What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-07-15 compared with 2021-07-08 · 1419 added, 1933 removed, 564 unchanged (86% of the section changed)

Financial Statements and Supplementary Data

The financial statements required by this item

begin on page F-1 hereof.

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

Index to Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCOAB ID 711 )

Financial Statements:

Consolidated Balance Sheets as of March 31, 2022 and 2021

Consolidated Statements of Operations and Comprehensive Loss for the Years Ended

March 31, 2021 and 2020

Consolidated Statements of Changes in Stockholders' Equity for the Years Ended March 31, 2021

Consolidated Statements of Operations and Comprehensive Loss for the Years Ended March 31, 2022 and 2021

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended March 31, 2022 and 2021

Consolidated Statements of Cash Flows for the Years Ended March 31, 2022 and 2021

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

1 unchanged sentence

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of Senmiao Technology Limited and Subsidiaries (collectively, the “Company”) as of March 31, 2021 and 2020,

and the related consolidated statements of operations and comprehensive loss, changes in stockholders’

equity, and cash flows for

each of the years in the two-year period ended March 31, 2021, and the related notes (collectively referred to as the 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, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended

March 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

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

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

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

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

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

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

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

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

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

Basis for Opinion

These consolidated financial statements are the

responsibility of the Company’s management.

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

statements based on our audits.

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

States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and

the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

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

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

The Company is not required to have, nor were we

engaged to perform, an audit of its internal control over financial reporting.

As part of our 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.

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 audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

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

As part of our 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.

Consideration of the Company’s Ability

to Continue as a Going Concern

The accompanying consolidated financial statements

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

As discussed in Note 2 to the financial statements, the Company

had incurred significant working capital deficiency, recurring losses from operations and accumulated deficit at March 31, 2021.

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

Management’s plans in regards

to these matters are also described in Note 2.

These financial statements do not include any adjustments that might result from the outcome

of these uncertainties.

If the Company is unable to successfully obtain the necessary additional financial support as specified in Note

2, there could be a material adverse effect on the Company.

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

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

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

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

/s/ Friedman LLP

We have served as the Company’s auditor

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

New York, New York

July 14, 2022

SENMIAO TECHNOLOGY LIMITED

7 unchanged sentences

Prepayments, other receivables and other assets, net

Due from related parties

Due from related parties, current portion

Current assets - discontinued operations

10 unchanged sentences

Finance lease receivables, net, noncurrent

LIABILITIES AND EQUITY

Due from a related party, noncurrent

Other assets - discontinued operations

Total other assets

LIABILITIES, MEZZANNIE EQUITY AND EQUITY

Current liabilities

Borrowings from financial institutions

Borrowings from financial institution

Accounts payable

Advances from customers

Income tax payable

Accrued expenses and other liabilities

7 unchanged sentences

Other liabilities

Borrowings from financial institutions, noncurrent

Operating lease liabilities, non-current

2 unchanged sentences

Deferred tax liability

Other liabilities - discontinued operations

Total other liabilities

1 unchanged sentence

Commitments and contingencies

Mezzanine Equity (redeemable)

Series A convertible preferred stock (par value $ 0.0001 per share, 5,000 shares authorized;

5,000 and 0 shares issued and outstanding at March 31, 2022 and 2021, respectively), net of issuance costs of $ 118,344

Stockholders’ equity

8 unchanged sentences

Non-controlling interests

Total liabilities and equity

The accompanying notes are an integral part of

the consolidated financial statements.

( 3,284,143 )

Total liabilities, mezzanine equity and equity

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

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

SENMIAO TECHNOLOGY LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Expressed in U.S.

2 unchanged sentences

Cost of revenues

( 6,511,031 )

( 1,984,079 )

Gross profit (loss)

( 1,597,929 )

Operating expenses

Selling, general and administrative expenses

Recovery of (Provision for) doubtful accounts

Impairments of long-lived assets

( 9,525,408 )

( 5,905,579 )

Provision for doubtful accounts, net of recovery

Impairments of inventories

Impairments of long-lived assets and goodwill

Total operating expenses

( 9,964,059 )

( 6,216,190 )

Loss from operations

( 11,561,988 )

( 6,011,429 )

Other income (expense)

3 unchanged sentences

Change in fair value of derivative liabilities

( 1,710,415 )

Issuance cost incurred for issuing series A convertible preferred stock

Total other income (expense), net

( 1,455,664 )

Loss before income taxes

( 5,601,579 )

( 7,467,093 )

Income tax expense

Net loss from continuing operations

Net loss from discontinued operations, net of applicable income taxes

Net loss attributable to non-controlling interests from continuing operations

Net loss attributable to stockholders

( 5,606,145 )

( 7,475,425 )

Discontinued operation:

Loss from discontinued operations, net of applicable income taxes

( 2,747,209 )

( 5,187,214 )

Net gain from deconsolidation of VIEs - discontinued operations

Gain (loss) from discontinued operations

( 5,187,214 )

Net income (loss)

( 12,662,639 )

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

( 3,872,645 )

Net loss attributable to non-controlling interests from discontinued operations

Net loss attributable to the Company’s stockholders

( 10,360,058 )

Net income (loss)

( 12,662,639 )

Other comprehensive loss

Foreign currency translation adjustment

Comprehensive loss

Total comprehensive loss attributable to noncontrolling interests

Comprehensive income (loss)

( 12,977,308 )

Total comprehensive income (loss) attributable to noncontrolling interests

( 2,286,057 )

Total comprehensive loss attributable to stockholders

( 10,691,251 )

Weighted average number of common stock

Basic and diluted*

Loss per share - basic and diluted

Earnings (loss) per share - basic and diluted*

Continuing operations

Discontinued operations

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

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

6 unchanged sentences

Non-controlling

BALANCE as of March 31, 2019

BALANCE, March 31, 2020

( 23,704,863 )

Issuance of common stock in registered direct offering net of issuance costs

Exercise of Series B warrants into common stock

Issuance of restricted stock units

Foreign currency translation adjustment

BALANCE as of March 31, 2020

( 1,331,340 )

4 unchanged sentences

Exercise of Placement warrants into common stock

Fair value of derivative liabilities upon exercises of warrants

Fair value of derivative liabilities upon exercise of warrants

Issuance of common stock and warrants in an underwritten direct offering, net of issuance costs

Issuance of common stock pursuant to exercise of underwriters’

over-allotment option, net of issuance costs

Issuance of common stock pursuant to exercise of underwriters’ over-allotment option, net of issuance costs

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

Fair value of warrants allocated to derivative liabilities

Issuance of common stock for consulting service

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

Acquisition of business entities

Foreign currency translation adjustment

BALANCE as of March 31, 2021

BALANCE, March 31, 2021

( 34,064,921 )

( 3,284,143 )

Net income (loss)

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

Issuance of restricted stock units

Exercise of Series A warrants into common stock

Fair value of derivative liabilities upon exercise of warrants

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

( 1,357,637 )

Issuance of common stock for consulting service

Foreign currency translation adjustment

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

Deconsolidation of discontinued operation

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

BALANCE, March 31, 2022

( 34,601,545 )

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

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

3 unchanged sentences

dollar, except for the number of shares)

For the Year Ended March 31,

For the Years Ended March 31,

Cash Flows from Operating Activities:

Net income (loss)

( 12,662,639 )

Net income (loss) from discontinued operations

( 5,187,214 )

Net loss from discontinued operations

Net loss from continuing operations

( 5,606,145 )

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

( 7,475,425 )

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

Depreciation and amortization of property and equipment

Stock based compensation expense

Stock compensation expense

Issuance cost incurred for issuing series A convertible preferred stock

Amortization of right-of-use assets

Amortization of intangible assets

Provision (recovery) for doubtful accounts

Impairment loss of long-lived assets

Gain (loss) on disposal of equipment

Provision for doubtful accounts, net of recovery

Impairments of inventories

Impairments of long-lived assets

Gain on disposal of equipment

Change in fair value of derivative liabilities

( 6,951,482 )

Change in operating assets and liabilities

1 unchanged sentence

Prepayments, other receivables and other assets

( 1,366,724 )

Finance lease receivables

6 unchanged sentences

Net cash used in operating activities from continuing operations

( 9,036,114 )

( 3,196,138 )

Net cash used in operating activities from discontinued operations

Net Cash Used in Operating Activities

( 9,159,281 )

( 3,936,067 )

Cash Flows from Investing Activities:

Purchases of property and equipment

Prepayment of intangible assets

( 3,223,992 )

( 2,293,415 )

Purchases of intangible assets

Cash released upon termination of a VIE

Cash acquired from XXTX, net of cash paid to XXTX

Net cash used in investing activities from continuing operations

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

( 3,365,915 )

( 2,310,697 )

Net cash used in investing activities from discontinued operations

Net Cash Used in Investing Activities

( 3,477,125 )

( 2,510,862 )

Cash Flows from Financing Activities:

Net proceeds from issuance of common stock in an underwritten public offering

Net proceeds from exercise of underwriters’

over-allotment option

Net proceeds from issuance of common stock and warrants in a registered direct public offering

Net proceeds from issuance of common stock and warrants in an underwritten public offering

Net proceeds from issuance of common stock upon warrants exercised

Borrowings from financial institutions

Repayments to third parties

Loan to related party

Borrowings from related parties and affiliates

Repayments from related parties

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

Net proceeds from exercise of underwriters’ over-allotment option

Borrowings from a financial institution

Loan to related parties

Repayments to related parties and affiliates

Repayments of current borrowings from financial institutions

Release of escrow receivable

Principal payments of finance lease liabilities

( 2,230,765 )

Net cash provided by financing activities from continuing operations

Net cash used in financing activities from

discontinued operations

Net cash provided by financing activities from discontinued operations

Net Cash Provided by Financing Activities

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

( 3,262,854 )

Cash and cash equivalents, beginning of year

5 unchanged sentences

Non-cash Transaction in Investing and Financing Activities

Prepayment in exchange of intangible assets

Recognition of right-of-use assets and lease liabilities

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

Acquisition of equipment through prepayment and financing lease

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

Recognition of other receivables from Jinkailong upon deconsolidation

Acquisition of equipment through prepayment and financing lease receivables offset

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

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

$ 1,010,752.00

Issuance of restricted stock units from accrued expenses and other liabilities

Acquisition of XXTX with payables

Acquisition of XXTX’s minority interest with issuance of common stock

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

2 unchanged sentences

ORGANIZATION AND PRINCIPAL ACTIVITIES

Senmiao Technology Limited (the “Company”)

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 two segments:

(1) automobile transaction and related services focusing on the online ride-hailing industry in the People’s Republic of China

(“PRC”

or “China”) through its wholly owned subsidiaries, Yicheng Financial Leasing Co., Ltd., a PRC limited

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

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

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

and its variable interest entity (“VIE”), Sichuan Jinkailong Automobile Leasing Co., Ltd., a PRC limited liability company

(“Jinkailong”).

(ii) online ride-hailing platform services through its own platform (known as Xixingtianxia)

as described further below, since October 2020, through Hunan Xixingtianxia Technology Co., Ltd., a PRC limited liability

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

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

The Company’s ride hailing

platform enables qualified ride-hailing drivers to provide transportation services in Chengdu, Changsha, Neijiang and Guangzhou, China.

The Company previously operated an online lending

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

(“Sichuan Senmiao”), which facilitated

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

The Company ceased its online lending services business in October 2019.

Hunan Ruixi holds a business license for automobile

sales and financial leasing and has been engaged in automobile financial leasing services and automobile sales since March 2019 and

January 2019, respectively.

Hunan Ruixi also controls Jinkailong through its 35% equity interest and voting agreements with Jinkailong’s

other shareholders.

Jinkailong facilitates automobile sales and financing transactions for its clients, who are primarily ride-hailing

drivers and provides them operating lease and relevant after-transaction services.

Yicheng holds a business license for automobiles sale

and financial leasing and has been engaged in automobile sales since June 2019.

The Company also has been engaged in operating leasing

services through Jinkailong and Hunan Ruixi since March 2019.

On July 4, 2020, Hunan Ruixi,

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

Hongyi Industrial Group Co., Ltd.

(“Hongyi”).

Pursuant to the JKL Investment Agreement, Jinkailong agreed to issue

and Hongyi agreed to subscribe for an approximately 27.03% equity interest in Jinkailong in consideration of RMB50 million

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

The Investment will be made in two payments:

(i) the first payment

of RMB10 million (approximately $1.4 million) was due no later than December 31, 2020 and (ii) the remaining RMB40 million

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

government and the other shareholders of Jinkailong having made their respective capital contributions in full in cash, but no later

than December 31, 2020.

As Hongyi did not make any payment in accordance with the investment, on July 2, 2021, the JKL

Investment Agreement has been terminated upon consent from Hunan Ruixi, Jinkailong, the other shareholders of Jinkailong, and

On September 11, 2020, Senmiao Consulting

entered into an investment agreement relating to XXTX with all the original shareholders of XXTX (the “XXTX Investment Agreement”),

pursuant to which Senmiao Consulting would make an investment of RMB3.16 million (approximately $0.5 million) in XXTX in cash and obtain

a 51% equity interest accordingly.

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

capital were completed and XXTX became a majority owned subsidiary of Senmiao Consulting.

On February 5, 2021, Senmiao Consulting

and all the shareholders of XXTX entered into a supplementary agreement related to XXTX’s Investment agreement (the “XXTX

Increase Investment Agreement”).

Under the XXTX Increase Investment Agreement, all shareholders of XXTX agreed to increase the total

registered capital of XXTX to RMB50.8 million (approximately $7.8 million).

Senmiao Consulting shall pay another investment amounted to

RMB36.84 million (approximately $5.7 million) in cash in exchange of additional 27.74% of XXTX’s equity interest.

As of the issuance

date of these consolidated financial statements, Senmiao Consulting has made a capital contribution of RMB19.8 million (approximately

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

As of March 31, 2021, XXTX had

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

In December 2020, Senmiao Consulting formed

Corenel, with a registered capital of RMB10 million (approximately $1.6 million) in Chengdu City, Sichuan Province.

Corenel has engaged

in automobile operating leases since March 2021.

In December 2020, Hunan Ruixi and a third party jointly formed a subsidiary,

Chengdu Xichuang Technology Service Co., Ltd.

(“Xichuang”), with a registered capital of RMB200,000 (approximately $32,000)

in Chengdu City, Sichuan Province.

(i) automobile transaction and related services focusing on the online ride-hailing industry in the People’s Republic of China (“PRC” or “China”) through its wholly owned subsidiaries, Sichuan Senmiao Yicheng Assets Management Co., Ltd., formerly named Yicheng Financial Leasing Co., Ltd., a PRC limited liability company (“Yicheng”), Chengdu Corenel Technology Co., Ltd., a PRC limited liability company (“Corenel”), and its majority owned subsidiary, Hunan Ruixi Financial Leasing Co., Ltd., a PRC limited liability company (“Hunan Ruixi”), and its equity investee company and former variable interest entity (“VIE”), Sichuan Jinkailong Automobile Leasing Co., Ltd., a PRC limited liability company (“Jinkailong”).

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

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

The Company’s ride hailing platform enables qualified ride-hailing drivers to provide transportation services in Chengdu, Changsha, Guangzhou, and other 18 cities in China as of the filing date of these consolidated financial statements.

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

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

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

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

The Company also has been engaged in operating leasing services through Jinkailong and Hunan Ruixi since March 2019.

On September 11, 2020, Senmiao Consulting entered into an investment agreement relating to XXTX with all the original shareholders of XXTX (the “XXTX Investment Agreement”), pursuant to which Senmiao Consulting would make an investment of RMB 3.16 million (approximately $ 0.5 million) in XXTX in cash and obtain a 51 % equity interest.

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

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

Under the XXTX Increase Investment Agreement, all shareholders of XXTX agreed to increase the total registered capital of XXTX to RMB 50.8 million (approximately $ 7.8 million).

Senmiao Consulting shall pay another investment amounted to RMB 36.84 million (approximately $ 5.7 million) in cash in exchange of additional 27.74 % of XXTX’s equity interest.

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

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

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

As of the filing date of these consolidated financial statements, Senmiao Consulting has made a cumulative capital contribution of RMB 36.86 million (approximately $ 5.81 million) to XXTX and the remaining amount is expected to be paid before December 31, 2025.

As of March 31, 2022, XXTX had eight wholly owned subsidiaries and only one of them has operations.

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

Corenel is engaged in automobile operating leases since March 2021.

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

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

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

In April 2021, the Company formed Senmiao

Technology (Hong Kong)., Ltd.

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

The Company holds 99.99%

of the equity interests of Senmiao HK.

The following diagram illustrates the Company’s

corporate structure, including its subsidiaries, and VIEs, as of the issuance date of these consolidated financial statements:

VIE Agreements with Sichuan Senmiao

According to the VIE Agreements, Sichuan Senmiao

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

Sichuan Senmiao’s entire operations are controlled

by the Company.

Although the Company discontinued Sichuan Senmiao’s online P2P lending services business as of October 2019,

the VIE Agreements remain in place, and such agreements are described in detail below:

Equity Interest Pledge Agreement

Senmiao Consulting, Sichuan Senmiao and the Sichuan

Senmiao Shareholders entered into an Equity Interest Pledge Agreement, pursuant to which the Sichuan Senmiao Shareholders pledged all

of their equity interest in Sichuan Senmiao to Senmiao Consulting in order to guarantee the performance of Sichuan Senmiao’s obligations

under the Exclusive Business Cooperation Agreement as described below.

During the term of the pledge, Senmiao Consulting is entitled to

receive any dividends declared on the pledged equity interest of Sichuan Senmiao.

The Equity Interest Pledge Agreement terminates when

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

Exclusive Business Cooperation Agreement

Pursuant to an Exclusive Business Cooperation

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

will provide Sichuan Senmiao with complete technical support, business support and related consulting services for 10 years ended September 18,

The Sichuan Senmiao Shareholders and Sichuan Senmiao will not engage any third party for the same or similar consultation services

without Senmiao Consulting’s prior consent.

Further, the Sichuan Senmiao Shareholders are entitled to receive an aggregate of 20,250,000

shares of common stock of the Company under the Exclusive Business Cooperation Agreement.

Senmiao Consulting may terminate the Exclusive

Business Cooperation Agreement at any time upon prior written notice to Sichuan Senmiao and the Sichuan Senmiao Shareholders.

Exclusive Option Agreement

Pursuant to an Exclusive Option Agreement entered

by and among Senmiao Consulting, Sichuan Senmiao and the Sichuan Senmiao Shareholders, the Sichuan Senmiao Shareholders have granted Senmiao

Consulting an exclusive option to purchase at any time their equity interests in Sichuan Senmiao at a purchase price equal to the capital

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

The Exclusive Option Agreement terminates

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

Powers of Attorney

Each of the Sichuan Senmiao Shareholders has signed

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

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

Sichuan Senmiao, including but not limited to:

(a) attending shareholders’

(b) exercising all the shareholder’s

rights that shareholders are entitled to under PRC laws and the Articles of Association of Sichuan Senmiao, including but not limited

to voting, sale, transfer, pledge and disposition of the equity interests of Sichuan Senmiao;

and (c) designating and appointing

the legal representative, chairperson, director, supervisor, chief executive officer and other senior management members of Sichuan Senmiao.

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

Timely Report Agreement

The Company and Sichuan Senmiao entered into a Timely Report Agreement,

pursuant to which, Sichuan Senmiao agrees to make its officers and directors available to the Company and promptly provide all information

required by the Company so that the Company can make necessary filings to the U.S.

Securities and Exchange Commission (“SEC”)

and other regulatory reports in a timely fashion.

The Company has concluded that it should consolidate

the financial statements with Sichuan Senmiao because it is Sichuan Senmiao’s primary beneficiary based on the Power of Attorney

from the Sichuan Senmiao Shareholders, who assigned their rights as shareholders of Sichuan Senmiao to Senmiao Consulting, the Company’s

wholly-owned subsidiary.

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

meetings, voting on matters submitted

for shareholder approval and appointing legal representatives, directors, supervisors and senior management of Sichuan Senmiao.

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

Pursuant to Exclusive

Business Cooperation Agreement, Senmiao Consulting shall provide complete technical support, business support and related consulting services

for 10 years.

Though not explicit in the VIE Agreements, the Company may provide financial support to Sichuan Senmiao to meet its working

capital requirements and capitalization purposes.

The terms of the VIE Agreements and the Company’s plan to provide financial support

to Sichuan Senmiao were considered in determining that the Company is the primary beneficiary of Sichuan Senmiao.

Accordingly, the financial

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

Voting Agreements with Jinkailong’s Other

Hunan Ruixi entered into two voting agreements

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

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

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.

The Company has concluded that it should consolidate

the financial statements with Jinkailong because it is Jinkailong’s primary beneficiary based on the Voting Agreements.

explicit in the Voting Agreements by and among Jinkailong, Hunan Ruixi, and other shareholders of Hunan Ruixi, the Company may provide

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

The terms of the Voting Agreements

and the Company’s plan to provide financial support to Jinkailong were considered in determining that the Company is the primary

beneficiary of Jinkailong.

Accordingly, management has determined that Jinkailong is a VIE and the financial statements of Jinkailong

are consolidated in the Company’s consolidated financial statements.

Total assets and total liabilities of the Company’s VIEs included

in the Company’s consolidated financial statements as of March 31, 2021 and 2020 are as follows:

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

Pursuant to the equity transfer agreement, another shareholder of Xichuang would transfer 30 % of its shares

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

to Hunan Ruixi for free.

However, in November 2021, Xichuang was dissolved.

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

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

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

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

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

In March 2022, Corenel and another company in Chengdu formed Chengdu Jiekai Technology Ltd.

(“Jiekai”), with a registered capital of RMB 500,000 (approximately $ 80,000 ).

Corenel holds 51 % of the equity interests of Jiekai.

Jiekai is engaged in automobile operating lease business.

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

Former VIE Agreements with Sichuan Senmiao

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

For the details of such agreements, please refer to the audited financial statements contained in the annual report on Form 10-K filed with the SEC on July 8, 2021.

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

On March 23, 2022, Senmiao Consulting and other shareholders with 94.5 % equity interests of Sichuan Senmiao terminated the VIE Agreements and acquired Sichuan Senmiao’s 94.5 % equity interests with total consideration of zero .

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

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

Former Voting Agreements with Jinkailong’s Other Shareholders

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

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

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

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

As of March 31, 2022, the parties no longer maintain a concerted action relationship with respect to the decision required to

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 (refer to Note 5).

As a result of the Termination Agreement, Jinkailong ceased to be a VIE to Ruixi.

The Company, through Ruixi, retains its 35 % equity interests in Jinkailong.

Former VIE Agreements with Youlu

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

The term of Youlu is similar to the Youlu VIE Agreements with Sichuan Senmiao as described above.

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

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

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

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

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Total assets and total liabilities of the Company’s VIEs included in the Company’s consolidated financial statements as of March 31, 2022 and 2021 are as follows after Jinkailong and Youlu deconsolidated from the Company’s consolidated financial statements at March 31, 2022:

Current assets:

3 unchanged sentences

Other receivable- intercompany

Due from related parties

Current assets - discontinued operations (1)

5 unchanged sentences

Other assets:

Operating lease right-of-use assets, net

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

Financing lease right-of-use assets, net

Accounts receivable, net, non-current

Other assets - discontinued operations

Total other assets

Current liabilities:

Borrowings from financial institutions

Accounts payable

Advances from customers

Income tax payable

Accrued expenses and other liabilities

1 unchanged sentence

Due to related parties and affiliates

Operating lease liabilities

Operating lease liabilities - related parties

Financing lease liabilities

Current liabilities - discontinued operations (2)

1 unchanged sentence

Other liabilities:

Borrowings from financial institutions, non-current

Operating lease liabilities, non-current

Operating lease liabilities, non-current - related parties

Financing lease liabilities, non-current

Other liabilities - discontinued operations

Total other liabilities

Total liabilities

Includes intercompany receivables of $177,825 and $543,446 as of March 31, 2021 and 2020, respectively.

Includes intercompany payables of $35,790 and $402,406 as of March 31, 2021 and 2020, respectively.

Net revenue, loss from operations and net loss

of the VIEs that were included in the Company's consolidated financial statements for the years ended March 31, 2021 and 2020 are

(1) Includes intercompany receivables of $ 0 and intercompany payables of $ 274,731 as of March 31, 2022 and March 31, 2021, respectively.

(2) Includes intercompany payables of $ 0 and $ 4,203,454 as of March 31, 2022 and March 31, 2021, respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Net revenue, loss from operations and net loss of the VIEs that were included in the Company’s consolidated financial statements for the years ended March 31, 2022 and 2021 are as follows:

For the Years Ended

Net revenue from continuing operations

1 unchanged sentence

Loss from operations from continuing operations

$ (4,897,744 )

$ (4,514,195 )

Loss from operations from discontinued operations

Net loss from continuing operations attributable to stockholders

( 2,537,715 )

( 4,254,403 )

Net loss from continuing operations attributable to stockholders

Net loss from discontinued operations attributable to stockholders

( 2,032,934 )

( 3,722,648 )

Net loss attributable to stockholders

1 unchanged sentence

( 4,253,630 )

* Net revenue, loss from operations and net loss attributable to stockholders for the year ended March 2021 were retroactively restated for comparative purpose.

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.

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) recurring losses from operations, including net loss of

approximately $12.6 million and $0.1 million from continuing operations and discontinued operations, respectively, for the year

ended March 31, 2021, (2) accumulated deficit of approximately $34.1 million as of March 31, 2021;

working capital deficit of approximately $5.9 million as of March 31, 2021;

(4) net operating cash outflows of

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

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

As of March 31, 2021, the Company has entered into two purchase

contracts with an automobile dealer to purchase a total of 700 automobiles for the amount of approximately $11.6 million.

to the contracts, the Company is required to purchase 350 automobiles in cash with the amount of approximately $5.8 million.

As the issuance date of these financial statements, 200 automobiles have been purchased in cash and delivered to the Company and the remaining purchase commitment of $2.5

million is to be completed before December 31, 2021.

The remaining 350 automobiles purchase commitment with the amount of

approximately $5.8 million shall be purchased with financing option through the dealer’s designated financial

institutions.

On May 13, 2021, the Company completed a

registered direct offering of 5,531,916 shares of the Company’s common stock at $1.175 per share, pursuant to a securities purchase

agreement with certain institutional investors.

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

and offering expenses, to support the Company’s working capital requirements.

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

2021, the Company’s working capital deficiency was approximately $0.1 million.

However, 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.

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) net loss of approximately $ 5.6 million from continuing operations for the year ended March 31, 2022, (2) accumulated deficit of approximately $34.9 million as of March 31, 2022;

(3) the working capital deficit of approximately $ 0.6 million as of March 31, 2022;

(4) net operating cash outflows of approximately $ 9.0 million and $0.1 million from continuing operations and discontinued operations, respectively, for the year ended March 31, 2022;

and (5) the purchase commitment of approximately $ 1.7 million for 100 automobiles.

As of the filing date of these consolidated financial statements, the Company has entered into a purchase contract with an automobile dealer to purchase a total of 200 automobiles for the amount of approximately $ 3.4 million, of which, 100 automobiles of approximately $ 1.7 million have been purchased in cash and delivered to the Company and the remaining purchase commitment of approximately $ 1.7 million shall be completed with financing option through the dealer’s designated financial institutions.

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:

1 unchanged sentence

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

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

Based on the above considerations, management

is of the opinion that the Company will probably not having sufficient funds to meet its working capital requirements and debt obligations as they

become due one year from the issuance date of these financial statements, if the Company is unable to obtain additional financing.

the maximum contingent liabilities the Company would be exposed to was approximately $12.8 million as of March 31, 2021.

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

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

of the COVID-19 pandemic on the Company’s business and areas of operations in China, (ii) changes in the demand for the Company’s

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

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

business partners, (vii) the ability of financial institutions in China to provide continued financial support to the Company’s

customers, and (viii) the perception of PRC-based companies in the U.S.

● 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.

In addition, the maximum contingent liabilities for automobile purchasers the Company would be exposed to was approximately $ 0.8 million as of March 31, 2022, assuming all the automobile purchasers were in default.

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) the impact of the COVID-19 pandemic on the Company’s business and areas of operations in China, (ii) changes in the demand for the Company’s services, (iii) PRC government policies, (iv) economic conditions in China and worldwide, (v) competitive pricing in the automobile transaction and related service and ride-hailing industries, (vi) changes in the Company’s relationships with key business partners, (vii) the ability of financial institutions in China to

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

provide continued financial support to the Company’s customers, and (viii) 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 viability and results of operations.

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 viability and results of operations.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying

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

United States of America (“U.S.

GAAP”).

Basis of consolidation

The consolidated

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

(a) Basis of presentation

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

(b) Basis of consolidation

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

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

Foreign currency

Transactions denominated in currencies other than

the functional currency are translated into the functional currency at the exchange rates prevailing on the dates of the transaction.

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

using the applicable exchange rates on the date of the balance sheet.

The resulting exchange differences are recorded in the statement

of operations.

The reporting currency of the Company and its

subsidiaries and VIEs is U.S.

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

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.

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

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

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

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

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

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

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

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

The gains and losses

resulting from translation of financial statements of the Company and its subsidiaries and VIEs are recorded as a separate component of

accumulated other comprehensive income within the statement of stockholders’

Translation of amounts from RMB into US$ has been

made at the following exchange rates for the respective periods:

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

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

Balance sheet items, except for equity accounts

For the Year Ended

Items in the statements of operations and comprehensive loss

Use of estimates

In presenting the consolidated financial statements

in accordance with U.S.

For the Years Ended March 31,

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

(d) Use of estimates

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

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

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

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

Accordingly, actual results could differ from those estimates.

ongoing basis, management reviews these estimates and assumptions using the currently available information.

Changes in facts and circumstances

may cause the Company to revise its estimates.

The Company bases its estimates on past experience and on various other assumptions that

are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

The inputs into our judgments and estimates consider the economic implications of COVID-19 on the Company’s critical and significant

accounting estimates.

Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, residual

values, lease classification and liabilities, finance lease receivables, inventory obsolescence, right-of-use assets, determinations of

the useful lives and valuation of long-lived assets and goodwill, estimates of allowances for doubtful accounts and prepayments, estimates

of impairment of intangible assets, valuation of deferred tax assets, estimated fair value used in business acquisitions, valuation of

derivative liabilities, allocation of fair value of derivative liabilities, issuance of common stock and warrants exercised and other

provisions and contingencies.

Fair values of financial instruments

Accounting Standards Codification (“ASC”)

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

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

In cases where quoted market prices are not

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

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.

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.

The inputs into our judgments and estimates consider the economic implications of COVID-19 on the Company’s critical and significant accounting estimates.

Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, residual values, lease classification and liabilities, finance lease receivables, inventory obsolescence, right-of-use assets, determinations of the useful lives and valuation of long-lived assets and goodwill, estimates of allowances for doubtful accounts and prepayments, estimates of impairment of long-lived assets

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

(e) Fair values of financial instruments

Accounting Standards Codification (“ASC”) Topic 825, Financial Instruments (“Topic 825”) requires disclosure of fair value information of financial instruments, whether or not recognized in the balance sheets, for which it is practicable to estimate that value.

In 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:

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

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

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

The following table sets forth by level within

the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31,

2021 and 2020:

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, 2022 and March 31, 2021:

Carrying Value at

March 31, 2021

Fair Value Measurement at

March 31, 2022

Derivative liabilities

Carrying Value at

March 31, 2020

Fair Value Measurement at

March 31, 2021

Derivative liabilities

The following is a reconciliation of the beginning

and ending balance of the assets and liabilities measured at fair value on a recurring basis for the years ended March 31, 2021 and

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, 2022 and 2021:

November 2021

2019 Registered Direct Offering

February 2021

Direct Offering

Registered Direct Offering

Private Placement

BALANCE as of March 31, 2020

2 unchanged sentences

Fair value of warrants exercised

( 1,470,285 )

( 1,769,841 )

Warrant forfeited due to expiration

BALANCE as of March 31, 2021

1 unchanged sentence

Change in fair value of derivative liabilities

( 2,535,376 )

( 2,895,392 )

( 6,951,482 )

Fair value of warrants exercised

Warrant forfeited due to expiration

BALANCE as of March 31, 2022

On June 21, 2019, the Company closed a registered

direct offering of an aggregate of 1,781,361 shares of common stock, and in connection therewith, issued to the investors (i) for

no additional consideration, Series A warrants to purchase up to an aggregate of 1,336,021 shares of common stock, (ii) for

nominal additional consideration, Series B warrants to purchase up to a maximum aggregate of 1,116,320 shares of common stock and

(iii) placement agent warrants to purchase up to 142,509 shares of common stock.

On August 6, 2020, the Company completed

a public offering of 12,000,000 shares of the Company’s common stock at $0.50 per share (the “Offering Price”), pursuant

to an underwriting agreement with The Benchmark Company, LLC and Axiom Capital Management, Inc., as representatives of the several

underwriters (the “Underwriters”).

On August 13, 2020, the Underwriters exercised their rights to purchase an additional

1,800,000 shares of common stock at the Offering Price.

In connection with the offering, the Company issued the Underwriters, on a private

placement basis, warrants to purchase up to 568,000 shares of common stock (the “Underwriters’

Warrants”).

The Underwriters’

Warrants are exercisable for a period of five years commencing six months from August 4, 2020 at a price per share equal to 125%

of the Offering Price and are exercisable on a “cashless”

As the underwriting agreement indicated, The Benchmark

Company, LLC and Axiom Capital Management, Inc.

have the right of first refusal to act as lead or joint investment banker, lead or

join book-runner and /or joint placement agent, for each and every future public and private equity and debt offering, including all equity

linked financings for the Company, or any successor to or any subsidiary of the Company for a period of twelve months following August 4,

2020, (the “ROFR”).

On June 21, 2019, the Company closed a registered direct offering of an aggregate of 178,137 ( 1,781,361 pre reverse split) shares of common stock, and in connection therewith, issued to the investors (i) for no additional consideration, Series A warrants to purchase up to an aggregate of 133,603 ( 1,336,021 pre reverse split) shares of common stock, (ii) for nominal additional consideration, Series B warrants to purchase up to a maximum aggregate of 111,632 ( 1,116,320 pre reverse split) shares of common stock and (iii) placement

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

agent warrants to purchase up to 14,251 ( 142,509 pre reverse split) shares of common stock (the “June 2019 Placement Agent Warrants”).

On August 6, 2020, the Company completed a public offering of 1,200,000 ( 12,000,000 pre reverse split) shares of the Company’s common stock at $ 5.0 ($ 0.50 pre-reverse split) per share (the “Offering Price”), pursuant to an underwriting agreement with The Benchmark Company, LLC and Axiom Capital Management, Inc., as representatives of the several underwriters (the “Underwriters”).

On August 13, 2020, the Underwriters exercised their rights to purchase an additional 180,000 ( 1,800,000 pre reverse split) shares of common stock at the Offering Price.

In connection with the offering, the Company issued the Underwriters, on a private placement basis, warrants to purchase up to 56,800 ( 568,000 pre reverse split) shares of common stock (the “Underwriters’ Warrants”).

The Underwriters’ Warrants are exercisable for a period of five years commencing six months from August 4, 2020 at a price per share equal to 125 % of the Offering Price and are exercisable on a “cashless” basis.

As the underwriting agreement indicated, the Underwriters have the right of first refusal to act as lead or joint investment banker, lead or join book-runner and /or joint placement agent, for each and every future public and private equity and debt offering, including all equity linked financings for the Company, or any successor to or any subsidiary of the Company for a period of twelve months following August 4, 2020, (the “ROFR”).

The ROFR was terminated as of February 4, 2021 as disclosed in more details below.

February 10, 2021, the Company completed a registered direct offering of 5,072,465 shares of the Company’s common stock at

$1.38 per share, pursuant to a placement agency agreement with FT Global Capital, Inc., as

exclusive placement agent in connection with this Offering.

In connection with the offering, the Company issued the placement agent

warrants to purchase up to 380,435 shares of its common stock.

These warrants are exercisable for a period of five years commencing 180

days from February 8, 2020 at a price of $1.38 per share and are exercisable on a “cashless”

In addition, the

company issued to The Benchmark Company, LLC and Axiom Capital Management, Inc.

seven percent of the gross proceeds from the

offering and warrants to purchase up to 152,174 shares of its common stock, in consideration for the termination of the ROFR as mentioned

These warrants are exercisable for a period of five years from February 8, 2020 at a price of $1.725 per share.

The strike price of the Company’s Series A

and Series B warrants, the placement agent warrants and the Underwriters’

Warrants are denominated in US$ and the Company’s

functional currency is RMB;

therefore, those warrant shares are not considered indexed to the Company’s own stock which should be

classified as derivative liability.

The Company’s Series A and Series B

warrants, the placement agent warrants, the Underwriters’

Warrants, and the ROFR warrants are not traded in an active securities

therefore, the Company estimates the fair value to those warrants using the Black-Scholes valuation model on June 20, 2019

(the grant date), August 4, 2020 (the grant date), February 10, 2021 (the grant date), March 31, 2020 and March 31,

On February 10, 2021, the Company completed a registered direct offering of 507,247 ( 5,072,465 pre reverse split) shares of the Company’s common stock at $ 13.8 ($ 1.38 pre-reverse split) per share, pursuant to a placement agency agreement with FT Global Capital, Inc., as exclusive placement agent in connection with this offering.

In connection with the offering, the Company issued the placement agent warrants to purchase up to 38,044 ( 380,435 pre reverse split) shares of its common stock.

These warrants are exercisable for a period of five years commencing 180 days from February 8, 2020 at a price of $ 13.8 ($ 1.38 pre-reverse split) per share and are exercisable on a “cashless” basis.

In addition, the company issued to the Underwriters seven percent of the gross proceeds from the offering and warrants to purchase up to 15,218 ( 152,174 pre reverse split) shares of its common stock, in consideration for the termination of the ROFR as mentioned above.

These warrants are exercisable for a period of five years from February 8, 2020 at a price of $ 17.25 ($ 1.725 pre-reverse split) per share.

On May 13, 2021, the Company completed a registered direct offering of 553,192 ( 5,531,916 pre-reverse split) shares of the Company’s common stock at $ 11.75 ($ 1.175 pre-reverse split) per share, pursuant to a securities purchase agreement with certain purchasers dated May 11, 2021.

As a result, the Company raised approximately $ 5.8 million, net of placement agent fees and offering expenses, to support the Company’s working capital requirements.

In connection with the offering, The Company also issued warrants to the investors to purchase a total of 553,192 ( 5,531,916 pre-reverse split) shares of common stock at an exercise price of $ 10.5 ($ 1.05 pre-reverse split) per share (the “May 2021 Investors Warrants”).

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

In connection with the offering, the Company paid the placement agent cash commission of approximately $ 487,500 and issued to it warrants to purchase up to 41,490 ( 414,894 pre-reverse split) shares of common stock at an exercise price of $ 10.5 ($ 1.05 pre reverse split) per share (the “May 2021 Placement Agent Warrants”), which warrants will be exercisable at any time on or after the issuance date and expire on the fifth-year anniversary of their issuance.

On November 10, 2021, the Company completed a private placement of 5,000 shares of the Company’s series A convertible preferred stock at $ 1,000 per share, pursuant to a securities purchase agreement with certain institutional investors.

As a result, the Company raised approximately $ 4.4 million, net of placement agent fees and offering expenses, to support the Company’s working capital requirements.

In connection with the offering, The Company also issued warrants to the investors to purchase a total of 735,295 ( 7,352,941 pre-reverse split) shares of common stock at an exercise price of $ 8.20 ($ 0.82 pre-reverse split) per share (the “November 2021 Investors Warrants”).

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

In connection with the offering, the Company paid the placement agent cash commission of approximately $ 375,000 and issued to it warrants to purchase up to 55,148 ( 551,471 pre-reverse split) shares of common stock at an exercise price of $ 6.80 ($ 0.68 pre-reverse split) per share (the “November 2021 Placement Agent Warrants”), which warrants will be exercisable at any time beginning from the date of six months from the closing of the Offering and expire on the fifth-year anniversary of their issuance.

The Series A Convertible Preferred Stock is redeemable as change of control occur.

A discount to the redemption amount of a contingently redeemable preferred share should be amortized only once it is probable the share will become redeemable.

The Company determined that the redemption is uncertain as the cash redemption feature upon change of control is at the option of the holder, and the redemption date upon the change of control is uncertain.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The strike price of the Company’s Series A and Series B warrants, the placement agent warrants, the Underwriters’ Warrants, the ROFR warrants, and the investors warrants are denominated in US$ and the Company’s functional currency is RMB;

therefore, those warrant shares are not considered indexed to the Company’s own stock which should be classified as derivative liability.

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

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

June 20, 2019

1 unchanged sentence

February 10, 2021

Underwriters’

November 10, 2021

Placement Agent

Underwriters’

Placement Agent

# of shares exercisable*

4 unchanged sentences

Expected volatility

March 31, 2020

Placement Agent

As of March 31, 2022

June 20, 2019

February 10, 2021

November 10, 2021

Underwriters’

# of shares exercisable*

4 unchanged sentences

Expected volatility

March 31, 2021

Underwriters’

As of March 31, 2021

June 20, 2019

August 4, 2020

February 10, 2021

Placement Agent

Underwriters’

Placement Agent

# of shares exercisable*

4 unchanged sentences

Expected volatility

* The Placement Agent Warrants granted on June

** The Placement Agent Warrants granted on February

As of March 31, 2021 and 2020, financial

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

cash, accounts receivable, inventories, finance lease receivables, prepayments, other receivables and other assets, due from related parties,

borrowings from financial institutions, accounts payable, advance from customers, lease liabilities, accrued expenses and other liabilities,

due to related parties and affiliates, and operating and financing lease liabilities, which approximate their fair values because of the

short-term nature of these instruments, and non-current liabilities of borrowings from financial institutions, which approximate their

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

The non-current portion of accounts receivables,

finance lease receivables, and operating and financing lease liabilities were recorded at gross adjusted for the interest using the effective

interest rate method.

The Company believes that the effective interest rates underlying these instruments approximate their fair values

because the Company used its incremental borrowing rate to recognize the present value of these instruments as of March 31, 2021

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.

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 as 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.

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

As of March 31, 2022 and 2021, financial instruments of the Company comprised primarily current assets and current liabilities including cash and cash equivalents, restricted cash, accounts receivable, inventories, finance lease receivables, prepayments, other receivables and other assets, due from related parties, borrowings from financial institutions, accounts payable, advance from customers, lease liabilities, accrued expenses and other liabilities, due to related parties and affiliates, and operating and financing lease liabilities, which approximate their fair values because of the short-term nature of these instruments, and non-current liabilities of borrowings from financial institutions, which approximate their fair values because of the stated loan interest rate to the rate charged by similar financial institutions.

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

The Company believes that the effective interest rates underlying these instruments approximate their fair values because the Company used its incremental borrowing rate to recognize the present value of these instruments as of March 31, 2022 and March 31, 2021.

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(f) 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 as 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.

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

Segment reporting

Operating segments are reported in a manner consistent

with the internal reporting provided to the chief operating decision maker (the “CODM”), which is comprised of certain

members of the Company's management team.

Historically, the Company had one single operating and reportable segment, namely the provision

of an online lending services which was discontinued in the periods after October 17, 2019.

During the year ended March 31,

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

The Company evaluated how the CODM manages the businesses of the

Company to maximize efficiency in allocating resources and assessing performance.

Consequently, the Company presents two operating and

reportable segments as set forth in Notes 1 and 19.

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 payment for automobiles, related insurances and taxes to be paid on behalf

of the automobile purchasers, which funds were held at the third party platforms’

fund accounts and which are unrestricted and immediately

available for withdrawal and use.

Accounts receivable, net

Accounts receivable are recorded at the invoiced

amount less an allowance for any uncollectible accounts and do not bear interest, and are due on demand.

Management reviews the adequacy

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

Management also

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

in the allowance when necessary.

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

and the potential for recovery is considered remote.

As of March 31, 2021 and 2020, allowance for doubtful accounts amounted to $78,167

and $379,689, respectively.

Inventories consist of automobiles which are held

primarily for sale and for leasing purposes, and are stated at lower of cost or net realizable value, as determined using the weighted

average cost method.

Management compares the cost of inventories with the net realizable value and if applicable, an allowance is made

for writing down the inventory to its net realizable value, if lower than cost.

On an ongoing basis, inventories are reviewed for potential

write-down for estimated obsolescence or unmarketable inventories which equals the difference between the costs of inventories and the

estimated net realizable value based upon forecasts for future demand and market conditions.

When inventories are written-down to the

lower of cost or net realizable value, it is not marked up subsequently based on changes in underlying facts and circumstances.

Finance lease receivables, net

Finance lease receivables, which result from sales-type

leases, are measured at discounted present value of (i) future minimum lease payments, (ii) any residual value not subject to

a bargain purchase option as a finance lease receivables on its balance sheet and (iii) accrued interest on the balance of the finance

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

Management also periodically

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

allowance when necessary.

Finance lease receivables is charged off against the allowance after all means of collection have been exhausted

and the potential for recovery is considered remote.

As of March 31, 2021 and 2020, the Company determined no allowance for doubtful

accounts was necessary for finance lease receivables.

As of March 31, 2021 and 2020, finance lease receivables consisted

of the following:

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

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

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

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

Consequently, the Company presents two operating and reportable segments as set forth in Notes 1 and 20.

(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 payment for automobiles, related insurances and taxes to be paid on behalf of the automobile purchasers, which funds 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.

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

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

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

As of March 31, 2022 and March 31, 2021, allowance for doubtful accounts amounted to $ 112,905 and $ 1,739 , respectively, was provided for continuing operations.

As of March 31, 2021, allowance for doubtful accounts amounted to $ 76,428 was provided for discontinued operations.

(j) Inventories

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

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

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

When inventories are written-down to the lower of cost or net realizable value, it is not marked up subsequently

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

based on changes in underlying facts and circumstances.

As of March 31, 2022, impairments of inventories amounted to $ 60,398 was provided for certain vehicles held for sale.

(k) Finance lease receivables, net

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

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

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

As of March 31, 2022 and March 31, 2021, the Company determined no allowance for doubtful accounts was necessary for finance lease receivables.

As of March 31, 2022 and March 31, 2021, finance lease receivables consisted of the following:

Minimum lease payments receivable

3 unchanged sentences

Finance lease receivables, net, non-current portion

Future scheduled minimum lease payments for investments in sales-type

leases as of March 31, 2021 are as follows:

Future scheduled minimum lease payments for investments in sales-type leases as of March 31, 2022 are as follows:

Minimum future

Twelve months ending March 31, 2022

payments receivable

Twelve months ending March 31, 2023

1 unchanged sentence

Twelve months ending March 31, 2025

Property and equipment, net

Property and equipment primarily consist of computer

equipment, which is stated at cost less accumulated depreciation less any provision required for impairment in value.

Depreciation is

computed using the straight-line method with no residual value based on the estimated useful life.

The useful life of property and equipment

is summarized as follows:

(l) Property and equipment, net

Property and equipment primarily consist of automobiles, leasehold improvements, computers and other equipment, which is stated at cost less accumulated depreciation less any provision required for impairment in value.

Depreciation is computed using the straight-line method with no residual value based on the estimated useful life.

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

Leasehold improvements

2 unchanged sentences

Office equipment

The Company reviews property and equipment for

impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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

such asset is considered to be impaired, the impairment recognized is the amount by which the carrying amount of the asset, if any, exceeds

its fair value determined using a discounted cash flow model.

For the years ended March 31, 2021 and 2020, the impairment for property

and equipment was $10,459 and $0, respectively.

Costs of repairs and maintenance are expensed

as incurred and asset improvements are capitalized.

The cost and related accumulated depreciation of assets disposed of or retired are

removed from the accounts, and any resulting gain or loss is reflected in the consolidated statements of operations and comprehensive

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:

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, 2022 and 2021, the Company did no t recognize impairment for property and equipment from continuing operations.

For the years ended March 31, 2022 and 2021, the impairment for property and equipment was $ 32,479 and $ 10,459 from discontinued operations, respectively.

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

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(m) Intangible assets, net

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

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

Online ride-hailing platform operating license

Separately identifiable intangible assets to be

held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets

may not be recoverable.

Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use

of the asset and its eventual disposition.

Measurement of any impairment loss for identifiable intangible assets is based on the amount

by which the carrying amount of the assets exceeds the fair value of the assets.

For the years ended March 31, 2021 and 2020, there

was $0 and $265,525 impairment, respectively, on customer relationship from Sichuan Senmiao as a result of the Company’s decision

to discontinue the P2P lending business in October 2019 of intangible assets.

Goodwill represents the excess of the consideration

paid of an acquisition over the fair value of the net identifiable assets of the acquired subsidiaries at the date of acquisition.

is not amortized and is tested for impairment at least annually, more often when circumstances indicate impairment may have occurred.

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, 2022 and 2021, there was no impairment of intangible assets.

Goodwill represents the excess of the consideration paid of an acquisition over the fair value of the net identifiable assets of the acquired subsidiaries at the date of acquisition.

Goodwill is not amortized and is tested for impairment at least annually, more often when circumstances indicate impairment may have occurred.

Goodwill is carried at cost less accumulated impairment losses.

If impairment exists, goodwill is immediately written off to its fair

value and the loss is recognized in the consolidated statements of operations and comprehensive loss.

Impairment losses on goodwill are

not reversed.

Company reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment

may exist annually or more frequently if events and circumstances indicate that it is more likely than not that an impairment has occurred.

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

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

below is required.

The first step compares the fair values of each

reporting unit to its carrying amount, including goodwill.

If the fair value of each reporting unit exceeds its carrying amount, goodwill

is not considered to be impaired and the second step will not be required.

If the carrying amount of a reporting unit exceeds

its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill.

The implied fair value of goodwill is determined in a manner similar to accounting for a business acquisition with the allocation of the

assessed fair value determined in the first step to the assets and liabilities of the reporting unit.

The excess of the fair value of

the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill.

Estimating fair value

is performed by utilizing various valuation techniques, with the primary technique being a discounted cash flow.

For years ended March 31, 2021 and 2020,

no impairment was recorded for goodwill.

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.

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.

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 accompanying consolidated statements

of operations and comprehensive loss as “change in fair value of derivative liabilities”.

Revenue recognition

The Company recognized its revenue under Accounting

Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606).

ASC 606 establishes principles for reporting

information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide

goods or services to customers.

The core principle requires an entity to recognize revenue to depict the transfer of goods or services

to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services

recognized as performance obligations are satisfied.

It also requires the Company to identify contractual performance obligations and

determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers

to a customer.

To achieve that core principle, the Company applies

the five steps defined under ASC 606:

(i) identify the contract(s) with a customer, (ii) identify the performance obligations

in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in

the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company accounts for a contract with a customer

when the contract is committed in writing, the rights of the parties, including payment terms, are identified, the contract has commercial

substance and consideration to collect is substantially probable.

As of March 31, 2021, the Company had outstanding

contracts for automobile transaction and related services amounting to $488,328, of which $315,135 is expected to be completed within twelve months

after March 31, 2021, and $173,194 is expected to be completed after March 31, 2022.

Disaggregated information of revenues by business

lines are as follows:

For Years Ended

If impairment exists, goodwill is immediately written off to its fair value and the loss is recognized in the consolidated statements of operations and comprehensive loss.

Impairment losses on goodwill are not reversed.

The Company reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist annually or more frequently if events and circumstances indicate that it is more likely than not that an impairment has occurred.

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

If the Company believes, as a result of the qualitative carrying amount, the two-step quantitative impairment test described below is required.

The first step compares the fair values of each reporting unit to its carrying amount, including goodwill.

If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required.

If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill.

The implied fair value of goodwill is determined in a manner similar to accounting for a business acquisition with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit.

The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill.

Estimating fair value is performed by utilizing various valuation techniques, with the primary technique being a discounted cash flow.

For the years ended March 31, 2022 and 2021, the Company recorded an impairment of $ 139,930 and $ 0 against goodwill, respectively.

(o) Earnings (loss) per share

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

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

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

As of March 31, 2022, the Company’s dilutive securities from series A convertible preferred stock are convertible into approximately 735,295 ( 7,352,941 pre-reverse split) shares of common stock.

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(p) 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 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.

(q) 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”.

(r) Revenue recognition

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

ASC 606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers.

The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

It also requires the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer.

To achieve that core principle, the Company applies the five steps defined under ASC 606:

(i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

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

As of March 31, 2022, the Company had outstanding contracts for automobile transaction and related services amounting to $ 136,418 , of which $ 91,448 is expected to be completed within twelve months after March 31, 2022, and $ 44,971 is expected to be completed after March 31, 2023.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Disaggregated information of revenues by business lines are as follows:

For the Years Ended

Automobile Transaction and Related Services (Continuing Operations)

- Revenues from sales of automobiles

- Operating lease revenues from automobile rentals

- Service fees from management and guarantee services

- Service fees from NEVs leasing

- Financing revenues

- Service fees from management and guarantee services

- Service fees from automobile purchase services

- Facilitation fees from automobile transactions

- Revenues from sales of automobiles

- Other service fees

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- Service fees

- Website development revenue

Total revenues from Online Lending Services (Discontinued Operations)

Automobile Transaction and Related Services (Discontinued Operations)

-Operating lease revenues from automobile rentals

- Commissions from online ride-hailing platforms

- Service fees from NEVs leasing

-Financing revenues

-Service fees from management and guarantee services

-Facilitation fees from automobile transactions

-Other service fees

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

Total Revenues from Discontinued Operations

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Automobile transaction and related services

Sales of automobiles –

The Company generates

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

(“Mashang Chuxing”).

The control over the automobile is transferred to the purchaser along with the delivery of automobiles.

The amount of the revenue is based on the sale price agreed by Hunan Ruixi or Yicheng and the counterparties, including Jinkailong, who

acts on behalf of its customers.

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

at a point in time.

Accounts receivable related to the revenue are being collected over 36 to 48 months.

The interest component is included in the non-current

portion of the accounts receivable.

Operating lease revenues from automobile rentals

–The Company generates revenue from sub-leasing automobiles from some online ride-hailing drivers or leasing its own automobiles.

The Company recognizes revenue wherein an automobile is transferred to the leasee and the leasee has the ability to control the asset,

is accounted for under ASC Topic 842.

Operating lease revenues from automobile rentals –The Company generates revenue from sub-leasing automobiles from 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.

Rental periods are short term in nature,

generally are twelve months or less.

Service fees from management and guarantee services

Over 95% of the Company’s customers are online ride-hailing drivers.

The drivers sign affiliation agreements with the Company,

pursuant to which the Company provides them with management and guarantee services during the affiliation period.

Service fees for management

and guarantee services are paid by such automobile purchasers on a monthly basis for the management and guarantee services provided

during the affiliation period.

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

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

The drivers sign affiliation agreements with the Company, pursuant to which the Company provides them with management and guarantee services during the affiliation period.

Service fees for management and guarantee services are paid by such automobile purchasers on a monthly basis for the management and guarantee services provided during the affiliation period.

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

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

Services fees from automobile purchase services are paid by automobile purchasers for a series of the services provided to them

throughout the purchase process such as credit assessment, preparation of financing application materials, assistance with closing of

financing transactions, license and plate registration, payment of taxes and fees, purchase of insurance, installment of GPS devices,

ride-hailing driver qualification and other administrative procedures.

The amount of these fees is based on the sales price of the automobiles

and relevant services provided.

The Company recognizes revenue when all the services are completed and an automobile is delivered to the

purchaser at a point in time.

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

The control over the automobile is transferred to the purchaser along with the delivery of automobiles.

The amount of the revenue is based on the sale price agreed by Hunan Ruixi or Jinkailong and the customers.

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

Accounts receivable related to the revenue are being collected over 36 to 48 months .

The interest component is included in the non-current

portion of the accounts receivable.

Facilitation fees from automobile transactions

Facilitation fees from automobile purchase transactions are paid by the Company’s customers including third-party sales

teams or the automobile purchasers for the facilitation of the sales and financing of automobiles.

The Company attracts automobile purchasers

through third-party sales teams or its own sales department.

For the sales facilitated between third-party sales teams and automobile

purchasers, the Company charges the fees to the third-party sales teams, which derived from the commission paid by the automobile purchasers

to the third-party sales teams.

Relating to sales facilitated between automobile purchasers and dealers, the Company charges the fees

to the automobile purchasers.

The Company recognizes revenue from facilitation fees when the titles are transferred to the purchasers

at a point in time.

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

The fees charged to third-party sales teams or automobile purchasers are paid before the automobile purchase transactions are consummated.

These fees are non-refundable upon the delivery of automobiles.

The interest component is included in the non-current portion of the accounts receivable.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Service fees from NEVs leasing and automobile purchase services – Services fees from NEVs leasing and automobile purchase services are paid by lessees who rent new energy electric vehicles from the Company or automobile purchasers for a series of the services provided to them throughout the purchase process such as credit assessment, preparation of financing application materials, assistance with closing of financing transactions, license and plate registration, payment of taxes and fees, purchase of insurance, installment of GPS devices, ride-hailing driver qualification and other administrative procedures.

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

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

Accounts receivable related to the revenue from NEVs leasing is collected upon the NEVs are delivered to lessees while accounts receivables from purchase services are being collected over 36 to 48 months .

The interest component is included in the non-current portion of the accounts receivable.

Online ride-hailing platform services

The Company generates revenue from providing services

to online ride-hailing drivers (“Drivers”) to assist them in providing transportation services to riders ("Riders")

looking for taxi/ride-hailing services.

The Company earns commissions for each completed ride in an amount equal to the difference between

an upfront quoted fare and the amount earned by a Driver based on actual time and distance for the ride charged to the Rider.

the Company bears a single performance obligation in the transaction of connecting Drivers with Riders to facilitate the completion of

a successful transportation service for Riders.

The Company recognizes revenue upon completion of a ride as the single performance obligation

is satisfied and the Company has the right to receive payment for the services rendered upon the completion of the ride.

The Company evaluates

the presentation of revenue on a gross or net basis based on whether it controls the service provided to the Rider and is the principal

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

"net").

Since the Company is not primarily responsible for ride-hailing services provided to Riders, it does not have inventory risk related to

the services.

The Company generates revenue from providing services to online ride-hailing drivers (“Drivers”) to assist them in providing transportation services to riders (“Riders”) looking for taxi/ride-hailing services.

The Company earns commissions for each completed ride in an amount equal to the difference between an upfront quoted fare and the amount earned by a Driver based on actual time and distance for the ride charged to the Rider.

As a result, the Company bears a single performance obligation in the transaction of connecting Drivers with Riders to facilitate the completion of a successful transportation service for Riders.

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

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

Since the Company is not primarily responsible for ride-hailing services provided to Riders, it does not have inventory risk related to the services.

Thus, the Company recognizes revenue at a net basis.

The Company accounts for leases in accordance

with ASC 842.

The Company accounts for leases in accordance with ASC 842.

The two primary accounting provisions the Company uses to classify transactions as sales-type or operating leases are:

review of the lease term to determine if it is for the major part of the economic life of the underlying equipment (defined as greater

and (ii) a review of the present value of the lease payments to determine if they are equal to or greater than substantially

all of the fair market value of the equipment at the inception of the lease (defined as greater than 90%).

Automobile 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 lease term for its automobiles and the automobiles

will be used for 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.

A portion of the Company’s direct sales

of automobile to end customers are made through bundled lease arrangements which typically include automobile, services (automobile purchase

services, facilitation services, and management and guarantee services) and financing components where the customer pays a single negotiated

fixed minimum monthly payment for all elements over the contractual lease term.

Revenues under these bundled lease arrangements are allocated

considering the relative standalone selling prices of the lease and non-lease deliverables included in the bundled arrangement and the

financing components.

Lease deliverables include the automobile and financing, while the non-lease deliverables generally consist of the

services and repayment of advanced fees made on behalf of its customers.

The Company considers the fixed payments for purposes of allocation

to the lease elements of the contract.

The fixed minimum monthly payments are multiplied by the number of months in the contract term

to arrive at the total fixed lease payments that the customer is obligated to make over the lease term.

Amounts allocated to the automobile

and financing elements are then subjected to the accounting estimates under ASC 842 to ensure the values reflect standalone selling prices.

The remainder of any fixed payments are allocated to non-lease elements (automobile purchase services, facilitation fees, and management

and guarantee services), for which these revenues are recognized in a manner consistent with the guidance for service fees from automobile

purchase services, facilitation fees from automobile transactions, and service fees from management and guarantee services as discussed

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, 2021, the

Company's pricing interest rate was 6.0% per annum.

Deferred income tax liabilities and assets are

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

of assets and liabilities.

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

tax expenses (benefits) if applicable.

Deferred tax is calculated using the balance sheet

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

the consolidated financial statements and the corresponding tax basis.

In principle, deferred tax liabilities are recognized for all taxable

temporary differences.

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

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

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

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

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

Current income taxes are provided for in accordance with the laws

of the relevant tax authorities.

An uncertain tax position is recognized as a benefit only if it is “more likely than not”

that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur.

The amount recognized is

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

Penalties and interest incurred related

to underpayment of income tax are classified as income tax expense in the period 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,

2021 and 2020.

As of March 31, 2021, the calendar years ended December 31, 2015 through 2020 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.

Comprehensive loss

Comprehensive loss includes net loss and foreign

currency adjustments.

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

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

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 accelerated attribution method, net of estimated forfeitures, over

the requisite service period.

(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 lease term for its automobiles and the automobiles will be used for 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.

A portion of the Company’s direct sales of automobile to end customers are made through bundled lease arrangements which typically include automobile, services (automobile purchase services, facilitation services, and management and guarantee services) and financing components where the customer pays a single negotiated fixed minimum monthly payment for all elements over the contractual lease term.

Revenues under these bundled lease arrangements are allocated considering the relative standalone selling prices of the lease and non-lease deliverables included in the bundled arrangement and the financing components.

Lease deliverables include the automobile and financing, while the non-lease deliverables generally consist of the services and repayment of advanced fees made on behalf of its customers.

The Company considers the fixed payments for purposes of allocation to the lease elements of the contract.

The fixed minimum monthly payments are multiplied by the number of months in the contract term to arrive at the total fixed lease payments that the customer is obligated to make over the lease term.

Amounts allocated to the automobile and financing elements are then subjected to the accounting estimates under ASC 842 to ensure the values reflect standalone selling prices.

The remainder of any fixed payments are allocated to non-lease elements (automobile purchase services, facilitation fees, and management and guarantee services), for which

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

these revenues are recognized in a manner consistent with the guidance for service fees from automobile purchase services, facilitation fees from automobile transactions, and service fees from management and guarantee services as discussed above.

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, 2022, the Company’s pricing interest rate was 6.0 % per annum.

(s) 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, 2022 and March 31, 2021.

As of March 31, 2022, the calendar years ended December 31, 2016 through 2020 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.

(t) Comprehensive income (loss)

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

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

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

(u) 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 accelerated attribution method, net of estimated forfeitures, over the requisite service period.

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

At each date of measurement, the Company reviews

internal and external sources of information to assist in the estimation of various attributes to determine the fair value of the share-based

awards granted by the Company, including but not limited to the fair value of the underlying shares, expected life, expected volatility

and expected forfeiture rates.

At each date of measurement, the Company reviews internal and external sources of information to assist in the estimation of various attributes to determine the fair value of the share-based awards granted by the Company, including but not limited to the fair value of the underlying shares, expected life, expected volatility and expected forfeiture rates.

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

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.

The Company accounts for leases in accordance

with ASC 842.

Beginning in the year ended March 31, 2020, the Company entered into certain agreements as a lessor under which it

leased automobiles for a short-term period (usually under 12 months) to ride-hailing car service drivers.

The Company also entered 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 finance lease (as a lessee) or as a direct financing or sales-type lease (both as a lessor):

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.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company accounts for leases in accordance with ASC 842.

Beginning in the fiscal year ended March 31, 2020, the Company entered into certain agreements as a lessor under which it leased automobiles for a short-term period (usually under 12 months) to ride-hailing car service drivers.

The Company also entered 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 finance lease (as a lessee) or as a direct financing or sales-type lease (both as a lessor):

● The lease transfers ownership of the underlying asset to the lessee by the end of the lease term;

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● The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.

Leases that do not meet any of

the above criteria are accounted for as operating leases.

The Company combines lease and

non-lease components in its contracts under Topic 842, when permissible.

Finance and operating lease ROU assets and lease

liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

Since the implicit

rate for the Company’s leases is not readily determinable, the Company use 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 consider 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.

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 an accretion basis as amortization expense, while

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

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

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

The Company reviews the impairment of its ROU

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

The Company reviews the recoverability of its long-lived

assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable.

The assessment

of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax

cash flows of the related operations.

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

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

For the year ended

March 31, 2021, the Company recognized impairment loss of $120,380 on its finance lease ROU assets.

Reclassification

Certain items of operating expenses in the consolidated

statements of operations and comprehensive of comparative period have been reclassified to conform to the consolidated financial statements

for the current period.

The reclassification has no impact on net loss.

Significant risks and uncertainties

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

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

The amortization of finance ROU assets is recognized on an accretion 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.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable.

The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations.

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

For the years ended March 31, 2022 and 2021, the Company recognized impairment loss on its finance lease ROU assets of $ 3,044 and $ 10,953 , respectively, from its continuing operations.

For the years ended March 31, 2022 and 2021, the Company recognized impairment loss of $ 0 and $ 109,427 on its finance lease ROU assets from its discontinued operations, respectively.

(w) Significant risks and uncertainties

1) Credit risk

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

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

On March 31, 2021 and 2020, approximately $1,5 60,000 and $2,600, respectively, was deposited with a bank in the United States which is insured by the U.S.

On March 31, 2022 and March 31, 2021, approximately $ 117,000 and $ 1,560,000 , respectively, were deposited with a bank in the United States which is insured by the U.S.

government up to $ 250,000 .

On March 31, 2021 and 2020, approximately $2,339,000 and $820,000, 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 is insured for a maximum of approximately $70,000 (RMB500,000).

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

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

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

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

In measuring the credit risk of accounts receivables due from the automobile

purchasers (the “customers”), the Company mainly reflects the “probability of default”

by the customer on its

contractual obligations and considers the current financial position of the customer and the risk exposures to the customer and its likely

future development.

However, as the Company only commenced the automobile transaction and related services since November 2018, there

was limited historic default data and other information to make an estimate on the expected credit losses.

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, 2021 and 2020,

the Company provided an allowance for doubtful accounts of $78,167 and $379,689, respectively.

For the years ended March 31, 2021

and 2020, the Company wrote off accounts receivable of $485,384 and $1,410,736, respectively, which represents due from automobile purchasers.

In measuring the credit risk of accounts receivables due from the borrowers and investors who formally used the Company’s discontinued P2P lending platform (the “P2P customers”), the Company mainly reflects the “probability of default”

by the P2P customers on its contractual obligations and considers the current financial position of the P2P customers and the risk exposures to the P2P customers and its likely future development.

Historically, most of the borrowers would pay the transaction fee within one year upon (i) disbursement of the proceeds for loans or (ii) full payment of principal and interest of loan.

Most of investors would pay the service fee within one year upon receipt of their investment returns.

On October 17, 2019, the Board approved the plan for the Company to discontinue and wind down its online lending services business.

For the year ended March 31, 2021, no additional accounts receivable were written-off.

On March 31, 2022 and March 31, 2021, approximately $ 874,000 and $ 2,339,000 , 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 $ 80,000 (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.

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

As of March 31, 2022 and March 31, 2021, allowance for doubtful accounts amounted to $ 112,905 and $ 1,739 was provided for continuing operations, respectively.

As of March 31, 2021, allowance for doubtful accounts amounted to $ 76,428 was provided for discontinued operations.

For the years ended March 31, 2022 and 2021, the Company wrote off accounts receivable of $ 44,227 and $ 89,921 from continuing operations, respectively, which represent due from automobile purchasers from continuing operation.

For the years ended March 31, 2022 and 2021, the Company wrote off accounts receivable of $ 16,273 and $ 395,463 from discontinued operations, respectively, which represent due from automobile purchasers.

2) Foreign currency risk

of March 31, 2021 and 2020, substantially all of the Company’s operating activities and major assets and liabilities, except

for the cash deposit of approximately $2, 073,000 and $818,000, 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 (“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.

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 significant affected.

RMB were appreciated from 7.08 RMB into

US$1.00 at March 31, 2020 to 6.55 RMB into US$1.00 at March 31, 2021.

The Company believes that the VIE Agreements and

the Voting Agreements are in compliance with PRC law and are legally enforceable.

However, uncertainties in the PRC legal system could

limit the Company’s ability to enforce these contractual arrangements.

The shareholders of Sichuan Senmiao are also shareholders

of the Company and therefore have no current interest in seeking to act contrary to the contractual arrangements.

However, if the shareholders

of Sichuan Senmiao were to reduce their interest in the Company, their interests may diverge from that of the Company and that may potentially

increase the risk that they would seek to act contrary to the contractual terms.

However, the other shareholders of Jinkailong are not

shareholders of the Company and there is a risk they may act in contrary to the interests of the shareholders of the Company.

The Company cannot assure that when conflicts

of interest arise, the shareholders of Sichuan Senmiao or the other shareholders of Jinkailong will act in the best interests of the Company

or that conflicts of interests will be resolved in the Company’s favor.

In addition, the Company’s ability to control Sichuan

Senmiao and Jinkailong via the VIE Agreements and Voting Agreements may not be as effective as direct equity ownership.

Further, the VIE Agreements or the Voting Agreements

may not be enforced in China if the PRC government or courts consider those contracts contravene PRC laws and regulations or otherwise

not enforceable for public policy reasons.

If the VIE Agreements or the Voting Agreements were found to be in violation of any existing

PRC laws and regulations, the PRC government could:

revoke the VIE’s business and operating licenses;

require the VIEs to discontinue or restrict operations;

restrict the Company’s right to collect revenues;

block the Company’s websites;

require the Company to restructure the operations in such a way as to compel the Company to establish a new enterprise, re-apply for the necessary licenses or relocate our businesses, staff and assets;

impose additional conditions or requirements with which the Company may not be able to comply;

take other regulatory or enforcement actions against the Company that could be harmful to the Company’s business.

Recently issued accounting standards

In June 2016, the FASB issued new accounting

guidance ASU 2016-13 for recognition of credit losses on financial instruments, which is effective January 1, 2020, with early adoption

permitted on January 1, 2019.

The guidance introduces a new credit reserving model known as the Current Expected Credit Loss (“CECL”)

model, which is based on expected losses, and differs significantly from the incurred loss approach used today.

The CECL model requires

measurement of expected credit losses not only based on historical experience and current conditions, but also by including reasonable

and supportable forecasts incorporating forward-looking information and will likely result in earlier recognition of credit reserves.

As of March 31, 2022 and March 31, 2021, substantially all of the Company’s operating activities and major assets and liabilities, except for the cash deposit of approximately $ 117,000 and $ 2,073,000 , 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 (“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 was appreciated from 6.55 RMB into US$1.00 on March 31, 2021 to 6.34 RMB into US$1.00 on March 31, 2022.

(x) Reclassification

Certain items of operating expenses in the consolidated statements of operations and comprehensive of comparative period have been reclassified to conform to the consolidated financial statements for the current period.

The reclassification has no impact on net loss.

(y) Recently issued accounting standards

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

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

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

In November 2019, the FASB issued ASU No.

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

2016-13 for private companies,

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

The new effective date for these

preparers is for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

has not yet adopted this update and it will become effective on January 1, 2023 assuming the Company will remain eligible to be smaller

reporting company.

The Company is currently evaluating the impact of this new standard on Company’s consolidated financial statements

and related disclosures.

CECL adoption will have broad impact on the financial statements of

financial services firms, which will affect key profitability and solvency measures.

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

2016-13 for private companies, not-for-profit organizations and certain smaller reporting companies applying for credit losses standard.

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

The Company has not yet adopted this update and it will become effective on April 1, 2023, assuming the Company will remain eligible to be smaller reporting company.

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

CECL adoption will have broad impact on the financial statements of financial services firms, which will affect key profitability and solvency measures.

Some of the more notable expected changes include:

2 unchanged sentences

- Increased reserve levels may lead to a reduction in capital levels.

As a result of higher reserving levels, the expectation is that CECL will reduce cyclicality in financial firms’

results, as higher reserving in “good times”

will mean that less dramatic reserve increases will be loan related income (which will continue to be recognized on a periodic basis based on the effective interest method) and the related credit losses (which will be recognized up front at origination).

- As a result of higher reserving levels, the expectation is that CECL will reduce cyclicality in financial firms’ results, as higher reserving in “good times” will mean that less dramatic reserve increases will be loan related income (which will continue to be recognized on a periodic basis based on the effective interest method) and the related credit losses (which will be recognized up front at origination).

This will make periods of loan expansion seem less profitable due to the immediate recognition of expected credit losses.

Periods of stable or declining loan levels will look comparatively profitable as the income trickles in for loans, where losses had been previously recognized.

December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes”.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes”.

The amendments in this Update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing

For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those

fiscal years, beginning after December 15, 2020.

For all other entities, the amendments are effective for fiscal years beginning

after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

Early adoption of the amendments

is permitted, including adoption in any interim period for (1) public business entities for periods for which financial statements

have not yet been issued and (2) all other entities for periods for which financial statements have not yet been made available for

An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning

of the annual period that includes that interim period.

Additionally, an entity that elects early adoption must adopt all the amendments

in the same period.

The adoption of this standard on January 1, 2021 did not have a material impact on its consolidated financial

In August 2020, the FASB issued ASU 2020-06,

“Debt –

Debt Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging –

Contracts in Entity’s

Own Equity (Subtopic 815-40)”.

The amendment in this Update is to address issues identified as a result of the complexity associated

with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and

For convertible instruments, the Board decided to reduce the number of accounting models for convertible debt instruments and

convertible preferred stock.

Limiting the accounting models results in fewer embedded conversion features being separately recognized

from the host contract as compared with current GAAP.

Convertible instruments that continue to be subject to separation models are (1) those

with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative,

and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial

premiums for which the premiums are recorded as paid-in capital.

The amendments in this Update are effective for public business entities

that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies

as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within

those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim

periods within those fiscal years.

The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal

The Company does not believe the adoption of this ASU would have a material effect on the Company’s consolidated financial

statements and related disclosures.

The Company does not believe other recently issued

but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position,

statements of operations and cash flows of the Company.

The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

Early adoption of the amendments is permitted, including adoption in any interim period for (1) public business entities for periods for which financial statements have not yet been issued and (2) all other entities for periods for which financial statements have not yet been made available for issuance.

An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period.

Additionally, an entity that elects early adoption must adopt all the amendments in the same period.

The adoption of this standard on April 1, 2021 did not have a material impact on its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, “Debt – Debt Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)”.

The amendment in this Update is to address issues identified as a result of the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity.

For convertible instruments, the Board decided to reduce the number of accounting models for convertible debt instruments and convertible preferred stock.

Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP.

Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital.

The amendments in this Update are effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year.

The Company has adopted this standard for the fiscal year beginning April 1, 2021.

In May 2021, The FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40)”.

The amendments in this Update provide the following guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic:

(1) An entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument.

(2) An entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as follows:

For a modification or an exchange that is a part of or directly related to a modification or an exchange of an existing debt instrument or line-of-credit or revolving-debt arrangements (hereinafter, referred to as a “debt” or “debt instrument”), as the difference between the fair value of the modified or exchanged written call option and the fair value of that written call option immediately before it is modified or exchanged.

Specifically, an entity should consider:

An increase or a decrease in the fair value of the modified or exchanged written call option in applying the 10 percent cash flow test and/or calculating the fees between debtor and creditor in accordance with Subtopic 470-50, Debt—Modifications and Extinguishments.

An increase (but not a decrease) in the fair value of the modified or exchanged written call option in calculating the third-party costs in accordance with Subtopic 470-50.

For all other modifications or exchanges, as the excess, if any, of the fair value of the modified or exchanged written call option over the fair value of that written call option immediately before it is modified or exchanged.

An entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange on the basis of the substance of the transaction, in the same manner as if cash had been paid as consideration, as follows:

A financing transaction to raise equity.

The effect should be recognized as an equity issuance cost in accordance with the guidance in Topic 340, Other Assets and Deferred Costs.

A financing transaction to raise or modify debt.

The effect should be recognized as a cost in accordance with the guidance in Topic 470, Debt, and Topic 835, Interest.

Other modifications or exchanges that are not related to financings or compensation for goods or services or other exchange 3 transactions within the scope of another Topic.

The effect should be recognized as a dividend.

For entities that present EPS in accordance with Topic 260, that dividend should be an adjustment to net income (or net loss) in the basic EPS calculation.

An entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option to compensate for goods or services in accordance with the guidance in Topic 718, Compensation—Stock Compensation.

In a multiple-element transaction (for example, one that includes both debt financing and equity financing), the

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

total effect of the modification should be allocated to the respective elements in the transaction.

The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

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

Adoption of this new update will not materially impact the Company’s consolidated financial statements and related disclosures.

In July 2021, The FASB issued ASU 2021-05, “Leases (Topic 842):

Lessors—Certain Leases with Variable Lease Payments” The amendments in this Update affect lessors with lease contracts that (1) have variable lease payments that do not depend on a reference index or a rate and (2) would have resulted in the recognition of a selling loss at lease commencement if classified as sales-type or direct financing.

The amendments amend the lease classification requirements for lessors to align them with practice under Topic 840.

Lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met:

(1) The lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria in paragraphs 842-10-25-2 through 25-3.

(2) The lessor would have otherwise recognized a day-one loss.

When a lease is classified as operating, the lessor does not recognize a net investment in the lease, does not derecognize the underlying asset, and, therefore, does not recognize a selling profit or loss.

The leased asset continues to be subject to the measurement and impairment requirements under other applicable GAAP 3 before and after the lease transaction (for example, Topic 360, Property, Plant, and Equipment).

The amendments are effective for fiscal years beginning after December 15, 2021, for all entities, and interim periods within those fiscal years for public business entities and interim periods within fiscal years beginning after December 15, 2022, for all other entities.

Adoption of this new update will not materially impact the Company’s consolidated financial statements and related disclosures.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows of the Company.

BUSINESS COMBINATION

On September 11, 2020, Senmiao Consulting

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

agreed to make an investment of RMB3.16 million (approximately $0.5 million) in XXTX in cash in exchange for a 51% equity interest.

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

a majority owned subsidiary of Senmiao Consulting.

On February 5, 2021, Senmiao Consulting and all the shareholders of XXTX entered

into XXTX Increase Investment Agreement, a supplementary agreement related to XXTX Investment Agreement.

Under the XXTX Increase Investment

Agreement, all shareholders of XXTX agreed to increase the total registered capital of XXTX to RMB50.8 million (approximately $7.8 million).

Senmiao Consulting shall pay another investment amounted to RMB36.84 million (approximately $5.7 million) in cash in exchange of additional

27.74% of XXTX’s equity interest.

As of the issuance date of these consolidated financial statements, Senmiao Consulting has made

a capital contribution of RMB19.8 million (approximately $3.0 million) to XXTX and the remaining amount is expected to be paid before

December 31, 2025.

The Company operates a ride-hailing platform through XXTX.

The Company’s acquisition of XXTX was accounted

for as a business combination in accordance with ASC 805.

The Company has allocated the purchase price of XXTX based upon the fair value

of the identifiable assets acquired and liabilities assumed on the acquisition date.

The Company estimated the fair values of the assets

acquired and liabilities assumed at the acquisition date in accordance with the business combination standard issued by the FASB with

the valuation methodologies using level 3 inputs, except for other current assets and current liabilities were valued using the cost approach.

Management of the Company is responsible for determining the fair value of assets acquired, liabilities assumed and intangible assets

identified as of the acquisition date and considered a number of factors including valuations from independent appraisers.

Acquisition-related

costs incurred for the acquisitions are not material and have been expensed as incurred in general and administrative expense.

The following table summarizes the fair value

of the identifiable assets acquired and liabilities assumed on the acquisition date, which represents the net purchase price allocation

on the date of the acquisition of XXTX based on valuation performed by an independent valuation firm engaged by the Company and translated

the fair value from RMB to USD using the exchange rate on October 23, 2020 at the rate of USD 1.00 to RMB 6.69.

As of March 31, 2021, the Company acquired

$8,065 in cash, net of cash paid to XXTX in the acquisition of XXTX.

The remaining purchase consideration of approximately $0.3 million

from XXTX Investment Agreement signed on September 11, 2020 and approximately $5.7 million additional capital investment from XXTX

Increase Investment Agreement signed on February 5, 2020 mentioned above are expected to be paid by the Company by December 31,

Under ASC 805-30-30-1, goodwill is calculated

On September 11, 2020, Senmiao Consulting entered into an investment agreement (“XXTX Investment Agreement”) relating to XXTX with all the original shareholders of XXTX, pursuant to which Senmiao Consulting agreed to make an investment of RMB 3.16 million (approximately $ 0.5 million) in XXTX in cash in exchange for a 51 % equity interest.

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

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

Under the XXTX Increase Investment Agreement, all shareholders of XXTX agreed to increase the total registered capital of XXTX to RMB 50.8 million (approximately $ 7.8 million).

Senmiao Consulting shall pay another investment amounted to RMB 36.84 million (approximately $ 5.7 million) in cash in exchange of additional 27.74 % of XXTX’s equity interest.

In October 2021, The Company, Senmiao Consulting, XXTX and its shareholders entered into a Share Swap Agreement, pursuant to which the Company, through Senmiao Consulting, purchased all of the equity shares of XXTX held by its shareholders by issuing a total of 533,167 ( 5,331,667 pre reverse split) shares of the Company’s common stock to XXTX’s Shareholders.

Upon closing, the Company, through Senmiao Consulting, owns 100 % of the equity interests in XXTX.

On November 9, 2021, the issuance of 533,167 ( 5,331,667 pre reverse split) shares of the Company’s common stock for this transaction has been completed and on March 31, 2022, the registration procedures for the change in shareholders have been completed.

As of the filing date of these consolidated financial statements, Senmiao Consulting has made a capital contribution of RMB 36.86 million (approximately $ 5.81 million) to XXTX and the remaining amount is expected to be paid before December 31, 2025.

The Company’s acquisition of XXTX was accounted for as a business combination in accordance with ASC 805.

The Company has allocated the purchase price of XXTX based upon the fair value of the identifiable assets acquired and liabilities assumed on the acquisition date.

The Company estimated the fair values of the assets acquired and liabilities assumed at the acquisition date in accordance with the business combination standard issued by the FASB with the valuation methodologies using level 3 inputs, except for other current assets and current liabilities were valued using the cost approach.

Management of the Company is responsible for determining the fair value of assets acquired, liabilities assumed and intangible assets identified as of the acquisition date and considered a number of factors including valuations from independent appraisers.

Acquisition-related costs incurred for the acquisitions are not material and have been expensed as incurred in general and administrative expense.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the fair value of the identifiable assets acquired and liabilities assumed on the acquisition date, which represents the net purchase price allocation on the date of the acquisition of XXTX based on valuation performed by an independent valuation firm engaged by the Company and translated the fair value from RMB to USD using the exchange rate on October 23, 2020 at the rate of USD 1.00 to RMB 6.69 .

As of March 31, 2022, the Company acquired $ 8,065 in cash, net of cash paid to XXTX in the acquisition of XXTX.

The remaining purchase consideration of approximately $ 0.3 million from XXTX Investment Agreement signed on September 11, 2020 and approximately $ 5.7 million additional capital investment from XXTX Increase Investment Agreement signed on February 5, 2021 mentioned above are expected to be paid by the Company by December 31, 2025.

Under ASC 805-30-30-1, goodwill is calculated as follows as of March 31, 2022:

Purchase consideration paid

7 unchanged sentences

Total fair value of net assets of XXTX

Goodwill as of the acquisiton date

Goodwill as of the acquisition date

Effect of exchange rate changes on goodwill

impairment loss of goodwill

Goodwill as of March 31, 2022

DISCONTINUED OPERATIONS

On October 17, 2019, the Board approved the

Plan under which the Company has discontinued and is winding down its online P2P lending services business.

The Company determined that

the continued operation of its online P2P lending services business was not viable in light of the tightened regulations on online peer-to-peer

lending in China generally and the unofficial request from local regulator to reduce the Company’s online peer-to-peer lending transaction

volume on a monthly basis.

The Company also determined that the discontinuation of its online P2P lending services business would allow

the Company to focus its resources on its automobile financing facilitation and transaction business.

In connection with the Plan, the

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

the platform.

The decision and action taken by the Company of discontinuing the online lending services business represented a major shift

that will have a major effect on the Company’s operations and financial results, which triggers discontinued operations accounting

in accordance with ASC 205-20-45.

The fair value of discontinued operations, determined

as of October 17, 2019, includes estimated consideration expected to be received, less costs to sell.

After consideration of the

determination of fair value of the discontinued operations including the assumption of all the outstanding loans from investors on the

platform, $143,668 of accounts receivable, $3,760,599 of other receivables, and $143,943 of prepayments for impaired intangible assets

were indicated as of the date the Company’s Board of Directors approved the winding down of the Company’s online P2P lending

services business on October 17, 2019, and the Company recognized $4,048,210 provision for doubtful accounts as of September 30,

2019 in related to the Company’s online lending services business, while the Company did not recognize any additional provision

for doubtful accounts for the year ended March 31, 2021.

The following table sets forth the reconciliation

of the carrying amounts of major classes of assets and liabilities from discontinued operations in consolidated balance sheet as of March 31,

2021 and 2020.

Carrying amounts of major classes of assets included as part of

discontinued operations:

Discontinued operations- Online P2P lending services

On October 17, 2019, the Board approved the Plan under which the Company has discontinued and is winding down its online P2P lending services business.

The Company determined that the operation of its online P2P lending services business was not viable in light of the tightened regulations on online peer-to-peer lending in China generally and the unofficial request from local regulator to reduce the Company’s online peer-to-peer lending transaction volume on a monthly basis.

The Company also determined that the discontinuation of its online P2P lending services business would allow the Company to focus its resources on its automobile financing facilitation and transaction business.

In connection with the Plan, the Company ceased facilitation of loan transactions on its online lending platform and assumed all the outstanding loans from investors on the platform.

The decision and action taken by the Company of discontinuing the online lending services business represented a major shift that will have a major effect on the Company’s operations and financial results, which triggers discontinued operations accounting in accordance with ASC 205-20-45.

The fair value of discontinued operations, determined as of October 17, 2019, includes estimated consideration expected to be received, less costs to sell.

After consideration of the determination of fair value of the discontinued operations including the assumption of all the outstanding loans from investors on the platform, $ 143,668 of accounts receivable, $ 3,760,599 of other receivables, and $ 143,943 of prepayments for impaired intangible assets were indicated as of the date the Company’s Board of Directors approved the Plan on October 17, 2019, and the Company recognized $ 4,048,210 provision for doubtful accounts as of September 30, 2019 related to the Company’s online lending services business, while the Company did not recognize any additional provision for doubtful accounts for the year ended March 31, 2022.

The following table sets forth the reconciliation of the carrying amounts of major classes of assets and liabilities from discontinued operations of Online P2P lending services in consolidated balance sheet as of March 31, 2022 and March 31, 2021.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Carrying amounts of major classes of assets included as part of discontinued operations of Online P2P lending services:

Current assets

Prepayments, other receivables and other assets, net

Total current assets

Property and equipment, net

Carrying amounts of major classes of liabilities included as part of discontinued operations of Online P2P lending services:

Current liabilities

Accrued expenses and other liabilities

Due to a stockholder

Total current liabilities

Total liabilities

The following table sets forth the reconciliation of the amounts of major classes of income and losses from discontinued operations of Online P2P lending services in the consolidated statements of operations and comprehensive loss for the years ended March 31, 2022 and 2021.

For the Years Ended

Operating expenses

Selling, general and administrative expenses

Total operating expenses

Loss from discontinued operations

Other income, net

Loss before income taxes

Income tax expenses

Net loss attributable to stockholders

Discontinued operation- Jinkailong

On March 31, 2022, Ruixi, a majority owned subsidiary of the Company, holding 35 % equity interest of Jinkailong, entered into an Agreement for the Termination of the Agreement for Concerted Action by Shareholders of Jinkailong (the “Termination Agreement”), pursuant to which the Agreement for Concerted Action by Shareholders with respect to Jinkailong signed on August 26, 2018 (“Voting Agreement No.1”) and the Agreement for Concerted Action by Shareholders with respect to Jinkailong signed on February 13, 2020 (“Voting Agreement No.2”, collectively, “Voting Agreements”) shall be terminated as of the date of the Termination Agreement.

As a result, the Company no longer has a controlling financial interest in Jinkailong and has determined that Jinkailong was deconsolidated

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2022, the paid-in capital of Jinkailong is zero .

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

Consolidation included

Jinkailong as of

Deconsolidation

Consolidation as of

March 31, 2022

of Jinkailong

March 31, 2022

Current assets

Cash and cash equivalents

Accounts receivable, net, current portion

Finance lease receivables, net, current portion

Prepayments, other receivables and other assets, net

Due from related parties, current portion (1)

Total current assets

Property and equipment, net

Carrying amounts of major classes of liabilities included as part

of discontinued operations:

Property and equipment, net

Total property and equipment, net

Operating lease right-of-use assets, net

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

Financing lease right-of-use assets, net

( 1,043,989 )

Intangible assets, net

Accounts receivable, net, noncurrent

Finance lease receivables, net, noncurrent

Due from a related party, noncurrent (1)

Total other assets

LIABILITIES AND EQUITY (DEFICIENCY)

Current liabilities

Borrowings from financial institutions

Accounts payable

Advances from customers

Income tax payable

Accrued expenses and other liabilities

Due to stockholders

( 4,871,902 )

Due to related parties and affiliates

Lease liabilities

Operating lease liabilities

Operating lease liabilities - related parties

Financing lease liabilities

( 3,197,924 )

Derivative liabilities

Current liabilities - discontinued operations

Total current liabilities

( 9,962,775 )

Other liabilities

Borrowings from financial institutions, noncurrent

Operating lease liabilities, non-current

Operating lease liabilities, non-current - related parties

Financing lease liabilities, non-current

Deferred tax liability

Total other liabilities

Total liabilities

The following table sets forth the reconciliation

of the amounts of major classes of income and losses from discontinued operations in the consolidated statements of operations and comprehensive

loss for years ended March 31, 2021 and 2020.

( 10,852,063 )

Commitments and contingencies

Mezzanine Equity (redeemable)

Series A convertible preferred stock (par value $ 0.0001 per share, 5,000 shares authorized;

5,000 shares issued and outstanding at December 31, 2021), net of issuance costs of $ 118,344

Stockholders’ equity (deficiency)

Common stock (par value $ 0.0001 per share, 10,000,000 shares authorized;

6,186,783 shares issued and outstanding at March 31, 2022.) (2)

Additional paid-in capital

Accumulated deficit

( 45,553,090 )

( 34,601,545 )

Accumulated other comprehensive income (loss)

Total Senmiao Technology Limited stockholders’ equity (deficiency)

( 3,529,539 )

Non-controlling interests

Total equity (deficiency)

Total liabilities and equity (deficiency)

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) As result of deconsolidation, the Company recognized $ 7,298,208 of related party receivable from Jinkailong, of which, $ 6,635,746 is to be repaid over a period from April 2023 to December 2026, classified as due from related parties, noncurrent.

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

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

The gain on deconsolidation of Jinkailong was calculated as follows:

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

Carrying amount of non-controlling interest

( 3,605,156 )

Cumulative currency translation adjustment removal

Net gain on deconsolidation of Jinkailong

The Company determined that the deconsolidation of Jinkailong represented a major shift that will have a major effect on the Company’s operations and financial results, which triggers discontinued operations accounting in accordance with ASC 205-20-45.

The following table sets forth the reconciliation of the carrying amounts of major classes of assets and liabilities from discontinued operations of Jinkailong in consolidated balance sheet as of March 31, 2022 and March 31, 2021.

Carrying amounts of major classes of assets included as part of discontinued operations of Jinkailong:

Current assets

Cash and cash equivalents

Accounts receivable, net

Prepayments, receivables and other assets, net

Due from related parties

Total current assets

Property and equipment, net

Operating lease right-of-use assets, net

Financing lease right-of use assets, net

Accounts receivable, net, noncurrent

Total other assets

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Carrying amounts of major classes of liabilities included as part of discontinued operations of Jinkailong:

Current liabilities

Borrowings from financial institutions

Advance from customers

Income tax payable

Accrued expenses and other liabilities

Due to related parties and affiliates

Operating lease liabilities

Finance lease liabilities

Total current liabilities

Other liabilities

Borrowings from financial institutions, noncurrent

Operating lease liabilities, non-current

Financing lease liabilities, non-current

Total other liabilities

Total liabilities

The following table sets forth the reconciliation of the amounts of major classes of income and losses from discontinued operations of Jinkailong in the consolidated statements of operations and comprehensive loss for the years ended March 31, 2022 and 2021.

For the Years Ended

Cost of revenues

( 5,183,806 )

( 3,985,413 )

Operating expenses

Selling, general and administrative expenses

Provision for doubtful accounts

Amortization of intangible assets

Impairments of intangible assets and goodwill

( 4,139,800 )

( 4,367,529 )

Long live assets impairment

Recovery of (Provision for) doubtful account

Total operating expenses

( 4,184,025 )

( 4,159,399 )

Loss from discontinued operations

Other income, net

( 2,537,715 )

( 4,173,118 )

Other expense, net

Loss before income taxes

( 2,747,209 )

( 5,118,943 )

Income tax expenses

Net loss from

discontinued operations attributable to stockholders

( 2,747,209 )

( 5,125,238 )

net loss from discontinued operations attributable to noncontrolling interest

Net loss attributable to stockholders

( 2,032,935 )

( 3,792,676 )

Discontinued operation- Youlu

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

As Youlu had limited operation, the Company recognized a gain of $ 23,556 from the termination.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ACCOUNTS RECEIVABLE, NET

Accounts receivable include a portion of bundled

lease arrangements on fixed minimum monthly payments to be paid by the automobile purchasers arising from automobile sales and services

fees, net of unearned interest income, discounted using the Company’s lease pricing interest rates.

As of March 31, 2021 and 2020, accounts receivable

were comprised of the following:

Accounts receivable include a portion of bundled lease arrangements on fixed minimum monthly payments to be paid by the automobile purchasers arising from automobile sales and services fees, net of unearned interest income, discounted using the Company’s lease pricing interest rates.

As of March 31, 2022 and March 31, 2021, accounts receivable were comprised of the following:

Receivables of automobile sales due from automobile purchasers

5 unchanged sentences

Accounts receivable, net

Accounts receivable, net, current portion

Accounts receivable, net, non-current portion

Movement of allowance for doubtful accounts for

the fiscal years ended March 31, 2021 and 2020 are as follows:

Accounts receivable, net – discontinued operations

( 1,142,404 )

Accounts receivable, net – continuing operations

Accounts receivable, net, current portion – continuing operations

Accounts receivable, net, non-current portion – continuing operations

Accounts receivable, net, current portion – discontinued operations

Accounts receivable, net, non-current portion – discontinued operations

Movement of allowance for doubtful accounts for March 31, 2022 and March 31, 2021 are as follows:

Beginning balance

Deconsolidation of Jinkailong

Translation adjustment

1 unchanged sentence

Automobiles (i)

As of March 31, 2021, the Company owned three automobiles

with a total value of $47,410 for sale, and six automobiles with a total value of $80,523 for either leasing or sale.

As of March 31, 2021 and 2020, management

compared the cost of automobiles with their net realizable value and determined no inventory write-down was necessary for these automobiles.

As of March 31, 2022, the Company owned 36 automobiles with a total value of $ 346,886 for sale or sales-type leases.

As of March 31, 2021, the Company owned three automobiles with a total value of $ 47,410 for sale, and six automobiles with a total value of $ 80,523 for either leasing or sale.

As of March 31, 2022 and March 31, 2021, management compared the cost of automobiles with their net realizable value and recognized impairments of $ 60,398 and $ 0 for certain automobiles for sale, respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PREPAYMENTS, OTHER RECEIVABLES AND OTHER ASSETS

As of March 31, 2021 and 2020, the prepayments,

receivables and other assets were comprised of the following:

As of March 31, 2022 and March 31, 2021, the prepayments, receivables and other assets were comprised of the following:

Receivables from borrowers of online lending platform, net (i)

Prepayments for automobiles (ii)

Prepaid expenses (iii)

Receivables from aggregation platforms (iv)

Due from automobile purchasers, net (v)

Deposits (vi)

Value added tax (“VAT”) recoverable

Prepaid expenses (ii)

Deposits (iii)

Value added tax (“VAT”) recoverable

Due from automobile purchasers, net (iv)

Receivables from aggregation platforms (v)

Prepayments for automobiles (vi)

Employee advances

1 unchanged sentence

Total prepayments, receivables and other assets - discontinued operations

( 1,638,543 )

Total prepayments, receivables and other assets - continuing operations

Receivables from borrowers of online lending platform, net

balance of receivables from borrowers of online lending platform represented the outstanding loans the Company assumed from investors

on the Company’s discontinued P2P lending platform, which will be collected from related borrowers.

As of March 31, 2021 and

2020, the Company recorded allowance of $3,8 94,011 and $3,688,800, respectively, against doubtful receivables.

Prepayments for automobiles

The balance represented advanced payments

in purchasing automobiles from auto dealers or other parties.

Prepaid expense

The balance of prepaid expense represented

automobile liability insurance premium for automobiles for operating lease and other miscellaneous expense such as office lease, office

remodel expense and etc.

(i ) Receivables from borrowers of online lending platform, net

The balance of receivables from borrowers of online lending platform represented the outstanding loans the Company assumed from investors on the Company’s discontinued P2P lending platform, which will be collected from related borrowers.

As of March 31, 2022 and March 31, 2021, the Company recorded allowance of $ 4,024,651 and $ 3,894,011 , respectively, against doubtful receivables.

(ii) Prepaid expense

The balance of prepaid expense represented automobile liability insurance premium for automobiles for operating lease and other miscellaneous expense such as office lease, office remodel expense and etc.

that will expire within one year.

Receivables from aggregation platforms

The balance of receivables from aggregation

platforms represented the amount due from the collaborated aggregation platforms based on the confirmed billings, which will be disbursed

to the drivers who completed their rides through the Company’s online ride-hailing platform.

Due from automobile purchasers, net

The balance due from automobile purchasers

represented the payment 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, 2021 and 2020, the Company recorded allowance of

$41,759 and $347,954, respectively, against doubtful receivables.

During the years ended March 31, 2021 and 2020, the Company wrote

off balance due from automobile purchasers of $468,077 and $1,227,894, respectively, and recorded additional allowances of $268,706 and

$0, respectively, while recovered allowance against the balance due from automobile purchasers of $125,940 and $0, respectively.

The balance of deposits mainly represented

the security deposit made by the Company to various financial institutions and Didi Chuxing Technology Co., Ltd., an online ride-hailing

(iii) Deposits

The balance of deposits mainly represented the security deposit made by the Company to various automobile leasing companies, financial institutions and Didi Chuxing Technology Co., Ltd., who runs an online ride-hailing platform.

(iv) Due from automobile purchasers, net

The balance due from automobile purchasers represented the payment 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, 2022 and 2021, the Company recorded allowance of $ 0 and $ 3,240 , from continuing operations, respectively, against doubtful receivables.

As of March 31, 2021, the Company recorded allowance of $ 38,519 from discontinued operations against doubtful receivables.

During the years ended March 31, 2022 and 2021, the Company recorded additional allowances of $ 84,600 and $ 175,460 , respectively, while wrote off balance due from automobile purchasers of $ 84,600 and $ 172,336 , respectively, and recovered allowance against the balance due from automobile purchasers of $ 3,308 and $ 0 , respectively from continuing operations.

During the years ended March 31, 2022 and 2021, the Company recorded additional allowances of $ 35,983 and $ 93,246 , respectively, while wrote off balance due from automobile purchasers of $ 1,134 and $ 295,741 , respectively, and recovered allowance against the balance due from automobile purchasers of $ 12,352 and $ 125,940 , respectively from discontinued operations.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(v) Receivables from aggregation platforms

The balance of receivables from aggregation platforms represented the amount due from the collaborated aggregation platforms based on the confirmed billings, which will be disbursed to the drivers who completed their rides through the Company’s online ride-hailing platform.

(v i ) Prepayments for automobiles

The balance represented advanced payments in purchasing automobiles from auto dealers or other parties.

PROPERTY AND EQUIPMENT, NET

4 unchanged sentences

accumulated depreciation and amortization

( 1,133,135 )

Total property and equipment, net

1 unchanged sentence

Total property and equipment, net - continuing operations

Depreciation expense from continuing operations

for the years ended March 31, 2021 and 2020 amounted to $260,592 and $103,009, respectively.

Depreciation expense from discontinued

operations for years ended March 31, 2021 and 2020 amounted to $8,621 and $10,846, respectively.

Depreciation expense from continuing operations for the years ended March 31, 2022 and 2021 amounted to $ 956,400 and $ 85,530 , respectively.

Depreciation expense from discontinued operations for the years ended March 31, 2022 and 2021 amounted to $ 170,177 and $ 183,683 , respectively.

INTANGIBLE ASSETS, NET

3 unchanged sentences

Total intangible assets, net

Amortization expense from continuing operations

totaled $107,765 and $283 for the years ended March 31, 2021 and 2020, respectively.

Amortization expense from discontinued operations

totaled $0 and $32,401 for the years ended March 31, 2021 and 2020, respectively.

The following table sets forth the Company’s amortization expense

for the next five years ending:

Amortization expense from continuing operations totaled $ 160,831 and $ 107,765 for the years ended March 31, 2022 and 2021, respectively.

The following table sets forth the Company’s amortization expense for the next five years ending:

Twelve months ending March 31, 2023

3 unchanged sentences

Twelve months ending March 31, 2027

BORROWINGS FROM FINANCIAL INSTITUTIONS, CURRENT AND NON-CURRENT

The borrowings from certain financial institutions

in China represented the short-term loans of $140,171 from a bank and the difference between the actual proceeds disbursed by the financial

institution to Jinkailong and the total amount of principal to be responsible for and repaid by the automobile purchasers of $215,453

as of March 31, 2021.

Such borrowings totaled $355,624 and $290,974 bearing interest rates ranging between 6.2% and 8.1% per annum

as of March 31, 2021 and 2020, respectively, of which $44,962 and $64,221, respectively, is to be repaid over a period of 13 to 24

interest expense for the years ended March 31, 2021 and 2020 was $45,764 and $49,422, respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

BORROWINGS FROM A FINANCIAL INSTITUTIONS

The borrowings from a certain financial institution in China represented the short-term loans of $ 145,542 as of March 31, 2022.

Such borrowings bearing interest rate of 13.04 % per annum as of March 31, 2022, which is to be repaid within the next 12 months , were classified as borrowings from financial institutions, current.

The interest expense for the years ended March 31, 2022 and 2021 was $ 5,893 and $ 0 , from continuing operations, respectively.

The interest expense for the years ended March 31, 2022 and 2021 was $ 501,361 and $ 579,870 from discontinued operations, respectively, of which, $ 450,889 and $ 531,954 were due to continuing operations and eliminated in the consolidation statements of operations and comprehensive loss.

ACCRUED EXPENSES AND OTHER LIABILITIES

Payables to investors of online lending platform (i)

Accrued payroll and welfare

Payables to drivers from aggregation platforms (ii)

Deposits (iii)

Accrued payroll and welfare

Other payables (iv)

Loan repayments received on behalf of financial institutions (v)

Payables for expenditures on automobile transaction and related services

Accrued expenses

Payables for expenditures on automobile transaction and related services

Loan repayments received on behalf of financial institutions (iv)

Other taxes payable

Other payables (v)

Total accrued expenses and other liabilities

Total accrued expenses and other liabilities - discontinued operations

( 6,070,431 )

Total accrued expenses and other liabilities - continuing operations

The balance of payables to investors of online lending platform represented the outstanding loans from investors on the Company’s discontinued P2P lending platform, which was assumed by the Company in connection with the Plan to discontinue its online lending services business.

The balance of payables to drivers from aggregation platforms represented the amount the Company collected on behalf of drivers who completed their transaction through the Company’s online ride-hailing platform base on the confirmed billings.

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.

As of March 31, 2022, the Company has fully settled the outstanding loans.

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.

The balance of other payables represented amount due to suppliers and vendors for operation purposes.

The balance of loan repayments received on behalf of financial institutions represented the loan repayments made by the automobile purchasers to financial institutions through the Company, which has not been paid to the financial institutions.

The balance of other payables represented amount due to suppliers and vendors for operations purposes.

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 $320,620

and $204,245 for the years ended March 31, 2021 and 2020, respectively, for continuing operations of the Company.

The contributions

made by the Company were $92,944 and $158,523 for the years ended March 31, 2021 and 2020, respectively, for the Company’s

discontinued operations.

As of March 31, 2021 and 2020, the Company

did not make adequate employee benefit contributions in the amount of $442,485 and $170,856, respectively, for continuing operations of

As of March 31, 2021 and 2020, the Company did not make adequate employee benefit contributions in the amount of $566,140

and $454,151, respectively, for discontinued operations of the Company.

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 $ 602,641 and $ 73,047 for the years ended March 31, 2022 and 2021, respectively, from continuing operations of the Company.

The contributions made by the Company were $ 464,159 and $ 340,517 for the years ended March 31, 2022 and 2021, respectively, for the Company’s discontinued operations.

As of March 31, 2022 and March 31, 2021, the Company did not make adequate employee benefit contributions in the amount of $ 963,824 and $ 111,534 , respectively, from continuing operations of the Company.

As of March 31, 2021, the Company did not make

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

adequate employee benefit contributions in the amount of $ 897,091 from discontinued operations of the Company.

The Company accrued the amount in accrued payroll and welfare.

The registration statement relating to the Company’s

initial public offering also included the underwriters’

common stock purchase warrants to purchase 337,940 shares of common stock

(“IPO Underwriter’s Warrants”).

Each five-year warrant entitles warrant holder to purchase one share of the Company’s

common stock at the price of $4.80 per share and is not exercisable for a period of 180 days from March 16, 2018.

As of March 31,

2021, there were 37,940 IPO Underwriter’s Warrants outstanding.

The registration statement relating to the Company’s initial public offering also included the underwriters’ common stock purchase warrants to purchase 33,794 ( 337,940 pre reverse split) shares of common stock (“IPO Underwriter’s Warrants”).

Each five-year warrant entitles warrant holder to purchase one share of the Company’s common stock at the price of $48.0 ($4.80 pre reverse split) per share and is not exercisable for a period of 180 days from March 16, 2018 .

As of March 31, 2022, there were 3,794 ( 37,940 pre reverse split) IPO Underwriter’s Warrants outstanding.

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.”

2019 Registered Direct Offering Warrants

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 price is 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.”

The Company allocated the proceeds received between

the common stock and warrants first to warrants based on the fair value on the date the proceeds were received with the balance to common

As of March 31, 2022 and March 31, 2021, there were 16,841 ( 168,411 pre reverse split) and 21,244 ( 212,440 pre reverse split) 2019 registered direct offering warrants outstanding, respectively.

During the year ended March 31, 2022, the change of fair value was a gain of $ 185,727 recognized in the consolidated statements of operations and comprehensive loss based on the decrease in fair value of the liabilities since March 31, 2021.

During the year ended March 31, 2021, the change of fair value was a loss of $ 1,372,966 recognized in the accompanying consolidated statements of operations and comprehensive loss based on the increase in fair value of the liabilities since March 31, 2020.

As of March 31, 2022 and March 31, 2021, the fair value of the derivative instrument totaled $ 12,438 and $ 243,840 , respectively.

August 2020 Underwriters’ Warrants

As of March 31, 2022 and March 31, 2021, there were 31,808 ( 318,080 pre reverse split) underwriters’ warrants outstanding.

During the year ended March 31, 2022, the change of fair value was a gain of $ 352,944 recognized in the consolidated statements of operations and comprehensive loss based on the decrease in fair value of the liabilities since March 31, 2021.

During the year ended March 31, 2021, the change of fair value was a loss of $ 455,162 , recognized in the accompanying consolidated statements of operations and comprehensive loss based on the increase in fair value of the liabilities since issuance.

As of March 31, 2022 and March 31, 2021, the fair value of the derivative instrument totaled $ 44,581 and $ 397,525 , respectively.

February 2021 Registered Direct Offering Warrants

As of March 31, 2022 and 2021, there were 53,262 ( 532,609 pre reverse split) February 2021 registered direct offering warrants outstanding.

During the year ended March 31, 2022, the change of fair value was a gain of $ 572,018 recognized in the consolidated statements of operations and comprehensive loss based on the decrease in fair value of the liabilities since March 31, 2021.

During the year ended March 31, 2021, the change of fair value was a gain of $ 117,713 recognized in the accompanying consolidated statements of operations and comprehensive loss based on the increase in fair value of the liabilities since issuance.

As of March 31, 2022 and March 31, 2021, the fair value of the derivative instrument totaled $ 65,543 and $ 637,561 , respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 2021 Registered Direct Offering Warrants

The Company allocated the proceeds received between the common stock and warrants first to warrants based on the fair value on the date the proceeds were received with the balance to common stock.

The value of the warrants was determined using the Black-Scholes valuation model using the following assumptions:

1 unchanged sentence

risk free interest rate 0.84 %;

dividend yield of 0% and expected term of 4 years of the Investor Series A Warrants, 1 year of the

Series B Warrants, and 4 years of the placement agent warrants.

The volatility of the Company’s common stock was estimated

by management based on the historical volatility of its common stock, the risk free interest rate was based on Treasury Constant Maturity

Rates published by the U.S.

dividend yield of 0 % and expected term of 5 years of the investors Warrants and placement agent Warrants.

The volatility of the Company’s common stock was estimated by management based on the historical volatility of its common stock, the risk-free interest rate was based on Treasury Constant Maturity Rates published by the U.S.

Federal Reserve for periods applicable to the expected life of the warrants.

The expected dividend yield was

based on the Company’s current and expected dividend policy and the expected term is equal to the contractual life of the warrants.

The value of the warrants was based on the Company’s common stock closing price of $2.80 on June 20, 2019 which was the date

the warrants were issued.

The expected dividend yield was based on the Company’s current and expected dividend policy and the expected term is equal to the contractual life of the warrants.

The value of the warrants was based on the Company’s common stock closing price of $ 7.2 ($ 0.72 pre reverse split) on May 13, 2021 which was the date the warrants were issued.

Net proceeds were allocated as the follows:

Fair value of the warrants

Total net proceeds

Subsequent to the initial recording, the change

in the fair value of the warrants, determined under the Black-Scholes valuation model, at each reporting date will result in either an

increase or decrease the amount recorded as liability, based on the fluctuations with the Company’s stock price with a corresponding

adjustment to other income (or expense).

During the year ended March 31, 2021, the change of fair value was a loss of $1,372,966

recognized in the accompanying consolidated statements of operations and comprehensive loss based on the increase in fair value of the

liabilities since March 31, 2020.

During the year ended March 31, 2020, the change of fair value was a gain of $1,796,724 was

recognized in the accompanying consolidated statements of operations and comprehensive loss based on the increase in fair value of the

liabilities since granted.

At March 31, 2021 and 2020, the fair value of the derivative instrument totaled $243,840 and $342,530,

respectively.

The fair value of derivative instrument of $2,481,038 was allocated to additional paid-in-capital upon exercise of warrants

as of the exercise date.

Fair value of derivative instrument was allocated as the following exercise date:

Exercised date

Fair value of

derivative instrument

allocated to additional

paid-in-capital

August 12, 2019

August 13, 2019

October 9, 2019

October 20, 2020

November 24, 2020

November 25, 2020

February 25, 2021

Underwriters’

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 price is 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.

The Underwriters’

Warrants are classified as liabilities under the caption “Derivative

liabilities”

in the consolidated statements of balance sheets and recorded at an estimated fair value at each reporting date, computed

using the Black-Scholes valuation model.

Changes in the liability from period to period are recorded in the consolidated statements of

operations and comprehensive income (loss) under the caption “Change in fair value of derivative liabilities.”

The Company allocated the proceeds received between

the common stock and warrants first to warrants based on the fair value on the date the proceeds were received with the balance to common

The value of the warrants was determined using the Black-Scholes valuation model using the following assumptions:

volatility 129%;

risk free interest rate 0.19%;

dividend yield of 0% and expected term of 5 years of the Underwriters’

The volatility of

the Company’s common stock was estimated by management based on the historical volatility of the Company’s common stock, the

risk free interest rate was based on Treasury Constant Maturity Rates published by the U.S.

Federal Reserve for periods applicable to

the expected life of the warrants (0.51), the expected dividend yield was based on the Company’s current and expected dividend policy

and the expected term is equal to the contractual life of the warrants.

The value of the warrants was based on the closing price of the

Company’s common stock of $0.51 on August 4, 2020, which was the date the warrants were issued.

Net proceeds were allocated

as the follows:

Subsequent to the initial recording, the change in the fair value of the warrants, determined under the Black-Scholes valuation model, on each reporting date will result in either an increase or decrease the amount recorded as liability, based on the fluctuations with the Company’s stock price with a corresponding adjustment to other income (or expense).

As of March 31, 2022, there were 594,682 ( 5,946,810 pre reverse split) May 2021 registered direct offering warrants outstanding.

During the year ended March 31, 2022, the change of fair value was a gain of $ 2,725,530 recognized in the consolidated statements of operations and comprehensive loss based on the decrease in fair value of the liabilities since issuance.

As of March 31, 2022, the fair value of the derivative instrument totaled $ 836,875 .

November 2021 Private Placement Warrants

In connection with November 2021 private placement, the company issued 735,295 ( 7,352,941 pre reverse split) and 55,148 ( 551,471 pre reverse split) warrants to the investors and placement agents, respectively.

The Company allocated the gross proceeds received between the Series A Preferred Stock and warrants issued to the Investors 735,295 ( 7,352,941 pre reverse split) shares in connection of the sale of Series A Preferred Stock first to warrants based on the fair value on the date the proceeds were received with the remaining balance to Series A Preferred Stock, gross proceeds were allocated as the follows:

Fair value of Investor warrants

Series A Preferred Stock

Total gross proceeds

Issuance cost

Total net proceeds

Subsequent to the initial recording, the change

in the fair value of the warrants, determined under the Black-Scholes valuation model, at each reporting date will result in either an

increase or decrease the amount recorded as liability, based on the fluctuations with the Company’s stock price with a corresponding

adjustment to other income (or expense).

During the year ended March 31, 2021, the change of fair value was a loss of $455,162, recognized

in the accompanying consolidated statements of operations and comprehensive loss based on the increase in fair value of the liabilities

since issuance.

At March 31, 2021, the fair value of the derivative instrument totaled $397,525.

The fair value of derivative instrument

of $299,556 was allocated to additional paid-in-capital upon exercise of warrants on March 4, 2021.

February 2021 Registered Direct Offering

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 price is 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.”

The Company allocated the proceeds received between

the common stock and warrants first to warrants based on the fair value on the date the proceeds were received with the balance to common

The value of the warrants was determined using the Black-Scholes valuation model using the following assumptions:

The value of the warrants to the investors and placement agents was determined using the Black-Scholes valuation model using the following assumptions:

volatility 126 %;

risk free interest rate 1.23 %;

dividend yield of 0% and expected term of 5 years of the placement agent Warrants and ROFR Warrants.

volatility of the Company’s common stock was estimated by management based on the historical volatility of its common stock, the

risk free interest rate was based on Treasury Constant Maturity Rates published by the U.S.

Federal Reserve for periods applicable to

the expected life of the warrants.

The expected dividend yield was based on the Company’s current and expected dividend policy and

the expected term is equal to the contractual life of the warrants.

The value of the warrants was based on the Company’s common

stock closing price of $1.63 on February 10, 2021 which was the date the warrants were issued.

Net proceeds were allocated as the

Total net proceeds

Subsequent to the initial recording, the change

in the fair value of the warrants, determined under the Black-Scholes valuation model, at each reporting date will result in either an

increase or decrease the amount recorded as liability, based on the fluctuations with the Company’s stock price with a corresponding

adjustment to other income (or expense).

During the year ended March 31, 2021, the change of fair value was a gain of $117,713 recognized

in the accompanying consolidated statements of operations and comprehensive loss based on the increase in fair value of the liabilities

since issuance.

At March 31, 2021, the fair value of the derivative instrument totaled $637,561.

The Company has warrants outstanding as follows:

dividend yield of 0 % and expected term of 5 years of the Placement Warrants and Investor Warrants.

The volatility of the Company’s common stock was estimated by management based on the historical volatility of our common stock, the risk-free interest rate was based on Treasury Constant Maturity Rates published by the U.S.

Federal Reserve for periods applicable to the expected life of the warrants, the expected dividend yield was based on the Company’s current and expected dividend policy and the expected term is equal to the contractual life of the warrants.

The value of the warrants was based on the Company’s common stock closing price of $ 6.7 ($ 0.67 pre reverse split) on the date the warrants were issued.

The value of the warrants allocated to derivative liabilities was recorded on insertion date as following:

Fair value of investor warrants

Fair value of placement agent warrants (i)

Total fair value of warrants allocated to derivative liabilities

(i) The issuance costs for placement agent warrants which was classified as liability were immediately expensed.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended March 31, 2022, the change of fair value was a gain of $ 3,115,263 recognized in the consolidated statements of operations and comprehensive loss based on the increase in fair value of the liabilities since issuance.

As of March 31, 2022, the fair value of the derivative instrument totaled $ 1,255,767 .

The Company has warrants outstanding, pre reverse split, as follows:

Balance, March 31, 2020

( 1,516,010 )

Balance, March 31, 2021

1 unchanged sentence

Restricted Stock Units

On October 29, 2020, the Board approved the

issuance of an aggregate of 127,273 restricted stock units (“RSUs”) to directors, officers and certain employees as stock

compensation for their services for the year ending March 31, 2021.

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 issuance date of issuance of these consolidated financial statements, the first and second

installment of RSUs with an aggregate of 63,637 was vested but has not been settled by the Company.

The Company expects to settle the

vested RSUs by issuance of shares of common stock within 2021 and account for the vested RSUs as an addition to both expenses and additional

paid-in capital.

On October 29, 2020, the Board approved the issuance of an aggregate of 127,273 restricted stock units (“RSUs”) to directors, officers and certain employees as stock compensation for their services for the twelve months ended March 31, 2022.

Total RSUs granted to these directors, officers and employees were valued at an aggregate fair value of $ 140,000 .

These RSUs will vest in four equal quarterly installments on January 29, 2021, April 29, 2021, July 29, 2021 and October 29, 2021 or in full upon the occurrence of a change in control of the Company, provided that the director, officer or the employee remains in service through the applicable vesting date.

The RSUs will be settled by the Company’s issuance of shares of common stock in certificated or uncertificated form upon the earlier of (i) vesting date, (ii) a change in control and (ii) termination of the services of the director, officer or employee due to a “separation of service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, or the death or disability of such director, officer or employee.

As of the filing date of these consolidated financial statements, all installment of RSUs with an aggregate of 12,727 ( 127,273 pre reverse split) was vested and 9,545 ( 95,457 pre reverse split) was settled by the Company.

The Company expects to settle the remaining vested RSUs by issuance of shares of common stock within 2022 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.

A committee consisting of at least two independent

directors 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, 2021, the Company has granted an aggregate of 303,788 RSUs and issued an

aggregate of 169,015 shares upon vest under the Equity Incentive Plan.

And 7,500 RSUs were forfeited due to two directors ceased to serve

on the board of the Company since November 8, 2018.

2019 Registered Direct Offering

On April 15, 2019, the SEC declared effective

the Company’s Registration Statement on Form S-3, pursuant to which, along with the accompanying prospectus, the Company registered

up to $80,000,000 in aggregate principal amount of its common stock, preferred stock, debt securities, warrants, rights and/or units.

On June 21, 2019, the Company closed a registered direct offering of an aggregate of 1,781,360 shares of its common stock, and in

connection therewith, issued to the investors (i) for no additional consideration, Series A warrants to purchase up to an aggregate

of 1,336,021 shares of common stock and (iii) for nominal additional consideration, Series B warrants to purchase up to a maximum

aggregate of 1,116,320 shares of common stock.

The Company sold the shares of common stock at a price of $3.38 per share (the “Share

Purchase Price”).

The Company received gross proceeds from the offering of approximately $6.0 million, and net proceeds from the

offering of approximately $5.1 million after deducting estimated offering expenses payable by the Company.

Series A warrants are exercisable immediately upon issuance at an exercise price of $3.72 per share and will expire on the fourth

(4th) anniversary of the original issue date.

In the event that on December 20, 2019, the exercise price is greater than the Six

Month Adjustment Price as defined below, on the trading day immediately following December 20, 2019 (the “Six Month Measuring

Date”), the exercise price shall automatically adjust to the Six Month Adjustment Price (as adjusted for stock splits, stock dividends,

stock combinations, recapitalizations and similar events).

Six Month Adjustment Price means the greater of (x) $1.50 (as adjusted

for any stock dividend, stock split, stock combination, reclassification or similar transaction) and (y) 100% of the quotient of

(I) the sum of the five lowest VWAPs of the common stock during the ten consecutive trading day period ending and including the Six

Month Measuring Date, divided by (II) five.

All such determinations to be appropriately adjusted for any stock dividend, stock split,

stock combination, reclassification or similar transaction during such period.

The exercise price of the Series A warrant was adjusted

pursuant to this formula from $3.72 to $1.50 per share on December 20, 2019.

The Company used the adjusted exercise price to value

its derivative liability on its December 31, 2019 financial statements and reporting periods onwards with changes in fair value of

warrant liabilities from period to period are recorded in the consolidated statements of operations and comprehensive loss under the caption

“Change in fair value of derivative liabilities”.

The exercise price of the Series A warrant was further adjusted to

$0.50 per share on August 7, 2020 as a result of the Company’s issuance of shares of common stock in its underwritten public

offering in August 2020, which has been recorded in the financial statements in the year ended March 31, 2021.

the exercise price of the placement agent warrants from the June 2019 registered direct offering was voluntarily adjusted by the

Company from $3.72 to $0.50 per share on August 18, 2020, which was in accordance with the terms of “Adjustment Upon Issuance

of Shares of Common Stock”

in the warrants purchase agreements.

The Series B warrants are pre-funded warrants

and were issued as a true-up with respect to the shares of common stock.

The maximum aggregate number of shares of common stock issuable

upon exercise of the Series B warrants is 1,116,320.

Initially, the Series B warrants shall not be exercisable for any shares

of common stock.

In the event that on the fiftieth (50th) day after the closing date (the “Adjustment Measuring Time”), the

closing price of the common stock is less than the Share Purchase Price, then the number of shares of common stock issuable upon exercise

of the Series B warrants shall be adjusted (upward or downward, as applicable) to the greater of (i) zero (0) and (ii) such

aggregate number of shares of common stock equal to fifty percent (50%) of the difference of (A) the quotient of (x) the Share

Purchase Price divided by (y) the Market Price (as defined in Purchase Agreement) as of the Adjustment Measuring Time, less (B) the

aggregate number of shares of common stock issued to the investors at the closing (as adjusted for share splits, share dividends, share

combinations, recapitalizations and similar events).

The exercise price of the Series B warrant was adjusted from $3.72 to $0.0001

per share on August 12, 2019.

The Company used the adjusted exercise price to value its derivative liability on its September 30,

2019 financial statements and reporting period onwards with changes in fair value of warrant liabilities from period to period are recorded

in the consolidated statements of operations and comprehensive loss under the caption “Change in fair value of derivative liabilities.

As of March 31, 2021, the Company has issued an aggregate of 1,113,188 shares of common stock to certain investors in the June 2019

offering upon exercise of the pre-funded Series B warrants for a total consideration of $111, and forfeited the remaining 3,132 warrants

as it expired on June 20, 2020.

Exercise of Warrants

On July 9, 2020, one of the holders of Series A

warrants exercised the warrants to purchase 50,000 shares of the Company’s common stock at an exercise price of $1.50 per share

generating gross proceeds of $75,000 to the Company.

On October 20, 2020, one of the holders of

Series A warrants exercised the warrants to purchase 337,500 shares of the Company’s common stock at an exercise price of $0.50

per share generating gross proceeds of $168,750 to the Company.

On November 24, 2020, one of the holders

of Series A warrants exercised the warrants to purchase 171,894 shares of the Company’s common stock at an exercise price of

$0.50 per share generating gross proceeds of $85,947 to the Company.

On November 25, 2020, one of the holders

of Series A warrants exercised the warrants to purchase 332,840 shares of the Company’s common stock at an exercise price of

$0.50 per share generating gross proceeds of $166,420 to the Company.

On February 25, 2021, three of the holders

of Series A warrants exercised the warrants to purchase 373,856 shares of the Company’s common stock at an exercise price of

$0.50 per share generating gross proceeds of $186,928 to the Company.

Underwritten Public Offering and Exercise of

the Over-Allotment Option

On August 4, 2020, the Company entered into

an underwriting agreement with The Benchmark Company, LLC and Axiom Capital Management, Inc., as representatives of the Underwriters,

relating to an underwritten public offering of 12,000,000 shares of the Company’s common stock at the Offering Price.

the terms of the Underwriting Agreement, the Company granted the Underwriters a 45-day option to purchase up to an additional 1,800,000

shares of common stock to cover over-allotments, if any, at the Offering Price less the underwriting discounts and commissions.

An underwriting

discount of 7% was applied to the Offering Price, except for shares of common stock purchased by certain existing investors of the Company

(the “Excluded Investors”), an underwriting discount of 6% was applied.

On August 6, 2020, the Company completed the

underwritten offering.

The net proceeds to the Company from this offering, after deducting the underwriting discounts and commissions

and other estimated offering expenses payable by the Company, were approximately $5.3 million.

On August 13, 2020, the Underwriters exercised

their over-allotment option to purchase an additional 1,800,000 shares of common stock at $0.50 per share.

This transaction was completed

on August 13, 2020.

Net proceeds from the exercise of the underwriters’

over-allotment option were approximately $0.8 million

net of underwriting discounts and commissions and offering expenses.

In connection with the underwritten offering,

the Company issued the Underwriters or their permitted designees, on a private placement basis, the Underwriters’

Warrants to purchase

up to 568,000 shares of common stock.

These warrants are valid for a period of five years and exercisable commencing six months from August 4,

2020 at a price per share equal to 125% of the Offering Price and are exercisable on a “cashless”

Exercise of Underwriters’

On March 4, 2021, two of the holders of underwriters’

warrants exercised the warrants on a “cashless”

basis which irrevocably to convert their right to purchase 249,920 shares

of the company under the original Purchase Warrant for 133,352 shares, as determined in accordance with the formula indicated on the notice

February 2021 Registered Direct Offering

February 8, 2021, the Company entered into a placement agency agreement with FT Global Capital, Inc., to act as exclusive placement

agent in connection with the registered direct public offering.

Pursuant to the terms of the placement agency agreement, the Company agreed

to pay the Placement Agent a cash fee equal to 7.5% of the gross proceeds raised in the Offering, and to reimburse the Placement Agent

for certain expenses, including legal fees and expenses, up to $60,000 in the aggregate.

The Placement Agent is also entitled to additional

tail compensation for any financings consummated within the 12-month period following the termination of the Placement Agent Agreement

to the extent that such financing is provided to the Company by investors that the Placement Agent had introduced to the Company.

February 10, 2021, the Company completed the registered direct offering.

The net proceeds to the Company from this offering, after

deducting the underwriting discounts and commissions and other estimated offering expenses payable by the Company, were approximately

$5.7 million.

In connection with the offering, the Company issued

the placement agent warrants to purchase up to 380,435 shares of its common stock.

These warrants are exercisable for a period of five

years commencing 180 days from February 8, 2020 at a price of $1.38 per share and are exercisable on a “cashless”

In addition, the company issued The Benchmark Company, LLC and Axiom Capital Management, Inc.

seven percent of the gross proceeds

from the offering and warrants to purchase up to 152,174 shares of its common stock, in consideration for the termination of the ROFR

(referred to Note 2.e).

These warrants are exercisable for a period of five years from February 8, 2020 at a price of $1.725 per

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.

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, 2022, the Company has granted an aggregate of RSUs and issued an aggregate of shares upon vest under the Equity Incentive Plan.

And RSUs were forfeited due to two directors ceased to serve on the board of the Company since November 8, 2018.

Exercise of 2019 Registered Direct Offering Warrants

On April 23, 2021, one of the holders of Series A warrants exercised the warrants to purchase 4,403 ( 44,029 pre reverse split) shares of the Company’s common stock at an exercise price of $ 5.0 ($ 0.50 pre reverse split) per share generating gross proceeds of $ 22,015 to the Company.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 2021 Registered Direct Offering

On May 11, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain purchasers (the “Investors”) pursuant to which the Company will sell to the Investors, in a registered direct offering, an aggregate of 553,192 ( 5,531,916 pre reverse split) units (the “Units”), each consisting of 0.1 (one pre reverse split) share (the “Shares”) of the Company’s common stock, par value $ 0.0001 per share (“Common Stock”) and a warrant to purchase 0.1 (one pre reverse split) share of the Company’s Common Stock (the “Warrants”), at a purchase price of $ 1.175 per unit, for aggregate gross proceeds to the Company of $ 6,500,000 , before deducting fees to the placement agent and other estimated offering expenses payable by the Company.

On May 13, 2021, the Company completed the registered direct offering.

The net proceeds to the Company from this offering, after deducting the underwriting discounts and commissions and other estimated offering expenses payable by the Company, were approximately $ 5.8 million.

The Warrants have a term of five years and are exercisable by the holders at any time after the date of issuance at an exercise price of $ 10.5 ($ 1.05 pre reverse split) per share.

The exercise price and the number of shares issuable upon exercise of the Warrants are subject to an adjustment upon the occurrence of certain events, including, but not limited to, stock splits or dividends, business combinations, sale of assets, similar recapitalization transactions, or other similar transactions.

The exercise price of the Warrants is also subject to an adjustment in the event that the Company issues or is deemed to issue shares of Common Stock for less than the applicable exercise price of such Warrants.

However, the exercise price of the Warrants shall not be lower than $ 10.5 ($ 1.05 pre reverse split) as a result of an adjustment, unless the Company has obtained the stockholder approval.

The exercisability of the Warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.99 %.

FT Global Capital, Inc.

(“FT Global Capital”) acted as the exclusive placement agent in connection with this offering pursuant to the terms of a placement agency agreement, dated May 11, 2021, between the Company and FT Global Capital (the “Placement Agent Agreement”).

Pursuant to the Placement Agent Agreement, the Company agreed to pay FT Global Capital a cash fee equal to seven point five percent ( 7.5 %) of the aggregate proceeds received by the Company from the sale of its securities to the investors introduced to the Company by FT Global Capital.

FT Global Capital is also entitled to additional tail compensation for any financings consummated within the 12-month period following the termination of the Placement Agent Agreement to the extent that such financing is provided to the Company by investors that FT Global Capita had introduced to the Company.

In addition to the cash fees, the Company agreed to issue to the Placement Agent warrants to purchase an aggregate of up to seven point five percent ( 7.5 %) of the aggregate number of shares of our Common Stock sold in the offering (the “Placement Agent Warrants”).

The Placement Agent Warrants shall generally be on the same terms and conditions as the Warrants, exercisable at a price of $ 10.5 ($ 1.05 pre reverse split) per share, provided that Placement Agent Warrants will not provide for certain anti-dilution protections included in the Warrants.

In connection with the offering, the Company issued the investors warrants and placement agent warrants to purchase up to 553,192 ( 5,531,916 pre reverse split) and 41,490 ( 414,894 pre reverse split) shares of its common stock, respectively.

These warrants are exercisable at any time on or after the issuance date and expire on the fifth-year anniversary of their issuance.

November 2021 Private Placement

On November 8, 2021, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Investors”) pursuant to which the Company will sell to the Investors, in a private placement (the “Private Placement”), an aggregate of $ 5,000,000 worth of securities of the Company, consisting of up to 5,000 shares (the “Preferred Shares”) of Series A Convertible Preferred Stock, par value $ 0.0001 per share (the “Series A Preferred Stock”) and warrants (the “Investor Warrants”) to initially acquire up to an aggregate number of shares of common stock of the Company, par value $ 0.0001 per share (the “Common Stock”) that equals to the number of shares of Common Stock to be issued upon conversion of the Preferred Shares at $ 0.68 per share (the “Initial Conversion Price”) (as converted into the Conversion Shares as defined below, collectively with the shares of the Common Stock from the exercise of the Investor Warrants, the “Warrant Shares”, collectively, the “Warrant Shares”).

The purchase price for the Preferred Shares was $ 1,000 per each Preferred Share (and related Investor Warrant).

On November 10, 2021, the Company completed the Private Placement.

The net proceeds to the Company from the Private Placement, after deducting the placement agent commissions and other estimated offering expenses payable by the Company, were approximately $ 4.4 million.

The Series A Convertible Preferred Stock is included in mezzanine equity on the consolidated balance sheets, because it is redeemable by the holders upon events of change of control which are not within the Company’s control.

A discount to the redemption amount of a contingently redeemable preferred share should be amortized only once it is probable the share will become redeemable.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to the certificate of designations for the Series A Preferred Stock (the “COD”), at any time after the initial issuance date, each holder shall be entitled to convert any portion of the outstanding Preferred Shares held by such holder into shares of Common Stock (the “Conversion Shares”) at Initial Conversion Price, which shall be adjusted to the greater of $ 0.41 per share or 85 % of the closing bid price of the Company’s Common Stock reported on the NASDAQ Capital Market on the Applicable Date, which is the earlier of the first date on which the registration statement covering the resale of the Conversion Shares and Warrant Shares is declared effective by the SEC or the first date on which all such shares are eligible to be resold by the Investors pursuant to Rule 144 or Rule 144A promulgated under the Securities Act.

The Investor Warrants have a term of five years and are exercisable by the holders at any time after six months and one day of the date of issuance at an exercise price of $ 8.2 ($ 0.82 pre reverse split) per share.

The exercise price and the number of shares issuable upon exercise of the Investor Warrants are subject to an adjustment upon the occurrence of certain events, including, but not limited to, stock splits or dividends, business combinations, sale of assets, similar recapitalization transactions, or other similar transactions.

The exercise price of the Investor Warrants is also subject to an adjustment in the event that the Company issues or is deemed to issue shares of Common Stock for less than the applicable exercise price of such Investor Warrants.

However, the exercise price of the Investor Warrants shall not be lower than $ 7.1 ($ 0.7125 pre reverse split) as a result of an adjustment, unless the Company has obtained the stockholders’ approval.

The exercisability of the Investor Warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.99 % or 9.99 % as the Investor chooses.

FT Global Capital acted as the exclusive placement agent in connection with this Private Placement pursuant to the terms of a placement agency agreement, dated November 7, 2021, between the Company and FT Global Capital (the “Placement Agent Agreement”).

Pursuant to the Placement Agent Agreement, the Company agreed to pay FT Global Capital a cash fee equal to 7.5 % of the aggregate proceeds received by the Company from the sale of its securities to the Investors.

FT Global Capital is also entitled to additional tail compensation for any financings consummated within the 12-month period following the termination of the Placement Agent Agreement to the extent that such financing is provided to the Company by Investors that FT Global Capital had introduced to the Company.

In addition to the cash fees, the Company agreed to issue to the Placement Agent warrants to purchase an aggregate of up to 7.5 % of the aggregate number of the Conversion Shares (the “Placement Agent Warrants”).

The Placement Agent Warrants shall generally be on the same terms and conditions as the Investor Warrants, exercisable at a price of $ 6.8 ($ 0.68 pre reverse split) per share, provided that Placement Agent Warrants will not provide for certain anti-dilution protections included in the Investor Warrants.

In connection with the Private Placement, the Company issued warrants to the Investors to purchase up to an aggregate number of shares of common stock that equals to the number of shares of common stock to be issued upon conversion of the Series A Preferred Stock at the Initial Conversion Price.

Meanwhile, the Company paid the placement agent cash commission of approximately $ 375,000 and issued to it warrants to purchase up to 55,148 ( 551,471 pre reverse split)shares of common stock at an exercise price of $ 6.8 ($ 0.68 pre reverse split) per share, which warrants will be exercisable at any time on or after the date of six months from the issuance date and expire on the fifth-year anniversary of their issuance.

Share Swap in purchase of XXTX’s remaining minority interest

Upon closing, the Company, through Senmiao Consulting, owns 100 % of the equity interests in XXTX.

Common stock issued for consulting services

On July 23, 2020, the Company entered into

a consulting agreement with FirsTrust China Ltd.

(the “Consultant”), pursuant to which the Company engaged the Consultant

to provide certain management, operation and business development advisory services for a period of twelve months.

As compensation for

the services, the Company agreed to issue the Consultant an aggregate of 500,000 shares of its common stock, par value $0.0001.

shares were valued at $445,000, based on the closing price of the Company’s common stock on July 23, 2020 of $0.89 per share.

Pursuant to the agreement, these shares issued to the Consultant are not subject to vesting or forfeiture, and the Company has no recourse

and no substantial disincentives against the Consultant if the services disrupt before the termination or expiration of the service period.

As a result, these shares issued to the Consultant should be expensed on the date of issuance.

For year ended March 31, 2021, these

shares was recorded as stock compensation of $445,000, respectively.

On October 22, 2021, the Company entered into a consulting agreement (the “Consulting Agreement”) with Jolly Good River Group Limited.

(the “Consultant”), pursuant to which the Company engaged the Consultant to provide certain market research and business development advisory services for a period of twelve months .

As compensation for the services, the Company agreed to issue the Consultant an aggregate of 100,000 ( 1,000,000 pre reverse split) shares of the Common Stock, par value $ 0.0001 , payable within ten working days from the signing of the Consulting Agreement.

As of November 9, 2021, the issuance of 100,000 ( 1,000,000 pre reverse split)shares of the Company’s common stock has been completed and the Company recorded the consulting fee of $ 653,000 pursuant to the fair value on November 3, 2021, the grant date.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1-for- 10 shares reverse split on common stock

The Company considered the above transactions after giving a retroactive effect to a 1-for-10 reverse stock split of its common stock which became effective on April 6, 2022.

The Company believed it is appropriate to reflect the above transactions on a retroactive basis similar to those after a stock split or dividend pursuant to ASC 260.

All shares and per share amounts used herein and in the accompanying consolidated financial statements have been retroactively stated to reflect the effect of the reverse stock split.

Upon execution of the 1-for-10 reverse stock split, the Company recognized additional 8,402 shares of common stock due to round up issue.

Change of ownership interest in a subsidiary

On March 23, 2022, Senmiao Consulting, the Company’s 100 % owned subsidary terminated the VIE Agreements and purchased Sichuan Senmiao’s 94.5 % equity interests with total consideration of zero .

As a result, the Company reduce its equity interest in Sichuan Senmiao to 94.5 %, and recongnized 5.5 % of noncontrolling interest.

As no consideration was received, $ 366,604 which is the difference between the fair value of the consideration received and the amount by which the noncontrolling interest is adjusted was recognized as an addition in additional paid-in capital in accordance with ASC 810-10-45-23 “Change in a parent’s ownership interest in a subsidiary”.

The United States of America

The Company is incorporated in the State of Nevada

in the U.S., and is subject to U.S.

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.

The State of Nevada does not impose any state corporate income tax.

On December 22, 2017, the U.S.

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

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

income earned by foreign subsidiaries.

For the years ended March 31, 2021 and 2020, the Company’s foreign subsidiaries in China

were operating at loss on a consolidated basis which resulted in no GILTI tax.

The Company’s net operating loss from U.S

for the year ended March 31, 2021 amounted to approximately $1.5 million.

As March 31, 2021, the Company’s net operating

loss carryforward for U.S.

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

The Tax Act imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries, and future foreign earnings are subject to U.S.

The Tax Act also stablished the Global Intangible Low-Taxed Income (GILTI), a new inclusion rule affecting non-routine income earned by foreign subsidiaries.

For the years ended March 31, 2022 and 2021, the Company’s foreign subsidiaries in China were operating at loss on a consolidated basis which resulted in no GILTI tax.

The Company’s net operating loss for U.S.

income taxes from U.S for the year ended March 31, 2022 amounted to approximately $ 2.3 million.

As of March 31, 2022, the Company’s net operating loss carryforward for U.S.

income taxes was approximately $ 5.9 million.

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,

2021 and 2020, valuation allowances for deferred tax assets were approximately $0.80 million and $0.48 million, respectively.

reviews the valuation allowance periodically and makes changes accordingly.

Senmiao Consulting, Sichuan Senmiao, Hunan Ruixi,

Ruixi Leasing, Jinkailong, Yicheng, XXTX and its subsidiaries are subject to PRC Enterprise Income Tax (“EIT”) on the taxable

income in accordance with the relevant PRC income tax laws.

The 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, 2022 and 2021, valuation allowances for deferred tax assets were approximately $ 1.23 million and $ 0.80 million, respectively.

Management reviews the valuation allowance periodically and makes changes accordingly.

Senmiao Consulting, Sichuan Senmiao, Hunan Ruixi, Ruixi Leasing, Jinkailong (deconsolidated for the year ended March 31, 2022), Yicheng, Jiekai, Youlu and XXTX and its subsidiaries are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws.

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

1 unchanged sentence

For the Years ended

Current income tax expenses (benefit)

Deferred income tax expenses (benefit)

Total income tax expenses (benefit)

Below is a reconciliation of the statutory tax rate to the effective

Current income tax expenses

Deferred income tax expenses

Total income tax expenses

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Below is a reconciliation of the statutory tax rate to the effective tax rate:

For the Years Ended

5 unchanged sentences

Effective tax rate

As of March 31, 2021 and 2020, the Company’s

PRC entities from continuing operations had net operating loss carryforwards of approximately $8.1 million and $1.7 million, respectively,

which will expire starting from 2023 and ending in 2025.

In addition, allowance for doubtful accounts must be approved by the Chinese

tax authority prior to being deducted as an expense item on the tax return.

The bad debt allowances are incurred in Company’s PRC

subsidiaries and VIEs which were operating at losses, the Company believes it is more likely than not that its PRC operations will be

unable to fully utilize its deferred tax assets related to the net operating loss carryforwards in the PRC.

As a result, the Company provided

100% allowance on all deferred tax assets on net operating loss carryforwards in the PRC of $2,036,311 and $414,996 related to its operations

in the PRC at March 31, 2021 and 2020, respectively and provided 100% allowance on all deferred tax assets on allowance for doubtful

account of $21,435 and $178,381 related to its operations in the PRC at March 31, 2021 and 2020, respectively.

The tax effects of temporary differences from

continuing operations that give rise to the Company’s deferred tax assets and liabilities are as follows:

As of March 31, 2022 and 2021, the Company’s PRC entities from continuing operations had net operating loss carryforwards of approximately $ 8.5 million and $ 1.7 million, respectively, which will expire starting from 2024 and ending in 2026.

In addition, allowance for doubtful accounts must be approved by the Chinese tax authority prior to being deducted as an expense item on the tax return.

The bad debt allowances are incurred in Company’s PRC subsidiaries and former VIEs which were operating at losses, the Company believes it is more likely than not that its PRC operations will be unable to fully utilize its deferred tax assets related to the net operating loss carryforwards in the PRC.

As a result, the Company provided 100 % allowance on all deferred tax assets on net operating loss carryforwards in the PRC of $ 2,315,793 and $ 415,533 related to its continuing operations in the PRC as of March 31, 2022 and March 31, 2021, respectively and provided 100 % allowance on all deferred tax assets on allowance for doubtful account of $ 29,129 and $ 1,245 related to its continuing operations in the PRC as of March 31, 2022 and March 31, 2021, respectively.

The tax effects of temporary differences from continuing operations that give rise to the Company’s deferred tax assets and liabilities are as follows:

Deferred Tax Assets

3 unchanged sentences

valuation allowance

( 3,579,711 )

( 1,171,280 )

Deferred tax assets, net

2 unchanged sentences

Deferred tax liabilities, net

As of March 31, 2021 and 2020, the Company’s

PRC entities associated with the discontinued P2P lending operations had net operating loss carryforwards of approximately $10.4 million

and $8.8 million, respectively, which will expire in 2023 to 2025.

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 be fully realized.

At March 31, 2020 and 2021, full valuation

allowance is provided against the deferred tax assets based upon management’s assessment as to their realization.

The tax effects of temporary differences from

discontinued operations that give rise to the Company’s deferred tax assets are as follows:

As of March 31, 2022 and March 31, 2021, the Company’s PRC entities associated with discontinued operations had net operating loss carryforwards of approximately $ 17.8 million and $ 15.3 million, which will expire in 2023 to 2026.

In addition, allowance for doubtful accounts must be approved by the Chinese tax authority prior to being deducted as an expense item on the tax return.

The Company reviews deferred tax assets for a valuation allowance based upon whether it is more likely than not that the deferred tax asset will be fully realized.

As of March 31, 2022 and March 31, 2021, full valuation allowance is provided against the deferred tax assets related to the Company’s discontinued operations based upon management’s assessment as to their realization.

The tax effects of temporary differences from discontinued operations that give rise to the Company’s deferred tax assets are as follows:

March 31, 2022

March 31, 2021

Net operating loss carryforwards in the PRC

Allowance for doubtful accounts

valuation allowance

( 2,595,919 )

( 3,822,686 )

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONCENTRATION

Major Suppliers

For the year ended March 31, 2022, three suppliers accounted for approximately 25.43 %, 14.97 %, and 14.17 % of the total costs of revenue from continuing operations of the Company, and one supplier accounted for approximately 18.18 % of the total cost of revenues for discontinued operations of the Company.

RELATED PARTY TRANSACTIONS AND BALANCES

1 unchanged sentence

1) Due from related parties

As of March 31, 2021 and 2020, balances due

from related parties were $24,311 and $12,341, respectively, and represented operation costs of four related parties paid by the Company

on their behalf, amounts received by the Company on behalf of a related party for refund of insurance claims, and amounts collected by

a related party on behalf of the Company from the automobile purchasers, including certain installment payments and facilitation fees.

In addition, another $15,261 and $14,120 represents advances to the non-controlling shareholders of Hunan Ruixi for operational purposes

as of March 31, 2021 and 2020, respectively.

As of March 31, 2022, balances due from related parties from the Company’s continuing operations of $ 7,298,208 represented balance due from Jinkailong as result of Jinkailong’s deconsolidation, of which, $ 6,635,746 is to be repaid over a period from April 2023 to December 2026, classified as due from related parties, noncurrent (refer to Note 5).

In addition, another $ 19,874 represented receivable due from Youlu as result of Youlu’s deconsolidation.

As of March 31, 2021, balances due from related parties of $ 24,311 from the Company’s discontinued operation represented operation costs of three related parties paid by the Company on their behalf, amounts received by the Company on behalf of a related party for refund of insurance claims, and amounts collected by a related party on behalf of the Company from the automobile purchasers, including certain installment payments and facilitation fees.

In addition, another $ 15,261 represent advances to a non-controlling shareholder of Hunan Ruixi for operational purposes as of March 31, 2021.

The balances due from related parties were all non-interest bearing and due on demand.

Due to stockholders

Due to stockholders comprised of amounts payable

to two stockholders named below and are unsecured, interest free and due on demand.

Total due to stockholders

Total due to stockholders –

discontinued operations

Total due to stockholders –

continuing operations

2) Due to a stockholder

Due to a stockholder comprised of amounts payable to a stockholder named below and are unsecured, interest free and due on demand.

Total due to a stockholder

Total due to a stockholder – discontinued operations

Total due to a stockholder – continuing operations

3) Due to related parties and affiliates

1 unchanged sentence

Total due to related parties and affiliates

Total due to related parties and affiliates –

discontinued operations

Total due to related parties and affiliates –

continuing operations

As of March 31, 2021 and 2020, the balances represented borrowings from three related parties, which are unsecured, interest free and due in the fiscal year of 2021.

As of March 31, 2021 and 2020, the balances represented $170,546 and 26,478, respectively of payables to five other related parties for operational purposes.

Total due to related parties and affiliates – discontinued operations

Total due to related parties and affiliates – continuing operations

(i) As of March 31, 2022 and March 31, 2021, the balances represented borrowings from a related party, of which, $ 9,897 and $ 78,708 are unsecured, interest free and due on demand, respectively, from the Company’s continuing operations.

In addition, as of March 31, 2021, the balances of $ 103,574 represented borrowings from two related parties, which are unsecured, interest free and due on demand, respectively, from the Company’s discontinued operations.

(ii) As of March 31, 2022 and March 31, 2021, the balances of $ 1,785 and $ 4,201 , respectively, represented payables to a related party for operational purposes from the Company’s continuing operations.

In addition, as of March 31, 2021, the balances of

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$ 166,345 represented payables to four other related parties for operational purposes from the Company’s continuing operations.

These balances are interest free and due on demand.

Interest expense for the years ended March 31,

2021 and 2020 were $0 and $29,944, respectively.

Interest expense for the years ended March 31, 2022 and 2021 were $ 0 .

Related Party Transactions

In December 2017, the Company entered into

loan agreements with two stockholders, who agreed to grant lines of credit of approximating $955,000 and $159,000, respectively, to the

Company for five years.

In December 2017, the Company entered into loan agreements with two stockholders, who agreed to grant lines of credit of approximating $ 955,000 and $ 159,000 , respectively, to the Company for five years.

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

As of March 31, 2021, the

outstanding balances due to these two stockholders in the discontinued operations were $48,795 and $0, respectively.

As of March 31,

2020, the outstanding balances in the discontinued operations to these two stockholders were $73,384 and $108,711, respectively.

The Company entered into two office lease agreements

with a stockholder of Sichuan Senmiao, which were set to expire on January 1, 2020.

On April 1, 2020, the two office leases

were amended with a leasing term from April 1, 2020 to March 31, 2023.

On March 1, 2021, the Company entered into

an additional office lease which was set to expire on February 1, 2026.

As of March 31, 2021 and 2020, operating lease right-of-use

assets of these leases in the continuing operations amounted to $475,408 and $105,432, respectively.

As of March 31, 2021 and 2020,

current leases liabilities of these leases in the continuing operations amounted to $161,818 and $78,482, respectively.

Non-current lease

liabilities of these leases in the continuing operation amounted to $285,371 and $0 as of March 31, 2021 and 2020, respectively.

As of March 31, 2021 and 2020, current leases liabilities of these leases in the discontinued operations amounted to $0 and $53,899,

respectively.

For the years ended March 31, 2021 and 2020, the Company incurred $121,012 and $109,896, respectively, in rental expenses

to this related party.

In November 2018, Hunan Ruixi entered into

an office lease agreement with Hunan Dingchentai Investment Co., Ltd.

("Dingchentai"), a company where one of our independent

directors serves as legal representative and general manager.

The term of the lease agreement was from November 1, 2018 to October 31,

2023 and the rent was approximately $44,250 per year, payable on a quarterly basis.

The original lease agreement with Dingchentai was

terminated on July 1, 2019.

The Company has fully settled the loan due to one of them as of March 31, 2021.

As of March 31, 2022 and 2021, the outstanding balances due to the other stockholder in the discontinued operations were $ 18,886 and $ 48,795 , respectively.

On July 28 and August 17, 2021, the Company entered into two loan agreements with its CEO, who agreed to loan $ 800,000 in total to the Company.

The loans are non-interest bearing, effective from July 28, 2021 and August 17, 2021, which shall be paid within six months and three months, respectively.

As of March 31, 2022, the loans were fully settled.

The Company entered into two office lease agreements with a stockholder of Sichuan Senmiao, which were set to expire on January 1, 2020.

On April 1, 2020, the two office leases were amended with a leasing term from April 1, 2020 to March 31, 2023.

On March 1, 2021, the Company entered into an additional office lease which was set to expire on February 1, 2026.

On April 1, 2021, the Company entered into another office lease which was set to expire on April 1, 2024.

As of March 31, 2022 and March 31, 2021, operating lease right-of-use assets of these leases amounted to $ 446,372 and $ 475,408 , respectively.

As of March 31, 2022 and March 31, 2021, current leases liabilities of these leases amounted to $ 246,516 and $ 161,818 , respectively.

Non-current lease liabilities of these leases amounted to $ 211,953 and $ 285,371 as of March 31, 2022 and March 31, 2021, respectively.

For the years ended March 31, 2022 and 2021, the Company incurred $ 237,968 and $ 121,012 , respectively, in rental expenses to this related party.

In November 2018, Hunan Ruixi entered into an office lease agreement with Hunan Dingchentai Investment Co., Ltd.

(“Dingchentai”), a company where one of our independent directors serves as legal representative and general manager.

The term of the lease agreement was from November 1, 2018 to October 31, 2023 and the rent was approximately $ 44,250 per year, payable on a quarterly basis.

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.

As of March 31, 2021 and 2020, operating lease right-of-use assets of this lease in the continuing operations amounted

$104,959 and $130,873, respectively.

As of March 31, 2021, current leases liabilities and non-current leases liabilities of this

lease in the continuing operations amounted $81,908 and $56,178, respectively.

As of March 31, 2020, current leases liabilities and

non-current leases liabilities of this lease in the continuing operations amounted $73,173 and $88,349, respectively.

As of March 31, 2022 and March 31, 2021, operating lease right-of-use assets of this lease amounted $ 69,534 and $ 104,959 , respectively.

As of March 31, 2022, current leases liabilities and non-current leases liabilities of this lease amounted $ 84,265 and $ 14,943 , respectively.

As of March 31, 2021, current leases liabilities and non-current leases liabilities of this lease in the continuing operations amounted $ 81,908 and $ 56,178 , respectively.

For the years ended March 31, 2022 and 2021, the Company incurred $ 45,651 and $ 44,169 , respectively, in rental expenses to this related party.

In June 2019 and January 2020, the Company’s former VIE entered into two automobile maintenance services contracts with Sichuan Qihuaxin Automobile Services Co., Ltd and Sichuan Yousen Automobile Maintenance Service Co., Ltd, which companies are controlled by one of the non-controlling shareholders of Jinkailong.

During the years ended March 31, 2022 and March 31, 2021, the Company incurred automobile maintenance fees of $ 942,581 and $ 575,136 to those companies as mentioned above, respectively.

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 (r), the Company discloses that revenue earned from automobile rentals, wherein an identified asset is transferred to the customer and the customer has the ability to control that asset, is accounted for under Topic 842 upon adoption for the year ended March 31, 2020.

As of March 31, 2022 and March 31, 2021, the Company has engaged in offices and showroom leases which were classified as operating leases.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company leased automobiles under operating lease agreements with a term shorter than twelve months which it elected not to recognize lease assets and lease liabilities under ASC 842.

Instead, the Company recognized the lease payments in profit or loss on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred.

In addition, the Company had automobiles leases which were classified as finance lease.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company recognized lease expense on a straight-line basis over the lease term for operating lease.

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

The ROU assets and lease liabilities are determined based on the present value of the future minimum rental payments of the lease as of the adoption date, using an effective interest rate of 6.0 %, which is determined using an incremental borrowing rate with similar term in the PRC.

As of March 31, 2022, the average remaining operating and finance lease term of its existing leases is 1.16 and 1.09 years, respectively.

Operating and finance lease expenses consist of the following:

For the Years Ended

March 31, 2021 and 2020, the Company incurred expense of $44,169 and $41,661 in rent to Dingchentai, respectively.

In June 2019 and January 2020, the Company

entered into two automobile maintenance services contracts with Sichuan Qihuaxin Automobile Services Co., Ltd and Sichuan Yousen Automobile

Maintenance Service Co., Ltd, which companies are controlled by one of the non-controlling shareholders of Jinkailong.

During the year

ended March 31, 2021, the Company paid automobile maintenance fees of $29,801 and $545,335 to those companies as mentioned above,

respectively.

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

(r), the Company discloses that revenue earned from automobile rentals, wherein an identified asset is transferred to the customer and

the customer has the ability to control that asset, is accounted for under Topic 842 upon adoption for the year ended March 31, 2020.

As of March 31, 2021 and 2020, the Company

has engaged in offices and showroom leases which were classified as operating leases.

In addition, the Company had automobiles leases

which were classified as finance lease.

occupies various offices 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.

The Company’s lease agreements do not contain

any material residual value guarantees or material restrictive covenants.

The Company recognized lease expense on a straight-line

basis over the lease term for operating lease.

Meanwhile, the Company recognized the finance leases ROU assets and interest on an amortized

The amortization of finance ROU assets is recognized on an accretion 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 ROU assets and lease liabilities are

determined based on the present value of the future minimum rental payments of the lease as of the adoption date, using an effective

interest rate of 6.0%, which is determined using an incremental borrowing rate with similar term in the PRC.

As of March 31,

2021, the average remaining operating and finance lease term of its existing leases is 2.1 and 1.5 years, respectively.

Operating and finance lease expenses consist of

the following:

Classification

March 31, 2022

March 31, 2021

Operating lease cost

Automobile lease costs

Cost of revenues

Lease expenses

2 unchanged sentences

Amortization of leased asset

Cost of revenue

Cost of revenues

Amortization of leased asset

Selling, general and administrative

General and administrative

Interest on lease liabilities

1 unchanged sentence

Total lease expenses

Operating lease expenses from continuing operations

totaled $396,276 and $294,127 for the years ended March 31, 2021 and 2020, respectively.

Operating lease expenses from discontinued

operations totaled $0 and $84,372 for the years ended March 31, 2021 and 2020, respectively.

Interest expenses on finance leases

from continuing operations totaled $733,202 and $373,407 for the years ended March 31, 2021 and 2020, respectively.

The following table sets forth the Company’s

minimum lease payments in future periods:

Total lease expenses – discontinued operations

Total Lease expenses- continuing operations

Operating lease expenses for automobiles from continuing operations totaled $ 1,390,767 and $ 42,306 for the year ended March 31, 2022 and 2021, respectively.

Operating lease expenses for automobiles from discontinued operations totaled $ 359,192 and $ 0 for the year ended March 31, 2022 and 2021, respectively.

Operating lease expenses for offices and showroom leases from continuing operations totaled $ 460,209 and $ 245,376 for the years ended March 31, 2022 and 2021, respectively.

Operating lease expenses offices and showroom leases from discontinued operations totaled $ 125,510 and $ 150,900 for the years ended March 31, 2022 and 2021, respectively.

Interest expenses on finance leases from continuing operations totaled $ 55,844 and $ 46,518 for the years ended March 31, 2022 and 2021, respectively.

Interest expenses on finance leases from continuing operations totaled $ 277,366 and $ 686,684 for the years ended March 31, 2022 and 2021, respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the Company’s minimum lease payments in future periods:

*Operating lease

Finance lease

3 unchanged sentences

Twelve months ending March 31, 2026

Total lease payments

Present value of lease liabilities

*As of March 31, 2022, the outstanding balance of operating lease payments due to related parties was $ 557,677 .

COMMITMENTS AND CONTINGENCIES

Purchase Commitments

On January 19 and February 22, 2021,

the Company entered into two purchase contracts with an automobile dealer to purchase a total of 700 automobiles for the amount of approximately

$11.6 million.

Pursuant to the contracts, the Company is required to purchase 350 automobiles in cash with the amount of approximately

$5.8 million.

The remaining 350 automobiles purchase commitment with the amount of approximately $5.8 million shall be purchased with

financing option through the dealer’s designated financial institutions.

As of the issuance date of these consolidated financial

statements, 200 automobiles have been purchased in cash and delivered to the Company.

As the Company is in process of getting approval

from the dealer’s designated financial institutions in financing the 350 automobiles’

purchase, there is no clear timing schedule

for completing the remaining purchase commitment with this automobile dealer.

However, the Company expects the purchase to be completed

by the end of 2021.

Contingencies

In measuring the credit risk of guarantee services

to automobile purchasers, the Company primarily reflects the “probability of default”

by the automobile purchasers on its

contractual obligations and considers the current financial position of the automobile purchasers and its likely future development.

The Company manages the credit risk of automobile

purchasers by performing preliminary credit checks of each automobile purchaser and ongoing monitoring every month.

By using the current

credit loss model, management is of the opinion that the Company is bearing the credit risk to repay the principal and interests to the

financial institutions if automobile purchasers default on their payments for more than three months.

Management also periodically re-evaluates

probability of default of automobile purchasers to make adjustments in the allowance when necessary, as the Company is the guarantor of

In measuring the credit risk of guarantee services to automobile purchasers, the Company primarily reflects the “probability of default” by the automobile purchasers on its contractual obligations and considers the current financial position of the automobile purchasers and its likely future development.

The Company manages the credit risk of automobile purchasers by performing preliminary credit checks of each automobile purchaser and ongoing monitoring every month.

By using the current credit loss model, management is of the opinion that the Company is bearing the credit risk to repay the principal and interests to the financial institutions if automobile purchasers default on their payments for more than three months.

Management also periodically re-evaluates probability of default of automobile purchasers to make adjustments in the allowance, when necessary, as the Company is the guarantor of the loans.

Contingent liabilities for automobile purchasers

Historically, most of the automobile purchasers

would pay the Company their previous defaulted amounts within one to three months.

In December 2019, a novel strain of coronavirus,

or COVID-19, surfaced and it has spread rapidly to many parts of China and other parts of the

world, including the United States.

The epidemic has resulted in quarantines, travel restrictions, and the temporary closure of stores

and facilities in China and elsewhere.

Because substantially all of the Company’s operations are conducted in China,

the COVID-19 outbreak has materially and adversely affected, and may continue to affect, the Company’s business operations, financial

condition and operating results for 2020 and 2021, including but not limited to decrease in revenues, slower collection of accounts receivables

and additional allowance for doubtful accounts.

Some of the Company’s customers exited the ride-hailing business and tendered their

automobiles to the Company for sublease or sale to generate income or proceeds to cover payments owed to financial institutions and the

For the years ended March 31, 2021 and 2020, the Company recognized an estimated provision loss of approximately $199,000

and $225,000, respectively for the guarantee services because the drivers who exited the ride-hailing business were not able to make the

monthly payments.

As of March 31, 2021, the maximum contingent liabilities the Company

would be exposed to was approximately $12,763,000 (including approximately $68,000 related to the discontinued P2P business), assuming

all the automobile purchasers were in default.

Automobiles are used as collateral to secure the payment obligations of the automobile

purchasers under the financing agreements.

The Company estimated the fair market value of the collateral to be approximately $8,615,000

as of March 31, 2021, based on the market price and the useful life of such collateral, which represents approximately 67.5% of the

maximum contingent liabilities.

As of March 31, 2021, approximately $3,890,000, including interests of approximately $233,000, due

to financial institutions, of all the automobile purchases we serviced were past due mainly due to the COVID-19 epidemic in China.

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

In December 2019, a novel strain of coronavirus, or COVID-19, surfaced and it has spread rapidly to many parts of China and other parts of the world, including the United States.

The epidemic has resulted in quarantines, travel restrictions, and the temporary closure of stores and facilities in China and elsewhere.

Because substantially all of the Company’s operations are conducted in China, the COVID-19 outbreak has materially and adversely affected, and may continue to affect, the Company’s business operations, financial condition and operating results for 2021 and 2022, including but not limited to decrease in revenues, slower collection of accounts receivables and additional allowance for doubtful accounts.

Some of the Company’s customers exited the ride-hailing business and rendered their automobiles to the Company for sublease or sale to generate income or proceeds to cover payments owed to financial institutions and the Company.

For the years ended March 31, 2022 and 2021, the Company recognized an estimated provision loss of approximately $ 8,000 and $ 40,504 , respectively, for drivers who exited the ride-hailing business were not able to make the monthly payments from continuing operations.

For the years ended March 31, 2022 and 2021, the Company recognized an estimated provision loss of approximately $ 716 and $ 158,100 , respectively, for the guarantee services for drivers who exited the ride-hailing business were not able to make the monthly payments from discontinued operations.

As of March 31, 2022, the maximum contingent liabilities Hunan Ruixi would be exposed to was approximately $ 0.8 million, assuming all the automobile purchasers were in default.

Automobiles are used as collateral to secure the payment obligations of the automobile purchasers under the financing agreements.

The Company estimated the fair market value of the collateral to be approximately $ 0.7 million as of March 31, 2022, based on the market price and the useful life of such collateral, which represents approximately 90 % of the maximum contingent liabilities.

Contingent liability of Jinkailong

On May 25, 2018, Chengdu Industrial Impawn

Co., Ltd (“Impawn”) signed a pledge and pawn contract (the “Master Contact”) with Langyue, pursuant to which, Impawn

shall provide loans to Langyue up to RMB20 million (approximately $2.9 million).

In connection with the Master Contract, Jinkailong entered

into a guaranty with Impawn and agreed to provide guarantee on all the payments (including principal, interests, compensations and other

expenses) of Langyue jointly and severally with seven other guarantors, one of which is a shareholder of Jinkailong.

Langyue used RMB7,019,652

(approximately $1,003,000) of the loans from Impawn and re-loaned it to automobile purchasers referred by Jinkailong from June 2018

to September 2018, which were also guaranteed by Jinkailong.

Langyue did not pay Impawn the monthly installment

of June 2020 timely.

In July 2020, Impawn sent the Collection Letter and Notice to Langyue to demand payment of the interest

and penalty of RMB100,300 (approximately $14,330).

On September 18, 2020, Impawn initiated a legal action with the People's

Court of Sichuan Pilot Free Trade Zone (the “Court”) for an order to collect and enforce the repayment of the total outstanding

principal, interest and penalty for an aggregate of RMB9,992,728 (approximately $1,428,000) and other expenses by freezing all bank accounts

of Langyue and all related guarantors.

On October 14, 2020, the cash in the bank accounts of Jinkailong, totaling RMB175,335 (approximately

$25,050) was frozen by the Court and became restricted cash accordingly.

On January 7, 2021, bank account was frozen mentioned above

has been fully released.

On December 24, 2020, Jinkailong, a shareholder

of Jinkailong and Impawn signed a settlement agreement (“Settlement Agreement”).

Impawn agreed to release the pledge of Jinkailong’s

75 automobiles, provided that Jinkailong and such shareholder repay an aggregate of RMB4,026,594 (approximately $614,000) in monthly installments

over 35 months.

In addition, upon the initial payment of RMB600,000 (approximately $92,000) by Jinkailong and such shareholder, Impawn

will request the court to release the frozen bank accounts of Jinkailong.

The Settlement Agreement further provides that it does not release

the guarantee obligations of Jinkailong and in the event Langyue’s loan is not fully repaid at the end of the 35 months, Impawn

reserves the right to pursue further actions against Jinkailong and such shareholder for the outstanding balance of the loan.

As of March 31,

2021, the original maximum contingent liabilities related to the loans from Langyue to automobile purchasers which Jinkailong would be

exposed to was approximately RMB2,163,000 (approximately $330,000), which has been included in the amount of contingent liabilities of

automobile purchasers as mentioned above.

Therefore, Jinkailong recorded the additional $94,000 for the gap between the total amount to

be paid pursuant to the Settle Agreement and the remaining principal of loans from Impawn as guarantee expenses in the consolidated financial

Jinkailong will collect monthly installment payments from online ride-hailing drivers who lease those 75 automobiles to repay

for the remaining balance of Impawns and recognize guarantee expenses if any.

However, as Jinkailong has undertaken the joint and several

liability guarantee for all of Langyue’s loans from Impawn, Jinkailong may be required to pay all the outstanding balance of approximately

$1,346,000 to Impawn in the future.

From time to time, the Company may be subject

to certain legal proceedings, claims and disputes that arise in the ordinary course of business.

Except the contingent liabilities for

Langyue, other amounts accrued, as well as the total amount of reasonable possible losses with the respect to such matters, individually

and in the aggregate, are not deemed to be material to the interim consolidated financial statements.

As of March 31, 2022, the maximum contingent liabilities of Jinkailong, the Company’s equity investee company and former VIE, would be exposed to was approximately $ 6.3 million, assuming all the automobile purchasers were in default.

Automobiles are used as collateral to secure the payment obligations of the automobile purchasers under the financing agreements.

Jinkailong estimated the fair

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

market value of the collateral to be approximately $ 4.2 million as of March 31, 2022, based on the market price and the useful life of such collateral, which represents approximately 66 % of the maximum contingent liabilities.

Meanwhile, approximately $ 4.8 million, including interests of approximately $ 286,000 , due to financial institutions, of all the automobile purchases Jinkailong serviced were past due mainly due to the COVID-19 pandemic in China in prior years.

On May 25, 2018, Chengdu Industrial Impawn Co., Ltd (“Impawn”) signed a pledge and pawn contract (the “Master Contact”) with Langyue, pursuant to which, Impawn shall provide loans to Langyue up to RMB 20 million (approximately $ 2.9 million).

In connection with the Master Contract, Jinkailong entered into a guaranty with Impawn and agreed to provide guarantee on all the payments (including principal, interests, compensations and other expenses) of Langyue jointly and severally with seven other guarantors, one of which is a shareholder of Jinkailong.

Langyue used RMB 7,019,652 (approximately $ 1,003,000 ) of the loans from Impawn and re-loaned it to automobile purchasers referred by Jinkailong from June 2018 to September 2018, which were also guaranteed by Jinkailong.

Langyue did not pay Impawn the monthly installment of June 2020 timely.

In July 2020, Impawn sent the Collection Letter and Notice to Langyue to demand payment of the interest and penalty of RMB 100,300 (approximately $ 14,330 ).

On September 18, 2020, Impawn initiated a legal action with the People’s Court of Sichuan Pilot Free Trade Zone (the “Court”) for an order to collect and enforce the repayment of the total outstanding principal, interest and penalty for an aggregate of RMB9, 992,728 (approximately $ 1,428,000 ) and other expenses by freezing all bank accounts of Langyue and all related guarantors.

On October 14, 2020, the cash in the bank accounts of Jinkailong, totaling RMB 175,335 (approximately $ 25,050 ) was frozen by the Court and became restricted cash accordingly.

On January 7, 2021, frozen bank account mentioned above has been fully released.

On December 24, 2020, Jinkailong, a shareholder of Jinkailong and Impawn signed a settlement agreement (“Settlement Agreement”).

Impawn agreed to release the pledge of Jinkailong’s 75 automobiles, provided that Jinkailong and such shareholder repay an aggregate of RMB 4,026,594 (approximately $ 635,000 ) in monthly installments over 35 months .

In addition, upon the initial payment of RMB 600,000 (approximately $ 94,000 ) by Jinkailong and such shareholder, Impawn will request the court to release the frozen bank accounts of Jinkailong.

The Settlement Agreement further provided that it did not release the guarantee obligations of Jinkailong and in the event Langyue’s loan was not fully repaid at the end of the 35 months, Impawn reserved the right to pursue further actions against Jinkailong and such shareholder for the outstanding balance of the loan.

As of March 31, 2022, the original maximum contingent liabilities related to the loans from Langyue to automobile purchasers which Jinkailong would be exposed to was approximately RMB 350,000 (approximately $ 55,000 ), which has been included in the amount of contingent liabilities of automobile purchasers as mentioned above.

Jinkailong will collect monthly installment payments from online ride-hailing drivers who lease those 75 automobiles to repay for the remaining balance of Impawns and recognize guarantee expenses if any.

However, as Jinkailong has undertaken the joint and several liability guarantee for all of Langyue’s loans from Impawn, Jinkailong may be required to pay all the outstanding balance of approximately $ 1,032,000 to Impawn in the future.

As the Company holds 35 % of equity interest of Jinkailong through Hunan Ruixi, and has not make any consideration towards to the investment.

In accordance with PRC’s company registry compliance, the Company will subject to the maximum amount of RMB 3.5 million (approximately $ 570,000 ) of which is equivalent to 35 % of liabilities in case Jinkailong is liquidated.

From time to time, the Company and its equity investee company may be subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business.

The total amount of reasonable possible losses with the respect to such matters, individually and in the aggregate, are not deemed to be material to the consolidated financial statements.

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.

The following tables present the summary of each

segment's revenue, loss from operations, loss before income taxes and net loss which is considered as a segment operating performance

measure, for the year ended March 31, 2021:

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.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the summary of each segment’s revenue, loss from operations, loss before income taxes and net loss which is considered as a segment operating performance measure, for the years ended March 31, 2022 and 2021:

For the year ended March 31, 2022

Transaction and

hailing platform

Loss from operations

( 3,957,831 )

( 6,962,113 )

( 3,179,759 )

( 14,099,703 )

( 2,537,715 )

( 11,561,988 )

loss before income taxes

( 4,682,007 )

( 7,438,693 )

( 8,348,788 )

( 2,747,209 )

( 5,601,579 )

Net income (loss)

( 4,686,573 )

( 7,438,693 )

( 8,353,354 )

( 2,747,209 )

( 5,606,145 )

For the year ended March 31, 2021

Transaction and

Related services

Online ride-hailing platform

Loss from operations

3 unchanged sentences

( 10,265,832 )

( 4,254,403 )

( 6,011,429 )

loss before income taxes

5 unchanged sentences

( 7,467,093 )

Net income (loss)

( 7,024,200 )

( 1,703,551 )

Details of the Company's revenue by segment are

set out in Note 2(g).

As of March 31, 2021, the Company’s

total assets were comprised of, $16,227,836 for automobile transaction and related services, $3,254,822 for online ride-hailing platform

services and $2,421,681 unallocated.

As substantially all of the Company's long-lived

assets are located in the PRC and substantially all of the Company's revenue is derived from within the PRC, no geographical information

is presented.

( 3,872,912 )

( 12,662,639 )

( 5,187,214 )

( 7,475,425 )

The accounting principles for the Company’s revenue by segment are set out in Note 3(g).

As of March 31, 2022, the Company’s total assets were comprised of $ 12,022,387 for automobile transaction and related services, $ 7,003,867 for online ride-hailing platform services and $ 851,863 unallocated.

As of March 31, 2021, the Company’s total assets were comprised of $ 8,777,138 , $ 7,450,698 and $ 398,940 for automobile transaction and related services from continuing and discontinued sections, and discontinued operations of P2P Business, respectively, $ 3,254,822 for online ride-hailing platform services and $ 2,421,681 unallocated.

As substantially all of the Company’s long-lived assets are located in the PRC and substantially all of the Company’s revenue is derived from within the PRC, no geographical information is presented.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PARENT-ONLY FINANCIALS

16 unchanged sentences

Commitments and Contingencies

Mezzanine Equity (redeemable)

Series A convertible preferred stock (par value $ 0.0001 per share, 5,000 shares authorized;

5,000 shares issued and outstanding at December 31, 2021), net of issuance costs of $ 118,344

Stockholders’ Equity

7 unchanged sentences

Total Senmiao Technology Limited Stockholders’ Equity

Total Liabilities and Equity

Total Liabilities, Mezzanine Equity and Equity

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SENMIAO TECHNOLOGY LIMITED

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

5 unchanged sentences

Change in fair value of derivative liabilities

( 1,710,415 )

Issuance costs for issuing series A convertible preferred stock

Equity of losses in subsidiaries

( 4,343,025 )

( 6,579,922 )

( 10,360,058 )

Foreign currency translation adjustment

1 unchanged sentence

( 10,691,251 )

$ (8,752,032 )

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SENMIAO TECHNOLOGY LIMITED

CONDENSED STATEMENTS OF CASH FLOWS

2 unchanged sentences

( 10,360,058 )

$ (8,673,325 )

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

1 unchanged sentence

Amortization of intangible asset

Issuance cost incurred for issuing series A convertible preferred stock

Stock compensation expense

Change in fair value of derivative liabilities

Change in operating assets and liabilities

( 6,951,482 )

Prepayments, receivables and other assets

1 unchanged sentence

Net Cash Used in Operating Activities

( 1,418,530 )

( 1,659,742 )

Cash Flows from Investing Activities:

Purchase of intangible assets

Working capital contribution for subsidiaries

( 5,749,950 )

( 3,600,000 )

Net Cash Used in Investing Activities

( 5,749,950 )

( 3,600,000 )

Cash Flows from Financing Activities:

Net proceeds from issuance of common stock in an underwritten public offering

Net proceeds from exercise of underwriters’

over-allotment option

Net proceeds from issuance of common stock and warrants in a registered direct public offering

Net proceeds from issuance of common stock in an underwritten public offering

Net proceeds from issuance of common stock upon warrants exercised

Net proceeds from exercise of underwriters’ over-allotment option

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

Borrowings to subsidiaries

Release of escrow receivable

( 4,487,690 )

( 5,658,318 )

Net Cash Provided by Financing Activities

Net increase (decrease) in cash and cash equivalents

( 1,493,165 )

Cash and cash equivalents, beginning of year

8 unchanged sentences

Issuance of restricted stock units from accrued expenses and other liabilities

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.

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.

Investments in subsidiaries and equity of loss in subsidiaries

The investments in subsidiaries consist of investments

in Senmiao Consulting, Hunan Ruixi and Yicheng.

The equity losses in subsidiaries consist of equity loss in Senmiao Consulting, Hunan

Ruixi and Yicheng.

Stockholders’

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 equity loss in Senmiao Consulting, Hunan Ruixi and Yicheng.

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 year ending March 31, 2021.

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 March 31, 2021 no RSUs have been vested.

As of the issuance date of issuance of these

consolidated financial statements, the first installment of RSUs vested but has not been settled by the Company.

The Company expects to

settle the vested RSUs by issuance of shares of common stock within 2021 and account for the vested RSUs as an addition to both expenses

and additional paid-in capital.

Total RSUs granted to these directors, officers and employees were valued at an aggregate fair value of $ 140,000 .

2019 Registered Direct Offering

On April 15, 2019, the SEC declared effective

the Company’s Registration Statement on Form S-3, pursuant to which, along with the accompanying prospectus, the Company registered

up to $80,000,000 in aggregate principal amount of its common stock, preferred stock, debt securities, warrants, rights and/or units.

On June 21, 2019, the Company closed a registered direct offering of an aggregate of 1,781,360 shares of its common stock, and in

connection therewith, issued to the investors (i) for no additional consideration, Series A warrants to purchase up to an aggregate

of 1,336,021 shares of common stock and (iii) for nominal additional consideration, Series B warrants to purchase up to a maximum

aggregate of 1,116,320 shares of common stock.

The Company sold the shares of common stock at a price of $3.38 per share (the “Share

Purchase Price”).

The Company received gross proceeds from the offering of approximately $6.0 million, and net proceeds from the

offering of approximately $5.1 million after deducting estimated offering expenses payable by the Company.

The Series A warrants are exercisable immediately

upon issuance at an exercise price of $3.72 per share and will expire on the fourth (4th) anniversary of the original issue date.

event that on December 20, 2019, the exercise price is greater than the Six Month Adjustment Price as defined below, on the trading

day immediately following December 20, 2019 (the “Six Month Measuring Date”), the exercise price shall automatically

adjust to the Six Month Adjustment Price (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar

Six Month Adjustment Price means the greater of (x) $1.50 (as adjusted for any stock dividend, stock split, stock combination,

reclassification or similar transaction) and (y) 100% of the quotient of (I) the sum of the five lowest VWAPs of the common

stock during the ten consecutive trading day period ending and including the Six Month Measuring Date, divided by (II) five.

such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction

during such period.

The exercise price of the Series A warrant was adjusted pursuant to this formula from $3.72 to $1.50 per share

on December 20, 2019.

The Company used the adjusted exercise price to value its derivative liability on its December 31, 2019

financial statements and reporting periods onwards with changes in fair value of warrant liabilities from period to period are recorded

in the consolidated statements of operations and comprehensive loss under the caption “Change in fair value of derivative liabilities”.

The exercise price of the Series A warrant was further adjusted to $0.50 per share on August 7, 2020 as a result of the Company’s

issuance of shares of common stock in its underwritten public offering in August 2020, which has been recorded in the financial statements

in the year ended March 31, 2021.

In addition, the exercise price of the placement agent warrants from the June 2019 registered

direct offering was voluntarily adjusted by the Company from $3.72 to $0.50 per share on August 18, 2020.

The Series B warrants are pre-funded warrants

and were issued as a true-up with respect to the shares of common stock.

The maximum aggregate number of shares of common stock issuable

upon exercise of the Series B warrants is 1,116,320.

Initially, the Series B warrants shall not be exercisable for any shares

of common stock.

In the event that on the fiftieth (50th) day after the closing date (the “Adjustment Measuring Time”), the

closing price of the common stock is less than the Share Purchase Price, then the number of shares of common stock issuable upon exercise

of the Series B warrants shall be adjusted (upward or downward, as applicable) to the greater of (i) zero (0) and (ii) such

aggregate number of shares of common stock equal to fifty percent (50%) of the difference of (A) the quotient of (x) the Share

Purchase Price divided by (y) the Market Price (as defined in Purchase Agreement) as of the Adjustment Measuring Time, less (B) the

aggregate number of shares of common stock issued to the investors at the closing (as adjusted for share splits, share dividends, share

combinations, recapitalizations and similar events).

The exercise price of the Series B warrant was adjusted from $3.72 to $0.0001

per share on August 12, 2019.

The Company used the adjusted exercise price to value its derivative liability on its September 30,

2019 financial statements and reporting period onwards with changes in fair value of warrant liabilities from period to period are recorded

in the consolidated statements of operations and comprehensive loss under the caption “Change in fair value of derivative liabilities.

As of March 31, 2021, the Company has issued an aggregate of 1,113,188 shares of common stock to certain investors in the June 2019

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

Underwritten Public Offering and Exercise of

the Over-Allotment Option

On August 4, 2020, the Company entered into

an underwriting agreement with The Benchmark Company, LLC and Axiom Capital Management, Inc., as representatives of the Underwriters,

relating to an underwritten public offering of 12,000,000 shares of the Company’s common stock at the Offering Price.

the terms of the Underwriting Agreement, the Company granted the Underwriters a 45-day option to purchase up to an additional 1,800,000

shares of common stock to cover over-allotments, if any, at the Offering Price less the underwriting discounts and commissions.

An underwriting

discount of 7% was applied to the Offering Price, except for shares of common stock purchased by certain existing investors of the Company

(the “Excluded Investors”), an underwriting discount of 6% was applied.

On August 6, 2020, the Company completed the

underwritten offering.

The net proceeds to the Company from this offering, after deducting the underwriting discounts and commissions

and other estimated offering expenses payable by the Company, were approximately $5.3 million.

On August 13, 2020, the Underwriters exercised

their over-allotment option to purchase an additional 1,800,000 shares of common stock at $0.50 per share.

This transaction was completed

on August 13, 2020.

Net proceeds from the exercise of the underwriters’

over-allotment option were approximately $0.8 million

net of underwriting discounts and commissions and offering expenses.

In connection with the underwritten offering,

the Company issued the Underwriters or their permitted designees, on a private placement basis, the Underwriters’

Warrants to purchase

up to 568,000 shares of common stock.

These warrants are valid for a period of five years and exercisable commencing six months from August 4,

2020 at a price per share equal to 125% of the Offering Price and are exercisable on a “cashless”

On April 15, 2019, the SEC declared effective the Company’s Registration Statement on Form S-3, pursuant to which, along with the accompanying prospectus, the Company registered up to $ 80,000,000 in aggregate principal amount of its common stock, preferred stock, debt securities, warrants, rights and/or units.

On June 21, 2019, the Company closed a registered direct offering of an aggregate of 178,136 ( 1,781,360 pre reverse split) shares of its common stock, and in connection therewith, issued to the investors (i) for no additional consideration, Series A warrants to purchase up to an aggregate of 133,602 ( 1,336,021 pre reverse split) shares of common stock and (iii) for nominal additional consideration, Series B warrants to purchase up to a maximum aggregate of 111,632 ( 1,116,320 pre reverse split) shares of common stock.

The Company sold the shares of common stock at a price of $ 33.8 ($ 3.38 pre reverse split) per share (the “Share Purchase Price”).

The Company received gross proceeds from the offering of approximately $ 6.0 million, and net proceeds from the offering of approximately $ 5.1 million after deducting estimated offering expenses payable by the Company.

The Series A warrants are exercisable immediately upon issuance at an exercise price of $ 37.2 ($ 3.72 pre reverse split) per share and will expire on the fourth (4th) anniversary of the original issue date.

In the event that on December 20, 2019, the exercise price is greater than the Six Month Adjustment Price as defined below, on the trading day immediately following December 20, 2019 (the “Six Month Measuring Date”), the exercise price shall automatically adjust to the Six Month Adjustment Price (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events).

Six Month Adjustment Price means the greater of (x) $ 15.0 ($ 1.50 pre reverse split) (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction) and (y) 100 % of the quotient of (I) the sum of the five lowest VWAPs of the common stock during the ten consecutive trading day period ending and including the Six Month Measuring Date, divided by (II) five .

All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction during such period.

The exercise price of the Series A warrant was adjusted pursuant to this formula from $ 37.2 ($ 3.72 pre reverse split) to $ 15.00 ($ 1.50 pre reverse split) per share on December 20, 2019.

The Company used the adjusted exercise price to value its derivative liability on its December 31, 2019 financial statements and reporting periods onwards with changes in fair value of warrant liabilities from period to period are recorded in the consolidated statements of operations and comprehensive loss under the caption “Change in fair value of derivative liabilities”.

The exercise price of the Series A warrant was further adjusted to $ 5.0 ($ 0.50 pre reverse split) per share on August 7, 2020 as a result of the Company’s issuance of shares of common stock in its underwritten public offering in August 2020, which has been recorded in the financial statements in the year ended March 31, 2021.

In addition, the exercise price of the placement agent warrants from the June 2019 registered direct offering was voluntarily adjusted by the Company from $ 37.2 ($ 3.72 pre reverse split) to $ 5.0 ($ 0.50 pre reverse split) per share on August 18, 2020.

The Series B warrants are pre-funded warrants and were issued as a true-up with respect to the shares of common stock.

The maximum aggregate number of shares of common stock issuable upon exercise of the Series B warrants is 111,632 ( 1,116,320 pre reverse split).

Initially, the Series B warrants shall not be exercisable for any shares of common stock.

In the event that on the fiftieth (50th) day after the closing date (the “Adjustment Measuring Time”), the closing price of the common stock is less than the Share Purchase Price, then the number of shares of common stock issuable upon exercise of the Series B warrants shall be adjusted (upward or downward, as applicable) to the greater of (i) zero (0) and (ii) such aggregate number of shares of common stock equal to fifty percent (50%) of the difference of (A) the quotient of (x) the Share Purchase Price divided by (y) the Market Price (as defined in Purchase Agreement) as of

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the Adjustment Measuring Time, less (B) the aggregate number of shares of common stock issued to the investors at the closing (as adjusted for share splits, share dividends, share combinations, recapitalizations and similar events).

The exercise price of the Series B warrant was adjusted from $ 37.2 ($ 3.72 pre reverse split) to $ 0.001 ($ 0.0001 pre reverse split) per share on August 12, 2019.

The Company used the adjusted exercise price to value its derivative liability on its September 30, 2019 financial statements and reporting period onwards with changes in fair value of warrant liabilities from period to period are recorded in the consolidated statements of operations and comprehensive loss under the caption “Change in fair value of derivative liabilities.

As of March 31, 2021, the Company has issued an aggregate of 111,319 ( 1,113,188 pre reverse split) shares of common stock to certain investors in the June 2019 offering upon exercise of the pre-funded Series B warrants for a total consideration of $ 111 .

Underwritten Public Offering and Exercise of the Over-Allotment Option

On August 4, 2020, the Company entered into an underwriting agreement with The Benchmark Company, LLC and Axiom Capital Management, Inc., as representatives of the Underwriters, relating to an underwritten public offering of 1,200,000 ( 12,000,000 pre reverse split) shares of the Company’s common stock at the Offering Price.

Pursuant to the terms of the Underwriting Agreement, the Company granted the Underwriters a 45-day option to purchase up to an additional 180,000 ( 1,800,000 pre reverse split)shares of common stock to cover over-allotments, if any, at the Offering Price less the underwriting discounts and commissions.

An underwriting discount of 7 % was applied to the Offering Price, except for shares of common stock purchased by certain existing investors of the Company (the “Excluded Investors”), an underwriting discount of 6 % was applied.

On August 6, 2020, the Company completed the underwritten offering.

On August 13, 2020, the Underwriters exercised their over-allotment option to purchase an additional 180,000 ( 1,800,000 pre reverse split) shares of common stock at $ 5.0 ($ 0.50 pre reverse split) per share.

This transaction was completed on August 13, 2020.

Net proceeds from the exercise of the underwriters’ over-allotment option were approximately $ 0.8 million net of underwriting discounts and commissions and offering expenses.

In connection with the underwritten offering, the Company issued the Underwriters or their permitted designees, on a private placement basis, the Underwriters’ Warrants to purchase up to 56,800 ( 568,000 pre reverse split) shares of common stock.

These warrants are valid for a period of five years and exercisable commencing six months from August 4, 2020 at a price per share equal to 125 % of the Offering Price and are exercisable on a “cashless” basis.

February 2021 Registered Direct Offering

February 8, 2021, the Company entered into a placement agency agreement with FT Global Capital, Inc., to act as exclusive placement

agent in connection with the registered direct public offering.

Pursuant to the terms of the placement agency agreement, the Company agreed

to pay the Placement Agent a cash fee equal to 7.5% of the gross proceeds raised in the Offering, and to reimburse the Placement Agent

for certain expenses, including legal fees and expenses, up to $60,000 in the aggregate.

The Placement Agent is also entitled to additional

tail compensation for any financings consummated within the 12-month period following the termination of the Placement Agent Agreement

to the extent that such financing is provided to the Company by investors that the Placement Agent had introduced to the Company.

February 10, 2021, the Company completed the registered direct offering.

The net proceeds to the Company from this offering, after

deducting the underwriting discounts and commissions and other estimated offering expenses payable by the Company, were approximately

$5.7 million.

connection with the offering, the Company issued the placement agent warrants to purchase up to 380,435 shares of its common stock.

warrants are exercisable for a period of five years commencing 180 days from February 8, 2020 at a price of $1.38 per share

and are exercisable on a “cashless”

On February 8, 2021, the Company entered into a placement agency agreement with FT Global Capital, Inc., to act as exclusive placement agent in connection with the registered direct public offering.

Pursuant to the terms of the placement agency agreement, the Company agreed to pay the Placement Agent a cash fee equal to 7.5 % of the gross proceeds raised in the Offering, and to reimburse the Placement Agent for certain expenses, including legal fees and expenses, up to $ 60,000 in the aggregate.

The Placement Agent is also entitled to additional tail compensation for any financings consummated within the 12-month period following the termination of the Placement Agent Agreement to the extent that such financing is provided to the Company by investors that the Placement Agent had introduced to the Company.

On February 10, 2021, the Company completed the registered direct offering.

In connection with the offering, the Company issued the placement agent warrants to purchase up to 38,044 ( 380,435 pre reverse split) shares of its common stock.

These warrants are exercisable for a period of five years commencing 180 days from February 8, 2020 at a price of $ 13.8 ($ 1.38 pre reverse split) per share and are exercisable on a “cashless” basis.

In addition, the company issued The Benchmark Company, LLC and Axiom Capital Management, Inc.

seven percent of the gross proceeds from the offering and warrants to purchase up to 152,174 shares of its common stock, in consideration

for the termination of the ROFR.

These warrants are exercisable for a period of five years from February 8, 2020 at a price of $1.725

SUBSEQUENT EVENTS

ss from the offering and warrants to purchase up to 15,218 ( 152,174 pre reverse split) shares of its common stock, in consideration for the termination of the ROFR.

These warrants are exercisable for a period of five years from February 8, 2020 at a price of $ 17.25 ($ 1.725 pre reverse split) per share.

May 2021 Registered Direct Offering

On May 13, 2021, the Company completed a

registered direct offering of 5,531,916 shares of the Company’s common stock at $1.175 per share, pursuant to a securities purchase

agreement with certain purchasers dated May 11, 2021.

As a result, the Company raised approximately $5.8 million, net of placement

agent fees and offering expenses, to support the Company’s working capital requirements.

In connection with the offering, The Company

also issued warrants to the investors to purchase a total of 5,531,916 shares of common stock at an exercise price of $1.05 per share.

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

In connection with the offering,

the Company paid the placement agent cash commission of approximately $487,500 and issued to it warrants to purchase up to 414,894 shares

of common stock at an exercise price of $1.05 per share, which warrants will be exercisable at any time on or after the issuance date

and expire on the fifth year anniversary of their issuance.

The warrants will be fair valued on the transaction date and accounted for

as a derivative liability.

Exercise of Warrants

On April 23, 2021, one of the holders of Series A warrants exercised the warrants to purchase 44,029 shares of the Company’s common

stock at an exercise price of $0.50 per share, generating gross proceeds of approximately $22,015 to the Company.

Termination of JKL Investment

On July 2 2021, Hunan Ruixi, other shareholders of

Jinkailong and Hongyi signed a termination agreement to terminate the investment by Hongyi on Jinkailong.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

common stock, par value $ 0.0001 per share (“Common Stock”) and a warrant to purchase 0.1 (one pre reverse split) share of the Company’s Common Stock (the “Warrants”), at a purchase price of $ 1.175 per unit, for aggregate gross proceeds to the Company of $ 6,500,000 , before deducting fees to the placement agent and other estimated offering expenses payable by the Company.

On May 13, 2021, the Company completed the registered direct offering.

The Warrants have a term of five years and are exercisable by the holders at any time after the date of issuance at an exercise price of $ 10.5 ($ 1.05 pre reverse split) per share.

However, the exercise price of the Warrants shall not be lower than $ 10.5 ($ 1.05 pre reverse split) as a result of an adjustment, unless the Company has obtained the stockholder approval.

The exercisability of the Warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.99 %.

FT Global Capital, Inc.

These warrants are exercisable at any time on or after the issuance date and expire on the fifth-year anniversary of their issuance.

November 2021 Private Placement

On November 8, 2021, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Investors”) pursuant to which the Company will sell to the Investors, in a private placement (the “Private Placement”), an aggregate of $ 5,000,000 worth of securities of the Company, consisting of up to 5,000 shares (the “Preferred Shares”) of Series A Convertible Preferred Stock, par value $ 0.0001 per share (the “Series A Preferred Stock”) and warrants (the “Investor Warrants”) to initially acquire up to an aggregate number of shares of common stock of the Company, par value $ 0.0001 per share (the “Common Stock”) that equals to the number of shares of Common Stock to be issued upon conversion of the Preferred Shares at $ 0.68 per share (the “Initial Conversion Price”) (as exercised, collectively, the “Warrant Shares”).

The purchase price for the Preferred Shares shall be $ 1,000 per each Preferred Share (and related Investor Warrant).

On November 10, 2021, the Company completed the Private Placement.

The net proceeds to the Company from this offering, after deducting the placement agent commissions and other estimated offering expenses payable by the Company, were approximately $ 4.4 million.

A discount to the redemption amount of a contingently redeemable preferred share should be amortized only once it is probable the share will become redeemable.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

by the SEC or the first date on which all such shares are eligible to be resold by the Investors pursuant to Rule 144 or Rule 144A promulgated under the Securities Act.

The exercise price of the Investor Warrants are also subject to an adjustment in the event that the Company issues or is deemed to issue shares of Common Stock for less than the applicable exercise price of such Investor Warrants.

However, the exercise price of the Investor Warrants shall not be lower than $ 7.1 ($ 0.7125 pre reverse split) as a result of an adjustment, unless the Company has obtained the stockholder approval.

The exercisability of the Investor Warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.99 % or 9.99 % as the Investor chooses.

Meanwhile, the Company paid the placement agent cash commission of approximately $ 375,000 and issued to it warrants to purchase up to 55,148 ( 551,471 pre reverse split) shares of common stock at an exercise price of $ 6.8 ($ 0.68 pre reverse split) per share, which warrants will be exercisable at any time on or after the date of six months from the issuance date and expire on the fifth-year anniversary of their issuance.

Share Swap in purchase of XXTX’s remaining minority interest

In October 2021, the Company, Senmiao Consulting, XXTX and its shareholders entered into a Share Swap Agreement, pursuant to which the Company, through Senmiao Consulting, shall purchase all of the equity shares of XXTX held by its shareholders by issuing a total of 533,167 ( 5,331,667 pre reverse split) shares of the Company’s common stock to XXTX’s Shareholders.

Upon closing, the Company, through Senmiao Consulting, shall own 100 % of the equity interests in XXTX.

Common stock issued for consulting services

On October 22, 2021, the Company entered into a consulting agreement (the “Consulting Agreement”) with Jolly Good River Group Limited.

(the “Consultant”), pursuant to which the Company engaged the Consultant to provide certain market research and business development advisory services for a period of twelve months .

As of November 9, 2021, the issuance of 100,000 ( 1,000,000 pre reverse split) shares of the Company’s common stock has been completed and the Company recorded the consulting fee of $ 653,000 pursuant to the fair value on November 3, 2021, the grant date.

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.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUBSEQUENT EVENTS

Conversion Price Adjustment for November 2021 Preferred Shares

Pursuant to the COD signed by the Company and certain institutional investors in November 2021 Private Placement, the initial conversion price of the series A convertible Preferred Shares was $ 0.68 .

If as of the applicable date the conversion price then in effect is greater than the greater of (x) $ 0.41 (the “floor Price”) (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events) and (y) 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 the filing date of these consolidated financial statements, 520 shares of the Series A Convertible Preferred Stock have been converted to 126,831 shares of Common Stock.

Adjustments of Exercise Price and Warrant Shares for November 2021 Investors Warrants

Pursuant to November 2021 Investors Warrants, if at any time and from time to time on or after the issuance date there occurs any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (“Stock Combination Event”) and the Event Market Price (which is defined as with respect to any Stock Combination Event date, the quotient determined by dividing (x) the sum of the VWAP of the Common Stock for each of the five ( 5 ) lowest trading days during the twenty ( 20 ) consecutive trading day period ending and including the trading day immediately preceding the sixteenth (16th) trading day after such Stock Combination Event date, divided by (y) five ( 5 )) is less than the original exercise price of $ 0.82 then in effect, then on the sixteenth (16th) trading day immediately following such Stock Combination Event, the exercise price then in effect on such sixteenth (16th) trading day shall be reduced (but in no event increased) to the event market price.

As the 1-for-10 reverse stock split on the Company’s common stock became effective on April 6, 2022, the exercise price of the November 2021 Investors Warrants was adjusted to $ 1.13 , the Event Market Price and the total number of shares of the November 2021 Investors Warrants was adjusted to 5,335,763 .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data