's license with age of 21 to 60 years old for males;

21 to 55 years old for females;

have a driving history of at least three years with driving license of (i) A1, A2, A3, B1, B2, C1 and C2 (referring to the different classes of driver’s license in China based on vehicle types), or (ii) C5 with an online reservation taxi driver's license and meeting the physical requirements for a driver's license above C2;

have a driving history of at least three years with driving license of (i) A1, A2, A3, B1, B2, C1 and C2 (referring to the different classes of driver’s license in China based on vehicle types);

must not have committed any hit-and-run accidents;

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have not been investigated or disciplined for unlawfully engaging in taxi services or other passenger transportation operations in Chengdu City within the past five years.

Our assessment of prospective

lessees in our auto financing business is substantially similar.

Our online ride-hailing platform

also set criteria for the automobiles used for online ride-hailing business, which need to be completed before the driver commences to

use the automobile for online ride-hailing business:

has obtained online booking taxi transportation certificate and be registered as "reserved taxi service"

with less than 7 seats and local registered number;

or in accordance with the requirements by local government;

has installed vehicle satellite positioning device and emergency alarm device with driving record function;

motor vehicle driving permit is still in use;

has been covered with compulsory insurance for motor vehicle traffic accident liability and compulsory insurance for third party liability of motor vehicle, and within the insurance period, or in accordance with the requirements by local government;

vehicle miles traveled is less than 600,000 km and the service life is less than 8 years;

other requirements by local government.

Post-Financing Services

Our post financing

management department is in charge of monitoring and managing monthly payments by the drivers.

We send text messages and make

phone calls as reminders three business days prior to the payment due date.

If a driver fails to pay on the due day, we will pay

the financial institution on behalf of the defaulted automobile purchaser but continue to contact the automobile purchaser and

request for payments.

Our post financing management

department is in charge of monitoring and managing monthly payments by the purchaser/leasee.

We send text messages and make phone calls

as reminders three business days prior to the payment due date.

If a purchaser/leasee fails to pay on the due day, we will pay the financial

institution on behalf of the defaulted automobile purchaser but continue to contact the automobile purchaser and request for payments.

If the delinquency continues for more than 15 days, we then seek to repossess the car.

Every car purchased

through us has a GPS device installed, which helps us locate the car.

After a car is repossessed, we store it in a warehouse and

later dispose of the automobile in accordance with law and relevant financing documents.

If we are unable to repossess collateral

from a delinquent automobile purchaser, we may commence a lawsuit against such purchaser.

The automobile financing

industry in China is large and evolving.

According to Didi, there were approximately 120 automobile financing and leasing companies

that have established business relationships with Didi in Chengdu City as of June 2020.

We face significant competition primarily

from companies that operate in Chengdu City, such as Chengdu Jingtengjian Business Consulting Co., Ltd., FAW Huidi Automotive Technology

and Chengdu Yudeng Automobile Service Co., Ltd.

As of June 2020, there were approximately 80 automobile financing and

leasing companies that have established business relationships with Didi in Changsha City and are engaged in the same business

We face significant competition primarily from companies that operate in Changsha City, such as Hunan Zuxing Tianxia Automobile

Leasing Co., Ltd., and Hunan Qiguang Automobile Service Co., Ltd.

This section sets forth

a summary of the most significant rules and regulations that affect our business activities in China or the rights of our stockholders

Every car purchased through us has a GPS device

installed, which helps us locate the car.

After a car is repossessed, we store it in a warehouse and later dispose of the automobile in

accordance with law and relevant financing documents.

If we are unable to repossess collateral from a delinquent automobile purchaser/leasee,

we may commence a lawsuit against such purchaser.

The online ride-hailing industry

in China is large and evolving.

There were approximately 80 automobile financing and leasing companies that provide automobile purchasing

and leasing services to online ride-hailing drivers in Chengdu and Changsha City as of June 2021.

We face significant competition

primarily from companies that operate in Chengdu City, such as Chengdu Jingtengjian Business Consulting Co., Ltd., FAW Huidi Automotive

Technology Co., Ltd.

and Jingming Automobile Leasing Co., Ltd.

The acquisition of XXTX has

brought us a new business of online ride-hailing platform services and enhanced our goal of providing an all-encompassing solution for

online ride-hailing drivers.

However, Didi takes approximately 90% market share of the online ride-hailing platforms according to a research

issued by Forward Research.

We choose to cooperate with well-known aggregation platforms to commence our online ride-hailing platform

business rather than competing with Didi directly.

As of June 2021, there were approximately 80 companies who operate their own online

ride-hailing platforms and have established business relationships with Gaode and Meituan in Chengdu, Changsha, Neijiang and Guangzhou

City and are engaged in the same business as ours.

We face significant competition primarily from platforms that have operation in Chengdu

and Changsha City, such as Caocao, Jishiyongche and Xiehua Chuxing.

We expect to have more cooperation with other aggregation platforms

in the online ride-hailing industries to have more competitive advantage in the industry.

This section sets forth a

summary of the most significant rules and regulations that affect our business activities in China or the rights of our stockholders

to receive dividends and other distributions from us.

Regulations Related to Ride-Hailing

In order to manage

the rapidly growing ride-hailing service market and control relevant risks, on July 27, 2016, seven ministries and commissions,

including the Ministry of Transport, jointly promulgated the Interim Measures for the Administration of Online Taxi Booking Business

Operations and Services and amended on December 28, 2019 , which legalizes ride-hailing services such as Didi and requires

the ride-hailing services to meet the requirements set out by the Interim Measures and obtain requisite service licenses.

Regulations Related to Online Ride-Hailing

In order to manage the rapidly

growing online ride-hailing service market and control relevant risks, on July 27, 2016, seven ministries and commissions, including

the Ministry of Transport (the “MOT”), jointly promulgated the Interim Measures for the Administration of Online Taxi Booking

Business Operations and Services and amended on December 28, 2019 , which legalizes online ride-hailing services such as Didi

and requires the online ride-hailing services to meet the requirements set out by the Interim Measures and obtain requisite service licenses

and take full responsibility of the ride services to ensure the safety of riders.

On November 5, 2016,

the Municipal Communications Commission of Chengdu City and a number of municipal departments jointly issued the Implementation

Rules for the Administration of Taxi Management Services for Chengdu Network.

On August 10, 2017, the Transportation Commission

of Chengdu further issued guidelines on compliance requirements for ride-hailing businesses, including Working Process for the

Online Appointment of Taxi Drivers Qualification Examination and Issuance and Online Appointment Taxi Transportation Certificate

Issuance Process.

According to these regulations and guidelines, three licenses or certificates are required for operating the

ride-hailing business:

(1) the ride-hailing service platform such as Didi is required to obtain the online reservation taxi operating

(2) the automobiles used for online ride-hailing are required to obtain the online reservation taxi transport certificate

(the “automobile certificate”);

(3) the drivers are required obtain the online reservation taxi driver's license (the

“driver’s license”).

On July 23, 2018,

the General Office of Changsha Municipal People's Government issued the “Detailed Rules for the Administration of Online

Booking Taxi Management Services for Changsha.”

According to those regulations and guidelines, licenses, which are online

reservation taxi operating license, automobile certificate and driver’s licenses, are required to operate a ride-hailing

business in Changsha, and automobiles used for online ride-hailing services are required to meet certain standards, including that

the sales price (including taxes) of the qualified automobile is over RMB120,000.

Without a requisite

automobile certificate or driver’s license, ride-hailing drivers may be suspended from providing ride-hailing services, their

illegal income may be confiscated and they may be subject to fines amounting to RMB5,000 (US$730) to RMB30,000 (US$4,370) for each

Regulations Related to Financial

the Municipal Communications Commission of Chengdu City and a number of municipal departments jointly issued the Implementation Rules for

the Administration of Taxi Management Services for Chengdu Network.

On August 10, 2017, the Transportation Commission of Chengdu

further issued guidelines on compliance requirements for online ride-hailing businesses, including Working Process for the Online Appointment

of Taxi Drivers Qualification Examination and Issuance and Online Appointment Taxi Transportation Certificate Issuance Process.

to these regulations and guidelines, three licenses or certificates are required for operating the online ride-hailing business:

online ride-hailing service platform such as Didi is required to obtain the online reservation taxi operating license;

(2) the automobiles

used for online ride-hailing are required to obtain the online reservation taxi transport certificate (the “automobile certificate”);

(3) the drivers are required obtain the online reservation taxi driver's license (the “driver’s license”).

On July 23, 2018, the

General Office of Changsha Municipal People's Government issued the “Detailed Rules for the Administration of Online Booking

Taxi Management Services for Changsha.”

According to those regulations and guidelines, licenses, which are online reservation taxi

operating license, automobile certificate and driver’s licenses, are required to operate a ride-hailing business in Changsha, and

automobiles used for online ride-hailing services are required to meet certain standards, including that the sales price (including taxes)

of the qualified automobile is over RMB120,000.

In addition to the national

online reservation taxi operating license, XXTX and its subsidiaries also obtained the local online reservation taxi operating license

in Chengdu, Changsha, Neijiang, Panzhihua, Nanchong and Guangzhou, from June 2020 to March 2021 issued by local authority, to

operate the online ride-hailing platform services.

Without a requisite automobile certificate or driver’s license, ride-hailing

drivers may be suspended from providing online ride-hailing services, their illegal income may be confiscated and they may be subject

to fines amounting to RMB5,000 (US$730) to RMB30,000 (US$4,370) for each offense.

However, approximately 55%

of our online ride-hailing drivers had not obtained the driver’s license as of March 31, 2021 while all of the cars used for

online ride-hailing services which we provided management services to have the automobile certificate.

Without requisite automobile certificate

or driver’s license, these drivers may be suspended from providing online 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.

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.

In December 2020, Chengdu Transportation Bureau has taken a series of investigations into actions violating

the Interim Measures and imposed fines for such violations.

Among the 226 cases, two cases involved drivers of our Xixingtianxia online

ride-hailing platform who failed to obtain the ride-hailing driver’s licenses.

As a result, we were fined RMB10,000.

the Interim Measures, XXTX and its subsidiaries may be fined between RMB5,000 to RMB30,000 (approximately $714 to $4,300) for violations

of the Interim Measures, including providing online ride-hailing platform services to unqualified drivers or vehicles.

During the year

ended March 31, 2021, we have been fined by approximately $36,000 by Traffic Management Bureaus in Chengdu and Changsha, of which,

approximately $5,900 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.

We are in the process of assisting the drivers to obtain the required certificate and license, such as providing registered and training

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.

Regulations Related to Financial Leasing

In September 2013, the

Ministry of Commerce of the People’s Republic of China (“MOFCOM”) issued the Administration Measures of Supervision

on Financing Lease Enterprises (the “Leasing Measures”), to regulate and administer the business operations of financial

leasing enterprises.

According to the Leasing Measures, financial leasing enterprises are allowed to carry out financial leasing

businesses in such forms as direct lease, sublease, sale-and-lease-back, leveraged lease, entrusted lease and joint lease in accordance

with the provisions of relevant laws, regulations and rules.

However, the Leasing Measures prohibit financial leasing enterprises

from engaging in financial businesses such as accepting deposits, and providing loans or entrusted loans.

Without the approval

from relevant authorities, financial leasing enterprises may not engage in inter-bank borrowing and other businesses.

financial leasing enterprises are prohibited from carrying out illegal fund-raising activities in the name of financial leases.

The Leasing Measures require financial leasing enterprises to establish and improve their financial and internal risk control systems,

and a financial leasing enterprise’s risk assets may not exceed ten times that of its total net assets.

on Financing Lease Enterprises (the “Leasing Measures”), to regulate and administer the business operations of financial leasing

According to the Leasing Measures, financial leasing enterprises are allowed to carry out financial leasing businesses in

such forms as direct lease, sublease, sale-and-lease-back, leveraged lease, entrusted lease and joint lease in accordance with the provisions

of relevant laws, regulations and rules.

However, the Leasing Measures prohibit financial leasing enterprises from engaging in financial

businesses such as accepting deposits, and providing loans or entrusted loans.

Without the approval from relevant authorities, financial

leasing enterprises may not engage in inter-bank borrowing and other businesses.

In addition, financial leasing enterprises are prohibited

from carrying out illegal fund-raising activities in the name of financial leases.

The Leasing Measures require financial leasing enterprises

to establish and improve their financial and internal risk control systems, and a financial leasing enterprise’s risk assets may

not exceed ten times that of its total net assets.

In April 2018, China

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On May 26, 2020, CBIRC

issued the Interim Measures for Supervision and Administration of Financial Leasing Companies, which clarified the business scope,

the scope of the leased property and the prohibited business or activity of the financial leasing company, as well as other business-related

definitions, such as purchase, registration, retrieval and value management of financial leasing products.

Financial leasing companies

may conduct some or all of the following businesses:

issued the Interim Measures for Supervision and Administration of Financial Leasing Companies (the “Financial Leasing Measures”),

which clarified the business scope, the scope of the leased property and the prohibited business or activity of the financial leasing

company, as well as other business-related definitions, such as purchase, registration, retrieval and value management of financial leasing

Financial leasing companies may conduct some or all of the following businesses:

(1) financial leasing business;

(2) leasing business;

(3) purchase, disposal

of residual value and repair of leased assets related to financial leasing and leasing business, consulting of the leasing transaction,

receipt of leasing deposit;

(4) transfer of financial leases or leased assets or acceptance of financial leases or leased assets

(3) purchase, disposal of residual value and repair of leased assets related to financial leasing and leasing business,

consulting of the leasing transaction, receipt of leasing deposit;

(4) transfer of financial leases or leased assets or acceptance

of financial leases or leased assets transferred;

(5) fixed income securities investment business.

The measures have also discussed certain regulatory standards, including

the proportion of financial leasing assets, the proportion of fixed income securities investment business, business concentration

The measures have also discussed

certain regulatory standards, including the proportion of financial leasing assets, the proportion of fixed income securities investment

business, business concentration and so on.

Financial leasing companies shall not conduct the following businesses or activities:

(1) illegal fund-raising, acceptance

or disguised acceptance of deposits;

fund-raising, acceptance or disguised acceptance of deposits;

(2) extension of loans or entrusted loans;

(3) placements with or from other financial leasing

companies or in disguise;

(4) financing or transferring assets through Internet Lending Information Intermediaries, private equity

(5) other businesses or activities prohibited by laws and regulations, the CBIRC and local financial regulatory authorities

in provinces, autonomous regions and municipalities.

(3) placements with

or from other financial leasing companies or in disguise;

(4) financing or transferring assets through Internet Lending Information

Intermediaries, private equity funds;

(5) other businesses or activities prohibited by laws and regulations, the CBIRC and local

financial regulatory authorities in provinces, autonomous regions and municipalities.

Financial leasing companies

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(1) degree of concentration of single client financing, meaning

the balance of all financial leasing business of a financial leasing company to a single lessee shall not exceed 30% of its net

(2) degree of concentration of single group client financing, meaning the balance of all financial leasing business of

a financial leasing company to a single group shall not exceed 50% of its net assets;

(3) ratio of a single related client, meaning

the balance of all financial leasing business of a financial leasing company to a related party shall not exceed 30% of its net

(4) ratio of all related parties, meaning the balance of all financial leasing business of a financial leasing company

to all related parties shall not exceed 50% of its net assets, and (5) ratio of a single related shareholder, meaning the financing

balance to a single shareholder and all its related parties shall not exceed the shareholder’s capital contribution in the

financial leasing company, and at the same time meet the provisions of the measures on the ratio of a single related client.

CBIRC may make adjustments to the above indicators according to regulatory needs.

the balance of all financial leasing business of a financial leasing company to a single lessee shall not exceed 30% of its net assets;

(2) degree of concentration of single group client financing, meaning the balance of all financial leasing business of a financial

leasing company to a single group shall not exceed 50% of its net assets;

(3) ratio of a single related client, meaning the balance

of all financial leasing business of a financial leasing company to a related party shall not exceed 30% of its net assets;

of all related parties, meaning the balance of all financial leasing business of a financial leasing company to all related parties shall

not exceed 50% of its net assets, and (5) ratio of a single related shareholder, meaning the financing balance to a single shareholder

and all its related parties shall not exceed the shareholder’s capital contribution in the financial leasing company, and at the

same time meet the provisions of the measures on the ratio of a single related client.

The CBIRC may make adjustments to the above indicators

according to regulatory needs.

Financial leasing companies

that were established before the implementation of the Interim Measures for the Supervision and Administration of Financial Leasing

Companies are required meet the requirements stipulated in the Measures within the transition period prescribed by the provincial

local financial supervision department.

that were established before the implementation of the Interim Measures for the Supervision and Administration of Financial Leasing Companies

are required meet the requirements stipulated in the Measures within the transition period prescribed by the provincial local financial

supervision department.

In principle, the transition period shall not exceed three years.

Provincial local financial

supervision departments can appropriately extend the transition period arrangement according to the actual situation of specific

Provincial local financial supervision departments

can appropriately extend the transition period arrangement according to the actual situation of specific industries.

As the date of this Report,

Hunan Ruixi, our proprietary financing lease subsidiary, has utilized our own capital to fund financing leases to automobile purchasers.

However, Yicheng has not carried out any financial leasing business.

Hunan Ruixi has not complied with all the requirements stipulated

under the Financial Leasing Measures.

Those two companies intend to rectify and to comply with all the requirements stipulated under the

Financial Leasing Measure during the transition period, failing which, Hunan Ruixi and/or Yicheng cannot carry out financial leasing business.

The PRC Civil Code promulgated

by the National People’s Congress effective from January 1, 2021 regulates the civil contractual relationship among natural

persons, legal persons and other organizations.

Chapter 15 of the PRC Civil Code sets forth related rules about financing lease contracts

including that financing lease contracts shall be in written form and normally include terms such as the name, quantity, specifications,

technical performance and inspection method of the leased property, the lease term, the composition, payment term, payment method and

currency of the rent and the ownership of the leased property upon expiration of the lease.

The PRC Civil Code further provides that the

lessor and the lessee may agree on the ownership of the leased property upon expiry of the lease term.

If the ownership of the leased

property is not or is not clearly agreed between the parties, and is still cannot be determined pursuant to the PRC Civil Code, the leased

property shall be owned by the lessor.

Regulation Related to Financing Guarantee

The State Council of

China promulgated the Regulations on the Administration of Financing Guarantee Companies on August 2, 2017, and on April 2, 2018,

The State Council of China

promulgated the Regulations on the Administration of Financing Guarantee Companies on August 2, 2017, and on April 2, 2018,

the CBIRC, together with several other governmental authorities, jointly adopted four supplemental rules over the Administration

of Financing Guarantee Companies:

(i) the Administrative Measures for the Financing Guarantee Business Permit, (ii) Measures for

Measuring the Outstanding Amount of Financing Guarantee Liabilities, (iii) Administrative Measures for the Asset Percentages of

Financing Guarantee Companies and (iv) Guidelines on Business Cooperation between Banking Financial Institutions and Financing

(i) the Administrative Measures for the Financing Guarantee Business Permit, (ii) Measures

for Measuring the Outstanding Amount of Financing Guarantee Liabilities, (iii) Administrative Measures for the Asset Percentages

of Financing Guarantee Companies and (iv) Guidelines on Business Cooperation between Banking Financial Institutions and Financing

Guarantee Companies, or the Four Supporting Measures of the Financing Guarantee Rules.

In addition, the CBIRC, together with several

other governmental authorities, jointly issued the Supplementary Provisions on the Supervision and Administration of Financing

Guarantee Companies on October 9, 2019.

According to the above

rules on financing guarantee companies, or the Financing Guarantee Rules, “financing guarantee”

refers to the activities

that guarantors provide guarantee to the guaranteed parties as to loans, bonds or other types of debt financing, including, among

other things, the activities whereby a guarantor provides guarantee for loans, online lending, financial leasing, commercial factoring,

bill acceptance, letters of credit or other forms of debt financing.

In addition, the CBIRC, together with several other

governmental authorities, jointly issued the Supplementary Provisions on the Supervision and Administration of Financing Guarantee Companies

on October 9, 2019.

According to the above rules on

financing guarantee companies, or the Financing Guarantee Rules, “financing guarantee”

refers to the activities that guarantors

provide guarantee to the guaranteed parties as to loans, bonds or other types of debt financing, including, among other things, the activities

whereby a guarantor provides guarantee for loans, online lending, financial leasing, commercial factoring, bill acceptance, letters of

credit or other forms of debt financing.

“Financing guarantees companies”

refer to companies

legally established and engaged in financing guarantee business.

According to those rules, the establishment of a financing guarantee

company is subject to the approval by the competent government authority, and unless otherwise stipulated, no entity may operate

financing guarantee business without such approval.

If any entity violates these regulations and operates financing guarantee business

without approval, the entity may be subject to penalties including ban or suspension of business, fines of RMB500,000 to RMB1,000,000,

and confiscation of illegal gains, if any.

If the violation constitutes a criminal offense, criminal liability will be imposed

in accordance with the law.

In connection with

our automotive financing facilitation business, we provide guarantees to our financing partners in connection with the financing

of the purchase of automobiles and such guarantee business is not our principal business.

It is uncertain whether this practice

would be deemed as operations in financing guarantee business.

Risk—Risks Relating to Our Industry and Business—We

are required to obtain certain licenses and permits for our business operations, and we may not be able to obtain or maintain such

licenses or permits.

Regulations Related to Value-Added

Telecommunication Business Certificates and Foreign Investment Restrictions

PRC regulations impose

sanctions for engaging in Internet information services of a commercial nature without having obtained an ICP certificate or engaging

in the operation of online data processing and transaction processing (“ODPTP”) without having obtained an ODPTP certificate.

These sanctions include corrective orders and warnings from the PRC communication administration authority, fines and confiscation

of illegal gains and, in the case of significant infringements, the websites may be ordered to close.

The website used for our

previous P2P online lending services business which website continue to contain our historical information, has not been fully

shut down and remains accessible to the public.

The PRC regulatory authorities' enforcement of such regulations in the context

of our discontinued business remains unclear.

refer to companies legally established and engaged

in financing guarantee business.

According to those rules, the establishment of a financing guarantee company is subject to the approval

by the competent government authority, and unless otherwise stipulated, no entity may operate financing guarantee business without such

If any entity violates these regulations and operates financing guarantee business without approval, the entity may be subject

to penalties including ban or suspension of business, fines of RMB500,000 to RMB1,000,000, and confiscation of illegal gains, if any.

If the violation constitutes a criminal offense, criminal liability will be imposed in accordance with the law.

In connection with our automotive

financing facilitation business, we provide guarantees to our financing partners in connection with the financing of the purchase of automobiles

and such guarantee business is not our principal business.

It is uncertain whether this practice would be deemed as operations in financing

guarantee business.

Risk—Risks Relating to Our Industry and Business—We are required to obtain certain licenses

and permits for our business operations, and we may not be able to obtain or maintain such licenses or permits.

Regulations Related to Value-Added Telecommunication

Business Certificates and Foreign Investment Restrictions

PRC regulations impose sanctions

for engaging in Internet information services of a commercial nature without having obtained an ICP certificate or engaging in the operation

of online data processing and transaction processing (“ODPTP”) without having obtained an ODPTP certificate.

These sanctions

include corrective orders and warnings from the PRC communication administration authority, fines and confiscation of illegal gains and,

in the case of significant infringements, the websites may be ordered to close.

According to the Provisions

1 unchanged sentence

telecommunication enterprise that engages in the operation of a value-added telecommunication business shall not exceed 50%.

Circular of Ministry of Industry and Information Technology Concerning Lifting Restrictions on the Proportion of Foreign Equity

in Online Data Processing and Transaction Processing Business (E-commerce) (the “Circular 196”), which was promulgated

on June 19, 2015, provides that foreign investors are permitted to invest up to 100% of the registered capital in a foreign-invested

telecommunication enterprise engaging in the operation of online data processing and transaction processing (E-commerce).

foreign investors are only permitted to invest up to 50% of the registered capital in a foreign-invested telecommunication enterprise

that engages in the operation of Internet information services.

Under either circumstance, the largest foreign investor will be

required to have a satisfactory business track record and operational experience in the value-added telecommunications business.

Circular 196 permits foreign ownership, in whole or in part, of online data and deal processing businesses (E-commerce), a sub-set

of value-added telecommunications services, it is not clear whether our existing online lending website would be deemed

as online data and deal processing.

Risk Factors — Risks Related to Doing Business

in China — We 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.

of Ministry of Industry and Information Technology Concerning Lifting Restrictions on the Proportion of Foreign Equity in Online Data

Processing and Transaction Processing Business (E-commerce) (the “Circular 196”), which was promulgated on June 19, 2015,

provides that foreign investors are permitted to invest up to 100% of the registered capital in a foreign-invested telecommunication enterprise

engaging in the operation of online data processing and transaction processing (E-commerce).

However, foreign investors are only permitted

to invest up to 50% of the registered capital in a foreign-invested telecommunication enterprise that engages in the operation of Internet

information services.

Under either circumstance, the largest foreign investor will be required to have a satisfactory business track record

and operational experience in the value-added telecommunications business.

While Circular 196 permits

foreign ownership, in whole or in part, of online data and deal processing businesses (E-commerce), a sub-set of value-added telecommunications

services, it is not clear whether our online ride-hailing platform would be deemed as online data and deal processing.

Factors — Risks Related to Doing Business in China — We 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.

Regulations Related to Internet Advertising

The Interim Measures

for Administration of Internet Advertising (the “Internet Advertising Measures”), were adopted by the SAIC and became

effective on September 1, 2016.

The Interim Measures for

Administration of Internet Advertising (the “Internet Advertising Measures”), were adopted by the SAIC and became effective

on September 1, 2016.

The Internet Advertising Measures regulate Internet advertising activities.

According to the

Internet Advertising Measures, Internet advertisers are responsible for the authenticity of the content of advertisements.

identity, administrative license, cited information and other certificates that advertisers are required to obtain in publishing

Internet advertisements shall be true and valid.

According to the Internet Advertising

Measures, Internet advertisers are responsible for the authenticity of the content of advertisements.

The identity, administrative

license, cited information and other certificates that advertisers are required to obtain in publishing Internet advertisements shall

be true and valid.

Internet advertisements shall be distinguishable and prominently marked as “advertisements”

in order to enable consumers to identify them as advertisements.

Publishing and circulating advertisements through the Internet

shall not affect the normal use of the Internet by users.

It is not allowed to induce users to click on the content of advertisements

by any fraudulent means, or to attach advertisements or advertising links in the emails without permission.

The Internet Advertising

Measures also impose several restrictions on the forms of advertisements and activities used in advertising.

enable consumers to identify them as advertisements.

Publishing and circulating advertisements through the Internet shall not affect the

normal use of the Internet by users.

It is not allowed to induce users to click on the content of advertisements by any fraudulent means,

or to attach advertisements or advertising links in the emails without permission.

The Internet Advertising Measures also impose several

restrictions on the forms of advertisements and activities used in advertising.

“Internet advertising”

as defined in the Internet Advertising Measures refers to commercial advertisements that directly or indirectly promote goods or

services through websites, web pages, Internet applications or other Internet media in various forms, including texts, pictures,

audio clips and videos.

Where Internet advertisements are not identifiable and marked as “advertisements”, a fine of

not more than RMB 100,000 (US$15,378) may be imposed in accordance with Advertising Law.

A fine ranging from RMB 5,000 (US$769)

to RMB 30,000 (US$4,613) may be imposed for any failure to provide a prominently marked “CLOSE”

button to ensure “one-click

closure”.

Advertisers who induce users to click on the content of advertisements by fraudulent means or without permission,

attach advertisements or advertising links in the emails shall be imposed a fine ranging from RMB 10,000 (US$1,538) to RMB 30,000

Our marketplace is in the process of complying with the new Internet Advertising Measures during our advertising activities.

Regulations Related to Information

Security and Confidentiality of User Information

Internet activities

in China are regulated and restricted by the PRC government and are subject to criminal penalties under the Decision Regarding

the Protection of Internet Security.

The MPS has promulgated

measures that prohibit use of the Internet in ways that, among other things, result in leaks of government secrets or the spread

of socially destabilizing content.

The MPS and its local counterparts have authority to supervise and inspect domestic websites

to carry out its measures.

Internet information service providers that violate these measures may have their licenses revoked and

their websites shut down.

On June 22, 2007,

the MPS, the State Secrecy Administration and other relevant authorities jointly issued the Administrative Measures for the Hierarchical

Protection of Information Security, which divides information systems into five categories and requires the operators of information

systems ranking above Grade II to file an application with the local Bureau of Public Security within 30 days of the date of its

security protection grade determination or since its operation.

The Company completed its registration with the local Bureau of

Public Security in April, 2017.

The PRC government

regulates the security and confidentiality of Internet users’

The Administrative Measures on Internet Information

Service, the Regulations on Technical Measures of Internet Security Protection and the Provisions on Protecting Personal Information

of Telecommunication and Internet Users, which were issued on July 16, 2013 by the MIIT, set forth strict requirements to

protect personal information of Internet users and require Internet information service providers to maintain adequate systems

to protect the security of such information.

Personal information collected must be used only in connection with the services provided

by the Internet information service provider.

Moreover, the Rules for Regulating the Order in the Market for Internet Information

Service also protect Internet users’

personal information by (i) prohibiting Internet information service providers from

unauthorized collection, disclosure or use of their users’

personal information and (ii) requiring Internet information service

providers to take measures to safeguard their users' personal information.

In December 2012, the Standing Committee of the

National People’s Congress passed the Decision on Strengthening Internet Information Protection, which provides that all

Internet service providers in China, including Internet information service providers, must require that their users provide identification

information before entering into service agreements or providing services.

as defined in the Internet

Advertising Measures refers to commercial advertisements that directly or indirectly promote goods or services through websites, web pages, Internet

applications or other Internet media in various forms, including texts, pictures, audio clips and videos.

Where Internet advertisements

are not identifiable and marked as “advertisements”, a fine of not more than RMB100,000 (approximately US$15,378) may be imposed

in accordance with Advertising Law.

A fine ranging from RMB5,000 (approximately US$769) to RMB30,000 (approximately US$4,613) may be imposed

for any failure to provide a prominently marked “CLOSE”

button to ensure “one-click closure”.

Advertisers who

induce users to click on the content of advertisements by fraudulent means or without permission, attach advertisements or advertising

links in the emails shall be imposed a fine ranging from RMB10,000 (approximately US$1,538) to RMB30,000 (approximately US$4,613).

marketplace is in the process of complying with the new Internet Advertising Measures during our advertising activities.

Regulations Related to Information Security

and Confidentiality of User Information

Internet activities in China

are regulated and restricted by the PRC government and are subject to criminal penalties under the Decision Regarding the Protection of

Internet Security.

The MPS has promulgated measures

that prohibit use of the Internet in ways that, among other things, result in leaks of government secrets or the spread of socially destabilizing

The MPS and its local counterparts have authority to supervise and inspect domestic websites to carry out its measures.

information service providers that violate these measures may have their licenses revoked and their websites shut down.

On June 22, 2007, the

MPS, the State Secrecy Administration and other relevant authorities jointly issued the Administrative Measures for the Hierarchical Protection

of Information Security, which divides information systems into five categories and requires the operators of information systems ranking

above Grade II to file an application with the local Bureau of Public Security within 30 days of the date of its security protection grade

determination or since its operation.

The Company completed its registration with the local Bureau of Public Security in April, 2017.

The PRC government regulates

the security and confidentiality of Internet users’

The Administrative Measures on Internet Information Service, the

Regulations on Technical Measures of Internet Security Protection and the Provisions on Protecting Personal Information of Telecommunication

and Internet Users, which were issued on July 16, 2013 by the MIIT, set forth strict requirements to protect personal information

of Internet users and require Internet information service providers to maintain adequate systems to protect the security of such information.

Personal information collected must be used only in connection with the services provided by the Internet information service provider.

Moreover, the Rules for Regulating the Order in the Market for Internet Information Service also protect Internet users’

information by (i) prohibiting Internet information service providers from unauthorized collection, disclosure or use of their users’

personal information and (ii) requiring Internet information service providers to take measures to safeguard their users' personal

In December 2012, the Standing Committee of the National People’s Congress passed the Decision on Strengthening

Internet Information Protection, which provides that all Internet service providers in China, including Internet information service providers,

must require that their users provide identification information before entering into service agreements or providing services.

On November 7, 2016,

2016, the Standing Committee of the National People’s Congress released the Cyber Security Law, which came into effect on

June 1, 2017 (“Cyber Security Law”).

The Cyber Security Law requires network operators to perform certain functions

related to cyber security protection and the strengthening of network information management.

For instance, under the Cyber Security

Law, network operators of key information infrastructure generally shall, during their operations in the PRC, store the personal

information and important data collected and produced within the territory of PRC.

On April 11, 2017,

the Cyberspace Administration of China announced the Measures for the Security Assessment of Personal Information and Important

Data to be Transmitted Abroad (consultation draft) (the “Consultation Draft of Security Assessment Measures”).

Consultation Draft of Security Assessment Measures requires network operators to conduct security assessments and obtain consents

from owners of personal information prior to transmitting personal information and other important data abroad.

Moreover, under

the Consultation Draft of Security Assessment Measures, the network operators are required to apply to the relevant regulatory

authorities for security assessments under several circumstances, including but not limited to:

(i) if data to be transmitted abroad

contains personal information of more than 500,000 users in aggregate;

(ii) if the quantity of the data to be transmitted abroad

is more than 1,000 gigabytes;

(iii) if data to be transmitted abroad contains information regarding nuclear facilities, chemical

biology, national defense or military projects, population and health, or relates to large-scale engineering activities, marine

environment issues or sensitive geographic information;

(iv) if data to be transmitted abroad contains network security information

regarding system vulnerabilities or security protection of critical information infrastructure;

(v) if key information infrastructure

network operators transmit personal information and important data abroad;

or (vi) if any other data to be transmitted abroad contains

information that might affect national security or public interest and are required to be assessed as determined by the relevant

regulatory authorities.

the Standing Committee of the National People’s Congress released the Cyber Security Law, which came into effect on June 1,

2017 (“Cyber Security Law”).

The Cyber Security Law requires network operators to perform certain functions related to cyber

security protection and the strengthening of network information management.

For instance, under the Cyber Security Law, network operators

of key information infrastructure generally shall, during their operations in the PRC, store the personal information and important data

collected and produced within the territory of PRC.

Besides, mobile internet

applications and the internet application store are specifically regulated by the Administrative Provisions on Mobile Internet Application

Information Services (the “

Mobile Application Administrative Provisions”)

which were promulgated by the Cyberspace Administration of China (the “CAC”) on June 28, 2016 and effective on August 1,

Pursuant to the Mobile Application Administrative Provisions, application information service providers shall obtain the relevant

qualifications prescribed by laws and regulations, strictly implement their information security management responsibilities and carry

out certain duties, including establish and complete user information security protection mechanism and information content inspection

and management mechanisms, protect users’

right to know and right to choose in the process of usage, and to record users’

daily information and preserve it for 60 days.

Furthermore, internet application store service providers and internet application information

service providers shall sign service agreements to determinate both sides’

rights and obligations.

Furthermore, on December 16,

2016, MIIT promulgated the Interim Measures on the Administration of Pre-Installation and Distribution of Applications for Mobile Smart

Terminals (the “

Mobile Application Interim Measures ”

effective on July 1, 2017.

The Mobile Application Interim Measures requires, among others, that internet information service providers

must ensure that a mobile application, as well as its ancillary resource files, configuration files and user data can be uninstalled by

a user on a convenient basis, unless it is a basic function software, which refers to a software that supports the normal functioning

of hardware and operating system of a mobile smart device.

On April 11, 2017, the

CAC announced the Measures for the Security Assessment of Personal Information and Important Data to be Transmitted Abroad (consultation

draft) (the “Consultation Draft of Security Assessment Measures”).

The Consultation Draft of Security Assessment Measures

requires network operators to conduct security assessments and obtain consents from owners of personal information prior to transmitting

personal information and other important data abroad.

Moreover, under the Consultation Draft of Security Assessment Measures, the network

operators are required to apply to the relevant regulatory authorities for security assessments under several circumstances, including

but not limited to:

(i) if data to be transmitted abroad contains personal information of more than 500,000 users in aggregate;

the quantity of the data to be transmitted abroad is more than 1,000 gigabytes;

(iii) if data to be transmitted abroad contains information

regarding nuclear facilities, chemical biology, national defense or military projects, population and health, or relates to large-scale

engineering activities, marine environment issues or sensitive geographic information;

(iv) if data to be transmitted abroad contains

network security information regarding system vulnerabilities or security protection of critical information infrastructure;

key information infrastructure network operators transmit personal information and important data abroad;

or (vi) if any other data

to be transmitted abroad contains information that might affect national security or public interest and are required to be assessed as

determined by the relevant regulatory authorities.

On November 28, 2019,

the Security Bureau of the Cyberspace Administration of China, the General Office of the MIIT, the General Office of the Ministry

of Public Security and the General Office of the State Market Supervision and Administration (the “MSA”) jointly issued

the Notice on Measures for Determining the Illegal Collection and Use of Personal Information through Mobile Applications, which

aims to provide reference for supervision and administration departments of the PRC government and provide guidance for mobile

applications operators’

self-examination and self-correction and social supervision by avid internet users (so called “netizens”),

and further elaborates the forms of behavior constituting the illegal collection and use of personal information through mobile

applications including:

(i) failing to publish the rules on the collection and use of personal information;

(ii) failing to explicitly

explain the purposes, methods and scope of the collection and use of personal information;

(iii) collecting and using personal

information without the users’

(iv) collecting personal information unrelated to the services the collector of the

information provides and beyond the necessary principle of such services;

(v) providing personal information to others without

the users’

(vi) failing to provide the function of deleting or correcting personal information according to PRC

laws or failing to publish information such as ways for internet users to file complaints and reports.

the Security Bureau of the CAC, the General Office of the MIIT, the General Office of the Ministry of Public Security and the General

Office of the State Market Supervision and Administration (the “MSA”) jointly issued the Notice on Measures for Determining

the Illegal Collection and Use of Personal Information through Mobile Applications, which aims to provide reference for supervision and

administration departments of the PRC government and provide guidance for mobile applications operators’

self-examination and self-correction

and social supervision by avid internet users (so called “netizens”), and further elaborates the forms of behavior constituting

the illegal collection and use of personal information through mobile applications including:

(i) failing to publish the rules on

the collection and use of personal information;

(ii) failing to explicitly explain the purposes, methods and scope of the collection

and use of personal information;

(iii) collecting and using personal information without the users’

(iv) collecting

personal information unrelated to the services the collector of the information provided and beyond the necessary principle of such services;

(v) providing personal information to others without the users’

(vi) failing to provide the function of deleting

or correcting personal information according to PRC laws or failing to publish information such as ways for internet users to file complaints

Regulations Related to Company Establishment

and Foreign Investment

establishment, operation and management of corporate entities in China is governed by the Company Law of the PRC (the

“Company Law”).

All of our subsidiaries and VIEs in China are subject to the Company Law.

According to the

Company Law, companies established in the PRC are either limited liability companies or joint stock limited liability

The establishment, operation

and management of corporate entities in China is governed by the Company Law of the PRC (the “Company Law”).

All of our subsidiaries

and VIEs in China are subject to the Company Law.

According to the Company Law, companies established in the PRC are either limited liability

companies or joint stock limited liability companies.

The Company Law applies to both PRC domestic companies and foreign-invested companies.

The establishment

procedures, approval procedures, registered capital requirements, foreign exchange matters, accounting practices, taxation

and labor matters of a wholly foreign-owned enterprise are regulated by the Wholly Foreign-Owned Enterprise Law of the PRC

and the Implementation Regulation of the Wholly Foreign-Owned Enterprise Law.

According to these regulations,

foreign-invested enterprises in the PRC may only pay dividends out of their accumulated profit, if any, determined in

accordance with PRC accounting standards and regulations.

A PRC company is required to set aside general reserves of at least

10% of its after-tax profit, until the cumulative amount of such reserves reaches 50% of its registered capital unless the

provisions of laws regarding foreign investment provide otherwise.

In addition, PRC companies may allocate a portion of their

after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion.

These reserves

and employee welfare and bonus funds are not distributable as cash dividends.

The establishment procedures, approval procedures, registered capital requirements, foreign exchange matters, accounting practices, taxation

and labor matters of a wholly foreign-owned enterprise are regulated by the Wholly Foreign-Owned Enterprise Law of the PRC and the Implementation

Regulation of the Wholly Foreign-Owned Enterprise Law.

According to these regulations, foreign-invested enterprises in the PRC may only

pay dividends out of their accumulated profit, if any, determined in accordance with PRC accounting standards and regulations.

A PRC company

is required to set aside general reserves of at least 10% of its after-tax profit, until the cumulative amount of such reserves reaches

50% of its registered capital unless the provisions of laws regarding foreign investment provide otherwise.

In addition, PRC companies

may allocate a portion of their after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion.

These reserves and employee welfare and bonus funds are not distributable as cash dividends.

A PRC company may not distribute any profits

until any losses from prior fiscal years have been offset.

Profits retained from prior fiscal years may be distributed

together with distributable profits from the current fiscal year.

In September 2016, the National People's Congress

Standing Committee published its decision to revise the laws relating to wholly foreign-owned enterprises and other

foreign-invested enterprises.

Such decision, which became effective on October 1, 2016, changes the “filing or

approval”

procedure for foreign investments in China such that foreign investments in business sectors not subject to

special administrative measures will only be required to complete a filing instead of the existing requirements to apply for

The special entry management measures shall be promulgated or approved to be promulgated by the State Council.

Pursuant to a notice issued by the National Development and Reform Commission (“NDRC”) and MOFCOM on

October 8, 2016, the special entry management measures shall be implemented with reference to the relevant regulations

as stipulated in the Catalogue of Industries for Guiding Foreign Investment in relation to the restricted foreign investment

industries, prohibited foreign investment industries and encouraged foreign investment industries.

Pursuant to the

Provisional Administrative Measures on Establishment and Modifications Filing for Foreign Investment Enterprises promulgated

by MOFCOM on October 8, 2016, establishment and changes of foreign investment enterprises not subject to the approval

under the special entry management measures shall be filed with the relevant commerce authorities.

Profits retained from prior fiscal years may be distributed together with distributable

profits from the current fiscal year.

In September 2016, the National People's Congress Standing Committee published its decision

to revise the laws relating to wholly foreign-owned enterprises and other foreign-invested enterprises.

Such decision, which became effective

on October 1, 2016, changes the “filing or approval”

procedure for foreign investments in China such that foreign investments

in business sectors not subject to special administrative measures will only be required to complete a filing instead of the existing

requirements to apply for approval.

The special entry management measures shall be promulgated or approved to be promulgated by the State

Pursuant to a notice issued by the National Development and Reform Commission (“NDRC”) and MOFCOM on October 8,

2016, the special entry management measures shall be implemented with reference to the relevant regulations as stipulated in the Catalogue

of Industries for Guiding Foreign Investment in relation to the restricted foreign investment industries, prohibited foreign investment

industries and encouraged foreign investment industries.

Pursuant to the Provisional Administrative Measures on Establishment and Modifications

Filing for Foreign Investment Enterprises promulgated by MOFCOM on October 8, 2016, establishment and changes of foreign investment

enterprises not subject to the approval under the special entry management measures shall be filed with the relevant commerce authorities.

The Provisions on Guiding

the Orientation of Foreign Investment and the 2015 revision of the Catalogue of Industries for Guiding Foreign Investment classify

foreign investment projects into four categories:

the Orientation of Foreign Investment and the 2015 revision of the Catalogue of Industries for Guiding Foreign Investment classify foreign

investment projects into four categories:

encouraged projects, permitted projects, restricted projects and prohibited projects.

The purpose of these regulations is to direct foreign investment into certain priority industry sectors and restrict or prohibit

investment in other sectors.

If the industry sector in which the investment is to occur falls into the encouraged category, foreign

investment can be conducted through the establishment of a wholly foreign-owned enterprise.

If a restricted category, foreign investment

may be conducted through the establishment of a wholly foreign-owned enterprise, provided certain requirements are met, and, in

some cases, the establishment of a joint venture enterprise is required with varying minimum shareholdings for the Chinese party

depending on the particular industry.

of these regulations is to direct foreign investment into certain priority industry sectors and restrict or prohibit investment in other

If the industry sector in which the investment is to occur falls into the encouraged category, foreign investment can be conducted

through the establishment of a wholly foreign-owned enterprise.

If a restricted category, foreign investment may be conducted through

the establishment of a wholly foreign-owned enterprise, provided certain requirements are met, and, in some cases, the establishment of

a joint venture enterprise is required with varying minimum shareholdings for the Chinese party depending on the particular industry.

If a prohibited category, foreign investment of any kind is not allowed.

Any industry not

falling into any of the encouraged, restricted or prohibited categories is classified as a permitted industry for foreign investment.

Our prior Online Lending Services are classified as permitted foreign investment projects.

Administrative Measures for Entrance of Foreign Investment (Negative List) (2018 Version) (the “2018 Negative List”),

which was promulgated jointly by the MOFCOM and the NDRC on June 28, 2018 and became effective on July 28, 2018, replaced and

partly abolished the Guidance Catalogue of Industries for Foreign Investment (2017 Revision) regulating the access of foreign

investors to China.

Foreign investors should refrain from making investing in any of prohibited sectors specified in the 2018

Negative List, and foreign investors are required to obtain the permit for access to other sectors that are listed in the 2018

Negative List but not classified as “prohibited.”

Any industry not falling into any of the encouraged, restricted

or prohibited categories is classified as a permitted industry for foreign investment.

Our prior Online Lending Services are classified

as permitted foreign investment projects.

The Special Administrative

Measures for Entrance of Foreign Investment (Negative List) (2018 Version) (the “2018 Negative List”), which was promulgated

jointly by the MOFCOM and the NDRC on June 28, 2018 and became effective on July 28, 2018, replaced and partly abolished the

Guidance Catalogue of Industries for Foreign Investment (2017 Revision) regulating the access of foreign investors to China.

Foreign investors

should refrain from making investing in any of prohibited sectors specified in the 2018 Negative List, and foreign investors are required

to obtain the permit for access to other sectors that are listed in the 2018 Negative List but not classified as “prohibited.”

On June 30, 2019, the

MOFCOM and the NDRC promulgated the Special Administrative Measures for Entrance of Foreign Investment (Negative List) (2019 Version)

which will become effective on July 31, 2019 (the “2019 Negative List”) to replace the 2018 Negative List.

which came into effect on July 31, 2019 (the “2019 Negative List”) and replaced the 2018 Negative List.

On June 23, 2020, the

MOFCOM and the NDRC promulgated the Special Administrative Measures for Entrance of Foreign Investment (Negative List) (2020 Version)

which will be effective from July 23, 2020 (the “2020 Negative List”) and will abolish the 2019 Negative List on the

The 2020 Negative List further reduces the scope under the access management of foreign investment and expands the foreign

investment scope.

Our Automobile Transaction

and Related Services is not listed in 2018 Negative List, 2019 Negative List or 2020 Negative List.

According to the PRC

Foreign Investment Law, “foreign investment”

refers to investment activities directly or indirectly conducted by one

or more natural persons, business entities, or otherwise organizations of a foreign country (collectively referred to as “foreign

investor”) within China, and the investment activities include the following situations:

(i) a foreign investor, individually

or collectively with other investors, establishes a foreign-invested enterprise within China;

(ii) a foreign investor acquires

stock shares, equity shares, shares in assets, or other like rights and interests of an enterprise within China;

(iii) a foreign

investor, individually or collectively with other investors, invests in a new project within China;

and (iv) investments in other

means as provided by laws, administrative regulations, or the State Council.

Since we are incorporated in Nevada, our activities

in China are subject to the PRC Foreign Investment Law.

According to the PRC

Foreign Investment Law, the State Council will publish or approve to publish the “negative list”

for special administrative

measures concerning foreign investment.

The PRC Foreign Investment Law grants national treatment to foreign-invested enterprises

(“FIEs”), except for those FIEs that operate in industries deemed to be either “restricted”

which came into effect and replaced the 2019 Negative List from July 23, 2020 (the “2020 Negative List”).

The 2020 Negative

List further reduces the scope under the access management of foreign investment and expands the foreign investment scope.

Neither our Automobile Transaction

and Related Services nor our Online Ride-hailing Platform Services is listed in 2018 Negative List, 2019 Negative List or 2020 Negative

According to the PRC Foreign

Investment Law, “foreign investment”

refers to investment activities directly or indirectly conducted by one or more natural

persons, business entities, or otherwise organizations of a foreign country (collectively referred to as “foreign investor”)

within China, and the investment activities include the following situations:

(i) a foreign investor, individually or collectively

with other investors, establishes a foreign-invested enterprise within China;

(ii) a foreign investor acquires stock shares, equity

shares, shares in assets, or other like rights and interests of an enterprise within China;

(iii) a foreign investor, individually

or collectively with other investors, invests in a new project within China;

and (iv) investments in other means as provided by laws,

administrative regulations, or the State Council.

Since we are incorporated in Nevada, our activities in China are subject to the PRC

Foreign Investment Law.

According to the PRC Foreign

Investment Law, the State Council will publish or approve to publish the “negative list”

for special administrative measures

concerning foreign investment.

The PRC Foreign Investment Law grants national treatment to foreign-invested enterprises (“FIEs”),

except for those FIEs that operate in industries deemed to be either “restricted”

or “prohibited”

in the “negative list”.

in the “negative

Because the “negative list”

has yet to be published, it is unclear whether it will

differ from the current Special Administrative Measures for Market Access of Foreign Investment (Negative List).

The PRC Foreign

Investment Law provides that FIEs operating in foreign restricted or prohibited industries will require market entry clearance

and other approvals from relevant PRC governmental authorities.

If a foreign investor is found to invest in any prohibited industry

in the “negative list”, such foreign investor may be required to, among other aspects, cease its investment activities,

dispose of its equity interests or assets within a prescribed time limit and have its income confiscated.

If the investment activity

of a foreign investor is in breach of any special administrative measure for restrictive access provided for in the “negative

list”, the relevant competent department shall order the foreign investor to make corrections and take necessary measures

to meet the requirements of the special administrative measure for restrictive access.

In addition, the PRC

government has established a foreign investment information reporting system, according to which foreign investors or foreign-invested

enterprises are required to submit investment information to the competent department for commerce concerned through the enterprise

registration system and the enterprise credit information publicity system, and a security review system under which the security

review shall be conducted for foreign investment affecting or likely affecting the state security.

Furthermore, the PRC

Foreign Investment Law provides that foreign invested enterprises established according to the existing laws regulating foreign

investment may maintain their structure and corporate governance within five years after the implementing of the Foreign Investment

In addition, the PRC

Foreign Investment Law provides several protective rules and principles for foreign investors and their investments in the PRC,

including, among others, that a foreign investor may freely transfer into or out of China, in Renminbi or a foreign currency, its

contributions, profits, capital gains, income from disposition of assets, royalties of intellectual property rights, indemnity

or compensation lawfully acquired, and income from liquidation, among others, within China;

local governments shall abide by their

commitments to the foreign investors;

governments at all levels and their departments shall enact local normative documents concerning

foreign investment in compliance with laws and regulations and shall not impair legitimate rights and interests, impose additional

obligations onto FIEs, set market access restrictions and exit conditions, or intervene with the normal production and operation

activities of FIEs;

except for special circumstances, in which case statutory procedures shall be followed and fair and reasonable

compensation shall be made in a timely manner, expropriation or requisition of the investment of foreign investors is prohibited;

has yet to be published, it is unclear whether it will differ from the current Special

Administrative Measures for Market Access of Foreign Investment (Negative List).

The PRC Foreign Investment Law provides that FIEs operating

in foreign restricted or prohibited industries will require market entry clearance and other approvals from relevant PRC governmental

If a foreign investor is found to invest in any prohibited industry in the “negative list”, such foreign investor

may be required to, among other aspects, cease its investment activities, dispose of its equity interests or assets within a prescribed

time limit and have its income confiscated.

If the investment activity of a foreign investor is in breach of any special administrative

measure for restrictive access provided for in the “negative list”, the relevant competent department shall order the foreign

investor to make corrections and take necessary measures to meet the requirements of the special administrative measure for restrictive

In addition, the PRC government

has established a foreign investment information reporting system, according to which foreign investors or foreign-invested enterprises

are required to submit investment information to the competent department for commerce concerned through the enterprise registration system

and the enterprise credit information publicity system, and a security review system under which the security review shall be conducted

for foreign investment affecting or likely affecting the state security.

Furthermore, the PRC Foreign

Investment Law provides that foreign invested enterprises established according to the existing laws regulating foreign investment may

maintain their structure and corporate governance within five years after the implementing of the Foreign Investment Law.

In addition, the PRC Foreign

Investment Law provides several protective rules and principles for foreign investors and their investments in the PRC, including,

among others, that a foreign investor may freely transfer into or out of China, in Renminbi or a foreign currency, its contributions,

profits, capital gains, income from disposition of assets, royalties of intellectual property rights, indemnity or compensation lawfully

acquired, and income from liquidation, among others, within China;

local governments shall abide by their commitments to the foreign investors;

governments at all levels and their departments shall enact local normative documents concerning foreign investment in compliance with

laws and regulations and shall not impair legitimate rights and interests, impose additional obligations onto FIEs, set market access

restrictions and exit conditions, or intervene with the normal production and operation activities of FIEs;

except for special circumstances,

in which case statutory procedures shall be followed and fair and reasonable compensation shall be made in a timely manner, expropriation

or requisition of the investment of foreign investors is prohibited;

and mandatory technology transfer is prohibited.

On March 15, 2019,

the National People’s Congress approved the Foreign Investment Law, and on December 26, 2019, the State Council promulgated

the Implementing Rules to Further Clarify and Elaborate the Relevant Provisions of the PRC Foreign Investment Law (the “Implementing

On March 15, 2019, the

National People’s Congress approved the Foreign Investment Law, and on December 26, 2019, the State Council promulgated the

Implementing Rules to Further Clarify and Elaborate the Relevant Provisions of the PRC Foreign Investment Law (the “Implementing

Rules”).

The PRC Foreign Investment Law and the Implementing Rules both took effect on January 1, 2020 and replaced three

major previous laws on foreign investments in China, namely, the Sino-foreign Equity Joint Venture Law, the Sino-foreign Cooperative

Joint Venture Law and the Wholly Foreign-owned Enterprise Law, and their respective implementing rules.

Pursuant to the Foreign

Investment Law, “foreign investments”

refer to investment activities conducted by foreign investors (including foreign

natural persons, foreign enterprises or other foreign organizations) directly or indirectly in the PRC, which include any of the

following circumstances:

(i) foreign investors setting up foreign-invested enterprises in the PRC solely or jointly with other

investors, (ii) foreign investors obtaining shares, equity interests, property portions or other similar rights and interests of

enterprises within the PRC, (iii) foreign investors investing in new projects in the PRC solely or jointly with other investors,

and (iv) investment in other methods as specified in laws, administrative regulations, or as stipulated by the State Council.

Implementing Rules introduce a see-through principle and further provide that foreign-invested enterprises that invest in the PRC

are also governed by the PRC Foreign Investment Law and the Implementing Rules.

According to the

Implementing Rules, the registration of foreign-invested enterprises is processed by the MSA or its authorized local counterparts.

Where a foreign investor invests in an industry or field subject to licensing in accordance with laws, the relevant competent government

department responsible for granting such license shall review the license application of the foreign investor in accordance with

the same requirements and procedures applicable to PRC domestic investors unless it is stipulated otherwise by the laws and administrative

regulations, and the competent government department may not apply discriminatory standards to the foreign investor in terms of

licensing requirements, application materials, reviewing steps, deadlines and so on.

Pursuant to the Foreign

Investment Law, the Implementing Rules, and the Information Reporting Measures for Foreign Investment jointly promulgated by the

MOFCOM and the MSA, which took effect on January 1, 2020, a foreign investment information reporting system was established and

foreign investors or foreign-invested enterprises must report investment information to competent commerce departments of the PRC

government through the enterprise registration system, the enterprise credit information publicity system and the foreign investment

information reporting system, and the relevant government authorities shall share such investment information to the competent

commerce departments in a timely manner.

We are subject to these regulatory requirements.

Regulations Related to Labor and

Social Security

Pursuant to the PRC

Labor Law, the PRC Labor Contract Law and the Implementing Regulations of the Employment Contracts Law, labor relationships between

employers and employees must be executed in written form.

major previous laws on foreign investments in China, namely, the Sino-foreign Equity Joint Venture Law, the Sino-foreign Cooperative Joint

Venture Law and the Wholly Foreign-owned Enterprise Law, and their respective implementing rules.

Pursuant to the Foreign Investment Law,

“foreign investments”

refer to investment activities conducted by foreign investors (including foreign natural persons, foreign

enterprises or other foreign organizations) directly or indirectly in the PRC, which include any of the following circumstances:

investors setting up foreign-invested enterprises in the PRC solely or jointly with other investors, (ii) foreign investors obtaining

shares, equity interests, property portions or other similar rights and interests of enterprises within the PRC, (iii) foreign investors

investing in new projects in the PRC solely or jointly with other investors, and (iv) investment in other methods as specified in

laws, administrative regulations, or as stipulated by the State Council.

The Implementing Rules introduce a see-through principle

and further provide that foreign-invested enterprises that invest in the PRC are also governed by the PRC Foreign Investment Law and the

Implementing Rules.

According to the Implementing

Rules, the registration of foreign-invested enterprises is processed by the MSA or its authorized local counterparts.

Where a foreign

investor invests in an industry or field subject to licensing in accordance with laws, the relevant competent government department responsible

for granting such license shall review the license application of the foreign investor in accordance with the same requirements and procedures

applicable to PRC domestic investors unless it is stipulated otherwise by the laws and administrative regulations, and the competent government

department may not apply discriminatory standards to the foreign investor in terms of licensing requirements, application materials, reviewing

steps, deadlines and so on.

Pursuant to the Foreign Investment

Law, the Implementing Rules, and the Information Reporting Measures for Foreign Investment jointly promulgated by the MOFCOM and the MSA,

which took effect on January 1, 2020, a foreign investment information reporting system was established and foreign investors or

foreign-invested enterprises must report investment information to competent commerce departments of the PRC government through the enterprise

registration system, the enterprise credit information publicity system and the foreign investment information reporting system, and the

relevant government authorities shall share such investment information to the competent commerce departments in a timely manner.

subject to these regulatory requirements.

Regulations Related to Labor and Social

Pursuant to the PRC Labor

Law, the PRC Labor Contract Law and the Implementing Regulations of the Employment Contracts Law, labor relationships between employers

and employees must be executed in written form.

Wages may not be lower than the local minimum wage.

Employers must establish

a system for labor safety and sanitation, strictly abide by state standards and provide relevant education to its employees.

are also required to work in safe and sanitary conditions.

Employers must establish a system

for labor safety and sanitation, strictly abide by state standards and provide relevant education to its employees.

Employees are also

required to work in safe and sanitary conditions.

On December 28, 2012,

the PRC Labor Contract Law was amended with effect on July 1, 2013 to impose more stringent requirements on labor dispatch.

Under such law, dispatched workers are entitled to pay equal to that of full-time employees for equal work, but the number of dispatched

workers that an employer hires may not exceed a certain percentage of its total number of employees as determined by the Ministry

of Human Resources and Social Security.

Additionally, dispatched workers are only permitted to engage in temporary, auxiliary or

substitute work.

According to the Interim Provisions on Labor Dispatch promulgated by the Ministry of Human Resources and Social

Security on January 24, 2014, which became effective on March 1, 2014, the number of dispatched workers hired by an employer

shall not exceed 10% of the total number of its employees (including both directly hired employees and dispatched workers).

Interim Provisions on Labor Dispatch require employers not in compliance with the PRC Labor Contract Law in this regard to reduce

the number of its dispatched workers to below 10% of the total number of its employees prior to March 1, 2016.

an employer is not permitted to hire any new dispatched worker until the number of its dispatched workers has been reduced to below

10% of the total number of its employees.

Under PRC laws, rules

and regulations, including the Social Insurance Law, the Interim Regulations on the Collection and Payment of Social Security Funds

and the Regulations on the Administration of Housing Accumulation Funds, employers are required to contribute, on behalf of their

employees, to a number of social security funds, including funds for basic pension insurance, unemployment insurance, basic medical

insurance, occupational injury insurance, maternity leave insurance and housing accumulation funds.

These payments are made to

local administrative authorities and any employer who fails to contribute may be fined and ordered to pay the deficit amount.

Risk Factors — Risks Related to Doing Business in China — 

Failure to make adequate

contributions to various employee benefit plans as required by PRC regulations may subject us to penalties.

Anti-money Laundering

such law, dispatched workers are entitled to pay equal to that of full-time employees for equal work, but the number of dispatched workers

that an employer hires may not exceed a certain percentage of its total number of employees as determined by the Ministry of Human Resources

and Social Security.

Additionally, dispatched workers are only permitted to engage in temporary, auxiliary or substitute work.

to the Interim Provisions on Labor Dispatch promulgated by the Ministry of Human Resources and Social Security on January 24, 2014,

which became effective on March 1, 2014, the number of dispatched workers hired by an employer shall not exceed 10% of the total

number of its employees (including both directly hired employees and dispatched workers).

The Interim Provisions on Labor Dispatch require

employers not in compliance with the PRC Labor Contract Law in this regard to reduce the number of its dispatched workers to below 10%

of the total number of its employees prior to March 1, 2016.

In addition, an employer is not permitted to hire any new dispatched

worker until the number of its dispatched workers has been reduced to below 10% of the total number of its employees.

Under PRC laws, rules and

regulations, including the Social Insurance Law, the Interim Regulations on the Collection and Payment of Social Security Funds and the

Regulations on the Administration of Housing Accumulation Funds, employers are required to contribute, on behalf of their employees, to

a number of social security funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance, occupational

injury insurance, maternity leave insurance and housing accumulation funds.

These payments are made to local administrative authorities

and any employer who fails to contribute may be fined and ordered to pay the deficit amount.

Risk Factors — Risks

Related to Doing Business in China — Failure to make adequate contributions to various employee benefit plans as required

by PRC regulations may subject us to penalties.

Anti-money Laundering Regulation

The PRC Anti-money Laundering

Law, which became effective in January 2007, sets forth the principal anti-money laundering requirements applicable to financial

institutions, as well as non-financial institutions with anti-money laundering obligations, including the adoption of precautionary

and supervisory measures, establishment of various systems for client identification, retention of clients’

identification

information and transactions records, and reports on large transactions and suspicious transactions.

According to the PRC Anti-money

Laundering Law, financial institutions subject to the PRC Anti-money Laundering Law include banks, credit unions, trust investment

companies, stock brokerage companies, futures brokerage companies, insurance companies and other financial institutions as listed

and published by the State Council, while the list of the non-financial institutions with anti-money laundering obligations will

be published by the State Council.

The PBOC and other governmental authorities issued a series of administrative rules and regulations

to specify the anti-money laundering obligations of financial institutions and certain non-financial institutions, such as payment

institutions.

However, the State Council has not promulgated the list of the non-financial institutions with anti-money laundering

institutions, as well as non-financial institutions with anti-money laundering obligations, including the adoption of precautionary and

supervisory measures, establishment of various systems for client identification, retention of clients’

identification information

and transactions records, and reports on large transactions and suspicious transactions.

According to the PRC Anti-money Laundering Law,

financial institutions subject to the PRC Anti-money Laundering Law include banks, credit unions, trust investment companies, stock brokerage

companies, futures brokerage companies, insurance companies and other financial institutions as listed and published by the State Council,

while the list of the non-financial institutions with anti-money laundering obligations will be published by the State Council.

and other governmental authorities issued a series of administrative rules and regulations to specify the anti-money laundering obligations

of financial institutions and certain non-financial institutions, such as payment institutions.

However, the State Council has not promulgated

the list of the non-financial institutions with anti-money laundering obligations.

Regulation Related to the Payment Services of Non-financial Institutions

According to Measures for

the Administration of Payment Services of Non-Financial Institutions which were promulgated by PBOC on June 14, 2010, effective on

September 1, 2010 and amended on April 29, 2020, and Implementing Rules for the Measures for the Administration of Payment

Services of Non-Financial Institution which were promulgated by the PBOC, effective on December 1, 2010 and amended on June 2,

2020, the payment services provided by non-financial institutions refer to some or all of the following monetary capital transfer services

provided by the non-financial institutions as intermediary agencies between payers and payees:

(1) payment through the internet;

(2) issuance and acceptance of prepaid cards;

(3) bankcard acquiring;

and (4) other payment services as determined by the

Non-financial institutions which provide payment services shall obtain a “Payment Business License”

and become a “payment

institution.”

Payment Business License is valid for five years from the date of issuance.

Payment institutions shall carry out business

activities in compliance with the scope of business approved by the Payment Business License, and shall not outsource any business, transfer,

lease, or lend its Payment Business License.

Any non-financial institution or individual shall not directly or indirectly engage in payment

business without the approval of the PBOC.

On May 9, 2019, the

MOT, the PBOC, the NDRC, the MPS, the SAMR and Banking and Insurance Regulatory Commission, jointly issued the Measures for the Administration

of User Funds in New Forms of Transport Business (Trial) (the “

Measures on Administration of User Funds”) which became effective on June 1, 2019.

According to the Trial Measures on Administration

of User Funds, an operating enterprise shall open a special deposit account for user deposits and a special deposit account for prepayments,

respectively, as are nationwide unique at the bank in the place of its registration in mainland China, and the bank where the special

deposit accounts are opened shall be the depository bank to preserve user funds.

Regulations on Intellectual Property

The PRC has adopted

legislation governing intellectual property rights, including copyrights, trademarks and patents.

The PRC is a signatory to major

international conventions on intellectual property rights and is subject to the Agreement on Trade Related Aspects of Intellectual

Property Rights as a result of its accession to the World Trade Organization in December 2001.

The National People's

Congress amended the Copyright Law in 2001 and 2010 to widen the scope of works and rights that are eligible for copyright protection.

The amended, the Copyright Law extends copyright protection to Internet activities, products disseminated over the Internet and

software products.

The PRC has adopted legislation

governing intellectual property rights, including copyrights, trademarks and patents.

The PRC is a signatory to major international conventions

on intellectual property rights and is subject to the Agreement on Trade Related Aspects of Intellectual Property Rights as a result of

its accession to the World Trade Organization in December 2001.

The National People's Congress

amended the Copyright Law in 2001 and 2010 to widen the scope of works and rights that are eligible for copyright protection.

the Copyright Law extends copyright protection to Internet activities, products disseminated over the Internet and software products.

In addition, there is a voluntary registration system administered by the China Copyright Protection Center.

To address copyright infringement related to content posted or transmitted over the Internet, the National Copyright Administration

and former Ministry of Information Industry jointly promulgated the Administrative Measures for Copyright Protection Related to

the Internet in April 2005.

These measures became effective in May 2005.

To address copyright infringement

related to content posted or transmitted over the Internet, the National Copyright Administration and former Ministry of Information Industry

jointly promulgated the Administrative Measures for Copyright Protection Related to the Internet in April 2005.

These measures became

effective in May 2005.

On December 20, 2001,

2001, the State Council promulgated the new Regulations on Computer Software Protection, effective from January 1, 2002, and

revised in 2013, which are intended to protect the rights and interests of the computer software copyright holders and encourage

the development of software industry and information economy.

In the PRC, software developed by PRC citizens, legal persons or

other organizations is automatically protected immediately after its development, without an application or approval.

copyrights may be registered with the designated agency and if registered, the certificate of registration issued by the software

registration agency will be the primary evidence of the ownership of the copyright and other registered matters.

On February 20,

2002, the National Copyright Administration of the PRC introduced the Measures on Computer Software Copyright Registration, which

outline the operational procedures for registration of software copyright, as well as registration of software copyright license

and transfer contracts.

The Copyright Protection Center of China is mandated as the software registration agency.

The PRC Trademark Law,

adopted in 1982 and revised in 1993, 2001, 2013 and 2019, respectively, protects the proprietary rights to registered trademarks.

The Trademark Office under the SAIC handles trademark registrations and may grant a term of ten years for registered trademarks,

which may be extended for another ten years upon request.

Trademark license agreements shall be filed with the Trademark Office

In addition, if a registered trademark is recognized as a well-known trademark, the protection of the proprietary right

of the trademark holder may reach beyond the specific class of the relevant products or services.

The Patent Law of the

PRC and its Implementation Rules provide for three types of patents:

the State Council promulgated the new Regulations on Computer Software Protection, effective from January 1, 2002, and revised in

2013, which are intended to protect the rights and interests of the computer software copyright holders and encourage the development

of software industry and information economy.

In the PRC, software developed by PRC citizens, legal persons or other organizations is

automatically protected immediately after its development, without an application or approval.

Software copyrights may be registered with

the designated agency and if registered, the certificate of registration issued by the software registration agency will be the primary

evidence of the ownership of the copyright and other registered matters.

of the PRC introduced the Measures on Computer Software Copyright Registration, which outline the operational procedures for registration

of software copyright, as well as registration of software copyright license and transfer contracts.

The Copyright Protection Center of

China is mandated as the software registration agency.

The PRC Trademark Law, adopted

in 1982 and revised in 1993, 2001, 2013 and 2019, respectively, protects the proprietary rights to registered trademarks.

The Trademark

Office under the SAIC handles trademark registrations and may grant a term of ten years for registered trademarks, which may be extended

for another ten years upon request.

Trademark license agreements shall be filed with the Trademark Office for record.

In addition, if

a registered trademark is recognized as a well-known trademark, the protection of the proprietary right of the trademark holder may reach

beyond the specific class of the relevant products or services.

The Patent Law of the PRC

and its Implementation Rules provide for three types of patents:

invention, utility model and design.

The duration of a patent

right is either 10 years or 20 years from the date of application, depending on the type of patent right.

The duration of a patent right

is either 10 years or 20 years from the date of application, depending on the type of patent right.

Regulations Related to Foreign Exchange

The principal regulations

governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, which were most recently amended

in August 2008.

Payments of current account items, such as profit distributions and trade and service-related foreign exchange

transactions, can usually be made in foreign currencies without prior approval from the State Administration of Foreign Exchange

(“SAFE”) by complying with certain procedural requirements.

By contrast, approval from or registration with appropriate

PRC authorities or banks authorized by appropriate PRC authorities is required where RMB capital is to be converted into foreign

currency and remitted out of China to pay capital expenses.

SAFE promulgated the

Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital

of Foreign-invested Enterprises (“Circular 19”), effective on June 1, 2015, in replacement of SAFE Circular 142

(the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of

Foreign Currency Capital of Foreign-Invested Enterprises.

According to Circular 19, the flow and use of the RMB capital converted

from foreign currency-denominated registered capital of a foreign-invested company is regulated such that RMB capital may not be

used for the issuance of RMB entrusted loans or the repayment of inter-enterprise loans or the repayment of banks loans that have

been transferred to a third party.

Although Circular 19 allows RMB capital converted from foreign currency-denominated registered

capital of a foreign-invested enterprise to be used for equity investments within the PRC, it also reiterates the principle that

RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used

for purposes beyond its business scope.

Thus, it is unclear whether SAFE will permit such capital to be used for equity investments

in the PRC in actual practice.

SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing

the Foreign Exchange Settlement Management Policy of Capital Account (the “Circular 16”), effective on June 9,

2016, which reiterates some of the rules set forth in Circular 19, but changes the prohibition against using RMB capital converted

from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition

against using such capital to issue loans to non-associated enterprises.

Violations of SAFE Circular 19 or Circular 16 could result

in administrative penalties.

From 2012, SAFE has

promulgated several circulars to substantially amend and simplify the current foreign exchange procedure.

Pursuant to these circulars,

the opening of various special purpose foreign exchange accounts, the reinvestment of RMB proceeds by foreign investors in the

PRC and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer

require the approval or verification of SAFE.

In addition, domestic companies are no longer limited to extend cross-border loans

to their offshore subsidiaries but are also allowed to provide loans to their offshore parents and affiliates and multiple capital

accounts for the same entity may be opened in different provinces.

SAFE also promulgated the Circular on Printing and Distributing

the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Documents

in May 2013, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors

in the PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment

in the PRC based on the registration information provided by SAFE and its branches.

In February 2015, SAFE promulgated SAFE

Circular 13, which took effect on June 1, 2015.

SAFE Circular 13 delegates the power to enforce the foreign exchange registration

in connection with inbound and outbound direct investments under relevant SAFE rules from local branches of SAFE to banks, thereby

further simplifying the foreign exchange registration procedures for inbound and outbound direct investments.

governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, which were most recently amended in

Payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions,

can usually be made in foreign currencies without prior approval from the State Administration of Foreign Exchange (“SAFE”)

by complying with certain procedural requirements.

By contrast, approval from or registration with appropriate PRC authorities or banks

authorized by appropriate PRC authorities is required where RMB capital is to be converted into foreign currency and remitted out of China

to pay capital expenses.

SAFE promulgated the Notice

of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested

Enterprises (“Circular 19”), effective on June 1, 2015, in replacement of SAFE Circular 142 (the Circular on the Relevant

Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested

According to Circular 19, the flow and use of the RMB capital converted from foreign currency-denominated registered capital

of a foreign-invested company is regulated such that RMB capital may not be used for the issuance of RMB entrusted loans or the repayment

of inter-enterprise loans or the repayment of banks loans that have been transferred to a third party.

Although Circular 19 allows RMB

capital converted from foreign currency-denominated registered capital of a foreign-invested enterprise to be used for equity investments

within the PRC, it also reiterates the principle that RMB converted from the foreign currency-denominated capital of a foreign-invested

company may not be directly or indirectly used for purposes beyond its business scope.

Thus, it is unclear whether SAFE will permit such

capital to be used for equity investments in the PRC in actual practice.

SAFE promulgated the Notice of the State Administration of Foreign

Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account (the “Circular 16”),

effective on June 9, 2016, which reiterates some of the rules set forth in Circular 19, but changes the prohibition against

using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted

loans to a prohibition against using such capital to issue loans to non-associated enterprises.

Violations of SAFE Circular 19 or Circular

16 could result in administrative penalties.

From 2012, SAFE has promulgated

several circulars to substantially amend and simplify the current foreign exchange procedure.

Pursuant to these circulars, the opening

of various special purpose foreign exchange accounts, the reinvestment of RMB proceeds by foreign investors in the PRC and remittance

of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval

or verification of SAFE.

In addition, domestic companies are no longer limited to extend cross-border loans to their offshore subsidiaries

but are also allowed to provide loans to their offshore parents and affiliates and multiple capital accounts for the same entity may be

opened in different provinces.

SAFE also promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration

over Domestic Direct Investment by Foreign Investors and the Supporting Documents in May 2013, which specifies that the administration

by SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks

shall process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by

SAFE and its branches.

In February 2015, SAFE promulgated SAFE Circular 13, which took effect on June 1, 2015.

SAFE Circular

13 delegates the power to enforce the foreign exchange registration in connection with inbound and outbound direct investments under relevant

SAFE rules from local branches of SAFE to banks, thereby further simplifying the foreign exchange registration procedures for inbound

and outbound direct investments.

On January 26, 2017,

2017, SAFE issued the Notice of State Administration of Foreign Exchange on Improving the Check of Authenticity and Compliance

to Further Promote Foreign Exchange Control (the “SAFE Circular 3”), which stipulates several capital control measures

with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle

of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records

and audited financial statements;

SAFE issued the Notice of State Administration of Foreign Exchange on Improving the Check of Authenticity and Compliance to Further Promote

Foreign Exchange Control (the “SAFE Circular 3”), which stipulates several capital control measures with respect to the outbound

remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks

shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements;

and (ii) domestic entities shall hold income to account for previous years’

losses before

remitting the profits.

Moreover, pursuant to SAFE Circular 3, domestic entities shall make detailed explanations of the sources

of capital and utilization arrangements, and provide board resolutions, contracts and other proof when completing the registration

procedures in connection with an outbound investment.

Regulations Relating to Offshore

Special Purpose Companies Held by PRC Residents

SAFE promulgated the

Circular on Relevant Issues Relating to Domestic Resident's Investment and Financing and Roundtrip Investment through Special Purpose

Vehicles (the “SAFE Circular 37”) in July 2014 that requires PRC residents or entities to register with SAFE or

its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas

investment or financing.

In addition, such PRC residents or entities must update their SAFE registrations when the offshore special

purpose vehicle undergoes material events relating to any change of basic information (including change of such PRC citizens or

residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers

or divisions.

SAFE Circular 37 was

issued to replace SAFE Circular 75 (the Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents

Engaging in Financing and Roundtrip Investments via Overseas Special Purpose Vehicles.

SAFE further enacted the Notice on Further

Simplifying and Improving the Foreign Exchange Management Policies for Direct Investment (the “SAFE Circular 13”) effective

from June 1, 2015, which allows PRC residents or entities to register with qualified banks in connection with their establishment

or control of an offshore entity established for the purpose of overseas investment or financing.

However, remedial registration

applications made by PRC residents that previously failed to comply with the SAFE Circular 37 continue to fall under the jurisdiction

of the relevant local branch of SAFE.

In the event that a PRC shareholder holding interests in a special purpose vehicle fails

to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from distributing

profits to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose

vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiaries.

Moreover, failure to comply

with the various SAFE registration requirements described above could result in liability under PRC law for evasion of foreign

exchange controls.

Factors — Risks Related to Doing Business in China — PRC regulations relating to offshore

investment activities by PRC residents may limit our PRC subsidiaries' 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 .”

SAFE Regulations Relating to Employee

Stock Incentive Plans

losses before remitting the profits.

pursuant to SAFE Circular 3, domestic entities shall make detailed explanations of the sources of capital and utilization arrangements,

and provide board resolutions, contracts and other proof when completing the registration procedures in connection with an outbound investment.

Regulations Relating to Offshore Special

Purpose Companies Held by PRC Residents

SAFE promulgated the Circular

on Relevant Issues Relating to Domestic Resident's Investment and Financing and Roundtrip Investment through Special Purpose Vehicles

(the “SAFE Circular 37”) in July 2014 that requires PRC residents or entities to register with SAFE or its local branch

in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.

In addition, such PRC residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes material

events relating to any change of basic information (including change of such PRC citizens or residents, name and operation term), increases

or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions.

SAFE Circular 37 was issued

to replace SAFE Circular 75 (the Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing

and Roundtrip Investments via Overseas Special Purpose Vehicles.

SAFE further enacted the Notice on Further Simplifying and Improving

the Foreign Exchange Management Policies for Direct Investment (the “SAFE Circular 13”) effective from June 1, 2015,

which allows PRC residents or entities to register with qualified banks in connection with their establishment or control of an offshore

entity established for the purpose of overseas investment or financing.

However, remedial registration applications made by PRC residents

that previously failed to comply with the SAFE Circular 37 continue to fall under the jurisdiction of the relevant local branch of SAFE.

In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the

PRC subsidiaries of that special purpose vehicle may be prohibited from distributing profits to the offshore parent and from carrying

out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute

additional capital into its PRC subsidiaries.

Moreover, failure to comply with the various SAFE registration requirements described above

could result in liability under PRC law for evasion of foreign exchange controls.

Risk Factors — Risks

Related to Doing Business in China — PRC regulations relating to offshore investment activities by PRC residents may

limit our PRC subsidiaries' 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 .”

SAFE Regulations Relating to Employee Stock

Incentive Plans

On February 15, 2012,

2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating

in Stock Incentive Plans of Overseas Publicly-Listed Companies (the “Stock Option Rules”), which replaced the Application

Procedures of Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Ownership Plans or Stock

Option Plans of Overseas Publicly-Listed Companies issued by SAFE on March 28, 2007.

Under the Stock Option Rules and other

relevant rules and regulations, PRC residents who participate in a stock incentive plan in an overseas publicly listed company

are required to register with SAFE or its local branches and complete certain other procedures.

Participants of a stock incentive

plan who are PRC residents must retain a qualified PRC agent, which could be a PRC subsidiary of such overseas publicly listed

company or another qualified institution selected by such PRC subsidiary, to conduct the SAFE registration and other procedures

with respect to the stock incentive plan on behalf of its participants.

Such participants must also retain an overseas entrusted

institution to handle matters in connection with their exercise of stock options, the purchase and sale of corresponding shares

or interests and fund transfers.

In addition, the PRC agent is required to amend the SAFE registration with respect to our share

incentive plans if there are any material changes to the share incentive plans, the PRC agent or the overseas entrusted institution

or other material changes.

In addition, SAFE Circular 37 provides that PRC residents who participate in a share incentive plan

of an overseas unlisted special purpose company may register with SAFE or its local branches before exercising rights.

Factors — Risks Related to Doing Business in China — Any 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 .”

Regulations Related to Tax

SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock

Incentive Plans of Overseas Publicly-Listed Companies (the “Stock Option Rules”), which replaced the Application Procedures

of Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Ownership Plans or Stock Option Plans of Overseas

Publicly-Listed Companies issued by SAFE on March 28, 2007.

Under the Stock Option Rules and other relevant rules and regulations,

PRC residents who participate in a stock incentive plan in an overseas publicly listed company are required to register with SAFE or its

local branches and complete certain other procedures.

Participants of a stock incentive plan who are PRC residents must retain a qualified

PRC agent, which could be a PRC subsidiary of such overseas publicly listed company or another qualified institution selected by such

PRC subsidiary, to conduct the SAFE registration and other procedures with respect to the stock incentive plan on behalf of its participants.

Such participants must also retain an overseas entrusted institution to handle matters in connection with their exercise of stock options,

the purchase and sale of corresponding shares or interests and fund transfers.

In addition, the PRC agent is required to amend the SAFE

registration with respect to our share incentive plans if there are any material changes to the share incentive plans, the PRC agent or

the overseas entrusted institution or other material changes.

In addition, SAFE Circular 37 provides that PRC residents who participate

in a share incentive plan of an overseas unlisted special purpose company may register with SAFE or its local branches before exercising

Risk Factors — Risks Related to Doing Business in China — Any 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 .”

Regulations Related to Income Tax

Under the PRC Enterprise

Income Tax Law (the “EIT Law”), which became effective on January 1, 2008, an enterprise established outside the

PRC with “de facto management bodies”

Income Tax Law (the “EIT Law”), which became effective on January 1, 2008, an enterprise established outside the PRC

with “de facto management bodies”

within the PRC is considered a “resident enterprise”

for PRC enterprise

income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income.

State Administration of Taxation (the “SAT”) issued the Notice Regarding the Determination of Chinese-Controlled Overseas

Incorporated Enterprises as PRC Tax Resident Enterprise on the Basis of De Facto Management Bodies (the “SAT Circular 82”),

which provides certain specific criteria for determining whether the “de facto management body”

of a PRC-controlled

enterprise that is incorporated offshore is located in China.

Further to SAT Circular 82, in 2011, the SAT issued the Administrative

Measures for Enterprise Income Tax of Chinese-Controlled Offshore Incorporated Resident Enterprises (Trial) (the “SAT Bulletin

45”) to provide more guidance on the implementation of SAT Circular 82.

for PRC enterprise income

tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income.

In 2009, the State Administration

of Taxation (the “SAT”) issued the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises

as PRC Tax Resident Enterprise on the Basis of De Facto Management Bodies (the “SAT Circular 82”), which provides certain

specific criteria for determining whether the “de facto management body”

of a PRC-controlled enterprise that is incorporated

offshore is located in China.

Further to SAT Circular 82, in 2011, the SAT issued the Administrative Measures for Enterprise Income Tax

of Chinese-Controlled Offshore Incorporated Resident Enterprises (Trial) (the “SAT Bulletin 45”) to provide more guidance

on the implementation of SAT Circular 82.

According to SAT Circular

82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be considered a PRC resident

enterprise by virtue of having its “de facto management body”

in China and will be subject to PRC enterprise income

tax on its worldwide income only if all of the following conditions are met:

(a) the senior management and core management departments

in charge of its daily operations function have their presence mainly in the PRC;

(b) its financial and human resources decisions

are subject to determination or approval by persons or bodies in the PRC;

and minutes and files of its board of directors and shareholders' meetings are located or kept in the PRC;

and (d) more than half

of the enterprise's directors or senior management with voting rights habitually reside in the PRC.

82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be considered a PRC resident enterprise

by virtue of having its “de facto management body”

in China and will be subject to PRC enterprise income tax on its worldwide

income only if all of the following conditions are met:

(a) the senior management and core management departments in charge of its

daily operations function have their presence mainly in the PRC;

(b) its financial and human resources decisions are subject to determination

or approval by persons or bodies in the PRC;

board of directors and shareholders' meetings are located or kept in the PRC;

and (d) more than half of the enterprise's directors

or senior management with voting rights habitually reside in the PRC.

Although SAT Circular 82

82 and SAT Bulletin 45 only apply to offshore-incorporated enterprises controlled by PRC enterprises or PRC enterprise groups and

not those controlled by PRC individuals or foreigners, the determination criteria set forth therein may reflect the SAT’s

general position on how the term “de facto management body”

could be applied in determining the tax resident status

of offshore enterprises, regardless of whether they are controlled by PRC enterprises, individuals or foreigners.

and SAT Bulletin 45 only apply to offshore-incorporated enterprises controlled by PRC enterprises or PRC enterprise groups and not those

controlled by PRC individuals or foreigners, the determination criteria set forth therein may reflect the SAT’s general position

on how the term “de facto management body”

could be applied in determining the tax resident status of offshore enterprises,

regardless of whether they are controlled by PRC enterprises, individuals or foreigners.

The State Administration

1 unchanged sentence

the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises (the “SAT

Circular 698”), the Notice on Several Issues Regarding the Income Tax of Non-PRC Resident Enterprises (the “SAT Circular

24”) and the Notice on Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-PRC Resident Enterprises

(the “SAT Circular 7”).

Pursuant to these rules and notices, if a non-PRC resident enterprise transfers its equity

interests in a PRC tax resident enterprise, such non-PRC resident transferor must report to the tax authorities at the place where

the PRC tax resident enterprise is located and is subject to a PRC withholding tax of up to 10%.

In addition, if a non-PRC resident

enterprise indirectly transfers so-called PRC Taxable Properties, referring to properties of an establishment or a place of business

in China, real estate properties in China and equity investments in a PRC tax resident enterprise, by disposition of the equity

interests in an overseas non-public holding company without a reasonable commercial purpose and resulting in the avoidance of PRC

enterprise income tax, the transfer will be re-characterized as a direct transfer of the PRC Taxable Properties and gains derived

from the transfer may be subject to a PRC withholding tax of up to 10%.

SAT Circular 7 has listed several factors to be taken into

consideration by the tax authorities in determining if an indirect transfer has a reasonable commercial purpose.

However, regardless

of these factors, an indirect transfer satisfying all the following criteria will be deemed to lack a reasonable commercial purpose

and be taxable in the PRC:

(i) 75% or more of the equity value of the intermediary enterprise being transferred is derived directly

or indirectly from PRC Taxable Properties;

(ii) at any time during the one year period before the indirect transfer, 90% or more

of the asset value of the intermediary enterprise (excluding cash) is comprised directly or indirectly of investments in the PRC,

or 90% or more of its income is derived directly or indirectly from the PRC;

(iii) the functions performed and risks assumed by

the intermediary enterprise and any of its subsidiaries that directly or indirectly hold the PRC Taxable Properties are limited

and are insufficient to prove their economic substance;

and (iv) the foreign tax payable on the gain derived from the indirect

transfer of the PRC Taxable Properties is lower than the potential PRC tax on the direct transfer of those assets.

hand, indirect transfers falling into the scope of the safe harbors under SAT Circular 7 may not be subject to PRC tax.

harbors include qualified group restructurings, public market trades and exemptions under tax treaties.

Under SAT Circular

7 and other PRC tax regulations, in the case of an indirect transfer, entities or individuals obligated to pay the transfer price

to the transferor must act as withholding agents and are required to withhold the PRC tax from the transfer price.

to do so, the seller is required to report and pay the PRC tax to the PRC tax authorities.

If neither party complies with the tax

payment or withholding obligations under SAT Circular 7, the tax authority may impose penalties such as late payment interest on

In addition, the tax authority may also hold the withholding agents liable and impose a penalty of 50% to 300% of the

unpaid tax on them.

The penalty imposed on the purchasers may be reduced or waived if the withholding agents have submitted the

relevant materials in connection with the indirect transfer to the PRC tax authorities in accordance with SAT Circular 7.

Circular 698”), the Notice on Several Issues Regarding the Income Tax of Non-PRC Resident Enterprises (the “SAT Circular 24”)

and the Notice on Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-PRC Resident Enterprises (the “SAT

Circular 7”).

Pursuant to these rules and notices, if a non-PRC resident enterprise transfers its equity interests in a PRC

tax resident enterprise, such non-PRC resident transferor must report to the tax authorities at the place where the PRC tax resident enterprise

is located and is subject to a PRC withholding tax of up to 10%.

In addition, if a non-PRC resident enterprise indirectly transfers so-called

PRC Taxable Properties, referring to properties of an establishment or a place of business in China, real estate properties in China and

equity investments in a PRC tax resident enterprise, by disposition of the equity interests in an overseas non-public holding company

without a reasonable commercial purpose and resulting in the avoidance of PRC enterprise income tax, the transfer will be re-characterized

as a direct transfer of the PRC Taxable Properties and gains derived from the transfer may be subject to a PRC withholding tax of up to

SAT Circular 7 has listed several factors to be taken into consideration by the tax authorities in determining if an indirect transfer

has a reasonable commercial purpose.

However, regardless of these factors, an indirect transfer satisfying all the following criteria

will be deemed to lack a reasonable commercial purpose and be taxable in the PRC:

(i) 75% or more of the equity value of the intermediary

enterprise being transferred is derived directly or indirectly from PRC Taxable Properties;

(ii) at any time during the one year

period before the indirect transfer, 90% or more of the asset value of the intermediary enterprise (excluding cash) is comprised directly

or indirectly of investments in the PRC, or 90% or more of its income is derived directly or indirectly from the PRC;

(iii) the functions

performed and risks assumed by the intermediary enterprise and any of its subsidiaries that directly or indirectly hold the PRC Taxable

Properties are limited and are insufficient to prove their economic substance;

and (iv) the foreign tax payable on the gain derived

from the indirect transfer of the PRC Taxable Properties is lower than the potential PRC tax on the direct transfer of those assets.

the other hand, indirect transfers falling into the scope of the safe harbors under SAT Circular 7 may not be subject to PRC tax.

safe harbors include qualified group restructurings, public market trades and exemptions under tax treaties.

Under SAT Circular 7 and other PRC tax regulations,

in the case of an indirect transfer, entities or individuals obligated to pay the transfer price to the transferor must act as withholding

agents and are required to withhold the PRC tax from the transfer price.

If they fail to do so, the seller is required to report and

pay the PRC tax to the PRC tax authorities.

If neither party complies with the tax payment or withholding obligations under SAT Circular

7, the tax authority may impose penalties such as late payment interest on the seller.

In addition, the tax authority may also hold the

withholding agents liable and impose a penalty of 50% to 300% of the unpaid tax on them.

The penalty imposed on the purchasers may be

reduced or waived if the withholding agents have submitted the relevant materials in connection with the indirect transfer to the PRC

tax authorities in accordance with SAT Circular 7.

In January 2019, the

SAT issued Announcement on the Implementation of the Preferential Income Tax Reduction Policy for Small and Low Profit Enterprises

(the “SAT 2019 Circular 2”).

Pursuant to SAT 2019 Circular 2, from January 1, 2019 to December 31, 2021, for small

low profit enterprises, (i) the tax rate for the first RMB 1 million the annual income does not exceed RMB1 million is 20% and

the taxable income is 25% of the annual taxable income;

(ii) the tax rate for the portion of annual income that exceeds RMB1 million

but does not exceed RMB3 million is 20% and the taxable income is 50% of the annual income.

SAT 2019 Circular 2 also defines "small

low profit enterprises"

as enterprises who are engaged in industries not restricted or prohibited and meet the three conditions

of (i) annual taxable income of RMB3 million or lower, (ii) employees number of 300 or lower;

SAT issued Announcement on the Implementation of the Preferential Income Tax Reduction Policy for Small and Low Profit Enterprises (the

“SAT 2019 Circular 2”).

Pursuant to SAT 2019 Circular 2, from January 1, 2019 to December 31, 2021, for small low

profit enterprises, (i) the tax rate for the first RMB1 million the annual income does not exceed RMB1 million is 20% and the taxable

income is 25% of the annual taxable income;

(ii) the tax rate for the portion of annual income that exceeds RMB1 million but does

not exceed RMB3 million is 20% and the taxable income is 50% of the annual income.

SAT 2019 Circular 2 also defines "small low profit

enterprises"

as enterprises who are engaged in industries not restricted or prohibited and meet the three conditions of (i) annual

taxable income of RMB3 million or lower, (ii) employees’

number of 300 or lower;

and (iii) total assets of RMB50 million

During the year ended March 31, 2020, all our subsidiaries and VIEs in China met the three criteria and enjoyed the preferential

Regulations Related to PRC Value-Added

In March 2016, the

Ministry of Finance and the State Administration of Taxation further promulgated the Notice on Fully Promoting the Pilot Plan for

Replacing Business Tax by Value-Added Tax (“VAT”), which became effective on May 1, 2016.

Pursuant to the pilot plan

and relevant notices, VAT is generally imposed in lieu of business tax in the modern service industries, including the value-added

telecommunication services, on a nationwide basis.

VAT of a rate of 6% applies to revenue derived from the provision of some modern

Certain small taxpayers under PRC law are subject to reduced value-added tax at a rate of 3%.

Unlike business tax, a

taxpayer is allowed to offset the qualified input VAT paid on taxable purchases against the output VAT chargeable on the modern

services provided.

On April 4, 2018,

the Ministry of Finance and the State Administration of Taxation issued the Notice on Adjustment of VAT Rates, which came into

effect on May 1, 2018.

According to the abovementioned notice, the taxable goods previously subject to VAT rates of 17% and 11%

respectively become subject to lower VAT rates of 16% and 10% respectively starting from May 1, 2018.

Furthermore, according to

the Announcement on Relevant Policies for Deepening Value-added Tax Reform jointly promulgated by the Ministry of Finance, the

State Administration of Taxation and the General Administration of Customs, which became effective on April 1, 2019, the taxable

goods previously subject to VAT rates of 16% and 10% respectively become subject to lower VAT rates of 13% and 9% respectively

starting from April 1, 2019.

Pursuant to applicable

PRC regulations promulgated by the Ministry of Finance of China and the SAT, we are required to pay a VAT at a rate of 6% for our

services and 13% for our automobile sales, operating lease and financial leasing, with respect to revenues derived from the provision

of Automobile Transaction and Related Services.

All revenues derived from Online Lending Services are subject to the rate of 3%

as Sichuan Senmiao is a small taxpayer.

A taxpayer is allowed to offset the qualified input VAT paid on taxable purchases against

the output VAT chargeable on the revenue from services provided.

Regulations Related to Mergers and

On August 8, 2006,

six PRC regulatory agencies, including China Securities Regulatory Commission (the “CSRC”), promulgated the Regulations

on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”), which became effective

on September 8, 2006 and were amended on June 22, 2009.

The M&A Rules, among other things, require offshore special

purpose vehicles formed for overseas listing purposes through acquisitions of PRC domestic companies and controlled by PRC domestic

enterprises or individuals to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange.

On September 21, 2006, the CSRC published a notice specifying the documents and materials that are required to be submitted

for obtaining CSRC approval.

The M&A Rules,

and other recently adopted regulations and rules concerning mergers and acquisitions established additional procedures and requirements

that could make merger and acquisition activities by foreign investors more time consuming and complex.

For example, the M&A

Rules require that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control

of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that impact

or may impact national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which

holds a famous trademark or PRC time-honored brand.

Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of the

National People’s Congress on August 30, 2007 and effective as of August 1, 2008 requires that transactions which

are deemed concentrations and involve parties with specified turnover thresholds must be cleared by MOFCOM before they can be completed.

In addition, on February 3, 2011, the General Office of the State Council promulgated a Notice on Establishing the Security

Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “Circular 6”), which officially

established a security review system for mergers and acquisitions of domestic enterprises by foreign investors.

Further, on August 25,

2011, MOFCOM promulgated the Regulations on Implementation of Security Review System for the Merger and Acquisition of Domestic

Enterprises by Foreign Investors (the “MOFCOM Security Review Regulations”), which became effective on September 1,

2011, to implement Circular 6.

Under Circular 6, a security review is required for mergers and acquisitions by foreign investors

having “national defense and security”

concerns and mergers and acquisitions by which foreign Investors may acquire

the “de facto control”

of domestic enterprises with “national security”

Under the MOFCOM Security

Review Regulations, MOFCOM will focus on the substance and actual impact of the transaction when deciding whether a specific merger

or acquisition is subject to security review.

If MOFCOM decides that a specific merger or acquisition is subject to security review,

it will submit it to the Inter-Ministerial Panel, an authority established under Circular 6 led by the NDRC and MOFCOM under the

leadership of the State Council, to carry out the security review.

The regulations prohibit foreign investors from bypassing the

security review by structuring transactions through trusts, indirect investments, leases, loans, control through contractual arrangements

or offshore transactions.

There is no explicit provision or official interpretation stating that the merger or acquisition of a

company engaged in the marketplace lending business requires security review.

As of the date of this

Report, we had a total of 179 full-time employees.

The following table

sets forth the breakdown of our employees by function:

During the calendar year ended December 31, 2020, all our subsidiaries and VIEs in China met the three criteria and enjoyed

the preferential tax rates.

Regulations Related to PRC Value-Added Tax

In March 2016, the Ministry

of Finance and the State Administration of Taxation further promulgated the Notice on Fully Promoting the Pilot Plan for Replacing Business

Tax by Value-Added Tax (“VAT”), which became effective on May 1, 2016.

Pursuant to the pilot plan and relevant notices,

VAT is generally imposed in lieu of business tax in the modern service industries, including the value-added telecommunication services,

on a nationwide basis.

VAT of a rate of 6% applies to revenue derived from the provision of some modern services.

Certain small taxpayers

under PRC law are subject to reduced value-added tax at a rate of 3%.

Unlike business tax, a taxpayer is allowed to offset the qualified

input VAT paid on taxable purchases against the output VAT chargeable on the modern services provided.

On April 4, 2018, the

Ministry of Finance and the State Administration of Taxation issued the Notice on Adjustment of VAT Rates, which came into effect on May 1,

According to the abovementioned notice, the taxable goods previously subject to VAT rates of 17% and 11% respectively become subject

to lower VAT rates of 16% and 10% respectively starting from May 1, 2018.

Furthermore, according to the Announcement on Relevant

Policies for Deepening Value-added Tax Reform jointly promulgated by the Ministry of Finance, the State Administration of Taxation and

the General Administration of Customs, which became effective on April 1, 2019, the taxable goods previously subject to VAT rates

of 16% and 10% respectively become subject to lower VAT rates of 13% and 9% respectively starting from April 1, 2019.

Pursuant to applicable PRC

regulations promulgated by the Ministry of Finance of China and the SAT, we are required to pay a VAT at a rate of 6% for our services

and 13% for our automobile sales, operating lease and financial leasing, with respect to revenues derived from the provision of Automobile

Transaction and Related Services.

In addition, as part of the Chinese government's effort to ease the burden of businesses affected by

COVID-19, the Ministry of Finance and the State Administration of Taxation temporarily reduced or exempted VAT on revenues derived from

the provision of certain transportation services from January 2020 to March 2021.

Accordingly, our revenues garnered from our Online Ride-hailing

Platform Services was exempted from duty since the acquisition date to March 31, 2021.

All revenues derived from Online Lending Services

are subject to the rate of 3% as Sichuan Senmiao is a small taxpayer.

A taxpayer is allowed to offset the qualified input VAT paid on

taxable purchases against the output VAT chargeable on the revenue from services provided.

Regulations Related to Mergers and Acquisitions

On August 8, 2006, six

PRC regulatory agencies, including China Securities Regulatory Commission (the “CSRC”), promulgated the Regulations on Mergers

and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”), which became effective on September 8,

2006 and were amended on June 22, 2009.

The M&A Rules, among other things, require offshore special purpose vehicles formed for

overseas listing purposes through acquisitions of PRC domestic companies and controlled by PRC domestic enterprises or individuals to

obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange.

On September 21, 2006,

the CSRC published a notice specifying the documents and materials that are required to be submitted for obtaining CSRC approval.

The M&A Rules, and other

recently adopted regulations and rules concerning mergers and acquisitions established additional procedures and requirements that

could make merger and acquisition activities by foreign investors more time consuming and complex.

For example, the M&A Rules require

that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise,

if (i) any important industry is concerned, (ii) such transaction involves factors that impact or may impact national

economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark

or PRC time-honored brand.

Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of the National People’s Congress

on August 30, 2007 and effective as of August 1, 2008 requires that transactions which are deemed concentrations and involve

parties with specified turnover thresholds must be cleared by MOFCOM before they can be completed.

In addition, on February 3, 2011,

the General Office of the State Council promulgated a Notice on Establishing the Security Review System for Mergers and Acquisitions of

Domestic Enterprises by Foreign Investors (the “Circular 6”), which officially established a security review system for mergers

and acquisitions of domestic enterprises by foreign investors.

Further, on August 25, 2011, MOFCOM promulgated the Regulations on

Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors (the “MOFCOM

Security Review Regulations”), which became effective on September 1, 2011, to implement Circular 6.

Under Circular 6, a security

review is required for mergers and acquisitions by foreign investors having “national defense and security”

concerns and mergers

and acquisitions by which foreign Investors may acquire the “de facto control”

of domestic enterprises with “national

security”

Under the MOFCOM Security Review Regulations, MOFCOM will focus on the substance and actual impact of the transaction

when deciding whether a specific merger or acquisition is subject to security review.

If MOFCOM decides that a specific merger or acquisition

is subject to security review, it will submit it to the Inter-Ministerial Panel, an authority established under Circular 6 led by the

NDRC and MOFCOM under the leadership of the State Council, to carry out the security review.

The regulations prohibit foreign investors

from bypassing the security review by structuring transactions through trusts, indirect investments, leases, loans, control through contractual

arrangements or offshore transactions.

There is no explicit provision or official interpretation stating that the merger or acquisition

of a company engaged in the marketplace lending business requires security review.

As of the date of this Report,

we had a total of 327 full-time employees including two executive officers, 241 employees in our Automobile Transaction and Related Services

segment and 84 employees in our Online Ride-hailing Platform Services segment.

The following table sets

forth the breakdown of our employees by function in our Automobile Transaction and Related Services segment:

Number of Employees

3 unchanged sentences

Finance and Accounting

Internal Audit

All of our employees

are based in the cities of Chengdu and Changsha, where our operations are located.

We believe we offer

our employees competitive compensation packages and a work environment that encourages initiative and is based on merit, and as

a result, we have generally been able to attract and retain qualified personnel and maintain a stable core management team.

plan to hire additional employees as we expand our business.

As required by PRC

regulations, we participate in various government statutory employee benefit plans, including social insurance funds, namely a

pension contribution plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a

maternity insurance plan and a housing provident fund.

We are required under PRC law to make contributions to employee benefit

plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified

by the local government from time to time.

We have not made adequate employee benefit payments, and may be required to make up

the contributions for these plans as well as to pay late fees and fines.

Risk Factors — Risks

Related to Doing Business in China — Failure to make adequate contributions to various employee benefit plans

as required by PRC regulations may subject us to penalties.

We enter into standard

labor and confidentiality agreements with each of our employees.

We believe that we maintain a good working relationship with our

employees, and we have not experienced any major labor disputes.

Internal Control and Audit

The following table sets

forth the breakdown of our employees by function in our Online Ride-hailing Platform Services segment:

Number of Employees

Legal & Risk Management

Drivers & Automobile Management and Services

Human Resources & Administration

Finance and Accounting

All of our employees are

based in the cities of Chengdu, Changsha and Guangzhou, where our operations are located.

We believe we offer our employees

competitive compensation packages and a work environment that encourages initiative and is based on merit, and as a result, we have generally

been able to attract and retain qualified personnel and maintain a stable core management team.

We plan to hire additional employees as

we expand our business.

As required by PRC regulations,

we participate in various government statutory employee benefit plans, including social insurance funds, namely a pension contribution

plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan and

a housing provident fund.

We are required under PRC law to make contributions to employee benefit plans at specified percentages of the

salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government from time to time.

We have not made adequate employee benefit payments, and may be required to make up the contributions for these plans as well as to pay

late fees and fines.

Risk Factors — Risks Related to Doing Business in China — Failure

to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties.

We enter into standard labor

and confidentiality agreements with each of our employees.

We believe that we maintain a good working relationship with our employees,

and we have not experienced any major labor disputes.

We have observed seasonal

trends or patterns in revenues related to our Automobile Transaction and Related Services.

Because of the PRC National Holiday

and close to the year end, there is a seasonal decrease in our facilitated new automobiles during the three months ended December

31 (our third fiscal quarter).

Because of the PRC National Holiday in October,

New Year’s Day, and the traditional Lunar New Year in January or February, there is a seasonal decrease in the demand of automobile

purchase/leasing in certain months during the six months ended March 31 (our third and fourth fiscal quarter).

We also expect to

experience seasonality in our Online Ride-hailing Platform Services.

For example, we expect to experience higher user traffic during the

Chinese National holiday.

Other seasonal trends that may affect us or China’s online ride-hailing industry generally may develop,

and current seasonal trends may become more extreme, all of which would contribute to fluctuations in our results of operations.

Our results of operations

in future quarters or years may fluctuate and deviate from the expectations of our investors, and any occurrence that disrupts our business

during any particular quarters could have a disproportionately material adverse effect on our liquidity and results of operations.

Research and Development

4 unchanged sentences

management which covers the whole transaction process.

We have completed the development of certain functions such as information

entry and delivery which are being tested by us.

We launched the system in March 2020 and we will upgrade the system to support

our business expansion, when necessary.

We have completed the development of certain functions such as information entry

and delivery which are being tested by us.

We launched the system in March 2020 and keep upgrading the system to support our business

We are also in the progress of developing the managing system for online ride-hailing platform, and the comprehensive management

system which could link all key information between Automobile Transaction and Related Services and Online Ride-hailing Platform Services

for our internal manage purpose.

Intellectual Property

We regard our trademarks,

domain names, know-how, proprietary technologies and similar intellectual property as critical to our success, and we rely on

PRC trademark and trade secret law and confidentiality, invention assignment and non-compete agreements with our employees and

others to protect our proprietary rights.

We own 15 software copyrights and eleven trademarks.

We have three trademark applications

pending at the PRC Trademark Office.

We have also registered numerous domain names, including www.51ruixi.com , www.jklqc.com ,

www.ihongsen.com , www.senmiaotech.com and http://senmiaotechir.com/ .

The information on our websites is not

a part of, or incorporated in, this Report.

Despite our efforts

to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology.

unauthorized use of our technology is difficult and costly, and we cannot be certain that the steps we have taken will prevent

misappropriation of our technology.

From time to time, we may have to resort to litigation to enforce our intellectual property

rights, which could result in substantial costs and diversion of our resources.

In addition, third

parties may initiate litigation against us alleging infringement of their proprietary rights or declaring their non-infringement

of our intellectual property rights.

In the event of a successful claim of infringement and our failure or inability to develop

non-infringing technology or license the infringed or similar technology on a timely basis, our business could be harmed.

even if we are able to license the infringed or similar technology, license fees could be substantial and may adversely affect

our results of operations.

Factors — Risks Related to Our Business — We may not be able to prevent others from unauthorized

use of our intellectual property, which could harm our business and competitive position.”

domain names, know-how, proprietary technologies and similar intellectual property as critical to our success, and we rely on PRC trademark

and trade secret law and confidentiality, invention assignment and non-compete agreements with our employees and others to protect our

proprietary rights.

We own 16 software copyrights and 38 trademarks.

We have 20 trademark applications pending at the PRC Trademark Office.

We have also registered numerous domain names, including www.51ruixi.com , www.jklqc.com , www.senmiaotech.com and

http://senmiaotechir.com/ .

The information on our websites is not a part of, or incorporated in, this Report.

Despite our efforts to protect

our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology.

Monitoring unauthorized use

of our technology is difficult and costly, and we cannot be certain that the steps we have taken will prevent misappropriation of our

From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in

substantial costs and diversion of our resources.

In addition, third parties

may initiate litigation against us alleging infringement of their proprietary rights or declaring their non-infringement of our intellectual

property rights.

In the event of a successful claim of infringement and our failure or inability to develop non-infringing technology

or license the infringed or similar technology on a timely basis, our business could be harmed.

Moreover, even if we are able to license

the infringed or similar technology, license fees could be substantial and may adversely affect our results of operations.

Risk Factors — Risks

Related to Our Business — We may not be able to prevent others from unauthorized use of our intellectual property,

which could harm our business and competitive position.”

and “—

We may be subject

to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations .”

We obtain accident

insurance and commercial liability insurance, which are mandatory, on all the automobiles we purchase for sales or financing and

pass on the costs of such insurance to our customers in the sale/financing transaction.

We provide social security insurance including

pension insurance, unemployment insurance, work-related injury insurance and medical insurance for our employees.

We do no maintain

any property insurance policies, business interruption insurance or general third-party liability insurance, nor do we maintain

product liability insurance or key-man insurance.

We consider our insurance coverage to be sufficient for our business operations

We may be subject to intellectual property infringement

claims, which may be expensive to defend and may disrupt our business and operations .”

We obtain accident insurance

and commercial liability insurance, which are mandatory, on all the automobiles we purchase for sales or financing and pass on the costs

of such insurance to our customers in the sale/financing transaction.

We provide social security insurance including pension insurance,

unemployment insurance, work-related injury insurance and medical insurance for our employees.

We do no maintain any property insurance

policies, business interruption insurance or general third-party liability insurance, nor do we maintain product liability insurance or

key-man insurance.

We consider our insurance coverage to be sufficient for our business operations in China.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business