What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-07-10 compared with 2024-06-27 · 1245 added, 1354 removed, 714 unchanged (78% of the section changed)

15 unchanged sentences

balance sheets of Senmiao Technology Limited (the “Company”) as of March 31, 2025 and 2024, 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”).

of operations and comprehensive loss, changes in equity and cash flows for each of the two years in the period ended March 31, 2025, and

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

In our opinion, the consolidated

13 unchanged sentences

Basis for Opinion

These financial statements are the

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

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.

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.

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.

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 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.

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 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.

Critical audit matters are matters arising from

the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee

(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.

4 unchanged sentences

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

July 10, 2025

NEW YORK OFFICE ● 7 Penn Plaza ● Suite

830 ● New York, New York ● 10001

June 27, 2024

Phone 8610.8518.7992 ● Fax 8610.8518.7993 ● www.marcumasia.com

SENMIAO TECHNOLOGY LIMITED

9 unchanged sentences

Prepayments, other receivables and other current assets, net

Prepayment - a related party

Due from related parties, net, current

Current assets - discontinued operations

Total current assets

Property and equipment, net

Property and equipment, net - discontinued operations

Total Property and equipment, net

Operating lease right-of-use assets, net

Operating lease right-of-use assets, net, related parties

Operating lease right-of-use assets, net, a related party

Financing lease right-of-use assets, net

3 unchanged sentences

Other non-current assets

Other non-current assets - discontinued operations

Total other assets

1 unchanged sentence

Current liabilities

Borrowings from a financial institution, current

Accounts payable

4 unchanged sentences

Operating lease liabilities, current

Operating lease liabilities - related parties

Operating lease liabilities - a related party

Financing lease liabilities, current

3 unchanged sentences

Other liabilities

Borrowings from a financial institution, non-current

Operating lease liabilities, non-current

Operating lease liabilities, non-current - related parties

Financing lease liabilities, non-current

Deferred tax liability

Other liabilities - discontinued operations

Total other liabilities

3 unchanged sentences

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

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

Stockholders’ equity

991 shares issued and outstanding at March 31, 2025 and March 31, 2024)

Stockholders’ (deficit) equity

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

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

10,518,040 shares issued and outstanding at March 31, 2025 and March 31, 2024)

Additional paid-in capital

5 unchanged sentences

( 1,672,005 )

Total Senmiao Technology Limited stockholders’ equity

Total Senmiao Technology Limited stockholders’ (deficit) equity

( 2,855,563 )

Non-controlling interests

Total liabilities, mezzanine equity and equity

* 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

The accompanying notes are an integral part of

the consolidated financial statements

SENMIAO TECHNOLOGY LIMITED

3 unchanged sentences

For the Years Ended

Revenues, a related party

Revenues, related parties

Total revenues

3 unchanged sentences

( 2,922,452 )

Cost of revenues, a related party

Cost of revenues, related parties

Total cost of revenues

5 unchanged sentences

( 3,130,213 )

Allowance for credit losses

Provision for credit losses

( 2,093,199 )

( 1,725,746 )

Impairments of inventories

Stock-based compensation

11 unchanged sentences

Total other income, net

Loss before income taxes

Loss before income tax expense

( 3,467,165 )

( 3,834,000 )

Income tax benefit

Income tax expense

Net loss from continuing operations

( 3,467,165 )

( 3,854,206 )

Net loss attributable to non-controlling interests from operations

Net loss from discontinued operations

( 3,680,812 )

( 4,234,214 )

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

Net loss attributable to the Company’s stockholders

5 unchanged sentences

Foreign currency translation adjustment

( 1,103,510 )

Comprehensive loss

1 unchanged sentence

( 4,652,998 )

Total comprehensive loss attributable to non-controlling interests

Total comprehensive income (loss) attributable to non-controlling interests

Total comprehensive loss attributable to stockholders

4 unchanged sentences

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

Net loss per share - basic and diluted

Continuing operations

Discontinued operations

The accompanying notes are an integral part of

the consolidated financial statements

SENMIAO TECHNOLOGY LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS

OF CHANGES IN EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Years Ended March 31, 2025 and 2024

2 unchanged sentences

comprehensive

March 31, 2022

$ ( 34,601,545 )

$ ( 109,454 )

BALANCE, March 31, 2023

$ ( 37,715,294 )

$ ( 1,247,099 )

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

( 3,668,974 )

( 4,234,214 )

March 31, 2023

Conversion of preferred stock into common stock

Issuance of common stock for consulting service

Issuance of common stock in purchase of Hunan Ruixi’s NCI

Foreign currency translation adjustment

BALANCE, March 31, 2024

$ ( 41,384,268 )

$ ( 1,672,005 )

Net income (loss)

( 3,725,305 )

( 3,680,812 )

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

Foreign currency translation adjustment

BALANCE, March 31, 2025

$ ( 45,109,573 )

$ ( 1,697,164 )

* 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

The accompanying notes are an integral part of

the consolidated financial statements

SENMIAO TECHNOLOGY LIMITED

6 unchanged sentences

$ ( 4,234,214 )

Net loss from discontinued operations

Net loss from continuing operations

( 3,467,165 )

( 3,854,206 )

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

Depreciation of property and equipment

Stock-based compensation

Depreciation and amortization of property and equipment

Stock compensation expense

Amortization of right-of-use assets

Amortization of intangible assets

Allowance for credit losses

Impairments of inventories

Provision for credit losses

Gain on disposal of equipment

Gain from lease modification

Gain from deconsolidation

Loss (gain) from lease modification or termination

Loss from termination of automobiles purchase

Change in fair value of derivative liabilities

( 1,711,889 )

Deferred tax benefit

Change in operating assets and liabilities

2 unchanged sentences

Finance lease receivables

Prepayments, other receivables and other current assets

Due from a related party

Prepayments, other receivables and other assets

Prepayment - a related party

Due from related parties

Accounts payable

2 unchanged sentences

Accrued expenses and other liabilities

Due to a related party

Due to related parties

Operating lease liabilities

Operating lease liabilities - related parties

Net Cash Provided by Operating Activities from Continuing Operations

Net Cash Used in Operating Activities from Discontinued Operations

Net Cash Provided by Operating Activities

1 unchanged sentence

Purchases of property and equipment

( 1,151,076 )

Cash received from disposal of property and equipment

Purchases of intangible assets

Net Cash Provided by (Used in) Investing Activities

Loan to a related party

Cash released upon disposal of subsidiaries

Net Cash Used in Investing Activities from Continuing Operations

Net Cash Provided by Investing Activities from Discontinued Operations

Net Cash Used in Investing Activities

Cash Flows from Financing Activities:

Borrowings from a financial institution

Repayments from related parties and affiliates

Loans to related parties and affiliates

Repayments of current borrowings from financial institutions

Repayments from a related party

Repayments of current borrowings from a financial institution

Repayments to related parties and affiliates

Principal payments of finance lease liabilities

Net Cash Used in Financing Activities from Continuing Operations

Net Cash (Used in) Provided by Financing Activities from Discontinued Operations

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

Net increase (decrease) in cash and cash equivalents

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

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

Cash and cash equivalents from discontinued operations

Cash, Cash equivalents and Restricted Cash from continuing operations, end of year

Supplemental Cash Flow Information

3 unchanged sentences

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

1 unchanged sentence

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

Cashless exercise of November 2021 Investor warrants into common stock

The following tables provides a reconciliation

1 unchanged sentence

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

For the Years Ended

Cash and cash equivalent from continuing operations, end of the year

Restricted cash from continuing operations, end of the year

Cash and cash equivalent from discontinued operations, end of the year

For the Years Ended

Cash and cash equivalent from continuing operations, beginning of the year

Restricted cash from continuing operations, beginning of the year

Cash and cash equivalent from discontinued operations, beginning of the year

The accompanying notes are an integral part of

the consolidated financial statements

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND PRINCIPAL

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

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

ORGANIZATION AND PRINCIPAL ACTIVITIES

Senmiao Technology Limited (the “Company”)

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

The Company operates its business in two segments:

(i) automobile

The Company operates its business in one segment:

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:

or “China”) through the Company’s majority owned subsidiaries, Chengdu Jiekai Yunli Technology Co., Ltd., a PRC limited

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

(“Hunan Ruixi”), and its former wholly owned subsidiary, Chengdu Corenel Technology Co., Ltd., a PRC limited liability company

(“Corenel”), and its equity investee company (an entity 35 % owned by Hunan Ruixi), Sichuan Jinkailong Automobile Leasing Co.,

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

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.

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 services.

The Company also used to operate online ride-hailing

platform services through its own platform (known as Xixingtianxia) from October 2020 to August 2024, through Hunan Xixingtianxia Technology

Co., Ltd., a PRC limited liability company (“XXTX”), which was a former 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 enabled qualified ride-hailing drivers to provide transportation services in several cities

On August 8, 2024, Senmiao Consulting entered into a certain Acquisition Agreement with Debt Assumption Takeover (the “Acquisition

Agreement”) with Jiangsu Yuelaiyuexing Technology Co., Ltd.

(the “Purchaser”), and other parties thereto, in connection

with the acquisition (the “Acquisition”) by the Purchaser of 100 % of the Company’s equity interest in XXTX and its subsidiaries.

On August 20, 2024, the Acquisition was completed and Senmiao Consulting disposed its 100 % equity interest in XXTX and its subsidiaries

(refer to Note 4).

After the disposition, the Company operates its business in one segment.

The following diagram illustrates the Company’s

corporate structure as of the filing date of these 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 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.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 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

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;

On March 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.

Starting from April 1, 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, 2025, the Company has outstanding

balance due from Jinkailong amounted to $ 1,468,822 , net of allowance for credit losses, of which, $ 1,386,139 is to be repaid over a period

from April 2026 to December 2026, classified as due from a related party, net, non-current.

As 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.

(refer to Note 15).

As of March 31, 2025 and 2024, allowance for credit

losses due from Jinkailong amounted to $ 5,165,699 and $ 3,099,701 , respectively.

During the years ended March 31, 2025 and 2024, the Company

recorded provision for credit losses against the balance due from Jinkailong of $ 2,093,199 and $ 1,703,563 , respectively.

GOING CONCERN

In assessing 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 $ 3.7 million for the year ended March 31, 2025;

(2) accumulated deficit of approximately $ 45.1 million

as of March 31, 2025;

(3) the working capital deficit of approximately $ 3.0 million as of March 31, 2025.

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:

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:

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.

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

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

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.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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.

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.

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.

The consolidated financial statements, including

the consolidated balance sheets as of March 31, 2025, the consolidated statements of operations and comprehensive loss, the consolidated

statements of changes in equity, and the consolidated statements of cash flows for the years ended March 31, 2025 and 2024, as well as

other information disclosed in the accompanying notes, have been prepared in accordance with accounting principles generally accepted

in the United States of America (“U.S.

GAAP”), and pursuant to the rules and regulations of the SEC and pursuant to Regulation

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.

All adjustments (including normal recurring adjustments)

necessary to present a fair statement of the Company’s financial position as of March 31, 2025, its results of operations for the

year ended March 31, 2025 and its cash flows for the year ended March 31, 2025, 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:

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 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 are recorded as a separate component of accumulated

other comprehensive loss within the consolidated statements of changes in 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 – RMB:

1 unchanged sentence

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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:

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.

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

Accordingly, actual results could differ from those estimates.

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 liabilities, right-of-use assets, determinations of the useful lives and valuation of long-lived assets, estimates

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

of deferred tax assets.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(d) Fair values of financial instruments

Accounting Standards Codification (“ASC”)

Topic 825, Financial Instruments (“Topic 825”) requires disclosure of fair value information of financial instruments, whether

or not recognized in the balance sheets, for which it is practicable to estimate that value.

In cases where quoted market prices are not

available, fair values are based on estimates using present value or other valuation techniques.

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,

2025 and 2024:

Fair Value Measurement as of

4 unchanged sentences

Derivative liabilities

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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, 2025 and 2024:

Registered Direct Offering

November 2021

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

Valuation date 6/20/2019 6/20/2019 6/20/2019 8/4/2020 2/10/2021 2/10/2021 5/13/2021 5/13/2021 11/10/2021 11/10/2021

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

Risk-free interest rate 1.77 % 1.91 % 1.77 % 0.19 % 0.46 % 0.46 % 0.84 % 0.84 % 1.23 % 1.23 %

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

BALANCE as of March 31, 2023

Change in fair value of derivative liabilities

Warrant forfeited due to expiration

BALANCE as of March 31, 2024

Change in fair value of derivative liabilities

BALANCE as of March 31, 2025

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

The August 2020 Underwriters’ Warrants,

the February 2021 Placement Agent Warrants, the February 2021 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 (all discussed below) are not traded in

an active securities market;

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

as of March 31, 2025 and 2024.

As of March 31, 2025

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

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

Placement Placement Placement

Underwriters’ Agent ROFR Investor Agent Investor Agent

Underwriter’ Agent ROFR Investor Agent Investor Agent

Granted Date Warrants Warrants Warrants Warrants Warrants Warrants Warrants

7 unchanged sentences

As of March 31, 2024

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

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

5 unchanged sentences

Expected volatility 117 % 117 % 117 % 117 % 117 % 117 % 117 %

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

As of March 31, 2025 and 2024, financial instruments

of the Company comprised primarily current assets and current liabilities including cash and cash equivalents, restricted cash, accounts

receivable, 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 were recorded at the gross amount adjusted for the interest using the effective interest rate

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, 2025 and 2024.

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.

(e) Equity 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

31, 2025 and 2024, the Company had equity investment in Jinkailong of 35 % that the Company has the ability to influence the operating

and financial decisions of 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.

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, 2025 and 2024,

the carrying value of the investment is $ 0 for both periods presented.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(f) Business combinations and

non-controlling interests

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

20 unchanged sentences

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

(g) Segment reporting

In November 2023, the FASB issued ASU 2023-07,

which is an update to Topic 280, Segment Reporting:

Improvements to reportable Segment Disclosures (“ASU 2023-07”), which

enhances the disclosure required for reportable segments in annual and interim consolidated financial statements, including additional,

more detailed information about a reportable segment’s expenses.

ASU 2023-07 is effective for fiscal years beginning after December

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

Early adoption is permitted.

The Company adopted

ASU 2023-07 for the year ended March 31, 2025, retrospectively to all periods presented in the consolidated financial statement.

of this ASU had no material impact on reportable segments identified and had no effect on the Company’s consolidated financial position,

results of operations, or cash flows.

Operating segments are reported in a manner consistent

with the internal reporting provided to the chief operating decision maker (the “CODM”), the Company’s CODM has been

identified as its CEO, who reviews the consolidated results when making decisions about allocating resources and assessing performance

of the Company.

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

XXTX in August 2024.

The Company evaluated how the CODM manages the businesses of the Company to maximize efficiency in allocating resources

and assessing performance.

The Company has one operating and reportable segment of automobile transaction and related services as set

forth in Note 1, after discontinued the online ride-hailing platform services on August 20, 2024.

(h) 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

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

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.

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:

(i) 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.

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.

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 (Topic 326):

Measurement of Credit Losses

on Financial Instruments” (“ASC Topic 326”).

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.

balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered

The Company’s management continues to evaluate the reasonableness of the valuation allowance policy and update it if necessary.

As of March 31, 2025 and 2024, the Company record allowance for credit losses of $0 and $ 1,545 against accounts receivable, respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(j) Finance lease receivables

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 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.

As of March 31, 2025 and 2024, the Company determined no allowance

for credit losses was necessary for finance lease receivables.

As of March 31, 2025 and 2024, finance lease receivables

consisted of the following:

Minimum lease payments receivable

Unearned interest

lease receivables

Financing 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

Future scheduled minimum lease payments for investments

in sales-type leases as of March 31, 2025 are as follows:

Twelve months ending March 31, 2026

Twelve months ending March 31, 2027

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:

Leasehold improvements

Shorter of the remaining lease terms or estimated useful lives

Computer equipment

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

(k) Property and equipment, net

Property and equipment primarily consist of leasehold

improvements, computer equipment, office equipment, fixtures and furniture and automobiles, which are stated at cost less accumulated

depreciation and amortization less any provision required for impairment in value.

Depreciation and amortization are 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

Categories Useful life

Leasehold improvements Shorter of the remaining lease terms or estimated useful lives

Computer equipment 2 – 5 years

Office equipment, fixture and furniture 3 – 5 years

Automobiles 3 – 5 years

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.

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

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, 2025 and 2024, the Company did not recognize

impairment for property and equipment.

Costs of repairs and maintenance are expensed

as incurred and asset improvements are capitalized.

The cost and related accumulated depreciation and amortization 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.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

Intangible assets, net

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

1 unchanged sentence

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

Online ride-hailing platform

operating license

Categories Useful life

Software 5 – 10 years

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

6 unchanged sentences

31, 2025 and 2024, 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

(m) Loss per share

Basic 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.

For 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 method.

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.

As of March 31, 2025, the Company’s dilutive

securities from the outstanding series A convertible preferred stock are convertible into 495,706 shares of common stock.

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

Mezzanine Equity (redeemable)

13 unchanged sentences

As of March 31, 2025, 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

(o) 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”.

(p) Revenue recognition

The Company recognized its revenue under Accounting

Standards Codification (“ASC”) 842 Leases (“ASC 842”) and Accounting Standards Codification (ASC) Topic 606, Revenue

from Contracts with Customers (ASC 606).

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

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.

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:

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

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.

The Company reassesses

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

As of March 31, 2025, the Company’s

pricing interest rate was 6.0 % per annum.

Contract liability

The Company’s contract liabilities consist

of advances from customers, which are the upfront rent received from customers.

The revenue recognized for the years ended March 31, 2025

and 2024 which was previously included in the advances from customers balances as of March 31, 2024 and March 31, 2023 was $ 121,025 and

$ 140,751 , respectively.

The Company’s advances from customers amounted

to $ 124,623 and $ 122,461 as of March 31, 2025 and 2024, respectively.

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

- Operating lease revenues from

automobile rentals

- Operating lease revenues from automobile rentals

- Service fees from NEVs leasing

- Monthly services commissions

- Default revenue

- Financing revenues

- Service fees from NEVs leasing

- Service fees from automobile purchase

- Service fees from management and guarantee

- Revenues from sales of automobiles

- Service fees from automobile purchase services

- Other service fees

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.

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.

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.

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

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 - Services fees

from NEVs leasing are paid by some lessees who rent new energy electric vehicles from the Company, which based on the product solutions.

The service content includes:

(1) introducing the current situation of the online ride-hailing industry;

(2) guiding the lessees to open

an account on Partner Platforms;

(3) introducing online ride-hailing business and order-taking skills;

(4) providing violation handling

consultation, insurance claims consultation, and traffic accident legal consultation;

Monthly 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.

Default revenue - The Company charged the lessees

default expenses such as early-termination the contracts or other violation behaviors to the contracts.

The default punishment is calculated

and confirmed by the customers.

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.

Service fees from automobile purchase services

- Automobile purchase services are paid by automobile purchasers for a series of the services provided to them throughout the purchase

process such as credit assessment, installment of GPS devices, ride-hailing driver qualification and other administrative procedures,

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

The Company recognizes those revenues at a point

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

recognizes the revenue of service fees from NEVs leasing once the lessees terminate the lease term and confirmed the settlement between

the Company and the lessees.

Accounts receivable related to automobile purchase services is collected upon the automobiles are delivered

to lessees or purchaser.

The Company recognizes default revenue at a point in time when performance obligations are completed and the

default punishment is calculated and confirmed by the customers, which represent the collectability is probable from the customers.

Other revenues – The Company generated other

revenues such as miscellaneous service fees charged to its customers for some supporting services provided to online ride-hailing drivers

and sales of automobiles.

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

is probable from the customers.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

Deferred income tax liabilities and assets are

40 unchanged sentences

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

3 unchanged sentences

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.

Leases – lessee

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.

(t) Leases – lessee

The Company accounts for leases in accordance

12 unchanged sentences

it is expected to have no alternative use to the lessor at the end of the lease term.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

Leases that do not meet any of the above criteria

10 unchanged sentences

environment and over a similar term.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Lease terms used to calculate the present value

18 unchanged sentences

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

The Company reviews the recoverability of its long-lived

The Company reviews the recovery ability 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.

6 unchanged sentences

March 31, 2025 and 2024, the Company did not recognize impairment loss on its finance lease ROU assets.

(u) Discontinued operations

A discontinued operation may include a component

of an entity or a group of components of an entity, or a business or nonprofit activity.

A disposal of a component of an entity or a group

of components of an entity is required to be reported in discontinued operation if the disposal represents a strategic shift that has

(or will have) a major effect on an entity’s operations and financial results when any of the following occurs:

(1) the component

of an entity or group of components of an entity meets the criteria to be classified as held for sale;

(2) the component of an entity

or group of components of an entity is disposed of by sale;

(3) the component of an entity or group of components of an entity is disposed

of other than by sale (for example, by abandonment or in a distribution to owners in a spinoff).

(v) Significant risks and uncertainties

1) Credit risk

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.

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.

As of March 31, 2025 and 2024, approximately $ 1,000 and $ 21,000 , respectively, were deposited with a bank in the United States which is insured by the U.S.

government up to $ 250,000 .

As of March 31, 2025 and 2024, approximately $ 760,000 and $ 719,000 , 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.

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.

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.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

In 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.

As of March 31, 2025 and 2024, the

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

Foreign currency risk

As of March 31, 2025 and 2024 substantially all

of the Company’s operating activities and major assets and liabilities, except for the cash deposit of approximately $ 1,000 and

$ 21,000 , respectively, in U.S.

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

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 approximately 7.22 RMB into US$ 1.00 on March 31, 2024 to approximately

7.26 RMB into US$ 1.00 on March 31, 2025.

(w) Comparability and reclassification adjustments

The Company has reclassified certain comparative

balances in the consolidated balance sheets as of March 31, 2024 and certain comparative amounts in the consolidated statements of operations

and comprehensive loss for the year ended March 31, 2024 to conform to the current period’s presentation.

The assets and liabilities

of the discontinued operations have been classified as current assets of discontinued operations, property and equipment, net of discontinued

operations, other assets of discontinued operations, current liabilities of discontinued operations, and other liabilities of discontinued

operations in the consolidated balance sheets as of March 31, 2024.

The results of discontinued operations for the year ended March 31,

2024 have been reflected separately in the consolidated statements of operations and comprehensive loss as a single line item for all

periods presented in accordance with U.S.

Cash flows from discontinued operations of the three categories for the year ended March

31, 2024 were separately presented in the consolidated statements of cash flows for all periods presented in accordance with U.S.

(x) Recent accounting pronouncements

not yet adopted

In December 2023, the FASB issued ASU 2023-09,

which is an update to Topic 740, Income Taxes.

The amendments in this update enhances the transparency and decision usefulness of income

tax disclosures.

ASU 2023-09 will be effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted for annual

financial statements that have not yet been issued or made available for issuance.

The 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.

The Company is evaluating the potential impact of this guidance on its tax

In November 2024, the FASB issued ASU No.

2019-10, which is to update the effective date of ASU No.

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

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:

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

Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement

Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU No.

2025-01, Income Statement - Reporting Comprehensive

Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date (“ASU 2025-01”).

requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types

of expenses included in the expense captions presented in the income statement.

ASU 2024-03, as clarified by ASU 2025-01, is effective

for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December

Both early adoption and retrospective application are permitted.

The Company is currently evaluating the impact of this accounting

standard update on its consolidated financial statements and related disclosures.

Except for the above-mentioned pronouncements,

there are no new recent issued accounting standards that will have material impact on the consolidated statements and related disclosures.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

DISCONTINUED OPERATIONS

Discontinued operations - P2P lending services

Since October 2019, the Company has discontinued

its online P2P lending services business.

Carrying 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, 2025 and 2024:

Current liabilities

Accrued expenses and other liabilities

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

Discontinued operations - Online ride-hailing

platform service

The Company used to operate online ride-hailing

platform services through its own platform from October 2020 to August 2024, through XXTX, which was a wholly owned subsidiary of Senmiao

Zecheng, a wholly-owned subsidiary of the Company.

On August 8, 2024, Senmiao Consulting entered into a certain Acquisition Agreement

with Debt Assumption Takeover (the “Acquisition Agreement”) with Jiangsu Yuelaiyuexing Technology Co., Ltd.

(the “Purchaser”),

and other parties thereto, in connection with the acquisition (the “Acquisition”) by the Purchaser of 100 % of the Company’s

equity interest in XXTX and its subsidiaries.

On August 20, 2024, the Acquisition was completed and the Company disposed of its 100 % equity

interest in XXTX and its subsidiaries to the Purchaser, effectively discontinued its operations in the online ride-hailing platform service

This decision was driven by recurring losses in the segment, which prompted the Company to strategically exit the online ride-hailing

The Company recognized a gain of $ 397,003 from the deconsolidation of XXTX accordingly.

In accordance with ASC 205-20-45, the

discontinuation of the Company’s online ride-hailing platform service was accounted for as a discontinued operation, as it represented

a strategic shift with a significant impact on the Company’s overall operations and financial results.

Reconciliation of the carrying amounts of major

classes of assets and liabilities from discontinued operations of online ride-hailing platform service in consolidated balance sheets

as of March 31, 2025 and 2024 are as follows:

Current assets

Cash and cash equivalents

Accounts receivable

Prepayments, other receivables, and other current assets, net

Due from a related party

Total current assets

Property and equipment, net:

Intangible assets, net

Current liabilities

Borrowings from financial institutions

Accounts payable

Accrued expenses and other liabilities

Total current liabilities

Other liabilities:

Borrowings from financial institutions, noncurrent

Deferred tax liability

Total Other liabilities

Total liabilities

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 online ride-hailing platform service in the consolidated

statements of operations and comprehensive loss for the years ended March 31, 2025 and 2024, respectively.

For the Years Ended

Cost of revenues

( 1,858,557 )

Operating expenses

Selling, general and administrative expenses

Provision for credit losses

Total operating expenses

Loss from operations

Other income (expenses), net

Interest expense

Loss before income taxes

Income tax benefit

Net loss from discontinued operations

$ ( 213,647 )

$ ( 380,008 )

Reconciliation of the amount of cash flows from

discontinued operations in the consolidated statements of cash flows for the years ended March 31, 2025 and 2024 are as follows:

For the Years Ended

Net cash used in operating activities from discontinued operations

$ ( 303,000 )

Net cash provided by investing activities from discontinued operations

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

ACCOUNTS RECEIVABLE, NET

Accounts receivable includes 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 rates.

As of March 31, 2025 and 2024, accounts receivable

were comprised of the following:

Receivables of operating lease

2 unchanged sentences

Accounts receivable, net

Movement of allowance for credit

losses for the years ended March 31, 2024 and 2023 are as follows:

Movement of allowance for credit losses for the

years ended March 31, 2025 and 2024 are as follows:

Beginning balance

2 unchanged sentences

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Automobiles (i)

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)

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

PREPAYMENTS, OTHER RECEIVABLES AND OTHER

CURRENT ASSETS, NET

As of March 31, 2025 and 2024, the prepayments,

other receivables and other current assets, net were comprised of the following:

Purchase contract termination refund (i)

Deposits (ii)

Receivables from aggregation platforms (iii)

Prepaid expenses (iii)

Value added tax (“VAT”) recoverable (iv)

3 unchanged sentences

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:

Movement of allowance for credit losses for the

years ended March 31, 2025 and 2024 are as follows:

Beginning balance

1 unchanged sentence

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.

(i) Purchase contract termination refund

The balance of Purchase contract termination

refund represented the part of the purchase prepayments originally made for automobile purchase, which will be refunded before March 31,

2026 due to the termination of automobile purchase.

(refer to note 9)

(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

The balance of deposits mainly represented

the security deposit made by the Company to various automobile leasing companies and Didi Chuxing Technology Co., Ltd., who runs an online

ride-hailing platform.

As of March 31, 2025 and 2024, the allowance for credit losses of $ 17,063 and $ 17,841 was recorded against the

security deposits not returned for more than one year after the end of the cooperation.

During the years ended March 31, 2025 and 2024,

the Company recorded additional allowances for credit losses of $ 0 and $ 17,974 , respectively, while wrote off balance against the security

deposits not returned for more than one year after the end of the cooperation of $ 693 and $ 0 , respectively.

(iii) Prepaid expense

The 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.

(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, 2025 and 2024, the allowance for credit losses recorded

against receivables due from automobile purchasers was $0 and $ 2,633 .

During the years ended March 31, 2025 and 2024, the Company recorded

additional allowances for credit losses of $ 0 and $ 2,652 , respectively, while wrote off balance due from automobile purchasers of $ 2,634

and $ 0 , respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

PROPERTY AND EQUIPMENT, NET

Property and equipment as of March 31, 2025 and

2024 consist of the following:

Leasehold improvements

5 unchanged sentences

Total property and equipment, net

expense for the years ended March 31, 2024 and 2023 were amounted to $ 933,395 and $ 1,095,518 , respectively.

Depreciation expense for the year ended March

31, 2025 were amounted to $ 913,443 .

Depreciation and amortization expense for the

year ended March 31, 2024 were amounted to $ 927,149 .

INTANGIBLE ASSETS, NET

Intangible assets consisted of

the following:

Online ride-hailing platform operating licenses

Intangible assets as of March 31, 2025 and 2024 consisted of the following:

accumulated amortization

Total intangible assets, net

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:

Amortization expense for the years ended March

31, 2025 and 2024 were amounted to $ 75,029 and $ 78,039 , respectively.

The following table sets forth the Company’s

amortization expense for the next five years as of March 31, 2025:

Twelve months ending March 31, 2026

3 unchanged sentences

Twelve months ending March 31, 2030

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Prepayments of automobiles purchased

In September 2022, the Company entered into an automobile purchase agreement

(“Purchase Agreement”) with a third party to purchase a total of 100 automobiles which amounted to approximately $ 1.52 million,

of which RMB 4.62 million (approximately $ 0.64 million) had been remitted as purchase prepayment.

In March 2025, the Company signed a termination agreement (“Termination Agreement”) with the seller, pursuant to which, the original Purchase Agreement would be terminated on March 31,2025, and the prepayment with amount of RMB 3.20 million (approximately $ 0.44 million) will be refunded to the Company in installments before March 31, 2026.

Therefore, the Company recognized a default loss of RMB 1.42 million (approximately $ 0.20 million) due to the Termination Agreement for the year ended March 31, 2025.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued payroll and welfare

1 unchanged sentence

Deposits (ii)

Accrued expenses

Payables for expenditures on automobile transaction and related services (iii)

Accrued expenses (iii)

Other taxes payable

Loan repayments received on behalf of financial institutions(iv)

Payables for expenditures on automobile transaction and related services

Other payables

Total accrued expenses and other liabilities

Total accrued expenses and other liabilities – discontinued operations

Total accrued expenses and other liabilities – continuing operations

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

(i) 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 Partner Platforms base on the confirmed billings.

(ii) Deposits

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.

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

(iii) Accrued expenses

The balance of accrued expenses represented

the unbilled or payable balances to the expenses related to the daily operations of automobiles and services fees to professional institutions.

EMPLOYEE BENEFIT PLAN

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, 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.

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 $ 147,128

and $ 177,112 for the years ended March 31, 2025 and 2024, respectively, from operations of the Company.

As of March 31, 2025 and 2024, the Company did

not make adequate employee benefit contributions in the amount of $ 965,756 and $ 928,943 , respectively.

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

loss under the caption “Change in fair value of derivative liabilities.”

SENMIAO TECHNOLOGY LIMITED

1 unchanged sentence

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.

August 2020 Underwriters’ Warrants

As of March 31, 2025 and 2024, there were 31,808

underwriters’ warrants outstanding.

During the years ended March 31, 2025 and 2024, the change of fair value was a gain of $ 3,198

and $ 5,231 recognized in the consolidated statements of operations and comprehensive loss based on the decrease in fair value of the liabilities,

respectively.

As of March 31, 2025 and 2024, the fair value of the derivative instrument totaled $ 21 and $ 3,219 , respectively.

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 .

February 2021 Registered Direct Offering Warrants

As of March 31, 2025 and 2024, there were 53,262

February 2021 registered direct offering warrants outstanding.

During the years ended March 31, 2025 and 2024, the change of fair value

was a gain of $ 4,114 and $ 7,158 recognized in the consolidated statements of operations and comprehensive loss based on the decrease in

fair value of the liabilities, respectively.

As of March 31, 2025 and 2024, the fair value of the derivative instrument totaled $ 219 and

$ 4,333 , 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.

May 2021 Registered Direct Offering Warrants

As of March 31, 2025 and 2024, there were 594,682

May 2021 registered direct offering warrants outstanding.

During the years ended March 31, 2025 and 2024, the change of fair value was

a gain of $ 72,899 and $ 87,424 recognized in the consolidated statements of operations and comprehensive loss based on the decrease in

fair value of the liabilities, respectively.

As of March 31, 2025 and 2024, the fair value of the derivative instrument totaled $ 13,785

and $ 86,684 , 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 $ 10.50 .

November 2021 Private Placement Warrants

As of March 31, 2025 and 2024, there were 5,365,911

November 2021 Private Placement Warrants outstanding.

During the years ended March 31, 2025 and 2024, the change of fair value was a gain

of $ 124,031 and $ 113,130 recognized in the consolidated statements of operations and comprehensive loss based on the decrease in fair

value of the liabilities, respectively.

On November 18, 2022, a holder of November 2021 private placement warrants exercised the warrants

on a “cashless” basis.

As of March 31, 2025 and 2024, the fair value of the derivative instrument totaled $ 70,566 and $ 194,597 ,

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 November 2021 Investors Warrants was adjusted to $ 1.13 .

Weighted Average

3 unchanged sentences

Balance, March 31, 2023 6,066,298 6,066,298 $ 2.29 3.56

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

Balance, March 31, 2025 6,045,663 6,045,663 $ 2.25 1.55

Restricted Stock Units

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.

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 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 (iii) 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 RSUs with an aggregate of 12,727 was vested and 9,545 was settled by the Company.

Company expects to settle the remaining vested RSUs by issuance of shares of common stock before December 31, 2025 and the vested RSUs

have been accounted in an expense and additional paid-in capital.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

Equity Incentive Plan

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.

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.

In March 2023 and April 2024, the Annual Meeting of Stockholders

of Company for the years ended March 31, 2022 and 2023 further approved the amendments to the 2018 Equity Incentive Plan, to increase

the number of shares of common stock reserved under the Plan to 1,500,000 shares and 1,800,000 shares, respectively.

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.

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, 2025, 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

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,

During the years ended March 31, 2025 and 2024, no new RSUs were granted.

Conversion Price Adjustment for November 2021

Preferred Shares

Pursuant 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 .

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 and the Floor Price of the Preferred Shares

mentioned above were proportionally adjusted.

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

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”.

As of March 31, 2025 and 2024, there were

991 shares of Series A convertible preferred stock outstanding, respectively, valued at $ 234,364 recorded as mezzanine equity.

31, 2025, 4,009 shares of Series A convertible preferred stock were converted into 1,871,125 shares of the Company’s common stock.

The United States of America

is incorporated in the State of Nevada in the U.S., and is subject to U.S.

The Company 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 %.

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.

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 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, 2025 and 2024, 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 amounted to approximately $ 0.9 million and $ 1.1 million for the years ended March 31, 2025 and 2024, respectively.

As of March 31, 2025 and 2024, the Company’s net operating loss carryforward for U.S.

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.

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.

income taxes was approximately $ 7.9 million

and $ 7.6 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, 2025 and 2024, valuation allowances for

deferred tax assets for US income taxes were approximately $ 1.7 million and $ 1.6 million, respectively.

Management reviews the valuation

allowance periodically and makes changes accordingly.

Senmiao Consulting, Sichuan Senmiao Ronglian Technology

(“Sichuan Senmiao”), Hunan Ruixi, Sichuan Senmiao Yicheng Assets Management Co., Ltd.

(“Yicheng”), Corenel,

and Jiekai are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income

The EIT rate for companies operating in the PRC is 25 %.

Net income (loss) before income tax by jurisdiction

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

Net loss before income tax by jurisdiction as

For the Years Ended

2 unchanged sentences

( 2,693,385 )

( 2,397,904 )

Total net loss before income tax

1 unchanged sentence

$ ( 3,834,000 )

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

For the years ended March 31, 2025, the Company

had no current tax expense or deferred tax expense, while the Company had current tax expense of $20,206 and no deferred tax expense for

the year ended March 31, 2024.

Below is a reconciliation of the statutory

6 unchanged sentences

Valuation allowance on deferred income tax asset

Equity investment loss

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

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:

* 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, 2025 and 2024, the Company’s

PRC entities from continuing operations had net operating loss carryforwards of approximately $ 11.2 million and $ 3.9 million, respectively,

which will be available to offset future taxable income.

As of March 31, 2025, these carryforwards will expire from 2026 through 2030,

As of March 31, 2025 and 2024, valuation allowances for deferred tax assets for PRC income taxes were approximately $ 4.1

million and $ 1.8 million, respectively.

With 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.

The tax 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

6 unchanged sentences

Deferred tax assets, net

Deferred tax liabilities:

Capitalized intangible assets cost

Deferred tax liabilities, net

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:

As of March 31, 2025 and 2024, the Company’s

PRC entities associated with discontinued operations had net operating loss carryforwards of approximately $ 0.3 million and $ 0.9 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, 2025, such net operating loss from discontinued

operations will expire in 2026, if not used.

The 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, 2025 and 2024, 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.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

The tax 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

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.

Uncertain tax positions

The 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, 2025 and 2024, 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, 2025 and 2024,

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).

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

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

For the year ended March 31, 2025, three suppliers

accounted for approximately 19.3 %, 16.0 %, and 11.6 % of the total costs of revenue from continuing operations of the Company.

For the year ended March 31, 2024, three suppliers

accounted for approximately 20.9 %, 13.9 %, and 13.9 % of the total costs of revenues from the continuing operations of the Company.

RELATED PARTY TRANSACTIONS AND BALANCES

Related Party Balances

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.

1) Accounts receivable, a related party

As of March 31, 2025 and 2024, accounts receivable

from a related party amounted to $ 7,924 and $0 , respectively, represented balance due from operating lease revenue recognized from Chengdu

Laobing Chuxing Automobile Leasing Co., Ltd.

(“Laobing”), a related party of the Company.

2) Prepayment, a related party

As of March 31, 2025 and 2024, the balance of

prepayment to a related party represented automobile lease prepayment made by the Company to Jinkailong, the Company’s equity investee

company, with amount of $ 22,662 and $0 , respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

3) Due from related parties

31, 2024 and 2023, balances due from related parties from the Company’s operations were comprised of the following:

As of March 31, 2025 and 2024, balances due from

related parties from the Company’s operations were comprised of the following:

Total due from related parties

5 unchanged sentences

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:

As of March 31, 2025, balances due from Jinkailong,

the Company’s equity investee company, was $ 1,468,822 , net of allowance for credit losses, of which, $ 1,386,139 is to be repaid

over a period from April 2026 to December 2026, which was classified as due from a related party, net, non-current.

The balances due from

Jinkailong consist of outstanding balance of $ 998,036 as a result of Jinkailong’s deconsolidation on March 31, 2022 and $ 470,786

represents daily operation expenses paid by the Company’s subsidiary, Jiekai, on behalf of Jinkailong.

As of March 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 December 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, Jiekai.

Movement of allowance for credit losses due from

Jinkailong for the years ended March 31, 2025 and 2024 are as follows:

Beginning balance

1 unchanged sentence

Ending balance

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.

On January 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, which was extended for 12 months since January 3, 2025.

As of March 31, 2025,

the outstanding balance was $ 81,098 .

As of March 31, 2025, balance of $ 8,268 due from

Laobing represented a deposit for the Company leased automobiles from Laobing.

4) Due to related parties

Loan payable to a related party (i)

Other payable due to related party (ii)

Other payable due to a related party (ii)

Other payable due to a related party (iii)

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 liabilities, current - related parties

Lease II (ii)

(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 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.

(i) As of March 31, 2025 and 2024, the balances represented borrowings from Xi Wen, the CEO of the Company, of which, $ 414 and $ 12,354 are unsecured, interest free and due on demand, respectively.

(ii) As of March 31, 2025 and 2024, the balances represented outstanding lease payments due to Hong Li, the Supervisor of Sichuan Senmiao, upon termination of existing lease.

In July 2024, the company signed a rent-free agreement with Li Hong, and the lease agreement period is from July 1, 2024 to July 31, 2025.

(iii) As of March 31, 2025 and 2024, the balances represented automobile lease payments to Laobing and a deposit for the Company leased automobiles to Laobing.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

lease right-of-use assets - a related party and Operating lease liabilities - a related party

Operating lease right-of-use assets – a related party

Operating lease liabilities – a related party

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 the legal representative and general manager.

The original lease agreement with Dingchentai was terminated

on July 1, 2019.

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, with an annual rent of approximately $ 41,000 , payable

on a quarter basis.

Related Party Transactions

For the years ended March 31, 2025 and 2024, the

Company incurred $ 4,532 and $ 96,614 , respectively, in rental expenses to Hong Li, supervisor of Sichuan Senmiao, pursuant to three office

lease agreements.

For the years ended March 31, 2025 and 2024, the

Company incurred $ 41,691 and $ 41,668 in rental expenses, respectively, to Dingchentai, a company where one of the Company’s independent

directors serves as the legal representative and general manager.

During the years ended March 31, 2025 and 2024,

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.

Corenel leased automobiles to Jinkailong and generated revenue of $ 14,109 and $ 34,742 , respectively.

During the year ended March 31, 2025,

Jiekai leased automobiles to Laobing, and two other related parties, Sichuan Xindaoda Automobile Sales Service Co., Ltd.

(“Xindaoda”),

and Sichuan Rongdu Daoda Automobile Sales Service Co., Ltd.

and generated revenue of $ 8,509 , $ 10,937 , and $ 12,906 , respectively, while

there were no such transactions during the year ended March 31, 2024.

During the year ended March 31, 2025, Jiekai leased

automobiles from Jinkailong, Laobing and Xindaoda, and had a rental cost of $ 93,872 , $ 7,854 and $ 12,642 , respectively.

While during the

year ended March 31, 2024, Jiekai leased automobiles from Jinkailong and had a rental cost of $ 472,848 .

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 (p),

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 years ended March 31, 2025 and 2024.

As of March 31, 2025 and 2024, 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

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

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.

As of March 31, 2025, the weighted-average remaining

operating and finance lease term of its existing leases is approximately 0.17 and 0.53 years, respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO 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.

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:

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

Operating and finance lease expenses consist of

the following:

For the Years Ended

Classification

March 31, 2024

March 31, 2023

Operating lease cost

11 unchanged sentences

Total lease expenses

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 cost for automobiles totaled $ 977,768

and $ 1,737,869 for the years ended March 31, 2025 and 2024, respectively.

Operating lease expense for office and showroom

leases totaled $ 78,268 and $ 196,327 for the years ended March 31, 2025 and 2024, respectively, of which $ 53,272 and $ 158,398 were amortization

of leased asset for operating leases for the years ended March 31, 2025 and 2024, respectively.

Interest expenses on finance leases totaled $ 15,145

and $ 29,088 for the years ended March 31, 2025 and 2024, respectively.

The following table sets forth the Company’s

minimum lease payments in future periods:

Operating lease

1 unchanged sentence

Twelve months ending March 31, 2026

Total lease payments

Present value of lease liabilities

of March 31, 2024 and 2023, the outstanding balance of operating lease payments due to related parties was $ 51,741 and $ 185,709 , respectively.

* As of March 31, 2025 and 2024, the outstanding balance of operating lease payments due to a related party was $ 10,365 and $ 51,741 , respectively.

COMMITMENTS AND CONTINGENCIES

Contingencies

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.

In measuring the credit risk of 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 more than three months.

Management also periodically

re-evaluates probability of default of automobile purchasers to make adjustments in the allowance, when necessary.

Purchase commitments

As of the filing date of these consolidated financial

statements, the Company has no purchase commitment.

SENMIAO TECHNOLOGY LIMITED

1 unchanged sentence

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, 2024 and 2023:

For the Year ended March 31, 2024

Transaction and

Online ride-hailing

Interest income

Depreciation and amortization

Loss from operations

$ ( 2,727,162 )

$ ( 381,845 )

$ ( 1,615,904 )

$ ( 4,724,911 )

Loss before income taxes

$ ( 2,398,572 )

$ ( 441,704 )

$ ( 1,402,954 )

$ ( 4,243,230 )

$ ( 2,389,556 )

$ ( 441,704 )

$ ( 1,402,954 )

$ ( 4,234,214 )

Capital expenditure

For the Year ended March 31, 2024

Transaction and

Online ride-hailing

Interest income

Contingent liability of Jinkailong

Pursuant to the Regulations of the State Council

on Implementing the Management System for Registered Capital Registration in the Company Law of the People’s Republic of China issued

on July 1, 2024 (the “Registered Capital Registration Implementing Rules”), as Jinkailong was registered and established before

June 30, 2024, its shareholders should fully pay their unpaid subscribed capital before June 30, 2032.

As of March 31, 2025, Hunan Ruixi

holds 35 % of equity interest of Jinkailong and has not made any payments towards to the investment amounted to RMB 3.5 million (approximately

According to the Registered Capital Registration Implementing Rules, Hunan Ruixi shall pay the subscribed capital of Jinkailong

before June 30, 2032.

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 only one reportable segment of automobile transaction and related services after discontinued the online ride-hailing

platform services on August 20, 2024.

The following table presents the significant revenue,

loss from operations, loss before income taxes and net loss in the Company’s single operating segment for the years ended March

31, 2025 and 2024:

For the Years Ended

Depreciation and amortization

2 unchanged sentences

$ ( 4,375,528 )

$ ( 1,463,608 )

$ ( 6,140,908 )

Loss before income taxes

3 unchanged sentences

$ ( 3,854,206 )

$ ( 356,164 )

$ ( 3,790,693 )

Capital expenditure

2 unchanged sentences

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

16 unchanged sentences

Commitments and Contingencies

Mezzanine Equity (redeemable)

Mezzanine Equity

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

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

Stockholders’ Equity

991 shares issued and outstanding at March 31, 2025 and March 31, 2024)

Stockholders’ (deficit) Equity

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

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

10,518,040 shares issued and outstanding at March 31, 2025 and March 31, 2024)

Additional paid-in capital

5 unchanged sentences

( 1,672,005 )

Total Senmiao Technology Limited Stockholders’ Equity

Total Senmiao Technology Limited Stockholders’ (deficit) Equity

( 2,855,563 )

Total Liabilities, Mezzanine Equity and Equity

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

SENMIAO TECHNOLOGY LIMITED

11 unchanged sentences

Foreign currency translation adjustment

( 1,137,645 )

Comprehensive loss attributable to stockholders

4 unchanged sentences

OF CASH FLOWS

For the Years Ended March 31,

For the Years Ended

Cash Flows from Operating Activities:

$ ( 3,668,974 )

$ ( 3,113,749 )

Adjustments to reconcile net loss to net cash used in operating activities:

3 unchanged sentences

Change in fair value of derivative liabilities

( 1,711,889 )

Change in operating assets and liabilities

Prepayments, receivables and other current assets

Other receivable – a related party

Due from a related party

Accrued expenses and other liabilities

2 unchanged sentences

Repayment from subsidiaries

Borrowings from subsidiaries

Borrowings from a related party

Repayments to a related party

11 unchanged sentences

have been condensed or omitted by reference to the consolidated financial statements.

b) Investments in subsidiaries

and equity of loss in subsidiaries

b) Investments in subsidiaries and equity

of loss in subsidiaries

The investments in subsidiaries

1 unchanged sentence

The equity losses in subsidiaries consist of total equity loss

in Senmiao Consulting, Hunan Ruixi, Yicheng, XXTX, Sichuan Senmiao, Corenel and Jiekai.

in Senmiao Consulting, Hunan Ruixi, Yicheng, Sichuan Senmiao, Corenel and Jiekai.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

c) Stockholders’

51 unchanged sentences

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 .

As of March 31, 2025 and 2024, there were 991shares of Series A convertible preferred

stock outstanding, respectively, valued at $ 234,364 , recorded as mezzanine equity.

As of March 31, 2025, 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

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

Common stock issued for consulting

7 unchanged sentences

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.

and the Company recorded $ 444,300 service expense during the year ended March 31, 2024.

Change of ownership interest in a subsidiary

9 unchanged sentences

SUBSEQUENT EVENTS

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.

Disposal of a subsidiary

On April 16, 2025, Senmiao Consulting entered

into an Equity Transfer Agreement with Jinkailong to transfer its 100 % equity in Corenel to Jinkailong at a price of RMB zero , and the

Transfer was completed on April 17, 2025.

Conversion of preferred stock

During the months in April and June 2025, an aggregate

of 729.4 shares of Series A convertible preferred stock were converted into 364,706 shares of the Company’s common stock pursuant

to the conversion notice from certain institutional investors in November 2021 Private Placement.

Exercise of November 2021 Private Placement

On June 11, 2025, a holder of November 2021 private

placement warrants exercised the warrants with exercise price of $ 1.13 per share to purchase 200,000 shares of the Company’s common

stock as determined in accordance with the formula indicated on the notice of exercise.

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