What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-07-13 compared with 2022-07-15 · 518 added, 887 removed, 1096 unchanged (56% of the section changed)

2 unchanged sentences

Index to Financial Statements

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

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

1 unchanged sentence

Consolidated Balance Sheets as of March 31, 2023 and 2022

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

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

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

2 unchanged sentences

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

Senmiao Technology Limited

Opinion on the Financial Statements

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

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

Explanatory Paragraph – Going Concern

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

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

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

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

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

Basis for Opinion

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

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

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

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

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

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

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

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

Accordingly, we express no such opinion.

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

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

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

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

Critical Audit Matters

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

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

We determined that there are no critical audit matters.

/s/ Marcum Asia CPAs LLP

Marcum Asia CPAs LLP

We have served as the Company’s auditor since 2018

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

New York, New York

July 12, 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

25 unchanged sentences

/s/ Friedman LLP

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

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

New York, New York

July 14, 2022

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

friedmanllp.com

Your livelihood, empowered.

An Independent Member Firm of DFK with offices worldwide.

SENMIAO TECHNOLOGY LIMITED

5 unchanged sentences

Accounts receivable, net, current portion

Accounts receivable, a related party

Finance lease receivables, net, current portion

Prepayments, other receivables and other assets, net

Due from related parties, current portion

Current assets - discontinued operations

Due from related parties, current portion, net

Total current assets

Property and equipment, net

Property and equipment, net - discontinued operations

Total property and equipment, net

Operating lease right-of-use assets, net

5 unchanged sentences

Due from a related party, noncurrent

Other assets - discontinued operations

Other non-current assets

Total other assets

1 unchanged sentence

Current liabilities

Borrowings from financial institution

Borrowings from a financial institution

Accounts payable

13 unchanged sentences

Deferred tax liability

Other liabilities - discontinued operations

Total other liabilities

Total liabilities

Commitments and contingencies

Mezzanine Equity (redeemable)

Commitments and contingencies (note 19)

Mezzanine Equity

Series A convertible preferred stock (par value $ 1,000 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

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

Stockholders’ equity

6 unchanged sentences

Accumulated other comprehensive loss

( 1,247,099 )

Total Senmiao Technology Limited stockholders’ equity

Non-controlling interests

( 3,284,143 )

Total liabilities, mezzanine equity and equity

5 unchanged sentences

dollar, except for the number of shares)

For the Year Ended March 31,

For the Years Ended March 31,

Revenues, a related party

Total revenues

Cost of revenues

( 6,080,097 )

( 7,001,297 )

Cost of revenues, a related party

Total cost of revenues

( 6,590,001 )

( 7,001,297 )

Gross profit (loss)

5 unchanged sentences

Provision for doubtful accounts, net of recovery

( 1,487,889 )

Impairments of inventories

11 unchanged sentences

Change in fair value of derivative liabilities

( 1,710,415 )

Issuance cost incurred for issuing series A convertible preferred stock

Total other income (expense), net

( 1,455,664 )

Total other income, net

Loss before income taxes

5 unchanged sentences

( 5,606,145 )

Discontinued operation:

Loss from discontinued operations, net of applicable income taxes

( 2,747,209 )

( 5,187,214 )

Net gain from deconsolidation of VIEs - discontinued operations

Gain (loss) from discontinued operations

( 5,187,214 )

Net income (loss)

Gain from discontinued operations

Net (loss) income

( 3,790,693 )

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

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

( 3,872,645 )

2 unchanged sentences

( 3,113,749 )

Net income (loss)

Net (loss) income

( 3,790,693 )

Other comprehensive loss

Other comprehensive (loss) income

Foreign currency translation adjustment

Comprehensive income (loss)

( 1,103,510 )

Total comprehensive income (loss) attributable to noncontrolling interests

Comprehensive (loss) income

( 4,894,203 )

Total comprehensive (loss) income attributable to noncontrolling interests

Total comprehensive loss attributable to stockholders

2 unchanged sentences

Basic and diluted*

Earnings (loss) per share - basic and diluted*

Earning (loss) per share - basic and diluted*

Continuing operations

Discontinued operations

Net Loss per share - basic and diluted*

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

10 unchanged sentences

( 3,284,143 )

( 10,360,058 )

( 2,302,581 )

( 12,662,639 )

Exercise of Series A warrants into common stock

Exercise of Placement warrants into common stock

Fair value of derivative liabilities upon exercise of warrants

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

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

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

Fair value of warrants allocated to derivative liabilities

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

Acquisition of business entities

Foreign currency translation adjustment

BALANCE, March 31, 2021

( 34,064,921 )

( 3,284,143 )

Net income (loss)

12 unchanged sentences

( 34,601,545 )

( 3,113,749 )

( 3,790,693 )

Conversion of preferred stock into common stock

Cashless exercise of November 2021 Investor warrants into common stock

Fair value of derivative liabilities upon exercise of warrants

Foreign currency translation adjustment

( 1,137,645 )

( 1,103,510 )

BALANCE, March 31, 2023

( 37,715,294 )

( 1,247,099 )

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

8 unchanged sentences

( 3,790,693 )

Net income (loss) from discontinued operations

( 5,187,214 )

Net income from discontinued operations

Net loss from continuing operations

1 unchanged sentence

( 5,606,145 )

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

Depreciation and amortization of property and equipment

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

Depreciation of property and equipment

Stock compensation expense

4 unchanged sentences

Impairments of inventories

Impairments of long-lived assets

Impairments of long-lived assets and goodwill

Gain on disposal of equipment

1 unchanged sentence

( 1,711,889 )

( 6,951,482 )

Change in operating assets and liabilities

Accounts receivable

Prepayments, other receivables and other assets

( 1,366,724 )

Accounts receivable, a related party

Finance lease receivables

Prepayments, other receivables and other assets

Accounts payable

Advances from customers

Income tax payable

Accrued expenses and other liabilities

1 unchanged sentence

Operating lease liabilities - related parties

Net cash used in operating activities from continuing operations

( 9,036,114 )

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

( 9,036,114 )

Net cash used in operating activities from discontinued operations

Net Cash Used in Operating Activities

( 9,159,281 )

Net Cash Provided by (Used in) Operating Activities

( 9,159,281 )

3 unchanged sentences

( 3,223,992 )

Cash proceed from disposal of property and equipment

Purchases of intangible assets

Cash released upon termination of a VIE

Cash acquired from XXTX, net of cash paid to XXTX

Net cash used in investing activities from continuing operations

( 3,365,915 )

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

( 3,365,915 )

Net cash used in investing activities from discontinued operations

Net Cash Used in Investing Activities

( 3,477,125 )

Net Cash Provided by (Used in) Investing Activities

( 3,477,125 )

Cash Flows from Financing Activities:

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

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

Net proceeds from issuance of common stock in registered direct offering

Net proceeds from issuance of common stock upon warrants exercised

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

Net proceeds from exercise of underwriters’ over-allotment option

Borrowings from a financial institution

Loan to related parties

Repayments to related parties and affiliates

Repayments from related parties and affiliates

Repayments of current borrowings from financial institutions

Principal payments of finance lease liabilities

( 2,230,765 )

Net cash provided by financing activities from continuing operations

Net cash provided by financing activities from discontinued operations

Net Cash Provided by Financing Activities

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

Net Cash Provided by (Used in) Financing Activities

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

( 3,262,854 )

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Cash and cash equivalents from discontinued operations

Cash and cash equivalents from continuing operations, end of year

Cash and cash equivalents, beginning of the year

Cash and cash equivalents, end of the year

Supplemental Cash Flow Information

Cash paid for interest expense

Cash paid for income tax

Non-cash Transaction in Investing and Financing Activities

Recognition of other receivables from Jinkailong upon deconsolidation

Recognition of right-of-use assets and lease liabilities

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

Recognition of other receivables from Jinkailong upon deconsolidation

Acquisition of equipment through prepayment and financing lease receivables offset

Termination of right-of use assets and lease liabilities

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

Cashless exercise of November 2021 Investor warrants into common stock

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

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

Acquisition of XXTX with payables

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

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

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

5 unchanged sentences

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”).

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

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

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

2 unchanged sentences

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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

4 unchanged sentences

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

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

to Hunan Ruixi for free.

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

However, in November 2021, Xichuang was dissolved.

4 unchanged sentences

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 ).

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

Corenel holds 51 % of the equity interests of Jiekai.

Jiekai is engaged in automobile operating lease business.

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

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

Former VIE Agreements with Sichuan Senmiao

Senmiao Consulting, Sichuan Senmiao 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.

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

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

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

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

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

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

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

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

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

Former Voting Agreements with Jinkailong’s Other Shareholders

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

Pursuant to the Voting 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

Pursuant to the Voting

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.

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

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

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

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

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

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

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

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

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

Carrying amount of non-controlling interest

( 3,605,156 )

Cumulative currency translation adjustment removal

Net gain on deconsolidation of Jinkailong

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

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

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

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

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

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

Former VIE Agreements with Youlu

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

The 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.

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

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

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

2 unchanged sentences

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Current assets:

Cash and cash equivalents

Accounts receivable, net, current portion

Prepayments, other receivables and other assets, net

Other receivable- intercompany

Current assets - discontinued operations (1)

Total current assets

Property and equipment, net:

Property and equipment, net

Property and equipment, net - discontinued operations

Total property and equipment, net

Other assets:

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

Other assets - discontinued operations

Total other assets

Current liabilities:

Accrued expenses and other liabilities

Other payable - intercompany

Due to related parties and affiliates

Operating lease liabilities - related parties

Current liabilities - discontinued operations (2)

Total current liabilities

Other liabilities:

Operating lease liabilities, non-current - related parties

Other liabilities - discontinued operations

Total other liabilities

Total liabilities

(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.

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

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

For the Years Ended

4 unchanged sentences

( 2,537,715 )

( 4,254,403 )

Net loss from continuing operations attributable to stockholders

1 unchanged sentence

( 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.

GOING CONCERN

3 unchanged sentences

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;

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

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

(3) the working capital deficit of approximately $ 0.4 million as of March 31, 2023;

(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.

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

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

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

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

1 unchanged sentence

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;

● Equity financing to support its working capital;

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

1 unchanged sentence

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

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

capital markets.

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

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

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

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.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2 unchanged sentences

(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.

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

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

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

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

11 unchanged sentences

For the years ended March 31,

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

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

(d) Use of estimates

6 unchanged sentences

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

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

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.

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

(e) Fair values of financial instruments

8 unchanged sentences

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

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

Carrying Value as of

Fair Value Measurement as of

March 31, 2023

1 unchanged sentence

Derivative liabilities

Carrying Value at

Fair Value Measurement at

Carrying Value as of

Fair Value Measurement as of

March 31, 2022

9 unchanged sentences

Change in fair value of derivative liabilities

Fair value of warrants exercised

( 2,535,376 )

( 2,895,392 )

Warrant forfeited due to expiration

( 6,951,482 )

Fair value of warrants exercised

BALANCE as of March 31, 2022

Derivative liabilities recognized at grant date

Change in fair value of derivative liabilities

( 1,711,889 )

( 2,895,392 )

( 6,951,482 )

Fair value of warrants exercised

Cashless exercise on November 2021 investor warrants

BALANCE as of March 31, 2023

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

June 20, 2019

17 unchanged sentences

November 10, 2021

Placement Agent

Underwriters’

Placement Agent

# of shares exercisable

8 unchanged sentences

February 10, 2021

November 10, 2021

Placement Agent

1 unchanged sentence

Placement Agent

# of shares exercisable*

5 unchanged sentences

*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.

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

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

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

1 unchanged sentence

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.

(f) Equity method investments

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

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

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

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

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

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

(g) Business combinations and non-controlling interests

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

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

7 unchanged sentences

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

(g) Segment reporting

(h) Segment reporting

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

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

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

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

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

(h) Cash and cash equivalents

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

(i) Cash and cash equivalents

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

Cash and cash equivalents also consist of funds received from automobile purchasers as 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

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

(j) Accounts receivable, net

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

1 unchanged sentence

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

Account balances are charged off

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.

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

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

(k) Inventories

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

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

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

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

(l) Finance lease receivables, net

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

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

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

As of March 31, 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:

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

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

Minimum lease payments receivable

9 unchanged sentences

Twelve months ending March 31, 2026

(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.

(m) Property and equipment, net

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

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

3 unchanged sentences

Computer equipment

Office equipment

Office equipment, fixture and furniture

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

5 unchanged sentences

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(m) Intangible assets, net

(n) Intangible assets, net

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

20 unchanged sentences

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

(o) Earnings (loss) per share

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(p) Earnings (loss) per share

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

1 unchanged sentence

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.

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

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(p) Mezzanine Equity (redeemable)

(q) Mezzanine Equity (redeemable)

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

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

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

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

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

(q) Derivative liabilities

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

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

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

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

(r) Derivative liabilities

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

1 unchanged sentence

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

(s) Revenue recognition

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

4 unchanged sentences

(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.

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

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

6 unchanged sentences

- Service fees from NEVs leasing

- Revenues from sales of automobiles

- Financing revenues

1 unchanged sentence

- Service fees from automobile purchase services

- Revenues from sales of automobiles

- Other service fees

2 unchanged sentences

Total Revenues from Continuing Operations

Online Lending Services (Discontinued Operations)

-Transaction fees

- Service fees

Total revenues from Online Lending Services (Discontinued Operations)

Automobile Transaction and Related Services (Discontinued Operations)

-Operating lease revenues from automobile rentals

- Commissions from online ride-hailing platforms

- Service fees from NEVs leasing

-Financing revenues

- Commission from Online Ride-hailing platforms

-Service fees from management and guarantee services

-Facilitation fees from automobile transactions

-Financing revenues

-Other service fees

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

Total Revenues from Discontinued Operations

Total revenues

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.

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

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

Rental transactions are satisfied over the rental period.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

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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

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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.

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

Thus, the Company recognizes revenue at a net basis.

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:

Leases - Lessor

The Company recognized revenue as lessor in accordance with ASC 842.The two primary accounting provisions the Company uses to classify transactions as sales-type or operating leases are:

(i) a review of the lease term to determine if it is for the major part of the economic life of the underlying equipment (defined as greater than 75 %);

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

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

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

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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.

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As of March 31, 2023, the Company’s pricing interest rate was 6.0 % per annum.

(s) Income taxes

(t) Income taxes

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

1 unchanged sentence

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

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

(t) Comprehensive income (loss)

(u) Comprehensive income (loss)

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

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

Accumulated other comprehensive 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.

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

(v) Share-based awards

Share-based awards granted to the Company’s employees are measured at fair value on grant date and share-based compensation expense is recognized (i) immediately at the grant date if no vesting conditions are required, or (ii) using the straight-line basis, net of estimated forfeitures, over the requisite service period.

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

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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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(w) Leases - lessee

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

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

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

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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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.

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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.

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

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

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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.

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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

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

(x) Significant risks and uncertainties

1) Credit risk

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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.

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

government up to $ 250,000 .

On March 31, 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.

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

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

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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.

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

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

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

2) Foreign currency risk

As of March 31, 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.

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

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

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

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

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

1 unchanged sentence

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

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

(y) Reclassification

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

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

(z) Recently issued accounting standards

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

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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.

The Company has adopted this update on April 1, 2023, and the adoption does not have material impact on Company’s consolidated financial statements and related disclosures.

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

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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:

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

Specifically, an entity should consider:

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

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

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

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

A financing transaction to raise equity.

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

A financing transaction to raise or modify debt.

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

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

The effect should be recognized as a dividend.

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

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In March 2023, the FASB issued new accounting guidance, ASU 2023-01, for leasehold improvements associated with common control leases, which is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance.

The new guidance introduced two issues:

terms and conditions to be considered with leases between related parties under common control and accounting for leasehold improvements.

The goals for the new issues are to reduce the cost associated with implementing and applying Topic 842 and to promote diversity in practice by entities within the scope when applying lease accounting requirements.

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

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the fair value of the identifiable assets acquired and liabilities assumed on the acquisition date, which represents the net purchase price allocation on the date of the acquisition of XXTX based on valuation performed by an independent valuation firm engaged by the Company and translated the fair value from RMB to USD using the exchange rate on October 23, 2020 at the rate of USD 1.00 to RMB 6.69 .

As of March 31, 2022, the Company acquired $ 8,065 in cash, net of cash paid to XXTX in the acquisition of XXTX.

The remaining purchase consideration of approximately $ 0.3 million from XXTX Investment Agreement signed on September 11, 2020 and approximately $ 5.7 million additional capital investment from XXTX Increase Investment Agreement signed on February 5, 2021 mentioned above are expected to be paid by the Company by December 31, 2025.

Under ASC 805-30-30-1, goodwill is calculated as follows as of March 31, 2022:

Purchase consideration paid

Fair value of non-controlling interest

fair value of nets assets of XXTX:

Cash and cash equivalents

Other current assets

Plant and equipment

Intangible assets

Total liabilities

Total fair value of net assets of XXTX

Goodwill as of the acquisition date

Effect of exchange rate changes on goodwill

impairment loss of goodwill

Goodwill as of March 31, 2022

DISCONTINUED OPERATIONS

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.

On October 17, 2019, the Board approved the plan under which the Company has discontinued and is winding down its online P2P lending services business (the “Plan”).

The Company determined that the operation of its online P2P lending services business was not viable in light of the tightened regulations on online peer-to-peer lending in China generally and the unofficial request from local regulator to reduce the Company’s online peer-to-peer lending transaction volume on a monthly basis.

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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 decision and action taken by the Company of discontinuing the online lending services business represented a major shift that had a major effect on the Company’s operations and financial results, which triggers discontinued operations accounting in accordance with ASC 205-20-45.

The fair value of discontinued operations, determined as of October 17, 2019, includes estimated consideration expected to be received, less costs to sell.

After consideration of the determination of fair value of the discontinued operations including the assumption of all the outstanding loans from investors on the platform, $ 143,668 of accounts receivable, $ 3,760,599 of other receivables, and $ 143,943 of prepayments for impaired intangible assets were indicated as of the date the Company’s Board of Directors approved the Plan on October 17, 2019, and the Company recognized $ 4,048,210 provision for doubtful accounts as of September 30, 2019 related to the Company’s online lending services business, while the Company did not recognize any additional provision for doubtful accounts for the year ended March 31, 2022.

The following table sets forth the reconciliation of the carrying amounts of major classes of assets and liabilities from discontinued operations of Online P2P lending services in consolidated balance sheet as of March 31, 2022 and March 31, 2021.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Carrying amounts of major classes of assets included as part of discontinued operations of Online P2P lending services:

Current assets

Prepayments, other receivables and other assets, net

Total current assets

Property and equipment, net

After consideration of the determination of fair value of the discontinued operations including the assumption of all the outstanding loans from investors on the platform, $ 143,668 of accounts receivable, $ 3,760,599 of other receivables, and $ 143,943 of prepayments for impaired intangible assets were indicated as of the date the Company’s Board of Directors approved the Plan on October 17, 2019, and the Company recognized $ 4,048,210 provision for doubtful accounts as of December 31, 2019 related to the Company’s online lending services business, while the Company did not recognize any additional provision for doubtful accounts for the year ended March 31, 2023.

The following table sets forth the reconciliation of the carrying amounts of major classes liabilities from discontinued operations of Online P2P lending services in consolidated balance sheet as of March 31, 2023 and 2022.

Carrying amounts of major classes of liabilities included as part of discontinued operations of Online P2P lending services:

1 unchanged sentence

Accrued expenses and other liabilities

Due to a stockholder

Total current liabilities

Total liabilities

The following table sets forth the reconciliation of the amounts of major classes of income and losses from discontinued operations of Online P2P lending services in the consolidated statements of operations and comprehensive loss for the years ended March 31, 2022 and 2021.

For the Years Ended

Operating expenses

Selling, general and administrative expenses

Total operating expenses

Loss from discontinued operations

Other income, net

Loss before income taxes

Income tax expenses

Net loss attributable to stockholders

Discontinued operation- Jinkailong

On March 31, 2022, Ruixi, a majority owned subsidiary of the Company, holding 35 % equity interest of Jinkailong, entered into an Agreement for the Termination of the Agreement for Concerted Action by Shareholders of Jinkailong (the “Termination Agreement”), pursuant to which the Agreement for Concerted Action by Shareholders with respect to Jinkailong signed on August 26, 2018 (“Voting Agreement No.1”) and the Agreement for Concerted Action by Shareholders with respect to Jinkailong signed on February 13, 2020 (“Voting Agreement No.2”, collectively, “Voting Agreements”) shall be terminated as of the date of the Termination Agreement.

As a result, the Company no longer has a controlling financial interest in Jinkailong and has determined that Jinkailong was deconsolidated

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

Consolidation included

Jinkailong as of

Deconsolidation

Consolidation as of

March 31, 2022

of Jinkailong

March 31, 2022

Current assets

Cash and cash equivalents

Accounts receivable, net, current portion

Finance lease receivables, net, current portion

Prepayments, other receivables and other assets, net

Due from related parties, current portion (1)

Total current assets

Property and equipment, net

Total property and equipment, net

Operating lease right-of-use assets, net

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

Financing lease right-of-use assets, net

( 1,043,989 )

Intangible assets, net

Accounts receivable, net, noncurrent

Finance lease receivables, net, noncurrent

Due from a related party, noncurrent (1)

Total other assets

LIABILITIES AND EQUITY (DEFICIENCY)

Current liabilities

Borrowings from financial institutions

Accounts payable

Advances from customers

Income tax payable

Accrued expenses and other liabilities

( 4,871,902 )

Due to related parties and affiliates

Operating lease liabilities

Operating lease liabilities - related parties

Financing lease liabilities

( 3,197,924 )

Derivative liabilities

Current liabilities - discontinued operations

Total current liabilities

( 9,962,775 )

Other liabilities

Borrowings from financial institutions, noncurrent

Operating lease liabilities, non-current

Operating lease liabilities, non-current - related parties

Financing lease liabilities, non-current

Deferred tax liability

Total other liabilities

Total liabilities

( 10,852,063 )

Commitments and contingencies

Mezzanine Equity (redeemable)

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

5,000 shares issued and outstanding at December 31, 2021), net of issuance costs of $ 118,344

Stockholders’ equity (deficiency)

Common stock (par value $ 0.0001 per share, 10,000,000 shares authorized;

6,186,783 shares issued and outstanding at March 31, 2022.) (2)

Additional paid-in capital

Accumulated deficit

( 45,553,090 )

( 34,601,545 )

Accumulated other comprehensive income (loss)

Total Senmiao Technology Limited stockholders’ equity (deficiency)

( 3,529,539 )

Non-controlling interests

Total equity (deficiency)

Total liabilities and equity (deficiency)

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) As result of deconsolidation, the Company recognized $ 7,298,208 of related party receivable from Jinkailong, of which, $ 6,635,746 is to be repaid over a period from April 2023 to December 2026, classified as due from related parties, noncurrent.

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

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

The gain on deconsolidation of Jinkailong was calculated as follows:

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

Carrying amount of non-controlling interest

( 3,605,156 )

Cumulative currency translation adjustment removal

Net gain on deconsolidation of Jinkailong

The Company determined that the deconsolidation of Jinkailong represented a major shift that will have a major effect on the Company’s operations and financial results, which triggers discontinued operations accounting in accordance with ASC 205-20-45.

The following table sets forth the reconciliation of the carrying amounts of major classes of assets and liabilities from discontinued operations of Jinkailong in consolidated balance sheet as of March 31, 2022 and March 31, 2021.

Carrying amounts of major classes of assets included as part of discontinued operations of Jinkailong:

Current assets

Cash and cash equivalents

Accounts receivable, net

Prepayments, receivables and other assets, net

Due from related parties

Total current assets

Property and equipment, net

Operating lease right-of-use assets, net

Financing lease right-of use assets, net

Accounts receivable, net, noncurrent

Total other assets

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Carrying amounts of major classes of liabilities included as part of discontinued operations of Jinkailong:

Current liabilities

Borrowings from financial institutions

Advance from customers

Income tax payable

Accrued expenses and other liabilities

Due to related parties and affiliates

Operating lease liabilities

Finance lease liabilities

Total current liabilities

Other liabilities

Borrowings from financial institutions, noncurrent

Operating lease liabilities, non-current

Financing lease liabilities, non-current

Total other liabilities

Total liabilities

The following table sets forth the reconciliation of the amounts of major classes of income and losses from discontinued operations of Jinkailong in the consolidated statements of operations and comprehensive loss for the years ended March 31, 2022 and 2021.

For the Years Ended

Cost of revenues

( 5,183,806 )

Cost of revenue

( 5,183,806 )

2 unchanged sentences

( 4,139,800 )

( 4,367,529 )

Long live assets impairment

Recovery of (Provision for) doubtful account

Impairment of long-live assets

Provision for doubtful account

Total operating expenses

( 4,184,025 )

( 4,159,399 )

Loss from discontinued operations

( 2,537,715 )

( 4,173,118 )

Other expense, net

1 unchanged sentence

( 2,747,209 )

( 5,118,943 )

Income tax expenses

( 2,747,209 )

( 5,125,238 )

net loss from discontinued operations attributable to noncontrolling interest

1 unchanged sentence

( 2,032,935 )

( 3,792,676 )

Discontinued operation- Youlu

1 unchanged sentence

As Youlu had limited operation, the Company recognized a gain of $ 23,556 from the termination.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ACCOUNTS RECEIVABLE, NET

Accounts receivable include a portion of bundled lease arrangements on fixed minimum monthly payments to be paid by the automobile purchasers arising from automobile sales and services fees, net of unearned interest income, discounted using the Company’s lease pricing interest rates.

As of March 31, 2022 and March 31, 2021, accounts receivable were comprised of the following:

It also includes online ride-hailing services fees due from online ride-hailing drivers and rental receivables due from operating lessees.

As of March 31, 2023 and 2022, accounts receivables were comprised of the following:

Receivables of automobile sales due from automobile purchasers

2 unchanged sentences

Receivables of operating lease

Unearned interest

Allowance for doubtful accounts

Accounts receivable, net

Accounts receivable, net – discontinued operations

( 1,142,404 )

Accounts receivable, net – continuing operations

Accounts receivable, net, current portion – continuing operations

Accounts receivable, net, non-current portion – continuing operations

Accounts receivable, net, current portion – discontinued operations

Accounts receivable, net, non-current portion – discontinued operations

Movement of allowance for doubtful accounts for March 31, 2022 and March 31, 2021 are as follows:

Accounts receivable, net, current portion

Accounts receivable, net, non-current portion

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Movement of allowance for doubtful accounts for March 31, 2023 and 2022 are as follows:

Beginning balance

3 unchanged sentences

Automobiles (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.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2023 and 2022, the Company owned 1 and 36 automobiles with a total value of $ 6,678 and $ 286,488 , net of impairment, for sale or sales-type leases, respectively.

As of March 31, 2023 and 2022, the Company compared the cost of automobiles with their net realizable value and recognized impairments of $ 3,085 and $ 60,398 , respectively for certain automobiles for sale for the years ended March 31, 2023 and 2022, respectively.

PREPAYMENTS, OTHER RECEIVABLES AND OTHER ASSETS

As of March 31, 2022 and March 31, 2021, the prepayments, receivables and other assets were comprised of the following:

Receivables from borrowers of online lending platform, net (i)

As of March 31, 2023 and 2022, the prepayments, other receivables and other assets were comprised of the following:

Prepaid expenses (ii)

Deposits (iii)

Value added tax (“VAT”) recoverable

Due from automobile purchasers, net (iv)

Receivables from aggregation platforms (v)

Prepayments for automobiles (vi)

Receivables from aggregation platforms (iii)

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

Due from automobile purchasers, net (v)

Employee advances

Total prepayments, receivables and other assets

Total prepayments, receivables and other assets - discontinued operations

( 1,638,543 )

Total prepayments, receivables and other assets - continuing operations

(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.

Total prepayments, other receivables and other assets

(i ) Deposits

The balance of deposits mainly represented the security deposit made by the Company to various automobile leasing companies, financial institutions and Didi Chuxing Technology Co., Ltd., who runs an online ride-hailing platform.

(ii) Prepaid expense

1 unchanged sentence

that will expire within one year.

(iii) Deposits

(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.

(iii) Receivables from aggregation platforms

The balance of receivables from aggregation platforms represented the amount due from the collaborated aggregation platforms based on the confirmed billings, which will be disbursed to the drivers who completed their rides through the Company’s online ride-hailing platform.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(v) Receivables from aggregation platforms

(v i ) Prepayments for automobiles

The balance represented advanced payments in purchasing automobiles from auto dealers or other parties.

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

The balance represented the amount of VAT, which resulted from historical purchasing activities and could be further used for deducting future VAT in PRC.

(v) Due from automobile purchasers, net

The balance due from automobile purchasers represented the payments of automobiles and related insurances and taxes made on behalf of the automobile purchasers.

The balance is expected to be collected from the automobile purchasers in installments.

As of March 31, 2023 and during the year ended March 31, 2023, the Company did not record allowance against doubtful receivables due from automobile purchasers.

As of March 31, 2022, the allowance against doubtful receivables due from automobile purchasers was zero.

During the year ended March 31, 2022, the Company recorded additional allowance of $ 84,600 , while wrote off balance due from automobile purchase of $ 84,600 , and recovered allowance against the balance due from automobile purchases $ 3,308 from continuing operations, against doubtful receivables.

During the year ended March 31, 2022, the Company recorded additional allowances of $ 35,983 , while wrote off balance due from automobile purchases of $ 1,134 , and recovered allowance against the balance due from automobile purchasers of $ 12,352 from discontinued operations.

PROPERTY AND EQUIPMENT, NET

1 unchanged sentence

Leasehold improvements

Electronic devices

Computer equipment

Office equipment, fixtures and furniture

1 unchanged sentence

( 1,635,990 )

( 1,133,135 )

Total property and equipment, net

Total property and equipment, net - discontinued operations

Total property and equipment, net - continuing operations

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.

Depreciation expense from continuing operations for years ended March 31, 2023 and 2022 were amounted to $ 1,095,518 and $ 956,400 , respectively.

Depreciation expense from discontinued operations for the year ended March 31, 2022 amounted to $ 170,177 .

OTHER NON-CURRENT ASSETS

Prepayments of automobiles purchased (i)

In March and September 2022, the Company entered into two automobile purchase agreements (“Purchase Agreements”) with two third parties to purchase a total of 150 automobiles which amounted to $ 2,444,813 .

As of March 31, 2023, the Company has made prepayments of $ 716,407 towards the remaining purchase pertaining to the Purchase Agreements.

The Company expects to complete the remaining purchase by December 31, 2023.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INTANGIBLE ASSETS, NET

10 unchanged sentences

Twelve months ending March 31, 2028

BORROWINGS FROM A FINANCIAL INSTITUTION

The borrowings from a financial institution in China represented the short-term loans of $ 8,813 and $ 145,542 as of March 31, 2023 and 2022, respectively.

Such borrowings bearing interest rate of 13.04 % per annum as of March 31, 2023 and 2022, which are to be repaid within the next 12 months .

The interest expense for the years ended March 31, 2023 and 2022 was $ 0 and $ 5,893 from continuing operations, respectively.

The interest expense for the year ended March 31, 2022 was $ 501,361 from discontinued operations, of which, $ 450,889 was due to continuing operations and eliminated in the consolidation statements of operations and comprehensive income (loss).

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

BORROWINGS FROM A FINANCIAL INSTITUTIONS

The borrowings from a certain financial institution in China represented the short-term loans of $ 145,542 as of March 31, 2022.

Such borrowings bearing interest rate of 13.04 % per annum as of March 31, 2022, which is to be repaid within the next 12 months , were classified as borrowings from financial institutions, current.

The interest expense for the years ended March 31, 2022 and 2021 was $ 5,893 and $ 0 , from continuing operations, respectively.

The interest expense for the years ended March 31, 2022 and 2021 was $ 501,361 and $ 579,870 from discontinued operations, respectively, of which, $ 450,889 and $ 531,954 were due to continuing operations and eliminated in the consolidation statements of operations and comprehensive loss.

ACCRUED EXPENSES AND OTHER LIABILITIES

Payables to investors of online lending platform (i)

Accrued payroll and welfare

Payables to drivers from aggregation platforms (ii)

Deposits (iii)

Payables to drivers from aggregation platforms (i)

Deposits (ii)

Accrued expenses

Payables for expenditures on automobile transaction and related services

Loan repayments received on behalf of financial institutions (iv)

Other taxes payable

Other payables (v)

Loan repayments received on behalf of financial institutions (iii)

Payables for expenditures on automobile transaction and related services

Other payables

Total accrued expenses and other liabilities

Total accrued expenses and other liabilities - discontinued operations

( 6,070,431 )

Total accrued expenses and other liabilities - continuing operations

The balance of payables to investors of online lending platform represented the outstanding loans from investors on the Company’s discontinued P2P lending platform, which was assumed by the Company in connection with the Plan to discontinue its online lending services business.

As of March 31, 2022, the Company has fully settled the outstanding loans.

Payables to drivers from aggregation platforms

The balance of payables to drivers from aggregation platforms represented the amount the Company collected on behalf of drivers who completed their transaction through the Company’s online ride-hailing platform base on the confirmed billings.

(ii) Deposits

The balance of deposits represented the security deposit from operating and finance lease customers to cover lease payment and related automobile expense in case the customers’ accounts are in default.

The balance is refundable at the end of the lease term, after deducting any missed lease payment and applicable fee.

(iii) Loan repayments received on behalf of financial institutions

The balance of loan repayments received on behalf of financial institutions represented the loan repayments made by the automobile purchasers to financial institutions through the Company, which has not been paid to the financial institutions.

The balance of other payables represented amount due to suppliers and vendors for operations purposes.

EMPLOYEE BENEFIT PLAN

1 unchanged sentence

The contributions made by the Company were $ 452,796 and $ 602,641 for the years ended March 31, 2023 and 2022, respectively, from continuing operations of the Company.

The contributions made by the Company were $ 464,159 and $ 340,517 for the years ended March 31, 2022 and 2021, respectively, for the Company’s discontinued operations.

As of March 31, 2022 and March 31, 2021, the Company did not make adequate employee benefit contributions in the amount of $ 963,824 and $ 111,534 , respectively, from continuing operations of the Company.

As of March 31, 2021, the Company did not make

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

adequate employee benefit contributions in the amount of $ 897,091 from discontinued operations of the Company.

The Company accrued the amount in accrued payroll and welfare.

The contributions made by the Company were $ 464,159 for the year ended March 31 2022 for the Company’s discontinuing operations.

As of March 31, 2023 and 2022, the Company did not make adequate employee benefit contributions in the amount of $ 1,086,526 and $ 963,824 , respectively, from continuing operations of the Company.

The registration statement relating to the Company’s initial public offering also included the underwriters’ common stock purchase warrants to purchase 33,794 ( 337,940 pre reverse split) shares of common stock (“IPO Underwriter’s Warrants”).

Each five-year warrant entitles warrant holder to purchase one share of the Company’s common stock at the price of $48.0 ($4.80 pre reverse split) per share and is not exercisable for a period of 180 days from March 16, 2018 .

Each five-year warrant entitles warrant holder to purchase one share of the Company’s common stock at the price of $ 48.0 ($ 4.80 before reverse split) per share and is not exercisable for a period of 180 days from March 16, 2018 .

As of March 31, 2023, there were 3,794 ( 37,940 pre reverse split) IPO Underwriter’s Warrants outstanding.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Warrants in Offerings

2 unchanged sentences

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.”

Changes in the liability from period to period are recorded in the consolidated statements of operations and comprehensive income (loss) under the caption “Change in fair value of derivative liabilities.”

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.

As of March 31, 2023 and 2022, there were 16,841 ( 168,411 pre reverse split) 2019 registered direct offering warrants outstanding.

During years ended March 31, 2023 and 2022, the change of fair value was a gain of $ 12,432 and $ 185,727 in the consolidated statements of operations and comprehensive income (loss) based on the decrease in fair value of the liabilities since March 31, 2021, respectively.

As of March 31, 2023 and 2022, the fair value of the derivative instrument totaled $ 6 and $ 12,438 , respectively.

August 2020 Underwriters’ Warrants

As of March 31, 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.

As of March 31, 2023 and 2022, there were 31,808 ( 318,080 pre reverse split) underwriters’ warrants outstanding.

During the years ended March 31, 2023 and 2022, the change of fair value was a gain of $ 36,131 and $ 352,944 recognized in the consolidated statements of operations and comprehensive income (loss) based on the decrease in fair value of the liabilities since March 31, 2021, respectively.

As of March 31, 2023 and 2022, the fair value of the derivative instrument totaled $ 8,450 and $ 44,581 , respectively.

February 2021 Registered Direct Offering Warrants

As of March 31, 2023 and 2022, there were 53,262 ( 532,609 pre reverse split) February 2021 registered direct offering warrants outstanding.

During the year ended March 31, 2022, the change of fair value was a gain of $ 572,018 recognized in the consolidated statements of operations and comprehensive loss based on the decrease in fair value of the liabilities since March 31, 2021.

During the year ended March 31, 2021, the change of fair value was a gain of $ 117,713 recognized in the accompanying consolidated statements of operations and comprehensive loss based on the increase in fair value of the liabilities since issuance.

As of March 31, 2022 and March 31, 2021, the fair value of the derivative instrument totaled $ 65,543 and $ 637,561 , respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the years ended March 31, 2023 and 2022, the change of fair value was a gain of $ 54,052 and $ 572,018 recognized in the consolidated statements of operations and comprehensive income (loss) based on the decrease in fair value of the liabilities since March 31, 2021, respectively.

As of March 31, 2023 and 2022, the fair value of the derivative instrument totaled $ 11,491 and $ 65,543 , respectively.

May 2021 Registered Direct Offering Warrants

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

Total net proceeds

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 .

As of March 31, 2023 and 2022, there were 594,682 ( 5,946,810 pre reverse split) May 2021 registered direct offering warrants outstanding.

During the years ended March 31, 2023 and 2022, the change of fair value was a gain of $ 662,767 and $ 2,725,530 recognized in the consolidated statements of operations and comprehensive income (loss) based on the decrease in fair value of the liabilities since March 31, 2021.

As of March 31, 2023 and 2022, the fair value of the derivative instrument totaled $ 174,108 and $ 836,875 , respectively.

November 2021 Private Placement Warrants

In connection with November 2021 private placement, the company issued 735,295 ( 7,352,941 pre reverse split) and 55,148 ( 551,471 pre reverse split) warrants to the investors and placement agents, respectively.

The Company allocated the gross proceeds received between the Series A Preferred Stock and warrants issued to the Investors 735,295 ( 7,352,941 pre reverse split) shares in connection of the sale of Series A Preferred Stock first to warrants based on the fair value on the date the proceeds were received with the remaining balance to Series A Preferred Stock, gross proceeds were allocated as the follows:

Fair value of Investor warrants

Series A Preferred Stock

Total gross proceeds

Issuance cost

Total net proceeds

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

Fair value of placement agent warrants (i)

Total fair value of warrants allocated to derivative liabilities

(i) The issuance costs for placement agent warrants which was classified as liability were immediately expensed.

Pursuant to November 2021 Investors Warrants, if at any time and from time to time on or after the issuance date there occurs any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (“Stock Combination Event”) and the Event Market Price (which is defined as with respect to any Stock Combination Event date, the quotient determined by dividing (x) the sum of the VWAP of the Common Stock for each of the five ( 5 ) lowest trading days during the twenty ( 20 ) consecutive trading day period ending and including the trading day immediately preceding the sixteenth (16th) trading day after such Stock Combination Event date, divided by (y) five ( 5 )) is less than the original exercise price of $ 0.82 then in effect, then on the sixteenth (16th) trading day immediately following such Stock Combination Event, the exercise price then in effect on such sixteenth (16th) trading day shall be reduced (but in no event increased) to the event market price.

As the 1-for-10 reverse stock split on the Company’s common stock became effective on April 6, 2022, the exercise price of the November 2021 Investors Warrants was adjusted to $ 1.13 , and the total number of shares of the November 2021 Investors Warrants was adjusted to 5,335,763 .

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended March 31, 2022, the change of fair value was a gain of $ 3,115,263 recognized in the consolidated statements of operations and comprehensive loss based on the increase in fair value of the liabilities since issuance.

As of March 31, 2022, the fair value of the derivative instrument totaled $ 1,255,767 .

The Company has warrants outstanding, pre reverse split, as follows:

As of March 31, 2023 and 2022, there were 5,365,911 ( 7,869,971 per reverse split), and 5,390,911 ( 7,904,422 pre reverse split) respectively for November 2021 Private Placement Warrants outstanding.

During the years ended March 31, 2023 and 2022, the change of fair value was a gain of $ 946,507 and $ 3,115,263 recognized in the consolidated statements of operations and comprehensive income (loss) based on the decrease in fair value of the liabilities since insurance.

On November 18, 2022, a holder of November 2021 private placement warrants exercised the warrants on a “cashless” basis.

Upon exercise of above-mentioned warrants, the Company reduced the fair value of the warrants and increased the additional paid in capital by $ 1,533 .

As of March 31, 2023 and 2022, the fair value of the derivative instrument totaled $ 307,727 and $ 1,255,767 , respectively.

The Company has warrants outstanding as follows giving retroactive effect to the 1-for-10 reverse stock split effected on April 6, 2022:

Balance, March 31, 2021

( 1,516,010 )

Balance, March 31, 2022

1 unchanged sentence

Restricted Stock Units

On October 29, 2020, the Board approved the issuance of an aggregate of 127,273 restricted stock units (“RSUs”) to directors, officers and certain employees as stock compensation for their services for the 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 .

2 unchanged sentences

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.

The Company expects to settle the remaining vested RSUs by issuance of shares of common stock before December 31, 2023 and account for the vested RSUs as an addition to both expenses and additional paid-in capital.

Equity Incentive Plan

At the 2018 Annual Meeting of Stockholders of the Company held on November 8, 2018, the Company’s stockholders approved the Company’s 2018 Equity Incentive Plan for employees, officers, directors and consultants of the Company and its affiliates.

At the 2022 Annual Meeting of Stockholders of Company held on March 30, 2023, the Company’s stockholders approved the amendment to the 2018 Equity Incentive Plan, to increase the number of shares of common stock reserved under the Plan to 1,500,000 shares.

A committee consisting of at least two independent directors would be appointed by the Board or in the absence of such a committee, the board of directors, will be responsible for the general administration of the Equity Incentive Plan.

All awards granted under the Equity Incentive Plan will be governed by separate award agreements between the Company and the participants.

As of March 31, 2022, the Company has granted an aggregate of RSUs and issued an aggregate of shares upon vest under the Equity Incentive Plan.

And RSUs were forfeited due to two directors ceased to serve on the board of the Company since November 8, 2018.

Exercise of 2019 Registered Direct Offering Warrants

On April 23, 2021, one of the holders of Series A warrants exercised the warrants to purchase 4,403 ( 44,029 pre reverse split) shares of the Company’s common stock at an exercise price of $ 5.0 ($ 0.50 pre reverse split) per share generating gross proceeds of $ 22,015 to the Company.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 2021 Registered Direct Offering

On May 11, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain purchasers (the “Investors”) pursuant to which the Company will sell to the Investors, in a registered direct offering, an aggregate of 553,192 ( 5,531,916 pre reverse split) units (the “Units”), each consisting of 0.1 (one pre reverse split) share (the “Shares”) of the Company’s common stock, par value $ 0.0001 per share (“Common Stock”) and a warrant to purchase 0.1 (one pre reverse split) share of the Company’s Common Stock (the “Warrants”), at a purchase price of $ 1.175 per unit, for aggregate gross proceeds to the Company of $ 6,500,000 , before deducting fees to the placement agent and other estimated offering expenses payable by the Company.

On May 13, 2021, the Company completed the registered direct offering.

The net proceeds to the Company from this offering, after deducting the underwriting discounts and commissions and other estimated offering expenses payable by the Company, were approximately $ 5.8 million.

The Warrants have a term of five years and are exercisable by the holders at any time after the date of issuance at an exercise price of $ 10.5 ($ 1.05 pre reverse split) per share.

The exercise price and the number of shares issuable upon exercise of the Warrants are subject to an adjustment upon the occurrence of certain events, including, but not limited to, stock splits or dividends, business combinations, sale of assets, similar recapitalization transactions, or other similar transactions.

The exercise price of the Warrants is also subject to an adjustment in the event that the Company issues or is deemed to issue shares of Common Stock for less than the applicable exercise price of such Warrants.

However, the exercise price of the Warrants shall not be lower than $ 10.5 ($ 1.05 pre reverse split) as a result of an adjustment, unless the Company has obtained the stockholder approval.

The exercisability of the Warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.99 %.

FT Global Capital, Inc.

(“FT Global Capital”) acted as the exclusive placement agent in connection with this offering pursuant to the terms of a placement agency agreement, dated May 11, 2021, between the Company and FT Global Capital (the “Placement Agent Agreement”).

Pursuant to the Placement Agent Agreement, the Company agreed to pay FT Global Capital a cash fee equal to seven point five percent ( 7.5 %) of the aggregate proceeds received by the Company from the sale of its securities to the investors introduced to the Company by FT Global Capital.

FT Global Capital is also entitled to additional tail compensation for any financings consummated within the 12-month period following the termination of the Placement Agent Agreement to the extent that such financing is provided to the Company by investors that FT Global Capita had introduced to the Company.

In addition to the cash fees, the Company agreed to issue to the Placement Agent warrants to purchase an aggregate of up to seven point five percent ( 7.5 %) of the aggregate number of shares of our Common Stock sold in the offering (the “Placement Agent Warrants”).

The Placement Agent Warrants shall generally be on the same terms and conditions as the Warrants, exercisable at a price of $ 10.5 ($ 1.05 pre reverse split) per share, provided that Placement Agent Warrants will not provide for certain anti-dilution protections included in the Warrants.

In connection with the offering, the Company issued the investors warrants and placement agent warrants to purchase up to 553,192 ( 5,531,916 pre reverse split) and 41,490 ( 414,894 pre reverse split) shares of its common stock, respectively.

These warrants are exercisable at any time on or after the issuance date and expire on the fifth-year anniversary of their issuance.

November 2021 Private Placement

On November 8, 2021, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Investors”) pursuant to which the Company will sell to the Investors, in a private placement (the “Private Placement”), an aggregate of $ 5,000,000 worth of securities of the Company, consisting of up to 5,000 shares (the “Preferred Shares”) of Series A Convertible Preferred Stock, par value $ 0.0001 per share (the “Series A Preferred Stock”) and warrants (the “Investor Warrants”) to initially acquire up to an aggregate number of shares of common stock of the Company, par value $ 0.0001 per share (the “Common Stock”) that equals to the number of shares of Common Stock to be issued upon conversion of the Preferred Shares at $ 0.68 per share (the “Initial Conversion Price”) (as converted into the Conversion Shares as defined below, collectively with the shares of the Common Stock from the exercise of the Investor Warrants, the “Warrant Shares”, collectively, the “Warrant Shares”).

The purchase price for the Preferred Shares was $ 1,000 per each Preferred Share (and related Investor Warrant).

On November 10, 2021, the Company completed the Private Placement.

The net proceeds to the Company from the Private Placement, after deducting the placement agent commissions and other estimated offering expenses payable by the Company, were approximately $ 4.4 million.

The Series A Convertible Preferred Stock is included in mezzanine equity on the consolidated balance sheets, because it is redeemable by the holders upon events of change of control which are not within the Company’s control.

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to the certificate of designations for the Series A Preferred Stock (the “COD”), at any time after the initial issuance date, each holder shall be entitled to convert any portion of the outstanding Preferred Shares held by such holder into shares of Common Stock (the “Conversion Shares”) at Initial Conversion Price, which shall be adjusted to the greater of $ 0.41 per share or 85 % of the closing bid price of the Company’s Common Stock reported on the NASDAQ Capital Market on the Applicable Date, which is the earlier of the first date on which the registration statement covering the resale of the Conversion Shares and Warrant Shares is declared effective by the SEC or the first date on which all such shares are eligible to be resold by the Investors pursuant to Rule 144 or Rule 144A promulgated under the Securities Act.

The Investor Warrants have a term of five years and are exercisable by the holders at any time after six months and one day of the date of issuance at an exercise price of $ 8.2 ($ 0.82 pre reverse split) per share.

The exercise price and the number of shares issuable upon exercise of the Investor Warrants are subject to an adjustment upon the occurrence of certain events, including, but not limited to, stock splits or dividends, business combinations, sale of assets, similar recapitalization transactions, or other similar transactions.

The exercise price of the Investor Warrants is also subject to an adjustment in the event that the Company issues or is deemed to issue shares of Common Stock for less than the applicable exercise price of such Investor Warrants.

However, the exercise price of the Investor Warrants shall not be lower than $ 7.1 ($ 0.7125 pre reverse split) as a result of an adjustment, unless the Company has obtained the stockholders’ approval.

The exercisability of the Investor Warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.99 % or 9.99 % as the Investor chooses.

FT Global Capital acted as the exclusive placement agent in connection with this Private Placement pursuant to the terms of a placement agency agreement, dated November 7, 2021, between the Company and FT Global Capital (the “Placement Agent Agreement”).

Pursuant to the Placement Agent Agreement, the Company agreed to pay FT Global Capital a cash fee equal to 7.5 % of the aggregate proceeds received by the Company from the sale of its securities to the Investors.

FT Global Capital is also entitled to additional tail compensation for any financings consummated within the 12-month period following the termination of the Placement Agent Agreement to the extent that such financing is provided to the Company by Investors that FT Global Capital had introduced to the Company.

In addition to the cash fees, the Company agreed to issue to the Placement Agent warrants to purchase an aggregate of up to 7.5 % of the aggregate number of the Conversion Shares (the “Placement Agent Warrants”).

The Placement Agent Warrants shall generally be on the same terms and conditions as the Investor Warrants, exercisable at a price of $ 6.8 ($ 0.68 pre reverse split) per share, provided that Placement Agent Warrants will not provide for certain anti-dilution protections included in the Investor Warrants.

In connection with the Private Placement, the Company issued warrants to the Investors to purchase up to an aggregate number of shares of common stock that equals to the number of shares of common stock to be issued upon conversion of the Series A Preferred Stock at the Initial Conversion Price.

Meanwhile, the Company paid the placement agent cash commission of approximately $ 375,000 and issued to it warrants to purchase up to 55,148 ( 551,471 pre reverse split)shares of common stock at an exercise price of $ 6.8 ($ 0.68 pre reverse split) per share, which warrants will be exercisable at any time on or after the date of six months from the issuance date and expire on the fifth-year anniversary of their issuance.

Share Swap in purchase of XXTX’s remaining minority interest

Upon closing, the Company, through Senmiao Consulting, owns 100 % of the equity interests in XXTX.

Common stock issued for consulting services

On 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.

As of March 31, 2023, the Company has granted an aggregate of RSUs and issued an aggregate of shares upon vest under the Equity Incentive Plan and RSUs were forfeited due to two directors ceased to serve on the board of the Company since November 8, 2018.

SENMIAO TECHNOLOGY LIMITED

5 unchanged sentences

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”.

Conversion Price Adjustment for November 2021 Preferred Shares

Pursuant to the COD signed by the Company and certain institutional investors in November 2021 Private Placement, the initial conversion price of the series A convertible Preferred Shares was $ 0.68 .

If as of the applicable date the conversion price then in effect is greater than the greater of (1) $ 0.41 (the “floor Price”) (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events) and (2) 85 % of the closing bid price on the applicable date (the “Adjustment Price”), the conversion price shall automatically lower to the Adjustment Price accordingly.

As the 1-for-10 reverse stock split on the Company’s Common Stock became effective on April 6, 2022, the conversion price of the Preferred Shares was adjusted to $ 4.1 .

As of March 31, 2023 and March 31, 2022, there were 1,641 and 5,000 shares of Series A convertible preferred stock outstanding, respectively.

During the year ended March 31, 2023, 3,359 shares of Series A convertible preferred stock was converted into 1,546,125 shares of the Company’s common stock.

Further, on August 9, 2022, the Company and the investors agreed to reduce the conversion price of the series A convertible Preferred Shares from $ 4.10 to $ 2.00 and to increase the number of the shares of common stock that are available to be issued upon conversion of the Preferred Shares from 1,092,683 to 2,240,000 .

The United States of America

6 unchanged sentences

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.

For the years ended March 31, 2023 and 2022, the Company’s foreign subsidiaries in China were operating at loss and as such, did not record a liability for GILTI tax.

The Company’s net operating loss for U.S.

income taxes from U.S for the 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.

income taxes from U.S for the years ended March 31, 2023 and 2022 amounted to approximately $ 1.3 million and $ 2.3 million respectively.

As of March 31, 2023 and 2022, the Company’s net operating loss carryforward for U.S.

income taxes was approximately $ 7.1 million and $ 5.9 million, respectively.

The net operating loss carryforward will not expire and is available to reduce future years’ taxable income, but limited to 80 % of income until utilized.

1 unchanged sentence

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.

As of March 31, 2023 and 2022, valuation allowances for deferred tax assets related to net operating loss carry forward for U.S.

income taxes were approximately $ 1.5 million and $ 1.2 million, respectively.

Management reviews the valuation allowance periodically and makes changes accordingly.

Senmiao Consulting, Sichuan Senmiao, Hunan Ruixi, Ruixi Leasing, Jinkailong (deconsolidated for the year ended March 31, 2022), Yicheng, Jiekai, Youlu and XXTX and its subsidiaries are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws.

Senmiao Consulting, Sichuan Senmiao, Hunan Ruixi, Ruixi Leasing, Jinkailong (deconsolidated in the year ended March 31, 2022), Yicheng, Jiekai, Youlu and XXTX and its subsidiaries are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws.

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

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income taxes in the PRC are consist of:

For the Years Ended

Current income tax expenses

Deferred income tax expenses

Total income tax expenses

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Below is a reconciliation of the statutory tax rate to the effective tax rate:

For the Years Ended

Statutory tax rate

Differential of PRC statutory tax rate

PRC Statutory tax rate*

Differential of local statutory tax rate

Permanent difference of write-off of receivables from guarantee of loans

Permanent difference of US (income) expenses not (taxable) deductible in PRC

Permanent difference of gain from change in fair value of derivative liabilities not taxable in PRC

Non-deductible expenses

Valuation allowance on deferred income tax asset

Effective tax rate

*As the Company business operation mainly concentrated PRC, the Company determined to apply PRC statutory tax rate in reconciliation of the statutory tax rate to the effective tax rate

As of March 31, 2023 and 2022, the Company’s PRC entities from continuing operations had net operating loss carryforwards of approximately $ 9.6 million and $ 8.5 million, respectively, which will expire starting from 2025 and ending in 2027.

1 unchanged sentence

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.

As a result, the Company provided 100 % allowance on all deferred tax assets on net operating loss carryforwards in the PRC of $ 2,403,785 and $ 2,315,793 related to its continuing operations in the PRC as of March 31, 2023 and 2022, respectively and provided 100 % allowance on all deferred tax assets on allowance for doubtful account of $ 402,599 and $ 29,129 related to its continuing operations in the PRC as of March 31, 2023 and 2022, respectively.

The tax effects of temporary differences from continuing operations that give rise to the Company’s deferred tax assets and liabilities are as follows:

10 unchanged sentences

Deferred tax liabilities, net

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.

As of March 31, 2023 and 2022, the Company’s PRC entities associated with discontinued operations had net operating loss carryforwards of approximately $ 1.9 million and $ 10.3 million, respectively which will start to expire from 2024 to 2027.

Meanwhile, net operating loss carry forward as of March 31, 2023 in the PRC from discontinued operations was reduced due to certain adjustments by PRC tax authorities.

For In addition, allowance for doubtful accounts must be approved by the Chinese tax authority prior to being deducted as an expense item on the tax return.

The Company reviews deferred tax assets for a valuation allowance based upon whether

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

it is more likely than not that the deferred tax asset will not be fully realized.

As of March 31, 2023 and 2022, full valuation allowance is provided against the deferred tax assets related to the Company’s discontinued operations based upon management’s assessment as to their realization.

The tax effects of temporary differences from discontinued operations that give rise to the Company’s deferred tax assets are as follows:

1 unchanged sentence

March 31, 2022

Net operating loss carryforwards in the PRC

Allowance for doubtful accounts

Net operating loss carry forwards in the PRC

valuation allowance

( 2,595,919 )

( 3,822,686 )

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONCENTRATION

Major Suppliers

For the year ended March 31, 2023, two suppliers accounted for approximately 21.2 % and 12.4 % of the total costs of revenue from continuing operations of the Company.

For the year ended March 31, 2022, three suppliers accounted for approximately 23.65 %, 13.92 %, and 13.18 % of the total costs of revenue from continuing operations of the Company, and one supplier accounted for approximately 18.18 % of the total cost of revenues for discontinued operations of the Company.

1 unchanged sentence

Related Party Balances

1) Account receivable, a related party

As of March 31, 2023 and 2022, account receivable from a related party from the Company’s continuing operations of $ 6,312 and $ 0 , respectively, represented balance due from operating lease revenue recognized from Jinkailong, the Company’s equity investee company.

2) 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.

Total due to a stockholder

Total due to a stockholder – discontinued operations

Total due to a stockholder – continuing operations

3) Due to related parties and affiliates

Loan payable to related parties (i)

Total due to related parties and affiliates

Total due to related parties and affiliates – discontinued operations

Total due to related parties and affiliates – continuing operations

(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

As of March 31, 2023 and March 31, 2022, balances due from related parties from the Company’s continuing operations were comprised of the following:

Total due from related parties

Allowance for doubtful accounts

( 1,481,036 )

Due from related parties, net

Due from related parties, net, current portion

Due from a related party, net, non-current portion

As of March 31, 2023, balances due from Jinkailong of $ 5,106,100 , net of allowance, of which, $ 3,640,206 is to be repaid over a period from April 2024 to December 2026, which was classified as due from a related party, net, non-current (refer to Note 4).

As of March 31, 2022, balances due from Jinkailong of $ 7,298,208 , represented balance due from Jinkailong as result of Jinkailong’s deconsolidation, of which, $ 6,635,746 is to be repaid over a period from April 2023 to December 2026, which was classified as due from a related party, non-current.

Movement of allowance for doubtful accounts due from Jinkailong for March 31, 2023 and 2022 are as follows:

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$ 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 .

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.

Beginning balance

Translation adjustment

Ending balance

As of March 31, 2023 and 2022, balance due from Youlu, the Company’s former VIE as result of Youlu’s deconsolidation in March 2022 were amounted to $ 23,020 and $ 19,873 , respectively.

3) Due to related parties and affiliates

Loan payable to a related party (i)

Total due to related parties and affiliates

(i) As of March 31, 2023 and 2022, the balances represented borrowings from Xi Wen, the CEO of the Company, of which, $ 8,667 and $ 9,897 are unsecured, interest free and due on demand, respectively.

(ii) As of March 31, 2023 and 2022, the balances of $ 0 and $ 1,785 , respectively, represented payables to Jinkailong, the Company’s equity investee company, for operational purposes.

4) Operating lease right-of-use assets, net, related parties and Operating lease liabilities - related parties

Lease II (ii)

Total Operating lease right-of-use assets - related parties

Lease II (ii)

Total Operating lease liabilities, current - related parties

Lease II (ii)

Total Operating lease liabilities, non-current - related parties

The Company entered into two office lease agreements with Hong Li, supervisor of Sichuan Senmiao, which were set to expire on January 1, 2020.

On April 1, 2020, the two office leases were updated with a leasing term from April 1, 2020 to March 31, 2023.

On March 1, 2021, the Company entered into an additional office lease which was set to expire on February 1, 2026.

On April 1, 2021, the Company entered into another office lease which was set to expire on April 1, 2024.

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 October 2022, the Company terminated the leases signed on March 1, 2021 and April 1, 2021 as mentioned above.

In November 2018, Hunan Ruixi entered into an office lease agreement with Hunan Dingchentai Investment Co., Ltd.

(“Dingchentai”), a company where one of our independent directors serves as legal representative and general manager.

(“Dingchentai”), a company where one of the Company’s independent directors serves as legal representative and general manager.

The term of the lease agreement was from November 1, 2018 to October 31, 2023 and the rent was approximately $ 44,250 per year, payable on a quarterly basis.

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.

The Company’s operating leases for automobile rentals have rental periods that are typically short term, generally is twelve months or less.

Revenue recognition section of Note 3 (r), the Company discloses that revenue earned from automobile rentals, wherein an identified asset is transferred to the customer and the customer has the ability to control that asset, is accounted for under Topic 842 upon adoption for the year ended March 31, 2020.

As of March 31, 2022 and March 31, 2021, the Company has engaged in offices and showroom leases which were classified as operating leases.

The Company entered

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

into another lease with Dingchentai on substantially similar terms on September 27, 2019, and a renewal lease contract was signed on June 2022 which extended the original lease to May 2025.

Related Party Transactions

For the years ended March 31, 2023 and 2022, the Company incurred $ 177,414 and $ 237,968 , respectively, in rental expenses to Hong Li, supervisor of Sichuan Senmiao, pursuant to four office lease agreements in total.

For the years ended March 31, 2023 and 2022, the Company incurred $ 47,043 and $ 45,651 , respectively, in rental expenses to Dingchentai, a company where one of the Company’s independent directors serves as legal representative and general manager.

The Company had reached cooperation with Jinkailong, the Company’s equity investee company, that the drivers who leased automobile from Jinkailong completed their online ride-hailing requests and orders through the company’s ride-hailing platform, and the company will pay Jinkailong a certain promotion service fee.

During the year ended March 31, 2023, the company incurred promotion fee of $ 95,804 payable to Jinkailong.

During the year ended March 31, 2022, the company incurred promotion fee of $ 553,761 to Jinkailong, which was eliminated in the loss of continuing operations of the consolidated financial statements.

During the year ended March 31, 2023, Corenel leased automobiles to Jinkailong and generated revenues of $ 344,120 , while Jiekai leased automobiles from Jinkailong and had a rental cost of $ 509,904 .

During the years ended March 31, 2022, Corenel and Yicheng leased automobiles to Jinkailong and generated revenues of $ 1,280,993 , which was eliminated in the loss of continuing operations of the consolidated financial statements.

During the year ended March 31, 2022, Hunan Ruixi and Yicheng had loans due from Jinkailong, the Company’s equity investee company, and had interest income of $ 450,889 , which was eliminated in the loss of continuing operations of the consolidated financial statements.

The Company’s operating leases for automobile rentals have rental periods that are typically short term, generally is twelve months or less.

Revenue recognition section of Note 3 (s), the Company discloses that revenue earned from automobile rentals, wherein an identified asset is transferred to the customer and the customer has the ability to control that asset, is accounted for under Topic 842 upon adoption for the year ended March 31, 2020.

As of March 31, 2023 and 2022, the Company has engaged in offices and showroom leases which were classified as operating leases.

The Company leased automobiles under operating lease agreements with a term shorter than twelve months which it elected not to recognize lease assets and lease liabilities under ASC 842.

4 unchanged sentences

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

The ROU assets and lease liabilities are determined based on the present value of the future minimum rental payments of the lease as of the adoption date, using an effective interest rate of 6.0 %, which is determined using an incremental borrowing rate with similar term in the PRC.

As of March 31, 2022, the average remaining operating and finance lease term of its existing leases is 1.16 and 1.09 years, respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2023, the weighted-average remaining operating and finance lease term of its existing leases is approximately 2.67 and 2.53 years, respectively.

Operating and finance lease expenses consist of the following:

10 unchanged sentences

Amortization of leased asset

Cost of revenues

Cost of revenue

Amortization of leased asset

4 unchanged sentences

Total Lease expenses – discontinued operations

( 4,150,972 )

Total Lease expenses- continuing operations

Operating lease expenses for automobiles from continuing operations totaled $ 1,390,767 and $ 42,306 for the year ended March 31, 2022 and 2021, respectively.

Operating lease expenses for automobiles from discontinued operations totaled $ 359,192 and $ 0 for the year ended March 31, 2022 and 2021, respectively.

Operating lease expenses for automobiles from continuing operations totaled $ 2,140,395 and $ 1,390,767 for the years ended March 31, 2023 and 2022, respectively.

Operating lease expenses for automobiles from discontinued operations totaled $ 359,192 for the year ended March 31, 2022.

Operating lease expenses for offices and showroom leases from continuing operations totaled $ 355,814 and $ 460,209 for the years ended March 31, 2023 and 2022, respectively.

Operating lease expenses 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.

Operating lease expenses for offices and showroom leases from discontinued operations totaled $ 125,510 for the year ended March 31, 2022.

Interest expenses on finance leases from continuing operations totaled $ 25,675 and $ 55,844 for the years ended March 31, 2023 and 2022, respectively.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Interest expenses on finance leases from discontinued operations totaled $ 277,366 for the year ended March 31, 2022.

The following table sets forth the Company’s minimum lease payments in future periods:

12 unchanged sentences

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.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

more than three months.

Management also periodically re-evaluates probability of default of automobile purchasers to make adjustments in the allowance, when necessary, as the Company is the guarantor of the loans.

Purchase commitments

On September 23, 2022, the Company entered into a purchase contract with an automobile dealer to purchase a total of 100 automobiles for the amount of approximately $ 1.6 million.

As of the date of filing of these consolidated financial statements, the Company has remit approximately $ 0.7 million as purchase prepayments, and expects to fulfill the purchase commitment before December 31, 2023.

On March 28, 2023, the Company entered into a purchase contract with an automobile dealer to purchase a total of 50 automobiles for the amount of approximately $ 0.8 million.

As of the date of filing of these consolidated financial statements, 30 automobiles of approximately $ 0.34 million have been purchased in cash and delivered to the Company, and the Company expects to fulfill the purchase commitment before December 31, 2023.

Contingent liabilities for automobile purchasers

2 unchanged sentences

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.

Because substantially all of the Company’s operations are conducted in China, the COVID-19 outbreak has materially and adversely affected the Company’s business operations, financial condition and operating results for 2021 and 2022, including but not limited to decrease in revenues, slower collection of accounts receivables and additional allowance for doubtful accounts.

Some of the Company’s customers exited the ride-hailing business and rendered their automobiles to the Company for sublease or sale to generate income or proceeds to cover payments owed to financial institutions and the Company.

For 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.

For years ended March 31, 2023 and 2022, the Company recognized an estimated provision loss of approximately $ 7,287 and $ 8,000 , respectively, for drivers who exited the ride-hailing business were not able to make the monthly payments from continuing operations.

For the year ended March 31, 2022, the Company recognized an estimated provision loss of approximately $ 716 , for the guarantee services for drivers who exited the ride-hailing business were not able to make the monthly payments from discontinued operations.

As of March 31, 2023, the maximum contingent liabilities Hunan Ruixi would be exposed to was approximately $ 10,000 , assuming all the automobile purchasers were in default.

Automobiles are used as collateral to secure the payment obligations of the automobile purchasers under the financing agreements.

The Company estimated the fair market value of the collateral 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.

The Company estimated the fair market value of the collateral represents approximately all of the maximum contingent liabilities as of March 31, 2023, based on the market price and the useful life of such collateral.

Contingent liability of Jinkailong

Despite that the Company holds 35 % of equity interest of Jinkailong through Hunan Ruixi, and has not make any consideration towards to the investment, the Company will be subjected to the maximum amount of RMB 3.5 million (approximately $ 510,000 ) of which is equivalent to 35 % of liabilities in case Jinkailong is liquidated in accordance with PRC’s company registry compliance.

As of March 31, 2023, the maximum contingent liabilities of Jinkailong, the Company’s equity investee company and former VIE, would be exposed to was approximately $ 3.9 million, assuming all the automobile purchasers were in default.

Automobiles are used as collateral to secure the payment obligations of the automobile purchasers under the financing agreements.

Jinkailong estimated the fair

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.

Jinkailong estimated the fair market value of the collateral to be approximately $ 2.5 million as of March 31, 2023, based on the market price and the useful life of such collateral, which represents approximately 65 % of the maximum contingent liabilities.

Meanwhile, approximately $ 2.6 million, including interests of approximately $ 232,000 , due to financial institutions, of all the automobile purchases Jinkailong serviced were past due mainly due to the COVID-19 pandemic in China in prior years.

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.

Besides, as of March 31, 2023, due to Jinkailong has undertaken the joint and several liability guarantee for all loans of Langyue Automobile Service Co., Ltd.

from Chengdu Industrial Impawn Co., Ltd (“Impawn”) for certain historical business, Jinkailong may be required to pay all the outstanding balance of approximately $ 881,000 to Impawn in the future.

From time to time, the Company and its equity investee company may be subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business.

The total amount of reasonable possible losses with the respect to such matters, individually and in the aggregate, are not deemed to be material to the consolidated financial statements.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEGMENT INFORMATION

3 unchanged sentences

The Company does not allocate assets to its segments as the CODM does not evaluate the performance of segments using asset information.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

By assessing the qualitative and quantitative criteria established by Accounting Standards Codification (“ASC”) 280, “Segment Reporting”, the Company considers itself to be operating in two reportable segments which comprise of automobile transaction and related services and online ride-hailing platform.

The segments are organized based on type of service offered.

The following tables present the summary of each segment’s revenue, loss from operations, loss before income taxes and net loss which is considered as a segment operating performance measure, for the years ended March 31, 2023 and 2022:

2 unchanged sentences

hailing platform

Interest income

Depreciation and amortization

Loss from operations

2 unchanged sentences

( 6,140,908 )

( 14,099,703 )

( 2,537,715 )

( 11,561,988 )

Loss before income taxes

3 unchanged sentences

( 3,790,693 )

( 5,601,579 )

Net income (loss)

( 4,686,573 )

( 7,438,693 )

( 8,353,354 )

( 2,747,209 )

( 5,606,145 )

Capital expenditure

For the Year ended March 31, 2022

Transaction and

Related services

Interest income

Depreciation and amortization

Loss from operations

11 unchanged sentences

( 5,601,579 )

( 7,467,093 )

Net income (loss)

4 unchanged sentences

( 5,606,145 )

( 7,475,425 )

The accounting principles for the Company’s revenue by segment are set out in Note 3(g).

Capital Expenditure

The accounting principles for the Company’s revenue by segment are set out in Note 3(h).

As of March 31, 2023, the Company’s total assets were comprised of $ 12,579,764 for automobile transaction and related services, $ 937,400 for online ride-hailing platform services and $ 721,451 unallocated.

As of March 31, 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 of March 31, 2022, the Company’s total assets were comprised of $ 12,022,387 for automobile transaction and related services, $ 7,003,867 for online ride-hailing platform services and $ 851,863 unallocated.

As substantially all of the Company’s long-lived assets are located in the PRC and substantially all of the Company’s revenue is derived from within the PRC, no geographical information is presented.

21 unchanged sentences

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

5,000 shares issued and outstanding at December 31, 2021), net of issuance costs of $ 118,344

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

Stockholders’ Equity

6 unchanged sentences

Accumulated other comprehensive loss

( 1,247,099 )

Total Senmiao Technology Limited Stockholders’ Equity

11 unchanged sentences

Change in fair value of derivative liabilities

( 1,710,415 )

Issuance costs for issuing series A convertible preferred stock

4 unchanged sentences

Foreign currency translation adjustment

( 1,137,645 )

Comprehensive loss attributable to stockholders

14 unchanged sentences

( 1,711,889 )

( 6,951,482 )

Prepayments, receivables and other assets

2 unchanged sentences

( 1,418,530 )

( 1,659,742 )

Cash Flows from Investing Activities:

1 unchanged sentence

( 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

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

Net proceeds from issuance of common stock upon warrants exercised

Net proceeds from exercise of underwriters’ over-allotment option

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

Borrowings to subsidiaries

( 4,487,690 )

Repayment from subsidiaries

Borrowings from subsidiaries

Borrowings paid to subsidiaries

( 4,487,690 )

Net Cash Provided by Financing Activities

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

( 1,493,165 )

5 unchanged sentences

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

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

Issuance of restricted stock units from accrued expenses and other liabilities

a) Basis of presentation

4 unchanged sentences

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.

The equity losses in subsidiaries consist of equity loss in Senmiao Consulting, Hunan Ruixi, Yicheng, XXTX, Sichuan Senmiao, Corenel and Jiekai.

SENMIAO TECHNOLOGY LIMITED

2 unchanged sentences

Restricted Stock Units

Total RSUs granted to these directors, officers and employees were valued at an aggregate fair value of $ 140,000 .

2 unchanged sentences

2019 Registered Direct Offering

75 unchanged sentences

by the SEC or the first date on which all such shares are eligible to be resold by the Investors pursuant to Rule 144 or Rule 144A promulgated under the Securities Act.

As the 1-for-10 reverse stock split on the Company's Common Stock became effective on April 6, 2022, the conversion price of the Preferred Shares was adjusted to $ 4.1 .

As of March 31, 2023 and 2022, there were 1,641 and 5,000 shares of Series A convertible preferred stock outstanding, respectively.

During the year ended March 31, 2023, 3,359 shares of Series A convertible preferred stock was converted into 1,546,125 shares of the Company's common stock.

3 unchanged sentences

The exercisability of the Investor Warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.99 % or 9.99 % as the Investor chooses.

As the 1-for-10 reverse stock split on the Company's common stock became effective on April 6, 2022, the exercise price of the November 2021 Investors Warrants was adjusted to $ 1.13 , the Event Market Price and the total number of shares of the November 2021 Investors Warrants was adjusted to 5,335,763 .

13 unchanged sentences

As of November 9, 2021, the issuance of 100,000 ( 1,000,000 pre reverse split) shares of the Company’s common stock has been completed and the Company recorded the consulting fee of $ 653,000 pursuant to the fair value on November 3, 2021, the grant date.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1-for-10 shares reverse split on common stock

3 unchanged sentences

Upon execution of the 1-for-10 reverse stock split, the Company recognized additional 8,402 shares of common stock due to round up issue.

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUBSEQUENT EVENTS

Conversion Price Adjustment for November 2021 Preferred Shares

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

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 .

Since March 31, 2023 to the filing date of these consolidated financial statements, 500 shares of Series A convertible preferred stock in the November 2021 Private Placement were converted into 250,000 shares of the Company’s common stock.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data