Senmiao Technology Ltd 10-K

Item 8. Financial Statements and Supplementary Data The financial statements required by this item begin on page F-1 hereof. ​ Index to Financial Statements Report of Independent Registered Public Accounting Firm (PCOAB ID 711 ) F-1 Financial Statements: ​ Consolidated Balance Sheets as of March 31, 2022 and 2021 ​ F-2 Consolidated Statements of Operations and Comprehensive Loss for the Years Ended March 31, 2022 and 2021 ​ F-3 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended March 31, 2022 and 2021 ​ F-4 Consolidated Statements of Cash Flows for the Years Ended March 31, 2022 and 2021 ​ F-5 Notes to Consolidated Financial Statements ​ F-6 ​ ​ ​ ​ 100 Table of Contents ​ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ​ To the Board of Directors and Stockholders of Senmiao Technology Limited Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Senmiao Technology Limited (collectively, the “Company”) as of March 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended March 31, 2022, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Consideration of the Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company had incurred significant working capital deficiency and accumulated deficit at March 31, 2022, net loss from continuing operations and net operating cash flows for the year ended March 31, 2022. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 2. These consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. If the Company is unable to successfully obtain the necessary additional financial support as specified in Note 2, there could be a material adverse effect on the Company. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. 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. /s/ Friedman LLP We have served as the Company’s auditor since 2018. New York, New York July 14, 2022 ​ ​ F-1 Table of Contents SENMIAO TECHNOLOGY LIMITED CONSOLIDATED BALANCE SHEETS (Expressed in U.S. dollar, except for the number of shares) ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 ASSETS ​ ​ Current assets ​ ​ Cash, and cash equivalents ​ $ 1,185,221 ​ $ 4,340,529 Accounts receivable, net, current portion ​ ​ 418,022 ​ 502,031 Inventories ​ 286,488 ​ 127,933 Finance lease receivables, net, current portion ​ 314,264 ​ 541,605 Prepayments, other receivables and other assets, net ​ ​ 2,713,208 ​ 2,660,083 Due from related parties, current portion ​ 682,335 ​ — Current assets - discontinued operations ​ ​ — ​ ​ 2,720,825 Total current assets ​ 5,599,538 ​ 10,893,006 ​ ​ ​ ​ Property and equipment, net ​ ​ ​ ​ Property and equipment, net ​ ​ 5,658,773 ​ 3,251,331 Property and equipment, net - discontinued operations ​ ​ — ​ ​ 454,408 Total property and equipment, net ​ ​ 5,658,773 ​ ​ 3,705,739 ​ ​ ​ ​ ​ ​ ​ Other assets ​ ​ ​ Operating lease right-of-use assets, net ​ ​ 109,621 ​ ​ 233,751 Operating lease right-of-use assets, net, related parties ​ ​ 515,906 ​ ​ 580,367 Financing lease right-of-use assets, net ​ ​ 305,933 ​ ​ 577,079 Intangible assets, net ​ 959,551 ​ 968,131 Goodwill ​ ​ — ​ ​ 135,388 Accounts receivable, net, noncurrent ​ ​ 69 ​ 61,943 Finance lease receivables, net, noncurrent ​ ​ 92,980 ​ ​ 473,472 Due from a related party, noncurrent ​ ​ 6,635,746 ​ ​ — Other assets - discontinued operations ​ ​ — ​ 4,674,403 Total other assets ​ 8,619,806 ​ 7,704,534 ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 19,878,117 ​ $ 22,303,279 ​ ​ ​ ​ LIABILITIES, MEZZANNIE EQUITY AND EQUITY ​ ​ ​ Current liabilities ​ ​ ​ Borrowings from financial institution ​ $ 145,542 ​ $ — Accounts payable ​ ​ 14,446 ​ ​ 44,769 Advances from customers ​ 120,629 ​ 110,173 Accrued expenses and other liabilities ​ 2,444,367 ​ 2,873,227 Due to related parties and affiliates ​ ​ 11,682 ​ 82,909 Operating lease liabilities ​ ​ 50,177 ​ ​ 109,813 Operating lease liabilities - related parties ​ ​ 330,781 ​ ​ 243,726 Financing lease liabilities ​ ​ 304,557 ​ ​ 358,135 Derivative liabilities ​ ​ 2,215,204 ​ ​ 1,278,926 Current liabilities - discontinued operations ​ ​ 528,426 ​ 11,677,266 Total current liabilities ​ 6,165,811 ​ 16,778,944 ​ ​ ​ ​ Other liabilities ​ ​ ​ ​ ​ ​ Operating lease liabilities, non-current ​ ​ 47,910 ​ ​ 95,886 Operating lease liabilities, non-current - related parties ​ ​ 226,896 ​ ​ 341,549 Financing lease liabilities, non-current ​ ​ 1,376 ​ 218,944 Deferred tax liability ​ ​ 46,386 ​ ​ 44,993 Other liabilities - discontinued operations ​ ​ — ​ ​ 2,250,393 Total other liabilities ​ 322,568 ​ 2,951,765 ​ ​ ​ ​ ​ Total liabilities ​ ​ 6,488,379 ​ ​ 19,730,709 ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ 820,799 ​ ​ — ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity ​ ​ ​ Common stock (par value $ 0.0001 per share, 10,000,000 shares authorized; 6,186,783 and 4,978,073 shares issued and outstanding at March 31, 2022 and 2021, respectively)* ​ 630 ​ 498 Additional paid-in capital ​ 42,803,033 ​ 40,759,807 Accumulated deficit ​ ( 34,601,545 ) ​ ( 34,064,921 ) Accumulated other comprehensive loss ​ ( 109,454 ) ​ ( 838,671 ) Total Senmiao Technology Limited stockholders’ equity ​ 8,092,664 ​ 5,856,713 ​ ​ ​ ​ Non-controlling interests ​ 4,476,275 ​ ( 3,284,143 ) ​ ​ ​ ​ ​ ​ ​ Total equity ​ 12,568,939 ​ 2,572,570 ​ ​ ​ ​ ​ ​ ​ Total liabilities, mezzanine equity and equity ​ $ 19,878,117 ​ $ 22,303,279 ​ * 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. ​ F-2 Table of Contents SENMIAO TECHNOLOGY LIMITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Expressed in U.S. dollar, except for the number of shares) ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended March 31, ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ Revenues ​ $ 4,913,102 ​ $ 2,188,840 Cost of revenues ​ ( 6,511,031 ) ​ ( 1,984,079 ) Gross profit (loss) ​ ( 1,597,929 ) ​ 204,761 ​ ​ ​ ​ Operating expenses ​ ​ ​ Selling, general and administrative expenses ​ ( 9,525,408 ) ​ ( 5,905,579 ) Provision for doubtful accounts, net of recovery ​ ​ ( 235,279 ) ​ ​ ( 299,658 ) Impairments of inventories ​ ​ ( 60,398 ) ​ ​ — Impairments of long-lived assets and goodwill ​ ​ ( 142,974 ) ​ ​ ( 10,953 ) Total operating expenses ​ ( 9,964,059 ) ​ ( 6,216,190 ) ​ ​ ​ ​ Loss from operations ​ ( 11,561,988 ) ​ ( 6,011,429 ) ​ ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ Other income (expense), net ​ ​ ( 107,444 ) ​ ​ 301,269 Interest expense ​ ( 5,893 ) ​ — Interest expense on finance leases ​ ( 55,844 ) ​ ( 46,518 ) Change in fair value of derivative liabilities ​ 6,951,482 ​ ( 1,710,415 ) Issuance cost incurred for issuing series A convertible preferred stock ​ ​ ( 821,892 ) ​ ​ — Total other income (expense), net ​ 5,960,409 ​ ( 1,455,664 ) ​ ​ ​ ​ ​ ​ ​ Loss before income taxes ​ ​ ( 5,601,579 ) ​ ( 7,467,093 ) ​ ​ ​ ​ Income tax expense ​ ​ ( 4,566 ) ​ ( 8,332 ) ​ ​ ​ ​ Net loss from continuing operations ​ ​ ( 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 ​ 10,975,101 ​ — Gain (loss) from discontinued operations ​ ​ 8,227,892 ​ ​ ( 5,187,214 ) ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ ​ 2,621,747 ​ ​ ( 12,662,639 ) ​ ​ ​ ​ ​ Net (income) loss attributable to non-controlling interests from continuing operations ​ ​ ( 3,872,645 ) ​ ​ 970,019 Net loss attributable to non-controlling interests from discontinued operations ​ ​ 714,274 ​ ​ 1,332,562 ​ ​ ​ ​ ​ ​ ​ Net loss attributable to the Company’s stockholders ​ $ ( 536,624 ) ​ $ ( 10,360,058 ) ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ 2,621,747 ​ $ ( 12,662,639 ) ​ ​ ​ ​ ​ ​ ​ Other comprehensive loss ​ ​ ​ ​ ​ ​ Foreign currency translation adjustment ​ ​ 64,470 ​ ( 314,669 ) ​ ​ ​ ​ ​ Comprehensive income (loss) ​ ​ 2,686,217 ​ ( 12,977,308 ) ​ ​ ​ ​ ​ ​ ​ less: Total comprehensive income (loss) attributable to noncontrolling interests ​ ​ 3,142,520 ​ ​ ( 2,286,057 ) ​ ​ ​ ​ ​ Total comprehensive loss attributable to stockholders ​ $ ( 456,303 ) ​ $ ( 10,691,251 ) ​ ​ ​ ​ ​ ​ ​ Weighted average number of common stock ​ ​ ​ Basic and diluted* ​ 5,726,997 ​ 3,943,089 ​ ​ ​ ​ Earnings (loss) per share - basic and diluted* ​ ​ ​ ​ Continuing operations ​ $ ( 1.66 ) ​ $ ( 1.65 ) Discontinued operations ​ $ 1.56 ​ $ ( 0.98 ) ​ *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. ​ F-3 Table of Contents SENMIAO TECHNOLOGY LIMITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY For the Years Ended March 31, 2022 and 2021 (Expressed in U.S. dollar, except for the number of shares) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ other ​ ​ ​ ​ ​ ​ ​ Common stock ​ paid-in ​ Accumulated ​ comprehensive ​ Non-controlling ​ Total ​ Shares* Par value capital deficit loss interest equity BALANCE, March 31, 2020 2,900,882 ​ $ 290 ​ $ 27,015,748 ​ $ ( 23,704,863 ) ​ $ ( 507,478 ) ​ $ ( 1,331,340 ) ​ $ 1,472,357 Net loss — ​ — ​ — ​ ( 10,360,058 ) ​ — ​ ( 2,302,581 ) ​ ( 12,662,639 ) Exercise of Series A warrants into common stock 126,609 ​ 13 ​ 683,033 ​ — ​ — ​ — ​ 683,046 Exercise of Placement warrants into common stock 13,335 ​ 1 ​ ( 1 ) ​ — ​ — ​ — ​ — Fair value of derivative liabilities upon exercise of warrants — ​ — ​ 1,769,841 ​ — ​ — ​ — ​ 1,769,841 Issuance of common stock and warrants in an underwritten direct offering, net of issuance costs ​ 1,200,000 ​ ​ 120 ​ ​ 5,261,177 ​ ​ — ​ ​ — ​ ​ — ​ ​ 5,261,297 Issuance of common stock pursuant to exercise of underwriters’ over-allotment option, net of issuance costs ​ 180,000 ​ ​ 18 ​ ​ 836,982 ​ ​ — ​ ​ — ​ ​ — ​ ​ 837,000 Issuance of common stock and warrants in a registered direct offering, net of issuance costs ​ 507,247 ​ ​ 51 ​ ​ 5,743,854 ​ ​ — ​ ​ — ​ ​ — ​ ​ 5,743,905 Fair value of warrants allocated to derivative liabilities ​ — ​ ​ — ​ ​ ( 995,822 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 995,822 ) Issuance of common stock and warrants in a registered direct offering, net of issuance costs ​ 50,000 ​ ​ 5 ​ ​ 444,995 ​ ​ — ​ ​ — ​ ​ — ​ ​ 445,000 Acquisition of business entities ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 333,254 ​ ​ 333,254 Foreign currency translation adjustment — ​ — ​ — ​ — ​ ( 331,193 ) ​ 16,524 ​ ( 314,669 ) BALANCE, March 31, 2021 4,978,073 ​ $ 498 ​ $ 40,759,807 ​ $ ( 34,064,921 ) ​ $ ( 838,671 ) ​ $ ( 3,284,143 ) ​ $ 2,572,570 Net income (loss) ​ — ​ ​ — ​ ​ — ​ ​ ( 536,624 ) ​ ​ — ​ ​ 3,158,371 ​ ​ 2,621,747 Issuance of common stock and warrants in a registered direct offering, net of issuance costs ​ 553,192 ​ ​ 56 ​ ​ 2,208,593 ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,208,649 Issuance of restricted stock units ​ 9,546 ​ ​ 9 ​ ​ 104,991 ​ ​ — ​ ​ — ​ ​ — ​ ​ 105,000 Exercise of Series A warrants into common stock ​ 4,403 ​ ​ 4 ​ ​ 22,011 ​ ​ — ​ ​ — ​ ​ — ​ ​ 22,015 Fair value of derivative liabilities upon exercise of warrants ​ — ​ ​ — ​ ​ 45,674 ​ ​ — ​ ​ — ​ ​ — ​ ​ 45,674 Issuance of common stock in purchase of XXTX’s remaining NCI ​ 533,167 ​ ​ 53 ​ ​ ( 1,357,637 ) ​ ​ — ​ ​ ( 21,762 ) ​ ​ 1,379,346 ​ ​ — Issuance of common stock for consulting service ​ 100,000 ​ ​ 10 ​ ​ 652,990 ​ ​ — ​ ​ — ​ ​ — ​ ​ 653,000 Foreign currency translation adjustment ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 80,321 ​ ​ ( 15,851 ) ​ ​ 64,470 Recognition of non-controlling interest from acquired equity interest of Sichuan Senmiao upon termination of the VIE agreement ​ — ​ ​ — ​ ​ 366,604 ​ ​ — ​ ​ — ​ ​ ( 366,604 ) ​ ​ — Deconsolidation of discontinued operation ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 670,658 ​ ​ 3,605,156 ​ ​ 4,275,814 Additional shares of common stock round up adjustment due to retroactive effect of 1-for-10 reverse stock split ​ 8,402 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — BALANCE, March 31, 2022 ​ 6,186,783 ​ $ 630 ​ $ 42,803,033 ​ $ ( 34,601,545 ) ​ $ ( 109,454 ) ​ $ 4,476,275 ​ $ 12,568,939 ​ *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. ​ ​ F-4 Table of Contents SENMIAO TECHNOLOGY LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in U.S. dollar, except for the number of shares) ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended March 31, ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ Cash Flows from Operating Activities: ​ ​ Net income (loss) ​ $ 2,621,747 ​ $ ( 12,662,639 ) Net income (loss) from discontinued operations ​ ​ 8,227,892 ​ ​ ( 5,187,214 ) Net loss from continuing operations ​ ​ ( 5,606,145 ) ​ ​ ( 7,475,425 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: ​ ​ Depreciation and amortization of property and equipment ​ 956,400 ​ 85,530 Stock compensation expense ​ 653,000 ​ 445,000 Issuance cost incurred for issuing series A convertible preferred stock ​ ​ 821,892 ​ ​ - Amortization of right-of-use assets ​ ​ 955,443 ​ ​ 398,292 Amortization of intangible assets ​ ​ 160,831 ​ ​ 107,765 Provision for doubtful accounts, net of recovery ​ ​ 235,279 ​ ​ 299,658 Impairments of inventories ​ ​ 60,398 ​ ​ — Impairments of long-lived assets ​ 142,974 ​ 10,953 Gain on disposal of equipment ​ ​ — ​ ​ ( 425 ) Change in fair value of derivative liabilities ​ ( 6,951,482 ) ​ 1,710,415 Change in operating assets and liabilities ​ — ​ — Accounts receivable ​ 4,456 ​ 162,828 Inventories ​ ( 260,464 ) ​ 172,626 Prepayments, other receivables and other assets ​ ​ 28,254 ​ ​ ( 1,366,724 ) Finance lease receivables ​ ​ 634,103 ​ ​ 348,919 Accounts payable ​ ( 31,434 ) ​ ( 6,067 ) Advances from customers ​ 6,678 ​ 47,895 Income tax payable ​ — ​ ( 168 ) Accrued expenses and other liabilities ​ ​ ( 377,965 ) ​ ​ 2,123,010 Operating lease liabilities ​ ​ ( 240,051 ) ​ ​ ( 64,701 ) Operating lease liabilities - related parties ​ ​ ( 228,281 ) ​ ​ ( 195,519 ) Net cash used in operating activities from continuing operations ​ ​ ( 9,036,114 ) ​ ​ ( 3,196,138 ) Net cash used in operating activities from discontinued operations ​ ​ ( 123,167 ) ​ ​ ( 739,929 ) Net Cash Used in Operating Activities ​ ( 9,159,281 ) ​ ( 3,936,067 ) ​ ​ ​ Cash Flows from Investing Activities: ​ ​ Purchases of property and equipment ​ ( 3,223,992 ) ​ ( 2,293,415 ) Purchases of intangible assets ​ ( 141,730 ) ​ ( 25,347 ) Cash released upon termination of a VIE ​ ​ ( 193 ) ​ ​ — Cash acquired from XXTX, net of cash paid to XXTX ​ ​ — ​ ​ 8,065 Net cash used in investing activities from continuing operations ​ ​ ( 3,365,915 ) ​ ​ ( 2,310,697 ) Net cash used in investing activities from discontinued operations ​ ​ ( 111,210 ) ​ ​ ( 200,165 ) Net Cash Used in Investing Activities ​ ( 3,477,125 ) ​ ( 2,510,862 ) ​ ​ ​ ​ Cash Flows from Financing Activities: ​ ​ ​ Net proceeds from issuance of common stock and warrants in a registered direct public offering ​ ​ 5,771,053 ​ ​ 5,743,905 Net proceeds from issuance of common stock and warrants in an underwritten public offering ​ ​ — ​ ​ 5,261,297 Net proceeds from issuance of common stock upon warrants exercised ​ ​ 22,015 ​ ​ 683,046 Net proceeds from issuance of series A convertible preferred stock and warrants in a private placement offering ​ ​ 4,369,937 ​ ​ — Net proceeds from exercise of underwriters’ over-allotment option ​ — ​ 837,000 Borrowings from a financial institution ​ 183,390 ​ — Loan to related parties ​ — ​ ( 101,142 ) Repayments to related parties and affiliates ​ ​ ( 117,761 ) ​ ​ ( 37,445 ) Repayments of current borrowings from financial institutions ​ ​ ( 39,613 ) ​ ​ — Principal payments of finance lease liabilities ​ ​ ( 433,611 ) ​ ​ ( 2,230,765 ) Net cash provided by financing activities from continuing operations ​ ​ 9,755,410 ​ ​ 10,155,896 Net cash provided by financing activities from discontinued operations ​ — ​ 103,881 Net Cash Provided by Financing Activities ​ 9,755,410 ​ 10,259,777 ​ ​ ​ ​ Effect of exchange rate changes on cash and cash equivalents ​ ( 381,858 ) ​ ​ ( 208,800 ) ​ ​ ​ Net (decrease) increase in cash and cash equivalents ​ ( 3,262,854 ) ​ ​ 3,604,048 Cash and cash equivalents, beginning of year ​ 4,448,075 ​ ​ 844,027 Cash and cash equivalents, end of year ​ ​ 1,185,221 ​ ​ 4,448,075 ​ ​ ​ Less: Cash and cash equivalents from discontinued operations ​ ​ — ​ ​ ( 107,546 ) ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents from continuing operations, end of year ​ $ 1,185,221 ​ $ 4,340,529 ​ ​ ​ ​ ​ ​ ​ Supplemental Cash Flow Information ​ ​ Cash paid for interest expense ​ $ 5,893 ​ $ 45,764 Non-cash Transaction in Investing and Financing Activities ​ ​ Recognition of right-of-use assets and lease liabilities ​ $ 273,555 ​ $ 3,785,526 Recognition of right-of-use assets and lease liabilities, related parties ​ $ 181,620 ​ $ — Recognition of other receivables from Jinkailong upon deconsolidation ​ $ 7,298,208 ​ $ — Acquisition of equipment through prepayment and financing lease receivables offset ​ $ — ​ $ 941,263 Allocation of fair value of derivative liabilities for issuance of common stock ​ $ 7,932,341 ​ $ 997,193 Allocation of fair value of derivative liabilities to additional paid in capital upon warrants exercised ​ $ 45,674 ​ $ 1,771,213 Acquisition of XXTX with payables ​ $ — ​ $ 317,835 Acquisition of XXTX’s minority interest with issuance of common stock ​ $ 1,972,717 ​ $ — ​ The accompanying notes are an integral part of the consolidated financial statements. ​ ​ F-5 Table of Contents SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND PRINCIPAL ACTIVITIES Senmiao Technology Limited (the “Company”) is a U.S. holding company incorporated in the State of Nevada on June 8, 2017 . The Company operates its business in two segments: (i) automobile transaction and related services focusing on the online ride-hailing industry in the People’s Republic of China (“PRC” or “China”) through 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 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 F-6 Table of Contents 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 F-7 Table of Contents 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. F-8 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ — ​ $ 27,229 Accounts receivable, net, current portion ​ ​ — ​ ​ — Prepayments, other receivables and other assets, net ​ ​ — ​ ​ 135 Other receivable- intercompany ​ ​ — ​ ​ 1,718,343 Current assets - discontinued operations (1) ​ ​ — ​ ​ 2,995,558 Total current assets ​ ​ — ​ ​ 4,741,265 ​ ​ ​ ​ ​ ​ ​ Property and equipment, net: ​ ​ ​ ​ ​ ​ Property and equipment, net ​ ​ — ​ ​ — Property and equipment, net - discontinued operations ​ ​ — ​ ​ 454,228 Total property and equipment, net ​ ​ — ​ ​ 454,228 ​ ​ ​ ​ ​ ​ ​ Other assets: ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets, net, related parties ​ ​ — ​ ​ 9,896 Other assets - discontinued operations ​ ​ — ​ ​ 4,674,403 Total other assets ​ ​ — ​ ​ 4,684,299 ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ — ​ $ 9,879,792 ​ ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ Accrued expenses and other liabilities ​ $ — ​ $ 581,126 Other payable - intercompany ​ ​ — ​ ​ 2,715,847 Due to related parties and affiliates ​ ​ — ​ ​ 82,908 Operating lease liabilities - related parties ​ ​ — ​ ​ 4,989 Current liabilities - discontinued operations (2) ​ ​ — ​ ​ 15,896,580 Total current liabilities ​ ​ — ​ ​ 19,281,450 ​ ​ ​ ​ ​ ​ ​ Other liabilities: ​ ​ ​ ​ ​ ​ Operating lease liabilities, non-current - related parties ​ ​ — ​ ​ 3,850 Other liabilities - discontinued operations ​ ​ — ​ ​ 2,250,393 Total other liabilities ​ ​ — ​ ​ 2,254,243 ​ ​ ​ ​ ​ ​ ​ Total liabilities ​ $ — ​ $ 21,535,693 (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. ​ F-9 Table of Contents 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 ​ ​ March 31, ​ 2022 2021* Net revenue from continuing operations ​ $ 32,817 ​ $ — Net revenue from discontinued operations ​ $ 6,830,116 ​ $ 3,978,847 Loss from operations from continuing operations ​ $ ( 179,068 ) ​ $ ( 532,455 ) Loss from operations from discontinued operations ​ $ ( 2,537,715 ) ​ $ ( 4,254,403 ) Net loss from continuing operations attributable to stockholders ​ $ ( 175,283 ) ​ $ ( 530,983 ) Net loss from discontinued operations attributable to stockholders ​ $ ( 2,032,934 ) ​ $ ( 3,722,648 ) Net loss attributable to stockholders ​ $ ( 2,208,218 ) ​ $ ( 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. ​ 2. GOING CONCERN In assessing the Company’s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. Debt financing from financial institutions and equity financings have been utilized to finance the working capital requirements of the Company. The Company’s business is capital intensive. The Company’s management has considered whether there is substantial doubt about its ability to continue as a going concern due to (1) 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: ● the Company will continue to seek equity financing to support its working capital; ● other available sources of financing (including debt) from PRC banks and other financial institutions; and ● financial support and credit guarantee commitments from the Company’s related parties. Based on the above considerations, management is of the opinion that the Company will probably not have sufficient funds to meet its working capital requirements and debt obligations as they become due one year from the filing date of these consolidated financial statements, if the Company is unable to obtain additional financing. 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 F-10 Table of Contents 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. ​ 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of presentation The accompanying consolidated financial statements of the Company has been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). (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. (c) Foreign currency translation Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing on the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates on the date of the balance sheet. The resulting exchange differences are recorded in the statement of operations. The reporting currency of the Company and its subsidiaries and former VIEs is U.S. dollars (“US$”) and the consolidated financial statements have been expressed in US$. However, the Company maintains the books and records in its functional currency, Chinese Renminbi (“RMB”), being the functional currency of the economic environment in which its operations are conducted. In general, for consolidation purposes, assets and liabilities of the Company and its subsidiaries whose functional currency is not the US$, are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of the Company and its subsidiaries and former VIEs are recorded as a separate component of accumulated other comprehensive loss within the consolidated statements of changes in stockholders’ equity. Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective periods: ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 Balance sheet items, except for equity accounts 6.3400 6.5527 ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended March 31, ​ 2022 2021 Items in the statements of operations and comprehensive loss, and statements of cash flows 6.4178 6.7960 ​ (d) Use of estimates In presenting the consolidated financial statements in accordance with U.S. GAAP, management make estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. The Company bases its estimates on past experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. 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 F-11 Table of Contents 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: 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 ​ Fair Value Measurement at ​ ​ March 31, 2022 ​ March 31, 2022 ​ ​ ​ ​ Level 1 Level 2 Level 3 Derivative liabilities $ 2,215,204 $ — $ — $ 2,215,204 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying Value at ​ Fair Value Measurement at ​ ​ March 31, 2021 ​ March 31, 2021 ​ ​ ​ Level 1 Level 2 Level 3 Derivative liabilities ​ $ 1,278,926 ​ $ — ​ $ — ​ $ 1,278,926 ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ August ​ February ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2020 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Underwritten ​ Registered ​ May 2021 ​ November 2021 ​ ​ ​ ​ ​ 2019 Registered Direct Offering ​ Public ​ Direct ​ Registered Direct Offering ​ Private Placement ​ ​ ​ ​ Series A Series B Placement Offering Offering ​ Investors ​ Placement ​ Investors ​ Placement ​ ​ ​ ​ Warrants Warrants Warrants Warrants Warrants Warrants Warrants Warrants Warrants Total BALANCE as of March 31, 2020 ​ $ 315,923 ​ $ 1,371 ​ $ 25,236 ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 342,530 Derivative liabilities recognized at grant date ​ ​ — ​ ​ — ​ ​ — ​ ​ 241,919 ​ ​ 755,274 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 997,193 Change in fair value of derivative liabilities ​ ​ 1,234,630 ​ ​ — ​ ​ 138,336 ​ ​ 455,162 ​ ​ ( 117,713 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,710,415 Fair value of warrants exercised ​ ​ ( 1,470,285 ) ​ ​ — ​ ​ — ​ ​ ( 299,556 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,769,841 ) Warrant forfeited due to expiration ​ ​ — ​ ​ ( 1,371 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,371 ) BALANCE as of March 31, 2021 ​ 80,268 ​ — ​ 163,572 ​ 397,525 ​ 637,561 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ 1,278,926 Derivative liabilities recognized at grant date ​ — ​ — ​ — ​ — ​ — ​ ​ 3,313,864 ​ ​ 248,541 ​ ​ 4,060,857 ​ ​ 310,173 ​ 7,933,435 Change in fair value of derivative liabilities ​ ( 32,680 ) ​ — ​ ( 153,047 ) ​ ( 352,944 ) ​ ( 572,018 ) ​ ​ ( 2,535,376 ) ​ ​ ( 190,154 ) ​ ​ ( 2,895,392 ) ​ ​ ( 219,871 ) ​ ( 6,951,482 ) Fair value of warrants exercised ​ ( 45,675 ) ​ — ​ — ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ( 45,675 ) BALANCE as of March 31, 2022 ​ $ 1,913 ​ $ — ​ $ 10,525 ​ $ 44,581 ​ $ 65,543 ​ $ 778,488 ​ $ 58,387 ​ $ 1,165,465 ​ $ 90,302 ​ $ 2,215,204 ​ 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 F-12 Table of Contents 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. 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. F-13 Table of Contents 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 August 4, 2020 ​ February 10, 2021 ​ May 13, 2021 ​ November 10, 2021 ​ ​ Series A Series B Placement Agent Underwriters’ ​ Placement Agent ​ ROFR ​ Investor ​ Placement Agent ​ Investor ​ Placement Agent ​ ​ ​ Warrants ​ Warrants ​ Warrants Warrants ​ Warrants ​ Warrants ​ Warrants ​ Warrants ​ Warrants ​ Warrants ​ # of shares exercisable* ​ 133,602 ​ 111,632 ​ 14,251 ​ ​ 56,800 ​ ​ 38,044 ​ ​ 15,218 ​ ​ 553,192 ​ ​ 41,490 ​ ​ 735,295 ​ ​ 55,148 ​ Valuation date ​ 6/20/2019 ​ 6/20/2019 ​ 6/20/2019 ​ ​ 8/4/2020 ​ ​ 2/10/2021 ​ ​ 2/10/2021 ​ ​ 5/13/2021 ​ ​ 5/13/2021 ​ ​ 11/10/2021 ​ ​ 11/10/2021 ​ Exercise price* ​ $ 37.20 ​ $ 37.20 ​ $ 33.80 ​ $ 6.30 ​ $ 13.80 ​ $ 17.30 ​ $ 10.50 ​ $ 10.50 ​ $ 8.20 ​ $ 6.80 ​ Stock price* ​ $ 28.00 ​ $ 28.00 ​ $ 28.00 ​ $ 5.10 ​ $ 16.30 ​ $ 16.30 ​ $ 7.20 ​ $ 7.20 ​ $ 6.70 ​ $ 6.70 ​ Expected term (years) ​ 4 ​ 1 ​ 4 ​ ​ 5 ​ ​ 5 ​ ​ 5 ​ ​ 5 ​ ​ 5 ​ ​ 5 ​ ​ 5 ​ Risk-free interest rate ​ 1.77 % 1.91 % 1.77 % ​ 0.19 % ​ 0.46 % ​ 0.46 % ​ 0.84 % ​ 0.84 % ​ 1.23 % ​ 1.23 % Expected volatility ​ 86 % 91 % 86 % ​ 129 % ​ 132 % ​ 132 % ​ 131 % ​ 131 % ​ 126 % ​ 126 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of March 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ August 4, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 20, 2019 ​ 2020 ​ February 10, 2021 ​ May 13, 2021 ​ November 10, 2021 ​ ​ ​ ​ ​ Placement ​ ​ ​ ​ Placement ​ ​ ​ ​ ​ ​ Placement ​ ​ ​ ​ Placement ​ ​ ​ Series A ​ Agent ​ Underwriters’ ​ Agent ​ ROFR Investor ​ Agent ​ Investor ​ Agent ​ Granted Date ​ Warrants ​ Warrants ​ Warrants ​ Warrants ​ Warrants Warrants ​ Warrants ​ Warrants ​ Warrants ​ # of shares exercisable* ​ 2,590 ​ 14,251 ​ 31,808 ​ 38,044 ​ 15,218 ​ ​ 553,192 ​ 41,490 ​ 735,295 ​ 55,148 Valuation date ​ 3/31/2022 ​ 3/31/2022 ​ 3/31/2022 ​ 3/31/2022 ​ 3/31/2022 ​ ​ 3/31/2022 ​ 3/31/2022 ​ 3/31/2022 ​ 3/31/2022 Exercise price* ​ $ 5.00 ​ $ 5.00 ​ $ 6.30 ​ $ 13.80 ​ $ 17.30 ​ $ 10.50 ​ $ 10.50 ​ $ 8.20 ​ $ 6.80 ​ Stock price* ​ $ 2.30 ​ $ 2.30 ​ $ 2.30 ​ $ 2.30 ​ $ 2.30 ​ $ 2.30 ​ $ 2.30 ​ $ 2.30 ​ $ 2.30 ​ Expected term (years) ​ 1.22 ​ 1.22 ​ 3.35 ​ 3.87 ​ 3.87 ​ 4.12 ​ 4.12 ​ 4.62 ​ 4.62 ​ Risk-free interest rate ​ 1.77 % 1.77 % 2.44 % 2.44 % 2.44 % 2.43 % 2.43 % 2.43 % 2.43 % Expected volatility ​ 123 % 123 % 123 % 123 % 123 % 123 % 123 % 123 % 123 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of March 31, 2021 ​ ​ ​ June 20, 2019 ​ August 4, 2020 ​ February 10, 2021 ​ ​ Series A Placement Agent Underwriters’ Placement Agent ROFR Granted Date ​ Warrants Warrants Warrants Warrants Warrants ​ # of shares exercisable* ​ 6,993 ​ 14,251 ​ 31,808 ​ ​ 38,044 ​ 15,218 Valuation date ​ 3/31/2021 ​ 3/31/2021 ​ 3/31/2021 ​ ​ 3/31/2021 ​ 3/31/2021 Exercise price* ​ $ 5.00 ​ $ 5.00 ​ $ 6.30 ​ $ 13.80 ​ $ 17.30 ​ Stock price* ​ $ 14.00 ​ $ 14.00 ​ $ 14.00 ​ $ 14.00 ​ $ 14.00 ​ Expected term (years) ​ 2.22 ​ 2.22 ​ 4.35 ​ 4.87 ​ 4.87 ​ Risk-free interest rate ​ 0.20 % 0.20 % 0.73 % 0.88 % 0.88 % Expected volatility ​ 132 % 132 % 132 % 132 % 132 % ​ *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. F-14 Table of Contents 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. 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 F-15 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ March 31, ​ ​ 2022 ​ 2021 Minimum lease payments receivable ​ $ 511,030 ​ $ 1,343,662 Less: Unearned interest ​ ​ ( 103,786 ) ​ ( 328,585 ) Financing lease receivables, net ​ $ 407,244 ​ $ 1,015,077 Finance lease receivables, net, current portion ​ $ 314,264 ​ $ 541,605 Finance lease receivables, net, non-current portion ​ $ 92,980 ​ $ 473,472 ​ Future scheduled minimum lease payments for investments in sales-type leases as of March 31, 2022 are as follows: ​ ​ ​ ​ ​ Minimum future ​ ​ payments receivable Twelve months ending March 31, 2023 ​ $ 345,425 Twelve months ending March 31, 2024 ​ 150,633 Twelve months ending March 31, 2025 ​ 14,972 Total ​ $ 511,030 ​ (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: ​ ​ ​ Categories ​ Useful life Leasehold improvements ​ Shorter of the remaining lease terms or estimated useful lives Computer equipment 2 - 5 years Office equipment 3 - 5 years Automobiles 3 - 5 years ​ The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the future net undiscounted cash flows that the asset is expected to generate. If such asset is considered to be impaired, the impairment recognized is the amount by which the carrying amount of the asset, if any, exceeds its fair value determined using a discounted cash flow model. For the years ended March 31, 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. F-16 Table of Contents 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: ​ ​ ​ Categories ​ Useful life Software 5 - 10 years Online ride-hailing platform operating license ​ 2 - 10 years ​ Separately identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for identifiable intangible assets is based on the amount by which the carrying amount of the assets exceeds the fair value of the assets. For the years ended March 31, 2022 and 2021, there was no impairment of intangible assets. (n) Goodwill Goodwill represents the excess of the consideration paid of an acquisition over the fair value of the net identifiable assets of the acquired subsidiaries at the date of acquisition. Goodwill is not amortized and is tested for impairment at least annually, more often when circumstances indicate impairment may have occurred. Goodwill is carried at cost less accumulated impairment losses. If impairment exists, goodwill is immediately written off to its fair value and the loss is recognized in the consolidated statements of operations and comprehensive loss. Impairment losses on goodwill are not reversed. The Company reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist annually or more frequently if events and circumstances indicate that it is more likely than not that an impairment has occurred. The Company assesses qualitative factors to determine whether it is necessary to perform the two-step in accordance with ASC 350-20. If the Company believes, as a result of the qualitative carrying amount, the two-step quantitative impairment test described below is required. The first step compares the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business acquisition with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. Estimating fair value is performed by utilizing various valuation techniques, with the primary technique being a discounted cash flow. For the years ended March 31, 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. F-17 Table of Contents 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. F-18 Table of Contents SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Disaggregated information of revenues by business lines are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ March 31, ​ 2022 2021 Automobile Transaction and Related Services (Continuing Operations) ​ ​ - Operating lease revenues from automobile rentals ​ $ 1,722,480 ​ $ 224,590 - Service fees from NEVs leasing ​ ​ 126,227 ​ ​ — - Financing revenues ​ ​ 101,828 ​ ​ 184,115 - Service fees from management and guarantee services ​ 73,554 ​ 79,565 - Service fees from automobile purchase services ​ ​ 1,468 ​ ​ 188,822 - Revenues from sales of automobiles ​ 26,019 ​ 487,947 - Other service fees ​ 196,069 ​ 120,547 Total revenues from Automobile Transaction and Related Services (Continuing Operations) ​ ​ 2,247,645 ​ ​ 1,285,586 Online Ride-hailing Platform Services (Continuing Operations) ​ ​ 2,665,457 ​ ​ 903,254 Total Revenues from Continuing Operations ​ ​ 4,913,102 ​ ​ 2,188,840 Online Lending Services (Discontinued Operations) ​ ​ ​ ​ -Transaction fees ​ ​ — ​ ​ 3,488 - Service fees ​ — ​ 3,665 Total revenues from Online Lending Services (Discontinued Operations) ​ ​ — ​ ​ 7,153 Automobile Transaction and Related Services (Discontinued Operations) ​ ​ ​ ​ ​ ​ -Operating lease revenues from automobile rentals ​ ​ 5,452,483 ​ ​ 3,207,781 - Commissions from online ride-hailing platforms ​ ​ 399,600 ​ ​ 32,797 - Service fees from NEVs leasing ​ ​ 232,295 ​ ​ — -Financing revenues ​ ​ 15,855 ​ ​ 43,744 -Service fees from management and guarantee services ​ ​ 217,838 ​ ​ 206,248 -Facilitation fees from automobile transactions ​ ​ — ​ ​ 1,665 -Other service fees ​ ​ 512,045 ​ ​ 479,459 Total revenues from Automobile Transaction and Related Services (Discontinued Operations) ​ ​ 6,830,116 ​ ​ 3,971,694 Total Revenues from Discontinued Operations ​ ​ 6,830,116 ​ ​ 3,978,847 Total revenues ​ $ 11,743,218 ​ $ 6,167,687 ​ Automobile transaction and related services 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. 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. 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. F-19 Table of Contents 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. 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. Leases 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: (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 F-20 Table of Contents 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. The Company is required to consider many factors and make certain assumptions during this assessment. If any of the assumptions used to determine the fair value of the share-based awards changes significantly, share-based compensation expense may differ materially in the future from that recorded in the current reporting period. F-21 Table of Contents SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (v) Leases 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; ● The lease grants the lessee an option to purchase the underlying asset that the Company is reasonably certain to exercise; ● The lease term is for 75 % or more of the remaining economic life of the underlying asset, unless the commencement date falls within the last 25 % of the economic life of the underlying asset; ● The present value of the sum of the lease payments equals or exceeds 90 % of the fair value of the underlying asset; or ● The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. 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. F-22 Table of Contents 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 a. Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents. The maximum exposure of these assets to credit risk is their carrying amounts as of the balance sheet dates. 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, 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. 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. b. 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. F-23 Table of Contents 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 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 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: - Higher allowance on financial guarantee reserve and finance lease receivable levels and related deferred tax assets. While different asset types will be impacted differently, the expectation is that reserve levels will generally increase across the board for all financial firms. - Increased reserve levels may lead to a reduction in capital levels. - As a result of higher reserving levels, the expectation is that CECL will reduce cyclicality in financial firms’ results, as higher reserving in “good times” will mean that less dramatic reserve increases will be loan related income (which will continue to be recognized on a periodic basis based on the effective interest method) and the related credit losses (which will be recognized up front at origination). This will make periods of loan expansion seem less profitable due to the immediate recognition of expected credit losses. Periods of stable or declining loan levels will look comparatively profitable as the income trickles in for loans, where losses had been previously recognized. F-24 Table of Contents 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 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: a. 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: a. 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. ii. 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. b. 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. c. 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. 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. b. 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. c. 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 F-25 Table of Contents 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. 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. ​ 4. BUSINESS COMBINATION 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. F-26 Table of Contents 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: ​ ​ ​ ​ ​ Fair value Purchase consideration paid ​ $ 472,573 Fair value of non-controlling interest ​ 326,570 Less: fair value of nets assets of XXTX: ​ ​ ​ Cash and cash equivalents ​ ​ 105,386 Other current assets ​ ​ 525,005 Plant and equipment ​ ​ 790 Intangible assets ​ ​ 265,536 Total assets ​ ​ 896,717 Total liabilities ​ ​ ( 230,247 ) Total fair value of net assets of XXTX ​ ​ 666,470 Goodwill as of the acquisition date ​ ​ 132,673 Effect of exchange rate changes on goodwill ​ ​ 7,257 Less: impairment loss of goodwill ​ ​ ( 139,930 ) Goodwill as of March 31, 2022 ​ $ — ​ ​ 5. 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. F-27 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ Prepayments, other receivables and other assets, net ​ $ — ​ $ 393,348 Total current assets ​ — ​ 393,348 ​ ​ ​ ​ ​ ​ ​ Property and equipment, net ​ — ​ 5,592 ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ — ​ $ 398,940 ​ Carrying amounts of major classes of liabilities included as part of discontinued operations of Online P2P lending services: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ Accrued expenses and other liabilities ​ $ 509,540 ​ $ 2,288,066 Due to a stockholder ​ 18,886 ​ 48,795 Total current liabilities ​ 528,426 ​ 2,336,861 ​ ​ ​ ​ ​ ​ ​ Total liabilities ​ $ 528,426 ​ $ 2,336,861 ​ 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 ​ ​ March 31, ​ 2022 2021 Revenues ​ $ — ​ $ 7,153 ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ Selling, general and administrative expenses ​ — ​ ( 88,438 ) Total operating expenses ​ — ​ ( 88,438 ) ​ ​ ​ ​ ​ ​ ​ Loss from discontinued operations ​ — ​ ( 81,285 ) ​ ​ ​ ​ ​ ​ ​ Other income, net ​ — ​ 19,309 ​ ​ ​ ​ ​ ​ ​ Loss before income taxes ​ — ​ ( 61,976 ) ​ ​ ​ ​ ​ ​ ​ Income tax expenses ​ — ​ — ​ ​ ​ ​ ​ ​ ​ Net loss attributable to stockholders ​ $ — ​ $ ( 61,976 ) ​ 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 F-28 Table of Contents 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 ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents $ 1,241,452 $ ( 56,231 ) $ 1,185,221 Accounts receivable, net, current portion ​ ​ 766,373 ​ ​ ( 348,351 ) ​ ​ 418,022 Inventories ​ ​ 286,488 ​ ​ — ​ ​ 286,488 Finance lease receivables, net, current portion ​ ​ 314,264 ​ ​ — ​ ​ 314,264 Prepayments, other receivables and other assets, net ​ ​ 3,699,361 ​ ​ ( 986,153 ) ​ ​ 2,713,208 Due from related parties, current portion (1) ​ ​ 51,135 ​ ​ 631,200 ​ ​ 682,335 Total current assets ​ ​ 6,359,073 ​ ​ ( 759,535 ) ​ ​ 5,599,538 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Property and equipment, net ​ ​ ​ ​ ​ ​ ​ ​ ​ Property and equipment, net ​ ​ 5,916,327 ​ ​ ( 257,554 ) ​ ​ 5,658,773 Total property and equipment, net ​ ​ 5,916,327 ​ ​ ( 257,554 ) ​ ​ 5,658,773 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other assets ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets, net ​ ​ 306,330 ​ ​ ( 196,709 ) ​ ​ 109,621 Operating lease right-of-use assets, net, related parties ​ ​ 515,906 ​ ​ — ​ ​ 515,906 Financing lease right-of-use assets, net ​ ​ 1,349,922 ​ ​ ( 1,043,989 ) ​ ​ 305,933 Intangible assets, net ​ ​ 959,551 ​ ​ — ​ ​ 959,551 Accounts receivable, net, noncurrent ​ ​ 2,732 ​ ​ ( 2,663 ) ​ ​ 69 Finance lease receivables, net, noncurrent ​ ​ 92,980 ​ ​ — ​ ​ 92,980 Due from a related party, noncurrent (1) ​ ​ — ​ ​ 6,635,746 ​ ​ 6,635,746 Total other assets ​ ​ 3,227,421 ​ ​ 5,392,385 ​ ​ 8,619,806 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets $ 15,502,821 $ 4,375,296 $ 19,878,117 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND EQUITY (DEFICIENCY) ​ ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ Borrowings from financial institutions $ 471,913 $ ( 326,371 ) $ 145,542 Accounts payable ​ ​ 14,446 ​ ​ - ​ ​ 14,446 Advances from customers ​ ​ 1,087,928 ​ ​ ( 967,299 ) ​ ​ 120,629 Income tax payable ​ ​ 17,992 ​ ​ ( 17,992 ) ​ ​ — Accrued expenses and other liabilities ​ ​ 7,316,269 ​ ​ ( 4,871,902 ) ​ ​ 2,444,367 Due to related parties and affiliates ​ ​ 478,825 ​ ​ ( 467,143 ) ​ ​ 11,682 Operating lease liabilities ​ ​ 164,321 ​ ​ ( 114,144 ) ​ ​ 50,177 Operating lease liabilities - related parties ​ ​ 330,781 ​ ​ — ​ ​ 330,781 Financing lease liabilities ​ ​ 3,502,481 ​ ​ ( 3,197,924 ) ​ ​ 304,557 Derivative liabilities ​ ​ 2,215,204 ​ ​ — ​ ​ 2,215,204 Current liabilities - discontinued operations ​ ​ 528,426 ​ ​ — ​ ​ 528,426 Total current liabilities ​ ​ 16,128,586 ​ ​ ( 9,962,775 ) ​ ​ 6,165,811 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ Borrowings from financial institutions, noncurrent ​ ​ 9,271 ​ ​ ( 9,271 ) ​ ​ — Operating lease liabilities, non-current ​ ​ 135,323 ​ ​ ( 87,413 ) ​ ​ 47,910 Operating lease liabilities, non-current - related parties ​ ​ 226,896 ​ ​ — ​ ​ 226,896 Financing lease liabilities, non-current ​ ​ 793,980 ​ ​ ( 792,604 ) ​ ​ 1,376 Deferred tax liability ​ ​ 46,386 ​ ​ — ​ ​ 46,386 Total other liabilities ​ ​ 1,211,856 ​ ​ ( 889,288 ) ​ ​ 322,568 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities ​ ​ 17,340,442 ​ ​ ( 10,852,063 ) ​ ​ 6,488,379 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ 820,799 ​ ​ — ​ ​ 820,799 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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) ​ ​ 630 ​ ​ — ​ ​ 630 Additional paid-in capital ​ ​ 42,803,033 ​ ​ — ​ ​ 42,803,033 Accumulated deficit ​ ​ ( 45,553,090 ) ​ ​ 10,951,545 ​ ​ ( 34,601,545 ) Accumulated other comprehensive income (loss) ​ ​ ( 780,112 ) ​ ​ 670,658 ​ ​ ( 109,454 ) Total Senmiao Technology Limited stockholders’ equity (deficiency) ​ ​ ( 3,529,539 ) ​ ​ 11,622,203 ​ ​ 8,092,664 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-controlling interests ​ ​ 871,119 ​ ​ 3,605,156 ​ ​ 4,476,275 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total equity (deficiency) ​ ​ 2,658,420 ​ ​ 15,227,359 ​ ​ 12,568,939 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities and equity (deficiency) $ 15,502,821 $ 4,375,296 $ 19,878,117 F-29 Table of Contents 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: ​ ​ ​ ​ ​ ​ March 31, ​ ​ 2022 Carrying amount of net deficit of Jinkailong as of March 31, 2022 ​ $ 15,227,359 Carrying amount of non-controlling interest ​ ( 3,605,156 ) Cumulative currency translation adjustment removal ​ ( 670,658 ) Net gain on deconsolidation of Jinkailong ​ $ 10,951,545 ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 Current assets ​ ​ Cash and cash equivalents ​ $ — ​ $ 107,546 Accounts receivable, net ​ — ​ 935,164 Prepayments, receivables and other assets, net ​ — ​ 1,245,195 Due from related parties ​ — ​ 39,572 Total current assets ​ — ​ 2,327,477 ​ ​ ​ ​ ​ ​ ​ Property and equipment, net ​ — ​ 448,816 ​ ​ ​ ​ ​ ​ ​ Other assets ​ ​ Operating lease right-of-use assets, net ​ — ​ 265,470 Financing lease right-of use assets, net ​ — ​ 4,201,693 Accounts receivable, net, noncurrent ​ — ​ 207,240 Total other assets ​ — ​ 4,674,403 ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ — ​ $ 7,450,696 ​ F-30 Table of Contents SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Carrying amounts of major classes of liabilities included as part of discontinued operations of Jinkailong: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 Current liabilities ​ ​ Borrowings from financial institutions ​ $ — ​ $ 310,662 Advance from customers ​ — ​ 45,413 Income tax payable ​ — ​ 17,408 Accrued expenses and other liabilities ​ — ​ 3,782,365 Due to related parties and affiliates ​ — ​ 269,918 Operating lease liabilities ​ — ​ 99,831 Finance lease liabilities ​ — ​ 4,814,808 Total current liabilities ​ — ​ 9,340,405 ​ ​ ​ ​ ​ ​ ​ Other liabilities ​ ​ Borrowings from financial institutions, noncurrent ​ — ​ 44,962 Operating lease liabilities, non-current ​ — ​ 167,822 Financing lease liabilities, non-current ​ — ​ 2,037,609 Total other liabilities ​ — ​ 2,250,393 ​ ​ ​ ​ ​ ​ ​ Total liabilities ​ $ — ​ $ 11,590,798 ​ 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 ​ ​ March 31, ​ 2022 2021 Revenues ​ $ 6,830,116 ​ $ 3,971,694 Cost of revenues ​ ( 5,183,806 ) ​ ( 3,985,413 ) Gross profit ​ 1,646,310 ​ ( 13,719 ) ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ Selling, general and administrative expenses ​ ( 4,139,800 ) ​ ( 4,367,529 ) Long live assets impairment ​ ( 32,479 ) ​ ( 119,886 ) Recovery of (Provision for) doubtful account ​ ( 11,746 ) ​ 328,016 Total operating expenses ​ ( 4,184,025 ) ​ ( 4,159,399 ) ​ ​ ​ ​ ​ ​ ​ Loss from discontinued operations ​ ( 2,537,715 ) ​ ( 4,173,118 ) ​ ​ ​ ​ ​ ​ ​ Other expense, net ​ ( 209,494 ) ​ ( 945,825 ) ​ ​ ​ ​ ​ ​ ​ Loss before income taxes ​ ( 2,747,209 ) ​ ( 5,118,943 ) Income tax expenses ​ — ​ ( 6,295 ) Net Loss ​ ( 2,747,209 ) ​ ( 5,125,238 ) Less: net loss from discontinued operations attributable to noncontrolling interest ​ 714,274 ​ 1,332,562 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. ​ ​ ​ F-31 Table of Contents SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. 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, 2022 and March 31, 2021, accounts receivable were comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 Receivables of automobile sales due from automobile purchasers ​ $ 392,530 ​ $ 760,126 Receivables of service fees due from automobile purchasers ​ ​ 17,350 ​ ​ 731,962 Receivables of online ride hailing fees from online ride-hailing drivers ​ ​ 121,116 ​ ​ 162,197 Receivables of operating lease ​ ​ — ​ ​ 170,707 Less: Unearned interest ​ ​ — ​ ​ ( 40,447 ) Less: Allowance for doubtful accounts ​ ​ ( 112,905 ) ​ ​ ( 78,167 ) Accounts receivable, net ​ ​ 418,091 ​ ​ 1,706,378 Accounts receivable, net – discontinued operations ​ ​ — ​ ​ ( 1,142,404 ) Accounts receivable, net – continuing operations ​ $ 418,091 ​ $ 563,974 ​ ​ ​ ​ ​ ​ ​ Accounts receivable, net, current portion – continuing operations ​ $ 418,022 ​ $ 502,031 Accounts receivable, net, non-current portion – continuing operations ​ ​ 69 ​ ​ 61,943 Accounts receivable, net, current portion – discontinued operations ​ ​ — ​ ​ 935,164 Accounts receivable, net, non-current portion – discontinued operations ​ $ — ​ $ 207,240 ​ Movement of allowance for doubtful accounts for March 31, 2022 and March 31, 2021 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ March 31, ​ ​ 2022 ​ 2021 Beginning balance ​ $ 78,167 ​ $ 379,689 Addition ​ 153,988 ​ 374,785 Recovery ​ — ​ ( 209,723 ) Write off ​ ​ ( 44,227 ) ​ ​ ( 485,384 ) Deconsolidation of Jinkailong ​ ​ ( 76,428 ) ​ ​ — Translation adjustment ​ 1,405 ​ 18,800 Ending balance ​ $ 112,905 ​ $ 78,167 ​ ​ 7. INVENTORIES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ March 31, ​ 2022 2021 Automobiles (i) ​ $ 286,488 ​ $ 127,933 (i) 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. ​ F-32 Table of Contents SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8. PREPAYMENTS, OTHER RECEIVABLES AND OTHER ASSETS As of March 31, 2022 and March 31, 2021, the prepayments, receivables and other assets were comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 Receivables from borrowers of online lending platform, net (i) ​ $ — ​ $ 393,348 Prepaid expenses (ii) ​ 957,200 ​ 829,032 Deposits (iii) ​ 731,279 ​ 537,619 Value added tax (“VAT”) recoverable ​ 597,884 ​ 99,445 Due from automobile purchasers, net (iv) ​ 238,421 ​ 504,792 Receivables from aggregation platforms (v) ​ 163,384 ​ 867,614 Prepayments for automobiles (vi) ​ ​ — ​ ​ 1,026,802 Employee advances ​ ​ 11,054 ​ ​ 9,739 Others ​ ​ 13,986 ​ ​ 30,235 Total prepayments, receivables and other assets ​ ​ 2,713,208 ​ ​ 4,298,626 Total prepayments, receivables and other assets - discontinued operations ​ — ​ ( 1,638,543 ) Total prepayments, receivables and other assets - continuing operations ​ $ 2,713,208 ​ $ 2,660,083 ​ (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. (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. F-33 Table of Contents 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. ​ 9. PROPERTY AND EQUIPMENT, NET Property and equipment consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 Leasehold improvements ​ $ 198,463 ​ $ 192,020 Electronic devices ​ 47,849 ​ 53,200 Office equipment, fixtures and furniture ​ 81,898 ​ 104,735 Vehicles ​ 6,463,698 ​ 3,778,811 Subtotal ​ 6,791,908 ​ 4,128,766 Less: accumulated depreciation and amortization ​ ( 1,133,135 ) ​ ( 423,027 ) Total property and equipment, net ​ 5,658,773 ​ 3,705,739 Total property and equipment, net - discontinued operations ​ — ​ ( 454,408 ) Total property and equipment, net - continuing operations ​ $ 5,658,773 ​ $ 3,251,331 ​ 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. ​ 10. INTANGIBLE ASSETS, NET Intangible assets consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 Software $ 796,042 ​ $ 794,548 Online ride-hailing platform operating licenses 450,701 ​ 297,258 Less: Accumulated amortization ​ ​ ( 287,192 ) ​ ​ ( 123,675 ) Total intangible assets, net ​ $ 959,551 ​ $ 968,131 ​ 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: ​ ​ ​ ​ ​ ​ Amortization ​ ​ expenses Twelve months ending March 31, 2023 ​ $ 186,772 Twelve months ending March 31, 2024 ​ 178,660 Twelve months ending March 31, 2025 ​ 171,289 Twelve months ending March 31, 2026 ​ 111,011 Twelve months ending March 31, 2027 ​ ​ 79,563 Thereafter ​ 232,256 Total ​ $ 959,551 ​ F-34 Table of Contents SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 11. 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. ​ 12. ACCRUED EXPENSES AND OTHER LIABILITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 Payables to investors of online lending platform (i) ​ $ — ​ $ 1,795,066 Accrued payroll and welfare ​ 1,176,442 ​ 1,306,509 Payables to drivers from aggregation platforms (ii) ​ ​ 806,921 ​ ​ 2,352,264 Deposits (iii) ​ ​ 783,830 ​ ​ 1,639,681 Accrued expenses ​ 94,106 ​ 6,090 Payables for expenditures on automobile transaction and related services ​ 56,222 ​ 159,388 Loan repayments received on behalf of financial institutions (iv) ​ 28,704 ​ 839,770 Other taxes payable ​ ​ 5,260 ​ ​ 398,220 Other payables (v) ​ 2,422 ​ 446,670 Total accrued expenses and other liabilities ​ ​ 2,953,907 ​ ​ 8,943,658 Total accrued expenses and other liabilities - discontinued operations ​ ( 509,540 ) ​ ( 6,070,431 ) Total accrued expenses and other liabilities - continuing operations ​ $ 2,444,367 ​ $ 2,873,227 (i) 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. As of March 31, 2022, the Company has fully settled the outstanding loans. (ii) 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. (iii) 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. (iv) 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. (v) The balance of other payables represented amount due to suppliers and vendors for operations purposes. 13. 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 $ 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 F-35 Table of Contents 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. ​ 14. EQUITY Warrants IPO Warrants 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 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. F-36 Table of Contents 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: volatility 131 %; risk free interest rate 0.84 %; 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 $ 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 $ 3,562,404 Common stock ​ 2,208,649 Total net proceeds ​ $ 5,771,053 ​ 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 $ 4,060,857 Series A Preferred Stock ​ ​ 939,143 Total gross proceeds ​ ​ 5,000,000 Issuance cost ​ ​ ( 630,063 ) Total net proceeds ​ $ 4,369,937 ​ 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 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 $ 4,060,857 Fair value of placement agent warrants (i) ​ 310,173 Total fair value of warrants allocated to derivative liabilities ​ $ 4,371,030 (i) The issuance costs for placement agent warrants which was classified as liability were immediately expensed. F-37 Table of Contents SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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). 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ ​ ​ Average ​ Remaining ​ ​ Warrants ​ Warrants ​ Exercise ​ Contractual ​ ​ Outstanding ​ Exercisable ​ Price ​ Life Balance, March 31, 2020 1,519,602 1,519,602 ​ $ 1.76 3.21 Granted 1,100,609 1,100,609 ​ $ 1.48 5.00 Forfeited ( 3,132 ) ( 3,132 ) ​ — — Exercised ( 1,516,010 ) ( 1,516,010 ) ​ ​ — — Balance, March 31, 2021 1,101,069 1,101,069 ​ $ 1.16 4.09 Granted 13,851,222 13,851,222 ​ $ 0.91 5.00 Exercised ( 44,029 ) ( 44,029 ) ​ — — Balance, March 31, 2022 14,908,262 14,908,262 ​ $ 0.93 4.32 ​ 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 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 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. F-38 Table of Contents 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. 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. F-39 Table of Contents 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 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. Common stock issued for consulting services On October 22, 2021, the Company entered into a consulting agreement (the “Consulting Agreement”) with Jolly Good River Group Limited. (the “Consultant”), pursuant to which the Company engaged the Consultant to provide certain market research and business development advisory services for a period of twelve months . As compensation for the services, the Company agreed to issue the Consultant an aggregate of 100,000 ( 1,000,000 pre reverse split) shares of the Common Stock, par value $ 0.0001 , payable within ten working days from the signing of the Consulting Agreement. As of November 9, 2021, the issuance of 100,000 ( 1,000,000 pre reverse split)shares of the Company’s common stock has been completed and the Company recorded the consulting fee of $ 653,000 pursuant to the fair value on November 3, 2021, the grant date. F-40 Table of Contents 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”. 15. INCOME TAXES The United States of America The Company is incorporated in the State of Nevada in the U.S., and is subject to U.S. federal corporate income taxes with tax rate of 21%. The State of Nevada does not impose any state corporate income tax. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries, and future foreign earnings are subject to U.S. taxation. The Tax Act also 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, 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. PRC 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 %. Income taxes in the PRC are consist of: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended ​ ​ March 31, ​ 2022 2021 Current income tax expenses ​ $ 4,566 ​ $ 8,332 Deferred income tax expenses ​ ​ — ​ ​ — Total income tax expenses ​ $ 4,566 ​ $ 8,332 ​ F-41 Table of Contents 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 ​ ​ March 31, ​ ​ 2022 2021 U.S. Statutory tax rate ​ ​ 21.0 % ​ 21.0 % Differential of PRC statutory tax rate ​ 4.0 % 4.0 % Permanent difference of write-off of receivables from guarantee of loans ​ ( 0.5 ) % ( 2.4 ) % Permanent difference of US (income) expenses not (taxable) deductible in PRC ​ 17.8 % ( 3.7 ) % Valuation allowance on deferred income tax asset ​ ​ ( 43.6 ) % ​ ( 17.2 ) % Others ​ ​ 1.2 % ​ ( 1.8 ) % Effective tax rate ​ ( 0.1 ) % ( 0.1 ) % ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 Deferred Tax Assets ​ ​ ​ ​ ​ ​ Net operating loss carryforwards in the PRC ​ $ 2,315,793 ​ $ 415,533 Net operating loss carryforwards in the U.S. ​ 1,234,789 ​ 754,502 Allowance for doubtful account ​ 29,129 ​ 1,245 Less: valuation allowance ​ ​ ( 3,579,711 ) ​ ​ ( 1,171,280 ) Deferred tax assets, net ​ $ — ​ $ — Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Capitalized intangible assets cost ​ $ 46,386 ​ $ 45,146 Deferred tax liabilities, net ​ $ 46,386 ​ $ 45,146 ​ 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 ​ $ 2,595,919 ​ $ 3,802,496 Allowance for doubtful accounts ​ ​ — ​ ​ 20,190 Less: valuation allowance ​ ( 2,595,919 ) ​ ( 3,822,686 ) ​ ​ $ — ​ $ — ​ ​ ​ F-42 Table of Contents SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 16. 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. ​ ​ 17. RELATED PARTY TRANSACTIONS AND BALANCES 1. Related Party Balances 1) Due from related parties 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. 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. ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 Jun Wang ​ $ 18,886 ​ $ 48,795 Total due to a stockholder ​ ​ 18,886 ​ ​ 48,795 Total due to a stockholder – discontinued operations ​ ( 18,886 ) ​ ( 48,795 ) Total due to a stockholder – continuing operations ​ $ — ​ $ — ​ 3) Due to related parties and affiliates ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 Loan payable to related parties (i) ​ $ 9,897 ​ $ 182,281 Others (ii) ​ ​ 1,785 ​ ​ 170,546 Total due to related parties and affiliates ​ ​ 11,682 ​ ​ 352,827 Total due to related parties and affiliates – discontinued operations ​ — ​ ( 269,918 ) Total due to related parties and affiliates – continuing operations ​ $ 11,682 ​ $ 82,909 (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 F-43 Table of Contents 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, 2022 and 2021 were $ 0 . 2. 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. The lines of credit are non-interest bearing, effective from January 2017. 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, 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. 18. LEASES Lessor The Company’s operating leases for automobile rentals have rental periods that are typically short term, generally is twelve months or less. Revenue recognition section of Note 3 (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. Lessee As of March 31, 2022 and March 31, 2021, the Company has engaged in offices and showroom leases which were classified as operating leases. F-44 Table of Contents 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 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, 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 ​ Classification March 31, 2022 March 31, 2021 Operating lease cost ​ ​ Automobile lease costs ​ Cost of revenues ​ ​ 1,749,959 ​ ​ 42,306 Lease expenses Selling, general and administrative ​ $ 585,719 ​ $ 396,276 Finance lease cost ​ ​ ​ ​ Amortization of leased asset Cost of revenues ​ 2,844,167 ​ 2,441,873 Amortization of leased asset General and administrative ​ 974,422 ​ 1,656,336 Interest on lease liabilities Interest expenses on finance leases ​ 333,210 ​ 733,202 Total lease expenses ​ ​ ​ ​ 6,487,477 ​ ​ 5,269,993 Total lease expenses – discontinued operations ​ ​ ​ ​ 4,150,972 ​ ​ 4,748,180 Total Lease expenses- continuing operations ​ ​ ​ $ 2,336,505 ​ $ 521,813 ​ 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. F-45 Table of Contents 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 ​ ​ ​ payments ​ payments ​ Total Twelve months ending March 31, 2023 ​ $ 386,942 ​ $ 317,499 ​ $ 704,441 Twelve months ending March 31, 2024 ​ 194,311 ​ 1,403 ​ 195,714 Twelve months ending March 31, 2025 ​ 64,268 ​ — ​ 64,268 Twelve months ending March 31, 2026 ​ 52,585 ​ — ​ 52,585 Total lease payments ​ 698,106 ​ 318,902 ​ 1,017,008 Less: discount ​ ( 42,342 ) ​ ( 12,969 ) ​ ( 55,311 ) Present value of lease liabilities ​ $ 655,764 ​ $ 305,933 ​ $ 961,697 *As of March 31, 2022, the outstanding balance of operating lease payments due to related parties was $ 557,677 . ​ 19. COMMITMENTS AND CONTINGENCIES Contingencies In measuring the credit risk of guarantee services to automobile purchasers, the Company primarily reflects the “probability of default” by the automobile purchasers on its contractual obligations and considers the current financial position of the automobile purchasers and its likely future development. The Company manages the credit risk of automobile purchasers by performing preliminary credit checks of each automobile purchaser and ongoing monitoring every month. By using the current credit loss model, management is of the opinion that the Company is bearing the credit risk to repay the principal and interests to the financial institutions if automobile purchasers default on their payments for 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 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 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 F-46 Table of Contents 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. ​ ​ 20. 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. F-47 Table of Contents 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 ​ ​ Automobile ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Transaction and ​ Online ride- ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ related ​ hailing platform ​ ​ ​ ​ ​ ​ Discontinued ​ Continuing ​ service services Unallocated Total operations operations Revenues ​ $ 9,077,761 ​ $ 2,665,457 ​ $ — ​ $ 11,743,218 ​ $ 6,830,116 ​ $ 4,913,102 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 ) ​ $ 3,771,912 ​ $ ( 8,348,788 ) ​ $ ( 2,747,209 ) ​ $ ( 5,601,579 ) Net income (loss) ​ $ ( 4,686,573 ) ​ $ ( 7,438,693 ) ​ $ 3,771,912 ​ $ ( 8,353,354 ) ​ $ ( 2,747,209 ) ​ $ ( 5,606,145 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended March 31, 2021 ​ ​ Online ride- ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Automobile ​ hailing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Transaction and ​ platform ​ Discontinued ​ ​ ​ ​ ​ ​ ​ Discontinued ​ Continuing ​ ​ Related services ​ services ​ P2P Business ​ Unallocated ​ Total ​ operations ​ operations Revenues ​ $ 5,257,280 ​ $ 903,254 $ 7,153 ​ $ — ​ $ 6,167,687 ​ $ 3,978,847 ​ $ 2,188,840 Loss from operations ​ $ ( 6,126,494 ) ​ $ ( 1,894,971 ) ​ $ ( 81,285 ) ​ $ ( 2,163,082 ) ​ $ ( 10,265,832 ) ​ $ ( 4,254,403 ) ​ $ ( 6,011,429 ) loss before income taxes ​ $ ( 7,009,570 ) ​ $ ( 1,703,551 ) ​ $ ( 61,976 ) ​ $ ( 3,872,915 ) ​ $ ( 12,648,012 ) ​ $ ( 5,180,919 ) ​ $ ( 7,467,093 ) Net income (loss) ​ $ ( 7,024,200 ) ​ $ ( 1,703,551 ) ​ $ ( 61,976 ) ​ $ ( 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. F-48 Table of Contents SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 21. PARENT-ONLY FINANCIALS SENMIAO TECHNOLOGY LIMITED CONDENSED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2022 ​ 2021 ASSETS ​ ​ Current Assets ​ ​ Cash and cash equivalents ​ $ 116,613 ​ $ 1,609,778 Due from subsidiaries ​ 12,587,739 ​ 8,170,057 Prepayments, other receivables and other assets, net ​ 135,252 ​ 136,901 Total Current Assets ​ 12,839,604 ​ 9,916,736 ​ ​ ​ Other Assets ​ ​ ​ ​ Intangible assets ​ ​ 600,000 ​ ​ 675,000 Total Assets ​ $ 13,439,604 ​ $ 10,591,736 ​ ​ ​ LIABILITIES AND EQUITY ​ ​ Current Liabilities ​ ​ ​ ​ ​ ​ Accrued expenses and other liabilities ​ $ — ​ $ — Derivative liabilities ​ ​ 2,215,204 ​ ​ 1,278,926 Total Current Liabilities ​ ​ 2,215,204 ​ ​ 1,278,926 ​ ​ ​ ​ ​ ​ ​ Other Liabilities ​ ​ ​ ​ ​ ​ Excess of investments in subsidiaries ​ ​ 2,310,937 ​ ​ 3,456,097 Total Liabilities ​ ​ 4,526,141 ​ ​ 4,735,023 ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ 820,799 ​ ​ — ​ ​ ​ ​ ​ ​ ​ Stockholders’ Equity ​ ​ Common stock (par value $ 0.0001 per share, 10,000,000 shares authorized; 6,186,783 and 4,978,073 shares issued and outstanding at March 31, 2022 and 2021, respectively)* ​ 630 ​ ​ 498 Additional paid-in capital ​ 42,803,033 ​ ​ 40,759,807 Accumulated deficit ​ ( 34,601,545 ) ​ ​ ( 34,064,921 ) Accumulated other comprehensive loss ​ ( 109,454 ) ​ ​ ( 838,671 ) Total Senmiao Technology Limited Stockholders’ Equity ​ 8,092,664 ​ ​ 5,856,713 Total Liabilities, Mezzanine Equity and Equity ​ $ 13,439,604 ​ ​ 10,591,736 *Giving retroactive effect to the 1-for-10 reverse stock split effected on April 6, 2022 ​ F-49 Table of Contents SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SENMIAO TECHNOLOGY LIMITED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended March 31, ​ 2022 2021 General and administrative expenses ​ $ ( 2,339,378 ) ​ $ ( 2,070,303 ) Other Income, net ​ 16,189 ​ 582 Change in fair value of derivative liabilities ​ ​ 6,951,482 ​ ​ ( 1,710,415 ) Issuance costs for issuing series A convertible preferred stock ​ ​ ( 821,892 ) ​ ​ — Equity of losses in subsidiaries ​ ( 4,343,025 ) ​ ( 6,579,922 ) Net loss ​ ( 536,624 ) ​ ( 10,360,058 ) Foreign currency translation adjustment ​ 80,321 ​ ( 331,193 ) Comprehensive loss attributable to stockholders ​ $ ( 456,303 ) ​ $ ( 10,691,251 ) ​ ​ F-50 Table of Contents SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SENMIAO TECHNOLOGY LIMITED CONDENSED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended March 31, ​ 2022 2021 Cash Flows from Operating Activities: ​ ​ Net loss ​ $ ( 536,624 ) ​ $ ( 10,360,058 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ Equity of loss of subsidiaries ​ 4,343,025 ​ 6,579,922 Amortization of intangible asset ​ ​ 75,000 ​ ​ 75,000 Issuance cost incurred for issuing series A convertible preferred stock ​ ​ 821,892 ​ ​ — Stock compensation expense ​ ​ 653,000 ​ ​ 445,000 Change in fair value of derivative liabilities ​ ​ ( 6,951,482 ) ​ ​ 1,710,415 Prepayments, receivables and other assets ​ 1,651 ​ ( 44,526 ) Accrued expenses and other liabilities ​ 175,008 ​ ( 65,495 ) Net Cash Used in Operating Activities ​ ( 1,418,530 ) ​ ( 1,659,742 ) ​ ​ ​ Cash Flows from Investing Activities: ​ ​ 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 and warrants in a registered direct public offering ​ 5,771,053 ​ 5,743,905 Net proceeds from issuance of common stock in an underwritten public offering ​ ​ — ​ ​ 5,261,297 Net proceeds from issuance of common stock upon warrants exercised ​ ​ 22,015 ​ ​ 683,046 Net proceeds from exercise of underwriters’ over-allotment option ​ — ​ 837,000 Net proceeds from issuance of series A convertible preferred stock and warrants in a private placement offering ​ ​ 4,369,937 ​ ​ — Borrowings to subsidiaries ​ ​ ( 4,487,690 ) ​ ​ ( 5,658,318 ) Net Cash Provided by Financing Activities ​ 5,675,315 ​ 6,866,930 ​ ​ ​ ​ ​ ​ ​ Net increase (decrease) in cash and cash equivalents ​ ( 1,493,165 ) ​ 1,607,188 Cash and cash equivalents, beginning of year ​ 1,609,778 ​ 2,590 Cash and cash equivalents, end of year ​ $ 116,613 ​ $ 1,609,778 ​ ​ ​ Supplemental Cash Flow Information ​ ​ Cash paid for interest expense ​ $ — ​ $ — Cash paid for income tax ​ $ — ​ $ — ​ ​ ​ Non-cash Transaction in Investing and Financing Activities ​ ​ Prepayments in exchange of intangible assets ​ $ — ​ $ — Allocation of fair value of derivative liabilities for issuance of common stock proceeds ​ $ 7,932,341 ​ $ 997,193 Allocation of fair value of derivative liabilities to additional paid in capital upon warrants exercised ​ $ 45,674 ​ $ 1,771,213 Issuance of restricted stock units from accrued expenses and other liabilities ​ $ — ​ $ — ​ 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. F-51 Table of Contents 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 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. 2019 Registered Direct Offering On April 15, 2019, the SEC declared effective the Company’s Registration Statement on Form S-3, pursuant to which, along with the accompanying prospectus, the Company registered up to $ 80,000,000 in aggregate principal amount of its common stock, preferred stock, debt securities, warrants, rights and/or units. On June 21, 2019, the Company closed a registered direct offering of an aggregate of 178,136 ( 1,781,360 pre reverse split) shares of its common stock, and in connection therewith, issued to the investors (i) for no additional consideration, Series A warrants to purchase up to an aggregate of 133,602 ( 1,336,021 pre reverse split) shares of common stock and (iii) for nominal additional consideration, Series B warrants to purchase up to a maximum aggregate of 111,632 ( 1,116,320 pre reverse split) shares of common stock. The Company sold the shares of common stock at a price of $ 33.8 ($ 3.38 pre reverse split) per share (the “Share Purchase Price”). The Company received gross proceeds from the offering of approximately $ 6.0 million, and net proceeds from the offering of approximately $ 5.1 million after deducting estimated offering expenses payable by the Company. The Series A warrants are exercisable immediately upon issuance at an exercise price of $ 37.2 ($ 3.72 pre reverse split) per share and will expire on the fourth (4th) anniversary of the original issue date. In the event that on December 20, 2019, the exercise price is greater than the Six Month Adjustment Price as defined below, on the trading day immediately following December 20, 2019 (the “Six Month Measuring Date”), the exercise price shall automatically adjust to the Six Month Adjustment Price (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events). Six Month Adjustment Price means the greater of (x) $ 15.0 ($ 1.50 pre reverse split) (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction) and (y) 100 % of the quotient of (I) the sum of the five lowest VWAPs of the common stock during the ten consecutive trading day period ending and including the Six Month Measuring Date, divided by (II) five . All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction during such period. The exercise price of the Series A warrant was adjusted pursuant to this formula from $ 37.2 ($ 3.72 pre reverse split) to $ 15.00 ($ 1.50 pre reverse split) per share on December 20, 2019. The Company used the adjusted exercise price to value its derivative liability on its December 31, 2019 financial statements and reporting periods onwards with changes in fair value of warrant liabilities from period to period are recorded in the consolidated statements of operations and comprehensive loss under the caption “Change in fair value of derivative liabilities”. The exercise price of the Series A warrant was further adjusted to $ 5.0 ($ 0.50 pre reverse split) per share on August 7, 2020 as a result of the Company’s issuance of shares of common stock in its underwritten public offering in August 2020, which has been recorded in the financial statements in the year ended March 31, 2021. In addition, the exercise price of the placement agent warrants from the June 2019 registered direct offering was voluntarily adjusted by the Company from $ 37.2 ($ 3.72 pre reverse split) to $ 5.0 ($ 0.50 pre reverse split) per share on August 18, 2020. The Series B warrants are pre-funded warrants and were issued as a true-up with respect to the shares of common stock. The maximum aggregate number of shares of common stock issuable upon exercise of the Series B warrants is 111,632 ( 1,116,320 pre reverse split). Initially, the Series B warrants shall not be exercisable for any shares of common stock. In the event that on the fiftieth (50th) day after the closing date (the “Adjustment Measuring Time”), the closing price of the common stock is less than the Share Purchase Price, then the number of shares of common stock issuable upon exercise of the Series B warrants shall be adjusted (upward or downward, as applicable) to the greater of (i) zero (0) and (ii) such aggregate number of shares of common stock equal to fifty percent (50%) of the difference of (A) the quotient of (x) the Share Purchase Price divided by (y) the Market Price (as defined in Purchase Agreement) as of F-52 Table of Contents SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS the Adjustment Measuring Time, less (B) the aggregate number of shares of common stock issued to the investors at the closing (as adjusted for share splits, share dividends, share combinations, recapitalizations and similar events). The exercise price of the Series B warrant was adjusted from $ 37.2 ($ 3.72 pre reverse split) to $ 0.001 ($ 0.0001 pre reverse split) per share on August 12, 2019. The Company used the adjusted exercise price to value its derivative liability on its September 30, 2019 financial statements and reporting period onwards with changes in fair value of warrant liabilities from period to period are recorded in the consolidated statements of operations and comprehensive loss under the caption “Change in fair value of derivative liabilities. As of March 31, 2021, the Company has issued an aggregate of 111,319 ( 1,113,188 pre reverse split) shares of common stock to certain investors in the June 2019 offering upon exercise of the pre-funded Series B warrants for a total consideration of $ 111 . Underwritten Public Offering and Exercise of the Over-Allotment Option On August 4, 2020, the Company entered into an underwriting agreement with The Benchmark Company, LLC and Axiom Capital Management, Inc., as representatives of the Underwriters, relating to an underwritten public offering of 1,200,000 ( 12,000,000 pre reverse split) shares of the Company’s common stock at the Offering Price. Pursuant to the terms of the Underwriting Agreement, the Company granted the Underwriters a 45-day option to purchase up to an additional 180,000 ( 1,800,000 pre reverse split)shares of common stock to cover over-allotments, if any, at the Offering Price less the underwriting discounts and commissions. An underwriting discount of 7 % was applied to the Offering Price, except for shares of common stock purchased by certain existing investors of the Company (the “Excluded Investors”), an underwriting discount of 6 % was applied. On August 6, 2020, the Company completed the underwritten offering. The net proceeds to the Company from this offering, after deducting the underwriting discounts and commissions and other estimated offering expenses payable by the Company, were approximately $ 5.3 million. On August 13, 2020, the Underwriters exercised their over-allotment option to purchase an additional 180,000 ( 1,800,000 pre reverse split) shares of common stock at $ 5.0 ($ 0.50 pre reverse split) per share. This transaction was completed on August 13, 2020. Net proceeds from the exercise of the underwriters’ over-allotment option were approximately $ 0.8 million net of underwriting discounts and commissions and offering expenses. In connection with the underwritten offering, the Company issued the Underwriters or their permitted designees, on a private placement basis, the Underwriters’ Warrants to purchase up to 56,800 ( 568,000 pre reverse split) shares of common stock. These warrants are valid for a period of five years and exercisable commencing six months from August 4, 2020 at a price per share equal to 125 % of the Offering Price and are exercisable on a “cashless” basis. February 2021 Registered Direct Offering On February 8, 2021, the Company entered into a placement agency agreement with FT Global Capital, Inc., to act as exclusive placement agent in connection with the registered direct public offering. Pursuant to the terms of the placement agency agreement, the Company agreed to pay the Placement Agent a cash fee equal to 7.5 % of the gross proceeds raised in the Offering, and to reimburse the Placement Agent for certain expenses, including legal fees and expenses, up to $ 60,000 in the aggregate. The Placement Agent is also entitled to additional tail compensation for any financings consummated within the 12-month period following the termination of the Placement Agent Agreement to the extent that such financing is provided to the Company by investors that the Placement Agent had introduced to the Company. On February 10, 2021, the Company completed the registered direct offering. 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 38,044 ( 380,435 pre reverse split) shares of its common stock. These warrants are exercisable for a period of five years commencing 180 days from February 8, 2020 at a price of $ 13.8 ($ 1.38 pre reverse split) per share and are exercisable on a “cashless” basis. In addition, the company issued The Benchmark Company, LLC and Axiom Capital Management, Inc. ss from the offering and warrants to purchase up to 15,218 ( 152,174 pre reverse split) shares of its common stock, in consideration for the termination of the ROFR. These warrants are exercisable for a period of five years from February 8, 2020 at a price of $ 17.25 ($ 1.725 pre reverse split) per share. ​ May 2021 Registered Direct Offering On May 11, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain purchasers (the “Investors”) pursuant to which the Company will sell to the Investors, in a registered direct offering, an aggregate of 553,192 ( 5,531,916 pre reverse split) units (the “Units”), each consisting of 0.1 (one pre reverse split) share (the “Shares”) of the Company’s F-53 Table of Contents 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 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 exercised, collectively, the “Warrant Shares”). The purchase price for the Preferred Shares shall be $ 1,000 per each Preferred Share (and related Investor Warrant). On November 10, 2021, the Company completed the Private Placement. The net proceeds to the Company from this offering, after deducting the placement agent commissions and other estimated offering expenses payable by the Company, were approximately $ 4.4 million. The Series A Convertible Preferred Stock is included in mezzanine equity on the consolidated balance sheets, because it is redeemable by the holders upon events of change of control which are not within the Company’s control. A discount to the redemption amount of a contingently redeemable preferred share should be amortized only once it is probable the share will become redeemable. The Company determined that the redemption is uncertain as the cash redemption feature upon change of control is at the option of the holder, and the redemption date upon the change of control is uncertain. Pursuant to the certificate of designations for the Series A Preferred Stock (the “COD”), at any time after the initial issuance date, each holder shall be entitled to convert any portion of the outstanding Preferred Shares held by such holder into shares of Common Stock (the “Conversion Shares”) at Initial Conversion Price, which shall be adjusted to the greater of $ 0.41 per share or 85 % of the closing bid price of the Company’s Common Stock reported on the NASDAQ Capital Market on the Applicable Date, which is the earlier of the first date on which the registration statement covering the resale of the Conversion Shares and Warrant Shares is declared effective F-54 Table of Contents 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 Investor Warrants have a term of five years and are exercisable by the holders at any time after six months and one day of the date of issuance at an exercise price of $ 8.2 ($ 0.82 pre reverse split) per share. The exercise price and the number of shares issuable upon exercise of the Investor Warrants are subject to an adjustment upon the occurrence of certain events, including, but not limited to, stock splits or dividends, business combinations, sale of assets, similar recapitalization transactions, or other similar transactions. The exercise price of the Investor Warrants are also subject to an adjustment in the event that the Company issues or is deemed to issue shares of Common Stock for less than the applicable exercise price of such Investor Warrants. However, the exercise price of the Investor Warrants shall not be lower than $ 7.1 ($ 0.7125 pre reverse split) as a result of an adjustment, unless the Company has obtained the stockholder approval. The exercisability of the Investor Warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.99 % or 9.99 % as the Investor chooses. 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 In October 2021, the Company, Senmiao Consulting, XXTX and its shareholders entered into a Share Swap Agreement, pursuant to which the Company, through Senmiao Consulting, shall purchase all of the equity shares of XXTX held by its shareholders by issuing a total of 533,167 ( 5,331,667 pre reverse split) shares of the Company’s common stock to XXTX’s Shareholders. Upon closing, the Company, through Senmiao Consulting, shall own 100 % of the equity interests in XXTX. Common stock issued for consulting services On October 22, 2021, the Company entered into a consulting agreement (the “Consulting Agreement”) with Jolly Good River Group Limited. (the “Consultant”), pursuant to which the Company engaged the Consultant to provide certain market research and business development advisory services for a period of twelve months . As compensation for the services, the Company agreed to issue the Consultant an aggregate of 100,000 ( 1,000,000 pre reverse split) shares of the Common Stock, par value $ 0.0001 , payable within ten working days from the signing of the Consulting Agreement. As of November 9, 2021, the issuance of 100,000 ( 1,000,000 pre reverse split) shares of the Company’s common stock has been completed and the Company recorded the consulting fee of $ 653,000 pursuant to the fair value on November 3, 2021, the grant date. 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. F-55 Table of Contents SENMIAO TECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ 22. 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 . ​ ​ F-56 Table of Contents Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. ​