What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-06-27 compared with 2023-07-13 · 1593 added, 1139 removed, 475 unchanged (85% of the section changed)

Financial Statements and Supplementary Data

The financial statements required by this item begin on page F-1 hereof.

Index to Financial Statements

Reports of Independent Registered Public Accounting Firm (PCAOB ID 5395 )

financial statements required by this item begin on page F-1 to F-40 hereof.

to Financial Statements

Report of Independent Registered Public Accounting Firm (PCOAB ID:

Financial Statements:

Consolidated Balance Sheets as of March 31, 2023 and 2022

Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended March 31, 2023 and 2022

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended March 31, 2023 and 2022

Consolidated Statements of Cash Flows for the Years Ended March 31, 2023 and 2022

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Consolidated Balance Sheets as of March 31, 2024 and 2023 F-3

Consolidated Statements of Operations and Comprehensive Loss for the Years Ended March 31, 2024 and 2023 F-4

Consolidated Statements of Changes in Equity for the Years Ended March 31, 2024 and 2023 F-5

Consolidated Statements of Cash Flows for the Years Ended March 31, 2024 and 2023 F-6

Notes to Consolidated Financial Statements F-7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Stockholders and Board of Directors of

1 unchanged sentence

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Senmiao Technology Limited (the “Company”) as of March 31, 2023, the related consolidated statement of operation, comprehensive loss, changes in stockholders’ equity and cash flow for the year ended March 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2023, and the results of its operation and its cash flow for the year ended March 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated

balance sheets of Senmiao Technology Limited (the “Company”) as of March 31, 2024 and 2023, the related consolidated statements

of operations and comprehensive loss , changes in equity and cash flows for each of the two years in the period ended March 31,

2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated

financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024 and 2023, and

the results of its operations and its cash flows for each of the two years in the period ended March 31, 2024, in conformity with accounting

principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 2, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations.

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 2, the Company has a significant

working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management’s plans in

regard to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that might

result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

These financial statements are the

responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

We conducted our audits in accordance with

the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether

the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required

to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are

required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on

the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provide s a reasonable basis for our opinion.

Our audits included performing procedures to

assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing

procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and

disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and

significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current year audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

Critical audit matters are matters arising

from the current period audits of the consolidated financial statements that were communicated or required to be communicated to the

audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2)

involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

2 unchanged sentences

We have served as the Company’s auditor since 2018.

(such date takes into account the acquisition of certain assets of Friedman LLP by Marcum Asia CPAs LLP effective September 1, 2022)

New York, New York

July 12, 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Senmiao Technology Limited

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Senmiao Technology Limited (collectively, the “Company”) as of March 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended March 31, 2022, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Consideration of the Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.

As discussed in Note 2 to the consolidated financial statements, the Company had incurred significant working capital deficiency and accumulated deficit at March 31, 2022, net loss from continuing operations and net operating cash flows for the year ended March 31, 2022.

These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regards to these matters are also described in Note 2.

These consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

If the Company is unable to successfully obtain the necessary additional financial support as specified in Note 2, there could be a material adverse effect on the Company.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Friedman LLP

We have served as the Company’s auditor since 2018 through 2022

(such date takes into account the acquisition of certain assets of

Friedman LLP by Marcum Asia CPAs LLP effective September 1, 2022)

New York, New York

July 14, 2022

One Liberty Plaza, 165 Broadway, 21 st Floor, New York, NY 10006 p 212.842.7000

friedmanllp.com

Your livelihood, empowered.

An Independent Member Firm of DFK with offices worldwide.

June 27, 2024

SENMIAO TECHNOLOGY LIMITED

1 unchanged sentence

(Expressed in U.S.

dollar, except for the number of shares)

dollar, except for the number

Current assets

Cash and cash equivalents

Accounts receivable, net, current portion

Restricted cash

Accounts receivable, net

Accounts receivable, a related party

Finance lease receivables, net, current portion

Prepayments, other receivables and other assets, net

Due from related parties, current portion, net

Finance lease receivables, current

Prepayments, other receivables and other current assets, net

Due from related parties, net, current

Total current assets

4 unchanged sentences

Intangible assets, net

Accounts receivable, net, noncurrent

Finance lease receivables, net, noncurrent

Due from a related party, noncurrent

Finance lease receivable, non-current

Due from a related party, net, non-current

Other non-current assets

2 unchanged sentences

Current liabilities

Borrowings from a financial institution

Borrowings from a financial institution, current

Accounts payable

Advances from customers

Income tax payable

Accrued expenses and other liabilities

Due to related parties and affiliates

Operating lease liabilities

Due to related parties

Operating lease liabilities, current

Operating lease liabilities - related parties

Financing lease liabilities

Financing lease liabilities, current

Derivative liabilities

2 unchanged sentences

Other liabilities

Borrowings from a financial institution, non-current

Operating lease liabilities, non-current

7 unchanged sentences

Series A convertible preferred stock (par value $ 1,000 per share, 5,000 shares authorized;

1,641 and 5,000 shares issued and outstanding at March 31, 2023 and 2022, respectively)

991 and 1,641 shares issued and outstanding at March 31, 2024 and March 31, 2023, respectively)

Stockholders’ equity

Common stock (par value $ 0.0001 per share, 500,000,000 shares authorized;

7,743,040 and 6,186,783 shares issued and outstanding at March 31, 2023 and 2022, respectively) *

10,518,040 and 7,743,040 shares issued and outstanding at March 31, 2024 and March 31, 2023, respectively)*

Additional paid-in capital

4 unchanged sentences

( 1,672,005 )

( 1,247,099 )

Total Senmiao Technology Limited stockholders’ equity

2 unchanged sentences

* Giving retroactive effect to the 1-for-10 reverse stock split effected on April 6, 2022

The accompanying notes are an integral part of the consolidated financial statements

The accompanying notes are an integral part of the consolidated financial

SENMIAO TECHNOLOGY LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

(Expressed in U.S.

dollar, except for the number of shares)

For the Years Ended March 31,

dollar, except for the number

For the Years Ended

Revenues, a related party

8 unchanged sentences

( 6,590,001 )

Gross profit (loss)

( 2,088,195 )

Operating expenses

2 unchanged sentences

( 6,142,447 )

Provision for doubtful accounts, net of recovery

Allowance for credit losses

( 1,725,746 )

( 1,487,889 )

Impairments of inventories

Impairments of long-lived assets and goodwill

Stock-based compensation

Total operating expenses

5 unchanged sentences

Other income (expense)

Other income (expense), net

Other income, net

Interest expense

1 unchanged sentence

Change in fair value of derivative liabilities

Issuance cost incurred for issuing series A convertible preferred stock

Total other income, net

2 unchanged sentences

( 3,790,693 )

Income tax expense

Net loss from continuing operations

( 3,790,693 )

Income tax benefit

( 4,234,214 )

Loss from discontinued operations, net of applicable income taxes

( 3,790,693 )

Net gain from deconsolidation of VIEs - discontinued operations

Gain from discontinued operations

Net (loss) income

Net loss attributable to non-controlling interests from operations

Net loss attributable to the Company’s stockholders

$ ( 3,668,974 )

Net loss (income) attributable to non-controlling interests from continuing operations

$ ( 3,113,749 )

Net loss attributable to non-controlling interests from discontinued operations

Net loss attributable to the Company’s stockholders

$ ( 4,234,214 )

Net (loss) income

$ ( 3,790,693 )

Other comprehensive (loss) income

Other comprehensive loss

Foreign currency translation adjustment

( 1,103,510 )

Comprehensive (loss) income

Comprehensive loss

( 4,652,998 )

Total comprehensive (loss) income attributable to noncontrolling interests

( 4,894,203 )

Total comprehensive loss attributable to non-controlling interests

Total comprehensive loss attributable to stockholders

$ ( 4,125,407 )

$ ( 4,251,394 )

Weighted average number of common stock

Basic and diluted

Earning (loss) per share - basic and diluted*

Continuing operations

Discontinued operations

Net loss per share - basic and diluted*

* Giving retroactive effect to the 1-for-10 reverse stock split effected on April 6, 2022

The accompanying notes are an integral part of the consolidated financial statements

The accompanying notes are an integral part of the consolidated financial

SENMIAO TECHNOLOGY LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS

OF CHANGES IN EQUITY

For the Years Ended March 31, 2024 and 2023

(Expressed in U.S.

dollar, except for the number of shares)

dollar, except for the number

comprehensive

Non-controlling

BALANCE, March 31, 2021

March 31, 2022

$ ( 34,601,545 )

$ ( 109,454 )

Net income (loss)

Issuance of common stock and warrants in a registered direct offering, net of issuance costs

Issuance of restricted stock units

Exercise of Series A warrants into common stock

Fair value of derivative liabilities upon exercise of warrants

Issuance of common stock in purchase of XXTX’s remaining NCI

( 3,113,749 )

Issuance of common stock for consulting service

Foreign currency translation adjustment

Recognition of non-controlling interest from acquired equity interest of Sichuan Senmiao upon termination of the VIE agreement

Deconsolidation of discontinued operation

Additional shares of common stock round up adjustment due to retroactive effect of 1-for-10 reverse stock split

BALANCE, March 31, 2022

( 3,790,693 )

of preferred stock into common stock

exercise of November 2021 Investor warrants into common stock

value of derivative liabilities upon exercise of warrants

currency translation adjustment

( 1,137,645 )

( 1,103,510 )

Conversion of preferred stock into common stock

Cashless exercise of November 2021 Investor warrants into common stock

Fair value of derivative liabilities upon exercise of warrants

Foreign currency translation adjustment

March 31, 2023

( 37,715,294 )

( 1,247,099 )

BALANCE, March 31, 2023

( 3,668,974 )

( 4,234,214 )

*Giving retroactive effect to the 1-for-10 reverse stock split effected on April 6, 2022

The accompanying notes are an integral part of the consolidated financial statements

of preferred stock into common stock

of common stock for consulting service

of common stock in purchase of Hunan Ruixi’s NCI

currency translation adjustment

March 31, 2024

( 41,384,268 )

$ ( 1,672,005 )

* Giving retroactive effect to the 1-for-10 reverse stock split

effected on April 6, 2022

The accompanying notes are an integral part of the consolidated financial

SENMIAO TECHNOLOGY LIMITED

1 unchanged sentence

(Expressed in U.S.

dollar, except for the number of shares)

For the Years Ended March 31,

dollar, except for the number

For the Years Ended

Cash Flows from Operating Activities:

Net income (loss)

$ ( 4,234,214 )

Net income from discontinued operations

Net loss from continuing operations

$ ( 3,790,693 )

( 5,606,145 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation of property and equipment

Stock compensation expense

Issuance cost incurred for issuing series A convertible preferred stock

Stock-based compensation

Amortization of right-of-use assets

Amortization of intangible assets

Provision for doubtful accounts, net of recovery

Allowance for credit losses

Impairments of inventories

Impairments of long-lived assets and goodwill

Gain on disposal of equipment

Gain from lease modification

Change in fair value of derivative liabilities

( 1,711,889 )

( 6,951,482 )

Deferred tax benefit

Change in operating assets and liabilities

2 unchanged sentences

Finance lease receivables

Prepayments, other receivables and other assets

Prepayments, other receivables and other current assets

Due from a related party

Accounts payable

Advances from customers

Income tax payable

Accrued expenses and other liabilities

Due to a related party

Operating lease liabilities

Operating lease liabilities - related parties

Net cash provided by (used in) operating activities from continuing operations

( 9,036,114 )

Net cash used in operating activities from discontinued operations

Net Cash Provided by (Used in) Operating Activities

( 9,159,281 )

Net Cash Provided by Operating Activities

Cash Flows from Investing Activities:

1 unchanged sentence

( 1,151,076 )

( 3,223,992 )

Cash proceed from disposal of property and equipment

Cash received from disposal of property and equipment

Purchases of intangible assets

Cash released upon termination of a VIE

Net cash provided by (used in) investing activities from continuing operations

( 3,365,915 )

Net cash used in investing activities from discontinued operations

Net Cash Provided by (Used in) Investing Activities

( 3,477,125 )

Cash Flows from Financing Activities:

Net proceeds from issuance of common stock in registered direct offering

Net proceeds from issuance of common stock upon warrants exercised

Net proceeds from issuance of series A convertible preferred stock and warrants in a private placement offering

Borrowings from a financial institution

Repayments to related parties and affiliates

Repayments from related parties and affiliates

Loans to related parties and affiliates

Repayments of current borrowings from financial institutions

Principal payments of finance lease liabilities

Net cash provided by (used in) financing activities from continuing operations

Net Cash Provided by (Used in) Financing Activities

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

( 3,262,854 )

Cash and cash equivalents, beginning of the year

Cash and cash equivalents, end of the year

Net Cash Used in Financing Activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of the year

Cash, cash equivalents and restricted cash, end of the year

Supplemental Cash Flow Information

2 unchanged sentences

Non-cash Transaction in Investing and Financing Activities

Recognition of other receivables from Jinkailong upon deconsolidation

Settlement of accounts payable by a related party

Recognition of right-of-use assets and lease liabilities

Recognition of right-of-use assets and lease liabilities, related parties

Termination of right-of use assets and lease liabilities

Modification of right-of use assets and lease liabilities

Termination of right-of use assets and lease liabilities, related parties

Cashless exercise of November 2021 Investor warrants into common stock

Allocation of fair value of derivative liabilities for issuance of common stock

Allocation of fair value of derivative liabilities to additional paid in capital upon warrants exercised

Acquisition of XXTX'S minority interest with issuance of common stock at fair value

The accompanying notes are an integral part of the consolidated financial statements

The following tables provides a reconciliation

of cash, cash equivalent and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts

shown in the consolidated statements of cash flows:

Cash, cash equivalent, end of the year

Restricted cash, end of the year

Total cash, cash equivalent and restricted

cash shown in the consolidated statements of cash flows, end of the year

Cash, cash equivalent, beginning of the year

Restricted cash, beginning of the year

Total cash, cash equivalent and restricted

cash shown in the consolidated statements of cash flows, beginning of the year

The accompanying notes are an integral part of the consolidated financial

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND PRINCIPAL ACTIVITIES

Senmiao Technology Limited (the “Company”) is a U.S.

ORGANIZATION AND PRINCIPAL

Technology Limited (the “Company”) is a U.S.

holding company incorporated in the State of Nevada on June 8, 2017 .

The Company operates its business in two segments:

(i) automobile transaction and related services focusing on the online ride-hailing industry in the People’s Republic of China (“PRC” or “China”) through the Company’s wholly owned subsidiaries, Sichuan Senmiao Yicheng Assets Management Co., Ltd., formerly named Yicheng Financial Leasing Co., Ltd., a PRC limited liability company (“Yicheng”), Chengdu Corenel Technology Co., Ltd., a PRC limited liability company (“Corenel”), and its majority owned subsidiaries, Chengdu Jiekai Yunli Technology Co., Ltd.

(“Jiekai”), and Hunan Ruixi Financial Leasing Co., Ltd., a PRC limited liability company (“Hunan Ruixi”), and its equity investee company (an entity 35% owned by Hunan Ruixi) and former variable interest entity (“VIE”), Sichuan Jinkailong Automobile Leasing Co., Ltd., a PRC limited liability company (“Jinkailong”).

(ii) online ride-hailing platform services through its own platform (known as Xixingtianxia) as described further below, since October 2020, through Hunan Xixingtianxia Technology Co., Ltd., a PRC limited liability company (“XXTX”), which is a wholly owned subsidiary of Sichuan Senmiao Zecheng Business Consulting Co., Ltd.

(“Senmiao Consulting”), a PRC limited liability company and wholly-owned subsidiary of the Company.

The Company’s ride hailing platform enables qualified ride-hailing drivers to provide transportation services in Chengdu, Changsha, Guangzhou, and other 23 cities in China as of the filing date of these consolidated financial statements.

Hunan Ruixi holds a business license for automobile sales and financial leasing and has been engaged in automobile financial leasing services and automobile sales since March 2019 and January 2019, respectively.

Yicheng holds a business license for automobiles sale and has been engaged in automobile sales since June 2019.

Yicheng used to have a license of financial leasing, which has been terminated since June 2022.

The Company also has been engaged in operating leasing services through Hunan Ruixi and its equity investee company, Jinkailong since March 2019.

Jinkailong used to facilitate automobile sales and financing transactions for its clients, who are primarily ride-hailing drivers and provides them operating lease and relevant after-transaction services.

On September 11, 2020, Senmiao Consulting entered into an investment agreement relating to XXTX with all the original shareholders of XXTX (the “XXTX Investment Agreement”), pursuant to which Senmiao Consulting would make an investment of RMB 3.16 million (approximately $ 0.46 million) in XXTX in cash and obtain a 51 % equity interest.

As of the filing date of these consolidated financial statements, the Company had remitted the full amount of investment to XXTX pertained to above mentioned XXTX Investment Agreement.

On October 23, 2020, the registration procedures for the change in shareholders and registered capital were completed and XXTX became a majority owned subsidiary of Senmiao Consulting.

On February 5, 2021, Senmiao Consulting and all the original shareholders of XXTX entered into a supplementary agreement related to XXTX’s Investment agreement (the “XXTX Increase Investment Agreement”).

Under the XXTX Increase Investment Agreement, all the shareholders of XXTX agreed to increase the total registered capital of XXTX to RMB 50.8 million (approximately $ 7.40 million).

Senmiao Consulting shall pay another investment amounted to RMB 36.84 million (approximately $ 5.36 million) in cash in exchange of additional 27.74 % of XXTX’s equity interest.

As of the filing date of these consolidated financial statements, the Company had remitted approximately RMB 36.60 million ($ 5.33 million) to XXTX pertained to above mentioned XXTX Increase Investment Agreement.

On October 22, 2021, the Company, Senmiao Consulting, XXTX and its other shareholders further entered into a Share Swap Agreement (the “Share Swap Agreement”), pursuant to which the Company, through Senmiao Consulting, purchased all of the remaining equity interests the original shareholders hold in XXTX at a total purchase price of $ 3.5 million, payable in the Company’s shares of common stock, par value $ 0.0001 per share at a per share price of the average closing price of a share of common stock reported on the Nasdaq Capital Market for ten (10) trading days immediately preceding the date of the Share Swap Agreement.

On November 9, 2021, the issuance of 533,167 ( 5,331,667 pre reverse split) shares of the Company’s common stock for this transaction has been completed and on December 31, 2021, the registration procedures for the change in shareholders was completed.

As a result, XXTX became a wholly-owned subsidiary of Senmiao Consulting.

As of the filing date of these consolidated financial statements, Senmiao Consulting has made a cumulative capital contribution of RMB 39.76 million (approximately $ 5.79 million) to XXTX and the remaining amount is expected to be paid before December 31, 2025.

As of March 31, 2023, XXTX had seven wholly owned subsidiaries and two of them had operations.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In December 2020, Senmiao Consulting formed Corenel, with a registered capital of RMB 10 million (approximately $ 1.6 million) in Chengdu City, Sichuan Province.

Corenel is engaged in automobile operating leases since March 2021.

In December 2020, Hunan Ruixi and a third party jointly formed a subsidiary, Chengdu Xichuang Technology Service Co., Ltd.

(“Xichuang”), with a registered capital of RMB 200,000 (approximately $ 32,000 ) in Chengdu City, Sichuan Province.

Hunan Ruixi holds 70 % of the equity interests of Xichuang.

In August 2021, Hunan Ruixi signed an equity transfer agreement with another shareholder of Xichuang.

Pursuant to the equity transfer agreement, another shareholder of Xichuang would transfer 30 % of its shares to Hunan Ruixi for a consideration of zero.

However, in November 2021, Xichuang was dissolved.

The dissolution of Xichuang did not have a material impact to the Company’s financial results.

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

(“Senmiao HK”), with a registered capital of $ 10,000 in Hongkong.

The Company holds 99.99 % of the equity interests of Senmiao HK.

As of the filing date of these consolidated financial statements, Senmiao HK has no operations.

In March 2022, Corenel and another company in Chengdu formed Jiekai, with a registered capital of RMB 500,000 (approximately $ 80,000 ).

Corenel holds 51 % of the equity interests of Jiekai.

Jiekai is engaged in automobile operating lease business since April 2022.

The following diagram illustrates the Company’s corporate structure, including its subsidiaries and equity investee company, as of the filing date of these consolidated financial statements:

Former VIE Agreements with Sichuan Senmiao

Senmiao Consulting, Sichuan Senmiao Ronglian Technology Co., Ltd.

(“Sichuan Senmiao”) and all the shareholders of Sichuan Senmiao (the “Sichuan Senmiao Shareholders”) entered into an Equity Interest Pledge Agreement, an Exclusive Business Cooperation Agreement, an Exclusive Option Agreement, Power of Attorneys, and Timely Report Agreements in September 2017 (collectively, the “Sichuan Senmiao VIE Agreements”).

For the details of such agreements, refer to the audited financial statements contained in the annual report on Form 10-K filed with the SEC on July 15, 2022.

According to the VIE Agreements, Senmiao Consulting was the primary beneficiary of Sichuan Senmiao and the financial statements of Sichuan Senmiao are consolidated in the accompanying consolidated financial statements.

Sichuan Senmiao suffered accumulated loss of approximately $ 18.0 million as of March 31, 2022 with shareholders’ deficiency of $ 7.6 million.

Due to such loss from Sichuan Senmiao, on March 23, 2022, Senmiao Consulting and other shareholders with 94.5 % equity interests of Sichuan Senmiao terminated the VIE Agreements and acquired Sichuan Senmiao’s 94.5 % equity interests with total consideration of zero .

Sichuan Senmiao became the majority owned subsidiary of Senmiao Consulting accordingly.

The termination of the Sichuan Senmiao VIE Agreements had no significant impact on the consolidated financial statements.

Former Voting Agreements with Jinkailong’s Other Shareholders

Hunan Ruixi entered into two voting agreements signed in August 2018 and February 2020, respectively, as amended (the “Voting Agreements”), with Jinkailong and other Jinkailong’s shareholders holding an aggregate of 65 % equity interests.

Pursuant to the Voting

(i) automobile

transaction and related services focusing on the online ride-hailing industry in the People’s Republic of China (“PRC”

or “China”) through the Company’s wholly owned subsidiary, Chengdu Corenel Technology Co., Ltd., a PRC limited liability

company (“Corenel”), and its majority owned subsidiaries, Chengdu Jiekai Yunli Technology Co., Ltd.

and Hunan Ruixi Financial Leasing Co., Ltd., a PRC limited liability company (“Hunan Ruixi”), and its equity investee company

(an entity 35% owned by Hunan Ruixi), Sichuan Jinkailong Automobile Leasing Co., Ltd., a PRC limited liability company (“Jinkailong”).

ride-hailing platform services through its own platform (known as Xixingtianxia) as described further below, since October 2020,

through Hunan Xixingtianxia Technology Co., Ltd., a PRC limited liability company (“XXTX”), which is a wholly owned subsidiary

of Sichuan Senmiao Zecheng Business Consulting Co., Ltd.

(“Senmiao Consulting”), a PRC limited liability company and wholly-owned

subsidiary of the Company.

The Company’s ride hailing platform enables qualified ride-hailing drivers to provide transportation

services in Chengdu, Changsha and other 20 cities in China as of the filing date of these consolidated financial statements.

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

and automobile sales since March 2019 and January 2019, respectively.

The Company also has been engaged in operating leasing services

through Hunan Ruixi, Jiekai and its equity investee company, Jinkailong since March 2019.

Jinkailong used to facilitate automobile sales

and financing transactions for its clients, who are primarily ride-hailing drivers and provides them operating lease and relevant after-transaction

filing date of these consolidated financial statements, Senmiao Consulting has made a cumulative capital contribution of RMB 40.41 million

(approximately $ 5.60 million) to XXTX and the remaining amount is expected to be paid before December 31, 2025.

As of March 31, 2024,

XXTX had eight wholly owned subsidiaries and two of them have operations.

The following

diagram illustrates the Company’s corporate structure as of the filing date of these consolidated financial statements:

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Agreements, all other Jinkailong’s shareholders will vote in concert with Hunan Ruixi on all fundamental corporate transactions in the event of a disagreement for periods of 20 years and 18 years , respectively, ending on August 25, 2038.

On March 31, 2022, Ruixi entered into an Agreement for the Termination of the Agreement for Concerted Action by Shareholders of Jinkailong (the “Termination Agreement”), pursuant to which the Voting Agreements mentioned above was terminated as of the date of the Termination Agreement.

Voting Agreements with Jinkailong’s Other Shareholders

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

with Jinkailong and other Jinkailong’s shareholders holding an aggregate of 65 % equity interests.

Pursuant to the Voting Agreements,

all other Jinkailong’s shareholders will vote in concert with Hunan Ruixi on all fundamental corporate transactions in the event

of a disagreement for periods of 20 years and 18 years , respectively, ending on August 25, 2038.

31, 2022, Hunan Ruixi entered into an Agreement for the Termination of the Agreement for Concerted Action by Shareholders of Jinkailong

(the “Termination Agreement”), pursuant to which the Voting Agreements mentioned above was terminated as of the date of the

Termination Agreement.

The termination will not impair the past and future legitimate rights and interests of all parties in Jinkailong.

As of March 31, 2023 and 2022, the parties no longer maintain a concerted action relationship with respect to the decision required to take concerted action at its shareholders meetings as stipulated in the Voting Agreements.

Each party shall independently express opinions and exercise various rights such as voting rights and perform relevant obligations in accordance with the provisions of laws, regulations, normative documents and the Jinkailong’s articles of association.

As a result of the Termination Agreement, the Company no longer has a controlling financial interest in Jinkailong and has determined that Jinkailong was deconsolidated from the Company’s Consolidated Financial Statements effective as of March 31, 2022.

However, as Hunan Ruixi still holds 35 % equity interests in Jinkailong, Jinkailong is the equity investee company of the Company since then.

As of March 31, 2023 and 2022, the paid-in capital of Jinkailong is zero.

In connection with the deconsolidation and in accordance with ASC 810-10-40-5, the Company recorded a gain on deconsolidation of Jinkailong on March 31, 2022 as follows:

Carrying amount of net deficit of Jinkailong as of March 31, 2022

Carrying amount of non-controlling interest

( 3,605,156 )

Cumulative currency translation adjustment removal

Net gain on deconsolidation of Jinkailong

In addition, the Company recognized $ 7,298,208 of related party receivable from Jinkailong as of March 31, 2022, of which, $ 6,635,746 is required to be repaid over a period from April 2023 to December 2026 based on the agreement between the Company and Jinkailong, classified as due from related parties, noncurrent.

Besides, the deconsolidation also excluded $ 31,263 receivables due from related parties, which was recorded by Jinkailong.

As of March 31, 2023, the Company has outstanding balance due from Jinkailong amounted to $ 5,106,100 , net of allowance, of which, $ 3,640,206 is to be repaid over a period from April 2024 to December 2026, classified as due from related party, noncurrent (refer to Note 4 and Note 17).

As of March 31, 2023 and 2022, allowance for doubtful accounts due from Jinkailong amounted to $ 1,481,036 and $ 0 , respectively.

During the year ended March 31, 2023, the Company recorded allowances against the balance due from Jinkailong of $ 1,484,495 .

The Company determined that the deconsolidation of Jinkailong represented a major shift that had a major effect on the Company’s operations and financial results for the year ended March 31, 2022, which triggers discontinued operations accounting in accordance with ASC 205-20-45 as discussed in note 4.

Former VIE Agreements with Youlu

On December 7, 2021, XXTX entered into a series of contractual arrangements (collectively, the “Youlu VIE Agreements”) with Youlu and each of its equity holders (“Youlu Shareholders”).

The terms of Youlu VIE Agreements were similar to the Sichuan Senmiao VIE Agreements.

According to the Youlu VIE Agreements, Youlu was obligated to pay XXTX service fees approximately equal to its net income.

Youlu’s entire operations were, in fact, directly controlled by XXTX.

There were no unrecognized revenue-producing assets that were held by Youlu.

However, on March 31, 2022, the Youlu VIE Agreements were terminated by XXTX and Youlu Shareholders.

As Youlu had limited operation, the termination had no significant impact on the consolidated financial statements.

After Jinkailong and Youlu were deconsolidated from the Company’s consolidated financial statements at March 31, 2022, there were no assets and liabilities from the Company’s former VIEs included in the Company’s financial statements going forward.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

loss from operations and net loss of the former VIEs that were included in the Company’s consolidated financial statements for the years ended March 31, 2023 and 2022 are as follows:

For the Years Ended

Net revenue from continuing operations

Net revenue from discontinued operations

Loss from operations from continuing operations

Loss from operations from discontinued operations

( 2,537,715 )

Net loss from continuing operations attributable to stockholders

Net loss from discontinued operations attributable to stockholders

( 2,032,934 )

Net loss attributable to stockholders

( 2,208,218 )

GOING CONCERN

In assessing the Company’s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments.

As of March 31, 2024 and 2023, the parties no longer maintain a concerted action relationship with respect to the decision required to

take concerted action at its shareholders meetings as stipulated in the Voting Agreements.

Each party shall independently express opinions

and exercise various rights such as voting rights and perform relevant obligations in accordance with the provisions of laws, regulations,

normative documents and the Jinkailong’s articles of association.

of the Termination Agreement, the Company no longer has a controlling financial interest in Jinkailong and has determined that Jinkailong

was deconsolidated from the Company’s Consolidated Financial Statements effective as of March 31, 2022.

However, as Hunan Ruixi

still holds 35 % equity interests in Jinkailong, Jinkailong is the equity investee company of the Company since then.

31, 2024 and 2023, the paid-in capital of Jinkailong is zero.

of March 31, 2024, the Company has outstanding balance due from Jinkailong amounted to $ 3,245,907 , net of allowance for credit losses,

of which, $ 2,747,313 is to be repaid over a period from April 2025 to December 2026,

classified as due from a related party, net, non-current portion.

As of March 31, 2023, the Company has outstanding balance due from Jinkailong

amounted to $ 5,106,100 , net of allowance for credit losses, of which, $ 3,640,206 is to be repaid over a period from April 2024 to

December 2026, classified as due from a related party, net, non-current portion (refer to Note 17).

31, 2024 and 2023, allowance for credit losses due from Jinkailong amounted to $3,099,701 and $ 1,481,036 , respectively.

During the years

ended March 31, 2024 and 2023, the Company recorded provision for credit losses against the balance due from Jinkailong of $ 1,703,563

and $ 1,484,495 , respectively.

the Company’s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments.

The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations.

Debt financing from financial institutions and equity financings have been utilized to finance the working capital requirements of the Company.

The Company’s business is capital intensive.

The Company’s management has considered whether there is substantial doubt about its ability to continue as a going concern due to (1) the net loss of approximately $ 3.8 million for the year ended March 31, 2023;

(2) accumulated deficit of approximately $ 37.7 million as of March 31, 2023;

Debt financing from financial institutions and equity financings have been utilized to finance the working capital requirements of the

The Company’s

business is capital intensive.

The Company’s management has considered whether there is substantial doubt about its ability to continue

as a going concern due to (1) the net loss of approximately $ 4.2 million for the year ended March 31, 2024;

(2) accumulated deficit

of approximately $ 41.4 million as of March 31, 2024;

(3) the working capital deficit of approximately $ 2.7 million as of March

and (4) two purchase commitments of approximately $ 1.36 million for 120 automobiles.

As of the filing date of these consolidated financial statements, the Company has entered into two purchase contracts with two automobile dealers to purchase a total of 150 automobiles in the amount of approximately $ 2.4 million, of which, 30 automobiles of approximately $ 0.34 million have been purchased in cash and delivered to the Company, and approximately $ 0.7 million has been remitted as purchase prepayments.

The remaining purchase commitment of approximately $ 1.36 million shall be remitted in installment to be completed before December 31, 2023.

Management has determined there is substantial doubt about its ability to continue as a going concern.

If the Company is unable to generate significant revenue, the Company may be required to curtail or cease its operations.

Management is trying to alleviate the going concern risk through the following sources:

● Equity financing to support its working capital;

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

● Financial support and credit guarantee commitments from the Company’s related parties.

Based on the above considerations, management is of the opinion that the Company will probably not have sufficient funds to meet its working capital requirements and debt obligations as they become due one year from the filing date of these consolidated financial statements, if the Company is unable to obtain additional financing.

There is no assurance that the Company will be successful in implementing the foregoing plans or that additional financing will be available to the Company on commercially reasonable terms, or at all.

There are a number of factors that could potentially arise that could undermine the Company’s plans, such as (i) changes in the demand for the Company’s services, (ii) PRC government policies, (iii) economic conditions in China and worldwide, (iv) competitive pricing in the automobile transaction and related service and ride-hailing industries, (v) changes in the Company’s relationships with key business partners, (vi) the ability of financial institutions in China to provide continued financial support to the Company’s customers, and (vii) the perception of PRC-based companies in the U.S.

capital markets.

The Company’s inability to secure needed financing when required could require material changes to the Company’s business plans and could have a material adverse effect on the Company’s ability to continue as a going concern and results of operations.

The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The consolidated financial statements do not include any adjustments that might result from the outcome of such uncertainties.

and (4) one purchase commitment of approximately $ 0.9 million for 100 automobiles.

As of the filing date of these

consolidated financial statements, the Company has entered into one purchase contract with an automobile dealer to purchase a total of

100 automobiles in the amount of approximately $ 1.5 million, of which, and approximately $ 0.6 million has been remitted as purchase

The remaining purchase commitment of approximately $ 0.9 million shall be remitted in installment to be completed before

March 31, 2025.

has determined there is substantial doubt about its ability to continue as a going concern.

If the Company is unable to generate significant

revenue, the Company may be required to curtail or cease its operations.

Management is trying to alleviate the going concern risk through

the following sources:

financing to support its working capital;

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

support and credit guarantee commitments from the Company’s related parties.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

the above considerations, management is of the opinion that the Company will probably not have sufficient funds to meet its working capital

requirements and debt obligations as they become due one year from the filing date of these consolidated financial statements if the Company

is unable to obtain additional financing.

There is no assurance that the Company will be successful in implementing the foregoing plans

or that additional financing will be available to the Company on commercially reasonable terms, or at all.

There are a number of factors

that could potentially arise that could undermine the Company’s plans, such as (i) changes in the demand for the Company’s

services, (ii) PRC government policies, (iii) economic conditions in China and worldwide, (iv) competitive pricing in the automobile transaction

and related service and ride-hailing industries, (v) changes in the Company’s relationships with key business partners, (vi) the

ability of financial institutions in China to provide continued financial support to the Company’s customers, and (vii) the perception

of PRC-based companies in the U.S.

capital markets.

The Company’s inability to secure needed financing when required could require

material changes to the Company’s business plans and could have a material adverse effect on the Company’s ability to continue

as a going concern and results of operations.

The consolidated financial statements have been prepared on a going concern basis, which

contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The consolidated financial statements

do not include any adjustments that might result from the outcome of such uncertainties.

SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

(a) Basis of presentation

The accompanying consolidated financial statements of the Company has been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

(b) Basis of consolidation

The consolidated financial statements include the accounts of the Company and include the assets, liabilities, revenues, and expenses of the subsidiaries.

The accompanying

consolidated financial statements of the Company has been prepared in accordance with accounting principles generally accepted in the

United States of America (“U.S.

The consolidated

financial statements include the accounts of the Company and include the assets, liabilities, revenues, and expenses of the subsidiaries.

All inter-company accounts and transactions have been eliminated in consolidation.

A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting power;

or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing on the dates of the transaction.

Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates on the date of the balance sheet.

The resulting exchange differences are recorded in the statement of operations.

The reporting currency of the Company and its subsidiaries and former VIEs is U.S.

dollars (“US$”) and the consolidated financial statements have been expressed in US$.

However, the Company maintains the books and records in its functional currency, Chinese Renminbi (“RMB”), being the functional currency of the economic environment in which its operations are conducted.

In general, for consolidation purposes, assets and liabilities of the Company and its subsidiaries whose functional currency is not the US$, are translated into US$, using the exchange rate on the balance sheet date.

Revenues and expenses are translated at average rates prevailing during the period.

The gains and losses resulting from translation of financial statements of the Company and its subsidiaries and former VIEs are recorded as a separate component of accumulated other comprehensive loss within the consolidated statements of changes in stockholders’ equity.

Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective periods:

Balance sheet items, except for equity accounts

For the years ended March 31,

Items in the statements of operations and comprehensive income (loss), and statements of cash flows

(d) Use of estimates

In presenting the consolidated financial statements in accordance with U.S.

GAAP, management make estimates and assumptions that affect the amounts reported and related disclosures.

Estimates, by their nature, are based on judgment and available information.

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.

The Company bases its 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 of property and equipment, lease classification and liabilities, 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 long-lived assets and goodwill, valuation of deferred tax

A subsidiary is an entity in which the Company, directly

or indirectly, controls more than one half of the voting power;

or has the power to govern the financial and operating policies, to appoint

or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.

All adjustments

(including normal recurring adjustments) necessary to present a fair statement of the Company’s financial position as of March 31,

2024, its results of operations for the year ended March 31, 2024 and its cash flows for the year ended March 31, 2024, as applicable,

have been made.

(b) Foreign currency translation

denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing

on the dates of the transaction.

Monetary assets and liabilities denominated in currencies other than the functional currency are translated

into the functional currency using the applicable exchange rates on the date of the balance sheet.

The resulting exchange differences

are recorded in the statement of operations.

The reporting

currency of the Company and its subsidiaries is U.S.

dollars (“US$”) and the consolidated financial statements have been expressed

However, the Company maintains the books and records in its functional currency, Chinese Renminbi (“RMB”), being the

functional currency of the economic environment in which its operations are conducted.

for consolidation purposes, assets and liabilities of the Company and its subsidiaries whose functional currency is not the US$, are translated

into US$, using the exchange rate on the balance sheet date.

Revenues and expenses are translated at average rates prevailing during the

The gains and losses resulting from translation of financial statements of the Company and its subsidiaries are recorded as a

separate component of accumulated other comprehensive loss within the consolidated statements of changes in stockholders’ equity.

of amounts from RMB into US$ has been made at the following exchange rates for the respective periods:

Balance sheet items, except for equity accounts – RMB:

For the years ended

Items in the statements of operations and comprehensive loss, and cash flows – RMB:

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

assets, estimated fair value used in business acquisitions, valuation of derivative liabilities, allocation of fair value of derivative liabilities, fair value used in issuance of common stock and warrants exercised and other provisions and contingencies.

(e) 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 presenting

the consolidated financial statements in accordance with U.S.

GAAP, management makes estimates and assumptions that affect the amounts

reported and related disclosures.

Estimates, by their nature, are based on judgment and available information.

Accordingly, actual results

could differ from those estimates.

On an ongoing basis, management reviews these estimates and assumptions using the currently available

Changes in facts and circumstances may cause the Company to revise its estimates.

The Company bases its 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 of property and equipment, lease classification and liabilities, right-of-use assets, determinations

of the useful lives and valuation of long-lived assets, estimates of allowances for credit losses for receivables, due from related parties,

estimates of impairment of long-lived assets, valuation of deferred tax assets and valuation of derivative liabilities.

(d) Fair values of financial

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 are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.

Topic 825 excludes certain financial instruments and all nonfinancial assets and liabilities from its disclosure requirements.

Accordingly, the aggregate fair value amounts do not represent the underlying value of the Company.

The three levels of valuation hierarchy are defined as follows:

Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value.

The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2023 and 2022:

Carrying Value as of

825 excludes certain financial instruments and all nonfinancial assets and liabilities from its disclosure requirements.

the aggregate fair value amounts do not represent the underlying value of the Company.

The three levels of valuation hierarchy are defined

Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable

for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Inputs to the valuation methodology are unobservable and significant to the fair value.

The following

table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on

a recurring basis as of March 31, 2024 and 2023:

Fair Value Measurement as of

March 31, 2024

March 31, 2023

Derivative liabilities

Carrying Value as of

Fair Value Measurement as of

March 31, 2023

March 31, 2022

Derivative liabilities

The following is a reconciliation of the beginning and ending balance of the assets and liabilities measured at fair value on a recurring basis for the years ended March 31, 2023 and 2022:

November 2021

2019 Registered Direct Offering

Registered Direct Offering

Private Placement

BALANCE as of March 31, 2021

Derivative liabilities recognized at grant date

Change in fair value of derivative liabilities

( 2,535,376 )

( 2,895,392 )

( 6,951,482 )

Fair value of warrants exercised

BALANCE as of March 31, 2022

Change in fair value of derivative liabilities

( 1,711,889 )

Cashless exercise on November 2021 investor warrants

BALANCE as of March 31, 2023

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s Series A and Series B warrants, the June 2019 Placement Agent Warrants, the Underwriters’ Warrants, the ROFR Warrants, the May 2021 Investors Warrants, the May 2021 Placement Agent Warrants, and the November 2021 Investors Warrants and November 2021 Placement Agent Warrants are not traded in an active securities market;

therefore, the Company estimates the fair value to those warrants using the Black-Scholes valuation model on June 20, 2019 (the grant date), August 4, 2020 (the grant date), February 10, 2021 (the grant date), May 13, 2021 (the grant date), November 10, 2021 (the grant date), as of March 31, 2023 and 2022.

June 20, 2019

August 4, 2020

February 10, 2021

November 10, 2021

Placement Agent

Underwriters’

Placement Agent

The following

is a reconciliation of the beginning and ending balance of the assets and liabilities measured at fair value on a recurring basis for

years ended March 31, 2024 and 2023:

Registered Direct

Private Placement

as of March 31, 2022

in fair value of derivative liabilities

( 1,711,889 )

exercise on November 2021 investor warrants

as of March 31, 2023

in fair value of derivative liabilities

forfeited due to expiration

as of March 31, 2024

The Company’s

Series A and Series B warrants, the June 2019 Placement Agent Warrants, the Underwriters’ Warrants, the ROFR Warrants, the May 2021

Investors Warrants, the May 2021 Placement Agent Warrants, and the November 2021 Investors Warrants and November 2021 Placement Agent

Warrants are not traded in an active securities market;

therefore, the Company estimates the fair value to those warrants using the Black-Scholes

valuation model on June 20, 2019 (the grant date), August 4, 2020 (the grant date), February 10, 2021 (the grant date), May 13, 2021 (the

grant date), November 10, 2021 (the grant date), as of March 31, 2024 and 2023.

June 20, 2019 August 4, 2020 February 10, 2021 May 13, 2021 November 10, 2021

Series A Series B Placement

Agent Underwriters’ Placement

Agent ROFR Investor Placement

Agent Investor Placement

Warrants Warrants Warrants Warrants Warrants Warrants Warrants Warrants Warrants Warrants

# of shares exercisable* 133,602 111,632 14,251 56,800 38,044 15,218 553,192 41,490 5,310,763 55,148

1 unchanged sentence

Exercise price* $ 37.20 $ 37.20 $ 33.80 $ 6.30 $ 13.80 $ 17.30 $ 10.50 $ 10.50 $ 1.13 $ 6.80

Stock price* $ 28.00 $ 28.00 $ 28.00 $ 5.10 $ 16.30 $ 16.30 $ 7.20 $ 7.20 $ 6.70 $ 6.70

Expected term (years) 4 1 4 5 5 5 5 5 5 5

1 unchanged sentence

Expected volatility 86 % 91 % 86 % 129 % 132 % 132 % 131 % 131 % 126 % 126 %

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2024

June 20, 2019

February 10, 2021

November 10, 2021

Placement Agent

Underwriters’

Placement Agent

August 4, 2020 February 10, 2021 May 13, 2021 November 10, 2021

Placement Placement Placement

Underwriters’ Agent ROFR Investor Agent Investor Agent

Granted Date Warrants Warrants Warrants Warrants Warrants Warrants Warrants

# of shares exercisable 31,808 38,044 15,218 553,192 41,490 5,310,763 55,148

1 unchanged sentence

Exercise price $ 6.30 $ 13.8 $ 17.30 $ 10.50 $ 10.50 $ 1.13 $ 1.13

Stock price $ 0.9 $ 0.9 $ 0.9 $ 0.9 $ 0.9 $ 0.9 $ 0.9

Expected term (years) 1.35 1.87 1.87 2.12 2.12 2.61 2.61

2 unchanged sentences

As of March 31, 2023

June 20, 2019

August 4, 2020

February 10, 2021

November 10, 2021

Placement Agent

Underwriters’

Placement Agent

June 20, 2019 August 4, 2020 February 10, 2021 May 13, 2021 November 10, 2021

Placement Placement Placement Placement

Series A Agent Underwriters’ Agent ROFR Investor Agent Investor Agent

Granted Date Warrants Warrants Warrants Warrants Warrants Warrants Warrants Warrants Warrants

# of shares exercisable 2,590 14,251 31,808 38,044 15,218 553,192 41,490 5,310,763 55,148

1 unchanged sentence

Exercise price $ 5.00 $ 5.00 $ 6.30 $ 13.80 $ 17.30 $ 10.50 $ 10.50 $ 1.13 $ 6.80

Stock price $ 0.90 $ 0.90 $ 0.90 $ 0.90 $ 0.90 $ 0.90 $ 0.90 $ 0.90 $ 0.90

Expected term (years) 0.22 0.22 2.35 2.87 2.87 3.12 3.12 3.62 3.62

1 unchanged sentence

Expected volatility 120 % 120 % 120 % 120 % 120 % 120 % 120 % 120 % 120 %

*Giving retroactive effect to the 1-for-10 reverse stock split effected on April 6, 2022.

As of March 31, 2023 and 2022, financial instruments of the Company comprised primarily current assets and current liabilities including cash and cash equivalents, accounts receivable, inventories, finance lease receivables, prepayments, other receivables and other assets, due from related parties, borrowings from financial institutions, accounts payable, advance from customers, lease liabilities, accrued expenses and other liabilities, due to related parties and affiliates, and operating and financing lease liabilities, which approximate their fair values because of the short-term nature of these instruments, and non-current liabilities of borrowings from financial institutions, which approximate their fair values because of the stated loan interest rate to the rate charged by similar financial institutions.

The non-current portion of accounts receivables, finance lease receivables, and operating and financing lease liabilities were recorded at gross adjusted for the interest using the effective interest rate method.

The Company believes that the effective interest rates underlying these instruments approximate their fair values because the Company used its incremental borrowing rate to recognize the present value of these instruments as of March 31, 2023 and 2022.

Other than as listed above, the Company did not identify any assets or liabilities that are required to be presented on the balance sheet at fair value.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(f) Equity method investments

The Company accounts for investments in private company by using equity method as the Company determined that it does not have control over Jinkailong under either voting or VIE models in accordance with ASC 323 “Investments- Equity Method and Joint Ventures”.

As of March 31, 2023 and 2022, the Company had equity investment in Jinkailong of 35 % that the Company has significant influence over Jinkailong.

The Company records equity method investments initially at cost and subsequently records its share of the earnings or losses of the investee in the periods for which they are reported by the investee in its financial statements rather than in the period in which an investee declares a dividend.

The Company adjusts the carrying amount of an investment for its share of the earnings or losses of the investee after the date of investment and share report the recognized earnings or loses in income.

If an investment balance is reduced to zero as a result of cumulative losses, the Company will need to pause the recognition of losses until its share of earnings exceeds the accumulated losses resulting in the investment balance returning to zero.

As of March 31, 2023 and 2022, the carrying value of the investment is $ 0 for both periods presented.

(g) Business combinations and non-controlling interests

The Company accounts for its business combinations using the acquisition method of accounting in accordance with ASC 805 “Business Combinations.” The cost of an acquisition is measured at the aggregate of the acquisition date fair value of the assets transferred to the sellers and liabilities incurred by the Company and equity instruments issued.

Transaction costs directly attributable to the acquisition are expensed as incurred.

Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests.

The excess of (i) the total costs of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill.

If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated income statements.

During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated income statements.

For the Company’s non-wholly owned subsidiaries, a non-controlling interest is recognized to reflect portion of equity that is not attributable, directly or indirectly, to the Company.

The cumulative results of operations attributable to non-controlling interests are also recorded as non-controlling interests in the Company’s consolidated balance sheets and consolidated statements of operations and comprehensive loss.

Cash flows related to transactions with non-controlling interests are presented under financing activities in the consolidated statements of cash flows.

(h) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (the “CODM”), which is comprised of certain members of the Company’s management team.

During the years ended March 31, 2019 and 2021, the Company acquired Hunan Ruixi and XXTX, respectively.

The Company evaluated how the CODM manages the businesses of the Company to maximize efficiency in allocating resources and assessing performance.

Consequently, the Company presents two operating and reportable segments of automobile transaction and related services and online ride-hailing platform services as set forth in Notes 1 and 20.

(i) Cash and cash equivalents

Cash and cash equivalents primarily consist of bank deposits with original maturities of three months or less, which are unrestricted as to withdrawal and use.

Cash and cash equivalents also consist of funds received from automobile purchasers as payments for automobiles, funds received from automobile lessees as payments for rentals, which were held at the third-party platforms’ fund accounts and which are unrestricted and immediately available for withdrawal and use.

(j) Accounts receivable, net

Accounts receivable are recorded at the invoiced amount less an allowance for any uncollectible accounts and do not bear interest, and are due on demand.

Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables.

Management also periodically evaluates individual customer’s financial condition, credit history and the current economic conditions to make adjustments in the allowance when necessary.

Account balances are charged off

retroactive effect to the 1-for-10 reverse stock split effected on April 6, 2022.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

As of March 31, 2023 and 2022, allowance for doubtful accounts amounted to $ 0 and $ 112,905 , respectively.

(k) Inventories

Inventories consist of automobiles which are held primarily for sale or sales-type leases purpose and are stated at lower of cost or net realizable value, as determined using the weighted average cost method.

Management compares the cost of inventories with the net realizable value and if applicable, an allowance is made for writing down the inventory to its net realizable value, if lower than cost.

On an ongoing basis, inventories are reviewed for potential write-down for estimated obsolescence or unmarketable inventories which equals the difference between the costs of inventories and the estimated net realizable value based upon forecasts for future demand and market conditions.

When inventories are written-down to the lower of cost or net realizable value, it is not marked up subsequently based on changes in underlying facts and circumstances.

For the years ended March 31, 2023 and 2022, $ 3,085 and $ 60,398 impairment of inventories was recorded, respectively.

(l) Finance lease receivables, net

Finance lease receivables, which result from sales-type leases, are measured at discounted present value of (i) future minimum lease payments, (ii) any residual value not subject to a bargain purchase option as finance lease receivables on its balance sheet and (iii) accrued interest on the balance of the finance lease receivables based on the interest rate inherent in the applicable lease over the term of the lease.

Management also periodically evaluates individual customer’s financial condition, credit history and the current economic conditions to make adjustments in the allowance when necessary.

Finance lease receivables is charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

As of March 31, 2023 and 2022, the Company determined no allowance for doubtful accounts was necessary for finance lease receivables.

As of March 31, 2023 and 2022, finance lease receivables consisted of the following:

31, 2024 and 2023, financial instruments of the Company comprised primarily current assets and current liabilities including cash and

cash equivalents, restricted cash, accounts receivable, inventories, finance lease receivables, prepayments, other receivables and other

assets, due from related parties, accounts payable, advance from customers, lease liabilities, accrued expenses and other liabilities,

due to related parties, and operating and financing lease liabilities, which approximate their fair values because of the short-term nature

of these instruments, and current liabilities of borrowings from a financial institution, which approximate their fair values because

of the stated loan interest rate to the rate charged by similar financial institutions.

The non-current

portion of finance lease receivables, operating and financing lease liabilities and borrowings from a financial institution were recorded

at the gross amount adjusted for the interest using the effective interest rate method.

The Company believes that the effective interest

rates underlying these instruments approximate their fair values because the Company used its incremental borrowing rate to recognize

the present value of these instruments as of March 31, 2024 and 2023.

as listed above, the Company did not identify any assets or liabilities that are required to be presented on the balance sheet at fair

method investments

accounts for investments in private company by using equity method as the Company determined that it does not have control over Jinkailong

under either voting or VIE models in accordance with ASC 323 “Investments- Equity Method and Joint Ventures”.

31, 2024 and 2023, the Company had equity investment in Jinkailong of 35 % that the Company has significant influence over Jinkailong.

The Company records equity method investments initially at cost and subsequently records its share of the earnings or losses of the investee

in the periods for which they are reported by the investee in its financial statements rather than in the period in which an investee

declares a dividend.

The Company adjusts the carrying amount of an investment for its share of the earnings or losses of the investee

after the date of investment and share report the recognized earnings or loses in income.

If an investment balance is reduced to zero

as a result of cumulative losses, the Company will need to pause the recognition of losses until its share of earnings exceeds the accumulated

losses resulting in the investment balance returning to zero.

As of March 31, 2024 and 2023, the carrying value of the investment is $ 0 for

both periods presented.

combinations and non-controlling interests

accounts for its business combinations using the acquisition method of accounting in accordance with ASC 805 “Business Combinations.”

The cost of an acquisition is measured at the aggregate of the acquisition date fair value of the assets transferred to the sellers and

liabilities incurred by the Company and equity instruments issued.

Transaction costs directly attributable to the acquisition are expensed

Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition

date, irrespective of the extent of any non-controlling interests.

The excess of (i) the total costs of acquisition, fair value of the

non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value

of the identifiable net assets of the acquiree is recorded as goodwill.

If the cost of acquisition is less than the fair value of the

net assets of the subsidiary acquired, the difference is recognized directly in the consolidated income statements.

During the measurement

period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities

assumed with the corresponding offset to goodwill.

Upon the conclusion of the measurement period or final determination of the values

of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated income statements.

Company’s non-wholly owned subsidiaries, a non-controlling interest is recognized to reflect portion of equity that is not attributable,

directly or indirectly, to the Company.

The cumulative results of operations attributable to non-controlling interests are also recorded

as non-controlling interests in the Company’s consolidated balance sheets and consolidated statements of operations and comprehensive

Cash flows related to transactions with non-controlling interests are presented under financing activities in the consolidated statements

of cash flows.

segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (the

“CODM”), which is comprised of certain members of the Company’s management team.

During the years ended March 31,

2019 and 2021, the Company acquired Hunan Ruixi and XXTX, respectively.

The Company evaluated how the CODM manages the businesses of

the Company to maximize efficiency in allocating resources and assessing performance.

Consequently, the Company

presents two operating and reportable segments of automobile transaction and related services and online ride-hailing

platform services as set forth in Notes 1 and 20.

TECHNOLOGY LIMITED

TO CONSOLIDATED FINANCIAL STATEMENTS

Cash and cash equivalents

and cash equivalents primarily consist of bank deposits with original maturities of three months or less, which are unrestricted as to

withdrawal and use.

Cash and cash equivalents also consist of funds received from automobile purchasers as payments for automobiles,

funds received from automobile lessees as payments for rentals, which were held at the third-party platforms’ fund accounts and

which are unrestricted and immediately available for withdrawal and use.

Restricted cash

cash consists of fund held in the bank accounts of Corenel was frozen by a court order with a prior business partner whom Corenel had

cooperation with.

The restricted cash of Corenel was approximately $ 2,337 as of March 31, 2024.

(j) Accounts receivable,

receivable are recorded at the invoiced amount less an allowance for any uncollectible accounts and do not bear interest, and are due

The carrying value of accounts receivable is reduced by an allowance that reflects the Company’s best estimate of the

amounts that will not be collected.

An allowance for credit losses is recorded in the period when a loss is probable based on an assessment

of specific evidence indicating collection is unlikely, historical bad debt rates, accounts aging, financial conditions of the customer

and industry trends.

Starting from April 1, 2023, the Company adopted ASU No.2016-13 “Financial Instruments – Credit Losses

Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”).

The Company used a modified

retrospective approach, and the adoption does not have an impact on our consolidated financial statements.

Management also periodically

evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in

the allowance when it is considered necessary.

Account balances are charged off against the allowance after all means of collection have

been exhausted and the potential for recovery is considered remote.

The Company’s management continues to evaluate the reasonableness

of the valuation allowance policy and update it if necessary.

As of March 31, 2024 and 2023, the Company record allowance for credit

losses of $ 1,545 and $ 0 against accounts receivable, respectively.

Finance lease receivables

lease receivables, which result from sales-type leases, are measured at discounted present value of (i) future minimum lease payments,

(ii) any residual value not subject to a bargain purchase option as finance lease receivables on its balance sheet and (iii) accrued

interest on the balance of the finance lease receivables based on the interest rate inherent in the applicable lease over the term of

Management also periodically evaluates individual customer’s financial condition, credit history and the current economic

conditions to make adjustments in the allowance for credit losses when necessary.

Finance lease receivables is charged off against the

allowance for credit losses after all means of collection have been exhausted and the potential for recovery is considered remote.

of March 31, 2024 and 2023, the Company determined no allowance for credit losses was necessary for finance lease receivables.

of March 31, 2024 and 2023, finance lease receivables consisted of the following:

Minimum lease payments receivable

Unearned interest

Financing lease receivables, net

Finance lease receivables, net, current portion

Finance lease receivables, net, non-current portion

Future scheduled minimum lease payments for investments in sales-type leases as of March 31, 2023 are as follows:

Minimum future

payments receivable

lease receivables

Finance lease receivables, current

Finance lease receivables, non-current

scheduled minimum lease payments for investments in sales-type leases as of March 31, 2024 are as follows:

Twelve months ending March 31, 2025

1 unchanged sentence

Twelve months ending March 31, 2027

(m) Property and equipment, net

Property and equipment primarily consist of automobiles, leasehold improvements, computers and other equipment, which are 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.

TECHNOLOGY LIMITED

TO CONSOLIDATED FINANCIAL STATEMENTS

Property and equipment, net

and equipment primarily consist of automobiles, leasehold improvements, computers and other equipment, which are 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.

The useful life of property and equipment is summarized as follows:

2 unchanged sentences

Computer equipment

Office equipment, fixture and furniture

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

An asset is considered impaired if its carrying amount exceeds the future net undiscounted cash flows that the asset is expected to generate.

If such asset is considered to be impaired, the impairment recognized is the amount by which the carrying amount of the asset, if any, exceeds its fair value determined using a discounted cash flow model.

For the years ended March 31, 2023 and 2022, the Company did no t recognize impairment for property and equipment from continuing operations.

For the years ended March 31, 2023 and 2022, the impairment for property and equipment was $ 0 and $ 32,479 from discontinued operations, respectively.

Costs of repairs and maintenance are expensed as incurred and asset improvements are capitalized.

The cost and related accumulated depreciation of assets disposed of or retired are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statements of operations and comprehensive loss.

(n) Intangible assets, net

Purchased intangible assets are recognized and measured at fair value upon acquisition.

Separately identifiable intangible assets that have determinable lives continue to be amortized over their estimated useful lives using the straight-line method as follows:

Online ride-hailing platform operating license

Separately identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition.

Measurement of any impairment loss for identifiable intangible assets is based on the amount by which the carrying amount of the assets exceeds the fair value of the assets.

For the years ended March 31, 2023 and 2022, there was no impairment of intangible assets.

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.

The Company reviews 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.

The Company assesses qualitative factors to determine whether it is necessary to perform the two-step in accordance with ASC 350-20.

If the Company believes, as a result of the qualitative carrying amount, the two-step quantitative 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.

The excess 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.

For the years ended March 31, 2023 and 2022, the Company recorded an impairment of $ 0 and $ 139,930 against goodwill, respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(p) Earnings (loss) per share

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to stockholders by the weighted average number of outstanding shares of common stock, adjusted for outstanding shares of common stock that are subject to repurchase.

For the calculation of diluted income (loss) per share, net income (loss) attributable to stockholders for basic earnings (loss) per share is adjusted by the effect of dilutive securities, including share-based awards, under the treasury stock method and convertible securities under the if-converted method.

Potentially dilutive securities, of which the amounts are insignificant, have been excluded from the computation of diluted net earnings (loss) per share if their inclusion is anti-dilutive.

As of March 31, 2023, the Company’s dilutive securities from the outstanding series A convertible preferred stock are convertible into approximately 820,706 shares of common stock.

This amount is not included in the computation of dilutive loss per share because their impact is anti-dilutive.

(q) Mezzanine Equity (redeemable)

The Company evaluates its convertible preferred stock in accordance with ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to determine if its convertible preferred stock should be treated as a liability or an equity.

As a result, the Company determined that the convertible preferred stock should be treated as an equity as it did not meet the definition of liability instrument.

In accordance with ASC 480-10-S99, the convertible preferred stock should be classified as a mezzanine equity, since it contained a change of control redemption right feature which is not solely within the control of the Company.

The Company believes the future event of change of control is not probable as of March 31, 2023;

therefore, the convertible preferred stock has not been remeasured to its redemption value.

Subsequently, the Company adjust the initial carrying amount of the convertible preferred stock by the at redemption value method.

As of March 31, 2023, there was no change to the initial carrying amount of the convertible preferred stock.

(r) Derivative liabilities

A contract is designated as an asset or a liability and is carried at fair value on the Company’s balance sheet, with any changes in fair value recorded in the Company’s results of operations.

The Company then determines 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 consolidated statements of operations and comprehensive loss as “change in fair value of derivative liabilities”.

(s) Revenue recognition

The Company recognized its revenue under Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (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 the Company 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, the Company applies 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.

The Company accounts for a contract with a customer when the contract is entered into by the parties, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration to collect is substantially probable.

As of March 31, 2023, the Company had outstanding contracts for automobile transaction and related services amounting to $ 18,952 , of which $ 18,560 is expected to be completed within twelve months after March 31, 2023, and $ 392 is expected to be completed after March 31, 2024.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Disaggregated information of revenues by business lines are as follows:

For the Years Ended

Automobile Transaction and Related Services (Continuing Operations)

- Operating lease revenues from automobile rentals

- Service fees from NEVs leasing

- Revenues from sales of automobiles

Office equipment, fixture

and furniture

Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of

an asset may not be recoverable.

An asset is considered impaired if its carrying amount exceeds the future net undiscounted cash flows

that the asset is expected to generate.

If such asset is considered to be impaired, the impairment recognized is the amount by which

the carrying amount of the asset, if any, exceeds its fair value determined using a discounted cash flow model.

For the years ended March

31, 2024 and 2023, the Company did not recognize impairment for property and equipment.

of repairs and maintenance are expensed as incurred and asset improvements are capitalized.

The cost and related accumulated depreciation

of assets disposed of or retired are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statements

of operations and comprehensive loss.

(m) Intangible

intangible assets are recognized and measured at fair value upon acquisition.

Separately identifiable intangible assets that have determinable

lives continue to be amortized over their estimated useful lives using the straight-line method as follows:

Online ride-hailing platform

operating license

identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that

the carrying amount of such assets may not be recoverable.

Determination of recoverability is based on an estimate of undiscounted future

cash flows resulting from the use of the asset and its eventual disposition.

Measurement of any impairment loss for identifiable intangible

assets is based on the amount by which the carrying amount of the assets exceeds the fair value of the assets.

For the years ended March

31, 2024 and 2023, there was no impairment of intangible assets.

Loss per share

loss per share is computed by dividing net loss attributable to stockholders by the weighted average number of outstanding shares of

common stock, adjusted for outstanding shares of common stock that are subject to repurchase.

the calculation of diluted loss per share, net loss attributable to stockholders for basic loss per share is adjusted by the effect of

dilutive securities, including share-based awards, under the treasury stock method and convertible securities under the if-converted

Potentially dilutive securities, of which the amounts are insignificant, have been excluded from the computation of diluted net

loss per share if their inclusion is anti-dilutive.

of March 31, 2024, the Company’s dilutive securities from the outstanding series A convertible preferred stock are convertible

into 495,706 shares of common stock.

This amount is not included in the computation of dilutive loss per share because their impact

is anti-dilutive.

TECHNOLOGY LIMITED

TO CONSOLIDATED FINANCIAL STATEMENTS

Mezzanine Equity (redeemable)

evaluates its convertible preferred stock in accordance with ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic

470-20), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments

and Contracts in an Entity’s Own Equity, to determine if its convertible preferred stock should be treated as a liability or an

As a result, the Company determined that the convertible preferred stock should be treated as an equity as it did not meet the

definition of liability instrument.

In accordance with ASC 480-10-S99, the convertible preferred stock should be classified as a mezzanine

equity, since it contained a change of control redemption right feature which is not solely within the control of the Company.

believes the future event of change of control is not probable as of March 31, 2024;

therefore, the convertible preferred stock has not

been re-measured to its redemption value.

Subsequently, the Company adjust the initial carrying amount of the convertible preferred stock

by the at redemption value method.

As of March 31, 2024, there was no change to the initial carrying amount of the convertible preferred

Derivative liabilities

contract is designated as an asset or a liability and is carried at fair value on the Company’s balance sheet, with any changes

in fair value recorded in the Company’s results of operations.

The Company then determines 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 consolidated statements of operations and comprehensive loss as “change in fair value of derivative liabilities”.

Revenue recognition

Company recognized its revenue under Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (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 the Company

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.

achieve that core principle, the Company applies 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.

Company accounts for a contract with a customer when the contract is entered into by the parties, the rights of the parties, including

payment terms, are identified, the contract has commercial substance and consideration to collect is substantially probable.

Disaggregated

information of revenues by business lines are as follows:

For the Years

Automobile Transaction and Related Services

- Operating lease revenues from

automobile rentals

- Monthly services commissions

- Financing revenues

- Service fees from management and guarantee services

- Service fees from automobile purchase services

- Other service fees

Total revenues from Automobile Transaction and Related Services (Continuing Operations)

Online Ride-hailing Platform Services (Continuing Operations)

Total Revenues from Continuing Operations

Automobile Transaction and Related Services (Discontinued Operations)

-Operating lease revenues from automobile rentals

- Service fees from NEVs leasing

- Commission from Online Ride-hailing platforms

-Service fees from management and guarantee services

-Financing revenues

- Service fees from automobile purchase

- Service fees from management and guarantee

- Revenues from sales of automobiles

- Other service fees

Total revenues from Automobile Transaction and Related Services (Discontinued Operations)

Total revenues

Automobile transaction and related services

Operating lease revenues from automobile rentals –The Company generates revenue from sub-leasing automobiles to some online ride-hailing drivers or third-parties and leasing its own automobiles.

The Company recognizes revenue wherein an automobile is transferred to the lessees and the lessees has the ability to control the asset, is accounted for under ASC Topic 842.

Rental transactions are satisfied over the rental period and is recognized over time.

As the operating lease revenue are variable in nature which is based on online ride-hailing drivers or third-parties’ performance for a certain period, the Company recognized the revenue from operating lease by using the output method based on periodic settlement between the Company and the online ride-hailing drivers or third-parties when such revenue is probable that a significant reversal in the amount of cumulative revenue recognized will not occur.

Rental periods are short term in nature, generally are twelve months or less.

Service fees from NEVs leasing and automobile purchase services – Services fees from NEVs leasing and automobile purchase services are paid by lessees who rent new energy electric vehicles from the Company or automobile purchasers for a series of the services provided to them throughout the purchase process such as credit assessment, installment of GPS devices, ride-hailing driver qualification and other administrative procedures.

The amount of services fees for NEVs leasing is based on the product solutions while the fees for purchase is based on the sales price of the automobiles and relevant services provided.

The Company recognizes revenue when all the services are completed and an automobile is delivered to the lessee or purchaser at a point in time.

Accounts receivable related to the revenue from NEVs leasing and automobile purchase services is collected upon the NEVs are delivered to lessees or purchaser.

Sales of automobiles – The Company generated revenue from sales of automobiles to the customers of Hunan Ruixi.

The control over the automobile 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 and the customers.

The Company recognizes revenues when an automobile is delivered and control is transferred to the purchaser at a point in time.

revenues from Automobile Transaction and Related Services

Ride-hailing Platform Services

Revenues from Operations

transaction and related services

lease revenues from automobile rentals –The Company generates revenue from sub-leasing automobiles to some online ride-hailing

drivers or third-parties and leasing its own automobiles.

The Company recognizes revenue wherein an automobile is transferred to the

lessees and the lessees has the ability to control the asset, is accounted for under ASC Topic 842.

Rental transactions are satisfied

over the rental period and is recognized over time.

As the operating lease revenue are variable in nature which is based on online ride-hailing

drivers or third-parties’ performance for a certain period, the Company recognized the revenue from operating lease by using the

output method based on periodic settlement between the Company and the online ride-hailing drivers or third-parties when such revenue

is probable that a significant reversal in the amount of cumulative revenue recognized will not occur.

Rental periods are short term

in nature, generally are twelve months or less.

TECHNOLOGY LIMITED

TO CONSOLIDATED FINANCIAL STATEMENTS

services commissions – Commissions from the services generated from the management and related services provided to Partner Platforms

and other companies, which are settled on a monthly basis.

The Company recognizes revenues at a point in time when performance obligations

are completed and the commission amount is confirmed by the Partner Platforms and other companies, based on their evaluations on the services

provided by the Company.

revenues – Interest income from the lease arising from the Company’s sales-type leases and bundled lease arrangements are

recognized as financing revenues over the lease term based on the effective rate of interest in the lease.

fees from NEVs leasing and automobile purchase services - Services fees from NEVs leasing and automobile purchase services are paid by

some lessees who rent new energy electric vehicles from the Company or automobile purchasers for a series of the services provided to

them throughout the purchase process such as credit assessment, installment of GPS devices, ride-hailing driver qualification and other

administrative procedures.

The amount of services fees for NEVs leasing is based on the product solutions while the fees for purchase

is based on the sales price of the automobiles and relevant services provided.

The Company recognizes revenue at a point in time when

above mentioned services are completed, and corresponding an automobile is delivered to the lessee or purchaser.

Accounts receivable

related to the revenue from NEVs leasing and automobile purchase services is collected upon the automobiles are delivered to lessees

or purchaser.

fees from automobile management and guarantee services – Over 95 % of the Company’s customers are online ride-hailing

Some of the drivers sign affiliation agreements with the Company, pursuant to which the Company provides 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.

The Company recognizes

revenue over the affiliation period when performance obligations are completed.

of automobiles – The Company generated revenue from sales of automobiles to the customers of Hunan Ruixi.

The control over the

automobile 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 and the customers.

The Company recognizes revenues when an automobile is delivered and control is transferred to

the purchaser at a point in time.

Accounts receivable related to the revenue are being collected within 12 months.

Service fees from management and guarantee services – Over 95% of the Company’s customers are online ride-hailing drivers.

Some of the drivers sign affiliation agreements with the Company, pursuant to which the Company provides 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.

The Company recognizes revenue over the affiliation period when performance obligations are completed.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financing revenues – Interest income from the lease arising from the Company’s sales-type leases and bundled lease arrangements are recognized as financing revenues over the lease term based on the effective rate of interest in the lease.

Online ride-hailing platform services

The Company generates 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.

The Company earns commissions for each completed ride 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, the Company bears a single performance obligation in the transaction of connecting Drivers with Riders to facilitate the completion of a successful transportation service for Riders.

The Company recognizes revenue upon completion of a ride as the single performance obligation is satisfied and the Company has the right to receive payment for the services rendered upon the completion of the ride.

The Company evaluates the presentation of revenue on a gross or net basis based on whether it controls the service provided to the Rider and is the principal (i.e., “gross”), or it arranges for other parties to provide the service to the Rider and is an agent (i.e., “net”).

Since the Company is not primarily responsible for ride-hailing services provided to Riders, it does not have discretion in establishing the price of the online ride-hailing service and inventory risk related to the services as the Company earns commissions for each completed order as the difference between an upfront quote fare and the amount earned by a driver based on actual time and distance for ride charged to the rider.

Thus, the Company recognizes revenue at a net basis.

Leases - Lessor

The Company recognized revenue as lessor in accordance with ASC 842.The two primary accounting provisions the Company uses 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 %).

Other service

fees – The Company generated other revenues such as miscellaneous service fees charged to its customers for some supporting services

provided to online ride-hailing drivers.

The Company recognizes revenues at a point in time when performance obligations are completed

and the collectability is probable from the customers.

Company recognized revenue as lessor in accordance with ASC 842.

The two primary accounting provisions the Company uses 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 %).

Automobiles included in arrangements meeting these conditions are accounted for as sales-type leases.

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.

The Company excludes from the measurement of its 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.

The Company considers the economic life of most of the automobiles to be three to five years , since this represents the most common long-term lease term for its automobiles and the automobiles will be used for online ride-hailing services.

The Company believes three to five years is representative of the period during which an automobile is expected to be economically usable, with normal service, for the purpose for which it is intended.

The Company’s 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.

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.

Company excludes from the measurement of its 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.

Company considers the economic life of most of the automobiles to be three to five years, since this represents the

most common long-term lease term for its automobiles and the automobiles will be used for online ride-hailing services.

The Company believes

three to five years is representative of the period during which an automobile is expected to be economically usable, with normal service,

for the purpose for which it is intended.

Company’s 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.

The Company reassesses its pricing interest rates quarterly based on changes in the local prevailing rates in the marketplace.

As of March 31, 2024, the Company’s pricing interest rate was 6.0 % per annum.

(t) Income taxes

Deferred income tax liabilities and assets are recognized for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities.

Provisions or benefits for income taxes consists of tax estimated from taxable income plus or minus deferred tax expenses (benefits) if applicable.

Deferred tax is calculated using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis.

In principle, deferred tax liabilities are recognized for all taxable temporary differences.

Deferred tax assets are recognized to the extent that it is probable that taxable income will be utilized with prior net operating loss carried forwards using tax rates that are expected to apply to the period when the asset is realized or the liability is settled.

Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be utilized.

Current income taxes are provided for in accordance with the laws of the relevant tax authorities.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur.

The amount recognized is the largest amount of tax benefit that is greater than 50 % likely of being realized on examination.

Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.

The Company did not have any significant unrecognized uncertain tax positions or any unrecognized liabilities, interest or penalties associated with unrecognized tax benefit as of March 31, 2023 and 2022.

As of March 31, 2023, the calendar years ended December 31, 2018 through 2022 for the Company’s PRC entities remain open for statutory examination by PRC tax authorities.

The Company presents deferred tax assets and liabilities as non-current in the balance sheet based on an analysis of each taxpaying component within a jurisdiction.

(u) Comprehensive income (loss)

Comprehensive income (loss) includes net income (loss) and foreign currency adjustments.

Comprehensive income (loss) is reported in the consolidated statements of operations and comprehensive income (loss).

Accumulated other comprehensive loss, as presented on the consolidated balance sheets are the cumulative foreign currency translation adjustments.

(v) Share-based awards

Share-based awards granted to the Company’s 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 straight-line basis, net of estimated forfeitures, over the requisite service period.

Online ride-hailing platform

generates 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.

The Company earns commissions for each completed ride

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, the Company bears a single performance obligation in the transaction of connecting Drivers

with Riders to facilitate the completion of a successful transportation service for Riders.

The Company recognizes revenue upon completion

of a ride as the single performance obligation is satisfied and the Company has the right to receive payment for the services rendered

upon the completion of the ride.

The Company evaluates the presentation of revenue on a gross or net basis based on whether it controls

the service provided to the Rider and is the principal (i.e., “gross”), or it arranges for other parties to provide the service

to the Rider and is an agent (i.e., “net”).

Since the Company is not primarily responsible for ride-hailing services provided

to Riders, it does not have discretion in establishing the price of the online ride-hailing service and inventory risk related to the

services as the Company earns commissions for each completed order as the difference between an upfront quote fare and the amount earned

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

Thus, the Company recognizes revenue at a net basis.

paid to Drivers are similar to retrospective volume-based rebates and represent variable consideration that is typically settled weekly

The Company recorded it as a reduction to revenue by the amount of the incentives to be paid upon completion of the performance

Deferred income tax liabilities and assets are

recognized for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis

of assets and liabilities.

Provisions or benefits for income taxes consists of tax estimated from taxable income plus or minus deferred

tax expenses (benefits) if applicable.

Deferred tax is calculated using the balance sheet

liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in

the consolidated financial statements and the corresponding tax basis.

In principle, deferred tax liabilities are recognized for all taxable

temporary differences.

Deferred tax assets are recognized to the extent that it is probable that taxable income will be utilized with

prior net operating loss carried forwards using tax rates that are expected to apply to the period when the asset is realized or the liability

Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that

some portion or all of the deferred tax assets will not be utilized.

Current income taxes are provided for in accordance with the laws

of the relevant tax authorities.

An uncertain tax position is recognized as a benefit

only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination

being presumed to occur.

The amount recognized is the largest amount of tax benefit that is greater than 50 % likely of being realized

on examination.

Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period

The Company did not have any significant unrecognized uncertain tax positions or any unrecognized liabilities, interest or penalties

associated with unrecognized tax benefit as of March 31, 2024 and 2023.

As of March 31, 2024, the calendar years ended December 31, 2018

through 2023 for the Company’s PRC entities remain open for statutory examination by PRC tax authorities.

The Company presents deferred

tax assets and liabilities as non-current in the balance sheet based on an analysis of each taxpaying component within a jurisdiction.

Meanwhile, the Internal Revenue Service (“IRS”) in the U.S.

can include returns filed within the last three years in an audit

unless a substantial error is found in which case, IRS may extend the period to six years.

The Company is not currently under examination

by any income tax authority, nor has it been notified of an impending examination.

Since these net operating losses may be utilized in

future periods, they remain subject to examination.

As of March 31, 2024, the Company was not aware of any pending income tax examinations

Comprehensive loss

Comprehensive loss includes net loss and foreign

currency adjustments.

Comprehensive loss is reported in the consolidated statements of operations and comprehensive loss.

other comprehensive loss, as presented on the consolidated balance sheets are the cumulative foreign currency translation adjustments.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Share-based awards

Share-based awards granted to the Company’s

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 straight-line basis, net of estimated forfeitures, over the requisite service

The fair value of restricted shares is determined with reference to the fair value of the underlying shares.

At each date of measurement, the Company reviews 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 the Company, including but not limited to the fair value of the underlying shares, expected life, expected volatility and expected forfeiture rates.

At each date of measurement, the Company reviews 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 the Company, including but not limited to the fair value of the underlying shares, expected life, expected volatility and expected

forfeiture rates.

The Company is required to consider many factors and make certain assumptions during this assessment.

If any of 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.

(w) Leases - lessee

The Company accounts for leases in accordance with ASC 842.

If any of 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.

Leases – lessee

The Company accounts for leases in accordance

with ASC 842.

The Company enters into certain agreements as a lessee to lease automobiles and to conduct its automobiles rental operations.

If any of the following criteria are met, the Company classifies the lease as a direct financing or sales-type lease (as a lessee):

● 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.

The Company combines 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 the Company’s leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease

● 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.

The Company combines 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 the Company’s leases is not readily determinable, the Company uses its 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 the Company 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.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The incremental borrowing rate is the rate of interest that the Company 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 the Company does not have reasonable certainty at lease inception that these options will be exercised.

The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets.

The Company has 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.

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 the Company does not have reasonable

certainty at lease inception that these options will be exercised.

The Company generally considers the economic life of its operating

lease ROU assets to be comparable to the useful life of similar owned assets.

The Company has 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 finance or operating lease ROU asset also excludes lease incentives.

Lease expense is recognized on a straight-line basis over the lease term for operating lease.

Meanwhile, the Company recognizes the finance leases ROU assets and interest on an amortized cost basis.

The amortization of finance ROU assets is recognized on a straight-line basis as amortization expense, while the lease liability is increased to reflect interest on the liability and decreased to reflect the lease payments made during the period.

Interest expense on the lease liability is determined each period during the lease term as the amount that results in a constant periodic interest rate of the automobile loans on the remaining balance of the liability.

The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets.

The Company reviews 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.

The Company has elected to include the carrying amount of finance and operating lease liabilities in any tested asset group and include the associated lease payments in the undiscounted future pre-tax cash flows.

For the years ended March 31, 2023 and 2022, the Company recognized impairment loss of $ 0 and $ 3,044 on its finance lease ROU assets, respectively.

(x) Significant risks and uncertainties

Lease expense is recognized

on a straight-line basis over the lease term for operating lease.

Meanwhile, the Company recognizes the finance leases ROU assets and

interest on an amortized cost basis.

The amortization of finance ROU assets is recognized on a straight-line basis as amortization expense,

while the lease liability is increased to reflect interest on the liability and decreased to reflect the lease payments made during the

Interest expense on the lease liability is determined each period during the lease term as the amount that results in a constant

periodic interest rate of the automobile loans on the remaining balance of the liability.

The Company reviews the impairment of its ROU

assets consistent with the approach applied for its other long-lived assets.

The Company reviews 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.

The Company has elected to include the carrying amount of finance and operating lease liabilities

in any tested asset group and include the associated lease payments in the undiscounted future pre-tax cash flows.

For the years ended

March 31, 2024 and 2023, the Company did not recognize impairment loss on its finance lease ROU assets.

( v ) Significant risks and uncertainties

1) Credit risk

Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents.

The maximum exposure of these assets to credit risk is their carrying amounts as of the balance sheet dates.

On March 31, 2023 and 2022, approximately $ 79,000 and $ 117,000 , respectively, were deposited with a bank in the United States which is insured by the U.S.

government up to $ 250,000 .

On March 31, 2023 and 2022, approximately $ 1,190,000 and $ 874,000 , respectively, were deposited in financial institutions located in mainland China, which were insured by the government authority.

Under the Deposit Insurance System in China, an enterprise’s deposits at one bank are insured for a maximum of approximately $ 73,000 (RMB 500,000 ).

To limit exposure to credit risk relating to deposits, the Company primarily places cash deposits with large financial institutions in China which management believes are of high credit quality.

The Company’s operations are carried out entirely in mainland China.

Accordingly, the Company’s business, financial condition and results of operations may be influenced by the social, political, economic and legal environments in the PRC as well as by the general state of the PRC economy.

In addition, the Company’s business may be influenced by changes in PRC government laws, rules and policies with respect to, among other matters, the response to the COVID-19 pandemic, anti-inflationary measures, currency conversion and remittance of currency outside of China, rates and methods of taxation and other factors.

In measuring the credit risk of accounts receivables due from the automobile purchasers (the “customers”), the Company mainly reflects the “probability of default” by the customer on its contractual obligations and considers the current financial position of the customer and the risk exposures to the customer and its likely future development.

that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents.

maximum exposure of these assets to credit risk is their carrying amounts as of the balance sheet dates.

As of March 31, 2024 and 2023,

approximately $ 21,000 and $ 79,000 , respectively, were deposited with a bank in the United States which is insured by the U.S.

up to $ 250,000 .

As of March 31, 2024 and 2023, approximately $ 719,000 and $ 1,190,000 , respectively, were deposited in financial

institutions located in mainland China, which were insured by the government authority.

Under the Deposit Insurance System in China,

an enterprise’s deposits at one bank are insured for a maximum of approximately $ 69,000 (RMB 500,000 ).

To limit exposure to

credit risk relating to deposits, the Company primarily places cash deposits with large financial institutions in China which management

believes are of high credit quality.

Company’s operations are carried out entirely in mainland China.

Accordingly, the Company’s business, financial condition

and results of operations may be influenced by the social, political, economic and legal environments in the PRC as well as by the general

state of the PRC economy.

In addition, the Company’s business may be influenced by changes in PRC government laws, rules and policies

with respect to, among other matters, anti-inflationary measures, currency conversion and remittance of currency outside of China, rates

and methods of taxation and other factors.

measuring the credit risk of accounts receivable due from the automobile purchasers (the “customers”), the Company mainly

reflects the “probability of default” by the customer on its contractual obligations and considers the current financial

position of the customer and the risk exposures to the customer and its likely future development.

Historically,

most of the automobile purchasers would pay the Company their previously defaulted amounts within one to three months.

As a result, the

Company would provide full provisions on accounts receivable if the customers default on repayments for over three months.

31, 2024 and 2023, the Company record allowance for credit losses of $ 1,545 and $ 0 against accounts receivable, respectively.

currency risk

of March 31, 2024 and 2023, substantially all of the Company’s operating activities and major assets and liabilities,

except for the cash deposit of approximately $ 21,000 and $ 79,000 , respectively, in U.S.

dollars, are denominated in RMB, which

are not freely convertible into foreign currencies.

All foreign exchange transactions take place through either the People’s

Bank of China (the “PBOC”) or other authorized financial institutions at exchange rates quoted by PBOC.

foreign currency payments by the PBOC or other regulatory institutions requires a payment application together with invoices and

signed contracts.

The value of RMB is subject to change in central government policies and international economic and political

developments affecting supply and demand in the China Foreign Exchange Trading System market.

When there is a significant change in

value of RMB, the gains and losses resulting from translation of financial statements of a foreign subsidiary will be

significantly affected.

RMB depreciated from 6.87 RMB into US$ 1.00 on March 31, 2023 to 7.22 RMB into

US$ 1.00 on March 31, 2024.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

As a result, the Company would provide full provisions on accounts receivable if the customers default on repayments for over three months.

As of March 31, 2023 and 2022, allowance for doubtful accounts amounted to $ 0 and $ 112,905 , respectively.

For years ended March 31, 2023 and 2022, the Company wrote off accounts receivable of $ 107,868 and $ 44,227 from continuing operations, respectively, which represent due from automobile purchasers from continuing operation.

For the year ended March 31, 2022, the Company wrote off accounts receivable of $ 16,273 from discontinued operations, which represent due from automobile purchasers, respectively.

2) Foreign currency risk

As of March 31, 2023 and 2022, substantially all of the Company’s operating activities and major assets and liabilities, except for the cash deposit of approximately $ 79,000 and $ 117,000 , respectively, in U.S.

dollars, are denominated in RMB, which are not freely convertible into foreign currencies.

All foreign exchange transactions take place through either the People’s Bank of China (the “PBOC”) or other authorized financial institutions at exchange rates quoted by PBOC.

Approval of foreign currency payments by the PBOC or other regulatory institutions requires a payment application together with invoices and signed contracts.

The value of RMB is subject to change in central government policies and international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market.

When there is a significant change in value of RMB, the gains and losses resulting from translation of financial statements of a foreign subsidiary will be significantly affected.

RMB depreciated from 6.34 RMB into US$1.00 on March 31, 2022 to 6.87 RMB into US$1.00 on March 31, 2023.

(y) Reclassification

Certain items of common stock and additional paid-in capital in the consolidated balance sheets, cost of revenues and operating expenses in the consolidated statements of operations and comprehensive income (loss) of comparative period have been reclassified to conform to the consolidated financial statements for the current period.

The reclassification has no impact on net income (loss).

(z) Recently issued accounting standards

In June 2016, the FASB issued new accounting guidance ASU 2016-13 for recognition of credit losses on financial instruments, which is effective January 1, 2020, with early adoption permitted on January 1, 2019.

The guidance introduces a new credit reserving model known as the Current Expected Credit Loss (“CECL”) model, which is based on expected losses, and differs significantly from the incurred loss approach used today.

The CECL model requires measurement of expected credit losses not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information and will likely result in earlier recognition of credit reserves.

Recent accounting pronouncements not yet adopted

2023, the FASB issued ASU 2023-06, Disclosure Improvements — codification amendments in response to SEC’s disclosure Update

and Simplification initiative which amend the disclosure or presentation requirements of codification subtopic 230-10 Statement of

Cash Flows—Overall, 250-10 Accounting Changes and Error Corrections— Overall, 260-10 Earnings Per Share— Overall, 270-10

Interim Reporting— Overall, 440-10 Commitments—Overall, 470-10 Debt—Overall, 505-10 Equity—Overall, 815-10 Derivatives

and Hedging—Overall, 860-30 Transfers and Servicing—Secured Borrowing and Collateral, 932-235 Extractive Activities—

Oil and Gas—Notes to Financial Statements, 946-20 Financial Services— Investment Companies— Investment Company Activities,

and 974-10 Real Estate—Real Estate Investment Trusts—Overall.

The amendments represent changes to clarify or improve

disclosure and presentation requirements of above subtopics.

Many of the amendments allow users to more easily compare entities subject

to the SEC’s existing disclosures with those entities that were not previously subject to the SEC’s requirements.

amendments align the requirements in the Codification with the SEC’s regulations.

For entities subject to existing SEC disclosure

requirements or those that must provide financial statements to the SEC for securities purposes without contractual transfer restrictions,

the effective date aligns with the date when the SEC removes the related disclosure from Regulation S-X or Regulation S-K.

Early adoption

is not allowed.

For all other entities, the amendments will be effective two years later from the date of the SEC’s removal.

The Company is currently evaluating the impact of the update on the Company’s consolidated financial statements and related disclosures.

2023, the FASB issued ASU 2023-07, which is an update to Topic 280, Segment Reporting.

The amendments in this Update improve

financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities

to enable investors to develop more decision-useful financial analyses.

The amendments in this update:

(1) require that a public

entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision

maker (CODM) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense

principle”), (2) Require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable

segment and a description of its composition.

The other segment items category is the difference between segment revenue less the segment

expenses disclosed under the significant expense principle and each reported measure of segment profit or loss, (3) Require that a public

entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in

interim periods, and (4) Clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment

performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit.

However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should

be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s

consolidated financial statements.

In other words, in addition to the measure that is most consistent with the measurement principles

under generally accepted accounting principles (GAAP), a public entity is not precluded from reporting additional measures of a segment’s

profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources, (5) Require that a public

entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or

loss in assessing segment performance and deciding how to allocate resources, and (6) Require that a public entity that has a single reportable

segment provide all the disclosures required by the amendments in this Update and all existing segment disclosures in Topic 280.

The amendments

in this Update also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies

the quantitative thresholds to determine its reportable segments.

The amendments in this Update are effective for fiscal years beginning

after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

entity should apply the amendments in this Update retrospectively to all prior periods presented in the financial statements.

Upon transition,

the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories

identified and disclosed in the period of adoption.

The Company is currently evaluating the impact of the update on the Company’s

consolidated financial statements and related disclosures.

In December 2023, the FASB

issued ASU 2023-09, which is an update to Topic 740, Income Taxes.

The amendments in this update related to the rate reconciliation

and income taxes paid disclosures improve the transparency of income tax disclosures by requiring (1) consistent categories and greater

disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction.

The amendments allow

investors to better assess, in their capital allocation decisions, how an entity’s worldwide operations and related tax risks and

tax planning and operational opportunities affect its income tax rate and prospects for future cash flows.

The other amendments in this

Update improve the effectiveness and comparability of disclosures by (1) adding disclosures of pretax income (or loss) and income tax

expense (or benefit) to be consistent with U.S.

Securities and Exchange Commission (SEC) Regulation S-X 210.4-08(h), Rules of General

Application—General Notes to Financial Statements:

Income Tax Expense, and (2) removing disclosures that no longer are considered

cost beneficial or relevant.

For public business entities, the amendments in this Update are effective for annual periods beginning after

December 15, 2024.

For entities other than public business entities, the amendments are effective for annual periods beginning after December

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

amendments in this Update should be applied on a prospective basis.

Retrospective application is permitted.

The Company is currently evaluating

the impact of the update on Company’s consolidated financial statements and related disclosures.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recently adopted accounting pronouncements

considers the applicability and impact of all accounting standards updates (“ASUs”).

Management periodically reviews new accounting

standards that are issued.

Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company

meets the definition of an emerging growth company and has elected the extended transition period for complying with new or revised accounting

standards, which delays the adoption of these accounting standards until they would apply to private companies.

2016, the FASB issued new accounting guidance ASU 2016-13 for recognition of credit losses on financial instruments, which is effective

January 1, 2020, with early adoption permitted on January 1, 2019.

The guidance introduces a new credit reserving model known as the Current

Expected Credit Loss (“CECL”) model, which is based on expected losses, and differs significantly from the incurred loss approach

The CECL model requires measurement of expected credit losses not only based on historical experience and current conditions,

but also by including reasonable and supportable forecasts incorporating forward-looking information and will likely result in earlier

recognition of credit reserves.

In November 2019, the FASB issued ASU No.

1 unchanged sentence

for private companies, not-for-profit organizations and certain smaller reporting companies applying for credit losses standard.

The new effective date for these preparers is for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The Company has adopted this update on April 1, 2023, and the adoption does not have material impact on Company’s consolidated financial statements and related disclosures.

CECL adoption will have broad impact on the financial statements of financial services firms, which will affect key profitability and solvency measures.

effective date for these preparers is for fiscal years beginning after December 15, 2022, including interim periods within those fiscal

The Company has adopted this update on April 1, 2023, and the adoption does not have material impact on Company’s consolidated

financial statements and related disclosures.

CECL adoption

will have broad impact on the financial statements of financial services firms, which will affect key profitability and solvency measures.

Some of the more notable expected changes include:

- Higher allowance on financial guarantee reserve and finance lease receivable levels and related deferred tax assets.

While different asset types will be impacted differently, the expectation is that reserve levels will generally increase across the board for all financial firms.

- Increased reserve levels may lead to a reduction in capital levels.

- As a result of higher reserving levels, the expectation is that CECL will reduce cyclicality in financial firms’ results, as higher reserving in “good times” will mean that less dramatic reserve increases will be loan related income (which will continue to be recognized on a periodic basis based on the effective interest method) and the related credit losses (which will be recognized up front at origination).

This will make periods of loan expansion seem less profitable due to the immediate recognition of expected credit losses.

Periods of stable or declining loan levels will look comparatively profitable as the income trickles in for loans, where losses had been previously recognized.

allowance on financial guarantee reserve and finance lease receivable levels and related deferred tax assets.

While different asset types

will be impacted differently, the expectation is that reserve levels will generally increase across the board for all financial firms.

reserve levels may lead to a reduction in capital levels.

a result of higher reserving levels, the expectation is that CECL will reduce cyclicality in financial firms’ results, as higher

reserving in “good times” will mean that less dramatic reserve increases will be loan related income (which will continue

to be recognized on a periodic basis based on the effective interest method) and the related credit losses (which will be recognized

up front at origination).

This will make periods of loan expansion seem less profitable due to the immediate recognition of expected

credit losses.

Periods of stable or declining loan levels will look comparatively profitable as the income trickles in for loans, where

losses had been previously recognized.

Although the Company has automobile

financing business, the Company reserves the allowance for doubtful account such as accounts receivable balance based on historical collection

rate, current economic environment, and credit worthy of specific customers, along with individual assessment on specific accounts.

these approvals are aligned with the CECL model, the adoption of CECL model does not have material impact on Company’s consolidated

financial statements and related disclosures.

Further, The Company does not believe other recently issued but not yet effective accounting

standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash

flows of the Company.

In March 2023, the FASB issued

new accounting guidance, ASU 2023-01, for leasehold improvements associated with common control leases, which is effective for fiscal

years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted for both interim

and annual financial statements that have not yet been made available for issuance.

The new guidance introduced two issues:

conditions to be considered with leases between related parties under common control and accounting for leasehold improvements.

for the new issues are to reduce the cost associated with implementing and applying Topic 842 and to promote diversity in practice by

entities within the scope when applying lease accounting requirements.

ASU 2023-01 is effective for the Company for annual and interim

reporting periods beginning April 1, 2024.

The Company has adopted this update on April 1, 2024, and does not anticipate such adoption

to have material impact on Company’s consolidated financial statements and related disclosures for the fiscal year ending March

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In March 2023, the FASB issued new accounting guidance, ASU 2023-01, for leasehold improvements associated with common control leases, which is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance.

The new guidance introduced two issues:

terms and conditions to be considered with leases between related parties under common control and accounting for leasehold improvements.

The goals for the new issues are to reduce the cost associated with implementing and applying Topic 842 and to promote diversity in practice by entities within the scope when applying lease accounting requirements.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows of the Company.

DISCONTINUED OPERATIONS

Discontinued operations- Online P2P lending services

On October 17, 2019, the Board approved the plan under which the Company has discontinued and is winding down its online P2P lending services business (the “Plan”).

The Company determined that the operation of its online P2P lending services business was not viable in light of the tightened regulations on online peer-to-peer lending in China generally and the unofficial request from local regulator to reduce the Company’s online peer-to-peer lending transaction volume on a monthly basis.

The Company also determined that the discontinuation of its online P2P lending services business would allow the Company to focus its resources on its automobile financing facilitation and transaction business.

In connection with the Plan, the Company ceased facilitation of loan transactions on its online lending platform and assumed all the outstanding loans from investors on the platform.

The decision and action taken by the Company of discontinuing the online lending services business represented a major shift that had a major effect on the Company’s operations and financial results, which triggers discontinued operations accounting in accordance with ASC 205-20-45.

The fair value of discontinued operations, determined as of October 17, 2019, includes estimated consideration expected to be received, less costs to sell.

After consideration of the determination of fair value of the discontinued operations including the assumption of all the outstanding loans from investors on the platform, $ 143,668 of accounts receivable, $ 3,760,599 of other receivables, and $ 143,943 of prepayments for impaired intangible assets were indicated as of the date the Company’s Board of Directors approved the Plan on October 17, 2019, and the Company recognized $ 4,048,210 provision for doubtful accounts as of December 31, 2019 related to the Company’s online lending services business, while the Company did not recognize any additional provision for doubtful accounts for the year ended March 31, 2023.

The following table sets forth the reconciliation of the carrying amounts of major classes liabilities from discontinued operations of Online P2P lending services in consolidated balance sheet as of March 31, 2023 and 2022.

Carrying amounts of major classes of liabilities included as part of discontinued operations of Online P2P lending services:

operations- Online P2P lending services

17, 2019, the Board approved the plan under which the Company has discontinued and is winding down its online P2P lending services business

(the “Plan”).

The Company determined that the operation of its online P2P lending services business was not viable in light

of the tightened regulations on online peer-to-peer lending in China generally and the unofficial request from local regulator to reduce

the Company’s online peer-to-peer lending transaction volume on a monthly basis.

The Company also determined that the discontinuation

of its online P2P lending services business would allow the Company to focus its resources on its automobile financing facilitation and

transaction business.

In connection with the Plan, the Company ceased facilitation of loan transactions on its online lending platform

and assumed all the outstanding loans from investors on the platform.

The decision and action taken by the Company of discontinuing the

online lending services business represented a major shift that had a major effect on the Company’s operations and financial results,

which triggers discontinued operations accounting in accordance with ASC 205-20-45.

value of discontinued operations, determined as of October 17, 2019, includes estimated consideration expected to be received, less costs

After consideration of the determination of fair value of the discontinued operations including the assumption of all the outstanding

loans from investors on the platform, $ 143,668 of accounts receivable, $ 3,760,599 of other receivables, and $ 143,943 of

prepayments for impaired intangible assets were indicated as of the date the Company’s Board of Directors approved the Plan on October

17, 2019, and the Company recognized $ 4,048,210 provision for doubtful accounts as of December 31, 2019 related to the Company’s

online lending services business, while the Company did not recognize any additional provision for doubtful accounts for the year ended

March 31, 2024.

amounts of major classes of liabilities was included as part of discontinued operations of Online P2P lending services, whose change was

due to the effect of exchange rate changes as of March 31, 2024 and 2023:

Current liabilities

Accrued expenses and other liabilities

Discontinued operation- Jinkailong

On March 31, 2022, Ruixi, a majority owned subsidiary of the Company, holding 35 % equity interest of Jinkailong, entered into an Agreement for the Termination of the Agreement for Concerted Action by Shareholders of Jinkailong (the “Termination Agreement”), pursuant to which the Agreement for Concerted Action by Shareholders with respect to Jinkailong signed on August 26, 2018 (“Voting Agreement No.1”) and the Agreement for Concerted Action by Shareholders with respect to Jinkailong signed on February 13, 2020 (“Voting Agreement No.2”, collectively, “Voting Agreements”) shall be terminated as of the date of the Termination Agreement.

As a result, the Company no longer has a controlling financial interest in Jinkailong and has determined that Jinkailong was deconsolidated from the Company’s consolidated financial statements effective as of March 31, 2022.

However, as Hunan Ruixi still holds 35 % equity interests in Jinkailong, Jinkailong is the equity investee company of the Company since then.

As of March 31, 2023, the paid-in capital of Jinkailong is zero .

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the reconciliation of the amounts of major classes of income and losses from discontinued operations of Jinkailong in the consolidated statements of operations and comprehensive income (loss) for the years ended March 31, 2023 and 2022.

For the Years Ended

Cost of revenue

( 5,183,806 )

Operating expenses

Selling, general and administrative expenses

( 4,139,800 )

Impairment of long-live assets

Provision for doubtful account

Total operating expenses

( 4,184,025 )

Loss from discontinued operations

( 2,537,715 )

Other expense, net

Loss before income taxes

( 2,747,209 )

Income tax expenses

( 2,747,209 )

net loss from discontinued operations attributable to noncontrolling interest

Net loss attributable to stockholders

( 2,032,935 )

Discontinued operation- Youlu

On March 31, 2022, the Youlu VIE Agreements were terminated by XXTX and Youlu Shareholders.

As Youlu had limited operation, the Company recognized a gain of $ 23,556 from the termination.

ACCOUNTS RECEIVABLE, NET

Accounts receivable include a portion of bundled lease arrangements on fixed minimum monthly payments to be paid by the automobile purchasers arising from automobile sales and services fees, net of unearned interest income, discounted using the Company’s lease pricing interest rates.

It also includes online ride-hailing services fees due from online ride-hailing drivers and rental receivables due from operating lessees.

As of March 31, 2023 and 2022, accounts receivables were comprised of the following:

Receivables of automobile sales due from automobile purchasers

Receivables of service fees due from automobile purchasers

RECEIVABLE, NET

receivable include online ride-hailing services fees due from online ride-hailing drivers and rental receivables due from operating lessees.

It also includes a portion of bundled lease arrangements on fixed minimum monthly payments to be paid by the automobile purchasers arising

from automobile sales and services fees, net of unearned interest income, discounted using the Company’s lease pricing interest

31, 2024 and 2023, accounts receivable were comprised of the following:

Receivables of online ride hailing fees from online ride-hailing drivers

Receivables of operating lease

Allowance for doubtful accounts

Receivables of automobile sales due from automobile purchasers

Allowance for credit losses

Accounts receivable, net

Accounts receivable, net, current portion

Accounts receivable, net, non-current portion

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Movement of allowance for doubtful accounts for March 31, 2023 and 2022 are as follows:

Movement of allowance for credit

losses for the years ended March 31, 2024 and 2023 are as follows:

Beginning balance

Deconsolidation of Jinkailong

Translation adjustment

Ending balance

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Automobiles (i)

As of March 31, 2023 and 2022, the Company owned 1 and 36 automobiles with a total value of $ 6,678 and $ 286,488 , net of impairment, for sale or sales-type leases, respectively.

As of March 31, 2023 and 2022, the Company compared the cost of automobiles with their net realizable value and recognized impairments of $ 3,085 and $ 60,398 , respectively for certain automobiles for sale for the years ended March 31, 2023 and 2022, respectively.

PREPAYMENTS, OTHER RECEIVABLES AND OTHER ASSETS

As of March 31, 2023 and 2022, the prepayments, other receivables and other assets were comprised of the following:

Prepaid expenses (ii)

of March 31, 2023, the Company owned an automobile with a total value of $ 6,678 , net of impairment, for sale or sales-type leases.

years ended March 31, 2024 and 2023, the Company recognized impairments of $ 0 and $ 3,085 , respectively for certain automobiles

PREPAYMENTS, OTHER RECEIVABLES

AND OTHER CURRENT ASSETS, NET

31, 2024 and 2023, the prepayments, other receivables and other current assets, net were comprised of the following:

Prepaid expenses (i)

Deposits (ii)

Receivables from aggregation platforms (iii)

2 unchanged sentences

Employee advances

Total prepayments, other receivables and other assets

(i ) Deposits

The balance of deposits mainly represented the security deposit made by the Company to various automobile leasing companies, financial institutions and Didi Chuxing Technology Co., Ltd., who runs an online ride-hailing platform.

(ii) Prepaid expense

The balance of prepaid expense represented automobile liability insurance premium for automobiles for operating lease and other miscellaneous expense such as office lease, office remodel expense and etc.

Allowance for credit losses

Total prepayments, other receivables and other current assets, net

Movement of allowance for credit

losses for the years ended March 31, 2024 and 2023 are as follows:

Beginning balance

Translation adjustment

Ending balance

balance of prepaid expense represented automobile purchase prepayments, automobile liability insurance premium for automobiles for operating

lease and other miscellaneous expense such as office lease, office remodel expense, etc.

that will expire within one year.

(iii) Receivables from aggregation platforms

The balance of receivables from aggregation platforms represented the amount due from the collaborated aggregation platforms based on the confirmed billings, which will be disbursed to the drivers who completed their rides through the Company’s online ride-hailing platform.

(ii) Deposits

The balance of deposits mainly

represented the security deposit made by the Company to various automobile leasing companies, financial institutions and Didi Chuxing

Technology Co., Ltd., who runs an online ride-hailing platform.

As of March 31, 2024, the

allowance for credit losses of $ 17,841 was recorded against the security deposits not returned

for more than one year after the end of the cooperation.

(iii) Receivables

from aggregation platforms

balance of receivables from aggregation platforms represented the amount due from the collaborated aggregation platforms based on the

confirmed billings, which will be disbursed to the drivers who completed their rides through the Company’s online ride-hailing

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(iv) Value added tax (“VAT”) recoverable

The balance represented the amount of VAT, which resulted from historical purchasing activities and could be further used for deducting future VAT in PRC.

(v) Due from automobile purchasers, net

The balance due from automobile purchasers represented the payments of automobiles and related insurances and taxes made on behalf of the automobile purchasers.

The balance is expected to be collected from the automobile purchasers in installments.

As of March 31, 2023 and during the year ended March 31, 2023, the Company did not record allowance against doubtful receivables due from automobile purchasers.

As of March 31, 2022, the allowance against doubtful receivables due from automobile purchasers was zero.

During the year ended March 31, 2022, the Company recorded additional allowance of $ 84,600 , while wrote off balance due from automobile purchase of $ 84,600 , and recovered allowance against the balance due from automobile purchases $ 3,308 from continuing operations, against doubtful receivables.

During the year ended March 31, 2022, the Company recorded additional allowances of $ 35,983 , while wrote off balance due from automobile purchases of $ 1,134 , and recovered allowance against the balance due from automobile purchasers of $ 12,352 from discontinued operations.

PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

added tax (“VAT”) recoverable

balance represented the amount of VAT, which resulted from historical purchasing activities and could be further used for deducting future

from automobile purchasers, net

The balance due from automobile

purchasers represented the payments of automobiles and related insurances and taxes made on behalf of the automobile purchasers.

is expected to be collected from the automobile purchasers in installments.

As of March 31, 2024, the allowance for credit losses recorded

against receivables due from automobile purchasers was $ 2,633 .

During the year ended March 31, 2024, the Company recorded provision for

credit losses of $ 2,652 against the balance from an automobile purchaser.

AND EQUIPMENT, NET

and equipment consist of the following:

Leasehold improvements

5 unchanged sentences

Total property and equipment, net

Depreciation expense from continuing operations for years ended March 31, 2023 and 2022 were amounted to $ 1,095,518 and $ 956,400 , respectively.

Depreciation expense from discontinued operations for the year ended March 31, 2022 amounted to $ 170,177 .

OTHER NON-CURRENT ASSETS

Prepayments of automobiles purchased (i)

In March and September 2022, the Company entered into two automobile purchase agreements (“Purchase Agreements”) with two third parties to purchase a total of 150 automobiles which amounted to $ 2,444,813 .

As of March 31, 2023, the Company has made prepayments of $ 716,407 towards the remaining purchase pertaining to the Purchase Agreements.

The Company expects to complete the remaining purchase by December 31, 2023.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

expense for the years ended March 31, 2024 and 2023 were amounted to $ 933,395 and $ 1,095,518 , respectively.

INTANGIBLE ASSETS, NET

Intangible assets consisted of the following:

Intangible assets consisted of

the following:

Online ride-hailing platform operating licenses

1 unchanged sentence

Total intangible assets, net

Amortization expense from continuing operations totaled $ 184,215 and $ 160,831 for the years ended March 31, 2023 and 2022, respectively.

The following table sets forth the Company’s amortization expense for the next five years ending:

expense for the years ended March 31, 2024 and 2023 were amounted to $ 172,135 and $ 184,215 , respectively.

The following

table sets forth the Company’s amortization expense for the next five years ending:

Twelve months ending March 31, 2025

3 unchanged sentences

Twelve months ending March 31, 2029

BORROWINGS FROM A FINANCIAL INSTITUTION

The borrowings from a financial institution in China represented the short-term loans of $ 8,813 and $ 145,542 as of March 31, 2023 and 2022, respectively.

Such borrowings bearing interest rate of 13.04 % per annum as of March 31, 2023 and 2022, which are to be repaid within the next 12 months .

The interest expense for the years ended March 31, 2023 and 2022 was $ 0 and $ 5,893 from continuing operations, respectively.

The interest expense for the year ended March 31, 2022 was $ 501,361 from discontinued operations, of which, $ 450,889 was due to continuing operations and eliminated in the consolidation statements of operations and comprehensive income (loss).

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ACCRUED EXPENSES AND OTHER LIABILITIES

OTHER NON-CURRENT ASSETS

Prepayments of automobiles purchased (i)

September 2022 and March 2023, the Company entered into two automobile purchase agreements (“Purchase Agreements”) with two

third parties to purchase a total of 150 automobiles which amounted to $ 2,301,261 .

As of March 31, 2024, 50 automobiles

have been delivered to the Company and the Company has made prepayments of $639 ,863 towards the remaining purchase pertaining

to the Purchase Agreements.

The Company expects to complete the remaining purchase by March 31, 2025.

BORROWINGS FROM A FINANCIAL

Interest March 31, March 31,

Bank name Maturity date rate 2024 2023

WeBank* 09/11/2025 12.24 % $ 213,684 $ —

SDIC Taikang Trust Co.

Ltd Fully Repaid on

August 31, 2023 13.04 % —

Total $ 213,684 $ 8,813

Borrowing from a financial institution, current $ 142,456 $ 8,813

Borrowing from a financial institution, non-current $ 71,228 $ —

September 11, 2023, the Company entered into a loan agreement (the “Loan Agreement”) with WeBank for a total amount of $ 249,297 .

Pursuant to the Loan Agreement, the borrowing bears an interest rate of 12.24 % per annum with monthly repayments consist of principal

and interest for two years.

As of March 31, 2024, the current portion of the loan principal balance to be repaid within the next twelve

months was amounted to $ 142,456 , while the noncurrent portion of the loan principal to be repaid after March 31, 2025, was amounted to

interest expense for the years ended March 31, 2024 and 2023 was $ 17,630 and $0 , respectively.

ACCRUED EXPENSES AND OTHER

Accrued payroll and welfare

2 unchanged sentences

Accrued expenses

Payables for expenditures on automobile transaction and related services (iii)

Other taxes payable

Loan repayments received on behalf of financial institutions (iii)

Payables for expenditures on automobile transaction and related services

Loan repayments received on behalf of financial institutions(iv)

Other payables

2 unchanged sentences

Total accrued expenses and other liabilities – continuing operations

Payables to drivers from aggregation platforms

The balance of payables to drivers from aggregation platforms represented the amount the Company collected on behalf of drivers who completed their transaction through the Company’s online ride-hailing platform base on the confirmed billings.

to drivers from aggregation platforms

balance of payables to drivers from aggregation platforms represented the amount the Company collected on behalf of drivers who completed

their transaction through the Company’s online ride-hailing platform base on the confirmed billings.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(ii) Deposits

The balance of deposits represented the security deposit from operating and finance lease customers to cover lease payment and related automobile expense in case the customers’ accounts are in default.

The balance is refundable at the end of the lease term, after deducting any missed lease payment and applicable fee.

(iii) Loan repayments received on behalf of financial institutions

The balance of loan repayments received on behalf of financial institutions represented the loan repayments made by the automobile purchasers to financial institutions through the Company, which has not been paid to the financial institutions.

balance of deposits represented the security deposit from operating and finance lease customers to cover lease payment and related automobile

expense in case the customers’ accounts are in default.

The balance is refundable at the end of the lease term, after deducting

any missed lease payment and applicable fee.

(iii) Payables

for expenditures on automobile transaction and related services

balance of payables for expenditures on automobile transaction and related services represented the payables balance to the miscellaneous

expenses related to the daily operations of automobiles.

repayments received on behalf of financial institutions

balance of loan repayments received on behalf of financial institutions represented the loan repayments made by the automobile purchasers

to financial institutions through the Company, which has not been paid to the financial institutions.

EMPLOYEE BENEFIT PLAN

The Company has made employee benefit plan in accordance with relevant PRC regulations, including retirement insurance, unemployment insurance, medical insurance, housing fund, work injury insurance and maternity insurance.

The contributions made by the Company were $ 452,796 and $ 602,641 for the years ended March 31, 2023 and 2022, respectively, from continuing operations of the Company.

The contributions made by the Company were $ 464,159 for the year ended March 31 2022 for the Company’s discontinuing operations.

As of March 31, 2023 and 2022, the Company did not make adequate employee benefit contributions in the amount of $ 1,086,526 and $ 963,824 , respectively, from continuing operations of the Company.

The registration statement relating to the Company’s initial public offering also included the underwriters’ common stock purchase warrants to purchase 33,794 ( 337,940 pre reverse split) shares of common stock (“IPO Underwriter’s Warrants”).

Each five-year warrant entitles warrant holder to purchase one share of the Company’s common stock at the price of $ 48.0 ($ 4.80 before reverse split) per share and is not exercisable for a period of 180 days from March 16, 2018 .

As of March 31, 2023, there were 3,794 ( 37,940 pre reverse split) IPO Underwriter’s Warrants outstanding.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Warrants in Offerings

The Company adopted the provisions of ASC 815 on determining what types of instruments or embedded features in an instrument held by a reporting entity can be considered indexed to its own stock for the purpose of evaluating the first criteria of the scope exception in ASC 815.

Warrants issued in connection with the direct equity offering with exercise prices denominated in US dollars are no longer considered indexed to the Company’s stock, as their exercise prices are not in the Company’s functional currency (RMB), and therefore no longer qualify for the scope exception and must be accounted for as a derivative.

These warrants are classified as liabilities under the caption “Derivative liabilities” in the consolidated statements of balance sheets and recorded at estimated fair value at each reporting date, computed using the Black-Scholes valuation model.

Changes in the liability from period to period are recorded in the consolidated statements of operations and comprehensive income (loss) under the caption “Change in fair value of derivative liabilities.”

has made employee benefit plan in accordance with relevant PRC regulations, including retirement insurance, unemployment insurance, medical

insurance, housing fund, work injury insurance and maternity insurance.

The contributions

made by the Company were $ 267,962 and $ 452,796 for the years ended March 31, 2024 and 2023, respectively, from operations of the Company.

31, 2024 and 2023, the Company did not make adequate employee benefit contributions in the amount of $ 1,137,887 and $ 1,086,526 , respectively.

The registration

statement relating to the Company’s initial public offering also included the underwriters’ common stock purchase warrants

to purchase 33,794 ( 337,940 pre reverse split) shares of common stock (“IPO Underwriter’s Warrants”).

Each five-year warrant entitles warrant holder to purchase one share of the Company’s common stock at the price of $ 48.0 ($ 4.80 before

reverse split) per share and is not exercisable for a period of 180 days from March 16, 2018 .

As of March 31, 2024,

the remaining 3,794 warrants of the Company’s initial public offering has been forfeited due to expiration.

adopted the provisions of ASC 815 on determining what types of instruments or embedded features in an instrument held by a reporting entity

can be considered indexed to its own stock for the purpose of evaluating the first criteria of the scope exception in ASC 815.

issued in connection with the direct equity offering with exercise prices denominated in US dollars are no longer considered indexed to

the Company’s stock, as their exercise prices are not in the Company’s functional currency (RMB), and therefore no longer

qualify for the scope exception and must be accounted for as a derivative.

These warrants are classified as liabilities under the caption

“Derivative liabilities” in the consolidated statements of balance sheets and recorded at estimated fair value at each reporting

date, computed using the Black-Scholes valuation model.

Changes in the liability from period to period are recorded in the consolidated

statements of operations and comprehensive loss under the caption “Change in fair value of derivative liabilities.”

Registered Direct Offering Warrants

As of March 31, 2023 and 2022, there were 16,841 ( 168,411 pre reverse split) 2019 registered direct offering warrants outstanding.

During years ended March 31, 2023 and 2022, the change of fair value was a gain of $ 12,432 and $ 185,727 in the consolidated statements of operations and comprehensive income (loss) based on the decrease in fair value of the liabilities since March 31, 2021, respectively.

As of March 31, 2023 and 2022, the fair value of the derivative instrument totaled $ 6 and $ 12,438 , respectively.

August 2020 Underwriters’ Warrants

As of March 31, 2023 and 2022, there were 31,808 ( 318,080 pre reverse split) underwriters’ warrants outstanding.

During the years ended March 31, 2023 and 2022, the change of fair value was a gain of $ 36,131 and $ 352,944 recognized in the consolidated statements of operations and comprehensive income (loss) based on the decrease in fair value of the liabilities since March 31, 2021, respectively.

As of March 31, 2023 and 2022, the fair value of the derivative instrument totaled $ 8,450 and $ 44,581 , respectively.

February 2021 Registered Direct Offering Warrants

As of March 31, 2023 and 2022, there were 53,262 ( 532,609 pre reverse split) February 2021 registered direct offering warrants outstanding.

During the years ended March 31, 2023 and 2022, the change of fair value was a gain of $ 54,052 and $ 572,018 recognized in the consolidated statements of operations and comprehensive income (loss) based on the decrease in fair value of the liabilities since March 31, 2021, respectively.

As of March 31, 2023 and 2022, the fair value of the derivative instrument totaled $ 11,491 and $ 65,543 , respectively.

May 2021 Registered Direct Offering Warrants

As of March 31, 2023 and 2022, there were 594,682 ( 5,946,810 pre reverse split) May 2021 registered direct offering warrants outstanding.

During the years ended March 31, 2023 and 2022, the change of fair value was a gain of $ 662,767 and $ 2,725,530 recognized in the consolidated statements of operations and comprehensive income (loss) based on the decrease in fair value of the liabilities since March 31, 2021.

As of March 31, 2023 and 2022, the fair value of the derivative instrument totaled $ 174,108 and $ 836,875 , respectively.

November 2021 Private Placement Warrants

Pursuant to November 2021 Investors Warrants, if at any time and from time to time on or after the issuance date there occurs any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (“Stock Combination Event”) and the Event Market Price (which is defined as with respect to any Stock Combination Event date, the quotient determined by dividing (x) the sum of the VWAP of the Common Stock for each of the five ( 5 ) lowest trading days during the twenty ( 20 ) consecutive trading day period ending and including the trading day immediately preceding the sixteenth (16th) trading day after such Stock Combination Event date, divided by (y) five ( 5 )) is less than the original exercise price of $ 0.82 then in effect, then on the sixteenth (16th) trading day immediately following such Stock Combination Event, the exercise price then in effect on such sixteenth (16th) trading day shall be reduced (but in no event increased) to the event market price.

As the 1-for-10 reverse stock split on the Company’s common stock became effective on April 6, 2022, the exercise price of the November 2021 Investors Warrants was adjusted to $ 1.13 , and the total number of shares of the November 2021 Investors Warrants was adjusted to 5,335,763 .

As of March 31, 2024 and 2023,

there were 0 and 16,841 2019 registered direct offering warrants outstanding, respectively.

During the year ended March 31,

2024, the Company has forfeited the remaining 16,841 2019 registered direct offering warrants as they expired.

During the years

ended March 31, 2024 and 2023, the change of fair value was a gain of $ 6 and $ 12,432 recognized in the consolidated statements of

operations and comprehensive loss based on the decrease in fair value of the liabilities since March 31, 2022, respectively.

31, 2024 and 2023, the fair value of the derivative instrument totaled $ 0 and $ 6 , respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2023 and 2022, there were 5,365,911 ( 7,869,971 per reverse split), and 5,390,911 ( 7,904,422 pre reverse split) respectively for November 2021 Private Placement Warrants outstanding.

During the years ended March 31, 2023 and 2022, the change of fair value was a gain of $ 946,507 and $ 3,115,263 recognized in the consolidated statements of operations and comprehensive income (loss) based on the decrease in fair value of the liabilities since insurance.

On November 18, 2022, a holder of November 2021 private placement warrants exercised the warrants on a “cashless” basis.

Upon exercise of above-mentioned warrants, the Company reduced the fair value of the warrants and increased the additional paid in capital by $ 1,533 .

As of March 31, 2023 and 2022, the fair value of the derivative instrument totaled $ 307,727 and $ 1,255,767 , respectively.

The Company has warrants outstanding as follows giving retroactive effect to the 1-for-10 reverse stock split effected on April 6, 2022:

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

2020 Underwriters’ Warrants

31, 2024 and 2023, there were 31,808 underwriters’ warrants outstanding.

During years ended March 31, 2024 and 2023, the

change of fair value was a gain of $ 5,231 and $ 36,131 recognized in the consolidated statements of operations and comprehensive

loss based on the decrease in fair value of the liabilities since March 31, 2022, respectively.

As of March 31, 2024 and 2023, the fair

value of the derivative instrument totaled $ 3,219 and $ 8,450 , respectively.

As the 1-for-10 reverse stock split on the Company’s

common stock became effective on April 6, 2022, the exercise price of the August 2020 Underwriters’ Warrants was adjusted to $ 6.25 .

2021 Registered Direct Offering Warrants

31, 2024 and 2023, there were 53,262 February 2021 registered direct offering warrants outstanding.

During the years ended March

31, 2024 and 2023, the change of fair value was a gain of $ 7,158 and $ 54,052 recognized in the consolidated statements of operations

and comprehensive loss based on the decrease in fair value of the liabilities since March 31, 2022, respectively.

As of March 31, 2024

and 2023, the fair value of the derivative instrument totaled $ 4,333 and $ 11,491 , respectively.

As the 1-for-10 reverse stock split

on the Company’s common stock became effective on April 6, 2022, the exercise prices of the Placement Agent Warrants and the ROFR

Warrants of the February 2021 Registered Direct Offering were adjusted to $ 13.80 and $ 17.25 , respectively.

Registered Direct Offering Warrants

As of March 31, 2024 and 2023,

there were 594,682 May 2021 registered direct offering warrants outstanding.

During the years ended March 31, 2024 and 2023,

the change of fair value was a gain of $ 87,424 and $ 662,767 recognized in the consolidated statements of operations and comprehensive

loss based on the decrease in fair value of the liabilities since March 31, 2022.

As of March 31, 2024 and 2023, the fair value of the

derivative instrument totaled $ 86,684 and $ 174,108 , respectively.

As the 1-for-10 reverse stock split on the Company’s

common stock became effective on April 6, 2022, the exercise price of the May 2021 Registered Direct Offering warrants was adjusted to

2021 Private Placement Warrants

to November 2021 Investors Warrants, if at any time and from time to time on or after the issuance date there occurs any stock split,

stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (“Stock Combination Event”)

and the Event Market Price (which is defined as with respect to any Stock Combination Event date, the quotient determined by dividing

(x) the sum of the VWAP of the Common Stock for each of the five ( 5 ) lowest trading days during the twenty ( 20 ) consecutive trading day

period ending and including the trading day immediately preceding the sixteenth (16th) trading day after such Stock Combination Event

date, divided by (y) five (5)) is less than the original exercise price of $ 0.82 then in effect, then on the sixteenth (16th) trading

day immediately following such Stock Combination Event, the exercise price then in effect on such sixteenth (16th) trading day shall be

reduced (but in no event increased) to the event market price.

As the 1-for-10 reverse stock split on the Company’s common

stock became effective on April 6, 2022, the exercise price of the November 2021 Investors Warrants was adjusted to $ 1.13 , the Event Market

Price and the total number of shares of the November 2021 Investors Warrants was adjusted to 5,335,763 .

of March 31, 2024 and 2023, there were 5,365,911 November 2021 Private Placement Warrants outstanding.

During the years ended March

31, 2024 and 2023, the change of fair value was a gain of $ 113,130 and $ 946,507 recognized in the consolidated statements of

operations and comprehensive loss based on the decrease in fair value of the liabilities since insurance.

On November 18, 2022, a holder

of November 2021 private placement warrants exercised the warrants on a “cashless” basis.

Upon exercise of above-mentioned

warrants, the Company reduced the fair value of the warrants and increased the additional paid in capital by $ 1,533 .

As of March 31, 2024

and 2023, the fair value of the derivative instrument totaled $ 194,597 and $ 307,727 , respectively.

Weighted Average

Average Remaining

Warrants Warrants Exercise Contractual

Outstanding Exercisable Price Life

Balance, March 31, 2022 6,091,298 6,091,298 $ 2.28 4.32

Exercised ( 25,000 ) ( 25,000 ) —

Balance, March 31, 2023 6,066,298 6,066,298 $ 2.29 3.56

Forfeited ( 20,635 ) ( 20,635 )

Balance, March 31, 2024 6,045,663 6,045,663 $ 2.25 2.55

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock Units

On October 29, 2020, the Board approved the issuance of an aggregate of 127,273 restricted stock units (“RSUs”) to directors, officers and certain employees as stock compensation for their services for the year ended March 31, 2022.

Total RSUs granted to these directors, officers and employees were valued at an aggregate fair value of $ 140,000 .

These RSUs will vest in four equal quarterly installments on January 29, 2021, April 29, 2021, July 29, 2021 and October 29, 2021 or in full upon the occurrence of a change in control of the Company, provided that the director, officer or the employee remains in service through the applicable vesting date.

The RSUs will be settled by the Company’s issuance of shares of common stock in certificated or uncertificated form upon the earlier of (i) vesting date, (ii) a change in control and (ii) termination of the services of the director, officer or employee due to a “separation of service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, or the death or disability of such director, officer or employee.

As of the filing date of these consolidated financial statements, all installment of RSUs with an aggregate of 12,727 ( 127,273 pre reverse split) was vested and 9,545 ( 95,457 pre reverse split) was settled by the Company.

The Company expects to settle the remaining vested RSUs by issuance of shares of common stock before December 31, 2023 and account for the vested RSUs as an addition to both expenses and additional paid-in capital.

29, 2020, the Board approved the issuance of an aggregate of 127,273 restricted stock units (“RSUs”) to directors,

officers and certain employees as stock compensation for their services for the years ended March 31, 2022.

Total RSUs granted to these

directors, officers and employees were valued at an aggregate fair value of $ 140,000 .

These RSUs will vest in four equal quarterly

installments on January 29, 2021, April 29, 2021, July 29, 2021 and October 29, 2021 or in full upon the occurrence of a change in control

of the Company, provided that the director, officer or the employee remains in service through the applicable vesting date.

will be settled by the Company’s issuance of shares of common stock in certificated or uncertificated form upon the earlier of

(i) vesting date, (ii) a change in control and (ii) termination of the services of the director, officer or employee due to a “separation

of service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, or the death or disability of

such director, officer or employee.

As of the filing date of these consolidated financial statements, all installment of RSUs with an

aggregate of 12,727 was vested and 9,545 was settled by the Company.

The Company expects to settle the remaining

vested RSUs by issuance of shares of common stock before December 31, 2024 and account for the vested RSUs as an addition to both expenses

and additional paid-in capital.

Equity Incentive Plan

At the 2018 Annual Meeting of Stockholders of the Company held on November 8, 2018, the Company’s stockholders approved the Company’s 2018 Equity Incentive Plan for employees, officers, directors and consultants of the Company and its affiliates.

At the 2022 Annual Meeting of Stockholders of Company held on March 30, 2023, the Company’s stockholders approved the amendment to the 2018 Equity Incentive Plan, to increase the number of shares of common stock reserved under the Plan to 1,500,000 shares.

A committee consisting of at least two independent directors would be appointed by the Board or in the absence of such a committee, the board of directors, will be responsible for the general administration of the Equity Incentive Plan.

All awards granted under the Equity Incentive Plan will be governed by separate award agreements between the Company and the participants.

As of March 31, 2023, the Company has granted an aggregate of RSUs and issued an aggregate of shares upon vest under the Equity Incentive Plan and RSUs were forfeited due to two directors ceased to serve on the board of the Company since November 8, 2018.

2018 Annual Meeting of Stockholders of the Company held on November 8, 2018, the Company’s stockholders approved the Company’s

2018 Equity Incentive Plan for employees, officers, directors and consultants of the Company and its affiliates.

At the 2022 Annual Meeting

of Stockholders of Company held on March 30, 2023, the Company’s stockholders approved the amendment to the 2018 Equity Incentive

Plan, to increase the number of shares of common stock reserved under the Plan to 1,500,000 shares.

A committee consisting

of at least two independent directors would be appointed by the Board or in the absence of such a committee, the board of directors,

will be responsible for the general administration of the Equity Incentive Plan.

All awards granted under the Equity Incentive Plan will

be governed by separate award agreements between the Company and the participants.

As of March 31, 2024, the Company has granted an aggregate

of 30,379 RSUs (after reverse split) , among which, 26,447 RSUs were issued

under the Equity Incentive Plan, 3,182 RSUs were vested but have not been issued while 750 RSUs were forfeited due to two directors

ceased to serve on the board of the Company since November 8, 2018.

During the year ended March 31, 2024, no new RSUs were granted.

1-for-10 shares reverse split

on common stock

considered the above transactions after giving a retroactive effect to a 1-for-10 reverse stock split of its common stock which became

effective on April 6, 2022.

The Company believed it is appropriate to reflect the above transactions on a retroactive basis similar to

those after a stock split or dividend pursuant to ASC 260.

All shares and per share amounts used herein and in the accompanying consolidated

financial statements have been retroactively stated to reflect the effect of the reverse stock split.

Upon execution of the 1-for-10 reverse

stock split, the Company recognized additional 8,402 shares of common stock due to round up issue.

Price Adjustment for November 2021 Preferred Shares

to the Certificate of Designation for the series A convertible preferred stock signed by the Company and certain institutional investors

in November 2021 Private Placement, the initial conversion price of the series A Convertible Preferred Shares was $ 0.68 .

applicable date the conversion price then in effect is greater than the greater of (1) $ 0.41 (the “floor Price”) (as

adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events) and (2) 85 % of the closing

bid price on the applicable date (the “Adjustment Price”), the conversion price shall automatically lower to the Adjustment

Price accordingly.

As the 1-for-10 reverse stock split on the Company’s Common Stock became effective on April 6, 2022, the conversion

price of the Preferred Shares was adjusted to $ 4.1 .

As of March 31, 2024 and 2023, there were 991 and 1,641 shares

of Series A convertible preferred stock outstanding, respectively, valued at $ 234,364 and $ 269,386 , recorded as mezzanine equity.

As of March 31, 2024, 4,009 shares of Series A convertible preferred stock were converted into 1,871,125 shares of

the Company’s common stock.

Further, on August 9, 2022, the Company and the investors agreed to reduce the conversion price of the

series A Convertible Preferred Shares from $ 4.10 to $ 2.00 and to increase the number of the shares of common stock that are

available to be issued upon conversion of the Preferred Shares from 1,092,683 to 2,240,000 .

Common stock issued for consulting

2023, the Company entered into three different consulting and services agreements (the “Consulting Agreements”) with three

consultants (the “Consultants”), pursuant to which the Company engaged the Consultant to provide certain merger and acquisition

consulting service, market research and business development advisory services, and financial consulting services, respectively.

As compensation

for the services, the Company agreed to issue the Consultants an aggregate of 1,500,000 shares of its common stock, par value

The Company recognized the non-employee share-based payment equity awards by using the grant-date fair values at the time of

signing agreement.

On November 7, 2023, the issuance of 1,500,000 shares of the Company’s common stock has been completed

and the Company recorded $ 444,300 service expense during the years ended March 31, 2024.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1-for-10 shares reverse split on common stock

The Company considered the above transactions after giving a retroactive effect to a 1-for-10 reverse stock split of its common stock which became effective on April 6, 2022.

The Company believed it is appropriate to reflect the above transactions on a retroactive basis similar to those after a stock split or dividend pursuant to ASC 260.

All shares and per share amounts used herein and in the accompanying consolidated financial statements have been retroactively stated to reflect the effect of the reverse stock split.

Upon execution of the 1-for-10 reverse stock split, the Company recognized additional 8,402 shares of common stock due to round up issue.

Conversion Price Adjustment for November 2021 Preferred Shares

Pursuant to the COD signed by the Company and certain institutional investors in November 2021 Private Placement, the initial conversion price of the series A convertible Preferred Shares was $ 0.68 .

If as of the applicable date the conversion price then in effect is greater than the greater of (1) $ 0.41 (the “floor Price”) (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events) and (2) 85 % of the closing bid price on the applicable date (the “Adjustment Price”), the conversion price shall automatically lower to the Adjustment Price accordingly.

As the 1-for-10 reverse stock split on the Company’s Common Stock became effective on April 6, 2022, the conversion price of the Preferred Shares was adjusted to $ 4.1 .

As of March 31, 2023 and March 31, 2022, there were 1,641 and 5,000 shares of Series A convertible preferred stock outstanding, respectively.

During the year ended March 31, 2023, 3,359 shares of Series A convertible preferred stock was converted into 1,546,125 shares of the Company’s common stock.

Further, on August 9, 2022, the Company and the investors agreed to reduce the conversion price of the series A convertible Preferred Shares from $ 4.10 to $ 2.00 and to increase the number of the shares of common stock that are available to be issued upon conversion of the Preferred Shares from 1,092,683 to 2,240,000 .

Change of ownership interest in a subsidiary

February 11, 2024, The Company and Hunan Ruixi’s two minority shareholders (“Shareholders”) has entered into a share

swap agreement (“Share Swap Agreement”).

Pursuant to the Share Swap Agreement, the Company would issue a total of 950,000

shares of its common stock to the above mentioned two Shareholders.

In return, each shareholder will transfer a 2.5 % equity interest

in Hunan Ruixi to the Company, which increasing the Company’s ownership in Hunan

Ruixi by 5 %.

As no cash consideration was received, $ 155,461 which is the difference between the fair value of the consideration

received and the amount by which the noncontrolling interest is adjusted was recognized as an addition in additional paid-in capital

in accordance with ASC 810-10-45-23 “Change in a parent’s ownership interest in a subsidiary”.

The United States of America

The Company is incorporated in the State of Nevada in the U.S., and is subject to U.S.

is incorporated in the State of Nevada in the U.S., and is subject to U.S.

federal corporate income taxes with tax rate of 21 %.

The State of Nevada does not impose any state corporate income tax.

On December 22, 2017, the U.S.

government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax 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 years ended March 31, 2023 and 2022, the Company’s foreign subsidiaries in China were operating at loss and as such, did not record a liability for GILTI tax.

The Company’s net operating loss for U.S.

income taxes from U.S for the years ended March 31, 2023 and 2022 amounted to approximately $ 1.3 million and $ 2.3 million respectively.

State of Nevada does not impose any state corporate income tax.

22, 2017, the U.S.

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

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 established the Global Intangible Low-Taxed Income (GILTI), a

new inclusion rule affecting non-routine income earned by foreign subsidiaries.

For the years ended March 31, 2024 and 2023, the Company’s

foreign subsidiaries in China were operating at loss and as such, did not record a liability for GILTI tax.

The Company’s

net operating loss for U.S.

income taxes from U.S for the years ended March 31, 2024 and 2023 amounted to approximately $ 1.1 million

and $ 1.3 million respectively.

As of March 31, 2024 and 2023, the Company’s net operating loss carryforward for U.S.

income taxes was approximately $ 7.1 million and $ 5.9 million, respectively.

The net operating loss carryforward will not expire and is available to reduce future years’ taxable income, but limited to 80 % of income until utilized.

Management believes that the utilization of the benefit from this loss appears uncertain due to the Company’s operating history.

Accordingly, the Company has recorded a 100 % valuation allowance on the deferred tax asset to reduce the deferred tax assets to zero on the consolidated balance sheets.

As of March 31, 2023 and 2022, valuation allowances for deferred tax assets related to net operating loss carry forward for U.S.

income taxes were approximately $ 1.5 million and $ 1.2 million, respectively.

taxes was approximately $ 7.6 million and $ 7.1 million, respectively.

The net operating loss carryforward will not expire and

is available to reduce future years’ taxable income but limited to 80 % of income until utilized.

Management believes that the

utilization of the benefit from this loss appears uncertain due to the Company’s operating history.

Accordingly, the Company has

recorded a 100 % valuation allowance on the deferred tax asset to reduce the deferred tax assets to zero on the consolidated balance

Management reviews the valuation allowance periodically and makes changes accordingly.

Senmiao Consulting, Sichuan Senmiao, Hunan Ruixi, Ruixi Leasing, Jinkailong (deconsolidated in the year ended March 31, 2022), Yicheng, Jiekai, Youlu and XXTX and its subsidiaries are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws.

Consulting, Sichuan Senmiao Ronglian Technology Co., Ltd.

(“Sichuan Senmiao”), Hunan Ruixi, Sichuan Senmiao Yicheng Assets

Management Co., Ltd.

(“Yicheng”), Corenel, Jiekai and XXTX and its subsidiaries are subject to PRC Enterprise Income Tax (“EIT”)

on the taxable income in accordance with the relevant PRC income tax laws.

The EIT rate for companies operating in the PRC is 25 %.

Net income (loss) before income tax by jurisdiction

For the Years Ended

$ ( 1,436,097 )

( 2,807,133 )

( 4,051,544 )

Total net loss before income tax

$ ( 4,243,230 )

$ ( 3,790,693 )

Significant components of the provision for income

taxes are as follows:

For the Years Ended

Current income tax

Deferred tax benefit

Income tax benefit

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income taxes in the PRC are consist of:

For the Years Ended

Deferred income tax expenses

Total income tax expenses

Below is a reconciliation of the statutory tax rate to the effective tax rate:

Below is a reconciliation of the statutory

tax rate to the effective tax rate:

For the Years Ended

1 unchanged sentence

Differential of local statutory tax rate

Permanent difference of write-off of receivables from guarantee of loans

Permanent difference of gain from change in fair value of derivative liabilities not taxable in PRC

2 unchanged sentences

Effective tax rate

*As the Company business operation mainly concentrated PRC, the Company determined to apply PRC statutory tax rate in reconciliation of the statutory tax rate to the effective tax rate

As of March 31, 2023 and 2022, the Company’s PRC entities from continuing operations had net operating loss carryforwards of approximately $ 9.6 million and $ 8.5 million, respectively, which will expire starting from 2025 and ending in 2027.

In addition, allowance for doubtful accounts must be approved by the Chinese tax authority prior to being deducted as an expense item on the tax return.

The bad debt allowances are incurred in Company’s PRC subsidiaries and former VIEs which were operating at losses, the Company believes it is more likely than not that its PRC operations will be unable to fully utilize its deferred tax assets related to the net operating loss carryforwards in the PRC.

As a result, the Company provided 100 % allowance on all deferred tax assets on net operating loss carryforwards in the PRC of $ 2,403,785 and $ 2,315,793 related to its continuing operations in the PRC as of March 31, 2023 and 2022, respectively and provided 100 % allowance on all deferred tax assets on allowance for doubtful account of $ 402,599 and $ 29,129 related to its continuing operations in the PRC as of March 31, 2023 and 2022, respectively.

The tax effects of temporary differences from continuing operations that give rise to the Company’s deferred tax assets and liabilities are as follows:

* As the Company business operation mainly concentrated PRC,

the Company determined to apply PRC statutory tax rate in reconciliation of the statutory tax rate to the effective tax rate

31, 2024 and 2023, the Company’s PRC entities from continuing operations had net operating loss carryforwards of approximately $ 9.7 million

and $ 9.6 million, respectively, which will be available to offset future taxable income.

As of March 31, 2024, these carryforwards

will expire from 2025 through 2034, if not used.

As of March 31, 2024 and 2023, valuation allowances for deferred tax assets related to

net operating loss carry forward for U.S.

income taxes were approximately $ 1.6 million and $ 1.5 million, respectively.

the consideration of the duration of statutory carry forward periods and forecasts of future profitability, it has concluded that it is

more likely than not that all its deferred tax assets generated from the Company would not be utilized in the future.

The Company has

provided full allowance of its deferred tax assets.

effects of temporary differences from continuing operations that give rise to the Company’s deferred tax assets and liabilities

are as follows:

Deferred Tax Assets

1 unchanged sentence

Net operating loss carryforwards in the U.S.

Allowance for doubtful account

Allowance for credit losses

valuation allowance

5 unchanged sentences

Deferred tax liabilities, net

As of March 31, 2023 and 2022, the Company’s PRC entities associated with discontinued operations had net operating loss carryforwards of approximately $ 1.9 million and $ 10.3 million, respectively which will start to expire from 2024 to 2027.

Meanwhile, net operating loss carry forward as of March 31, 2023 in the PRC from discontinued operations was reduced due to certain adjustments by PRC tax authorities.

For In addition, allowance for doubtful accounts must be approved by the Chinese tax authority prior to being deducted as an expense item on the tax return.

The Company reviews deferred tax assets for a valuation allowance based upon whether

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

it is more likely than not that the deferred tax asset will not be fully realized.

As of March 31, 2023 and 2022, full valuation allowance is provided against the deferred tax assets related to the Company’s discontinued operations based upon management’s assessment as to their realization.

The tax effects of temporary differences from discontinued operations that give rise to the Company’s deferred tax assets are as follows:

March 31, 2023

March 31, 2022

As of March 31, 2024 and 2023,

the Company’s PRC entities associated with discontinued operations had net operating loss carryforwards of approximately $ 0.9 million

and $ 1.9 million, respectively .

Despite the fact that the net operating loss carryforwards arose from the Company discontinued

operation, the Company may still benefit from them as potential deduction against future taxable income.

As of March 31, 2024, such net

operating loss from discontinued operations will expire from 2025 through 2026, if not used.

Company reviews deferred tax assets for a valuation allowance based upon whether it is more likely than not that the deferred tax asset

will not be fully realized.

As of March 31, 2024 and 2023, full valuation allowance is provided against the deferred tax assets related

to the Company’s discontinued operations based upon management’s assessment as to their realization.

effects of temporary differences from discontinued operations that give rise to the Company’s deferred tax assets are as follows:

Net operating loss carry forwards in the PRC

valuation allowance

( 2,595,919 )

tax positions

Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical

merits, and measure the unrecognized benefits associated with the tax positions.

As of March 31, 2024 and 2023, the Company did not have

any unrecognized uncertain tax positions and the Company does not believe that its unrecognized tax benefits will change over the next

twelve months.

For the years ended March 31, 2024 and 2023, the Company did not incur any interest and penalties related to potential

underpaid income tax expenses.

According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the

underpayment of taxes is due to computational errors made by the taxpayer or withholding agent.

The statute of limitations will be extended

five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB 0.1 million

is specifically listed as a special circumstance).

In the case of a related party transaction, the statute of limitations is ten years.

There is no statute of limitations in the case of tax evasion.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONCENTRATION

Major Suppliers

For the year ended March 31, 2023, two suppliers accounted for approximately 21.2 % and 12.4 % of the total costs of revenue from continuing operations of the Company.

For the year ended March 31, 2022, three suppliers accounted for approximately 23.65 %, 13.92 %, and 13.18 % of the total costs of revenue from continuing operations of the Company, and one supplier accounted for approximately 18.18 % of the total cost of revenues for discontinued operations of the Company.

RELATED PARTY TRANSACTIONS AND BALANCES

year ended March 31, 2024, three suppliers accounted for approximately 20.1 %, 13.5 %, and 12.1 % of the total

costs of revenue from operations of the Company.

For the year ended March

31, 2023, two suppliers accounted for approximately 21.2 % and 12.4 % of the total costs of revenue from continuing

operations of the Company.

RELATED PARTY TRANSACTIONS

Related Party Balances

1) Account receivable, a related party

As of March 31, 2023 and 2022, account receivable from a related party from the Company’s continuing operations of $ 6,312 and $ 0 , respectively, represented balance due from operating lease revenue recognized from Jinkailong, the Company’s equity investee company.

1) Accounts receivable, a

related party

31, 2024 and 2023, accounts receivable from a related party amounted to $ 0 and $ 6,312 , respectively, represented balance due from

operating lease revenue recognized from Jinkailong, the Company’s equity investee company.

2) Due from related parties

As of March 31, 2023 and March 31, 2022, balances due from related parties from the Company’s continuing operations were comprised of the following:

31, 2024 and 2023, balances due from related parties from the Company’s operations were comprised of the following:

Total due from related parties

Allowance for doubtful accounts

Allowance for credit losses

( 3,099,701 )

( 1,481,036 )

Due from related parties, net

Due from related parties, net, current portion

Due from a related party, net, non-current portion

As of March 31, 2023, balances due from Jinkailong of $ 5,106,100 , net of allowance, of which, $ 3,640,206 is to be repaid over a period from April 2024 to December 2026, which was classified as due from a related party, net, non-current (refer to Note 4).

As of March 31, 2022, balances due from Jinkailong of $ 7,298,208 , represented balance due from Jinkailong as result of Jinkailong’s deconsolidation, of which, $ 6,635,746 is to be repaid over a period from April 2023 to December 2026, which was classified as due from a related party, non-current.

Movement of allowance for doubtful accounts due from Jinkailong for March 31, 2023 and 2022 are as follows:

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Due from related parties, net, current

Due from a related party, net, non-current

31, 2024, balances due from Jinkailong, the Company’s equity investee company was $ 3,245,907 , net of allowance for credit losses,

of which, $ 2,747,313 is to be repaid over a period from April 2025 to March 2026, which was classified as due from a related party,

net, non-current.

The balances due from Jinkailong consist of outstanding balance of $ 2,651,078 as a result of Jinkailong’s

deconsolidation on March 31, 2022 and $ 594,829 represents revenue collected by Jinkailong on behalf of the Company’s subsidiary,

31, 2023, balances due from Jinkailong was $ 5,106,100 , representing balance due from Jinkailong as result of Jinkailong’s deconsolidation

on March 31, 2022, of which, $ 3,640,206 is to be repaid over a period from April 2024 to December 2026, which was classified as due

from a related party, non-current.

of allowance for credit losses due from Jinkailong for March 31, 2024 and 2023 are as follows:

Beginning balance

1 unchanged sentence

Ending balance

As of March 31, 2023 and 2022, balance due from Youlu, the Company’s former VIE as result of Youlu’s deconsolidation in March 2022 were amounted to $ 23,020 and $ 19,873 , respectively.

3) Due to related parties and affiliates

3, 2024, Xiang Hu, the Legal Representative of Sichuan Senmiao and a shareholder of the Company, entered into a loan agreement wherein

the Company agreed to provide an interest-free special reserve loan of $ 150,000 for a period of 12 months.

This loan is strictly designated

for the Company’s business development, potential capital market investments, and prospective mergers and business combinations.

As of March 31, 2024, total of $ 150,000 has been disbursed to Xiang Hu, but no actual spending has been incurred yet.

The Company will

monitor the actual spending to determine the utilized amount.

Any unused portion must be returned to the Company upon expiration of the

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2024 and 2023,

balance due from Chengdu Youlu Technology Ltd.

(“ Youlu”), a related party of

the Company were amounted to $ 6,938 and $ 23,020 , respectively.

3) Due to related parties

Loan payable to a related party (i)

Total due to related parties and affiliates

(i) As of March 31, 2023 and 2022, the balances represented borrowings from Xi Wen, the CEO of the Company, of which, $ 8,667 and $ 9,897 are unsecured, interest free and due on demand, respectively.

(ii) As of March 31, 2023 and 2022, the balances of $ 0 and $ 1,785 , respectively, represented payables to Jinkailong, the Company’s equity investee company, for operational purposes.

4) Operating lease right-of-use assets, net, related parties and Operating lease liabilities - related parties

Other payable due to related party (ii)

Total due to related parties

of March 31, 2024 and 2023, the balances represented borrowings from Xi Wen, the CEO of the Company, of which, $ 12,354 and $ 8,667 are

unsecured, interest free and due on demand, respectively.

of March 31, 2024 and 2023, the balances represented outstanding lease payments due to Hong Li, the Supervisor of Sichuan Senmiao, upon

termination of existing lease.

lease right-of-use assets, net, related parties and Operating lease liabilities - related parties

Lease II (ii)

Total Operating lease right-of-use assets - related parties

Lease II (ii)

1 unchanged sentence

Lease II (ii)

Total Operating lease liabilities, non-current - related parties

The Company entered into two office lease agreements with Hong Li, supervisor of Sichuan Senmiao, which were set to expire on January 1, 2020.

On April 1, 2020, the two office leases were updated with a leasing term from April 1, 2020 to March 31, 2023.

On March 1, 2021, the Company entered into an additional office lease which was set to expire on February 1, 2026.

On April 1, 2021, the Company entered into another office lease which was set to expire on April 1, 2024.

In October 2022, the Company terminated the leases signed on March 1, 2021 and April 1, 2021 as mentioned above.

In November 2018, Hunan Ruixi entered into an office lease agreement with Hunan Dingchentai Investment Co., Ltd.

(“Dingchentai”), a company where one of the Company’s independent directors serves as legal representative and general manager.

The term of the lease agreement was from November 1, 2018 to October 31, 2023 and the rent was approximately $ 44,250 per year, payable on a quarterly basis.

(i) On March 31, 2023, the Company entered into two office lease

agreements with Hong Li, supervisor of Sichuan Senmiao, with a leasing term from April 1, 2023 to March 31, 2026, such lease was terminated

in December 2023.

On March 1, 2021, the Company entered into an office lease which was set to expire on February 1, 2026.

2021, the Company entered into another office lease which was set to expire on April 1, 2024.

In October 2022, the Company terminated

the leases signed on March 1, 2021 and April 1, 2021.

November 2018, Hunan Ruixi entered into an office lease agreement with Hunan Dingchentai Investment Co., Ltd.

(“Dingchentai”),

a company where one of the Company’s independent directors serves as legal representative and general manager.

The term of the

lease agreement was from November 1, 2018 to October 31, 2023 and the rent was approximately $ 44,250 per year, payable on a quarterly

The original lease agreement with Dingchentai was terminated on July 1, 2019.

The Company entered

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

into another lease with Dingchentai on substantially similar terms on September 27, 2019, and a renewal lease contract was signed on June 2022 which extended the original lease to May 2025.

Related Party Transactions

For the years ended March 31, 2023 and 2022, the Company incurred $ 177,414 and $ 237,968 , respectively, in rental expenses to Hong Li, supervisor of Sichuan Senmiao, pursuant to four office lease agreements in total.

For the years ended March 31, 2023 and 2022, the Company incurred $ 47,043 and $ 45,651 , respectively, in rental expenses to Dingchentai, a company where one of the Company’s independent directors serves as legal representative and general manager.

The Company had reached cooperation with Jinkailong, the Company’s equity investee company, that the drivers who leased automobile from Jinkailong completed their online ride-hailing requests and orders through the company’s ride-hailing platform, and the company will pay Jinkailong a certain promotion service fee.

During the year ended March 31, 2023, the company incurred promotion fee of $ 95,804 payable to Jinkailong.

During the year ended March 31, 2022, the company incurred promotion fee of $ 553,761 to Jinkailong, which was eliminated in the loss of continuing operations of the consolidated financial statements.

During the year ended March 31, 2023, Corenel leased automobiles to Jinkailong and generated revenues of $ 344,120 , while Jiekai leased automobiles from Jinkailong and had a rental cost of $ 509,904 .

During the years ended March 31, 2022, Corenel and Yicheng leased automobiles to Jinkailong and generated revenues of $ 1,280,993 , which was eliminated in the loss of continuing operations of the consolidated financial statements.

During the year ended March 31, 2022, Hunan Ruixi and Yicheng had loans due from Jinkailong, the Company’s equity investee company, and had interest income of $ 450,889 , which was eliminated in the loss of continuing operations of the consolidated financial statements.

The Company’s operating leases for automobile rentals have rental periods that are typically short term, generally is twelve months or less.

Revenue recognition section of Note 3 (s), the Company discloses that revenue earned from automobile rentals, wherein an identified asset is transferred to the customer and the customer has the ability to control that asset, is accounted for under Topic 842 upon adoption for the year ended March 31, 2020.

As of March 31, 2023 and 2022, the Company has engaged in offices and showroom leases which were classified as operating leases.

The Company leased automobiles under operating lease agreements with a term shorter than twelve months which it elected not to recognize lease assets and lease liabilities under ASC 842.

Instead, the Company recognized the lease payments in profit or loss on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred.

In addition, the Company had automobiles leases which were classified as finance lease.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company recognized lease expense on a straight-line basis over the lease term for operating lease.

Meanwhile, the Company recognized the finance leases ROU assets and interest on an amortized cost basis.

The ROU assets and lease liabilities are determined based on the present value of the future minimum rental payments of the lease as of the adoption date, using an effective interest rate of 6.0 %, which is determined using an incremental borrowing rate with similar term in

The Company entered into another lease with Dingchentai

on substantially similar terms on September 27, 2019, and a renewal lease contract was signed on June 2022 which extended the original

lease to May 2025.

Party Transactions

years ended March 31, 2024 and 2023, the Company incurred $ 96,614 and $ 177,414 , respectively, in rental expenses to Hong Li, supervisor

of Sichuan Senmiao, pursuant to three office lease agreements.

years ended March 31, 2024 and 2023, the Company incurred $ 41,668 and $ 47,043 , respectively, in rental expenses to Dingchentai, a

company where one of the Company’s independent directors serves as legal representative and general manager.

had reached cooperation with Jinkailong, the Company’s equity investee company, that the drivers who leased automobile from Jinkailong

completed their online ride-hailing requests and orders through the company’s ride-hailing platform, and the company will pay Jinkailong

a certain promotion service fee.

During the years ended March 31, 2024 and 2023, the company incurred promotion fee of $ 11,115 and

$ 95,804 payable to Jinkailong.

During the years ended March 31, 2024 and 2023,

Corenel leased automobiles to Jinkailong and generated revenue of $ 34,742 and $ 344,120 , while Jiekai leased automobiles from Jinkailong

and had a rental cost of $ 472,848 and $ 509,904 respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2023, the weighted-average remaining operating and finance lease term of its existing leases is approximately 2.67 and 2.53 years, respectively.

Operating and finance lease expenses consist of the following:

The Company’s

operating leases for automobile rentals have rental periods that are typically short term, generally is twelve months or less.

recognition section of Note 3 (r), the Company discloses that revenue earned from automobile rentals, wherein an identified asset is transferred

to the customer and the customer has the ability to control that asset, is accounted for under Topic 842 upon adoption for the year ended

March 31, 2024.

31, 2024 and 2023, the Company has engaged in offices and showroom leases which were classified as operating leases.

leased automobiles under operating lease agreements with a term shorter than twelve months which it elected not to recognize lease assets

and lease liabilities under ASC 842.

Instead, the Company recognized the lease payments in profit or loss on a straight-line basis over

the lease term and variable lease payments in the period in which the obligation for those payments is incurred.

In addition, the Company

had automobiles leases which were classified as finance lease.

The Company’s

lease agreements do not contain any material residual value guarantees or material restrictive covenants.

recognized lease expense on a straight-line basis over the lease term for operating lease.

Meanwhile, the Company recognized the finance

leases ROU assets and interest on an amortized cost basis.

The amortization of finance ROU assets is recognized on a straight-line basis

as amortization expense, while the lease liability is increased to reflect interest on the liability and decreased to reflect the lease

payments made during the period.

Interest expense on the lease liability is determined each period during the lease term as the amount

that results in a constant periodic interest rate of the automobile loans on the remaining balance of the liability.

assets and lease liabilities are determined based on the present value of the future minimum rental payments of the lease as of the adoption

date, using effective interest rate of 6.0 %, which is determined using an incremental borrowing rate with similar term in the PRC.

As of March 31, 2024, the weighted-average remaining operating and finance lease term of its existing leases is approximately 1.63 and 1.53 years,

respectively.

and finance lease expenses consist of the following:

For the Years Ended

15 unchanged sentences

Total lease expenses

Total Lease expenses – discontinued operations

( 4,150,972 )

Total Lease expenses- continuing operations

Operating lease expenses for automobiles from continuing operations totaled $ 2,140,395 and $ 1,390,767 for the years ended March 31, 2023 and 2022, respectively.

Operating lease expenses for automobiles from discontinued operations totaled $ 359,192 for the year ended March 31, 2022.

Operating lease expenses for offices and showroom leases from continuing operations totaled $ 355,814 and $ 460,209 for the years ended March 31, 2023 and 2022, respectively.

Operating lease expenses for offices and showroom leases from discontinued operations totaled $ 125,510 for the year ended March 31, 2022.

Interest expenses on finance leases from continuing operations totaled $ 25,675 and $ 55,844 for the years ended March 31, 2023 and 2022, respectively.

Interest expenses on finance leases from discontinued operations totaled $ 277,366 for the year ended March 31, 2022.

The following table sets forth the Company’s minimum lease payments in future periods:

lease costs for automobiles totaled $ 1,737,869 and $ 2,020,276 for the years ended March 31, 2024 and 2023, respectively.

lease expenses for offices and showroom leases totaled $ 206,432 and $ 355,814 for the years ended March 31, 2024 and 2023, respectively,

of which $ 199,445 and $ 380,794 were amortization of leased asset for operating leases for the years ended March 31, 2024 and

2023, respectively.

expenses on finance leases totaled $ 29,088 and $ 25,675 for years ended March 31, 2024 and 2023, respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following

table sets forth the Company’s minimum lease payments in future periods:

Operating lease

2 unchanged sentences

Twelve months ending March 31, 2026

Twelve months ending March 31, 2027

Total lease payments

Present value of lease liabilities

*As of March 31, 2023, the outstanding balance of operating lease payments due to related parties was $ 185,709 .

of March 31, 2024 and 2023, the outstanding balance of operating lease payments due to related parties was $ 51,741 and $ 185,709 , respectively.

COMMITMENTS AND CONTINGENCIES

Contingencies

In measuring the credit risk of guarantee services to automobile purchasers, the Company primarily reflects the “probability of default” by the automobile purchasers on its contractual obligations and considers the current financial position of the automobile purchasers and its likely future development.

The Company manages the credit risk of automobile purchasers by performing preliminary credit checks of each automobile purchaser and ongoing monitoring every month.

By using the current credit loss model, management is of the opinion that the Company is bearing the credit risk to repay the principal and interests to the financial institutions if automobile purchasers’ default on their payments for

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

more than three months.

Management also periodically re-evaluates probability of default of automobile purchasers to make adjustments in the allowance, when necessary, as the Company is the guarantor of the loans.

Purchase commitments

On September 23, 2022, the Company entered into a purchase contract with an automobile dealer to purchase a total of 100 automobiles for the amount of approximately $ 1.6 million.

As of the date of filing of these consolidated financial statements, the Company has remit approximately $ 0.7 million as purchase prepayments, and expects to fulfill the purchase commitment before December 31, 2023.

On March 28, 2023, the Company entered into a purchase contract with an automobile dealer to purchase a total of 50 automobiles for the amount of approximately $ 0.8 million.

As of the date of filing of these consolidated financial statements, 30 automobiles of approximately $ 0.34 million have been purchased in cash and delivered to the Company, and the Company expects to fulfill the purchase commitment before December 31, 2023.

Contingent liabilities for automobile purchasers

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

In December 2019, a novel strain of coronavirus, or COVID-19, surfaced and it has spread rapidly to many parts of China and other parts of the world, including the United States.

The epidemic has resulted in quarantines, travel restrictions, and the temporary closure of stores and facilities in China and elsewhere.

Because substantially all of the Company’s operations are conducted in China, the COVID-19 outbreak has materially and adversely affected the Company’s business operations, financial condition and operating results for 2021 and 2022, including but not limited to decrease in revenues, slower collection of accounts receivables and additional allowance for doubtful accounts.

Some of the Company’s customers exited the ride-hailing business and rendered their automobiles to the Company for sublease or sale to generate income or proceeds to cover payments owed to financial institutions and the Company.

For years ended March 31, 2023 and 2022, the Company recognized an estimated provision loss of approximately $ 7,287 and $ 8,000 , respectively, for drivers who exited the ride-hailing business were not able to make the monthly payments from continuing operations.

For the year ended March 31, 2022, the Company recognized an estimated provision loss of approximately $ 716 , for the guarantee services for drivers who exited the ride-hailing business were not able to make the monthly payments from discontinued operations.

As of March 31, 2023, the maximum contingent liabilities Hunan Ruixi would be exposed to was approximately $ 10,000 , assuming all the automobile purchasers were in default.

Automobiles are used as collateral to secure the payment obligations of the automobile purchasers under the financing agreements.

The Company estimated the fair market value of the collateral represents approximately all of the maximum contingent liabilities as of March 31, 2023, based on the market price and the useful life of such collateral.

Contingent liability of Jinkailong

Despite that the Company holds 35 % of equity interest of Jinkailong through Hunan Ruixi, and has not make any consideration towards to the investment, the Company will be subjected to the maximum amount of RMB 3.5 million (approximately $ 510,000 ) of which is equivalent to 35 % of liabilities in case Jinkailong is liquidated in accordance with PRC’s company registry compliance.

As of March 31, 2023, the maximum contingent liabilities of Jinkailong, the Company’s equity investee company and former VIE, would be exposed to was approximately $ 3.9 million, assuming all the automobile purchasers were in default.

Automobiles are used as collateral to secure the payment obligations of the automobile purchasers under the financing agreements.

Jinkailong estimated the fair market value of the collateral to be approximately $ 2.5 million as of March 31, 2023, based on the market price and the useful life of such collateral, which represents approximately 65 % of the maximum contingent liabilities.

Meanwhile, approximately $ 2.6 million, including interests of approximately $ 232,000 , due to financial institutions, of all the automobile purchases Jinkailong serviced were past due mainly due to the COVID-19 pandemic in China in prior years.

Besides, as of March 31, 2023, due to Jinkailong has undertaken the joint and several liability guarantee for all loans of Langyue Automobile Service Co., Ltd.

from Chengdu Industrial Impawn Co., Ltd (“Impawn”) for certain historical business, Jinkailong may be required to pay all the outstanding balance of approximately $ 881,000 to Impawn in the future.

From time to time, the Company and its equity investee company may be subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business.

The total amount of reasonable possible losses with the respect to such matters, individually and in the aggregate, are not deemed to be material to the consolidated financial statements.

the credit risk of guarantee services to automobile purchasers, the Company primarily reflects the “probability of default”

by the automobile purchasers on its contractual obligations and considers the current financial position of the automobile purchasers

and its likely future development.

manages the credit risk of automobile purchasers by performing preliminary credit checks of each automobile purchaser and ongoing monitoring

By using the current credit loss model, management is of the opinion that the Company is bearing the credit risk to repay

the principal and interests to the financial institutions if automobile purchasers’ default on their payments for more than three

Management also periodically re-evaluates probability of default of automobile purchasers to make adjustments in the allowance,

when necessary, as the Company is the guarantor of the loans.

On September 23, 2022, the Company

entered into a purchase contract with an automobile dealer to purchase a total of 100 automobiles for the amount of approximately

$ 1.5 million.

As of the filing date of these consolidated financial statements, the Company has remitted approximately $ 0.6 million

as purchase prepayments, and expects to fulfill the purchase commitment before March 31, 2025.

liabilities for automobile purchasers

Historically,

most of the automobile purchasers would pay the Company their previous defaulted amounts within one to three months.

In December 2019,

a novel strain of coronavirus, or COVID-19, surfaced and it has spread rapidly to many parts of China and other parts of the world, including

the United States.

The epidemic has resulted in quarantines, travel restrictions, and the temporary closure of stores and facilities in

China and elsewhere.

Because substantially all of the Company’s operations are conducted in China, the COVID-19 outbreak has materially

and adversely affected the Company’s business operations, financial condition and operating results for 2021 and 2022, including

but not limited to decrease in revenues, slower collection of accounts receivable and additional allowance for credit losses.

the Company’s customers exited the ride-hailing business and rendered their automobiles to the Company for sublease or sale to generate

income or proceeds to cover payments owed to financial institutions and the Company.

For the years ended March 31, 2024 and 2023, the

Company recognized an estimated provision loss of approximately $ 499 and $ 7,287 respectively, for drivers who exited the

ride-hailing business were not able to make the monthly payments from operations.

As of March 31, 2024, there was no contingent liabilities

Hunan Ruixi had for the automobile purchasers.

liability of Jinkailong

that the Company holds 35 % of equity interest of Jinkailong through Hunan Ruixi, and has not make any consideration towards to the

investment, the Company will be subjected to the maximum amount of RMB 3.5 million (approximately $ 485,000 ) of which is equivalent

to 35 % of liabilities in case Jinkailong is liquidated in accordance with PRC’s company registry compliance.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEGMENT INFORMATION

The Company presents segment information after elimination of inter-company transactions.

In general, revenue, cost of revenue and operating expenses are directly attributable, or are allocated, to each segment.

The Company allocates costs and expenses that are not directly attributable to a specific segment, such as those that support infrastructure across different segments, to different segments mainly on the basis of usage, revenue or headcount, depending on the nature of the relevant costs and expenses.

The Company does not allocate assets to its segments as the CODM does not evaluate the performance of segments using asset information.

By assessing the qualitative and quantitative criteria established by Accounting Standards Codification (“ASC”) 280, “Segment Reporting”, the Company considers itself to be operating in two reportable segments which comprise of automobile transaction and related services and online ride-hailing platform.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

presents segment information after elimination of inter-company transactions.

In general, revenue, cost of revenue and operating expenses

are directly attributable, or are allocated, to each segment.

The Company allocates costs and expenses that are not directly attributable

to a specific segment, such as those that support infrastructure across different segments, to different segments mainly on the basis

of usage, revenue or headcount, depending on the nature of the relevant costs and expenses.

The Company does not allocate assets to its

segments as the CODM does not evaluate the performance of segments using asset information.

the qualitative and quantitative criteria established by Accounting Standards Codification (“ASC”) 280, “Segment Reporting”,

the Company considers itself to be operating in two reportable segments which comprise of automobile transaction and related

services and online ride-hailing platform.

The segments are organized based on type of service offered.

The following tables present the summary of each segment’s revenue, loss from operations, loss before income taxes and net loss which is considered as a segment operating performance measure, for the years ended March 31, 2023 and 2022:

The following

tables present the summary of each segment’s revenue, loss from operations, loss before income taxes and net loss which is considered

as a segment operating performance measure, for the years ended March 31, 2024 and 2023:

For the Year ended March 31, 2024

Transaction and

hailing platform

Online ride-hailing

Interest income

4 unchanged sentences

$ ( 1,615,904 )

$ ( 4,724,911 )

Loss before income taxes

3 unchanged sentences

$ ( 4,243,230 )

$ ( 2,389,556 )

$ ( 441,704 )

$ ( 1,402,954 )

$ ( 4,234,214 )

Capital expenditure

1 unchanged sentence

Transaction and

Online ride-hailing

Interest income

5 unchanged sentences

$ ( 6,140,908 )

( 2,537,715 )

( 11,561,988 )

Loss before income taxes

4 unchanged sentences

$ ( 356,164 )

Net income (loss)

$ ( 3,790,693 )

( 7,438,693 )

( 8,353,354 )

( 2,747,209 )

( 5,606,145 )

Capital expenditure

The accounting principles for the Company’s revenue by segment are set out in Note 3(h).

As of March 31, 2023, the Company’s total assets were comprised of $ 12,579,764 for automobile transaction and related services, $ 937,400 for online ride-hailing platform services and $ 721,451 unallocated.

As of March 31, 2022, the Company’s total assets were comprised of $ 12,022,387 for automobile transaction and related services, $ 7,003,867 for online ride-hailing platform services and $ 851,863 unallocated.

As substantially all of the Company’s long-lived assets are located in the PRC and substantially all of the Company’s revenue is derived from within the PRC, no geographical information is presented.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

The accounting

principles for the Company’s revenue by segment are set out in Note 3(h).

31, 2024, the Company’s total assets were comprised of $ 8,637,552 for automobile transaction and related services, $ 575,887 for

online ride-hailing platform services and $ 648,045 for unallocated.

31, 2023, the Company’s total assets were comprised of $ 12,579,764 for automobile transaction and related services, $ 937,400 for

online ride-hailing platform services and $ 721,451 unallocated.

As substantially

all of the Company’s long-lived assets are located in the PRC and substantially all of the Company’s revenue is derived from

within the PRC, no geographical information is presented.

PARENT-ONLY FINANCIALS

4 unchanged sentences

Due from subsidiaries

Prepayments, other receivables and other assets, net

Prepayments, other receivables and other current assets, net

Total Current Assets

11 unchanged sentences

Series A convertible preferred stock (par value $ 1,000 per share, 5,000 shares authorized;

1,641 and 5,000 shares issued and outstanding at March 31, 2023 and 2022, respectively)

991 and 1,641 shares issued and outstanding at March 31, 2024 and March 31, 2023, respectively)

Stockholders’ Equity

Common stock (par value $ 0.0001 per share, 500,000,000 shares authorized;

7,743,040 and 6,186,783 shares issued and outstanding at March 31, 2023 and 2022, respectively)*

10,518,040 and 7,743,040 shares issued and outstanding at March 31, 2024 and March 31, 2023, respectively)

Additional paid-in capital

4 unchanged sentences

( 1,672,005 )

( 1,247,099 )

Total Senmiao Technology Limited Stockholders’ Equity

Total Liabilities, Mezzanine Equity and Equity

*Giving retroactive effect to the 1-for-10 reverse stock split effected on April 6, 2022

SENMIAO TECHNOLOGY LIMITED

1 unchanged sentence

SENMIAO TECHNOLOGY LIMITED

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the Years Ended March 31,

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

For the Years Ended

General and administrative expenses

1 unchanged sentence

$ ( 1,451,038 )

Other Income, net

Change in fair value of derivative liabilities

Issuance costs for issuing series A convertible preferred stock

Equity of losses in subsidiaries

2 unchanged sentences

( 3,668,974 )

( 3,113,749 )

Foreign currency translation adjustment

2 unchanged sentences

$ ( 4,125,407 )

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SENMIAO TECHNOLOGY LIMITED

CONDENSED STATEMENTS OF CASH FLOWS

$ ( 4,251,394 )

SENMIAO TECHNOLOGY

CONDENSED STATEMENTS

OF CASH FLOWS

For the Years Ended March 31,

1 unchanged sentence

$ ( 3,668,974 )

$ ( 3,113,749 )

Adjustments to reconcile net loss to net cash used in operating activities:

1 unchanged sentence

Amortization of intangible asset

Issuance cost incurred for issuing series A convertible preferred stock

Stock compensation expense

1 unchanged sentence

( 1,711,889 )

( 6,951,482 )

Prepayments, receivables and other assets

Change in operating assets and liabilities

Prepayments, receivables and other current assets

Other receivable – a related party

Accrued expenses and other liabilities

Net Cash Used in Operating Activities

( 1,418,530 )

Cash Flows from Investing Activities:

Working capital contribution for subsidiaries

( 5,749,950 )

Net Cash Used in Investing Activities

( 5,749,950 )

Cash Flows from Financing Activities:

Net proceeds from issuance of common stock and warrants in a registered direct public offering

Net proceeds from issuance of common stock upon warrants exercised

Net proceeds from issuance of series A convertible preferred stock and warrants in a private placement offering

Repayment from subsidiaries

Borrowings from subsidiaries

Borrowings paid to subsidiaries

( 4,487,690 )

Repayments to a related party

Net Cash Provided by Financing Activities

Net decrease in cash and cash equivalents

( 1,493,165 )

Cash and cash equivalents, beginning of year

3 unchanged sentences

Cash paid for income tax

Non-cash Transaction in Investing and Financing Activities

Allocation of fair value of derivative liabilities for issuance of common stock proceeds

Allocation of fair value of derivative liabilities to additional paid in capital upon warrants exercised

a) Basis of presentation

The condensed financial information of Senmiao Technology Limited, has been prepared using the same accounting policies as set out in the consolidated financial statements.

The condensed financial

information of Senmiao Technology Limited, has been prepared using the same accounting policies as set out in the consolidated financial

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S.

GAAP have been condensed or omitted by reference to the consolidated financial statements.

b) Investments in subsidiaries and equity of loss in subsidiaries

The investments in subsidiaries consist of investments in Senmiao Consulting, Hunan Ruixi and Yicheng.

The equity losses in subsidiaries consist of equity loss in Senmiao Consulting, Hunan Ruixi, Yicheng, XXTX, Sichuan Senmiao, Corenel and Jiekai.

have been condensed or omitted by reference to the consolidated financial statements.

b) Investments in subsidiaries

and equity of loss in subsidiaries

The investments in subsidiaries

consist of investments in Senmiao Consulting, Hunan Ruixi and Yicheng.

The equity losses in subsidiaries consist of total equity loss

in Senmiao Consulting, Hunan Ruixi, Yicheng, XXTX, Sichuan Senmiao, Corenel and Jiekai.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

c) Stockholders’ equity

c) Stockholders’

Restricted Stock Units

Total RSUs granted to these directors, officers and employees were valued at an aggregate fair value of $ 140,000 .

2019 Registered Direct Offering

On April 15, 2019, the SEC declared effective the Company’s Registration Statement on Form S-3, pursuant to which, along with the accompanying prospectus, the Company registered up to $ 80,000,000 in aggregate principal amount of its common stock, preferred stock, debt securities, warrants, rights and/or units.

On June 21, 2019, the Company closed a registered direct offering of an aggregate of 178,136 ( 1,781,360 pre reverse split) shares of its common stock, and in connection therewith, issued to the investors (i) for no additional consideration, Series A warrants to purchase up to an aggregate of 133,602 ( 1,336,021 pre reverse split) shares of common stock and (iii) for nominal additional consideration, Series B warrants to purchase up to a maximum aggregate of 111,632 ( 1,116,320 pre reverse split) shares of common stock.

The Company sold the shares of common stock at a price of $ 33.8 ($ 3.38 pre reverse split) per share (the “Share Purchase Price”).

The Company received gross proceeds from the offering of approximately $ 6.0 million, and net proceeds from the offering of approximately $ 5.1 million after deducting estimated offering expenses payable by the Company.

The Series A warrants are exercisable immediately upon issuance at an exercise price of $ 37.2 ($ 3.72 pre reverse split) per share and will expire on the fourth (4th) anniversary of the original issue date.

In the event that on December 20, 2019, the exercise price is greater than the Six Month Adjustment Price as defined below, on the trading day immediately following December 20, 2019 (the “Six Month Measuring Date”), the exercise price shall automatically adjust to the Six Month Adjustment Price (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events).

Six Month Adjustment Price means the greater of (x) $ 15.0 ($ 1.50 pre reverse split) (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction) and (y) 100 % of the quotient of (I) the sum of the five lowest VWAPs of the common stock during the ten consecutive trading day period ending and including the Six Month Measuring Date, divided by (II) five .

All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction during such period.

The exercise price of the Series A warrant was adjusted pursuant to this formula from $ 37.2 ($ 3.72 pre reverse split) to $ 15.00 ($ 1.50 pre reverse split) per share on December 20, 2019.

The Company used the adjusted exercise price to value its derivative liability on its December 31, 2019 financial statements and reporting periods onwards with changes in fair value of warrant liabilities from period to period are recorded in the consolidated statements of operations and comprehensive loss under the caption “Change in fair value of derivative liabilities”.

The exercise price of the Series A warrant was further adjusted to $ 5.0 ($ 0.50 pre reverse split) per share on August 7, 2020 as a result of the Company’s issuance of shares of common stock in its underwritten public offering in August 2020, which has been recorded in the financial statements in the year ended March 31, 2021.

In addition, the exercise price of the placement agent warrants from the June 2019 registered direct offering was voluntarily adjusted by the Company from $ 37.2 ($ 3.72 pre reverse split) to $ 5.0 ($ 0.50 pre reverse split) per share on August 18, 2020.

The Series B warrants are pre-funded warrants and were issued as a true-up with respect to the shares of common stock.

The maximum aggregate number of shares of common stock issuable upon exercise of the Series B warrants is 111,632 ( 1,116,320 pre reverse split).

Initially, the Series B warrants shall not be exercisable for any shares of common stock.

In the event that on the fiftieth (50th) day after the closing date (the “Adjustment Measuring Time”), the closing price of the common stock is less than the Share Purchase Price, then the number of shares of common stock issuable upon exercise of the Series B warrants shall be adjusted (upward or downward, as applicable) to the greater of (i) zero (0) and (ii) such aggregate number of shares of common stock equal to fifty percent (50%) of the difference of (A) the quotient of (x) the Share Purchase Price divided by (y) the Market Price (as defined in Purchase Agreement) as of

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the Adjustment Measuring Time, less (B) the aggregate number of shares of common stock issued to the investors at the closing (as adjusted for share splits, share dividends, share combinations, recapitalizations and similar events).

The exercise price of the Series B warrant was adjusted from $ 37.2 ($ 3.72 pre reverse split) to $ 0.001 ($ 0.0001 pre reverse split) per share on August 12, 2019.

The Company used the adjusted exercise price to value its derivative liability on its September 30, 2019 financial statements and reporting period onwards with changes in fair value of warrant liabilities from period to period are recorded in the consolidated statements of operations and comprehensive loss under the caption “Change in fair value of derivative liabilities.

As of March 31, 2021, the Company has issued an aggregate of 111,319 ( 1,113,188 pre reverse split) 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 .

Underwritten Public Offering and Exercise of the Over-Allotment Option

On August 4, 2020, the Company entered into an underwriting agreement with The Benchmark Company, LLC and Axiom Capital Management, Inc., as representatives of the Underwriters, relating to an underwritten public offering of 1,200,000 ( 12,000,000 pre reverse split) shares of the Company’s common stock at the Offering Price.

Pursuant to the terms of the Underwriting Agreement, the Company granted the Underwriters a 45-day option to purchase up to an additional 180,000 ( 1,800,000 pre reverse split) shares of common stock to cover over-allotments, if any, at the Offering Price less the underwriting discounts and commissions.

An underwriting discount of 7 % was applied to the Offering Price, except for shares of common stock purchased by certain existing investors of the Company (the “Excluded Investors”), an underwriting discount of 6 % was applied.

On August 6, 2020, the Company completed the underwritten offering.

The net proceeds to the Company from this offering, after deducting the underwriting discounts and commissions and other estimated offering expenses payable by the Company, were approximately $ 5.3 million.

On August 13, 2020, the Underwriters exercised their over-allotment option to purchase an additional 180,000 ( 1,800,000 pre reverse split) shares of common stock at $ 5.0 ($ 0.50 pre reverse split) per share.

This transaction was completed on August 13, 2020.

Net proceeds from the exercise of the underwriters’ over-allotment option were approximately $ 0.8 million net of underwriting discounts and commissions and offering expenses.

In connection with the underwritten offering, the Company issued the Underwriters or their permitted designees, on a private placement basis, the Underwriters’ Warrants to purchase up to 56,800 ( 568,000 pre reverse split) shares of common stock.

These warrants are valid for a period of five years and exercisable commencing six months from August 4, 2020 at a price per share equal to 125 % of the Offering Price and are exercisable on a “cashless” basis.

February 2021 Registered Direct Offering

On February 8, 2021, the Company entered into a placement agency agreement with FT Global Capital, Inc., to act as exclusive placement agent in connection with the registered direct public offering.

Pursuant to the terms of the placement agency agreement, the Company agreed to pay the Placement Agent a cash fee equal to 7.5 % of the gross proceeds raised in the Offering, and to reimburse the Placement Agent for certain expenses, including legal fees and expenses, up to $ 60,000 in the aggregate.

The Placement Agent is also entitled to additional tail compensation for any financings consummated within the 12-month period following the termination of the Placement Agent Agreement to the extent that such financing is provided to the Company by investors that the Placement Agent had introduced to the Company.

On February 10, 2021, the Company completed the registered direct offering.

In connection with the offering, the Company issued the placement agent warrants to purchase up to 38,044 ( 380,435 pre reverse split) shares of its common stock.

These warrants are exercisable for a period of five years commencing 180 days from February 8, 2020 at a price of $ 13.8 ($ 1.38 pre reverse split) per share and are exercisable on a “cashless” basis.

In addition, the company issued The Benchmark Company, LLC and Axiom Capital Management, Inc.

ss from the offering and warrants to purchase up to 15,218 ( 152,174 pre reverse split) shares of its common stock, in consideration for the termination of the ROFR.

These warrants are exercisable for a period of five years from February 8, 2020 at a price of $ 17.25 ($ 1.725 pre reverse split) per share.

May 2021 Registered Direct Offering

On May 11, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain purchasers (the “Investors”) pursuant to which the Company will sell to the Investors, in a registered direct offering, an aggregate of 553,192 ( 5,531,916 pre reverse split) units (the “Units”), each consisting of 0.1 (one pre reverse split) share (the “Shares”) of the Company’s

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

common stock, par value $ 0.0001 per share (“Common Stock”) and a warrant to purchase 0.1 (one pre reverse split) share of the Company’s Common Stock (the “Warrants”), at a purchase price of $ 1.175 per unit, for aggregate gross proceeds to the Company of $ 6,500,000 , before deducting fees to the placement agent and other estimated offering expenses payable by the Company.

On May 13, 2021, the Company completed the registered direct offering.

The Warrants have a term of five years and are exercisable by the holders at any time after the date of issuance at an exercise price of $ 10.5 ($ 1.05 pre reverse split) per share.

The exercise price and the number of shares issuable upon exercise of the Warrants are subject to an adjustment upon the occurrence of certain events, including, but not limited to, stock splits or dividends, business combinations, sale of assets, similar recapitalization transactions, or other similar transactions.

The exercise price of the Warrants is also subject to an adjustment in the event that the Company issues or is deemed to issue shares of Common Stock for less than the applicable exercise price of such Warrants.

However, the exercise price of the Warrants shall not be lower than $ 10.5 ($ 1.05 pre reverse split) as a result of an adjustment, unless the Company has obtained the stockholder approval.

The exercisability of the Warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.99 %.

FT Global Capital, Inc.

(“FT Global Capital”) acted as the exclusive placement agent in connection with this offering pursuant to the terms of a placement agency agreement, dated May 11, 2021, between the Company and FT Global Capital (the “Placement Agent Agreement”).

Pursuant to the Placement Agent Agreement, the Company agreed to pay FT Global Capital a cash fee equal to seven point five percent ( 7.5 %) of the aggregate proceeds received by the Company from the sale of its securities to the investors introduced to the Company by FT Global Capital.

FT Global Capital is also entitled to additional tail compensation for any financings consummated within the 12-month period following the termination of the Placement Agent Agreement to the extent that such financing is provided to the Company by investors that FT Global Capita had introduced to the Company.

In addition to the cash fees, the Company agreed to issue to the Placement Agent warrants to purchase an aggregate of up to seven point five percent ( 7.5 %) of the aggregate number of shares of our Common Stock sold in the offering (the “Placement Agent Warrants”).

The Placement Agent Warrants shall generally be on the same terms and conditions as the Warrants, exercisable at a price of $ 10.5 ($ 1.05 pre reverse split) per share, provided that Placement Agent Warrants will not provide for certain anti-dilution protections included in the Warrants.

In connection with the offering, the Company issued the investors warrants and placement agent warrants to purchase up to 553,192 ( 5,531,916 pre reverse split) and 41,490 ( 414,894 pre reverse split) shares of its common stock, respectively.

These warrants are exercisable at any time on or after the issuance date and expire on the fifth-year anniversary of their issuance.

November 2021 Private Placement

On November 8, 2021, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Investors”) pursuant to which the Company will sell to the Investors, in a private placement (the “Private Placement”), an aggregate of $ 5,000,000 worth of securities of the Company, consisting of up to 5,000 shares (the “Preferred Shares”) of Series A Convertible Preferred Stock, par value $ 0.0001 per share (the “Series A Preferred Stock”) and warrants (the “Investor Warrants”) to initially acquire up to an aggregate number of shares of common stock of the Company, par value $ 0.0001 per share (the “Common Stock”) that equals to the number of shares of Common Stock to be issued upon conversion of the Preferred Shares at $ 0.68 per share (the “Initial Conversion Price”) (as exercised, collectively, the “Warrant Shares”).

The purchase price for the Preferred Shares shall be $ 1,000 per each Preferred Share (and related Investor Warrant).

On November 10, 2021, the Company completed the Private Placement.

The net proceeds to the Company from this offering, after deducting the placement agent commissions and other estimated offering expenses payable by the Company, were approximately $ 4.4 million.

The Series A Convertible Preferred Stock is included in mezzanine equity on the consolidated balance sheets, because it is redeemable by the holders upon events of change of control which are not within the Company’s control.

A discount to the redemption amount of a contingently redeemable preferred share should be amortized only once it is probable the share will become redeemable.

The Company determined that the redemption is uncertain as the cash redemption feature upon change of control is at the option of the holder, and the redemption date upon the change of control is uncertain.

Pursuant to the certificate of designations for the Series A Preferred Stock (the “COD”), at any time after the initial issuance date, each holder shall be entitled to convert any portion of the outstanding Preferred Shares held by such holder into shares of Common Stock (the “Conversion Shares”) at Initial Conversion Price, which shall be adjusted to the greater of $ 0.41 per share or 85 % of the closing bid price of the Company’s Common Stock reported on the NASDAQ Capital Market on the Applicable Date, which is the earlier of the first date on which the registration statement covering the resale of the Conversion Shares and Warrant Shares is declared effective

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

by the SEC or the first date on which all such shares are eligible to be resold by the Investors pursuant to Rule 144 or Rule 144A promulgated under the Securities Act.

As the 1-for-10 reverse stock split on the Company's Common Stock became effective on April 6, 2022, the conversion price of the Preferred Shares was adjusted to $ 4.1 .

As of March 31, 2023 and 2022, there were 1,641 and 5,000 shares of Series A convertible preferred stock outstanding, respectively.

During the year ended March 31, 2023, 3,359 shares of Series A convertible preferred stock was converted into 1,546,125 shares of the Company's common stock.

The Investor Warrants have a term of five years and are exercisable by the holders at any time after six months and one day of the date of issuance at an exercise price of $ 8.2 ($ 0.82 pre reverse split) per share.

The exercise price and the number of shares issuable upon exercise of the Investor Warrants are subject to an adjustment upon the occurrence of certain events, including, but not limited to, stock splits or dividends, business combinations, sale of assets, similar recapitalization transactions, or other similar transactions.

The exercise price of the Investor Warrants are also subject to an adjustment in the event that the Company issues or is deemed to issue shares of Common Stock for less than the applicable exercise price of such Investor Warrants.

However, the exercise price of the Investor Warrants shall not be lower than $ 7.1 ($ 0.7125 pre reverse split) as a result of an adjustment, unless the Company has obtained the stockholder approval.

The exercisability of the Investor Warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.99 % or 9.99 % as the Investor chooses.

As the 1-for-10 reverse stock split on the Company's common stock became effective on April 6, 2022, the exercise price of the November 2021 Investors Warrants was adjusted to $ 1.13 , the Event Market Price and the total number of shares of the November 2021 Investors Warrants was adjusted to 5,335,763 .

FT Global Capital acted as the exclusive placement agent in connection with this Private Placement pursuant to the terms of a placement agency agreement, dated November 7, 2021, between the Company and FT Global Capital (the “Placement Agent Agreement”).

Pursuant to the Placement Agent Agreement, the Company agreed to pay FT Global Capital a cash fee equal to 7.5 % of the aggregate proceeds received by the Company from the sale of its securities to the Investors.

In addition to the cash fees, the Company agreed to issue to the Placement Agent warrants to purchase an aggregate of up to 7.5 % of the aggregate number of the Conversion Shares (the “Placement Agent Warrants”).

The Placement Agent Warrants shall generally be on the same terms and conditions as the Investor Warrants, exercisable at a price of $ 6.8 ($ 0.68 pre reverse split) per share, provided that Placement Agent Warrants will not provide for certain anti-dilution protections included in the Investor Warrants.

In connection with the Private Placement, the Company issued warrants to the Investors to purchase up to an aggregate number of shares of common stock that equals to the number of shares of common stock to be issued upon conversion of the Series A Preferred Stock at the Initial Conversion Price.

Meanwhile, the Company paid the placement agent cash commission of approximately $ 375,000 and issued to it warrants to purchase up to 55,148 ( 551,480 pre reverse split) shares of common stock at an exercise price of $ 6.8 ($ 0.68 pre reverse split) per share, which warrants will be exercisable at any time on or after the date of six months from the issuance date and expire on the fifth-year anniversary of their issuance.

Share Swap in purchase of XXTX’s remaining minority interest

In October 2021, the Company, Senmiao Consulting, XXTX and its shareholders entered into a Share Swap Agreement, pursuant to which the Company, through Senmiao Consulting, shall purchase all of the equity shares of XXTX held by its shareholders by issuing a total of 533,167 ( 5,331,667 pre reverse split) shares of the Company’s common stock to XXTX’s Shareholders.

Upon closing, the Company, through Senmiao Consulting, shall own 100 % of the equity interests in XXTX.

Common stock issued for consulting services

On October 22, 2021, the Company entered into a consulting agreement (the “Consulting Agreement”) with Jolly Good River Group Limited.

(the “Consultant”), pursuant to which the Company engaged the Consultant to provide certain market research and business development advisory services for a period of twelve months .

As compensation for the services, the Company agreed to issue the Consultant an aggregate of 100,000 ( 1,000,000 pre reverse split) shares of the Common Stock, par value $ 0.0001 , payable within ten working days from the signing of the Consulting Agreement.

As of November 9, 2021, the issuance of 100,000 ( 1,000,000 pre reverse split) shares of the Company’s common stock has been completed and the Company recorded the consulting fee of $ 653,000 pursuant to the fair value on November 3, 2021, the grant date.

29, 2020, the Board approved the issuance of an aggregate of 127,273 restricted stock units (“RSUs”) to directors,

officers and certain employees as stock compensation for their services for the years ended March 31, 2022.

Total RSUs granted to these

directors, officers and employees were valued at an aggregate fair value of $ 140,000 .

These RSUs will vest in four equal quarterly

installments on January 29, 2021, April 29, 2021, July 29, 2021 and October 29, 2021 or in full upon the occurrence of a change in control

of the Company, provided that the director, officer or the employee remains in service through the applicable vesting date.

The RSUs will

be settled by the Company’s issuance of shares of common stock in certificated or uncertificated form upon the earlier of (i) vesting

date, (ii) a change in control and (ii) termination of the services of the director, officer or employee due to a “separation of

service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, or the death or disability of such

director, officer or employee.

As of the filing date of these consolidated financial statements, all installment of RSUs with an aggregate

of 12,727 was vested and 9,545 was settled by the Company.

The Company expects to settle the remaining vested RSUs

by issuance of shares of common stock before March 31, 2024 and account for the vested RSUs as an addition to both expenses and additional

paid-in capital.

Equity Incentive Plan

Annual Meeting of Stockholders of the Company held on November 8, 2018, the Company’s stockholders approved the Company’s

2018 Equity Incentive Plan for employees, officers, directors and consultants of the Company and its affiliates.

At the 2022 Annual Meeting

of Stockholders of Company held on March 30, 2023, the Company’s stockholders approved the amendment to the 2018 Equity Incentive

Plan, to increase the number of shares of common stock reserved under the Plan to 1,500,000 shares.

A committee consisting of

at least two independent directors would be appointed by the Board or in the absence of such a committee, the board of directors,

will be responsible for the general administration of the Equity Incentive Plan.

All awards granted under the Equity Incentive Plan will

be governed by separate award agreements between the Company and the participants.

As of March 31, 2024, the Company has granted an aggregate

of 30,379 RSUs (after reverse split) , among which, 26,447 RSUs were issued

under the Equity Incentive Plan, 3,182 RSUs were vested but have not been issued while 750 RSUs were forfeited due to two directors

ceased to serve on the board of the Company since November 8, 2018.

1-for-10 shares reverse split

on common stock

considered the above transactions after giving a retroactive effect to a 1-for-10 reverse stock split of its common stock which became

effective on April 6, 2022.

The Company believed it is appropriate to reflect the above transactions on a retroactive basis similar to

those after a stock split or dividend pursuant to ASC 260.

All shares and per share amounts used herein and in the accompanying consolidated

financial statements have been retroactively stated to reflect the effect of the reverse stock split.

Upon execution of the 1-for-10 reverse

stock split, the Company recognized additional 8,402 shares of common stock due to round up issue.

Price Adjustment for November 2021 Preferred Shares

to the Certificate of Designation for the series A convertible preferred stock signed by the Company and certain institutional investors

in November 2021 Private Placement, the initial conversion price of the series A Convertible Preferred Shares was $ 0.68 .

applicable date the conversion price then in effect is greater than the greater of (1) $ 0.41 (the “floor Price”) (as

adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events) and (2) 85 % of the closing

bid price on the applicable date (the “Adjustment Price”), the conversion price shall automatically lower to the Adjustment

Price accordingly.

As the 1-for-10 reverse stock split on the Company’s Common Stock became effective on April 6, 2022, the conversion

price of the Preferred Shares was adjusted to $ 4.1 .

As of March 31, 2024 and 2023, there were 991 and 1,641 shares

of Series A convertible preferred stock outstanding, respectively, valued at $ 234,364 and $ 269,386 , recorded as mezzanine equity.

As of March 31, 2024, 4,009 shares of Series A convertible preferred stock were converted into 1,871,125 shares of

the Company’s common stock.

Further, on August 9, 2022, the Company and the investors agreed to reduce the conversion price of the

series A Convertible Preferred Shares from $ 4.10 to $ 2.00 and to increase the number of the shares of common stock that are

available to be issued upon conversion of the Preferred Shares from 1,092,683 to 2,240,000 .

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1-for-10 shares reverse split on common stock

The Company considered the above transactions after giving a retroactive effect to a 1-for-10 reverse stock split of its common stock which became effective on April 6, 2022.

The Company believed it is appropriate to reflect the above transactions on a retroactive basis similar to those after a stock split or dividend pursuant to ASC 260.

All shares and per share amounts used herein and in the accompanying consolidated financial statements have been retroactively stated to reflect the effect of the reverse stock split.

Upon execution of the 1-for-10 reverse stock split, the Company recognized additional 8,402 shares of common stock due to round up issue.

Common stock issued for consulting

2023, the Company entered into three different consulting and services agreements (the “Consulting Agreements”) with three

consultants (the “Consultants”), pursuant to which the Company engaged the Consultant to provide certain merger and acquisition

consulting service, market research and business development advisory services, and financial consulting services, respectively.

As compensation

for the services, the Company agreed to issue the Consultants an aggregate of 1,500,000 shares of its common stock, par value

The Company recognized the non-employee share-based payment equity awards by using the grant-date fair values at the time of

signing agreement.

On November 7, 2023, the issuance of 1,500,000 shares of the Company’s common stock has been completed

and the Company recorded $ 444,300 service expense during the years ended March 31, 2024.

Change of ownership interest in a subsidiary

On February 11, 2024, The Company and Hunan

Ruixi’s two minority shareholders (“Shareholders”) has entered into a share swap agreement (“Share Swap

Pursuant to the Share Swap Agreement, the Company would issue a total of 950,000 shares of its common stock to the

above mentioned two Shareholders.

In return, each shareholder will transfer a 2.5 % equity interest in Hunan

Ruixi to the Company, which increasing the Company’s ownership in Hunan Ruixi

As no cash consideration was received, $ 155,461 which is the difference between the fair value of the consideration received

and the amount by which the non-controlling interest is adjusted was recognized as an addition in additional paid-in capital in accordance

with ASC 810-10-45-23 “Change in a parent’s ownership interest in a subsidiary”.

SUBSEQUENT EVENTS

Since March 31, 2023 to the filing date of these consolidated financial statements, 500 shares of Series A convertible preferred stock in the November 2021 Private Placement were converted into 250,000 shares of the Company’s common stock.

evaluated all events and transactions that occurred after March 31, 2024 up through the date the Company filed these consolidated financial

No events require adjustment to or disclosure in the consolidated financial statements.

9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data