Senmiao Technology Ltd 10-K

Item 8. Financial Statements and Supplementary Data The financial statements required by this item begin on page F-1 to F-36 hereof. Index to Financial Statements Report of Independent Registered Public Accounting Firm (PCOAB ID: 5395 ) F-2 Financial Statements: Consolidated Balance Sheets as of March 31, 2025 and 2024 F-3 Consolidated Statements of Operations and Comprehensive Loss for the Years Ended March 31, 2025 and 2024 F-4 Consolidated Statements of Changes in Equity for the Years Ended March 31, 2025 and 2024 F-5 Consolidated Statements of Cash Flows for the Years Ended March 31, 2025 and 2024 F-6 Notes to Consolidated Financial Statements F-7 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of Senmiao Technology Limited Opinion on the Financial Statements We have audited the accompanying consolidated 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, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. 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. Critical Audit Matters 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 and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ Marcum Asia CPAs LLP Marcum Asia CPAs LLP We have served as the Company’s auditor since 2018. (such date takes into account the acquisition of certain assets of Friedman LLP by Marcum Asia CPAs LLP effective September 1, 2022) New York. New York July 10, 2025 NEW YORK OFFICE ● 7 Penn Plaza ● Suite 830 ● New York, New York ● 10001 Phone 8610.8518.7992 ● Fax 8610.8518.7993 ● www.marcumasia.com F- 2 SENMIAO TECHNOLOGY LIMITED CONSOLIDATED BALANCE SHEETS (Expressed in U.S. dollar, except for the number of shares) March 31, March 31, 2025 2024 ASSETS Current assets Cash and cash equivalents $ 833,577 $ 737,719 Restricted cash — 2,337 Accounts receivable, net 21,127 19,883 Accounts receivable, a related party 7,924 — Finance lease receivables, current 166,339 144,166 Prepayments, other receivables and other current assets, net 1,015,084 678,369 Prepayment - a related party 22,662 — Due from related parties, net, current 172,049 648,594 Current assets - discontinued operations — 420,092 Total current assets 2,238,762 2,651,160 Property and equipment, net 1,652,921 2,675,257 Property and equipment, net - discontinued operations — 1,267 Total Property and equipment, net 1,652,921 2,676,524 Other assets Operating lease right-of-use assets, net — 60,862 Operating lease right-of-use assets, net, a related party 6,910 47,128 Financing lease right-of-use assets, net 117,867 355,383 Intangible assets, net 375,000 450,029 Finance lease receivable, non-current 23,193 92,524 Due from a related party, net, non-current 1,386,139 2,747,313 Other non-current assets — 639,863 Other non-current assets - discontinued operations — 140,698 Total other assets 1,909,109 4,533,800 Total assets $ 5,800,792 $ 9,861,484 LIABILITIES, MEZZANNIE EQUITY AND EQUITY Current liabilities Accounts payable $ 163,231 $ 96,404 Advances from customers 124,623 122,461 Income tax payable 19,918 20,019 Accrued expenses and other liabilities 3,757,393 2,976,539 Due to related parties 179,431 170,986 Operating lease liabilities, current — 14,007 Operating lease liabilities - a related party 10,365 51,741 Financing lease liabilities, current 360,268 279,768 Derivative liabilities 84,591 288,833 Current liabilities - discontinued operations 518,352 1,322,452 Total current liabilities 5,218,172 5,343,210 Other liabilities Operating lease liabilities, non-current — 20,430 Financing lease liabilities, non-current — 126,637 Other liabilities - discontinued operations — 82,839 Total other liabilities — 229,906 Total liabilities 5,218,172 5,573,116 Commitments and contingencies (note 17) Mezzanine Equity Series A convertible preferred stock (par value $ 1,000 per share, 5,000 shares authorized; 991 shares issued and outstanding at March 31, 2025 and March 31, 2024) 234,364 234,364 Stockholders’ (deficit) equity Common stock (par value $ 0.0001 per share, 500,000,000 shares authorized; 10,518,040 shares issued and outstanding at March 31, 2025 and March 31, 2024) 1,051 1,051 Additional paid-in capital 43,950,123 43,950,123 Accumulated deficit ( 45,109,573 ) ( 41,384,268 ) Accumulated other comprehensive loss ( 1,697,164 ) ( 1,672,005 ) Total Senmiao Technology Limited stockholders’ (deficit) equity ( 2,855,563 ) 894,901 Non-controlling interests 3,203,819 3,159,103 Total equity 348,256 4,054,004 Total liabilities, mezzanine equity and equity $ 5,800,792 $ 9,861,484 The accompanying notes are an integral part of the consolidated financial statements F- 3 SENMIAO TECHNOLOGY LIMITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Expressed in U.S. dollar, except for the number of shares) For the Years Ended March 31, 2025 2024 Revenues Revenues $ 3,342,611 $ 4,285,289 Revenues, related parties 46,461 34,742 Total revenues 3,389,072 4,320,031 Cost of revenues Cost of revenues ( 2,424,901 ) ( 2,922,452 ) Cost of revenues, related parties ( 114,368 ) ( 472,848 ) Total cost of revenues ( 2,539,269 ) ( 3,395,300 ) Gross profit 849,803 924,731 Operating expenses Selling, general and administrative expenses ( 2,624,120 ) ( 3,130,213 ) Provision for credit losses ( 2,093,199 ) ( 1,725,746 ) Stock-based compensation — ( 444,300 ) Total operating expenses ( 4,717,319 ) ( 5,300,259 ) Loss from operations ( 3,867,516 ) ( 4,375,528 ) Other income (expense) Other income, net 211,254 358,192 Interest expense — ( 525 ) Interest expense on finance leases ( 15,145 ) ( 29,088 ) Change in fair value of derivative liabilities 204,242 212,949 Total other income, net 400,351 541,528 Loss before income tax expense ( 3,467,165 ) ( 3,834,000 ) Income tax expense — ( 20,206 ) Net loss from continuing operations ( 3,467,165 ) ( 3,854,206 ) Net loss from discontinued operations ( 213,647 ) ( 380,008 ) Net loss ( 3,680,812 ) ( 4,234,214 ) Net loss (income) attributable to non-controlling interests from operations ( 44,493 ) 565,240 Net loss attributable to the Company’s stockholders $ ( 3,725,305 ) $ ( 3,668,974 ) Net loss $ ( 3,680,812 ) $ ( 4,234,214 ) Other comprehensive loss Foreign currency translation adjustment ( 24,936 ) ( 418,784 ) Comprehensive loss ( 3,705,748 ) ( 4,652,998 ) less: Total comprehensive income (loss) attributable to non-controlling interests 44,716 ( 527,591 ) Total comprehensive loss attributable to stockholders $ ( 3,750,464 ) $ ( 4,125,407 ) Weighted average number of common stock Basic and diluted 10,521,222 8,863,190 Net loss per share - basic and diluted ( 0.35 ) ( 0.41 ) Net loss per share - basic and diluted Continuing operations $ ( 0.33 ) $ ( 0.37 ) Discontinued operations $ ( 0.02 ) $ ( 0.04 ) The accompanying notes are an integral part of the consolidated financial statements F- 4 SENMIAO TECHNOLOGY LIMITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the Years Ended March 31, 2025 and 2024 (Expressed in U.S. dollar, except for the number of shares) Accumulated Additional other Non- Common stock paid-in Accumulated comprehensive controlling Total Shares Par value capital deficit loss interest equity BALANCE, March 31, 2023 7,743,040 $ 773 $ 43,355,834 $ ( 37,715,294 ) $ ( 1,247,099 ) $ 3,833,466 $ 8,227,680 Net loss — — — ( 3,668,974 ) — ( 565,240 ) ( 4,234,214 ) Conversion of preferred stock into common stock 325,000 33 34,989 — — — 35,022 Issuance of common stock for consulting service 1,500,000 150 444,150 — — — 444,300 Issuance of common stock in purchase of Hunan Ruixi’s NCI 950,000 95 115,150 — 31,527 ( 146,772 ) — Foreign currency translation adjustment — — — — ( 456,433 ) 37,649 ( 418,784 ) BALANCE, March 31, 2024 10,518,040 $ 1,051 $ 43,950,123 $ ( 41,384,268 ) $ ( 1,672,005 ) $ 3,159,103 $ 4,054,004 Net income (loss) — — — ( 3,725,305 ) — 44,493 ( 3,680,812 ) Foreign currency translation adjustment — — — — ( 25,159 ) 223 ( 24,936 ) BALANCE, March 31, 2025 10,518,040 $ 1,051 $ 43,950,123 $ ( 45,109,573 ) $ ( 1,697,164 ) $ 3,203,819 $ 348,256 The accompanying notes are an integral part of the consolidated financial statements F- 5 SENMIAO TECHNOLOGY LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in U.S. dollar, except for the number of shares) For the Years Ended March 31, 2025 2024 Cash Flows from Operating Activities: Net loss $ ( 3,680,812 ) $ ( 4,234,214 ) Net loss from discontinued operations ( 213,647 ) ( 380,008 ) Net loss from continuing operations ( 3,467,165 ) ( 3,854,206 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization of property and equipment 913,443 927,149 Stock compensation expense — 444,300 Amortization of right-of-use assets 290,325 398,027 Amortization of intangible assets 75,029 78,039 Provision for credit losses 2,093,199 1,725,746 Gain on disposal of equipment ( 4,020 ) ( 35,172 ) Gain from deconsolidation ( 397,003 ) — Loss (gain) from lease modification or termination 19,636 ( 18,272 ) Loss from termination of automobiles purchase 196,777 — Change in fair value of derivative liabilities ( 204,242 ) ( 212,949 ) Change in operating assets and liabilities Accounts receivable ( 1,352 ) 80,656 Accounts receivable, a related party ( 7,968 ) 6,048 Inventories — 6,825 Finance lease receivables 148,134 162,687 Prepayments, other receivables and other assets 101,398 95,541 Prepayment - a related party ( 22,789 ) — Due from related parties 60,973 ( 150,000 ) Accounts payable 67,693 136,417 Advances from customers 2,792 ( 18,626 ) Income tax payable — 20,167 Accrued expenses and other liabilities 735,522 671,205 Due to related parties 21,300 159,810 Operating lease liabilities ( 6,263 ) ( 62,565 ) Operating lease liabilities - related parties ( 41,347 ) ( 250,586 ) Net Cash Provided by Operating Activities from Continuing Operations 574,072 310,241 Net Cash Used in Operating Activities from Discontinued Operations ( 73,769 ) ( 303,000 ) Net Cash Provided by Operating Activities 500,303 7,241 Cash Flows from Investing Activities: Purchases of property and equipment ( 1,602 ) ( 671,679 ) Cash received from disposal of property and equipment 16,761 101,912 Loan to a related party ( 336,397 ) — Cash released upon disposal of subsidiaries ( 143,589 ) — Net Cash Used in Investing Activities from Continuing Operations ( 464,827 ) ( 569,767 ) Net Cash Provided by Investing Activities from Discontinued Operations 49 159 Net Cash Used in Investing Activities ( 464,778 ) ( 569,608 ) Cash Flows from Financing Activities: Repayments from a related party 13,858 339,049 Repayments of current borrowings from a financial institution — ( 8,445 ) Repayments to related parties and affiliates ( 11,940 ) ( 506,766 ) Principal payments of finance lease liabilities ( 44,345 ) ( 215,443 ) Net Cash Used in Financing Activities from Continuing Operations ( 42,427 ) ( 391,605 ) Net Cash (Used in) Provided by Financing Activities from Discontinued Operations ( 81,293 ) 223,265 Net Cash Used in Financing Activities ( 123,720 ) ( 168,340 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 127,136 ( 84,747 ) Net increase (decrease) in cash and cash equivalents 38,941 ( 815,454 ) Cash, cash equivalents and restricted cash, beginning of the year 794,636 1,610,090 Cash, cash equivalents and restricted cash, end of the year 833,577 794,636 Less: Cash and cash equivalents from discontinued operations — ( 54,580 ) Cash, Cash equivalents and Restricted Cash from continuing operations, end of year 833,577 740,056 Supplemental Cash Flow Information Cash paid for interest expense $ — $ 525 Cash paid for income tax $ — $ 39 Non-cash Transaction in Investing and Financing Activities Settlement of accounts payable by a related party $ — $ 86,572 Recognition of right-of-use assets and lease liabilities, related parties $ — $ 349,186 Modification of right-of use assets and lease liabilities $ — $ 22,799 Termination of right-of use assets and lease liabilities, related parties $ 47,563 $ 264,818 The following tables provides a reconciliation of cash, cash equivalent and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows: For the Years Ended March 31, 2025 2024 Cash and cash equivalent from continuing operations, end of the year $ 833,577 $ 737,719 Restricted cash from continuing operations, end of the year $ — $ 2,337 Cash and cash equivalent from discontinued operations, end of the year $ — $ 54,580 For the Years Ended March 31, 2025 2024 Cash and cash equivalent from continuing operations, beginning of the year $ 737,719 $ 1,485,100 Restricted cash from continuing operations, beginning of the year $ 2,337 $ — Cash and cash equivalent from discontinued operations, beginning of the year $ 54,580 $ 124,990 The accompanying notes are an integral part of the consolidated financial statements F- 6 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND PRINCIPAL ACTIVITIES Senmiao Technology Limited (the “Company”) is a U.S. holding company incorporated in the State of Nevada on June 8, 2017 . The Company operates its business in one segment: automobile transaction and related services focusing on the online ride-hailing industry in the People’s Republic of China (“PRC” or “China”) through the Company’s 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 in China. 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. F- 7 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. 2. 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. Management has determined there is substantial doubt about its ability to continue as a going concern. If the Company is unable to generate significant revenue, the Company may be required to curtail or cease its operations. Management is trying to alleviate the going concern risk through the following sources: ● Equity financing to support its working capital; ● Other available sources of financing (including debt) from PRC banks and other financial institutions; and ● Financial support and credit guarantee commitments from the Company’s related parties. Based on the above considerations, management is of the opinion that the Company will probably not have sufficient funds to meet its working capital requirements and debt obligations as they become due one year from the filing date of these consolidated financial statements if the Company is unable to obtain additional financing. There is no assurance that the Company will be successful in implementing the foregoing plans or that additional financing will be available to the Company on commercially reasonable terms, or at all. There are a number of factors that could potentially arise that could undermine the Company’s plans, such as (i) changes in the demand for the Company’s services, (ii) PRC government policies, (iii) economic conditions in China and worldwide, (iv) competitive pricing in the automobile transaction and related service and ride-hailing industries, (v) changes in the Company’s relationships with key business partners, (vi) the ability of financial institutions in China to provide continued financial support to the Company’s customers, and (vii) the perception of PRC-based companies in the U.S. capital markets. The Company’s inability to secure needed financing when required could require material changes to the Company’s business plans and could have a material adverse effect on the Company’s ability to continue as a going concern and results of operations. The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments that might result from the outcome of such uncertainties. F- 8 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of presentation 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 S-X. 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 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: March 31, March 31, 2025 2024 Balance sheet items, except for equity accounts – RMB: US$1: 7.2567 7.2203 For the years ended March 31, 2025 2024 Items in the statements of operations and comprehensive loss, and cash flows – RMB: US$1: 7.2163 7.1671 (c) Use of estimates 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 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. F- 9 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: Carrying Value as of Fair Value Measurement as of March 31, March 31, 2025 2025 Level 1 Level 2 Level 3 Derivative liabilities $ 84,591 $ — $ — $ 84,591 Carrying Value as of Fair Value Measurement as of March 31, March 31, 2024 2024 Level 1 Level 2 Level 3 Derivative liabilities $ 288,833 $ — $ — $ 288,833 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: 2019 Registered Direct Offering August 2020 Underwritten Public February 2021 Registered Direct May 2021 Registered Direct Offering November 2021 Private Placement Series A Warrants Placement Warrants Offering Warrants Offering Warrants Investors Warrants Placement Warrants Investors Warrants Placement Warrants Total BALANCE as of March 31, 2023 $ 1 $ 5 $ 8,450 $ 11,491 $ 161,961 $ 12,147 $ 284,762 $ 22,965 $ 501,782 Change in fair value of derivative liabilities — — ( 5,231 ) ( 7,158 ) ( 81,325 ) ( 6,099 ) ( 105,242 ) ( 7,888 ) ( 212,943 ) Warrant forfeited due to expiration ( 1 ) ( 5 ) — — — — — — ( 6 ) BALANCE as of March 31, 2024 — — 3,219 4,333 80,636 6,048 179,520 15,077 288,833 Change in fair value of derivative liabilities — — ( 3,198 ) ( 4,114 ) ( 67,813 ) ( 5,086 ) ( 114,934 ) ( 9,097 ) ( 204,242 ) BALANCE as of March 31, 2025 $ — $ — $ 21 $ 219 $ 12,823 $ 962 $ 64,586 $ 5,980 $ 84,591 F- 10 SENMIAO TECHNOLOGY LIMITED 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 Placement Placement Placement Underwriter’ 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 Valuation date 3/31/2025 3/31/2025 3/31/2025 3/31/2025 3/31/2025 3/31/2025 3/31/2025 Exercise price $ 6.25 $ 13.80 $ 17.25 $ 10.50 $ 10.50 $ 1.13 $ 6.80 Stock price $ 0.89 $ 0.89 $ 0.89 $ 0.89 $ 0.89 $ 0.89 $ 0.89 Expected term (years) 0.35 0.87 0.87 1.12 1.12 1.61 1.61 Risk-free interest rate 1.39 % 3.49 % 3.49 % 4.01 % 4.01 % 4.21 % 4.21 % Expected volatility 112 % 112 % 112 % 112 % 112 % 112 % 112 % As of March 31, 2024 August 4, 2020 February 10, 2021 May 13, 2021 November 10, 2021 Placement Placement Placement Underwriters’ Agent ROFR Investor Agent Investor Agent Granted Date Warrants Warrants Warrants Warrants Warrants Warrants Warrants # of shares exercisable 31,808 38,044 15,218 553,192 41,490 5,310,763 55,148 Valuation date 3/31/2024 3/31/2024 3/31/2024 3/31/2024 3/31/2024 3/31/2024 3/31/2024 Exercise price $ 6.25 $ 13.80 $ 17.25 $ 10.50 $ 10.50 $ 1.13 $ 6.80 Stock price $ 0.90 $ 0.90 $ 0.90 $ 0.90 $ 0.90 $ 0.90 $ 0.90 Expected term (years) 1.35 1.87 1.87 2.12 2.12 2.61 2.61 Risk-free interest rate 4.88 % 4.65 % 4.65 % 4.57 % 4.57 % 4.47 % 4.47 % Expected volatility 117 % 117 % 117 % 117 % 117 % 117 % 117 % 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 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, 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 The Company accounts for investments in private company by using equity method as the Company determined that it does not have control over Jinkailong under either voting or VIE models in accordance with ASC 323 “Investments- Equity Method and Joint Ventures”. As of March 31, 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. 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, 2025 and 2024, the carrying value of the investment is $ 0 for both periods presented. F- 11 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (f) Business combinations and non-controlling interests The Company accounts for its business combinations using the acquisition method of accounting in accordance with ASC 805 “Business Combinations.” The cost of an acquisition is measured at the aggregate of the acquisition date fair value of the assets transferred to the sellers and liabilities incurred by the Company and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total costs of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated income statements. During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated income statements. For the Company’s non-wholly owned subsidiaries, a non-controlling interest is recognized to reflect portion of equity that is not attributable, directly or indirectly, to the Company. The cumulative results of operations attributable to non-controlling interests are also recorded as non-controlling interests in the Company’s consolidated balance sheets and consolidated statements of operations and comprehensive loss. Cash flows related to transactions with non-controlling interests are presented under financing activities in the consolidated statements of cash flows. (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. The adoption 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 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. (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. 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 (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. 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, 2025 and 2024, the Company record allowance for credit losses of $0 and $ 1,545 against accounts receivable, respectively. F- 12 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: March 31, March 31, 2025 2024 Minimum lease payments receivable $ 293,872 $ 354,617 Less: Unearned interest ( 104,340 ) ( 117,927 ) Financing lease receivables $ 189,532 $ 236,690 Finance lease receivables, current $ 166,339 $ 144,166 Finance lease receivables, non-current $ 23,193 $ 92,524 Future scheduled minimum lease payments for investments in sales-type leases as of March 31, 2025 are as follows: Minimum future payments receivable Twelve months ending March 31, 2026 $ 239,015 Twelve months ending March 31, 2027 54,857 Total $ 293,872 (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 as follows: 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. 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, 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. F- 13 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (l) Intangible assets, net Purchased intangible assets are recognized and measured at fair value upon acquisition. Separately identifiable intangible assets that have determinable lives continue to be amortized over their estimated useful lives using the straight-line method as follows: Categories Useful life Software 5 – 10 years Separately identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for identifiable intangible assets is based on the amount by which the carrying amount of the assets exceeds the fair value of the assets. For the years ended March 31, 2025 and 2024, there was no impairment of intangible assets. (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. This amount is not included in the computation of dilutive loss per share because their impact is anti-dilutive. (n) Mezzanine Equity (redeemable) The Company evaluates its convertible preferred stock in accordance with ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to determine if its convertible preferred stock should be treated as a liability or an equity. As a result, the Company determined that the convertible preferred stock should be treated as an equity as it did not meet the definition of liability instrument. In accordance with ASC 480-10-S99, the convertible preferred stock should be classified as a mezzanine equity, since it contained a change of control redemption right feature which is not solely within the control of the Company. The Company believes the future event of change of control is not probable as of March 31, 2025; therefore, the convertible preferred stock has not been re-measured to its redemption value. Subsequently, the Company adjust the initial carrying amount of the convertible preferred stock by the at redemption value method. As of March 31, 2025, there was no change to the initial carrying amount of the convertible preferred stock. (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). F- 14 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: (i) a review of the lease term to determine if it is for the major part of the economic life of the underlying equipment (defined as greater than 75)%; and (ii) a review of the present value of the lease payments to determine if they are equal to or greater than substantially all of the fair market value of the equipment at the inception of the lease (defined as greater than 90 %). Automobiles included in arrangements meeting these conditions are accounted for as sales-type leases. Interest income from the lease is recognized in financing revenues over the lease term. Automobile included in arrangements that do not meet these conditions are accounted for as operating leases and revenue is recognized over the term of the lease. The Company excludes from the measurement of its lease revenues any tax assessed by a governmental authority that is both imposed on and concurrent with a specific revenue-producing transaction and collected from a customer. The Company considers the economic life of most of the automobiles to be three to five years , since this represents the most common long-term lease term for its automobiles and the automobiles will be used for online ride-hailing services. The Company believes three to five years is representative of the period during which an automobile is expected to be economically usable, with normal service, for the purpose for which it is intended. The Company’s lease pricing interest rates, which are used in determining customer payments in a bundled lease arrangement, are developed based upon the local prevailing rates in the marketplace where its customer will be able to obtain an automobile loan under similar terms from the bank. 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. F- 15 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Disaggregated information of revenues by business lines are as follows: For the Years Ended March 31, 2025 2024 Automobile Transaction and Related Services - Operating lease revenues from automobile rentals $ 2,800,992 $ 3,831,037 - Service fees from NEVs leasing 184,625 45,231 - Monthly services commissions 145,227 196,099 - Default revenue 105,025 100,763 - Financing revenues 93,473 57,677 - Service fees from automobile purchase services 38,696 36,637 - Other service fees 21,034 52,587 Total Revenues $ 3,389,072 $ 4,320,031 Automobile transaction and related services Operating lease revenues from automobile rentals –The Company generates revenue from sub-leasing automobiles to some online ride-hailing drivers or third-parties and leasing its own automobiles. The Company recognizes revenue wherein an automobile is transferred to the lessees and the lessees has the ability to control the asset, is accounted for under ASC Topic 842. Rental transactions are satisfied over the rental period and is recognized over time. As the operating lease revenue are variable in nature which is based on online ride-hailing drivers or third-parties’ performance for a certain period, the Company recognized the revenue from operating lease by using the output method based on periodic settlement between the Company and the online ride-hailing drivers or third-parties when such revenue is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Rental periods are short term in nature, generally are twelve months or less. Service fees from NEVs leasing - 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; etc. 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. The Company 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. F- 16 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (q) Income taxes Deferred income tax liabilities and assets are recognized for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provisions or benefits for income taxes consists of tax estimated from taxable income plus or minus deferred tax expenses (benefits) if applicable. Deferred tax is calculated using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis. In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable income will be utilized with prior net operating loss carried forwards using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be utilized. Current income taxes are provided for in accordance with the laws of the relevant tax authorities. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50 % likely of being realized on examination. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Company did not have any significant unrecognized uncertain tax positions or any unrecognized liabilities, interest or penalties associated with unrecognized tax benefit as of March 31, 2025 and 2024. As of March 31, 2025, the calendar years ended December 31, 2019 through 2024 for the Company’s PRC entities remain open for statutory examination by PRC tax authorities. The Company presents deferred tax assets and liabilities as non-current in the balance sheet based on an analysis of each taxpaying component within a jurisdiction. Meanwhile, the Internal Revenue Service (“IRS”) in the U.S. can include returns filed within the last three years in an audit unless a substantial error is found in which case, IRS may extend the period to six years. The Company is not currently under examination by any income tax authority, nor has it been notified of an impending examination. Since these net operating losses may be utilized in future periods, they remain subject to examination. As of March 31, 2025, the Company was not aware of any pending income tax examinations by U.S. (r) Comprehensive loss Comprehensive loss includes net loss and foreign currency adjustments. Comprehensive loss is reported in the consolidated statements of operations and comprehensive loss. Accumulated other comprehensive loss, as presented on the consolidated balance sheets are the cumulative foreign currency translation adjustments. (s) Share-based awards Share-based awards granted to the Company’s employees are measured at fair value on grant date and share-based compensation expense is recognized (i) immediately at the grant date if no vesting conditions are required, or (ii) using the straight-line basis, net of estimated forfeitures, over the requisite service period. 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. 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. (t) Leases – lessee The Company accounts for leases in accordance with ASC 842. The Company enters into certain agreements as a lessee to lease automobiles and to conduct its automobiles rental operations. If any of the following criteria are met, the Company classifies the lease as a direct financing or sales-type lease (as a lessee): ● The lease transfers ownership of the underlying asset to the lessee by the end of the lease term; ● The lease grants the lessee an option to purchase the underlying asset that the Company is reasonably certain to exercise; ● The lease term is for 75 % or more of the remaining economic life of the underlying asset, unless the commencement date falls within the last 25 % of the economic life of the underlying asset; ● The present value of the sum of the lease payments equals or exceeds 90 % of the fair value of the underlying asset; or ● The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. F- 17 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Leases that do not meet any of the above criteria are accounted for as operating leases. The Company combines lease and non-lease components in its contracts under Topic 842, when permissible. Finance and operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Since the implicit rate for the Company’s leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term. Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally do not provide a residual guarantee. The finance or operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term for operating lease. Meanwhile, the Company recognizes the finance leases ROU assets and interest on an amortized cost basis. The amortization of finance ROU assets is recognized on a straight-line basis as amortization expense, while the lease liability is increased to reflect interest on the liability and decreased to reflect the lease payments made during the period. Interest expense on the lease liability is determined each period during the lease term as the amount that results in a constant periodic interest rate of the automobile loans on the remaining balance of the liability. The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the 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. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of finance and operating lease liabilities in any tested asset group and include the associated lease payments in the undiscounted future pre-tax cash flows. For the years ended March 31, 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 a. 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. 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. F- 18 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS b. 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. 2) 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. All foreign exchange transactions take place through either the People’s Bank of China (the “PBOC”) or other authorized financial institutions at exchange rates quoted by PBOC. Approval of foreign currency payments by the PBOC or other regulatory institutions requires a payment application together with invoices and signed contracts. The value of RMB is subject to change in central government policies and international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. When there is a significant change in value of RMB, the gains and losses resulting from translation of financial statements of a foreign subsidiary will be significantly affected. RMB depreciated from 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. GAAP. 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. GAAP. (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 evaluating the potential impact of this guidance on its tax disclosures. In November 2024, the FASB issued ASU No. 2024-03, 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”). ASU 2024-03 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 15, 2027. 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. F- 19 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. DISCONTINUED OPERATIONS Discontinued operations - P2P lending services business 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: March 31, March 31, 2025 2024 Current liabilities Accrued expenses and other liabilities $ 461,672 $ 464,000 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 segment. This decision was driven by recurring losses in the segment, which prompted the Company to strategically exit the online ride-hailing business. 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: March 31, 2025 March 31, 2024 ASSETS Current assets Cash and cash equivalents $ — $ 54,580 Accounts receivable — 14,130 Prepayments, other receivables, and other current assets, net — 344,444 Due from a related party — 6,938 Total current assets — 420,092 Property and equipment, net: — 1,267 Other Assets Intangible assets, net — 140,698 Total assets $ — $ 562,057 LIABILITIES Current liabilities Borrowings from financial institutions $ — $ 142,456 Accounts payable — 44,128 Accrued expenses and other liabilities 56,680 671,868 Total current liabilities 56,680 858,452 Other liabilities: Borrowings from financial institutions, noncurrent — 71,228 Deferred tax liability — 11,611 Total Other liabilities — 82,839 Total liabilities $ 56,680 $ 941,291 F- 20 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 March 31, 2025 2024 Revenues $ 344,241 $ 2,494,397 Cost of revenues ( 247,025 ) ( 1,858,557 ) Gross profit 97,216 635,840 Operating expenses Selling, general and administrative expenses ( 166,937 ) ( 985,223 ) Provision for credit losses ( 173,278 ) — Total operating expenses ( 340,215 ) ( 985,223 ) Loss from operations ( 242,999 ) ( 349,383 ) Other income (expenses), net 33,214 ( 42,742 ) Interest expense ( 8,372 ) ( 17,105 ) Loss before income taxes ( 218,157 ) ( 409,230 ) Income tax benefit 4,510 29,222 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 March 31, 2025 2024 Net cash used in operating activities from discontinued operations $ ( 73,769 ) $ ( 303,000 ) Net cash provided by investing activities from discontinued operations $ 49 $ 159 Net cash (used in) provided by financing activities from discontinued operations $ ( 81,293 ) $ 223,265 5. 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: March 31, March 31, 2025 2024 Receivables of operating lease $ 19,845 $ 18,531 Receivables of automobile sales due from automobile purchasers 1,282 2,897 Less: Allowance for credit losses — ( 1,545 ) Accounts receivable, net $ 21,127 $ 19,883 Movement of allowance for credit losses for the years ended March 31, 2025 and 2024 are as follows: March 31, March 31, 2025 2024 Beginning balance $ 1,545 $ — Addition — 1,557 Write off ( 1,538 ) Translation adjustment ( 7 ) ( 12 ) Ending balance $ — $ 1,545 F- 21 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. 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: March 31, March 31, 2025 2024 Purchase contract termination refund (i) $ 440,972 $ — Deposits (ii) 273,182 349,381 Prepaid expenses (iii) 273,405 294,370 Value added tax (“VAT”) recoverable (iv) 40,065 27,443 Due from automobile purchasers, net (v) — 2,633 Employee advances 413 142 Others 4,110 24,874 Less: Allowance for credit losses ( 17,063 ) ( 20,474 ) Total prepayments, other receivables and other current assets, net $ 1,015,084 $ 678,369 Movement of allowance for credit losses for the years ended March 31, 2025 and 2024 are as follows: March 31, March 31, 2025 2024 Beginning balance $ 20,474 $ — Addition — 20,626 Write off ( 3,327 ) — Translation adjustment ( 84 ) ( 152 ) Ending balance $ 17,063 $ 20,474 (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 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. F- 22 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. PROPERTY AND EQUIPMENT, NET Property and equipment as of March 31, 2025 and 2024 consist of the following: March 31, March 31, 2025 2024 Leasehold improvements $ — $ 174,266 Computer equipment 25,758 13,291 Office equipment, fixtures and furniture 63,272 77,898 Automobiles 4,356,020 4,707,663 Subtotal 4,445,050 4,973,118 Less: accumulated depreciation and amortization ( 2,792,129 ) ( 2,297,861 ) Total property and equipment, net $ 1,652,921 $ 2,675,257 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 . 8. INTANGIBLE ASSETS, NET Intangible assets as of March 31, 2025 and 2024 consisted of the following: March 31, March 31, 2025 2024 Software $ 791,055 $ 791,262 Less: accumulated amortization ( 416,055 ) ( 341,233 ) Total intangible assets, net $ 375,000 $ 450,029 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: Amortization expenses Twelve months ending March 31, 2026 $ 75,000 Twelve months ending March 31, 2027 75,000 Twelve months ending March 31, 2028 75,000 Twelve months ending March 31, 2029 75,000 Twelve months ending March 31, 2030 75,000 $ 375,000 9. OTHER NON-CURRENT ASSETS March 31, March 31, 2025 2024 Prepayments of automobiles purchased $ — $ 639,863 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. F- 23 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. ACCRUED EXPENSES AND OTHER LIABILITIES March 31, March 31, 2025 2024 Accrued payroll and welfare $ 1,599,205 $ 1,221,294 Payables to drivers from aggregation platforms (i) 802,910 521,439 Deposits (ii) 711,997 668,172 Accrued expenses (iii) 520,876 423,420 Other taxes payable 111,869 90,256 Payables for expenditures on automobile transaction and related services 9,955 9,768 Other payables 581 42,190 Total accrued expenses and other liabilities $ 3,757,393 $ 2,976,539 (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 The balance of deposits represented the security deposit from operating and finance lease customers to cover lease payment and related automobile expense in case the customers’ accounts are in default. The balance is refundable at the end of the lease term, after deducting any missed lease payment and applicable fee. (iii) 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. 11. EMPLOYEE BENEFIT PLAN The Company has made employee benefit plan in accordance with relevant PRC regulations, including retirement insurance, unemployment insurance, medical insurance, housing fund, work injury insurance and maternity insurance. The contributions made by the Company were $ 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. 12. EQUITY Warrants 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.” F- 24 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. 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 . 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 Average Remaining Warrants Warrants Exercise Contractual Outstanding Exercisable Price Life 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 Exercised — — — — Balance, March 31, 2025 6,045,663 6,045,663 $ 2.25 1.55 Restricted Stock Units On October 29, 2020, the Board approved the issuance of an aggregate of 127,273 restricted stock units (“RSUs”) to directors, officers and certain employees as stock compensation for their services for the 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. The 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. F- 25 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Equity Incentive Plan At the 2018 Annual Meeting of Stockholders of the Company held on November 8, 2018, the Company’s stockholders approved the Company’s 2018 Equity Incentive Plan for employees, officers, directors and consultants of the Company and its affiliates. 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. 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 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 . 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. 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. 13. INCOME TAXES The United States of America 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 %. 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. taxation. 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. 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. PRC Senmiao Consulting, Sichuan Senmiao Ronglian Technology Co., Ltd. (“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 tax laws. The EIT rate for companies operating in the PRC is 25 %. F- 26 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Net loss before income tax by jurisdiction as follows: For the Years Ended March 31, 2025 2024 U.S. $ ( 773,780 ) $ ( 1,436,096 ) PRC ( 2,693,385 ) ( 2,397,904 ) Total net loss before income tax $ ( 3,467,165 ) $ ( 3,834,000 ) 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 tax rate to the effective tax rate: For the Years Ended March 31, 2025 2024 PRC Statutory tax rate* 25.0 % 25.0 % Differential of local statutory tax rate ( 0.9 )% ( 1.5 )% Permanent difference of gain from change in fair value of derivative liabilities not taxable in PRC 1.2 % 1.2 % Non-deductible expenses ( 2.1 )% ( 3.2 )% Valuation allowance on deferred income tax asset ( 73.3 )% ( 21.5 )% Equity investment loss 50.1 % — % Others — % ( 0.5 )% Effective tax rate — % ( 0.5 )% * 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, if not used. 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: March 31, March 31, 2025 2024 Deferred Tax Assets Net operating loss carryforwards in the PRC $ 2,797,877 $ 976,138 Net operating loss carryforwards in the U.S. 1,667,423 1,588,529 Allowance for credit losses 1,324,308 807,974 Others 6,398 6,431 Less: valuation allowance ( 5,796,006 ) ( 3,379,072 ) Deferred tax assets, net $ — $ — 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. F- 27 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: March 31, 2025 March 31, 2024 Net operating loss carry forwards in the PRC $ 77,782 $ 228,268 Less: valuation allowance ( 77,782 ) ( 228,268 ) Total $ — $ — 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). In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. 14. CONCENTRATION Major Suppliers 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. 15. RELATED PARTY TRANSACTIONS AND BALANCES 1. Related Party Balances 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. F- 28 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3) Due from related parties As of March 31, 2025 and 2024, balances due from related parties from the Company’s operations were comprised of the following: March 31, March 31, 2025 2024 Total due from related parties $ 6,723,887 $ 6,495,608 Less: Allowance for credit losses ( 5,165,699 ) ( 3,099,701 ) Due from related parties, net $ 1,558,188 $ 3,395,907 Due from related parties, net, current $ 172,049 $ 648,594 Due from a related party, net, non-current $ 1,386,139 $ 2,747,313 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: March 31, March 31, 2025 2024 Beginning balance $ 3,099,701 $ 1,481,036 Addition 2,093,199 1,703,563 Translation adjustment ( 27,201 ) ( 84,898 ) Ending balance $ 5,165,699 $ 3,099,701 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 March 31, March 31, 2025 2024 Loan payable to a related party (i) $ 414 $ 12,354 Other payable due to a related party (ii) 162,343 158,632 Other payable due to a related party (iii) 16,674 — Total due to related parties $ 179,431 $ 170,986 (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. F- 29 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4) Operating lease right-of-use assets - a related party and Operating lease liabilities - a related party March 31, March 31, 2025 2024 Operating lease right-of-use assets – a related party $ 6,910 $ 47,128 Operating lease liabilities – a related party $ 10,365 $ 51,741 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. 2. 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 $ 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 . 16. LEASES Lessor 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. Lessee 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 842. Instead, the Company recognized the lease payments in profit or loss on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred. In addition, the Company had automobiles leases which were classified as finance lease. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company recognized lease expense on a straight-line basis over the lease term for operating lease. Meanwhile, the Company recognized the finance leases ROU assets and interest on an amortized cost basis. The 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. F- 30 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Operating and finance lease expenses consist of the following: For the Years Ended Classification March 31, 2025 March 31, 2024 Operating lease cost Automobile lease costs Cost of revenues $ 977,768 $ 1,737,869 Lease expenses Selling, general and administrative 78,268 196,327 Finance lease cost Amortization of leased asset Cost of revenue 237,053 239,353 Amortization of leased asset General and administrative — 276 Interest on lease liabilities Interest expenses on finance leases 15,145 29,088 Total lease expenses $ 1,308,234 $ 2,202,913 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 Finance lease payments* payments Total Twelve months ending March 31, 2026 $ 10,466 $ 362,424 $ 372,890 Total lease payments 10,466 362,424 372,890 Less: discount ( 101 ) ( 2,156 ) ( 2,257 ) Present value of lease liabilities $ 10,365 $ 360,268 $ 370,633 * 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. 17. COMMITMENTS AND CONTINGENCIES Contingencies 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. F- 31 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 $ 482,000 ). According to the Registered Capital Registration Implementing Rules, Hunan Ruixi shall pay the subscribed capital of Jinkailong before June 30, 2032. 18. 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 March 31, 2025 2024 Revenues $ 3,389,072 $ 4,320,031 Depreciation and amortization $ 1,278,797 $ 1,403,215 Loss from operations $ ( 3,867,516 ) $ ( 4,375,528 ) Loss before income taxes $ ( 3,467,165 ) $ ( 3,834,000 ) Net loss $ ( 3,467,165 ) $ ( 3,854,206 ) Capital expenditure $ 1,602 $ 671,679 F- 32 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 19. PARENT-ONLY FINANCIALS SENMIAO TECHNOLOGY LIMITED CONDENSED BALANCE SHEETS March 31, March 31, 2025 2024 ASSETS Current Assets Cash and cash equivalents $ 999 $ 21,124 Due from subsidiaries 10,510,066 11,301,053 Prepayments, other receivables and other current assets, net — 37,125 Total Current Assets 10,511,065 11,359,302 Other Assets Intangible assets 375,000 450,000 Total Assets $ 10,886,065 $ 11,809,302 LIABILITIES AND EQUITY Current Liabilities Accrued expenses and other liabilities $ 1,080,265 $ 495,481 Derivative liabilities 84,591 288,833 Total Current Liabilities 1,164,856 784,314 Other Liabilities Excess of investments in subsidiaries 12,342,408 9,895,723 Total Liabilities 13,507,264 10,680,037 Commitments and Contingencies Mezzanine Equity Series A convertible preferred stock (par value $ 1,000 per share, 5,000 shares authorized; 991 shares issued and outstanding at March 31, 2025 and March 31, 2024) 234,364 234,364 Stockholders’ (deficit) Equity Common stock (par value $ 0.0001 per share, 500,000,000 shares authorized; 10,518,040 shares issued and outstanding at March 31, 2025 and March 31, 2024) 1,051 1,051 Additional paid-in capital 43,950,123 43,950,123 Accumulated deficit ( 45,109,573 ) ( 41,384,268 ) Accumulated other comprehensive loss ( 1,697,164 ) ( 1,672,005 ) Total Senmiao Technology Limited Stockholders’ (deficit) Equity ( 2,855,563 ) 894,901 Total Liabilities, Mezzanine Equity and Equity $ 10,886,065 11,809,302 F- 33 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SENMIAO TECHNOLOGY LIMITED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the Years Ended March 31, 2025 2024 General and administrative expenses $ ( 978,022 ) $ ( 1,649,046 ) Change in fair value of derivative liabilities 204,242 212,949 Equity of losses in subsidiaries ( 2,951,525 ) ( 2,232,877 ) Net loss ( 3,725,305 ) ( 3,668,974 ) Foreign currency translation adjustment ( 25,159 ) ( 456,433 ) Comprehensive loss attributable to stockholders $ ( 3,750,464 ) $ ( 4,125,407 ) SENMIAO TECHNOLOGY LIMITED CONDENSED STATEMENTS OF CASH FLOWS For the Years Ended March 31, 2025 2024 Cash Flows from Operating Activities: Net loss $ ( 3,725,305 ) $ ( 3,668,974 ) Adjustments to reconcile net loss to net cash used in operating activities: Equity of loss of subsidiaries 2,951,525 2,232,877 Amortization of intangible asset 75,000 75,000 Stock compensation expense — 444,300 Change in fair value of derivative liabilities ( 204,242 ) ( 212,949 ) Change in operating assets and liabilities Prepayments, receivables and other current assets 37,124 ( 1,872 ) Due from a related party — ( 150,000 ) Accrued expenses and other liabilities 201,761 386,682 Net Cash Used in Operating Activities ( 664,137 ) ( 894,936 ) Cash Flows from Financing Activities: Repayment from subsidiaries 569,239 855,522 Borrowings from a related party 74,773 — Repayments to a related party — ( 18,155 ) Net Cash Provided by Financing Activities 644,012 837,367 Net decrease in cash and cash equivalents ( 20,125 ) ( 57,569 ) Cash and cash equivalents, beginning of year 21,124 78,693 Cash and cash equivalents, end of year $ 999 $ 21,124 Supplemental Cash Flow Information Cash paid for interest expense $ — $ — Cash paid for income tax $ — $ — a) Basis of presentation The condensed financial information of Senmiao Technology Limited, has been prepared using the same accounting policies as set out in the consolidated financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted by reference to the consolidated financial statements. b) Investments in subsidiaries and equity of loss in subsidiaries The investments in subsidiaries consist of investments in Senmiao Consulting, Hunan Ruixi and Yicheng. The equity losses in subsidiaries consist of total equity loss in Senmiao Consulting, Hunan Ruixi, Yicheng, Sichuan Senmiao, Corenel and Jiekai. F- 34 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS c) Stockholders’ equity Restricted Stock Units On October 29, 2020, the Board approved the issuance of an aggregate of 127,273 restricted stock units (“RSUs”) to directors, officers and certain employees as stock compensation for their services for the years ended March 31, 2022. Total RSUs granted to these directors, officers and employees were valued at an aggregate fair value of $ 140,000 . These RSUs will vest in four equal quarterly installments on January 29, 2021, April 29, 2021, July 29, 2021 and October 29, 2021 or in full upon the occurrence of a change in control of the Company, provided that the director, officer or the employee remains in service through the applicable vesting date. The RSUs will be settled by the Company’s issuance of shares of common stock in certificated or uncertificated form upon the earlier of (i) vesting date, (ii) a change in control and (ii) termination of the services of the director, officer or employee due to a “separation of service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, or the death or disability of such director, officer or employee. As of the filing date of these consolidated financial statements, all installment of RSUs with an aggregate of 12,727 was vested and 9,545 was settled by the Company. The Company expects to settle the remaining vested RSUs by issuance of shares of common stock before March 31, 2025 and account for the vested RSUs as an addition to both expenses and additional paid-in capital. Equity Incentive Plan At the 2018 Annual Meeting of Stockholders of the Company held on November 8, 2018, the Company’s stockholders approved the Company’s 2018 Equity Incentive Plan for employees, officers, directors and consultants of the Company and its affiliates. At the 2022 Annual Meeting of Stockholders of Company held on March 30, 2023, the Company’s stockholders approved the amendment to the 2018 Equity Incentive Plan, to increase the number of shares of common stock reserved under the Plan to 1,500,000 shares. A committee consisting of at least two independent directors would be appointed by the Board or in the absence of such a committee, the board of directors, will be responsible for the general administration of the Equity Incentive Plan. All awards granted under the Equity Incentive Plan will be governed by separate award agreements between the Company and the participants. As of March 31, 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. 1-for-10 shares reverse split on common stock The Company considered the above transactions after giving a retroactive effect to a 1-for-10 reverse stock split of its common stock which became effective on April 6, 2022. The Company believed it is appropriate to reflect the above transactions on a retroactive basis similar to those after a stock split or dividend pursuant to ASC 260. All shares and per share amounts used herein and in the accompanying consolidated financial statements have been retroactively stated to reflect the effect of the reverse stock split. Upon execution of the 1-for-10 reverse stock split, the Company recognized additional 8,402 shares of common stock due to round up issue. Conversion Price Adjustment for November 2021 Preferred Shares Pursuant to the 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 of the Preferred Shares was adjusted to $ 4.1 . 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 . F- 35 SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Common stock issued for consulting services In October 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 $ 0.0001 . 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 year ended March 31, 2024. Change of ownership interest in a subsidiary On February 11, 2024, The Company and Hunan Ruixi’s two minority shareholders (“Shareholders”) has entered into a share swap agreement (“Share Swap 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 non-controlling interest is adjusted was recognized as an addition in additional paid-in capital in accordance with ASC 810-10-45-23 “Change in a parent’s ownership interest in a subsidiary”. 20. SUBSEQUENT EVENTS 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 Warrants 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. F- 36 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.