What changed in this filing

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Item 7. Management’s Discussion and Analysis

2021-07-08 compared with 2020-07-09 · 1143 added, 1021 removed, 111 unchanged (95% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis

of our results of operations and financial condition should be read together with our consolidated financial statements and the

notes thereto and other financial information, which are included elsewhere in this Report.

Our financial statements have been

prepared in accordance with U.S.

In addition, our financial statements and the financial information included in this Report

reflect our organizational transactions and have been prepared as if our current corporate structure had been in place throughout

the relevant periods.

We are a provider of automobile transaction

and related services, connecting auto dealers, financial institutions, and consumers, who are mostly existing and prospective Didi

We provide automobile transaction and related services through our majority owned subsidiary, Yicheng, Hunan Ruixi and

its VIE, Jinkailong.

The following discussion

and analysis of our results of operations and financial condition should be read together with our consolidated financial statements and

the notes thereto and other financial information, which are included elsewhere in this Report.

Our financial statements have been prepared

in accordance with U.S.

In addition, our financial statements and the financial information included in this Report reflect our

organizational transactions and have been prepared as if our current corporate structure had been in place throughout the relevant periods.

We are a provider of automobile

transaction and related services, connecting auto dealers, financial institutions, and consumers, who are mostly existing and prospective

ride-hailing drivers affiliated with different operators of online ride-hailing platforms in the People’s Republic of China (“PRC”

or “China”).

We provide automobile transaction and related services through our wholly owned subsidiaries, Yicheng and Corenel,

our majority owned subsidiary, Hunan Ruixi and its VIE, Jinkailong.

Since October 2020, we have been operating an online ride-hailing

platform through XXTX.

Our platform enables qualified ride-hailing drivers to provide application based transportation services in Chengdu,

Changsha and Guangzhou, China.

Substantially all of our operations are conducted in China.

We previously also operated an online

lending platform through our VIE, Sichuan Senmiao, in China, which facilitated loan transactions between Chinese investors

and individual and SME borrowers.

As more fully discussed above under “

Business –

Overview ,”

ceased our online lending services in October 2019 to focus on our automobile transaction and related services.

Our Automobile Transactions and Related

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

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

financing facilitation business;

(iii) automobile operating lease where we provide car rental services to individual customers

Our Automobile Transaction and Related Services

Our Automobile Transaction

and Related Services are mainly comprised of (i) automobile operating lease where we provide car rental services to individual customers

to meet their personal needs with lease term no more than twelve months;

and (iv) automobile financing where we provide our

customers with auto finance solutions through financing leases.

We started our facilitation services in November 2018, the

sale of automobiles in January 2019, and financial and operating leasing in March 2019.

As of March 31, 2020, we facilitated financing

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.

During the year ended March 31,

2020, we facilitated financing for 1,315 automobiles with a total value of approximately $19.2 million, sold an aggregate of 1,176

automobiles with a total value of approximately $11.5 million, delivered 557 automobiles under operating leases with a total value

of approximately $5.0 million and 97 automobiles with a total value of approximately $1.5 million under financing leases to the

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.

(ii) automobile sales where we procure new cars from dealerships

and sell them to our customers in the automobile financing facilitation business;

(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;

and (iv) automobile financing where we provide our customers with auto finance

solutions through financing leases.

We started our facilitation services in November 2018, the sale of automobiles in January 2019,

and financial and operating leasing in March 2019, respectively.

Since November 22, 2018,

the acquisition date of Hunan Ruixi, as of March 31, 2021, we have facilitated financing for an aggregate of 1,687 automobiles with

a total value of approximately $24.65 million, sold an aggregate of 1,424 automobiles with a total value of approximately $13.8 million

and delivered approximately 1,300 automobiles under operating leases and 131 automobiles under financing leases to customers, the vast

majority of whom are online ride-hailing drivers.

The table below provides

a breakdown of the number of vehicles sold or delivered under different leasing arrangements or managed/guaranteed by us and corresponding

revenue generated for the years ended March 31, 2021 and 2020:

For the Years Ended

Operating Leases

Financing Leases

Other Services

* The number was rounded

to the nearest thousand for disclosure purpose.

Our operating leases, auto

sales, auto financing and transaction facilitation, automobile management services and auto financial leasing accounted for approximately

65.3%, 9.3%, 3.6%, 5.4% and 4.3% of our total revenue from our automobile transactions and related services, respectively, for the year

ended March 31, 2021 as compared to approximately 8.3%, 73.7%, 12.3%, 0.9% and 1.1% for the year ended March 31, 2020, respectively.

Our Ride-Hailing Platform

As 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 increasingly competitive

online ride-hailing industry and to take advantage of the market potential, in October 2020, we began operating our own online ride-hailing

platform in Chengdu.

The platform (called Xixingtianxia) was owned and operated

by XXTX, of which Senmiao Consulting acquired a 78.74% equity interest pursuant to a supplementary agreement to XXTX Investment Agreement

with all the original shareholders of XXTX on February 5, 2021 (the “XXTX Increase Investment Agreement”).

Pursuant to the XXTX Increase

Investment Agreement, Senmiao Consulting agreed to make an investment of RMB40 million (approximately $60 million) in XXTX in cash in

exchange for a 78.74% equity interest in XXTX.

The registration procedures for the change in shareholders and registered capital of XXTX

were completed on March 19, 2021.

As the date of this Report, Senmiao Consulting has made 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.

XXTX operates Xixingtianxia

and holds a national online reservation taxi operating license.

The platform is presently servicing online ride-hailing drivers

in Chengdu, Changsha, Neijiang, Guangzhou, Nanchong and Panzhihua, China, providing them with a platform to view and take customer orders

We currently collaborate with Gaode Map and Meituan, two well-known aggregation platforms in China.

As described in the Section titled

Recent Development ”

above, we just entered into a cooperation agreement with a top online ride-hailing platform in

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 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.

The acquisition of XXTX has

brought us a new stream of revenue and enhanced our goal of providing an all-encompassing solution for online ride-hailing drivers.

launched Xixingtianxia in specific markets within Chengdu in late October 2020,

focusing on current driver customers.

Since October 23, 2020, the acquisition date, to March 31, 2021, we have expanded marketing

of our 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 Xixingtianxia and an average of over 6,000 ride-hailing drivers completed rides and earned income through Xixingtianxia (the “Active

Drivers”) each month.

We plan to expand our driver base for the platform and automobile rental business while strengthening the

royalty of the drivers who both lease our cars and use our platform while expanding.

During the period since the acquisition date to March 31,

2021, we achieved revenue of approximately $0.9 million from our Online Ride-hailing Platform Services, after taking into account approximately

$1.8 million incentives paid by us to Active Drivers, which were recorded as a reduction to our revenue.

We intend to focus on drivers

who currently finance or lease vehicles through us but our platform is available to others.

We plan to launch Xixingtianxia

in more cities across China during 2021.

Key Factors and Risks Affecting Results

of Operations of Our Automobile Transactions and Related Services

Ability to Increase the Automobile Purchaser and Leasee Base

Our revenue growth has been largely driven

by the expansion of (i) our automobile purchaser base and the corresponding increase in the amount of automobile transactions facilitated

through us, and (ii) our automobile leasee base and the corresponding revenue generated from operating and financial leasing.

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 flyers and participate in

trade shows to advertise our services.

We plan to strengthen our partnerships with existing sales teams by improving the quality

and variety of our services.

We will also strengthen our marketing efforts through our own team by employing more experienced staffs

and setting up new service centers in the cities of Chengdu and Changsha in 2020.

As of March 31, 2020, we had 29 employees in

our own sales department and cooperated with a total of 26 third-party sales teams with about 258 professionals in the aggregate.

Management of Automobile Rental

Due to the fierce competition of online

ride-hailing industry in Chengdu and the adverse impact from COVID-19 pandemic, a significant number of online ride-hailing drivers

who exited the ride-hailing business and tendered their automobiles to us for sublease or sales in order to generate income/proceeds

to cover their payments owed to the financial institutions and us.

We recently have seen an increasing demand for short-term car

The daily management and timely maintenance of those leased automobiles will have a significant effect on

the growth of our income from leasing automobiles in the next twelve months.

The effective management of our automobiles through

our proprietary system and experienced auto-management team could provide qualified automobiles to potential leasees, either

for personal use or providing online ride-hailing services.

As of March 31, 2020, we had two parking lots and 15 employees in Chengdu

to manage these automobiles.

During the year ended March 31, 2020, our average utilization of the automobiles for operating lease

was approximately 64%.

of Operations

Ability to Increase Our Automobile Lessee and Active Driver Base

Our revenue growth has been

largely driven by the expansion of our automobile lessee base and the corresponding revenue generated from operating and financial

After the acquisition of XXTX, our revenue growth also depends on the number of completed online ride-hailing orders on our platform,

which largely depends on the number of Active Drivers who complete ride-hailing transactions on our platform.

We acquire customers for

our Automobile Transaction and Related Services, as well as for our Online Ride-hailing Platform Services, through the network of third-party

sales teams, referral from online ride-hailing platforms and our own efforts including online advertising and billboard advertising.

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

We plan to increase the number of our Active Drivers by

expanding our platform to more cities during 2021 as well as marketing our platform to our existing and prospective automobile lessees.

We expect the expansion of our Active Driver base to promote the growth of our automobile rental business because we offer automobile

rental solutions/incentives specifically targeted at drivers using our platform.

An effective cross-selling strategies between our automobile

finance and leasing business and the newer online ride-hailing platform business is important to our expansion and revenue growth.

also plan to strengthen our marketing efforts through the collaboration with certain automobile dealers and through our own team by employing

more experienced staffs and improving the quality and variety of our services.

We also plan to continue to set up new service centers

in the cities of Chengdu and Changsha during 2021.

As of March 31, 2021, we had 60 employees in our own sales department and during

the year ended March 31, 2021, we have cooperated with a total of 13 third-party sales teams with about 190 professionals in the

Management of Automobile Rentals

Due to the fierce competition

of online ride-hailing industry in Chengdu and the adverse impact from COVID-19 pandemic across mainland China, a significant number of

online ride-hailing drivers exited the ride-hailing business and tendered their automobiles to us for sublease or sales in order to generate

income/proceeds to cover their payments owed to the financial institutions and us.

We have seen an increasing demand for short-term car

rentals since the end of 2019, which remained stable during the three months ended March 31, 2021.

The daily management and timely

maintenance of leased automobiles will have a significant effect on the growth of our income from leasing automobiles in the next twelve

The effective management of our automobiles through our proprietary system and experienced auto-management team could provide

qualified automobiles to potential lessees, either for personal use or providing online ride-hailing services.

As of March 31, 2021,

we had one parking lot and 15 employees in Chengdu and one parking lot and four employees in Changsha for parking and management of automobiles

for operating lease.

During the year ended March 31, 2021, our average utilization of the automobiles for operating lease was approximately

Our Service Offerings and Pricing

growth of our revenue depends on our ability to improve existing solutions and services provided, continue identifying evolving

business needs, refine our collaboration model with financial institutions and provide value-added services to our customers.

attraction of new automobile purchasers depends in part on our collaboration with financial institutions to offer more attractive

automobile financing solutions with competitive interest rates to our automobile purchasers.

We have also adopted a stable

pricing formula, considering the historical and future expenditure, remaining available leasing months and market price to determine

our rental price for varied rental solutions.

Furthermore, our product designs affect the type of automobile purchasers or leases

we attract, which in turn affects our financial performance.

Our revenue growth also depends on our abilities to effectively price

our services and the ability to obtain relatively lower expenditure paid to dealers, insurance companies and other service providers,

which enables us to attract more customers and improve our profit margin.

Ability to Retain Existing Financial Institutions and Engage

New Financial Institutions

During the year

ended March 31, 2020, approximately 97% of the automobile purchasers financed their purchase of automobiles through financial institutions.

The growth of our business is dependent on our ability to retain existing financial institutions and engage new financial institutions.

We have established collaboration with financial institutions and plan to expand our collaboration with more financial institutions

to access lower cost capital and provide more financing sources to our customers.

The growth of our revenue

depends on our ability to improve existing solutions and services provided, continue identifying evolving business needs, refine our collaborations

with business partners and provide value-added services to our customers.

The attraction of new automobile leasees depends on our

leasing solutions with attractive rental price and flexible leasing terms.

We have also adopted a stable pricing formula, considering

the historical and future expenditure, remaining available leasing months and market price to determine our rental price for varied rental

Furthermore, our product designs affect the type of automobile leases we attract, which in turn affects our financial performance.

The attraction of new Active Drivers depends on the comprehensive income they could earn from our platform, which is mainly affected by

the number orders distributed to them through our platform and the amount of our incentives paid to them.

Our revenue growth also depends

on our abilities to effectively price our services, which enables us to attract more customers and improve our profit margin.

Ability to Retain Existing Financial Institutions

and Engage New Financial Institutions

The growth of our business

is dependent on our ability to retain existing financial institutions and engage new financial institutions.

During the year ended March 31,

2021, we saw a significant decrease in the number of automobile financing facilitation transactions because of the shift of our business

focus to automobile rental.

Despite such decrease, we are exploring new collaboration methods with financial institutions in connection

with our automobile rental business and for our purchase of NEVs in the next twelve months.

Our collaborations with financial institutions

may be affected by factors beyond our control, such as perception of automobile financing as an attractive asset, stability of

financial institutions, general economic conditions and regulatory environment.

To increase the number of our cooperative financial

institutions will enhance the overall stability and sufficiency of funding for automobile transactions.

Ability to Pay for the Automobile

Purchase Price and Expenditure in Advance

We advance the

purchase price of automobiles and all service expenses when we provide related services to the purchasers.

Pursuant to the affiliation

agreements with automobile purchasers, we collect from them monthly installment payments (including principal and interest), our

management and guarantee services fees and our advance payment for expenses.

We also collect part of our automobile purchase price

and purchase services fees from automobile purchasers through monthly installment payments.

As of March 31, 2020, we had accounts

receivable of $1.5 million and advanced payments of approximately $1.4 million due from the automobile purchasers, which will be

collected through proceeds disbursed from financial institutions and installment payments on a monthly basis during the relevant

affiliation periods.

The accounts receivable

and advance payments may increase our liquidity risk.

Jinkailong has borrowed money from financial institutions, third parties

and related parties to fund the advance payments.

We have used all of the proceeds from our equity offerings and plan to seek equity

and/or debt financings to pay for the expenditure related to the automobile purchase.

may be affected by factors beyond our control, such as perception of automobile financing as an attractive asset, stability of financial

institutions, general economic conditions and regulatory environment.

To increase the number of our cooperative financial institutions

and the availability of financing for our existing and new businesses will enhance the overall stability and sufficiency of funding for

automobile transactions.

Ability to Collect Payments on a Timely Basis

We advance the purchase price

of automobiles and all service expenses when we provide related services to the purchasers.

We collect the receivables due from automobile

purchasers from their monthly installment payments and repay financial institutions on behalf of the purchasers every month.

As of March 31,

2021, we had accounts receivable of $1.4 million and advanced payments of approximately $0.5 million due from the automobile purchasers,

which will be collected through installment payments on a monthly basis during the relevant affiliation periods.

The efficiency of collection

of the monthly installment payments has a material impact on our daily operation.

Our risk and asset management department has set up

a series of procedures to monitor the collection.

The accounts receivable and

advance payments may increase our liquidity risk.

We have used the majority of the proceeds from our equity offerings and plan to seek

equity and/or debt financings to pay for the expenditure related to the automobile purchase.

To pay for the expenditure in advance will

enhance the stability of our daily operation and lower the liquidity risk, and attract more customers.

Ability to Collect Payments and

Deal with Defaults Effectively

We collect the

monthly installment payments from automobile purchasers and repay financial institutions on behalf of the purchasers every month.

We are exposed to credit risk as we are required by certain financial institutions to provide guarantee on the lease/loan payments

(including principal and interests) of the automobile purchasers referred by us.

If a default occurs, we are required to make the

monthly payments on behalf of the defaulted purchasers to the financial institution.

We manage the

credit risk arising from the default of automobile purchasers by performing credit checks on each automobile purchaser based on

the credit reports from PBOC and third party credit rating companies, and personal information including residence, ethnicity group,

Ability to Manage Defaults and Potential Guarantee

Liability Effectively

We are exposed to credit

risk as we are required by certain financial institutions to provide guarantee on the lease/loan payments (including principal and interests)

of the automobile purchasers referred by us.

If a default occurs, we are required to make the monthly payments on behalf of the defaulted

purchasers to the financial institution.

We manage the credit risk

arising from the default of automobile purchasers by performing credit checks on each automobile purchaser based on the credit reports

from People’s Bank of China and third party credit rating companies, and personal information including residence, ethnicity group,

driving history and involvement in legal proceeding.

Our post-transaction management department continuously monitors the payment

by each purchaser and send them payment reminders.

We also keep close communication with our purchasers in particular the online

ride-hailing drivers so that we can evaluate their financial conditions and provide them with assistance including the transfer

of automobile to a new driver if they are no longer interested in providing ride-hailing services or are unable to earn enough

income to make monthly lease/loan payments.

Our risk department continuously monitors the payment by each purchaser and sends

them payment reminders.

We also keep close communication with our purchasers in particular the online ride-hailing drivers so that we

can evaluate their financial conditions and provide them with assistance including the transfer of automobile to a new driver if they

are no longer interested in providing ride-hailing services or are unable to earn enough income to make monthly lease/loan payments.

In addition, automobiles

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payment obligations under the financing arrangement.

In the event of a default,

we can track the automobile through an installed GPS system and repossess and handover the automobile over to the financial institution

so that we can be released from our guarantee liability.

of March 31, 2020, we had an outstanding balance of installment payments receivable in the aggregate of $109,000 from approximately

146 automobile purchasers that remained in the online ride-hailing business, of which, all were due within two months from

the default date.

Historically, most of the defaulted automobile purchasers would pay the default amounts within one to three months.

However, if the balances are overdue for more than three months or the purchasers decide to exit the online ride-hailing business

and sublease or sell their automobiles, we would fully record allowance against receivables from those purchasers.

ended March 31, 2020, we recognized estimated provisions loss of approximately $225,000 for the guarantee services and bad debt

expenses for doubtful accounts of $3,406,215, respectively, as the drivers exited the online ride-hailing business and would no

longer make the monthly repayments to us.

By subleasing those automobiles, we believe we can cope with the defaults and control

the automobiles subject to our financing leases are not collateralized by us.

As of March 31, 2020, the total value of non-collateralized

automobiles was approximately $1,273,026.

We believe our risk exposure of financing leasing is immaterial as we just commenced

the business in late March 2019 and have experienced no default to date.

Potential Impact of Ongoing Coronavirus (COVID-19) in China on Our Business

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.

In the event of a default, we

can track the automobile through an installed GPS system and repossess and handover the automobile over to the financial institution so

that we can be released from our guarantee liability.

However, if a financial institution initiates a legal proceeding to collect payments

due from a defaulted automobile purchaser, we may be required to repay the defaulted amount as a guarantor.

If we are unable to undertake

the responsibility as a guarantor, our assets, such as cash and cash equivalents, may be frozen by the court if the financial institution

successfully requests for an order to freeze our assets or bank accounts, which may adversely affect our operations.

As of March 31, 2021,

approximately $3,890,000, including interests of approximately $233,000, due to financial institutions, of all the automobile purchases

we serviced were past due.

Approximately 1,289 online ride-hailing drivers we serviced tendered their automobiles to us for sublease or

sale and approximately 43 automobile purchasers that remained in the online ride-hailing business were late in their monthly installment

payments as of March 31, 2021.

In general, most of the defaulted automobile purchasers who want to remain in online ride-hailing

business would pay the default amounts within one to three months.

Our risk management department typically starts to interact with overdue

purchasers if they have missed one monthly installment payment.

However, if the balances are overdue for more than two months or the purchasers

decide to exit the online ride-hailing business and sublease or sell their automobiles, we would fully record an allowance against receivables

from those purchasers.

As of March 31, 2021, we recognized an accumulated allowance against receivables of approximately $3,530,000

from these purchasers.

For the year ended March 31, 2021, we also recognized an estimated provision loss of approximately $199,000

for the guarantee services as the drivers exited the online ride-hailing business and would no longer make the monthly repayments to us.

By subleasing automobiles from these drivers, we believe we can cope with the defaults and control associated risks.

Further, the automobiles

subject to our financing leases are not collateralized by us.

As of March 31, 2021, the total value of non-collateralized automobiles

was approximately $1,289,000.

We believe our risk exposure of financing leasing is immaterial as we have experienced limited default cases

and we are able to re-lease those automobiles to drivers under financing leases.

Actual and Potential Impact of Ongoing Coronavirus

(COVID-19) in China on Our Business

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

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In March 2020, 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

(where the virus first originated), 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 “

Business - Our Automobile Transaction and Related Services ”):

Temporary closure

of offices and travel restrictions

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 was in mandatory self-quarantine and our entire

business operations were restricted during such period.

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.

Adverse impact

on our financial conditions

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.

Approximately 1,500 drivers delayed their monthly installments of February and March 2020, which resulted in a decrease in our

monthly installment collection by $732,000 during February and March 2020.

As of March 31, 2020, approximately 840 drivers exited

the online ride-hailing business and tendered their automobiles to us for sublease or sale while approximately 380 drivers postponed

their monthly installment payments from one to three months.

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

This situation

may worsen if the COVID-19 pandemic reoccurs in the second half of 2020.

We will continue to closely monitor our collections throughout

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 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 fiscal quarters of 2020-21 and may worsen if the COVID-19 pandemic reoccurs.

In an effort to

assist with our automobile purchasers, we have been negotiating with the financial institutions we cooperate with to extend the

due dates for monthly payments that may be affected by the epidemic.

Certain financial institutions have agreed to grant a grace

period of up to four months from February to May for qualified drivers.

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 in the progress of recovering.

However, if the epidemic in China deteriorates during the year ending March 31, 2021, our automobile

purchasers and leasees may be unable to generate sufficient income to pay their monthly installment payments and the financial

institutions may not agree to further extend the due dates, which may create a significant risk of continuing default form our

automobile purchasers.

Given the rapidly expanding

nature of the COVID-19 pandemic, and because all of our business operations and our workforce are concentrated in China (where the virus

first originated), 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.

As a result, our revenue and income for the three

months ended March 31, 2020 and the subsequent three months ended June 30, 2020 was negatively impacted to a significant extent.

As the online ride-hailing markets in Chengdu and Changsha gradually recovered from the impact of COVID-19 since April 2020, our

revenue for the three months ended September 30, 2020, three months ended December 31, 2020 and three months ended March 31,

2021 had an increase of approximately 21% , 43% and 73%, respectively, as compared with three months ended June 30, 2020.

Our ability to collect the

monthly installment payments from ride-hailing drivers during February and March 2020 was adversely impacted.

Approximately

1,500 drivers delayed their monthly installments of February and March 2020, which resulted in a decrease in our monthly installment

collection by $732,000 during February and March 2020.

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.

As of March 31, 2021, approximately

1,289 drivers exited the online ride-hailing business and tendered their automobiles to us for sublease or sale while approximately 43

drivers postponed their monthly installment payments.

As a result, we recorded accumulated bad debt expenses of approximately $3,530,000.

However, during the year ended March 31, 2021, there was an increase in our collection of monthly installments from automobile purchasers

and operating lease as compared with the three months ended March 31, 2020, and the negative impact has been gradually alleviated.

We will continue to closely monitor our collections.

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 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.

We anticipate having a larger cash outflow in our daily operations in the next twelve months

(even greater than during the year ended March 31, 2021) as we expand our Online Ride-hailing Platform Services in more cities in

China and incur more marketing and promotion expenses.

Our cash flow situation may worsen if the COVID-19 pandemic reoccurs in China.

In an effort to assist with

our automobile purchasers, we negotiated with the financial institutions we cooperate with to extend the due dates for monthly payments

that may be affected by the epidemic.

Certain financial institutions agreed to grant a grace period of up to four months from February to

May 2020 for qualified drivers.

We commenced the operation

of our online ride-hailing platform since late October 2020 and have witnessed the decrease in online ride-hailing orders in mid-December 2020,

when Chengdu reported 14 confirmed COVID-19 cases and fewer people took ride-hailing trips as a result.

The average daily rides completed

through our platform decreased by approximately 15% compared to that before the reporting of the new COVID-19 cases in Chengdu and recovered

a week later as the new confirmed cases in Chengdu were fully under control.

Consequently, the income of our Automobile Transaction and

Related Services customers who ran their business through the Didi platform also decreased during this period.

Similarly, in early January 2021,

Beijing reported three confirmed COVID-19 cases and one asymptomatic case involving drivers for Didi, a major transportation network company,

which also resulted in the decrease in orders in the Didi platform in Beijing.

Since mid-May 2021 to June 2021, Guangzhou has

reported a series of confirmed and asymptomatic COVID-19 cases, the local government has ensured concrete and effective measures to fight

against the resurgence, including suspending some traffic activities in certain medium-risk and high-risk areas in Guangzhou.

daily rides completed through our platform decreased by approximately 40% compared to that before the reporting of the new COVID-19 cases

in Guangzhou.

Recent local resurgences

of COVID-19 cases in some areas did not have material negative impacts on the economy of China, so we expect that the impact brought by

potential COVID-19 cases in the future may be limited as China has established plans to rapidly contain the spread of COVID-19 cases and

minimize related economic losses.

However, if the epidemic in China deteriorates during the year ending March 31, 2022, new confirmed

COVID-19 cases in the regions where we operate our online ride-hailing platform may have significant negative impact on the demand for

rides through online ride-hailing platforms, including our platform and our revenue from the Online Ride-hailing Platform Services may

In addition, our automobile

purchasers and lessees may be unable to generate sufficient income to make their monthly installment payments, which may create a significant

risk of continuing default from our automobile purchasers or lessees.

As a result, we may have to repay the defaulted amount as a guarantor

Meanwhile, the collection of our

receivables due from those automobile purchasers may also be further adversely affected, which may result in additional credit

If we experience a widespread default by our automobile purchasers, our cash flow and results of operations will be materially

and adversely affected.

As a consequence, we could face shortfalls in liquidity without extra financing resources for the foreseeable

future and we will be unable to grow our business and may be required to reduce or refocus our operations, which may raise substantial

doubts about our ability to continue as a going concern.

Any of these factors related to COVID-19

and other similar or currently unforeseen factors beyond our control could have an adverse effect on our overall business environment,

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.

Compete Effectively

Our business and

results of operations depend on our ability to compete effectively.

Overall, our competitive position may be affected by, among

other things, our service quality and our ability to price our solutions and services competitively.

We will set up and continuously

optimize our own business system to improve our service quality and user experience.

Our competitors may have more resources than

we do, including financial, technological, marketing and others and may be able to devote greater resources to the development

and promotion of their services.

We will need to continue to introduce new or enhance existing solutions and services to continue

to attract automobile dealers, financial institutions, car buyers and other industry participants.

Whether and how quickly we can

do so will have a significant impact on the growth of our business.

Market Opportunity

and Government Regulations in China

The demand for our services depends on

overall market conditions of the ride-hailing industry in China.

The continuous growth of the urban population places increasing

pressure on the urban transportation and the improvement of living standards has increased the market demand for quality travel

Traditional taxi service is limited, and the emerging online ride-hailing platforms have created good opportunities for

the development of the online ride-hailing service market.

Based on the monitoring of China E-Commerce Research Center, the number

of online ride-hailing service users had reached 333 million by the end of 2018, representing an increase of 16% from 2017.

to Bain & Company, the transaction value of China's online ride-hailing market in 2017 was larger than the total of the

rest of the world.

It is estimated that by 2021, the total transaction value of China's online ride-hailing market will reach $60

The ride-hailing industry is facing increasing competition in China and is attracting more capital investment.

in addition to the traditional online ride-hailing platform, automobile manufacturers, offline operation service companies and

financial and map service providers have built cooperation relationships with each other to make the online ride-hailing industry

a more aggregated industry.

In March 2019, T3, a new travel service platform, was established in Nanjing and subsequently

in other cities, including Wuhan and Chongqing, and has accumulated over 1 million registered users since March 2019.

jointly invested by three large automobile manufacturers, FAW, Dongfeng and Chang’an, and leading internet, retail and finance

companies such as Suning, Tencent and Alibaba and intends to compete with Didi and capitalize on the great potential of the ride-hailing

As of December 2019, Alibaba, together with its affiliate, has invested in or acquired more than 30 enterprises in

the fields related to ride-hailing, including Hello Travel, Yongan Travel, Didi, Gaode Software, Xiaopeng Automobile and others

within the ride-hailing industry.

The online ride-hailing industry may also

be affected by, among other factors, the general economic conditions in China.

The interest rates and unemployment rates may affect

the demand of ride-hailing services and automobile purchasers’

or lose the monthly rental revenue.

If we experience a widespread default by our automobile purchasers/lessees, our cash flow and results

of operations will be materially and adversely affected.

As a consequence, we could face shortfalls in liquidity without extra financing

resources for the foreseeable future and lose the ability to grow our business or may even be required to scale down or restructure our

Any of these factors related

to COVID-19 and other similar or currently unforeseen factors beyond our control could have an adverse effect on our overall business

environment, 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.

Ability to Manage and Grow New Online Ride-Hailing Business

Due to the fierce competition

of online ride-hailing industry in Chengdu and Changsha, our ability to increase our revenue over time may be limited if we focus only

on our current Automobile Transaction and Related Services business model.

As part of our strategy to provide an all-encompassing solution

for online ride-hailing drivers, we have expanded our services to drivers through the operation of Xixingtianxia,

our own online ride-hailing platform, which has brought us a new stream of revenue.

We generate revenue from commissions earned

from each completed order, which represent the difference between an upfront quoted fare and the amount earned by a driver based on actual

time and distance for the ride charged to the rider.

As the aggregation platforms distribute the demand orders to different online ride-hailing

platforms, the flow of drivers in our area of operations is enhanced, leading to a higher probability that more ride orders will be distributed

to our platform, which in turn will increase the revenue of the drivers who use our platform (and our revenue).

This also allows us to

attract more drivers to engage their online ride-hailing business on our platform.

Through a series of promotion and effective daily management

and training services, we expect our own online ride-hailing platform will offer us a stable revenue source which can also help grow our

automobile financing and leasing business.

Pursuant to the cooperation

agreement signed with Didi for our Automobile Transaction and Related Services, we may be penalized by Didi, or our partnership with Didi

may be terminated as we now operate a business competitive with Didi.

However, the service fees we earned from Didi for automobile transaction

and related services currently represent less than 0.1% of our total revenue.

Therefore, we believe the termination of cooperation with

Didi on automobile transaction and related services will not have a material influence on our business or results of operations.

Ability to Compete Effectively

Our business and results

of operations depend on our ability to compete effectively.

Overall, our competitive position may be affected by, among other things,

our service quality and our ability to price our solutions and services competitively.

We will set up and continuously optimize our own

business system to improve our service quality and user experience.

Our competitors may have more resources than we do, including financial,

technological, marketing and others and may be able to devote greater resources to the development and promotion of their services.

will need to continue to introduce new or enhance existing solutions and services to continue to attract automobile dealers, financial

institutions, car buyers, leasees, ride-hailing drivers and other industry participants.

Whether and how quickly we can do so will have

a significant impact on the growth of our business.

Market Opportunity and Government Regulations

The demand for our services

depends on overall market conditions of the online ride-hailing industry in China.

The continuous growth of the urban population places

increasing pressure on the urban transportation and the improvement of living standards has increased the market demand for quality travel

Traditional taxi service is limited, and the merging online platforms have created good opportunities for the development of

the online ride-hailing service market.

Based on the monitoring of China E-Commerce Research Center, the number of online ride-hailing

service users had reached 333 million by the end of 2018, increased by 16% from 2017.

According to Bain & Company, the transaction

value of China's online ride-hailing market in 2017 was larger than the total of the rest of the world.

It estimated that by 2021, the

total transaction value of China's online ride-hailing market will reach $60 billion.

The online ride-hailing industry is facing increasing

competition in China and is attracting more capital investment.

According to the MOT of the People’s Republic of China, as of May

31, 2021, approximately 234 online ride-hailing platforms have obtained booking taxi operating licenses and the total volume of online

ride-hailing orders was approximately 800 million in May 2021 in China.

Meanwhile, approximately 1.31 million online booking taxi

transportation certificates and approximately 3.44 million online booking taxi driver's licenses were issued nationwide in China.

to the 47th Statistical Report on Internet Development published in February 2021, by the end of December 2020, the number

of passengers of online ride-hailing in China was approximately 365 million, took approximately 36.9% of the total number of Chinese internet

Since 2019, in addition to the traditional online ride-hailing platforms, automobile manufacturers, offline operation service companies,

financial and map service providers, among others, have built cooperation relationships with each other to make the online ride-hailing

industry a more aggregated industry.

The online ride-hailing industry

may also be affected by, among other factors, the general economic conditions in China.

The interest rates and unemployment rates may

affect the demand of ride-hailing services and automobile purchasers’

willingness to seek credit from financial institutions.

economic conditions could also reduce the number of qualified automobile purchasers and online ride-hailing drivers seeking credit

from the financial institutions, as well as their ability to make payments.

Should any of those negative situations occur, the

volume and value of the automobile transactions we service will decline, and our revenue and financial condition will be negatively

In order to manage the rapidly growing

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

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

Operations and Services”, which legalizes online ride-hailing services such as Didi and requires the ride-hailing services

to meet the requirements set out by the measures and obtain taxi-booking service licenses.

On November 5, 2016, the Municipal

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

the Administration of Online Booking Taxi Management Services for Chengdu.”

On August 10, 2017, the Transportation Commission

of Chengdu further issued the detailed guidance “Working Process for the Online Booking Taxi Drivers Qualification Examination

economic conditions could also reduce the number of qualified automobile purchasers and online ride-hailing drivers seeking credit from

the financial institutions, as well as their ability to make payments.

Should any of those negative situations occur, the volume and value

of the automobile transactions we service will decline, and our revenue and financial condition will be negatively impacted.

In order to manage the rapidly

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

the MOT, jointly promulgated the “Interim Measures for the Administration of Online Taxi Booking Business Operations and Services”

(“Interim Measures”) and amended on December 28, 2019, which legalizes online ride-hailing services such as Didi and

requires the online ride-hailing services to meet the requirements set out by the measures and obtain taxi-booking service licenses and

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

On November 5, 2016,

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

Rules for the Administration of Online Booking Taxi Management Services for Chengdu.”

On August 10, 2017, the Transportation

Commission of Chengdu further issued the detailed guidance “Working Process for the Online Booking Taxi Drivers Qualification Examination

and Issuance”

2 unchanged sentences

and guidelines, three licenses /certificates are required for operating the online ride-hailing business in Chengdu:

ride-hailing service platform such as Didi should obtain the online booking taxi operating license;

(2) the automobiles used

for online ride-hailing should obtain the online booking taxi transportation certificate (“automobile certificate”);

(3) the drivers should obtain the online booking taxi driver's license (“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 practice, Hunan Ruixi is also required to

employ a safety administrator for every 50 automobiles used for online ride-hailing services and submit daily operation information

of these automobiles, such as traffic violation, to the Transport Management Office of the Municipal Communications Commission

of Changsha City every month.

Didi, the online

ride-hailing platform, with whom we cooperate, obtained the online reservation taxi operating license in Chengdu and Changsha in

March 2017 and July 2018, respectively.

However, approximately 5% of the cars used for online ride-hailing services which

we provided management services to did not have the automobile certificate and approximately 68% of our ride-hailing drivers had

not obtained the driver’s license as of March 31, 2020.

Without requisite automobile certificate or driver’s license,

these drivers may be suspended from providing ride-hailing services, confiscated their illegal income and subject to fines of up

to 10 times of their illegal income.

Starting in August 2019, Didi began limiting customer orders allocated to drivers in

Chengdu if they do not have requisite driver’s license or the automobiles used for ride-hailing services lack the automobile

Further, 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.

The limitation will affect the income of the drivers and may

cause an increase in defaults if the drivers fail to generate sufficient income from providing ride-hailing services.

the process of assisting the drivers to obtain the required certificate and license.

However, there is no guarantee that all of

the drivers affiliated with us would be able to obtain all the certificate and license.

Our business and results of operations

will be materially affected if our affiliated drivers are suspended from providing ride-hailing services or imposed substantial

Our Discontinued Online P2P Lending

Through our now discontinued online P2P

lending platform, we offered access to credit for borrowers and attractive investment returns for investors.

In September 2016,

we acquired our online lending platform which had been in operation for two years prior to the acquisition.

Our revenues from online lending services

were primarily generated from fees charged for our services in matching investors with borrowers.

We charged borrowers transaction

fees for the work we performed through our platform and charged our investors service fees on their actual investment returns.

The rapid growth of China’s online

P2P lending industry attracted a large number of market players.

However, business failures of, or accusations of fraud and unfair

dealing against, certain companies in the online P2P lending industry in China have surfaced in recent years, creating a negative

public perception of online individual finance market players.

Our business and results of operations were affected by general

factors affecting China’s online P2P lending industry, in particular, the development of regulatory environment.

regulatory changes had affected our business negatively.

For example, in February 2019, the Chengdu financial regulatory authorities

required us to gradually reduce our “business scale,”

the daily average outstanding balance of loans facilitated by

Specifically, the outstanding balance of our facilitated loans as of the end of each month starting in February 2019,

is expected to be lower than that as of the end of prior month.

Furthermore, since April 2019, the

financial authorities of serval provinces and cities, such as Yunnan, Shandong, Sichuan, Shanghai and Shenzhen, have issued lists

of online lending companies under their jurisdiction that should exit the P2P lending industry after outstanding balance of loans

is fully paid.

On April 29, 2019, the Leading Group Office of Online Lending Risk Response of Sichuan Province officially

issued a circular requiring 38 marketplaces exit the P2P lending industry.

In October 2019, the financial authorities of Hunan

and Shandong Provinces announced the failure of local P2P lending platforms to complete rectification and required that all P2P

lending platforms in the province cease operations.

Also in this month, Hubei Province revoked the business licenses of 53 P2P

lending platforms.

In December 2019, Sichuan Province announced the failure of local P2P lending platforms to complete rectification

and required that all P2P lending platforms in the province cease operations.

As the P2P lending industry in China is

experiencing a continuous decline in total transaction volume and facing an increasingly tighter regulatory environment, we have

determined that the continued operation of our online lending business is not viable.

On October 17, 2019, our Board of Directors

approved the Plan, to wind down and discontinue our online P2P lending business.

Despite the discontinuation, we expect to receive

minimal service fees following the discontinuation as loans having a term of 36 months remain outstanding.

We also think the discontinuation

of our online lending business would allow us to focus our resources on our Automobile Transaction and Related Services.

revenue from our online lending services only accounted for 0.7% of our total revenue for the year ended March 31, 2020, the discontinuation

had no significant impact on our revenue.

We plan to provide technology services through Sichuan Senmiao, which operated the online

lending platform in the year of 2020.

In connection with the Plan, we have ceased

facilitation of loan transactions on our online lending platform and assumed all the outstanding loans from investors on the platform

since October 17, 2019.

(1) the ride-hailing

service platform such as Didi should obtain the online booking taxi operating license;

(2) the automobiles used for online ride-hailing

should obtain the online booking taxi transportation certificate (“automobile certificate”);

(3) the drivers should obtain

the online booking taxi driver's license (“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.”

On June 12, 2019, the Municipal Communications Commission of Changsha City further

issued “Transfer and Registration Procedures of Changsha Online Booking of Taxi.”

According to the regulations and guidelines,

to operate a ride-hailing business in Changsha requires similar licenses in Chengdu, except those automobiles used for online ride-hailing

services are required to meet certain standards, including that the sales price (including taxes) is over RMB120,000 (approximately $17,000).

In practice, Hunan Ruixi is also required to employ a safety administrator for every 50 automobiles used for online ride-hailing services

and submit daily operation information of these automobiles such as traffic violation to the Transport Management Office of the Municipal

Communications Commission of Changsha City every month.

In addition to the national

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

Changsha, Neijiang, Panzhihua, Nanchong and Guangzhou, from June 2020 to March 2021, to operate the online ride-hailing platform

And Didi, the online ride-hailing platform with whom we cooperate for our automobile transaction and related services, obtained

the online reservation taxi operating license in Chengdu and Changsha in March 2017 and July 2018, respectively.

However, approximately 55%

of our 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 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 both for our Automobile Transaction and Related Services and our

Online Ride-hailing Platform Services.

However, there is no guarantee that all of the drivers affiliated with us would be able to obtain

all the certificates and licenses.

Further, there is no assurance that each of the drivers who use our platform or the cars used by such

drivers in providing ride-hailing services possess the requisite license or certificate.

Our business and results of operations will be

materially and adversely affected if our affiliated drivers are suspended from providing ride-hailing services or imposed substantial

fines or if we are found to be in serious violation of the Interim Measures due to the drivers’

failure to obtain requite licenses

and/or automobile certificates in connection with providing services through our platform.

Our Discontinued Online P2P Lending Services

We previously also operated

an online lending platform through our VIE, Sichuan Senmiao, in China, which facilitated loan transactions between Chinese investors and

individual and SME borrowers.

Our revenues from online lending services were primarily generated from fees charged for our services in

matching investors with borrowers.

We charged borrowers transaction fees for the work we perform through our platform and charged our

investors service fees on their actual investment returns.

We ceased our online lending services in October 2019 to focus on our

Automobile Transaction and Related Services.

In connection with the plan

adopted by our Board of Directors to discontinue and wind down our online P2P lending services business on October 17, 2019 (the

“Plan”), we ceased facilitation of loan transactions on our online lending platform and assumed all the outstanding loans

from investors on the platform.

The aggregate balance of the loans we assumed was approximately $5.6 million.

As of Mach 31, 2020,

As of March 31, 2021,

we have used cash generated from our Automobile Transaction and Related Services and payments collected from borrowers in the aggregate

of approximately $1.8 million to repay platform investors and we expect to repay 90% of them by December 31, 2020.

if we could not generate enough cash flow to pay investors on time in accordance with the Plan, we may incur

additional commitment liabilities in our financial statements during the following periods before we fully fulfill

As of March 31, 2020, we treated the online lending business as discontinued operations and recognized receivables from

borrowers and payables to investors of approximately $4.0 million in our financial statements accordingly.

Based on recent repayments

collected from borrowers, we also recognized bad debt expenses of approximately $3.7 million for those receivables and $0.3 million

for accounts receivable and prepayment for intangible assets related to our online lending services.

However, the amount and timing

of the actual allowance for bad debt may change based on evidence of collectability of the subject loans during the execution of

As part of the Plan, we have transferred certain employees who worked on our online lending business, primarily the information

technology staff, to provide a new website design and development service for customers.

We may further terminate certain employees

of the online lending business by December 31, 2020.

The estimated costs associated with the

discontinuation of our online P2P lending business are primarily comprised of employee severance and benefits expenses and an allowance

for bad debt (i.e., debt that cannot be collected for borrowers on our lending platform, which would be used to repay the investors

on the platform).

We estimated that we would incur a one-time personnel-related charges of no more than $20,000 for employee severance

and other related termination benefits.

Severance payments are expected to be paid in full by December 31, 2020.

As a result of the discontinuation of our

online lending services, we believe we can improve our operating cash flow by lowering our operating expenses and focusing on maximizing

the profitability of our Automobile Transaction and Related Services.

of approximately $4.3 million to repay platform investors and we expect to repay all of them by December 31, 2021, an extended due

date agreed by the investors.

However, if we could not generate enough cash flow to pay investors on time in accordance with

the Plan, we may incur additional commitment liabilities in our financial statements during the following periods

before we fully fulfill our Plan.

Since December 31, 2019, we have treated the online lending business as discontinued operations

and recognized receivables from borrowers and payables to investors of approximately $4.0 million in our financial statements accordingly.

Based on recent repayments collected from borrowers, we also recognized bad debt expenses of approximately $3.8 million for those receivables

and $0.3 million for accounts receivable and prepayment for intangible assets related to our online lending services.

However, the amount

and timing of the actual allowance for bad debt may change based on evidence of collectability of the subject loans during the execution

As part of the Plan, we transferred certain employees who used to work on our online lending business, primarily the information

technology staffs, to provide a new website design and development service for customers.

Results of Continuing Operations for the Year Ended March 31,

2021 Compared to the Year Ended March 31, 2020

For the Years Ended

For the Years Ended March 31,

Cost of revenues

1 unchanged sentence

Selling, general and administrative expenses

Bad debt expense

Recovery of (Provision for) doubtful accounts

Impairments of long-lived assets

Total operating expenses

Loss from operations

Other expenses, net

Other income (expenses), net

Interest expense

3 unchanged sentences

Income tax expenses

started generating revenue from automobile transaction and related services from November 22, 2018, the acquisition date of

Revenue for the year ended March 31, 2020 generated from our automobile transaction and related services, which increased

by $13,104,468, or 514%, as compared with the period from November 22, 2018, the acquisition date of Hunan Ruixi, to March 31,

Due to our business expansion in Chengdu and Changsha, our revenue increased as compared with the prior year.

Revenue from our automobile transaction

and related services includes sales revenue of automobiles, service fees from automobile purchase services, facilitation fees from

automobile purchase, service fees from automobile management and guarantee services, interest income from financial leasing, operating

lease revenues from automobile rentals and other services fees, which accounted for 73.7%, 11.0%, 1.3%, 0.9%, 1.1%, 8.3% and 3.7%,

respectively, of the total revenue from automobile transaction and related services during the year ended March 31, 2020.

light of the measures and restrictions to combat the nationwide epidemic in China, although we believe there is huge market opportunity

and rapid development of the ride-hailing service market in China, we have experienced a decrease in our revenue from automobile

transaction and related services for the three months end ed March 31, 2020 as compared with the same period in the prior

The income of most of our customers, who are online ride-hailing drivers, in February and March 2020 has been significantly

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

In order to gain enough working capital

and develop a new income resource, we are shifting our business focus on automobile rental from facilitation of automobile transaction

and financing.

However, we expect our revenue from sales of automobiles and rental income from automobile rental to account for

a majority of our revenues for the next twelve months;

therefore, our business will remain vulnerable during the pendency of the

COVID-19 epidemic.

As the ride-hailing markets in Chengdu and Changsha are gradually recovering from the impact of COVID-19, we

expect to see a decrease in the number of automobiles tendered to us by the ride-hailing drivers exiting the business in the second

half of 2020.

In addition, we will focus more on our automobile rental business to capitalize on the increasing demand for short-term

automobile rentals.

Consequently, we expect our business to improve in the second half of 2020.

The following table sets forth the breakdown

of revenues by revenue source for the years ended March 31, 2020 and 2019:

We started generating revenue

from Automobile Transaction and Related Services from our acquisition of Hunan Ruixi on November 22, 2018.

As described above, we

acquired a new business that allows us to generate revenue from our Online Ride-hailing Platform Services, which brought us $0.9 million

during the period from October 23, 2020 (the date we acquired the platform) to March 31, 2021.

Revenue for the year ended

March 31, 2021 decreased by $9,495,041, or approximately 61%, as compared with the year ended March 31, 2020.

The decrease was

mainly due to the decrease in the number of newly facilitated automobile purchases and automobiles sold.

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 sharp decrease in the number of newly facilitated automobile transactions.

This resulted in a significant decrease in our revenue from

Automobile Transaction and Related Services since January 2020 as compared with the prior year.

Moreover, a significant number of

online ride-hailing drivers 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.

In an effort to mitigate

the negative impact on our daily cash flow resulting from the tendering of automobiles from drivers who exited the 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.

We had revenue of $3,434,615 from automobile rental during the year ended March 31, 2021, which

partially offset the negative impact of the decrease in our revenue.

The online ride-hailing market

has gradually recovered since April 2020 as COVID-19 is generally under control in China and travel restrictions have been lifted

by the Chinese government.

As a result, the number of additional automobiles tendered to us by the ride-hailing drivers exiting the business

decreased since the second quarter of the year ended March 31, 2021 as compared with prior quarters.

The monthly installments we

collected from our customers in the third and fourth quarters kept stable as compared with the second quarter for the year ended March 31,

As we plan to focus more

on our automobile rental and Online Ride-hailing Platform Services business, we expect our revenue from automobile rental income to continue

to account for a majority of our revenues and revenue from our Online Ride-hailing Platform Services to increase over the next twelve

We plan to take advantage of the expansion of our online ride-hailing platform to increase the utilization of our automobiles

for operating leases, which would bring the increasing demand for short-term automobile rentals.

The following table sets forth the breakdown of

revenues by revenue source for the years ended March 31, 2021 and 2020:

For the Years Ended

1 unchanged sentence

- Revenues from sales of automobiles

- Service fees from automobile purchase services

- Facilitation fees from automobile transactions

- Operating lease revenues from automobile rentals

- Service fees from automobile management and guarantee services

- Financing revenues

- Operating lease revenues from automobile rentals

- Service fees from automobile purchase services

- Facilitation fees from automobile transactions

- Other service fees

Revenue from Online Ride-hailing Platform Services

Total Revenue

Revenue from Automobile Transactions and Related

Revenue from our Automobile

Transaction and Related Services includes sales revenue of automobiles, operating lease revenues from automobile rentals, service fees

from automobile management and guarantee services, financing revenues, service fees from automobile purchase services, and other services

fees, which accounted for approximately 9.3%, 65.3%, 5.4%, 4.3%, 3.6% and 12.1%, respectively, of the total revenue from Automobile Transaction

and Related Services during the year ended March 31, 2021.

Meanwhile, sales revenue of automobiles, service fees from automobile

purchase services, operating lease revenues from automobile rentals, facilitation fees from automobile purchase, service fees from automobile

management and guarantee services, financing revenues and other services fees, which accounted for approximately 73.7%, 11.0%, 8.3%, 1.3%,

0.9%, 1.1% and 3.7%, respectively, of the total revenue from Automobile Transaction and Related Services during the year ended March 31,

Sales of automobiles

We generate revenues from sales of automobiles

to the customers of Jinkailong, Hunan Ruixi and Chengdu Mashangchuxing Automobile Leasing Co., Ltd.

(“Mashang Chuxing”).

Sales of automobiles during the year ended March 31, 2020 increased by $9,721,266 as compared to the same period in 2019, mainly

due to the increase in the number of new automobile purchases.

We sold an aggregate of 1,176 automobiles for $11.5 million to the

customers of Jinkailong, Hunan Ruixi and Mashang Chuxing during the year ended March 31, 2020, and 212 automobiles for $1.8 million

to the customers of Jinkailong during the year ended March 31, 2019.

Service fees from automobile purchase

We generate revenues from providing a series

of automobile purchase services throughout the automobile purchase transaction process.

The amount of these fees is based on the

sales price of the automobiles and relevant services provided.

Service fees from automobile purchase services increased by $1,319,085

as compared with the prior year, mainly due to the increase in the number of facilitated new automobile purchases.

1,315 new automobile purchases with service fees ranging from $89 to $3,600 per automobile during the year ended March 31, 2020

while we serviced 311 new automobile purchases with service fees ranging from $243 to $2,300 per automobile during the year ended

March 31, 2019.

Facilitation fees from automobile transactions

We also generate revenues from fees charged

to third-party sales teams or the automobile purchasers for the facilitation of sales of automobiles.

The amount of facilitation

fee is based on the type of automobile and negotiation with each sales team or automobile purchaser.

The fees charged to third-party

sales teams or automobile purchasers are paid when the transactions are consummated.

These fees are non-refundable upon the delivery

of automobiles.

Facilitation fees from automobile transaction increased by $55,200 as compared with the prior year mainly due to

the increase in the number of facilitated new automobiles purchases, but partly offset by the decreased average facilitation fee

per automobile.

We facilitated 1,315 and 311 new automobile purchases during the year ended March 31, 2020 and 2019, respectively.

The average facilitation fee we charged decreased from $456 per automobile during the year ended March 31, 2019 to $140 during

We generate revenues from

sales of automobiles to the customers of Jinkailong, Hunan Ruixi and Chengdu Mashangchuxing Automobile Leasing Co., Ltd.

(“Mashang

Chuxing”) during the year ended March 31, 2021 and the year ended March 31, 2020.

Sales of automobiles during the year

ended March 31, 2021 decreased by $11,049,265 as compared with last year, mainly due to the decrease in the number of new automobile

purchases, which was a result of the increased competition in the online ride-hailing market in Chengdu and Changsha, and the adverse

impact of COVID-19 across mainland China and the shift of our business focus to automobile leasing.

We sold an aggregate of 36 automobiles

and 1,176 automobiles during the years ended March 31, 2021 and 2020, respectively.

Operating lease revenues from automobile rentals

We generate revenues from

leasing our own automobiles, leased automobiles from third parties and sub-leasing automobiles tendered by online ride-hailing drivers

with their authorization for a lease term of no more than twelve months.

We leased over 1,200 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.

While we have leased

approximately 560 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 31, 2020.

Service fees from automobile management and

guarantee services

The majority of our customers

whom we provided automobile purchase services to are online ride-hailing drivers.

They also entered into affiliation service agreements

with us pursuant to which we provide them post-transaction management services and guarantee services.

The increase of $143,900 was due

to the increased number of automobiles which we provided management and guarantee services to during the year ended March 31, 2021

as compared with prior year, but offset by the increase in the accumulated number of tendered automobiles which were subsequently rented

to ride-hailing drivers whom we charge rent rather than charging management and guarantee services fee.

Financing revenues

We started our financial

leasing business in March 2019 and began to generate interest income from providing financial leasing services to online ride-hailing

drivers in April 2019.

We charge the customers of our automobile financing facilitation services interest on their monthly payments

which cover purchase price of automobile and our services fees and facilitation fees for terms of 36 or 48 months.

We recognized a total

interest income of $227,599 and $164,391 during the years ended March 31, 2021 and 2020, respectively.

The increase of $63,208 was

mainly attributed to the increase in the accumulated number of automobiles under financial leasing.

Service fees from automobile purchase services

We generate revenues from

providing a series of automobile purchase services throughout the automobile purchase transaction process.

Service fees from automobile

purchase services had a significant decrease of $1,539,422 during the year ended March 31, 2021 as compared with last year, mainly

due to the decrease in the number of facilitated new automobile purchases.

We serviced 112 new automobile transactions, including purchase,

financial leasing and operating leases, with service fees ranging from approximately $140 to $3,550 per automobile during the year ended

March 31, 2021 while we serviced 1,315 new automobile purchases with service fees ranging from $89 to $3,600 per automobile during

the year ended March 31, 2020.

In order to attract more customers during the COVID-19 epidemic period in the fourth quarter of

this fiscal year, we further decreased the facilitation fee to zero in Chengdu.

We expect the revenue from facilitation fees from

automobile transactions to account for a smaller portion of our total revenue due to the low service fee and the increase in other

revenue from the expansion of our Automobile Transaction and Related Services.

Service fees from automobile management

and guarantee services

The vast majority of our customers are

ride-hailing drivers of Didi on-line network, who enter into affiliation service agreements with us pursuant to which we provide

them post-transaction management services and guarantee services.

The increase of $81,516 in service fees from automobile management

and guarantee services was attributed to the increase in the number of automobiles we serviced, partially offset by the decrease

of our average service fee per automobile.

We provided management and guarantee services for over 2,400 and 1,200 automobiles during

the years ended March 31, 2020 and 2019, respectively.

Our fees decreased from an average of $792 per automobile for the affiliation

period during the year ended March 31, 2019 to $583 during the year ended March 31, 2020.

Interest income from financial leasing

We started our financial leasing in March

2019 and generate interest income from providing financial leasing services to ride-hailing drivers in April 2019.

We also charge

the customers of our automobile financing facilitation services interest on their monthly payments which cover purchase price of

automobile and our services fees and facilitation fees for terms of 36 or 48 months.

During the year ended March 31, 2020, we recognized

a total interest income of $164,391.

lease revenues from automobile rentals

We generate revenues from leasing our own

automobiles or sub-leasing automobiles tendered by online ride-hailing drivers with their authorization for a lease term of no

more than twelve months.

Due to the fierce competition and the COVID-19 pandemic, during the year ended March 31, 2020, approximately

840 online ride-hailing drivers exited the online ride-hailing business because of decreased income.

We have leased approximately

540 of them and 19 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 31, 2020.

Facilitation fees from automobile transactions

Facilitation fees from automobile

transaction decreased by $196,152 during the year ended March 31, 2021 as compared with last year mainly due to the decrease in the

number of facilitated new automobile purchases from 1,315 to 61 and the decreased average facilitation fee per automobile.

our business focus to automobile rental, we waived the facilitation fee for new automobile purchasers during the nine March 31, 2021.

Other service fees

We generate other revenues from the commissions

from insurance companies and other miscellaneous service fees charged to the automobile purchasers, which accounted for 79.9%,

We generate other revenues

such as commissions from insurance companies and other miscellaneous service fees charged to the automobile purchasers, which accounted

for 76.6 %, and 23.4% of revenues from other service fees during the year ended March 31, 2021, respectively.

We generate other revenues

from commissions from insurance companies and other miscellaneous service fees charged to the automobile buyers, which accounted for 79.9%,

and 20.1% of revenues from other service fees during the year ended March 31, 2020, respectively.

The increase of $459,371 was

attributed to the increase in the number of automobiles we serviced during the year ended March 31, 2020.

The increase of $48,460 was mainly

attributed to the increase of commissions from insurance and miscellaneous service fees as the total number of automobiles we served increased

during the year ended March 31, 2021 as compared with last year.

Revenue from Online Ride-hailing Platform

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 and earn commissions for each completed order equal to the difference between an upfront quoted fare and the amount earned by

a driver based on actual time and distance for the ride charged to the rider.

During the period from October 23, 2020 to March 31,

2021, approximately 4.4 million rides were completed through our Xixingtianxia platform and we earned online ride-hailing platform service

fees of $903,254, netting off approximately $1.8 million incentives paid to Active Drivers.

Cost of Revenues

Cost of revenues represents the costs of

automobiles sold of $11,310,469 and amortization expense of leased automobiles from certain online ride-hailing drivers of $969,769.

Cost of revenues increased by $10,468,051, or 578% during the year ended March 31, 2020 as compared with the same period in 2019

was attributed to the increase in the number of automobiles sold increased from 212 to 1,176 and we had incur operating lease in

the year ended March 31, 2020 .

Gross profit from our Automobile Transaction

and Related Services increased by $2,636,417 or 357% during the year ended March 31, 2020 as compared with the same period in 2019

mainly due to our business expansion.

The gross profit generated from sales of automobiles increased by $222,984 due to the increase

in the number of automobiles sold from 212 for the year ended March 31, 2019 to 1,176 for the year ended March 31, 2020.

profit generated from operating lease revenues from automobile rentals increased by $333,870 due to the fact that we started to

focus on our operating lease as a means of mitigating the impact of the intense competition in the online ride-hailing market in

Chengdu and the COVID-19 pandemic.

Other revenues with no cost of revenues increased by $2,079,593 due to the significant

increase in the number of facilitated new automobiles purchases and management in the year ended March 31, 2020.

Selling, General and Administrative

Selling, general and administrative expenses

primarily consist of salary and employee benefits, office rental expense, travel expenses, and other costs.

Selling, general and

administrative expenses increased from $1,776,690 for the year ended March 31, 2019 to $5,567,939 for the year ended March 31,

2020, representing an increase of $3,791,249.

The increase was attributable to the selling, general and administrative expenses

of our Automobile Transaction and Related Services since we commenced this business in November 2018 and significantly expanded

the business operations in the year ended March 31, 2020.

The increase mainly consists of an increase of $1,474,295 in salary and

employee benefits, $322,889 in advertising and promotion, $409,882 in rental and other office expenses, $333,098 in insurance,

transportation and maintenances fees, $791,624 in amortization of automobiles which were tendered to us but have not been sub-leased

or sold, $225,468 of guarantee expense and $233,993 of other miscellaneous expenses.

Bad Debt Expense

Considering the fierce competition in the

online ride-hailing markets in Chengdu and the negative impact of the COVID-19, approximately 840 online ride-hailing drivers we

serviced have tendered their automobiles to us for sublease or sale and approximately 380 drivers postponed their monthly installment

We evaluated the possibility of collection of unsettled balances from those drivers and concluded the possibility of

collection was low and recognized bad debt expenses of $3,404,336 for those receivables.

Interest Expense

Interest expense for the year ended March

31, 2020 was $96,624, resulting from the borrowings of Jinkailong from a financial institution, third parties and related parties

for its working capital requirements.

The increase of $62,746 was because we acquired the control of Jinkailong on November 22,

Interest Expense on Finance Leases

Interest expense on

finance leases for the year ended March 31, 2020 was $373,407, representing the interest expenses on the leased automobiles tendered

to us for sublease or sale by the online ride-hailing drivers who exited the ride-hailing business.

We were authorized to sublease

or sell the automobiles to generate income/proceeds to pay for the amounts owed to the financial institutions and us.

Change in Fair Value of Derivative

Warrants issued in our June 2019 Offering

were classified as liabilities under the caption “Derivative Liabilities”

in the consolidated balance sheet and recorded

at estimated fair value at each reporting date, computed using the Black-Scholes valuation model.

In August and October 2019,

we issued an aggregate of 1,113,187 shares of common stock to certain investors in the June 2019 Offering upon exercise of

the pre-funded Series B warrants for a total consideration of $111.

The change in fair value of derivative liabilities for

the year ended March 31, 2020 derived from change of the fair value between March 31, 2020 and June 20, 2019, the

date of issuance, resulted in a gain of $1,796,724.

Income Tax Expense

Generally, our subsidiaries and consolidated

VIEs in China are subject to enterprise income tax on their taxable income in China at a rate of 25%.

The enterprise income tax

is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.

Income tax expense

of $33,184 for the year ended March 31, 2020 mainly represented the provision of enterprise income tax resulting from the

taxable income of $26,036 from Hunan Ruixi, $84,108 from Jinkailong and $22,592 from Yicheng.

Other subsidiaries and consolidated VIE

in China incurred cumulative losses and no tax expense were recorded.

However, companies operating within China are required to

adjust their net operating losses according to the Enterprise Income Tax Law of China which can be carried forward to offset operating

income for five years.

On December 22, 2017, the U.S.

enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”).

imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries, and future foreign earnings

are subject to U.S.

The Tax Act also stablished the Global Intangible Low-Taxed Income (GILTI), a new inclusion rule

affecting non-routine income earned by foreign subsidiaries.

For the year ended March 31, 2020 and March 31, 2019, our foreign

subsidiaries in China cumulatively were operating at loss which resulted in no GILTI tax.

As a result of the foregoing, net loss

from our Automobile Transaction and Related Services for the year ended March 31, 2020 was $4,348,776, representing an increase

of $3,193,001 from net loss of $1,155,775 for the year ended March 31, 2019.

Results of Discontinued Operations for

the Year Ended March 31, 2020 Compared to the Year Ended March 31, 2019

For the Years Ended

Operating expenses

Cost of revenues represents

the costs of automobiles sold of $476,267, amortization, daily maintenance and insurance expense of automobiles leased to online ride-hailing

drivers of $4,170,081, technical service charges and insurance of online ride-hailing platform services of $1,323,144.

Cost of revenues

decreased by $6,310,746, or approximately 51%, during the year ended March 31, 2021 as compared with last year, mainly due to the

decrease in costs of automobiles sold of $10,834,202 as the number of automobiles sold decreased from 1,176 to 36, partially offset by

the increase of $3,200,312 in costs of automobiles under operating leases and $1,323,144 in direct expense and technical service fees

of Online Ride-hailing Platform Services, respectively, as a result of the commencement and expansion of those two businesses.

Gross profit decreased by

$3,184,295, or approximately 94%, during the year ended March 31, 2021 as compared with last year mainly due to the decreased number

of automobile sales and facilitated new automobile purchases.

Gross profit generated from sales of automobiles decreased by $215,063 and

other revenues with no cost of revenues decreased by $1,480,006 due to the significant decrease in the number of automobiles sold and

facilitated new automobile purchases during the year ended March 31, 2021 as compared with last year.

Meanwhile, we had gross loss

of $1,069,336 from operating lease revenues from automobile rentals during the year ended March 31, 2021.

The majority of those leased

automobiles were tendered to us with overdue monthly installment payments to financial institutions.

Therefore, the total amount of the

amortization and daily maintenance expense of these automobiles were higher than the monthly rents generated.

We have focused on our operating

leases as a means of mitigating the impact from the return of automobiles by a substantial number of online ride-hailing drivers who exited

the ride-hailing business as a result of COVID-19 and the intense competition in the online ride-hailing market in Chengdu and Changsha

Moreover, we had gross loss of $419,890 from our Online Ride-hailing Platform Services as we just started this new business

in October 2020 and paid cash incentives to attractive drivers to our platform.

Selling, General and Administrative Expenses

Amortization of intangible assets

Impairments of intangible assets and goodwill

Bad debt expense

Total operating expenses

Loss from operations

Other income, net

Loss before income taxes

Income tax expenses

the year ended March 31, 2020, we charged borrowers transaction fees ranging from 0.19% to 3% of the loan amount, which fees were

paid upon (i) disbursement of the proceeds for loans which accrue interest on a monthly basis or (ii) full payment of

principal and interest of loans which accrue interest on a daily basis.

We also charged our investors a service fee of 8.00% of

the interest that investors receive and the service fees were paid when the investors received interest payments.

As the online

P2P lending industry in China experienced a continuous decline in total transaction volume and was facing an increasingly

tighter regulatory environment in 2019, we determined that the continued operation of our online lending business was not viable.

We have discontinued our online lending business since October 2019 but expect to continue to receive service fees following

the discontinuation as loans with a term of 36 months remain outstanding.

Selling, general and administrative

general and administrative expenses for our online lending services was $1,365,733 for the year ended March 31, 2020, a decrease

of $877,172 compared to the year ended March 31, 2019.

The decrease mainly consisted of the decrease of $324,466 in salary

and employee benefits due to our termination and transfer of employees from our Online Lending Services to our Automobile

Transaction and Related Services, and $465,477 in advertising and marketing expenses as we discontinued our online lending business

since October 2019 and did not engage advertising and marketing firms to increase our publicity as we did following our IPO

in March 2018.

Amortization of Intangible Assets

Intangible asset amortization for the year

ended March 31, 2020 was $32,401 as compared to $308,043 for the year ended March 31, 2019, representing a decrease of

The decrease was mainly attributable to the decrease in net book value of our online lending platform and related software

as a result of the impairment charges of $265,525 and $1,225,073 recorded against for the fiscal year ended March 31, 2020

and 2019, respectively.

Impairments of Intangible Assets

For the year ended March 31, 2020,

we recognized the impairment loss of $265,525 on customer relationship of our online lending business as we decided to discontinue

the online lending business in October 2019.

For the year ended March 31, 2019, we did not recognize any impairment loss.

Bad Debt Expense

We have discontinued our online lending

business since October 2019 and recognized receivables from borrowers and payables to investors of approximately $4.0 million.

Based on historical repayments collected from borrowers, we concluded that the possibility of collection from the borrowers was

low and recognized bad debt expenses of $4,048,210 for those receivables.

As a result of the foregoing, net loss

from our discontinued operations for the year ended March 31, 2020 was $5,587,027, representing an increase of $2,200,277 from

expenses primarily consist of salary and employee benefits, office rental expense, travel expenses, and other costs.

Selling, general

and administrative expenses increased from $5,496,955 for the year ended March 31, 2020 to $10,273,104 for the year ended March 31,

2021, representing an increase of $4,776,149, or approximately 87%.

The increase was attributable to more employees hired for the operations

of our businesses and the management of a significant number of automobiles tendered to us for sublease or sale due to the negative impact

The increase mainly consists of an increase of $972,164 in amortization of automobiles which were tendered to us but have

not been sub-leased or sold, an increase of $1,858,927 in salary and employee benefits as the number of our employee increased from 181

to 275, an increase $1,049,461 in professional service fees such as financial, legal and market consulting, an increase of $887,493 in

advertising and promotion, rental and other expenses, and slight increase of $8,105 in other office charges.

Recovery of (Provision for) doubtful accounts

As a result of the fierce

competition in the online ride-hailing market in Chengdu and Changsha, and the negative impact of COVID-19, an aggregate of approximately

840 online ride-hailing drivers we serviced tendered their automobiles to us for sublease or sale and approximately 380 drivers postponed

their monthly installment payments during the year ended March 31, 2020.

Then we recognized provision for doubtful accounts of $2,657,442

and allowance for doubtful accounts of $746,894, respectively, for the year ended March 31, 2020 accordingly.

However, the additional

numbers of new drivers who tendered automobiles and postponed their monthly installment payments decreased by approximately 390 and approximately

340, respectively, during the year ended March 31, 2021 as compared with last year.

We re-evaluated the possibility of collection

of unsettled balances from those drivers and recovered allowance for doubtful accounts of $28,358 for those receivables during the year

ended March 31, 2021.

Impairments of Long-lived Assets

For the years ended March 31,

2021 and March 31, 2020, we evaluated the future cash flow of our right-of-use assets and our own vehicles used for financing leases

during their remaining useful life and recognized impairment loss of $130,839 and $70,984, respectively, for those assets that could not

generate sufficient cash.

Other Income (expense), net

For the year ended March 31,

and Capital Resources

We have financed our operations primarily

through proceeds from our equity offerings, stockholder loans, and cash flow from operations.

had cash and cash equivalents of $833,888 as of March 31, 2020 as compared to $3,967,980 as of March 31, 2019 for our

continuing operations.

We had cash and cash equivalents of $10,139 as of March 31, 2020 as compared to $1,052,530 as of March 31,

2019 for our discontinued operations.

We primarily hold our excess unrestricted cash in short-term interest-bearing

bank accounts at financial institutions.

In December 2017, Sichuan Senmiao

entered into loan agreements with its two stockholders, who agreed to grant lines of credit of approximating $955,000 and $159,000,

respectively, to Sichuan Senmiao for five years.

The lines of credit are non-interest bearing, effective from January 2017.

During the year ended March 31, 2020, we repaid them in the aggregate amount of $931,905.

As of March 31, 2020, the outstanding

balances were $108,711 and $73,384, respectively.

On March 16, 2018, we closed our IPO

of 3,000,000 shares of common stock at $4.00 per share.

On March 28, 2018, we sold additional 379,400 shares of common stock

upon exercise of the underwriter’s over-allotment option.

The total gross proceeds from the offering were approximately $13.5

After deducting underwriting discounts and commissions and offering expenses payable by us, the aggregate net proceeds

totaled approximately $12.2 million.

On June 21, 2019, we closed a registered

direct offering of common stock and warrants pursuant to our registration statement on Form S-3, as supplemented, for total

gross proceeds of $6.0 million.

The offering price of the shares sold in the offering was $3.38 per share.

After deducting placement

agent fees and offering expenses payable by us, the aggregate net proceeds totaled approximately $5.1 million.

We plan to use anticipated cash flows from

operating activities and obtain loans from our bank credit facility and additional equity financing to expand our automobile transaction

and related services business.

We have considered whether there is substantial doubt about our ability to continue as a going concern

due to (1) our recurring losses from operations, including approximately $3.1 million and $5.6 million net loss attributable to

the our stockholders from continuing operations and discontinued operations, respectively, for the year ended March 31, 2020;

our accumulated deficit of approximately $23.7 million as of March 31, 2020;

(3) our working capital deficit of $4.5 million;

(4) the fact that we had negative operating cash flows of approximately $4.5 million and $2.0 million from continuing operations

and discontinued operations, respectively, for the year ended March 31, 2020.

2021, we had other income of $87,888, mainly as a result of the receipt of a government subsidy of $147,000 from Sichuan Economic and

Information Department for our initial public offering in 2018, and a special support fund of $80,000 for government industrial development

from Chengdu Municipal people's Government.

The income was offset by the guarantee expenses of $125,437 payable accrued to Impawn in order

to deal with the frozen accounts of Jinkailong in December 2020.While we had miscellaneous expense of $45,347 in the same period

Interest Expense and Interest Expense on

Finance Leases

Interest expense for the

year ended March 31, 2021 was $45,764, resulting from the borrowings of Jinkailong from a financial institution for its working capital

requirements.

The decrease of $50,860 or approximately 53%, was due to the decrease in outstanding principal of loans obtained before

2019 and lower interest rate for the remaining principal.

Interest expense on finance

leases for year ended March 31, 2021 was $733,202, representing the interest expense accrued under financing leases for the leased

automobiles tendered to us for sublease or sale by the online ride-hailing drivers who exited the ride-hailing business.

Interest expense

on finance leases increased by $359,795 as compared with last year, mainly due to the annual weighted average number of tendered automobiles

increased approximately 77% than that in last year as the tendering incurred mainly since the second half of our fiscal year ended March 31,

Change in Fair Value of Derivative Liabilities

Warrants issued in our June 2019

and February 2021 registered direct offering and August 2020 underwritten public offering were classified as liabilities under

the caption “Derivative Liabilities”

in the consolidated balance sheet and recorded at estimated fair value at each reporting

date, computed using the Black-Scholes valuation model.

The change in fair value of derivative liabilities for the year ended March 31,

2021 was a loss of $1,710,415 in total.

The loss was mainly due to our stock price as of March 31, 2021 was higher than the price

on March 31, 2020, resulting a loss of $1,372,966 for the warrants issued in our June 2019 registered direct offering, a loss

of $455,162 for the warrants issued in our August 2020 underwritten public offering.

It was offset by a gain of $117,713 for the

warrants issued in our February 2021 underwritten public offering.

The change in fair value of derivative liabilities resulted in

a gain of $1,796,724 for the year ended March 31, 2020, mainly due our stock price as of March 31, 2020 was lower than that

on June 20, 2019, the date of issuance.

Income Tax Expense

Generally, our subsidiaries

and consolidated VIEs in China are subject to enterprise income tax on their taxable income in China at a rate of 25%.

The enterprise

income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.

expense of $14,627 and $33,184 for the years ended March 31, 2021 and 2020, respectively, represented the provision of enterprise

income tax resulting from the taxable income of $58,508 from Hunan Ruixi, Jinkailong and Yicheng.

Other subsidiaries and consolidated

VIEs in China incurred cumulative losses and no tax expense were recorded.

As a result of the foregoing,

net loss for the year ended March 31, 2021 was $12,600,663, representing an increase of $8,251,887 from net loss of $4,348,776 for

the year ended March 31, 2020.

Liquidity and Capital Resources

We have financed our operations

primarily through proceeds from our equity offerings, stockholder loans, commercial debt and cash flow from operations.

We had cash and cash equivalents

of $4,448,075 as of March 31, 2021 as compared to $833,888 as of March 31, 2020 for our continuing operations.

We had no cash

and cash equivalents as of March 31, 2021 as compared to $10,139 as of March 31, 2020 for our discontinued operations.

hold our excess unrestricted cash in short-term interest-bearing bank accounts at financial institutions.

On August 6, 2020, we

closed an underwritten public offering of 12,000,000 shares at $0.50 per share for total gross proceeds of approximately $6.0 million.

After deducting underwriting discounts and commissions and offering expenses payable by us, the aggregate net proceeds totaled approximately

$5.3 million.

In addition, the underwriters for the public offering exercised their over-allotment to purchase 1,800,000 shares of common

stock at $0.50 per share, generating net proceeds of approximately $0.8 million after deducting underwriting discounts and commissions

and offering expenses.

On February 10, 2021,

we closed a registered direct offering of 5,072,465 shares of our common stock at $1.38 per share, pursuant to a securities purchase agreement

with certain accredited investors.

As a result, the Company raised approximately $5.7 million, net of placement agent fees and offering

expenses, to support our working capital requirements.

On May 13, 2021, we

closed a registered direct offering of 5,531,916 shares of our common stock at $1.175 per share, pursuant to a securities purchase agreement

with certain accredited investors.

As a result, the Company raised approximately $5.8 million, net of placement agent fees and offering

expenses, to support our working capital requirements.

Our business is capital intensive and we have spent expenditure on

developing our new business of Online Ride-hailing Platform Services and expanding automobile operating leasing during the year ended

March 31, 2021.

We have considered whether there is substantial doubt about our ability to continue as a going concern due to (1) recurring

losses from operations, including net loss of approximately $12.6 million and $0.1 million from continuing operations and discontinued

operations, respectively, for the year ended March 31, 2021, (2) accumulated deficit of approximately $34.1 million as of March 31,

(3) the working capital deficit of approximately $5.9 million as of March 31, 2021;

(4) net operating cash outflows

of approximately $2.2 million and $1.7 million from continuing operations and discontinued operations, respectively, for the year ended

March 31, 2021 and (5) the purchase commitment of $2.5 million.

As of March 31, 2021, we have entered into two purchase contracts with an automobile dealer to

purchase a total of 700 automobiles for the amount of approximately $11.6 million.

Pursuant to the contracts, we are required to purchase

350 automobiles in cash with the amount of approximately $5.8 million.

As of the date of this Report, 200 automobiles have been purchased

in cash and delivered to us and the remaining purchase commitment of $2.5 million is to be completed before December 31, 2021.

The remaining

350 automobiles purchase commitment with the amount of approximately $5.8 million shall be purchased with financing option through the

dealer’s designated financial institutions.

After the completion of the registered direct offering on May 13,

2021, our working capital deficiency was approximately $0.1 million in working capital deficiency.

We have determined there is substantial

doubt about our ability to continue as a going concern.

We are trying to alleviate the going concern risk through the following

cash and cash equivalents generated from operations;

other equity financing to support our working capital.

As described in “

Business - Recent

Developments - JKL Investment Agreement”, pursuant to the JKL Investment Agreement signed on July 4, 2020, Hongyi agreed

to make a capital contribution of RMB 50 million (approximately $7.0 million) in consideration of a 27.03% equity interest in Jinkailong.

The initial investment by Hongyi of approximately RMB10 million ($1.4 million) shall be paid no later than September 30, 2020.

At the same time such initial investment is made, all the original shareholders of Jinkailong shall fully pay their investment

funds in accordance with their respective equity interests in Jinkailong.

Within 30 days from the date of completion of the industrial

and commercial registration procedures required to accommodate this transaction but no later than December 31, 2020, Hongyi will

pay the remaining investment of RMB 40 million (approximately $5.6 million).

However, if Jinkailong fails to meet the

criteria set in the JKL Investment Agreement, Hongyi may 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).

If we are unable to generate significant operating cash flows

or secure additional debt and equity financing, we may be required to cease or curtail our operations.

Our consolidated financial

statements do not include adjustments that might result from the outcome of these uncertainties.

For the Year Ended

doubt about its ability to continue as a going concern.

If we are unable to generate significant revenue, we may be required to cease

or curtail its operations.

We are trying to alleviate the going concern risk through the following sources:

we will continue to seek equity financing to support our working capital;

other available sources of financing (including debt) from PRC banks and other financial institutions;

financial support and credit guarantee commitments from our related parties.

Based on the above considerations, we think we will probably not having

sufficient funds to meet our working capital requirements and debt obligations as they become due one year from the date of this Report,

if we are unable to obtain additional financing.

In addition, the the maximum contingent liabilities we would be exposed to was approximately

$12.8 million as of March 31, 2021.

However, there is no assurance

that we will be successful in implementing the foregoing plans or that additional financial will be available to us on commercially reasonable

terms, or at all.

There are a number of factors that could potentially arise that could undermine our plans, such as (i) the impact

of the COVID-19 pandemic on our business and areas of operations in China, (ii) changes in the demand for our services, (iii) PRC

government policies, (iv) economic conditions in China and worldwide, (v) competitive pricing in the automobile transaction

and related service and online ride-hailing industries, (vi) changes in our relationships with key business partners, (vii) that

financial institutions in China may not able to provide continued financial support to our customers, and (viii) the perception of

PRC-based companies in the U.S.

capital markets.

Our inability to secure needed financing when required could require material changes

to our business plans and could have a material adverse effect on our viability and results of operations.

For the Years Ended

Net Cash Used in Operating Activities

7 unchanged sentences

Cash Flow in Operating Activities

For the year ended March 31, 2020, net

cash used in operating activities was $6,447,664, which consists of the net cash used in operating activities of $4,530,293 from

continuing operations and $1,917,371 from discontinued operations.

For the year ended March 31,

2021, net cash used in operating activities was $3,936,067, which consists of the net cash used in operating activities of $2,219,672

from continuing operations and $1,716,395 from discontinued operations.

The total net cash used in operating activities primarily comprised

of salary and employee surcharge of $2,519,541, other operating costs of $2,331,318, costs of $1,185,031 on automobiles used for

financial lease to be collected within the lease terms, and payment of $11,872,377 for purchase of automobiles and related transactions,

partially offset by revenue received of $11,460,604.

The net cash outflow was mainly due to (1) net loss of $9,935,802;

changes in fair value of derivative liabilities of $1,796,723;

(3) the increase in receivables due from automobile purchasers of

$356,381 due to our Automobile Transaction and Related Services expansion;

(4) the increase in financing lease receivables of $1,185,031;

offset by (5) the increase in the accrued expense and other liabilities of $4,903,882, of which, mainly resulted from the outstanding

loans from investors on the online lending platform, which was assumed by us in connection with the Plan to discontinue our online

lending services business;

(6) the amortization of the right - of - used assets of $1,762,276 ;

and (7) the decrease in inventories

of $437,012 as we sold more automobiles during the year without purchasing more automobiles.

For the year ended March 31, 2019, we had

net cash used in operating activities of $6,256,226, which consisted of the net cash used in operating activities of $4,552,979

of salary and employee surcharge of $3,812,320, the payment of $1,712,028 to investors of the discontinued P2P platform, other operating

costs of $3,795,567, and payment of $1,069,839 for maintenance fees, insurance and other costs for automobiles and related transactions,

partially offset by revenue received of $6,175,280 and the net collection of $278,406 on automobiles used for financial lease to be collected

within the lease terms.

For the year ended March 31,

2020, net cash used in operating activities was $6,447,664, which consists of the net cash used in operating activities of $4,530,293

from continuing operations and $1,917,371 from discontinued operations.

The total net cash used in operating activities was primarily

comprised salary and employee surcharge of $1,265,970, other operating costs of $1,344,048, and net advance payment for automobile

purchase transactions of $6,280,086, partially offset by revenue received of $2,633,878.

The total net cash used in operating activities primarily comprised

of salary and employee surcharge of $2,519,541, other operating costs of $2,331,318, costs of $1,185,031 on automobiles used for financial

lease to be collected within the lease terms, and payment of $11,872,377 for purchase of automobiles and related transactions, partially

offset by revenue received of $11,460,604.

Cash Flow in Investing Activities

For the year ended March 31, 2020, we had

net cash used in investing activities of $963,416, which consisted of the net cash used in investing activities of $965,241 from

continuing operations, partially offset by the net cash provided by of $1,825 from discontinued operations.

The total net cash

used in investing activities primarily consisted of:

(1) the payment of $181,116, $262,763 and $49,537 for the purchases of

leasehold improvements, vehicles and office equipment, respectively, and (2) the payment of $470,000 for the development of

software used in our automobile transaction and related services.

For the year ended March 31, 2019, we had

net cash used in investing activities of $314,434 from continuing operations and $218,191 from discontinued operations.

The total net cash used in investing activities primarily consisted of the payment of $28,870 for the purchases of office equipment,

the payment of $471,555 for the development of software to be used in our previous online lending platform and our automobile transaction

and financing services;

and the investments in principal of finance lease of $32,200.

For the year ended March 31,

2021, we had net cash used in investing activities of $2,510,862, which consisted of the net cash used in investing activities of $2,508,578

from continuing operations and $2,284 from discontinued operations.

The majority net cash used in investing was for the purchase of automobiles

for operating lease purpose.

For the year ended March 31,

2020, we had net cash used in investing activities of $963,416, which consisted of the net cash used in investing activities of $965,241

from continuing operations, partially offset by the net cash provided by of $1,825 from discontinued operations.

The total net cash used

in investing activities primarily consisted of:

(1) the payment of $181,116, $262,763 and $49,537 for the purchases of leasehold

improvements, vehicles and office equipment, respectively, and (2) the payment of $470,000 for the development of software used in

our automobile transaction and related services.

Cash Flow in Financing Activities

the year ended March 31, 2020, we had net cash provided by financing activities of $3,431,797, which consisted of the net cash

provided by financing activities of $4,080,202 from continuing operations and the net cash of $648,405 from discontinued operations.

The total net cash provided by financing activities primarily consisted of:

(1) gross proceeds from our June 2019 Offering of $5.1

(2) release of escrow receivable of $600,000;

(3) net proceeds from short-term borrowings from related parties and affiliates

of $177,266 for the daily operation of Jinkailong, partially offset by (4) payments of finance lease liabilities to financial

institutions of $975,958;

(5) repayments of borrowings from financial institutions and third parties of $749,610;

and (6) repayment

of borrowings from stockholders of $817,294.

For the year ended March 31, 2019, we had

net cash used in financing activities of $1,272,272 from continuing operations, offset by net cash provided by of $1,973,479

from discontinued operations.

The total net cash provided by financing activities was mainly consisted of:

(1) the release of the

deposit of $600,000 from escrow account;

(2) cash acquired from the acquisition of Hunan Ruixi and Jinkailong of $218,816;

repayments of borrowings from financial institutions, related parties and affiliates of $662,696, partially offset by short-term

borrowings from third parties of $471,608 for the daily operation of Jinkailong after the acquisition;

and (4) proceeds from stockholders

loans of $1,973,479, partially offset by repayments to stockholders of $1,900,000.

For the year ended March 31,

2021, we had net cash provided by financing activities of $10,259,777, which primarily consisted of:

(1) total net proceeds of $11.8

million from our underwritten public offering in August 2020 and registered public offering in February 2021, and $683,046 from

exercised warrants from investors, respectively;

(2) borrowings from a financial institution of $572,035, partially offset by (4) principal

payments made for finance lease liabilities of $2,230,765, (5) repayments of current borrowings from financial institutions and the

insurance company of $529,288;

and (5) repayments and loans to stockholders, related parties and affiliates of $77,453.

For the year ended March 31,

2020, we had net cash provided by financing activities of $3,431,797, which consisted of the net cash provided by financing activities

of $4,080,202 from continuing operations and the net cash of $648,405 from discontinued operations.

The total net cash provided by financing

activities primarily consisted of:

(1) gross proceeds from our June 2019 Offering of $5.1 million;

(2) release of escrow

receivable of $600,000;

(3) net proceeds from short-term borrowings from related parties and affiliates of $177,266 for the daily

operation of Jinkailong, partially offset by (4) payments of finance lease liabilities to financial institutions of $975,958;

(5) repayments

of borrowings from financial institutions and third parties of $749,610;

and (6) repayment of borrowings from stockholders of $817,294.

Off-Balance Sheet Arrangements

As of the date of this Report, we have

the following off-balance sheet arrangements that are likely to have a future effect on our financial condition, revenues or expenses,

As of the date of this Report,

we have the following off-balance sheet arrangements that are likely to have a future effect on our financial condition, revenues or expenses,

results of operations and liquidity:

Purchase Commitments

On January 19 and February 22,

2021, we entered into two purchase contracts with an automobile dealer to purchase a total of 700 automobiles for the amount of approximately

$11.6 million.

Pursuant to the contracts, we are required to purchase 350 automobiles in cash with the amount of approximately $5.8 million.

The remaining 350 automobiles purchase commitment with the amount of approximately $5.8 million shall be purchased with financing option

through the dealer’s designated financial institutions.

As of the date of this Report, 200 automobiles have been purchased in cash

and delivered to us.

As we are in process of getting approval from the dealer’s designated financial institutions in financing the

350 automobiles’

purchase, there is no clear timing schedule for completing the remaining purchase commitment with this automobile

However, we expect the purchase to be completed by the end of 2021.

Contingent Liabilities

We are exposed to credit risk as we are

required by certain financial institutions to provide guarantee on the lease/loan payments (including principal and interests)

Contingent liabilities for automobile purchasers

We are exposed to credit

risk as we are required by certain financial institutions to provide guarantee on the lease/loan payments (including principal and interests)

of the automobile purchasers referred by us.

As of March 31, 2020, the maximum contingent liabilities we would be exposed to was approximately $18,627,000 (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.

As of March 31,

2020, approximately $1,431,000, 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.

Purchase Commitments

As of March 31, 2020, we had a purchase

commitment of 50 automobiles for a total purchase price of approximately $699,000.

These purchase transactions will be completed

by the end of 2020, which will lead to an increase in our inventory and cash outflow in operating activities.

We do not believe our business and operations

have been materially affected by inflation.

As of March 31, 2021, the maximum contingent liabilities the we would be exposed to

was approximately $12,763,000 (including approximately $68,000 related to our 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.

2021, approximately $3,890,000, including interests of $233,000, due to financial institutions, of all the automobile purchases we serviced

were past due.

Contingent liability of Jinkailong

On May 25, 2018, Chengdu

Industrial Impawn Co., Ltd (“Impawn”) signed a pledge and pawn contract (the “Master Contact”) with Langyue, pursuant

to which, Impawn shall provide loans to Langyue up to RMB20 million (approximately $2.9 million).

In connection with the Master Contract,

Jinkailong entered into a guaranty with Impawn and agreed to provide guarantee on all the payments (including principal, interests, compensations

and other expenses) of Langyue jointly and severally with seven other guarantors, one of which is a shareholder of Jinkailong.

used RMB7,019,652 (approximately $1,003,000) of the loans from Impawn and re-loaned it to automobile purchasers referred by Jinkailong

from June 2018 to September 2018, which were also guaranteed by Jinkailong.

Langyue did not timely pay

Impawn the monthly installment for June 2020.

In July 2020, Impawn sent the Collection Letter and Notice to Langyue to

demand payment of the interest and penalty of RMB100,300 (approximately $14,330).

On September 18, 2020, Impawn initiated a

legal action in front of the Court for an order to collect and enforce the repayment of the total outstanding principals, interest and

penalty for an aggregate of RMB9,992,728 (approximately $1,428,000) and other expenses by freezing all bank accounts of the Langyue and

all related guarantors.

On October 14, 2020, the cash in the bank of Jinkailong, with total amount of RMB175,335 (approximately $25,050)

were frozen by the Court and became restricted cash accordingly.

On December 24, 2020,

Jinkailong, a shareholder of Jinkailong and Impawn signed a settlement agreement (“Settlement Agreement”).

Impawn agreed to

release the pledge of Jinkailong’s 75 automobiles, provided that Jinkailong and such shareholder repay an aggregate of RMB4,026,593.66

(approximately $617,000) in monthly installments over 35 months.

In addition, upon the initial payment of RMB600,000 (approximately $92,000)

by Jinkailong and such shareholder, Impawn will request the court to release the frozen bank accounts of Jinkailong.

The Settlement

Agreement further provides that it does not release the guarantee obligations of Jinkailong and in the event Langyue’s loan is not

fully repaid at the end of the 35 months, Impawn reserves the right to pursue further actions against Jinkailong and such shareholder

for the outstanding balance of the loan.

So Jinkailong recorded the additional $109,000 for the difference between the total amount to

be paid pursuant to the Settle Agreement and the remaining principals of loans from Impawn as guarantee expenses in the consolidated financial

Jinkailong shall collect monthly installment payments from online ride-hailing drivers who lease those 75 automobiles to repay

for the remaining balance of Impawns and recognize guarantee expenses if any.

As of March 31, 2021, the original maximum contingent

liabilities related to the loans from Langyue to automobile purchasers which Jinkailong would be exposed to was approximately RMB2,163,000

(approximately $330,000), which has been included in the amount of contingent liabilities of automobile purchasers as mentioned above.

However, as Jinkailong has undertaken the joint and several liability guarantee for all of Langyue’s loans from Impawn, Jinkailong

may be required to pay all the outstanding balance of $1,346,000 to Impawn in the future.

As of January 7, 2021,

none of the bank accounts are restricted.

We do not believe our business

and operations have been materially affected by inflation.

Critical Accounting Policies

We prepare our consolidated financial statements

in accordance with U.S GAAP.

These accounting principles require us to make judgments, estimates and assumptions on the reported

amounts of assets and liabilities at the end of each fiscal period, and the reported amounts of revenues and expenses during each

fiscal period.

We continually evaluate these judgments and estimates based on our past experience, knowledge and assessments of

current business and other conditions, our expectations regarding the future based on available information and assumptions.

The selection of critical accounting policies,

the judgments and other uncertainties affecting the application of those policies and the sensitivity of reported results to changes

in conditions and assumptions are factors that should be considered when reviewing our financial statements.

We believe the following

accounting policies involve the most significant assumptions and estimates used in the preparation of our consolidated financial

We prepare our consolidated

financial statements in accordance with U.S GAAP.

These accounting principles require us to make judgments, estimates and assumptions

on the reported amounts of assets and liabilities at the end of each fiscal period, and the reported amounts of revenues and expenses

during each fiscal period.

We continually evaluate these judgments and estimates based on our past experience, knowledge and assessments

of current business and other conditions, our expectations regarding the future based on available information and assumptions.

The selection of critical

accounting policies, the judgments and other uncertainties affecting the application of those policies and the sensitivity of reported

results to changes in conditions and assumptions are factors that should be considered when reviewing our financial statements.

the following accounting policies involve the most significant assumptions and estimates used in the preparation of our consolidated financial

Use of estimates

In presenting the consolidated financial

statements in accordance with U.S.

In presenting the consolidated

financial statements in accordance with U.S.

GAAP, management make estimates and assumptions that affect the amounts reported and related

Estimates, by their nature, are based on judgement and available information.

Accordingly, actual results could differ

from those estimates.

Accordingly, actual results could differ from

those estimates.

On an ongoing basis, management reviews these estimates and assumptions using the currently available information.

Changes in facts and circumstances may cause the Company to revise its estimates.

we base our estimates on past experience and

on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about

the carrying values of assets and liabilities.

Estimates are used when accounting for items and matters including, but not limited

to, revenue recognition, residual values, lease classification and liabilities, finance lease receivables, inventory obsolescence,

right-of-use assets, determinations of the useful lives and valuation of long-lived assets, estimates of allowances for doubtful

accounts and prepayments, estimates of impairment of intangible assets, valuation of deferred tax assets, estimated fair value

used in business acquisitions, valuation of derivative liabilities and other provisions and contingencies.

in facts and circumstances may cause us to revise our estimates.

we base our estimates on past experience and on various other assumptions

that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, residual values, lease classification

and liabilities, finance lease receivables, inventory obsolescence, right-of-use assets, determinations of the useful lives and valuation

of long-lived assets, estimates of allowances for doubtful accounts and prepayments, estimates of impairment of intangible assets and

goodwill, valuation of deferred tax assets, estimated fair value used in business acquisitions, valuation of derivative liabilities, allocation

of fair value of derivative liabilities, issuance of common stock and warrants exercised and other provisions and contingencies.

Fair values of financial instruments

Accounting Standards Codification (“ASC”)

Topic 825, Financial Instruments (“Topic 825”) requires disclosure of fair value information of financial instruments,

whether or not recognized in the balance sheets, for which it is practicable to estimate that value.

In cases where quoted market

prices are not available, fair values are based on estimates using present value or other valuation techniques.

Accounting Standards Codification

(“ASC”) Topic 825, Financial Instruments (“Topic 825”) requires disclosure of fair value information of financial

instruments, whether or not recognized in the balance sheets, for which it is practicable to estimate that value.

In cases where quoted

market prices are not available, fair values are based on estimates using present value or other valuation techniques.

Those techniques

9 unchanged sentences

Property and equipment

Property and equipment primarily consists

of computer equipment, which is stated at cost less accumulated depreciation less any provision required for impairment in value.

Property and equipment primarily

consists of computer equipment, which is stated at cost less accumulated depreciation less any provision required for impairment in value.

Depreciation is computed using the straight-line method with no residual value based on the estimated useful life.

Goodwill represents the excess

of the consideration paid of an acquisition over the fair value of the net identifiable assets of the acquired subsidiaries at the date

of acquisition.

Goodwill is not amortized and is tested for impairment at least annually, more often when circumstances indicate impairment

may have occurred.

Goodwill is carried at cost less accumulated impairment losses.

If impairment exists, goodwill is immediately written

off to its fair value and the loss is recognized in the consolidated statements of operations and comprehensive loss.

Impairment losses

on goodwill are not reversed.

We review the carrying value

of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist annually or more frequently

if events and circumstances indicate that it is more likely than not that an impairment has occurred.

We assess qualitative factors to

determine whether it is necessary to perform the two-step in accordance with ASC 350-20.

If we believe, as a result of the quantitative

carrying amount, the two-step quantities impairment test described below is required.

The first step compares the

fair values of each reporting unit to its carrying amount, including goodwill.

If the fair value of each reporting unit exceeds its carrying

amount, goodwill is not considered to be impaired and the second step will not be required.

If the carrying amount of

a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting

unit’s goodwill.

The implied fair value of goodwill is determined in a manner similar to accounting for a business acquisition with

the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit.

of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill.

Estimating fair value is performed by utilizing various valuation techniques, with the primary technique being a discounted cash flow.

If impairment exists, goodwill

is immediately written off to its fair value and the loss is recognized in the consolidated statements of operations and comprehensive

Impairment losses on goodwill are not reversed.

Derivative liabilities

A contract is designated as an asset or

a liability and is carried at fair value on a company’s balance sheet, with any changes in fair value recorded in a company’s

results of operations.

We then determine which options, warrants and embedded features require liability accounting and records

the fair value as a derivative liability.

A contract is designated

as an asset or a liability and is carried at fair value on a company’s balance sheet, with any changes in fair value recorded in

a company’s results of operations.

We then determine which options, warrants and embedded features require liability accounting

and records the fair value as a derivative liability.

The changes in the values of these instruments are shown in the accompanying consolidated

1 unchanged sentence

Revenue recognition

We have adopted ASC 606 on April 1,

2018 using the modified retrospective approach.

ASC 606 establishes principles for reporting information about the nature, amount,

timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers.

The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount

that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as

performance obligations are satisfied.

It also requires us to identify contractual performance obligations and determine whether

revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer.

To achieve that core principle, we apply

the five steps defined under ASC 606:

(i) identify the contract(s) with a customer, (ii) identify the performance obligations in

the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the

contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

We account for a contract with a customer

when the contract is committed in writing, the rights of the parties, including payment terms, are identified, the contract has

commercial substance and consideration to collect is substantially probable.

We have assessed the impact of the guidance

by reviewing our existing customer contracts and current accounting policies and practices to identify differences that will result

from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments,

We recognize our revenue

under ASC 606.

ASC 606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and

cash flows arising from the entity's contracts to provide goods or services to customers.

The core principle requires an entity to recognize

revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled

to receive in exchange for those goods or services recognized as performance obligations are satisfied.

It also requires us to identify

contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when

control of goods and services transfers to a customer.

To achieve that core principle,

we apply the five steps defined under ASC 606:

(i) identify the contract(s) with a customer, (ii) identify the performance

obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations

in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

We account for a contract

with a customer when the contract is committed in writing, the rights of the parties, including payment terms, are identified, the contract

has commercial substance and consideration to collect is substantially probable.

We have assessed the impact

of the guidance by reviewing our existing customer contracts and current accounting policies and practices to identify differences that

will result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments,

transfer of control and principal versus agent considerations.

Based on the assessment, we concluded that there was no change to

the timing and pattern of revenue recognition for its current revenue streams in scope of ASC 606 and therefore there was no material

changes to our consolidated financial statements upon adoption of ASC 606.

Based on the assessment, we concluded that there was no change to the timing

and pattern of revenue recognition for its current revenue streams in scope of ASC 606 and therefore there was no material changes to

our consolidated financial statements upon adoption of ASC 606.

Automobile Transaction and Related Services

Sales of automobiles –

revenue from sales of automobiles to the customers of Jinkailong, Hunan Ruixi and Mashang Chuxing.

We generate revenue from sales of automobiles to the customers of Jinkailong, Hunan Ruixi and Mashang Chuxing.

The control over the automobile

is transferred to the purchaser along with the delivery of automobile.

The amount of the revenue is based on the sale price agreed

by Hunan Ruixi or Yicheng and the counterparties, including Jinkailong and Mashang Chuxing, who act on behalf of their customers.

We recognize revenues when the automobile is delivered and control is transferred to the purchaser at a point in time.

Service fees from automobile purchase services

Services fees from automobile purchase services are paid by automobile purchasers for a series of the services provided

to them throughout the purchase process such as credit assessment, preparation of financing application materials, assistance with

closing of financing transactions, license and plate registration, payment of taxes and fees, purchase of insurance, installment

is transferred to the purchaser along with the delivery of automobiles.

The amount of the revenue is based on the sale price agreed by

Hunan Ruixi or Yicheng and the counterparties, including Jinkailong, who act on behalf of their customers.

We recognize revenues when

an automobile is delivered and control is transferred to the purchaser.

Accounts receivable related to the revenue are being collected over 36 to 48 months.

The interest component is included in the non-current

portion of the accounts receivable.

Operating lease revenues

from automobile rentals –

We generate revenue from sub-leasing automobiles from some online ride-hailing drivers or leasing our

own automobiles.

We recognize revenue wherein an automobile is transferred to the leasee and the leasee has the ability to control the

asset, is accounted for under ASC Topic 842.

Rental transactions are satisfied over the rental period.

Rental periods are short term in

nature, generally are twelve months or less.

Service fees from management

and guarantee services –

Over 95% of our customers are online ride-hailing drivers.

The drivers sign affiliation agreements with

us, pursuant to which we provide them with management and guarantee services during the affiliation period.

Service fees for management

and guarantee services are paid by such automobile purchasers on a monthly basis for the management and guarantee services provided during

the affiliation period.

We recognize revenue over the affiliation period when performance obligations are completed.

Financing revenues –

Interest income from the lease arising from our sales-type leases and bundled lease arrangements is recognized in financing revenues over

the lease term based on the effective rate of interest in the lease.

Service fees from automobile

purchase services –

Services fees from automobile purchase services are paid by automobile purchasers for a series of the services

provided to them throughout the purchase process such as credit assessment, preparation of financing application materials, assistance

with closing of financing transactions, license and plate registration, payment of taxes and fees, purchase of insurance, installment

of GPS devices, ride-hailing driver qualification and other administrative procedures.

The amount of these fees is based on the

sales price of the automobiles and relevant services provided.

We recognize revenue when all the services are completed and the

automobile is delivered to the purchaser at a point in time.

Facilitation fees from automobile transactions

Facilitation fees from automobile purchase transactions are paid by our customers including third-party sales teams or

the automobile purchasers for the facilitation of the sales and financing of automobiles.

The amount of these fees is based on the sales

price of the automobiles and relevant services provided.

We recognize revenue when all the services are completed and an automobile is

delivered to the purchaser at a point in time.

Accounts receivable related to the revenue are being collected over 36 to 48 months.

The interest component is included in the non-current

portion of the accounts receivable.

Facilitation fees from automobile

transactions –

Facilitation fees from automobile purchase transactions are paid by our customers including third-party sales teams

or the automobile purchasers for the facilitation of the sales and financing of automobiles.

We attract automobile purchasers through

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We recognize revenue from facilitation fees when the titles are transferred to the purchasers at a point in time.

The amount of

fees is based on the type of automobile and negotiation with each sales team or automobile purchaser.

The fees charged to third-party

sales teams or automobile purchasers are paid before the automobile purchase transactions are consummated.

These fees are non-refundable

upon the delivery of automobiles.

Service fees from management and guarantee

services –

Over 95% of our customers are drivers of Didi, the largest ride-hailing service platform in China.

sign affiliation agreements with us, pursuant to which we provide them with management and guarantee services during the affiliation

Service fees for management and guarantee services are paid by such automobile purchasers on a monthly basis for the management

and guarantee services provided during the affiliation period.

We recognize revenue over the affiliation period when performance

obligations are completed.

Financing revenues –

Interest income

from the lease arising from our sales-type leases and bundled lease arrangements are recognized in financing revenues over the

lease term based on the effective rate of interest in the lease.

Operating lease revenues from automobile

rentals –

We generate revenue from sub-leasing automobiles from some online ride-hailing drivers or leasing our own automobiles.

We recognize revenue wherein the automobile is transferred to the leasee and the leasee has the ability to control the asset, is

accounted for under ASC Topic 842.

Rental transactions are satisfied over the rental period.

Rental periods are short term in nature,

generally are twelve months or less.

On April 1, 2019, we adopted ASC Topic

This update, as well as additional amendments and targeted improvements issued in 2018 and early 2019, supersedes existing

lease accounting guidance found under ASC 840.

The accounting for lessors does not fundamentally change with this update except

for changes to conform and align guidance to the lessee guidance, as well as to the revenue recognition guidance in ASU 2014-09,

Revenue from Contracts with Customers (ASC Topic 606).

Some of these conforming changes, such as those related to the definition

of lease term and minimum lease payments, resulted in certain lease arrangements, that would have been previously accounted for

as operating leases, to be classified and accounted for as sales-type leases with a corresponding up-front recognition of automobile

sales revenue when the lessee obtained control over the automobile.

The two primary accounting provisions we

use to classify transactions as sales-type or operating leases are:

(i) a review of the lease term to determine if it is for

the major part of the economic life of the underlying equipment (defined as greater than 75%);

and (ii) a review of the present

value of the lease payments to determine if they are equal to or greater than substantially all of the fair market value of the

equipment at the inception of the lease (defined as greater than 90%).

Automobile included in arrangements meeting these conditions

are accounted for as sales-type leases.

For sales-type leases, we recognize sales equal to the present value of the minimum lease

payments discounted using the implicit interest rate in the lease and cost of sales equal to carrying amount of the asset being

leased and any initial direct costs incurred, less the present value of the unguaranteed residual.

Interest income from the lease

is recognized in financing revenues over the lease term.

Automobile included in arrangements that do not meet these conditions

are accounted for as operating leases and revenue is recognized over the term of the lease.

We exclude from the measurement of our

lease revenues any tax assessed by a governmental authority that is both imposed on and concurrent with a specific revenue-producing

The amount of fees is

based on the type of automobile and negotiation with each sales team or automobile purchaser.

The fees charged to third-party sales teams

or automobile purchasers are paid before the automobile purchase transactions are consummated.

These fees are non-refundable upon the

delivery of automobiles.

Online ride-hailing platform service revenue

We generate revenue from

providing services to online ride-hailing drivers (“Drivers”) to assist them in providing transportation services to riders

("Riders") looking for taxi/ride-hailing services.

We earn commissions for each completed order in an amount equal to the difference

between an upfront quoted fare and the amount earned by a Driver based on actual time and distance for the ride charged to the Rider.

As a result, we bear a single performance obligation in the transaction of connecting Drivers with Riders to facilitate the completion

of a successful transportation service for Riders.

We recognize revenue upon completion of a ride as the single performance obligation

is satisfied and we have the right to receive payment for the services rendered upon the completion of the ride.

We evaluate the presentation

of revenue on a gross or net basis based on whether we control the service provided to the Rider and are the principal (i.e.

“gross”),

or we arrange for other parties to provide the service to the Rider and are an agent (i.e.

“net”).

Since we are not primarily

responsible for ride-hailing services provided to Riders, nor do we have inventory risk related to the services, we recognize revenue

at net basis.

We account for leases in

accordance with ASC 842.

The two primary accounting provisions we use to classify transactions as sales-type or operating leases are:

(i) a review of the lease term to determine if it is for the major part of the economic life of the underlying equipment (defined

as greater than 75%);

and (ii) a review of the present value of the lease payments to determine if they are equal to or greater than

substantially all of the fair market value of the equipment at the inception of the lease (defined as greater than 90%).

Automobile included

in arrangements meeting these conditions are accounted for as sales-type leases.

For sales-type leases, we recognize sales equal to the

present value of the minimum lease payments discounted using the implicit interest rate in the lease and cost of sales equal to carrying

amount of the asset being leased and any initial direct costs incurred, less the present value of the unguaranteed residual.

income from the lease is recognized in financing revenues over the lease term.

Automobile included in arrangements that do not meet these

conditions are accounted for as operating leases and revenue is recognized over the term of the lease.

We exclude from the measurement

of our lease revenues any tax assessed by a governmental authority that is both imposed on and concurrent with a specific revenue-producing

transaction and collected from a customer.

We consider the economic life of most of

automobile to be three to four years, since this represents the most frequent contractual lease term for its automobile and the

automobile will be used for Didi driving services.

We believe three to four years is representative of the period during which

the automobile is expected to be economically usable, with normal service, for the purpose for which it is intended.

A portion of our direct sales of automobile

to end customers are made through bundled lease arrangements which typically include automobile, services (automobile purchase

We consider the economic

life of most of automobile to be three to five years, since this represents the most frequent contractual lease term for its automobile

and the automobile will be used for online ride-hailing services.

We believe three to five years is representative of the period during

which the automobile is expected to be economically usable, with normal service, for the purpose for which it is intended.

A portion of our direct sales

of automobile to end customers are made through bundled lease arrangements which typically include automobile, services (automobile purchase

services, facilitation fees, and management and guarantee services) and financing components where the customer pays a single negotiated

fixed minimum monthly payment for all elements over the contractual lease term.

Revenues under these bundled lease arrangements

are allocated considering the relative standalone selling prices of the lease and non-lease deliverables included in the bundled

arrangement and the financing components.

Lease deliverables include the automobile and financing, while the non-lease deliverables

generally consist of the services and repayment of advanced fees made on behalf of its customers.

We consider the fixed payments

for purposes of allocation to the lease elements of the contract.

The fixed minimum monthly payments are multiplied by the number

of months in the contract term to arrive at the total fixed lease payments that the customer is obligated to make over the lease

Amounts allocated to the automobile and financing elements are then subjected to the accounting estimates under ASC 842 to

ensure the values reflect standalone selling prices.

The remainder of any fixed payments are allocated to non-lease elements (automobile

purchase services, facilitation fees, and management and guarantee services), for which these revenues are recognized in a manner

consistent with the guidance for service fees from automobile purchase services, facilitation fees from automobile transactions,

and service fees from management and guarantee services as discussed above.

Our lease pricing interest rates, which

are used in determining customer payments in a bundled lease arrangement, are developed based upon the local prevailing rates in

the marketplace where its customer will be able to obtain an automobile loan under similar terms from the bank.

We reassess our

pricing interest rates quarterly based on changes in the local prevailing rates in the marketplace.

As of December 31, 2019,

our pricing interest rate is 6.0% per annum.

Online Discontinued P2P Lending Services

(Discontinued Operations)

Transaction fees –

Prior to our P2P

lending business being discontinued on October 17, 2019, transaction fees were paid by borrowers to us for the work we perform

through its platform.

The amount of these fees was based upon the loan amount and the maturity date of the loan.

The fees charged

to borrowers were paid upon (i) disbursement of the proceeds for loans which accrued interest on a monthly basis or (ii) full

payment of principal and interest of loans which accrue interest on a daily basis.

These fees were non-refundable upon the issuance

We recognized the revenue when loans were disbursed to borrowers or borrowers repaid their principal or interest of loans.

Service fees - We charged investors service

fees on their actual investment payments.

We generally received the service fees upon the investors’

receipt of their investment

We recognized the revenue when loans were repaid and investor received their investment income.

Website development revenues - Revenue

allocated to website development services is recognized as the service is performed over time using our efforts or inputs to the

satisfaction of a performance obligation using an input measure method, under which the total value of revenue is recognized on

the basis of the percentage that total cost to date bears to the total expected costs.

We consider labor costs and related outsource

labor costs for the input measurement as the best available indicator of the progress, pattern and timing in which contract obligations

are fulfilled.

Provisions for estimated losses, if any,

on uncompleted contracts are recorded in the period in which such losses become probable based on the current contract estimates.

In instances where substantive acceptance provisions are specified in customer contracts, revenues are deferred until all acceptance

criteria have been met.

To date, we have not incurred a material loss on any contracts.

However, as a policy, provisions for estimated

losses on such engagements will be made during the period in which a loss becomes probable and can be reasonably estimated.

We generally do not enter into arrangements

with multiple deliverables for website development services contracts.

If the deliverables have standalone value at contract inception,

we account for each deliverable separately.

Prior to March 31, 2019, leases are

classified as either capital or operating leases as lessee.

Leases that transfer substantially all the benefits and risks incidental

to the ownership of assets are accounted for as if there was an acquisition of an asset and incurrence of an obligation at the

inception of the lease.

All other leases are accounted for as operating leases and are included in the consolidated statements

of operations on a straight-line basis over the term of the leases.

Leases are classified as either operating lease, sales-type

lease, or direct finance leases as lessor.

On April 1, 2019, we adopted ASC Topic

This update supersedes existing lease accounting guidance found under ASC 840 and requires the recognition of right-of-use

(“ROU”) assets and lease obligations (“lease liabilities”) by lessees for those leases currently classified

as operating leases under existing lease guidance.

Leases will be classified as either finance or operating, with classification

affecting the pattern of expense recognition.

Short term leases with a term of 12 months or less are not required to be recognized.

Lessor accounting is generally the same under ASC 842 as compared to ASC 840 except with an additional requirement to assess collectability

to support classification as a direct financing lease.

Also, in order to derecognize the asset and record revenue, collection of

payments due must be probable for sales-type leases and the lessees of sales-type leases will need to obtain control over the leased

We adopted the practical expedient that

allows lessees to treat the lease and non-lease components of a lease a single lease component.

The impact of the adoption of the

ASC 842, as of April 1, 2019, we recognized approximately $246,227 ROU assets and approximately $247,325 lease liabilities,

primarily related to leases of facilities.

The adoption of this standard resulted in the recording of operating lease assets and

operating lease liabilities as of April 1, 2019, with no related impact on our statement of changes in stockholders' equity

or consolidated statements of operations and comprehensive loss.

During the year ended March 31, 2020, we

entered into certain agreements as a lessor under which we leased automobiles to short-term (usually under 12 months) car service

We also enter into certain agreements as a lessee to rent automobiles and to conduct our automobiles rental operations.

If any of the following criteria are met, we classify the lease as a finance lease (as a lessee) or as a direct financing or sales-type

lease (both as a lessor):

The lease transfers ownership of the underlying

asset to the lessee by the end of the lease term;

The lease grants the lessee an option

to purchase the underlying asset that we are reasonably certain to exercise;

The lease term is for 75% or more of the

remaining economic life of the underlying asset, unless the commencement date falls within the last 25% of the economic life of

the underlying asset;

The present value of the sum of the lease

payments equals or exceeds 90% of the fair value of the underlying asset;

The underlying asset is of such a specialized

nature that it is expected to have no alternative use to the lessor at the end of the lease term.

Leases that do not meet

any of the above criteria are accounted for as operating leases.

Revenues under these bundled lease arrangements are allocated

considering the relative standalone selling prices of the lease and non-lease deliverables included in the bundled arrangement and the

financing components.

Lease deliverables include the automobile and financing, while the non-lease deliverables generally consist of the

services and repayment of advanced fees made on behalf of its customers.

We consider the fixed payments for purposes of allocation to

the lease elements of the contract.

The fixed minimum monthly payments are multiplied by the number of months in the contract term to

arrive at the total fixed lease payments that the customer is obligated to make over the lease term.

Amounts allocated to the automobile

and financing elements are then subjected to the accounting estimates under ASC 842 to ensure the values reflect standalone selling prices.

The remainder of any fixed payments are allocated to non-lease elements (automobile purchase services, facilitation fees, and management

and guarantee services), for which these revenues are recognized in a manner consistent with the guidance for service fees from automobile

purchase services, facilitation fees from automobile transactions, and service fees from management and guarantee services as discussed

Our lease pricing interest

rates, which are used in determining customer payments in a bundled lease arrangement, are developed based upon the local prevailing rates

in the marketplace where its customer will be able to obtain an automobile loan under similar terms from the bank.

We reassess our pricing

interest rates quarterly based on changes in the local prevailing rates in the marketplace.

As of March 31, 2021, our pricing interest

rate is 6.0% per annum.

Share-based awards

Share-based awards granted

to the our employees are measured at fair value on grant date and share-based compensation expense is recognized (i) immediately

at the grant date if no vesting conditions are required, or (ii) using the accelerated attribution method, net of estimated forfeitures,

over the requisite service period.

The fair value of restricted shares is determined with reference to the fair value of the underlying

At each date of measurement,

we review internal and external sources of information to assist in the estimation of various attributes to determine the fair value of

the share-based awards granted by us, including but not limited to the fair value of the underlying shares, expected life, expected volatility

and expected forfeiture rates.

We are required to consider many factors and make certain assumptions during this assessment.

the assumptions used to determine the fair value of the share-based awards changes significantly, share-based compensation expense may

differ materially in the future from that recorded in the current reporting period.

We account for leases in accordance with ASC 842.

Beginning in the

year ended March 31, 2020, we entered into certain agreements as a lessor under which we leased automobiles to short-term (usually

under twelve months) car service drivers.

We also enter into certain agreements as a lessee to lease automobiles and to conduct our automobiles

rental operations.

If any of the following criteria are met, we classify the lease as a finance lease (as a lessee) or as a direct financing

or sales-type lease (both as a lessor):

The lease transfers ownership of the underlying asset to the lessee by the end of the lease term;

The lease grants the lessee an option to purchase the underlying asset that the Company is reasonably certain to exercise;

The lease term is for 75% or more of the remaining economic life of the underlying asset, unless the commencement date falls within the last 25% of the economic life of the underlying asset;

The present value of the sum of the lease payments equals or exceeds 90% of the fair value of the underlying asset;

The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.

Leases that do not meet any

of the above criteria are accounted for as operating leases.

We combine lease and non-lease

components in its contracts under Topic 842, when permissible.

Finance and operating lease ROU assets

and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

Since the implicit rate for our leases is not readily determinable, we use our incremental borrowing rate based on the information

available at the commencement date in determining the present value of lease payments.

The incremental borrowing rate is the rate

of interest that we would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar

economic environment and over a similar term.

Lease terms used to calculate the present

value of lease payments generally do not include any options to extend, renew, or terminate the lease, as we do not have reasonable

Finance and operating lease

ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

Since the implicit rate for our leases is not readily determinable, we use our incremental borrowing rate based on the information available

at the commencement date in determining the present value of lease payments.

The incremental borrowing rate is the rate of interest that

we would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and

over a similar term.

Lease terms used to calculate

the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as we do not have reasonable

certainty at lease inception that these options will be exercised.

We generally consider the economic life of its operating lease

ROU assets to be comparable to the useful life of similar owned assets.

We have elected the short-term lease exception, therefore

operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less.

Its leases generally

do not provide a residual guarantee.

We generally consider the economic life of its operating lease ROU

assets to be comparable to the useful life of similar owned assets.

We have elected the short-term lease exception, therefore operating

lease ROU assets and liabilities do not include leases with a lease term of twelve months or less.

Its leases generally do not provide

a residual guarantee.

The operating lease ROU asset also excludes lease incentives.

Lease expense is recognized

on a straight-line basis over the lease term.

We review the impairment of our ROU assets

consistent with the approach applied for our other long-lived assets.

We review the recoverability of its long-lived assets when

events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable.

Lease expense is recognized on a straight-line basis

over the lease term.

We review the impairment

of our ROU assets consistent with the approach applied for our other long-lived assets.

We review the recoverability of its long-lived

assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable.

The assessment

of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future

pre-tax cash flows of the related operations.

We have elected to include the carrying amount of operating lease liabilities in

any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows.

of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax

cash flows of the related operations.

We have elected to include the carrying amount of operating lease liabilities in any tested asset

group and include the associated operating lease payments in the undiscounted future pre-tax cash flows.

Quantitative and Qualitative Disclosures about Market Risk

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What changed 10-K

Item 7. Management’s Discussion and Analysis