The following discussion and analysis of our results of operations and financial
condition should be read together with our unaudited consolidated financial
statements and the notes thereto, which are included elsewhere in this report
and our Annual Report on Form 10-K for the year ended March 31, 2021 (the
"Annual Report") filed with the SEC. Our financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America ("U.S. GAAP").

Overview

We are a provider of automobile transaction and related services, connecting
auto dealers, financial institutions, and consumers, who are mostly existing and
prospective ride-hailing drivers affiliated with different operators of online
ride-hailing platforms in the People's Republic of China ("PRC" or "China"). We
provide automobile transaction and related services through our wholly owned
subsidiaries, Yicheng Financial Leasing Co., Ltd., a PRC limited liability
company ("Yicheng"), Chengdu Corenel Technology Limited, a PRC limited liability
company ("Corenel"), and our majority owned subsidiary, Hunan Ruixi Financial
Leasing Co., Ltd. ("Hunan Ruixi"), a PRC limited liability company, and its
variable interest entity ("VIE"), Sichuan Jinkailong Automobile Leasing
Co., Ltd. ("Jinkailong"). Since October 2020, we also operate an online
ride-hailing platform through Hunan Xixingtianxia Technology Co., Ltd. ("XXTX"),
a majority owned subsidiary of Sichuan Senmiao Zecheng Business Consulting
Co., Ltd., our wholly-owned subsidiary ("Senmiao Consulting"). Our platform
enables qualified ride-hailing drivers to provide application based
transportation services mainly in Chengdu, Changsha and Guangzhou, China.
Substantially all of our operations are conducted in China.

Our Automobile Transactions and Related Services

Our automobile transaction and related services are mainly comprised of
(i) automobile operating lease where we provide car rental services to
individual customers to meet their personal needs with lease term no more than
twelve months; (ii) automobile financing where we provide our customers with
auto finance solutions through financing leases; (iii) automobile sales where we
procure new cars from dealerships and sell them to our customers in the
automobile financing facilitation business; and (iv) facilitation of automobile
transaction and financing where we connect the prospective ride-hailing drivers
to financial institutions to buy, or get financing on the purchase of, cars to
be used to provide online ride-hailing services. We started our facilitation
services in November 2018, the sale of automobiles in January 2019, and
financial and operating leasing in March 2019, respectively.

Since November 22, 2018, the acquisition date of Hunan Ruixi, and as of
September 30, 2021, we have facilitated financing for an aggregate of 1,687
automobiles with a total value of approximately $25.9 million, sold an aggregate
of 1,422 automobiles with a total value of approximately $13.8 million and
delivered approximately 2,417 automobiles under operating leases and 131
automobiles under financing leases to customers, the vast majority of whom are
online ride-hailing drivers.

The table below provides a breakdown of the number of vehicles sold or delivered
under different leasing arrangements or managed/guaranteed by us and
corresponding revenue generated for the three and six months ended September 30,
2021 and 2020:




                                               Three Months Ended September 30                                   Six Months Ended September 30
                                    2021                            2020                            2021                            2020
                                  Number of        Revenue        Number of        Revenue        Number of        Revenue        Number of        Revenue
                                  Vehicles      (Approximate)     Vehicles      (Approximate)     Vehicles      (Approximate)     Vehicles      (Approximate)
Operating Leases                      2,036    $     2,008,000          442    $       788,000        2,085    $     3,493,000          512    $     1,196,000
Financing Leases                        131    $        30,000          122    $        62,000          131    $        76,000          122    $       104,000
Sales                                                        -           12    $        84,000                               -           35    $       424,000
Facilitation                                                 -           12    $        75,000                               -           54    $       162,000
Other Services                       >1,500    $       260,000       >2,500    $       381,000       >1,800    $       537,000       >2,500    $       651,000




Our operating leases, automobile management services and auto financial leasing
accounted for approximately 85.1%, 2.5% and 1.9% of our total revenue from our
automobile transactions and related services, respectively, for the six months
ended September 30, 2021, while our operating leases, auto sales, automobile
management services, auto financing and transaction facilitation, and auto

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financial leasing accounted for approximately 47.2%, 16.7%, 10.8%, 6.4% and 4.1%
for the six months ended September 30, 2020, respectively.

Our Ride-Hailing Platform Services

As part of our goal to provide an all-encompassing solution for online
ride-hailing drivers as well as to increase our competitive strengths in an
increasingly competitive online ride-hailing industry and to take advantage of
the market potential, in October 2020, we began operating our own online
ride-hailing platform in Chengdu. The platform (called Xixingtianxia) was owned
and operated by XXTX, of which Senmiao Consulting acquired a 78.74% equity
interest pursuant to a supplementary agreement to XXTX Investment Agreement with
all the original shareholders of XXTX on February 5, 2021 (the "XXTX Increase
Investment Agreement").

Pursuant to the XXTX Increase Investment Agreement, Senmiao Consulting agreed to
make an investment of RMB40 million (approximately $6 million) in XXTX in cash
in exchange for a 78.74% equity interest in XXTX. The registration procedures
for the change in shareholders and registered capital of XXTX were completed on
March 19, 2021.

On October 22, 2021, Senmiao Consulting further entered into a Share Swap
Agreement (the "Share Swap Agreement"), pursuant to which the 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 5,331,667
shares of the Company's common stock for this tranaction has been completed and
the record-filing of the local PRC government is expected to be completed within
December 2021. Upon the completion of the transaction, Senmiao Consulting shall
hold 100% equity interest in XXTX.

As the date of this Report, Senmiao Consulting has made capital contribution of
RMB26.81 million (approximately $4.16 million) to XXTX and the remaining amount
is expected to be paid before December 31, 2025.

XXTX operates Xixingtianxia and holds a national online reservation taxi
operating license. The platform is presently servicing online ride-hailing
drivers in 11 cities in China, including Chengdu, Changsha, Guangzhou and so on,
providing them with a platform to view and take customer orders for rides. We
currently collaborate with Gaode Map a well-known aggregation platform in China
on our ride-hailing platform services. We also entered into a cooperation
agreement with a top online ride-hailing platform in June 2021. Under our
collaboration, when a rider using the platform searches for taxi/ride-hailing
services on the aggregation platform, the platform provides such rider a number
of online ride-hailing platforms for selection, including ours and if our
platform is selected by the rider, the order will then be distributed to
registered drivers on our platform for viewing and acceptance. The rider may
also simultaneously select multiple online ride-hailing platforms in which case,
the aggregation platform will distribute the requests to different online
ride-hailing platforms which they cooperate with, based on the number of
available drivers using the platform in a certain area and these drivers'
historical performance, among other things. We generate revenue from providing
services to online ride-hailing drivers to assist them in providing
transportation services to the riders looking for taxi/ride-hailing services. We
earn commissions for each completed order as the difference between an upfront
quoted fare and the amount earned by a driver based on actual time and distance
for the ride charged to the rider. We settle our commissions with the
aggregation platforms on a weekly basis.

Meanwhile, in order to strengthen our market position in certain cities, our
collaboration model with Meituan has been changed from the one the same as
Gaode, to the one focusing on automobile operating lease and drivers' management
services since August 2021. Since early August 2021, we signed a new contract
with an affiliate of Meituan, whereby the online ride-hailing requests and
orders shall be completed on Meituan's platform utilizing our network of cars
and drivers. We earn rental income from drivers and will earn commissions from
Meituan in the future.

The acquisition of XXTX has brought us a new stream of revenue and enhanced our
goal of providing an all-encompassing solution for online ride-hailing drivers.
We launched Xixingtianxia in specific markets within Chengdu in late October
2020, focusing on current driver customers. During the six months ended
September 30, 2021, we have expanded marketing of our ride-hailing platform to a
larger pool of potential drivers and riders in Chengdu, Changsha, Guangzhou and
another six cities through cooperation with certain local car rental companies
and through offering attractive incentives and awards to drivers.

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During the six months ended September 30, 2021, approximately 12.4 million rides
with gross fare of approximately $38.0 million were completed through
Xixingtianxia and an average of over 19,900 ride-hailing drivers completed rides
and earned income through Xixingtianxia (the "Active Drivers") each month. We
plan to expand our driver base for the platform and automobile rental business
while strengthening the royalty of the drivers who both lease our cars and use
our platform while expanding. During the six months ended September 30, 2021, we
earned online ride-hailing platform service fees of $600,298, netting off
approximately $3.1 million incentives paid to Active Drivers.

We intend to focus on drivers who currently finance or lease vehicles through us
but our platform is available to others. We plan to launch Xixingtianxia in more
cities across China the next five years.

Key Factors and Risks Affecting Results of Operations

Ability to Increase Our Automobile Lessee and Active Driver Base

Our revenue growth has been largely driven by the expansion of our automobile
lessee base and the corresponding revenue generated from operating and financial
leasing. After the acquisition of XXTX, our revenue growth also depends on the
number of completed online ride-hailing orders on our platform, which largely
depends on the number of Active Drivers who complete ride-hailing transactions
on our platform. We acquire customers for our Automobile Transaction and Related
Services, as well as for our Online Ride-hailing Platform Services, through the
network of third-party sales teams, referral from online ride-hailing platforms
and our own efforts including online advertising and billboard advertising. We
also send out fliers and participate in trade shows to advertise our services.
We plan to increase the number of our Active Drivers by expanding our platform
to more cities during the next five years as well as marketing our platform to
our existing and prospective automobile lessees. We expect the expansion of our
Active Driver base to promote the growth of our automobile rental business
because we offer automobile rental solutions/incentives specifically targeted at
drivers using our platform. An effective cross-selling strategies between our
automobile finance and leasing business and the newer online ride-hailing
platform business is important to our expansion and revenue growth. We also plan
to strengthen our marketing efforts through the collaboration with certain
automobile dealers and through our own team by employing more experienced staffs
and improving the quality and variety of our services. We also plan to continue
to set up new service centers in the cities of Chengdu and Changsha during the
next three years. As of September 30, 2021, we had 79 employees in our own sales
department.

Management of Automobile Rentals

Due to the fierce competition of online ride-hailing industry in Chengdu and the
adverse impact from COVID-19 pandemic across mainland China, a significant
number of online ride-hailing drivers exited the ride-hailing business and
rendered their automobiles to us for sublease or sales in order to generate
income/proceeds to cover their payments owed to the financial institutions and
us. We have seen an increasing demand for short-term car rentals since the end
of 2019, which remained stable during the three and six months ended September
30, 2021. To meet the demand of business expansion, we also lease automobiles
from third parties. The daily management and timely maintenance of leased
automobiles will have a significant effect on the growth of our income from
leasing automobiles in the next twelve months. The effective management of our
automobiles through our proprietary system and experienced auto-management team
could provide qualified automobiles to potential lessees, either for personal
use or providing online ride-hailing services. As of September 30, 2021, we had
one parking lot and 18 employees in Chengdu, one parking lot and five employees
in Guangzhou, and one parking lot and five employees in Changsha for parking and
management of automobiles for operating lease. During the three months ended
September 30, 2021 and 2020, our average utilization of the automobiles for
operating lease was approximately 71% and 48%, respectively. During the six
months ended September 30, 2021 and 2020, our average utilization of the
automobiles for operating lease was approximately 70% and 54%, respectively.

Our Service Offerings and Pricing

The growth of our revenue depends on our ability to improve existing solutions
and services provided, continue identifying evolving business needs, refine our
collaborations with business partners and provide value-added services to our
customers. The attraction of new automobile leases depends on our leasing
solutions with attractive rental price and flexible leasing terms. We have also
adopted a stable pricing formula, considering the historical and future
expenditure, remaining available leasing months and market price to determine
our rental price for varied rental solutions. Furthermore, our product designs
affect the type of automobile leases we attract, which in turn affects our
financial performance. The attraction of new Active Drivers depends on the
comprehensive income they could earn from our platform, which is mainly affected
by the number orders distributed to them through our platform and the amount of
our

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incentives paid to them. Our revenue growth also depends on our abilities to
effectively price our services, which enables us to attract more customers and
improve our profit margin.

Ability to Retain Existing Financial Institutions and Engage New Financial
Institutions

Historically, the growth of our business is dependent on our ability to retain
existing financial institutions and engage new financial institutions. During
the three and six months ended September 30, 2021, we did not generate revenue
from automobile financing facilitation transactions because of the shift of our
business focus to automobile rental. Despite such decrease, we are exploring new
collaboration methods with financial institutions in connection with our
automobile rental business and for our purchase of new energy vehicles ("NEVs")
in the next twelve months. Our collaborations with financial institutions may be
affected by factors beyond our control, such as perception of automobile
financing as an attractive asset, stability of financial institutions, general
economic conditions and regulatory environment. To increase the number of our
cooperative financial institutions and the availability of financing for our
existing and new businesses will enhance the overall stability and sufficiency
of funding for automobile transactions.

Ability to Collect Payments on a Timely Basis

We used to advance the purchase price of automobiles and all service expenses
when we provide related services to the purchasers. We collect the receivables
due from automobile purchasers from their monthly installment payments and repay
financial institutions on behalf of the purchasers every month. As of September
30, 2021, we had accounts receivable, net of allowance of approximately $0.7
million and advanced payments of approximately $0.5 million due from the
automobile purchasers, net of allowance, which will be collected through
installment payments on a monthly basis during the relevant affiliation periods.
During the six months ended September 30, 2021, we settle our commissions with
the aggregation platforms on a weekly basis for our online ride-hailing platform
services and automobile rental income on a monthly basis. As of September 30,
2021, we had accounts receivable of operating lease and online ride-hailing
service fees of approximately $0.1 million in total.

The efficiency of collection of the monthly and weekly payments has a material
impact on our daily operation. Our risk and asset management department has set
up a series of procedures to monitor the collection from Drivers. Our business
department has also set up a stable and close relationship with cooperated
platform to ensure the timely collection of commissions. The accounts receivable
and advance payments may increase our liquidity risk. We have used the majority
of the proceeds from our equity offerings and plan to seek equity and/or debt
financings to pay for the expenditure related to the automobile purchase. To pay
for the expenditure in advance will enhance the stability of our daily operation
and lower the liquidity risk, and attract more customers.

Ability to Manage Defaults and Potential Guarantee Liability Effectively

We are exposed to credit risk as we are required by certain financial
institutions to provide guarantee on the lease/loan payments (including
principal and interests) of the automobile purchasers referred by us. If a
default occurs, we are required to make the monthly payments on behalf of the
defaulted purchasers to the financial institution.

We manage the credit risk arising from the default of automobile purchasers by
performing credit checks on each automobile purchaser based on the credit
reports from People's Bank of China and third party credit rating companies, and
personal information including residence, ethnicity group, driving history and
involvement in legal proceeding. Our risk department continuously monitors the
payment by each purchaser and sends them payment reminders. We also keep close
communication with our purchasers in particular the online ride-hailing drivers
so that we can evaluate their financial conditions and provide them with
assistance including the transfer of automobile to a new driver if they are no
longer interested in providing ride-hailing services or are unable to earn
enough income to make monthly lease/loan payments.

In addition, automobiles are used as collateral to secure purchasers' payment
obligations under the financing arrangement. In the event of a default, we can
track the automobile through an installed GPS system and repossess and handover
the automobile over to the financial institution so that we can be released from
our guarantee liability. However, if a financial institution initiates a legal
proceeding to collect payments due from a defaulted automobile purchaser, we may
be required to repay the defaulted amount as a guarantor. If we are unable to
undertake the responsibility as a guarantor, our assets, such as cash and cash
equivalents, may be frozen by the court if the financial institution
successfully requests for an order to freeze our assets or bank accounts, which
may adversely affect our operations.

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As of September 30, 2021, approximately $5,428,000, including interests of
approximately $326,000, due to financial institutions, of all the automobile
purchases we serviced were past due. 1,305 online ride-hailing drivers we
serviced rendered their automobiles to us for sublease or sale and 79 automobile
purchasers that remained in the online ride-hailing business were late in their
monthly installment payments as of September 30, 2021. In general, most of the
defaulted automobile purchasers who want to remain in online ride-hailing
business would pay the default amounts within one to three months. Our risk
management department typically starts to interact with overdue purchasers if
they have missed one monthly installment payment. However, if the balances are
overdue for more than two months or the purchasers decide to exit the online
ride-hailing business and sublease or sell their automobiles, we would fully
record an allowance against receivables from those purchasers. As of September
30, 2021, we recognized an accumulated allowance against receivables of
approximately $3,691,000 from these purchasers. For the three and six months
ended September 30, 2021, we also recognized approximately $14,000 and $20,000
expenses, respectively, for the guarantee services as the drivers exited the
online ride-hailing business and would no longer make the monthly repayments to
us. By subleasing automobiles from these drivers, we believe we can cope with
the defaults and control associated risks.

Further, the automobiles subject to our financing leases are not collateralized
by us. As of September 30, 2021, the total value of non-collateralized
automobiles was approximately $1,133,000. We believe our risk exposure of
financing leasing is immaterial as we have experienced limited default cases and
we are able to re-lease those automobiles to drivers under financing leases.

Actual and Potential Impact of Ongoing Coronavirus (COVID-19) in China on Our
Business

Beginning in late 2019, an outbreak of a novel strain of coronavirus and related
respiratory illness (which we refer to as COVID-19) was first identified in
China and has since spread rapidly globally. The COVID-19 pandemic has resulted
in quarantines, travel restrictions, and the temporary closure of stores and
business facilities in China and globally. In March 2020, the WHO declared
COVID-19 a pandemic. Given the rapidly expanding nature of the COVID-19
pandemic, and because all of our business operations and our workforce are
concentrated in China (where the virus first originated), our business, results
of operations and financial condition have been adversely affected.

Due to the lockdown policy and travel restrictions, the demand for ride-hailing
services has been materially and adversely impacted in our areas of operation in
China, which reduced the demand of our Automobile Transaction and Related
Services. As a result, our revenue and income for the three months ended March
31, 2020 and the subsequent three months ended June 30, 2020 was negatively
impacted to a significant extent. As the online ride-hailing markets in Chengdu
and Changsha gradually recovered from the impact of COVID-19 since April 2020,
we have witnessed the increasing trend on our revenue for the last three
quarters in the year ended March 31, 2021. The revenue generated during the
three and six months ended September 30, 2021 increased over 100% and 85.5%,
respectively, as compared with the three and six months ended September 30,
2020.

Impact on Our Automobile Transactions and Related Services

Our ability to collect the monthly installment payments from ride-hailing
drivers during February and March 2020 was adversely impacted. Approximately
1,500 drivers delayed their monthly installments of February and March 2020,
which resulted in a decrease in our monthly installment collection by $732,000
during February and March 2020. Since April 2020, the COVID-19 epidemic in China
has been effectively controlled and the online ride-hailing markets in Chengdu
and Changsha have been recovering. As of September 30, 2021, 1,305 drivers
exited the online ride-hailing business and rendered their automobiles to us for
sublease or sale while 79 drivers postponed their monthly installment payments.
As a result, we recorded accumulated bad debt expenses of approximately
$3,691,000. The average monthly installments during the three and six months
ended September 30, 2021 increased approximately 3% and 6%, respectively, as
compared with the same period in 2020. We will continue to closely monitor our
collections.

Our daily cash flow has also been adversely impacted as a result of the
unsatisfied collection from the online ride-hailing drivers and our potential
guarantee expenditure pursuant to the financing agreements we guaranteed. Our
cash flow will continue to be adversely impacted if local resurgence of COVID-19
cases incurs in Chengdu, Changsha and Guangzhou, which would have negative
impact on the online ride-hailing market accordingly due to travel restriction.
In addition, our automobile purchasers and lessees may be unable to generate
sufficient income to make their monthly installment payments, which may create a
significant risk of continuing default from our automobile purchasers or
lessees. As a result, we may have to repay the defaulted amount as a guarantor
or lose the monthly rental revenue. If we experience a widespread default by our
automobile purchasers/lessees, our cash flow and results of operations will

be

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materially and adversely affected. As a consequence, we could face shortfalls in
liquidity without extra financing resources for the foreseeable future and lose
the ability to grow our business or may even be required to scale down or
restructure our operations.

In an effort to assist with our automobile purchasers, we negotiated with the
financial institutions we cooperate with to extend the due dates for monthly
payments that may be affected by the epidemic. Certain financial institutions
agreed to grant a grace period of up to four months from February to May 2020
for qualified drivers.

Impact on Our Ride-Hailing Platform Services

We commenced the operation of our online ride-hailing platform since late
October 2020 and have witnessed the decrease in online ride-hailing orders in
mid-December 2020 and late July 2021, when Chengdu reported 14 and 6 confirmed
COVID-19 cases, respectively, and fewer people took ride-hailing trips as a
result. The average daily rides completed through our platform decreased by
approximately 10% to 15% compared to that before the reporting of the new
COVID-19 cases in Chengdu and recovered a week later as the new confirmed cases
in Chengdu were fully under control. Consequently, the income of our Automobile
Transaction and Related Services customers who ran their business through the
Didi platform also decreased during this period. Similarly, in early January
2021, Beijing reported three confirmed COVID-19 cases and one asymptomatic case
involving drivers for Didi, a major transportation network company, which also
resulted in the decrease in orders in the Didi platform in Beijing. Since
mid-May 2021 to June 2021, Guangzhou has reported a series of confirmed and
asymptomatic COVID-19 cases, the local government has ensured concrete and
effective measures to fight against the resurgence, including suspending some
traffic activities in certain medium-risk and high-risk areas in Guangzhou. The
average daily rides completed through our platform decreased by approximately
40% compared to that before the reporting of the new COVID-19 cases in
Guangzhou.

Recent local resurgences of COVID-19 cases in some areas did not have material
negative impacts on the economy of China, so we expect that the impact brought
by potential COVID-19 cases in the future may be limited as China has
established plans to rapidly contain the spread of COVID-19 cases and minimize
related economic losses. We temporally closed our corporate headquarter to
adhere to the lockdown policy in Chengdu from July 28 to August 11, 2021, as
required by relevant Chengdu regulatory authorities as a countermeasure for the
local resurgences of COVID-19 in late July 2021. Our employees were working in
other offices and the closure of our headquarter did not have significant impact
on our business operations during such period. We reopened our headquarter in
Chengdu on August 12, 2021. However, if the epidemic in China deteriorates
during the year ending March 31, 2022, large number of new confirmed COVID-19
cases in the regions where we operate our online ride-hailing platform may have
significant negative impact on the demand for rides through online ride-hailing
platforms, including our platform and our revenue from the Online Ride-hailing
Platform Services may decrease.

We anticipate having a larger cash outflow in our daily operations in the next
twelve months as we expand our Online Ride-hailing Platform Services in more
cities in China and incur more marketing and promotion expenses. Our cash flow
situation may worsen if the COVID-19 pandemic reoccurs in China.

Any of these factors related to COVID-19 and other similar or currently
unforeseen factors beyond our control could have an adverse effect on our
overall business environment, cause uncertainties in the regions in China where
we conduct business, cause our business to suffer in ways that we cannot predict
and materially and adversely impact our business, financial condition and
results of operations.

Ability to Manage and Grow New Ride-Hailing Business

Due to the fierce competition of online ride-hailing industry in Chengdu and
Changsha, our ability to increase our revenue over time may be limited if we
focus only on our current Automobile Transaction and Related Services business
model. As part of our strategy to provide an all-encompassing solution for
online ride-hailing drivers, we have expanded our services to drivers through
the operation of Xixingtianxia, our own online ride-hailing platform, which has
brought us a new stream of revenue. We generate revenue from commissions earned
from each completed order, which represent the difference between an upfront
quoted fare and the amount earned by a driver based on actual time and distance
for the ride charged to the rider. As the aggregation platforms distribute the
demand orders to different online ride-hailing platforms, the flow of drivers in
our area of operations is enhanced, leading to a higher probability that more
ride orders will be distributed to our platform, which in turn will increase the
revenue of the drivers who use our platform (and our revenue). This also allows
us to attract more drivers to engage their online ride-hailing business on

our
platform. Through a series

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of promotion and effective daily management and training services, we expect our
own online ride-hailing platform will offer us a stable revenue source which can
also help grow our automobile financing and leasing business.

Pursuant to the cooperation agreement signed with Didi Chuxing Technology
Co., Ltd. ("Didi") for our Automobile Transaction and Related Services, we may
be penalized by Didi, or our partnership with Didi may be terminated as we now
operate a business competitive with Didi. However, the service fees we earned
from Didi for automobile transaction and related services currently represent
less than 0.1% of our total revenue. Therefore, we believe the termination of
cooperation with Didi on automobile transaction and related services will not
have a material influence on our business or results of operations.

Ability to Compete Effectively

Our business and results of operations depend on our ability to compete
effectively. Overall, our competitive position may be affected by, among other
things, our service quality and our ability to price our solutions and services
competitively. We will set up and continuously optimize our own business system
to improve our service quality and user experience. Our competitors may have
more resources than we do, including financial, technological, marketing and
others and may be able to devote greater resources to the development and
promotion of their services. We will need to continue to introduce new or
enhance existing solutions and services to continue to attract automobile
dealers, financial institutions, car buyers, leasees, ride-hailing drivers and
other industry participants. Whether and how quickly we can do so will have a
significant impact on the growth of our business.

Market Opportunity and Government Regulations in China

The demand for our services depends on overall market conditions of the online
ride-hailing industry in China. The continuous growth of the urban population
places increasing pressure on the urban transportation and the improvement of
living standards has increased the market demand for quality travel in China.
Traditional taxi service is limited, and the merging online platforms have
created good opportunities for the development of the online ride-hailing
service market. Based on the monitoring of China E-Commerce Research Center, the
number of online ride-hailing service users had reached 333 million by the end
of 2018, increased by 16% from 2017. According to Bain & Company, the
transaction value of China's online ride-hailing market in 2017 was larger than
the total of the rest of the world. It estimated that by 2021, the total
transaction value of China's online ride-hailing market will reach $60 billion.
The online ride-hailing industry is facing increasing competition in China and
is attracting more capital investment. According to the MOT of the People's
Republic of China, as of October 31, 2021, approximately 251 online ride-hailing
platforms have obtained booking taxi operating licenses and the total volume of
online ride-hailing orders was approximately 692 million in October 2021 in
China. Meanwhile, approximately 1.46 million online booking taxi transportation
certificates and approximately 3.8 million online booking taxi driver's licenses
were issued nationwide in China. According to the 47th Statistical Report on
Internet Development published in February 2021, by the end of December 2020,
the number of passengers of online ride-hailing in China was approximately 365
million, took approximately 36.9% of the total number of Chinese internet users.
Since 2019, in addition to the traditional online ride-hailing platforms,
automobile manufacturers, offline operation service companies, financial and map
service providers, among others, have built cooperation relationships with each
other to make the online ride-hailing industry a more aggregated industry.

The online ride-hailing industry may also be affected by, among other factors,
the general economic conditions in China. The interest rates and unemployment
rates may affect the demand of ride-hailing services and automobile purchasers'
willingness to seek credit from financial institutions. Adverse economic
conditions could also reduce the number of qualified automobile purchasers and
online ride-hailing drivers seeking credit from the financial institutions, as
well as their ability to make payments. Should any of those negative situations
occur, the volume and value of the automobile transactions we service will
decline, and our revenue and financial condition will be negatively impacted.

In order to manage the rapidly growing ride-hailing service market and control
relevant risks, on July 27, 2016, seven ministries and commissions in China,
including the MOT, jointly promulgated the "Interim Measures for the
Administration of Online Taxi Booking Business Operations and Services"
("Interim Measures") and amended on December 28, 2019, which legalizes online
ride-hailing services such as Didi and requires the online ride-hailing services
to meet the requirements set out by the measures and obtain taxi-booking service
licenses and take full responsibility of the ride services to ensure the safety
of riders.

On November 5, 2016, the Municipal Communications Commission of Chengdu City and
a number of municipal departments jointly issued the "Implementation Rules for
the Administration of Online Booking Taxi Management Services for Chengdu",
which was abolished and replaced by the updated version issued on July 26, 2021.
On August 10, 2017, the Transportation Commission of

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Chengdu further issued the detailed guidance "Working Process for the Online
Booking Taxi Drivers Qualification Examination and Issuance" and the "Online
Booking Taxi Transportation Certificate Issuance Process." According to these
regulations and guidelines, three licenses /certificates are required for
operating the online ride-hailing business in Chengdu: (1) the ride-hailing
service platform such as Didi should obtain the online booking taxi operating
license; (2) the automobiles used for online ride-hailing should obtain the
online booking taxi transportation certificate ("automobile certificate");
(3) the drivers should obtain the online booking taxi driver's license
("driver's license"). Besides, all the new cars used for online ride-hailing
should be NEVs.

On July 23, 2018, the General Office of Changsha Municipal People's Government
issued the "Detailed Rules for the Administration of Online Booking Taxi
Management Services for Changsha." On June 12, 2019, the Municipal
Communications Commission of Changsha City further issued "Transfer and
Registration Procedures of Changsha Online Booking of Taxi." According to the
regulations and guidelines, to operate a ride-hailing business in Changsha
requires similar licenses in Chengdu, except those automobiles used for online
ride-hailing services are required to meet certain standards, including that the
sales price (including taxes) is over RMB120,000 (approximately $17,000). In
practice, Hunan Ruixi is also required to employ a safety administrator for
every 50 automobiles used for online ride-hailing services and submit daily
operation information of these automobiles such as traffic violation to the
Transport Management Office of the Municipal Communications Commission of
Changsha City every month.

In addition to the national online reservation taxi operating license, XXTX and
its subsidiaries also obtained the online reservation taxi operating license in
12 cities, including Chengdu, Changsha, Guangzhou, Tai'an, Hezhou, two cities in
Jiangsu Province and other seven cities in Sichuan Province from June 2020 to
October 2021, to operate the online ride-hailing platform services. And Didi,
the online ride-hailing platform with whom we cooperate for our automobile
transaction and related services, obtained the online reservation taxi operating
license in Chengdu and Changsha in March 2017 and July 2018, respectively.

However, approximately 52% of our ride-hailing drivers had not obtained the
driver's license as of September 30, 2021 while all of the cars used for online
ride-hailing services which we provided management services to have the
automobile certificate. Without requisite automobile certificate or driver's
license, these drivers may be suspended from providing ride-hailing services,
confiscated their illegal income and subject to fines of up to 10 times of their
illegal income. Starting in December 2019, Didi began to enforce such limitation
on drivers in Chengdu who have a driver's license but operate automobiles
without the automobile certificate.

Furthermore, according to the Interim Measures, no enterprise or individual is
allowed to provide information for conducting online ride-hailing services to
unqualified vehicles and drivers. In December 2020, Chengdu Transportation
Bureau has taken a series of investigations into actions violating the Interim
Measures and imposed fines for such violations. Among the 226 cases, two cases
involved drivers of our Xixingtianxia online ride-hailing platform who failed to
obtain the ride-hailing driver's licenses. As a result, we were fined RMB10,000.
Pursuant to the Interim Measures, XXTX and its subsidiaries may be fined between
RMB5,000 to RMB30,000 (approximately $776 to $4,654) for violations of the
Interim Measures, including providing online ride-hailing platform services to
unqualified drivers or vehicles. During the three and six months ended September
30, 2021, we have been fined by approximately $79,000 and $166,000 by Traffic
Management Bureaus in Chengdu and Changsha, respectively, of which,
approximately $2,000 and $13,000, respectively, was further compensated by
drivers or cooperated third parties. If we are deemed in serious violation of
the Interim Measures, our Online Ride-hailing Platform Services may be suspended
and the relevant licenses may be revoked by certain government authorities.

We are in the process of assisting the drivers to obtain the required
certificate and license both for our Automobile Transaction and Related Services
and our Online Ride-hailing Platform Services. However, there is no guarantee
that all of the drivers affiliated with us would be able to obtain all the
certificates and licenses. Further, there is no assurance that each of the
drivers who use our platform or the cars used by such drivers in providing
ride-hailing services possess the requisite license or certificate. Our business
and results of operations will be materially and adversely affected if our
affiliated drivers are suspended from providing ride-hailing services or imposed
substantial fines or if we are found to be in serious violation of the Interim
Measures due to the drivers' failure to obtain requite licenses and/or
automobile certificates in connection with providing services through our
platform.

The Chinese government has exercised and continues to exercise substantial
control over virtually every sector of the Chinese economy through regulation
and state ownership. For example, the Chinese cybersecurity regulator announced
on July 2, 2021 that it had begun an investigation of Didi and two days later
ordered that the company's app be removed from smartphone app stores. We believe
that our current operations are in compliance with the laws and regulations of
the Chinese cybersecurity regulator. However, the Company's operations could be
adversely affected, directly or indirectly, by existing or future laws and
regulations relating to its business or industry.

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Our Discontinued Online P2P Lending Services

We previously also operated an online lending platform through our VIE, Sichuan
Senmiao, in China, which facilitated loan transactions between Chinese investors
and individual and SME borrowers. Our revenues from online lending services were
primarily generated from fees charged for our services in matching investors
with borrowers. We charged borrowers transaction fees for the work we perform
through our platform and charged our investors service fees on their actual
investment returns. We ceased our online lending services in October 2019 to
focus on our automobile transaction and related services.

In connection with the plan adopted by our Board of Directors to discontinue and
wind down our online P2P lending services business on October 17, 2019 (the
"Plan"), we ceased facilitation of loan transactions on our online lending
platform and assumed all the outstanding loans from investors on the platform.
The aggregate balance of the loans we assumed was approximately $5.6 million. As
of September 30, 2021, we have used cash generated from our Automobile
Transaction and Related Services and payments collected from borrowers in the
aggregate of approximately $6.2 million to repay platform investors and we
expect to repay all of them by December 31, 2021, an extended due date agreed by
the investors. However, if we could not generate enough cash flow to pay
investors on time in accordance with the Plan, we may incur
additional commitment liabilities in our financial statements during the
following periods before we fully fulfill our Plan. Since December 31, 2019, we
have treated the online lending business as discontinued operations and
recognized receivables from borrowers and payables to investors of approximately
$4.0 million in our financial statements accordingly. Based on recent repayments
collected from borrowers, we also recognized bad debt expenses of approximately
$3.8 million for those receivables and $0.3 million for accounts receivable and
prepayment for intangible assets related to our online lending services.
However, the amount and timing of the actual allowance for bad debt may change
based on evidence of collectability of the subject loans during the execution of
the Plan. As part of the Plan, we transferred certain employees who used to work
on our online lending business, primarily the information technology staffs, to
provide a new website design and development service for customers.

Results of Operations for the Three Months Ended September 30, 2021 Compared to
the Three Months Ended September 30, 2020

                                                                 For the
                                                           Three Months Ended
                                                              September 30,
                                                          2021             2020            Change
                                                       (unaudited)      (unaudited)
Revenues                                              $   2,855,909    $   1,390,396    $   1,465,513
Cost of revenues                                        (2,868,309)        (994,515)      (1,873,794)
Gross profit (loss)                                        (12,400)          395,881        (408,281)
Operating expenses
Selling, general and administrative expenses            (2,981,720)      (2,749,209)        (232,511)
Provision for (Recovery of) doubtful accounts              (57,187)           47,540        (104,727)
Impairments of long-lived assets                            (5,886)        

(80,223)           74,337
Total operating expenses                                (3,044,793)      (2,781,892)        (262,901)
Loss from operations                                    (3,057,193)      (2,386,011)        (671,182)
Other income, net                                            38,705          135,457         (96,752)
Interest expense                                           (12,952)         (14,892)            1,940

Interest expense on finance leases                        (108,208)        (211,053)          102,845
Change in fair value of derivative liabilities            3,017,734        (129,961)        3,147,695
Loss before income taxes                                  (121,914)      (2,606,460)        2,484,546
Income tax expenses                                            (11)        

   (705)              694
Net loss                                              $   (121,925)    $ (2,607,165)    $   2,485,240




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Revenues

We started generating revenue from Automobile Transaction and Related Services
from our acquisition of Hunan Ruixi on November 22, 2018 and revenue from Online
Ride-hailing Platform Services from our acquisition of XXTX on October 23, 2020,
respectively.

Revenue for the three months ended September 30, 2021 increased by $1,465,513,
or approximately 105%, as compared with three months ended September 30, 2020.
The increase was mainly due to the increase of operating lease revenues from
automobile rentals and revenues from online ride-hailing platform services. In
an effort to mitigate the negative impact on our daily cash flow resulting from
the rendering of automobiles from drivers who exited the ride-hailing business
due to the COVID-19 pandemic in China and develop the new business, we shifted
our business focus to automobile rentals from facilitation of automobile
transaction and financing since the fiscal year 2021. The online ride-hailing
market has gradually recovered since April 2020 as COVID-19 is generally under
control in China and the sporadic local resurgences of COVID-19 did not have
material impact on the market. As a result, the number of additional automobiles
rendered to us by the ride-hailing drivers exiting the business decreased during
the three months ended September 30, 2021 as compared with the same period in
the prior year. We had revenue of $2,008,462 from automobile rental and $557,947
from online ride-hailing platform services during the three months ended
September 30, 2021, which offset the negative impact of the decrease in our
revenue in automobile sales and facilitation of automobile transaction and
financing.

As we plan to focus more on our automobile rental and Online Ride-hailing
Platform Services business, we expect our revenue from automobile rental income
to continue to account for a majority of our revenues and revenue from our
Online Ride-hailing Platform Services to keep stable over the next twelve
months. We plan to take advantage of the expansion of our online ride-hailing
platform to increase the utilization of our automobiles for operating leases,
which would bring the increasing demand for short-term automobile rentals.

The following table sets forth the breakdown of revenues by revenue source for
the three months ended September 30, 2021 and 2020:

                                                                       For the
                                                                  Three Months Ended
                                                                    September 30,
                                                                 2021            2020
                                                             (unaudited)     (unaudited)

Revenue from automobile transactions and related services $ 2,297,962

  $  1,390,396
- Operating lease revenues from automobile rentals              2,008,462  

787,955

- Financing revenues                                               30,308  

62,404

- Service fees from automobile management and guarantee
services                                                           57,625  

161,043

- Service fees from automobile purchase services                      795  

75,038

- Revenues from sales of automobiles                                    -  

83,787

- Facilitation fees from automobile transactions                        -              16
- Other service fees                                              200,772  

220,153

Revenue from online ride-hailing platform services                557,947  

            -

Total Revenue                                                $  2,855,909    $  1,390,396

Revenue from automobile transactions and related services

Revenue from our automobile transaction and related services mainly includes
operating lease revenues from automobile rentals, service fees from automobile
management and guarantee services, financing revenues (representing interest
income from financial leasing) and other services fees, which accounted for
approximately 87.4%, 2.5%, 1.3% and 8.8%, respectively, of the total revenue
from automobile transaction and related services during the three months ended
September 30, 2021. Meanwhile, operating lease revenues from automobile rentals,
service fees from automobile management and guarantee services, sales revenue of
automobiles, service fees from automobile purchase services, financing revenues
(representing interest income from financial leasing) and other services fees,
which accounted for approximately 56.7%, 11.6%, 6.0%, 5.4%, 4.5% and 15.8%,
respectively, of the total revenue from automobile transaction and related
services during the three months ended September 30, 2020.

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Operating lease revenues from automobile rentals

We generate revenues from leasing our own automobiles or sub-leasing automobiles
rendered by online ride-hailing drivers with their authorization for a lease
term of no more than twelve months. The increase of rental income was due to the
increased number of leased automobiles. We leased over 2,030 automobiles with an
average monthly rental income of $476 per automobile, resulting in a rental
income of $2,008,462, for the three months ended September 30, 2021. While we
leased over 440 automobiles with an average monthly rental income of $495 per
automobile and generated rental revenue of $787,955 during the three months
ended September 30, 2020.

Financing revenues

We started our financial leasing business in March 2019 and began to generate
interest income from providing financial leasing services to ride-hailing
drivers in April 2019. We also charge the customers of our automobile financing
facilitation services interest on their monthly payments which cover purchase
price of automobile and our services fees and facilitation fees for terms of 36
or 48 months. We recognized a total interest income of $30,308 from an average
monthly number of 74 automobiles and $62,404 from an average monthly number of
96 automobiles during the three months ended September 30, 2021 and 2020,
respectively. The decrease was further aggravated by the decrease in the monthly
amortization of interest income for automobiles leased in prior periods

Service fees from automobile management and guarantee services

The majority of our customers are online ride-hailing drivers. They also entered
into affiliation service agreements with us pursuant to which we provide them
post-transaction management services and guarantee services. The decrease of
$103,418 was due to the decrease in the accumulated number of rendered
automobiles which were subsequently rented to ride-hailing drivers whom we
charge rent rather than charging management and guarantee services fee. We had
management and guarantee services for over 1,350 and 2,500 automobiles during
the three months ended September 30, 2021 and 2020, respectively.

Service fees from automobile purchase services

We generate revenues from providing a series of automobile purchase services
throughout the automobile purchase transaction process. The amount of these fees
is based on the sales price of the automobiles and relevant services provided.
Service fees from automobile purchase services decreased by $74,243 as compared
with the same period in 2020, mainly due to the decrease in the number of
facilitated new automobile purchases. We had revenue from only one new financial
leasing automobile transaction during the three months ended September 30, 2021
while we serviced 12 new automobile purchases and 13 new automobiles under
financial leasing during the three months ended September 30, 2020.

Sales of automobiles and facilitation fees from automobile transactions

As we have shifted our business focus to automobile leasing, we had no
automobile sold during the three months ended September 30, 2021. Meanwhile, we
sold an aggregate of 12 automobiles of $83,787 to the customers of Jinkailong
and Hunan Ruixi during the three months ended September 30, 2020. Facilitation
fees from automobile transaction were minimal in our revenue constitution.

Other service fees

We generate other revenues such as commissions from insurance companies, service
fees from drivers who rent our new energy electric vehicles and other
miscellaneous service fees charged to our customers, which accounted for
approximately 39.9%, 19.3% and 40.8% of revenues from other service fees during
the three months ended September 30, 2021, respectively. The commissions from
insurance companies and other miscellaneous service fees charged to the
automobile purchasers, which accounted for approximately 91.3%, and 8.7% of
revenues from other service fees during the three months ended September 30,
2020, respectively. Other service fees decreased by $19,381 due to decrease of
approximately $112,796 in commissions from insurance companies, partially offset
by the new service fees with amount of $38,780 charged to online ride-hailing
drivers who rent our new energy electric vehicles and the increase of
approximately $54,635 in other miscellaneous service fees.

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Revenue from online ride-hailing platform services

We generate revenue from providing services to online ride-hailing drivers to
assist them in providing transportation service to the riders though our
platform and earn commissions for each completed order equal to the difference
between an upfront quoted fare and the amount earned by a driver based on actual
time and distance for the ride charged to the rider since October 2020. During
the three months ended September 30, 2021, approximately 4 million rides with
gross fare of approximately $12.9 million were completed through our
Xixingtianxia platform and we earned online ride-hailing platform service fees
of $557,947, netting off approximately $0.4 million incentives paid to Active
Drivers.

Cost of Revenues

Cost of revenues represents the amortization, daily maintenance and insurance
expense of automobiles leased to online ride-hailing drivers of $2,659,564,
technical service charges, insurance and other expenses of online ride-hailing
platform services of $208,745. Cost of revenues increased by $1,873,794, or
approximately 188%, during the three months ended September 30, 2021 as compared
with the same period in 2020, mainly due to the increase of $1,742,913 in costs
of automobiles under operating leases and $208,745 in direct expense and
technical service fees of Online Ride-hailing Platform Services, respectively,
as a result of the expansion of those two businesses, partially offset by the
decrease in costs of automobile sold of $77,864 as the number of automobiles
sold decreased from 12 to 0.

Gross Profit (loss)

Gross profit decreased by $408,281 or approximately 103%, during the three
months ended September 30, 2021 as compared with the same period in 2020 mainly
due to the decreased number of automobile sales and facilitated new automobile
purchases. Gross profit generated from sales of automobiles decreased by $5,923
and other revenues with no cost of revenues decreased by $229,154 due to the
significant decrease in the number of automobiles sold and facilitated new
automobile purchases during the three months ended September 30, 2021 as
compared with the same period in 2020. Meanwhile, the gross loss from automobile
rentals operating lease increased by $522,406 during the three months ended
September 30, 2021 as compared with the same period in 2020. The majority of
those leased automobiles were rendered to us with overdue monthly installment
payments to financial institutions. Therefore, the total amount of the
amortization and daily maintenance expense of these automobiles were higher than
the monthly rent generated and resulted in losses. We have focused on our
operating leases as a means of mitigating the impact of the return of
automobiles by a substantial number of Didi drivers who exited the ride-hailing
business as a result of COVID-19 and the intense competition in the online
ride-hailing market in Chengdu and Changsha since 2020. And we had gross profit
of $349,202 from our online ride-hailing platform services during the three
months ended September 30, 2021, which partially offset the negative impact of
the decrease in our gross profit.

Selling, General and Administrative Expenses

Selling, general and administrative expenses primarily consist of salary and
employee benefits, office rental expense, travel expenses, and other costs.
Selling, general and administrative expenses increased from $2,749,209 for the
three months ended September 30, 2020 to $2,981,720 for the three months ended
September 30, 2021, representing an increase of $232,511, or approximately 8.5%.
The increase was attributable to more employees hired for business expansion for
our new online ride-hailing platform services and the daily operations of our
automobile transaction and related services business and the management of the
increasing number of automobiles for sublease. The increase mainly consists of
an increase of $719,235 in salary and employee benefits as the number of our
employee increased from 200 to 352, an increase of $266,530 in offices rental
and charges, which was partially offset by a decrease of $386,539 in
professional service fees such as financial, legal and market consulting, a
decrease of $323,708 in amortization of intangible assets and automobiles which
were rendered to us but have not been sub-leased as we leased more automobiles
and a decrease of $43,007 in other miscellaneous expenses, during three months
ended September 30, 2021 as compared with the same period in last year.

Bad Debt Expense

As a result of the fierce competition in the online ride-hailing markets in
Chengdu and Changsha, and the negative impact of COVID-19, the number of online
ride-hailing drivers we serviced who rendered their automobiles to us for
sublease or sale increased by approximately 4 and the numbers of drivers who
missed their monthly installment payments increased by approximately 22 during

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the three months September 30, 2021. We re-evaluated the possibility of
collection of unsettled balances from those drivers and provided bad debt
expense of $57,187 for those receivables during the three months ended September
30, 2021.

Impairments of Long-lived Assets

For the three months ended September 30, 2021, we evaluated the future cash flow
of our right-of-use assets and our own vehicles used for operating leases during
their remaining useful life and recognized an additional impairment loss of
$5,886 for those assets that could not generate sufficient cash. While for the
three months ended September 30, 2021, we recognized an additional impairment
loss of $80,223 for certain right-of-use assets that could not generate
sufficient cash.

Other Income, net

For the three months ended September 30, 2021, we had other income, net of
$38,705 primarily consist of penalty income of $108,000 from some leasees,
partially offset by fines of $77,000 for our served online ride-hailing drivers
who failed to obtain the ride-hailing driver's licenses approximately. We had
other income, net of $135,457, primarily a result of the receipt of a government
subsidy of $143,000 from Sichuan Economic and Information Department for our
initial public offering in 2018 in the same period in 2020.

Interest Expense and Interest Expense on Finance Leases

Interest expense for the three months ended September 30, 2021 was $12,952,
resulting from the borrowings of Jinkailong from a financial institution for its
working capital requirements. The decrease of $1,940, or approximately 13%, was
due to the decrease in outstanding principal of the loans obtained before 2019
and lower interest rate for the remaining principal.

Interest expense on finance leases for the three months ended September 30, 2021
was $108,208, representing the interest expense accrued under financing leases
for the un-leased automobiles rendered to us for sublease or sale by the online
ride-hailing drivers who exited the ride-hailing business. Interest expense on
finance leases decreased by $102,845, or approximately 49%, as compared with the
same period in 2020, mainly due to the weighted average number of rendered
automobiles during the three months ended September 30, 2021 decreased
approximately 13% than that in the same period in last year, as well as the
decrease in the number of automobiles which were rendered to us but have not
been sub-leased as we leased more automobiles during the current period.

Change in Fair Value of Derivative Liabilities

Warrants issued in our registered direct offerings that took place in June 2019,
February 2021 and May 2021, and the August 2020 underwritten public offering
were classified as liabilities under the caption "Derivative Liabilities" in the
consolidated balance sheet and recorded at estimated fair value at each
reporting date, computed using the Black-Scholes valuation model. The change in
fair value of derivative liabilities the three months ended September 30, 2021
was a gain of $3,017,734 in total, which consists of a gain of $72,024 for the
warrants issued in our June 2019 registered direct offering, a gain of $139,459
for the warrants issued in our August 2020 underwritten public offering, and a
gain of $225,353 for the warrants issued in our February 2021 registered direct
offering, and a gain of $2,580,898 for the warrants issued in our May 2021
registered direct offering. The change in fair value of derivative liabilities
for the three months ended September 30, 2020 a loss of $79,237 for the warrants
issued in our June 2019 registered direct offering and a loss of $50,724 for the
warrants issued in our August 2020 underwritten public offering, resulted in a
loss of $129,961 in total.

Income Tax Expense

Generally, our subsidiaries and consolidated VIEs in China are subject to
enterprise income tax on their taxable income in China at a rate of 25%. The
enterprise income tax is calculated based on the entity's global income as
determined under PRC tax laws and accounting standards. Income tax expense of
$11 and $705 for the three months ended September 30, 2021 and 2020,
respectively, mainly represented the provision of enterprise income tax
resulting from the taxable income of $44 and $2,820, respectively, from Xichuang
and Hunan Ruixi.

Net Loss

As a result of the foregoing, net loss for the three months ended September 30,
2021 was $121,925, representing a decrease of $2,485,240 from net loss of
$2,607,165 for the three months ended September 30, 2020.

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Results of Operations for the Six Months Ended September 30, 2021 Compared to
the Six Months Ended September 30, 2020

                                                               For the
                                                           Six Months Ended
                                                            September 30,
                                                        2021             2020            Change
                                                     (unaudited)      (unaudited)
Revenues                                            $   4,705,984    $   2,537,312    $   2,168,672
Cost of revenues                                      (6,647,655)      (1,794,771)      (4,852,884)
Gross profit (loss)                                   (1,941,671)          742,541      (2,684,212)
Operating expenses
Selling, general and administrative expenses          (6,664,997)      (4,709,634)      (1,955,363)
Provision for doubtful accounts                         (102,740)         (81,072)         (21,668)
Impairments of long-lived assets and goodwill           (170,143)         (80,223)         (89,920)
Total operating expenses                              (6,937,880)      (4,870,929)      (2,066,951)
Loss from operations                                  (8,879,551)      (4,128,388)      (4,751,163)
Other income (expense), net                              (17,954)          129,381        (147,335)
Interest expense                                         (27,648)         (35,540)            7,892
Interest expense on finance leases                      (215,847)        (437,230)          221,383
Change in fair value of derivative liabilities          1,648,450        (412,941)        2,061,391
Loss before income taxes                              (7,492,550)      (4,884,718)      (2,607,832)
Income tax expenses                                          (11)          (6,977)            6,966
Net loss                                            $ (7,492,561)    $ (4,891,695)    $ (2,600,866)




Revenues

Revenue for the six months ended September 30, 2021 increased by $2,168,672, or
approximately 85%, as compared with six months ended September 30, 2020. The
increase was mainly due to the increase of operating lease revenues from
automobile rentals and revenues from online ride-hailing platform services.

The following table sets forth the breakdown of revenues by revenue source for
the six months ended September 30, 2021 and 2020:

                                                                        For the
                                                                    Six Months Ended
                                                                     September 30,
                                                                 2021             2020
                                                               (unaudited)      (unaudited)

Revenue from automobile transactions and related services $ 4,105,686

   $   2,537,312
- Operating lease revenues from automobile rentals               3,492,989 

1,196,433

- Financing revenues                                                75,994 

104,434

- Service fees from automobile management and guarantee
services                                                           101,172 

273,601

- Service fees from automobile purchase services                       975 

160,577

- Revenues from sales of automobiles                                     - 

423,632

- Facilitation fees from automobile transactions                         - 

1,616

- Other service fees                                               434,556 

377,019

Revenue from online ride-hailing platform services                 600,298 

              -

Total Revenue                                                $   4,705,984    $   2,537,312

Revenue from automobile transactions and related services

Revenue from our automobile transaction and related services mainly includes
operating lease revenues from automobile rentals, service fees from automobile
management and guarantee services, financing revenues and other services fees,
which accounted for approximately 85.1%, 2.5%, 1.9% and 10.5%, respectively, of
the total revenue from automobile transaction and related services during

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the six months ended September 30, 2021. Meanwhile, operating lease revenues
from automobile rentals, service fees from automobile management and guarantee
services, sales revenue of automobiles, service fees from automobile purchase
services, financing revenues and other services fees, which accounted for
approximately 47.2%, 10.8%, 16.7%, 6.3%, 4.1% and 14.9%, respectively, of the
total revenue from automobile transaction and related services during the six
months ended September 30, 2020.

Operating lease revenues from automobile rentals

We generate revenues from leasing our own automobiles or sub-leasing automobiles
rendered by online ride-hailing drivers with their authorization for a lease
term of no more than twelve months. The increase of rental income was due to the
increased number of leased automobiles. We leased over 2,080 automobiles with an
average monthly rental income of $449 per automobile, resulting in a rental
income of $3,492,989, for the six months ended September 30, 2021. While we
leased over 500 automobiles with an average monthly rental income of $495 per
automobile, resulting in a rental income of $1,196,433, for the six months

ended
September 30, 2020.

Financing revenues

We recognized a total interest income of $75,994 from an average monthly number
of 84 automobiles during the six months ended September 30, 2021 and $104,434
from an average monthly number of 79 automobiles and 2020, respectively. The
decrease was further aggravated by the decrease in the monthly amortization of
interest income for automobiles leased in prior periods.

Service fees from automobile management and guarantee services

The decrease of $172,429 was due to the decrease in the accumulated number of
rendered automobiles which were subsequently rented to ride-hailing drivers whom
we charge rent rather than charging management and guarantee services fee. We
had management and guarantee services for over 1,350 and 2,500 automobiles
during the six months ended September 30, 2021 and 2020, respectively.

Service fees from automobile purchase services

Service fees from automobile purchase services decreased by $159,602 during the
six months ended September 30, 2021, as compared with the same period in 2020,
mainly due to the decrease in the number of facilitated new automobile
purchases. We had revenue from only two new automobile transactions during the
six months ended September 30, 2021 while we serviced 79 new automobile
purchases under financing lease with service fees ranging from $135 to $3,450
per automobile during the six months ended September 30, 2020.

Sales of automobiles and facilitation fees from automobile transactions

As we have shifted our business focus to automobile leasing, we had no
automobile sold during the six months ended September 30, 2021. Meanwhile, we
sold an aggregate of 35 automobiles of $423,632 during the six months ended
September 30, 2020. Facilitation fees from automobile transaction were minimal
in our revenue constitution.

Other service fees

We generate other revenues such as commissions from insurance companies, service
fees from drivers who rent our new energy electric vehicles and other
miscellaneous service fees charged to our customers, which accounted for
approximately 40.9%, 23.5% and 35.5% of revenues from other service fees during
the six months ended September 30, 2021, respectively. The commissions from
insurance companies and other miscellaneous service fees charged to the
automobile purchasers, which accounted for approximately 90.6%, and 9.4% of
revenues from other service fees during the six months ended September 30, 2020,
respectively. Other service fees increased by $57,537 due to the new service
fees with amount of $102,224 charged to online ride-hailing drivers who rent our
new energy electric vehicles and increase of approximately $133,644 in other
miscellaneous service fees. partially offset by decrease of approximately
$178,331 in commissions from insurance companies.

Revenue from online ride-hailing platform services

We generate revenue from providing services to online ride-hailing drivers to
assist them in providing transportation service to the riders though our
platform and earn commissions for each completed order equal to the difference
between an upfront quoted fare and

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the amount earned by a driver based on actual time and distance for the ride
charged to the rider since October 2020. During the six months ended September
30, 2021, approximately 12.4 million rides with gross fare of approximately
$38.0 million were completed through our Xixingtianxia platform and we earned
online ride-hailing platform service fees of $600,298, netting off approximately
$3.1 million incentives paid to Active Drivers.

Cost of Revenues

Cost of revenues represents the amortization, daily maintenance and insurance
expense of automobiles leased to online ride-hailing drivers of $4,533,283,
technical service charges, insurance and other expenses of online ride-hailing
platform services of $2,114,372. Cost of revenues increased by $4,852,884, or
approximately 270%, during the six months ended September 30, 2021 as compared
with the same period in 2020, mainly due to the increase of $3,148,667 in costs
of automobiles under operating leases and $2,114,372 in direct expense and
technical service fees of Online Ride-hailing Platform Services, respectively,
as a result of the expansion of those two businesses, partially offset by the
decrease in costs of automobile sold of $410,155 as the number of automobiles
sold decreased from 35 to 0.

Gross Profit (loss)

Gross profit decreased by $2,684,212, or approximately 361%, during the six
months ended September 30, 2021 as compared with the same period in 2020 mainly
due to the decreased number of automobile sales and facilitated new automobile
purchases. Gross profit generated from sales of automobiles decreased by $13,477
and other revenues with no cost of revenues decreased by $304,550 due to the
significant decrease in the number of automobiles sold and facilitated new
automobile purchases during the six months ended September 30, 2021 as compared
with the same period in 2020. Meanwhile, the gross loss from automobile rentals
operating lease increased by $852,111 during the six months ended September 30,
2021 as compared with the same period in 2020. The majority of those leased
automobiles were rendered to us with overdue monthly installment payments to
financial institutions. Therefore, the total amount of the amortization and
daily maintenance expense of these automobiles were higher than the monthly rent
generated and resulted in losses. And we had gross loss of $1,514,074 from our
Online Ride-hailing Platform Services due to we paid excess driver incentives to
attractive drivers to our platform in the six months ended September 30 2021,
especially from April to June 2021.

Selling, General and Administrative Expenses

Selling, general and administrative expenses primarily consist of salary and
employee benefits, office rental expense, travel expenses, and other costs.
Selling, general and administrative expenses increased from $4,709,634 for the
six months ended September 30, 2020 to $6,664,997 for the six months ended
September 30, 2021, representing an increase of $1,955,363, or approximately
41.5%. The increase was attributable to more employees hired for business
expansion for our new online ride-hailing platform services and the daily
operations of our automobile transaction and related services business and the
management of the increasing number of automobiles for sublease. The increase
mainly consists of an increase of $1,459,610 in salary and employee benefits as
the number of our employee increased from 195 to 334, an increase of $739,927 in
advertising and promotion for the new online ride-hailing platform services, an
increase of $596,844 in offices rental and charges, which was partially offset
by a decrease of $203,189 in professional service fees such as financial, legal
and market consulting, a decrease of $593,408 in amortization of intangible
assets and automobiles which were rendered to us but have not been sub-leased as
we leased more automobiles and a slight decrease of $44,421 in other
miscellaneous expenses during six months ended September 30, 2021 as compared
with the same period in last year.

Bad Debt Expense

As a result of the fierce competition in the online ride-hailing markets in
Chengdu and Changsha, and the negative impact of COVID-19, the number of online
ride-hailing drivers we serviced who rendered their automobiles to us for
sublease or sale increased by approximately 16 and the numbers of drivers who
missed their monthly installment payments increased by approximately 36 during
the six months September 30, 2021. We re-evaluated the possibility of collection
of unsettled balances from those drivers and provided bad debt expense of
$102,740 for those receivables during the six months ended September 30, 2021.

Impairments of Long-lived Assets and Goodwill

For the six months ended September 30, 2021, we evaluated the future cash flow
of our right-of-use assets and our own vehicles used for operating leases during
their remaining useful life and recognized an additional impairment loss of
$32,527 for those assets that

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could not generate sufficient cash. Meanwhile, we performed impairment test on
goodwill and fully recognized impairment of $137,616 against goodwill. We
recognized the impairment loss due to regulatory changes in the online ride
hailing industry, and forecast an insufficient future cashflow to support the
valuation of our goodwill. For the six months ended September 30, 2020, we
recognized an additional impairment loss of $80,223 for certain right-of-use
assets that could not generate sufficient cash.

Other Income (Expense), net

For the six months ended September 30, 2021, we had other expense, net of
$17,954, primarily consist of fines of $153,000 for our served online
ride-hailing drivers who failed to obtain the ride-hailing driver's licenses
approximately and other miscellaneous non-recurring expense, partially offset by
penalty income of $138,000 from some leases. We had other income, net of
$129,381, primarily a result of the receipt of a government subsidy of $143,000
from Sichuan Economic and Information Department for our initial public offering
in 2018 in the same period in 2020.

Interest Expense and Interest Expense on Finance Leases

Interest expense for the six months ended September 30, 2021 was $27,648,
resulting from the borrowings of Jinkailong from a financial institution for its
working capital requirements. The decrease of $7,892, or approximately 22%, was
due to the decrease in outstanding principal of the loans obtained before 2019
and lower interest rate for the remaining principal.

Interest expense on finance leases for the six months ended September 30, 2021
was $215,847, representing the interest expense accrued under financing leases
for the leased automobiles rendered to us for sublease or sale by the online
ride-hailing drivers who exited the ride-hailing business. Interest expense on
finance leases decreased by $221,383, or approximately 51%, as compared with the
same period in 2020, mainly due to the weighted average number of rendered
automobiles during the six months ended September 30, 2021 decreased
approximately 7% than that in the same period in last year, as well as the
decrease in the number of automobiles which were rendered to us but have not
been sub-leased as we leased more automobiles during the current period.

Change in Fair Value of Derivative Liabilities

Warrants issued in our registered direct offerings that took place in June 2019,
February 2021 and May 2021, and the August 2020 underwritten public offering
were classified as liabilities under the caption "Derivative Liabilities" in the
consolidated balance sheet and recorded at estimated fair value at each
reporting date, computed using the Black-Scholes valuation model. The change in
fair value of derivative liabilities the six months ended September 30, 2021 was
a gain of $1,648,450 in total, which consists of a gain of $136,080 for the
warrants issued in our June 2019 registered direct offering, a gain of $251,253
for the warrants issued in our August 2020 underwritten public offering, a gain
of $411,555 for the warrants issued in our February 2021 registered direct
offering, and a gain of $849,562 for the warrants issued in our May 2021
registered direct offering. The change in fair value of derivative liabilities
for the six months ended September 30, 2020 a loss of $362,217 for the warrants
issued in our June 2019 registered direct offering and a loss of $50,724 for the
warrants issued in our August 2020 underwritten public offering, resulted in a
loss of $412,941 in total.

Income Tax Expense

Generally, our subsidiaries and consolidated VIEs in China are subject to
enterprise income tax on their taxable income in China at a rate of 25%. The
enterprise income tax is calculated based on the entity's global income as
determined under PRC tax laws and accounting standards. All subsidiaries and
consolidated VIEs in China incurred cumulative losses and no tax expense was
recorded for the six months ended September 30, 2021. Income tax expense of $11
and $6,977 for the six months ended September 30, 2021 and 2020, respectively,
mainly represented the provision of enterprise income tax resulting from the
taxable income of $44 and $27,908, respectively.

Net Loss

As a result of the foregoing, net loss for the six months ended September 30,
2021 was $7,492,561, representing an increase of $2,600,866 from net loss of
$4,891,695 for the six months ended September 30, 2020.

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Liquidity and Capital Resources

We have financed our operations primarily through proceeds from our equity
offerings, stockholder loans, commercial debt and cash flow from operations.

We had cash and cash equivalents of $1,766,104 as of September 30, 2021 as
compared to $4,448,075 as of March 31, 2021 for our continuing operations. We
primarily hold our excess unrestricted cash in short-term interest-bearing bank
accounts at financial institutions.

On May 13, 2021, we closed a registered direct offering of $5,531,916 shares of
our common stock at $1.175 per share, pursuant to a securities purchase
agreement with certain accredited investors. As a result, the Company raised
approximately $5.8 million, net of placement agent fees and offering expenses,
to support our working capital requirements.

Our business is capital intensive and we have spent expenditure on developing
our new business of Online Ride-hailing Platform Services and expanding
automobile operating leasing during the six months ended September 30, 2021. We
have considered whether there is substantial doubt about our ability to continue
as a going concern due to (1) recurring losses from operations, including net
loss of approximately $7.5 million for the six months ended September 30, 2021,
(2) accumulated deficit of approximately $39.9 million as of September 30, 2021;
(3) the working capital deficit of approximately $10.9 million as of September
30, 2021; (4) net operating cash outflows of approximately $4.6 million and $1.4
million from continuing operations and discontinued operations, respectively,
for the six months ended September 30, 2021 and (5) the purchase commitment of
approximately $3.2 million. As of September 30, 2021, we have entered into two
purchase contracts with two automobile dealers to purchase a total of 300
automobiles for the amount of approximately $4.9 million. As the issuance date
of these financial statements, 100 automobiles of approximately $1.7 million
have been purchased in cash and delivered to us and the remaining purchase
commitment of approximately $3.2 million is expected to be completed before
March 2022.

We do not believe that the proceeds from our public offerings and our
anticipated cash flows would be sufficient to meet our anticipated working
capital requirements and capital expenditures in the ordinary course of business
for the next 12 months from the date of this Report. We have determined there is
substantial doubt about our ability to continue as a going concern. If we are
unable to generate significant revenue, we may be required to cease or curtail
our operations. We are trying to alleviate the going concern risk through the
following sources:

? continuing to seek equity financing to support our working capital;

? other available sources of financing (including debt) from PRC banks and other

financial institutions; and

? financial support and credit guarantee commitments from our related parties.

However, there is no assurance that we will be successful in implementing the
foregoing plans or that additional financial will be available to us on
commercially reasonable terms, or at all. There are a number of factors that
could potentially arise that could undermine our plans, such as (i) the impact
of the COVID-19 pandemic on our business and areas of operations in China,
(ii) changes in the demand for our 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 our relationships with key business partners, (vii) that
financial institutions in China may not able to provide continued financial
support to our customers, and (viii) the perception

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of PRC-based companies in the U.S. capital markets. Our inability to secure
needed financing when required could require material changes to our business
plans and could have a material adverse effect on our viability and results

of
operations.




                                                                        For the
                                                                   Six Months Ended
                                                                     September 30,
                                                                 2021             2020
                                                              (unaudited)      (unaudited)

Net Cash Used in Operating Activities                        $ (6,004,863)    $ (1,295,974)
Net Cash Used in Investing Activities                          (2,140,995) 

(19,643)

Net Cash Provided by Financing Activities                        5,439,491 

4,789,349

Effect of Exchange Rate Changes on Cash and Cash
Equivalents                                                         24,396 

76,259

Cash and Cash Equivalents at Beginning of Period                 4,448,075 

844,028

Cash and Cash Equivalents at End of Period                       1,766,104 

4,394,019

Less: Cash and cash equivalents from discontinued
operations                                                               -                -
Cash and cash equivalents from continuing operations, end
of period                                                    $   1,766,104    $   4,394,019

Cash Flow in Operating Activities

For the six months ended September 30, 2021, net cash used in operating
activities was $6,004,863, which consists of $4,622,624 from continuing
operations and $1,382,239 from discontinued operations. While for the six months
ended September 30, 2020, net cash used in operating activities was $1,295,974,
which consists of $164,410 from continuing operations and $1,131,564 from
discontinued operations.

The total net cash used in operating activities from continuing operations
primarily comprised of the payment of salary and employee benefits of
$2,556,138, other operating costs of $3,365,279, and maintenance fees, insurance
and other costs for automobiles and related transactions of $4,710,117,
partially offset by revenue received of $5,631,088 and the net collection of
$377,710 on automobiles used for financial lease to be collected within the
lease terms. The increase of $4,458,214 in net cash used in operating activities
from continueing operations for the six months ended September 30, 2021 was
primarily attributable to (1) increase of net loss of $2,523,087; (2) $2,061,391
decrease in the change of fair value of derivative liabilities as our stock
price is running below our stock warrant's exercise price; (3) $989,034 decrease
in accrued expenses and other liabilities, offset by (4) decrease of $1,106,144
in account receivable and finance lease receivable due to we collect our revenue
in a better turnover rate.

The increase of $250,675 in net cash used in operating activities from
discontinued operation for the six months ended September 30, 2021 was primarily
attributable to more payment was remitted to investors of P2P platform.

Cash Flow in Investing Activities

For the six months ended September 30, 2021, we had net cash used in investing
activities of $2,140,995, which consisted of $2,139,602 from continuing
operations and $1,393 from discontinued operations. The majority net cash used
in investing was for the purchase of automobiles for operating lease purpose.

For the six months ended September 30, 2020, we had net cash used in investing
activities of $19,643, which consisted of $19,572 from continuing operations and
$71 from discontinued operations. The total net cash used in investing was for
the purchase of office equipment.

Cash Flow in Financing Activities

For the six months ended September 30, 2021, we had net cash provided by
financing activities of $5,439,491, which primarily consisted of: (1) total net
proceeds of approximately $5.8 million from our registered public offering in
May 2021, and $22,015 from exercised warrants from investors, respectively; (2)
borrowings from a financial institution of $578,567; (3) borrowings froma
related party of $800,000, partially offset by (4) principal payments made for
finance lease liabilities of $1,241,041, (5) repayments to related parties of
$172,528; and (6) repayments of current borrowings from financial institutions
of $318,575.

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For the six months ended September 30, 2020, we had net cash provided by
financing activities of $4,789,349, which primarily consisted of: (1) net
proceeds of $6,098,297 from our underwritten public offering in August 2020; (2)
proceeds from the exercise of warrants of $75,000; (3) borrowings from an
insurance company of $488,932, partially offset by (4) repayments and loans to
stockholders, related parties and affiliates of $300,896, (5) repayments of
current borrowings from financial institutions of $150,999; and (5) principal
payments made for finance lease liabilities of $1,449,554.

Off-Balance Sheet Arrangements

As the date of the Report, we had the following off-balance sheet arrangements
that are likely to have a future effect on our financial condition, revenues or
expenses, results of operations and liquidity:

? Purchase Commitments

On February 22 and July 9, 2021, we entered into two purchase contracts with two
automobile dealers to purchase a total of 300 automobiles for the amount of
approximately $4.9 million. Pursuant to the contract singed on July 9, 2021, we
are required to purchase 100 automobiles in cash with the amount of
approximately $1.5 million. Pursuant to the contract signed on February 22,
2021, we are required to purchase 100 automobiles in cash with the amount of
approximately $1.7 million. The remaining 100 automobiles purchase commitment
with the amount of approximately $1.7 million shall be completed with financing
option through the dealer's designated financial institutions. As of the date of
this Report, 100 automobiles of the contract signed in Febuary 2021 have been
purchased in cash and delivered to us. As we are in process of getting approval
from the dealer's designated financial institutions in financing the 100
automobiles' purchase, there is no clear timing schedule for completing the
remaining purchase commitment with this automobile dealer. However, we expect
the purchase to be completed by March 2022.

? Contingent Liabilities

Contingent liabilities for automobile purchasers

We are exposed to credit risk as we are required by certain financial
institutions to provide guarantee on the lease/loan payments (including
principal and interests) of the automobile purchasers referred by us. As of
September 30, 2021, the maximum contingent liabilities the we would be exposed
to was approximately $10.8 million (including approximately $23,000 related to
our discontinued P2P business), assuming all the automobile purchasers were in
default, which may cause an increase in guarantee expense and cash outflow in
financing activities. As of September 30, 2021, approximately $5,428,000,
including interests of $326,000, due to financial institutions, of all the
automobile purchases we serviced were past due.

Contingent liability of Jinkailong

On May 25, 2018, Chengdu Industrial Impawn Co., Ltd ("Impawn") signed a pledge
and pawn contract (the "Master Contact") with Langyue, pursuant to which, Impawn
shall provide loans to Langyue up to RMB20 million (approximately $2.9 million).
In connection with the Master Contract, Jinkailong entered into a guaranty with
Impawn and agreed to provide guarantee on all the payments (including principal,
interests, compensations and other expenses) of Langyue jointly and severally
with seven other guarantors, one of which is a shareholder of Jinkailong.
Langyue used RMB7,019,652 (approximately $1,003,000) of the loans from Impawn
and re-loaned it to automobile purchasers referred by Jinkailong from June 2018
to September 2018, which were also guaranteed by Jinkailong.

Langyue did not timely pay Impawn the monthly installment for June 2020. In
July 2020, Impawn sent the Collection Letter and Notice to Langyue to demand
payment of the interest and penalty of RMB100,300 (approximately $14,330). On
September 18, 2020, Impawn initiated a legal action in front of the Court for an
order to collect and enforce the repayment of the total outstanding principals,
interest and penalty for an aggregate of RMB9,992,728 (approximately $1,428,000)
and other expenses by freezing all bank accounts of the Langyue and all related
guarantors. On October 14, 2020, the cash in the bank of Jinkailong, with total
amount of RMB175,335 (approximately $25,050) were frozen by the Court and became
restricted cash accordingly.

On December 24, 2020, Jinkailong, a shareholder of Jinkailong and Impawn signed
a settlement agreement ("Settlement Agreement"). Impawn agreed to release the
pledge of Jinkailong's 75 automobiles, provided that Jinkailong and such
shareholder repay an aggregate of RMB4,026,594 (approximately $625,000) in
monthly installments over 35 months. In addition, upon the initial payment of
RMB600,000 (approximately $93,000) by Jinkailong and such shareholder, Impawn
will request the court to release the frozen bank

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accounts of Jinkailong. The Settlement Agreement further provides that it does
not release the guarantee obligations of Jinkailong and in the event Langyue's
loan is not fully repaid at the end of the 35 months, Impawn reserves the right
to pursue further actions against Jinkailong and such shareholder for the
outstanding balance of the loan. As of September 30, 2021, the original maximum
contingent liabilities related to the loans from Langyue to automobile
purchasers which Jinkailong would be exposed to was approximately RMB962,000
(approximately $149,000), 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 $1,192,000 to Impawn

in
the future.

Inflation

We do not believe our business and operations have been materially affected by
inflation.

Critical Accounting Policies

We prepare our unaudited condensed consolidated financial statements in
accordance with U.S GAAP. These accounting principles require us to make
judgments, estimates and assumptions on the reported amounts of assets and
liabilities at the end of each fiscal period, and the reported amounts of
revenues and expenses during each fiscal period. We continually evaluate these
judgments and estimates based on our past experience, knowledge and assessments
of current business and other conditions, our expectations regarding the future
based on available information and assumptions.

Other than disclosed below, there have been no material changes during the
six months ended September 30, 2021 in our accounting policies from those
previously disclosed in our Annual Report for the fiscal year ended March 31,
2021.

The selection of critical accounting policies, the judgments and other
uncertainties affecting the application of those policies and the sensitivity of
reported results to changes in conditions and assumptions are factors that
should be considered when reviewing our financial statements. We believe the
following accounting policies involve the most significant assumptions and
estimates used in the preparation of our unaudited consolidated financial
statements.

(a)Use of estimates

In presenting the unaudited condensed consolidated financial statements in
accordance with U.S. GAAP, management make estimates and assumptions that affect
the amounts reported and related disclosures. Estimates, by their nature, are
based on judgement and available information. Accordingly, actual results could
differ from those estimates. On an ongoing basis, management reviews these
estimates and assumptions using the currently available information. Changes in
facts and circumstances may cause us to revise our estimates. we base our
estimates on past experience and on various other assumptions that are believed
to be reasonable, the results of which form the basis for making judgments about
the carrying values of assets and liabilities. Estimates are used when
accounting for items and matters including, but not limited to, revenue
recognition, residual values, lease classification and liabilities, finance
lease receivables, 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 intangible
assets 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.

(b)Fair values of financial instruments

Accounting Standards Codification ("ASC") Topic 825, Financial Instruments
("Topic 825") requires disclosure of fair value information of financial
instruments, whether or not recognized in the balance sheets, for which it is
practicable to estimate that value. In cases where quoted market prices are not
available, fair values are based on estimates using present value or other
valuation techniques. Those techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. Topic 825 excludes certain financial instruments and all nonfinancial
assets and liabilities from its disclosure requirements.

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Accordingly, the aggregate fair value amounts do not represent the underlying
value of us. The three levels of valuation hierarchy are defined as follows:

Level 1Inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets.

Level 2Inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable for the
assets or liability, either directly or indirectly, for substantially the full
term of the financial instruments.

Level 3Inputs to the valuation methodology are unobservable and significant to
the fair value.

(c)Property and equipment

Property and equipment primarily consists of computer equipment, which is stated
at cost less accumulated depreciation less any provision required for impairment
in value. Depreciation is computed using the straight-line method with no
residual value based on the estimated useful life.

(d)Derivative liabilities

A contract is designated as an asset or a liability and is carried at fair value
on a company's balance sheet, with any changes in fair value recorded in a
company's results of operations. We then determine which options, warrants and
embedded features require liability accounting and records the fair value as a
derivative liability. The changes in the values of these instruments are shown
in the accompanying unaudited condensed consolidated statements of operations
and comprehensive loss as "change in fair value of derivative liabilities".

(e)Revenue recognition

We recognize our revenue under ASC 606. ASC 606 establishes principles for
reporting information about the nature, amount, timing and uncertainty of
revenue and cash flows arising from the entity's contracts to provide goods or
services to customers. The core principle requires an entity to recognize
revenue to depict the transfer of goods or services to customers in an amount
that reflects the consideration that it expects to be entitled to receive in
exchange for those goods or services recognized as performance obligations are
satisfied. It also requires us to identify contractual performance obligations
and determine whether revenue should be recognized at a point in time or over
time, based on when control of goods and services transfers to a customer.

To achieve that core principle, we apply the five steps defined under ASC 606:
(i) identify the contract(s) with a customer, (ii) identify the performance
obligations in the contract, (iii) determine the transaction price,
(iv) allocate the transaction price to the performance obligations in the
contract, and (v) recognize revenue when (or as) the entity satisfies a
performance obligation.

We account 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.

We have assessed the impact of the guidance by reviewing our existing customer
contracts and current accounting policies and practices to identify differences
that will result from applying the new requirements, including the evaluation of
its performance obligations, transaction price, customer payments, transfer of
control and principal versus agent considerations. Based on the assessment, we
concluded that there was no change to the timing and pattern of revenue
recognition for its current revenue streams in scope of ASC 606 and therefore
there was no material changes to our unaudited condensed consolidated financial
statements upon adoption of ASC 606.

Automobile Transaction and Related Services

Sales of automobiles - We generate revenue from sales of automobiles to the
customers of Jinkailong, Hunan Ruixi and Mashang Chuxing. The control over the
automobile is transferred to the purchaser along with the delivery of
automobiles. The amount of the revenue is based on the sale price agreed by
Hunan Ruixi or Yicheng and the counterparties, including Jinkailong, who act on
behalf of their customers. We recognize revenues when an automobile is delivered
and control is transferred to the purchaser. Accounts receivable

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related to the revenue are being collected over 36 to 48 months. The interest
component is included in the non-current portion of the accounts receivable.

Operating lease revenues from automobile rentals - We generate revenue from
sub-leasing automobiles from some online ride-hailing drivers or leasing our own
automobiles. We recognize revenue wherein an automobile is transferred to the
leasee and the leasee has the ability to control the asset, is accounted for
under ASC Topic 842. Rental transactions are satisfied over the rental period.
Rental periods are short term in nature, generally are twelve months or less.

Service fees from management and guarantee services - Over 95% of our customers
are online ride-hailing drivers. The drivers sign affiliation agreements with
us, pursuant to which we provide 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. We
recognize revenue over the affiliation period when performance obligations are
completed.

Financing revenues - Interest income from the lease arising from our sales-type
leases and bundled lease arrangements is recognized in financing revenues over
the lease term based on the effective rate of interest in the lease.

Service fees from automobile purchase services - Services fees from automobile
purchase services are paid by automobile purchasers for a series of the services
provided to them throughout the purchase process such as credit assessment,
preparation of financing application materials, assistance with closing of
financing transactions, license and plate registration, payment of taxes and
fees, purchase of insurance, installment of GPS devices, ride-hailing driver
qualification and other administrative procedures. The amount of these fees is
based on the sales price of the automobiles and relevant services provided. We
recognize 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 are being collected over 36 to 48 months. The interest component is
included in the non-current portion of the accounts receivable.

Facilitation fees from automobile transactions - Facilitation fees from
automobile purchase transactions are paid by our customers including third-party
sales teams or the automobile purchasers for the facilitation of the sales and
financing of automobiles. We attract automobile purchasers through third-party
sales teams or its own sales department. For the sales facilitated between
third-party sales teams and automobile purchasers, we charge the fees to the
third-party sales teams, which derived from the commission paid by the
automobile purchasers to the third-party sales teams. Relating to sales
facilitated between automobile purchasers and dealers, we charge the fees to the
automobile purchasers. We recognize revenue from facilitation fees when the
titles are transferred to the purchasers at a point in time. The amount of fees
is based on the type of automobile and negotiation with each sales team or
automobile purchaser. The fees charged to third-party sales teams or automobile
purchasers are paid before the automobile purchase transactions are consummated.
These fees are non-refundable upon the delivery of automobiles.

Online ride-hailing platform service revenue

We generate revenue from providing services to online ride-hailing drivers
("Drivers") to assist them in providing transportation services to riders
("Riders") looking for taxi/ride-hailing services. We earn commissions for each
completed order in an amount equal to the difference between an upfront quoted
fare and the amount earned by a Driver based on actual time and distance for the
ride charged to the Rider. As a result, we bear a single performance obligation
in the transaction of connecting Drivers with Riders to facilitate the
completion of a successful transportation service for Riders. We recognize
revenue upon completion of a ride as the single performance obligation is
satisfied and we have the right to receive payment for the services rendered
upon the completion of the ride. We evaluate the presentation of revenue on a
gross or net basis based on whether we control the service provided to the Rider
and are the principal (i.e. "gross"), or we arrange for other parties to provide
the service to the Rider and are an agent (i.e. "net"). Since we are not
primarily responsible for ride-hailing services provided to Riders, nor do we
have inventory risk related to the services, we recognize revenue at net basis.

Leases

We account for leases in accordance with ASC 842. The two primary accounting
provisions we use to classify transactions as sales-type or operating leases
are: (i) a review of the lease term to determine if it is for the major part of
the economic life of the underlying equipment (defined as greater than 75%); and
(ii) a review of the present value of the lease payments to determine if they
are equal to or greater than substantially all of the fair market value of the
equipment at the inception of the lease (defined as greater than 90%).

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Automobile included in arrangements meeting these conditions are accounted for
as sales-type leases. For sales-type leases, we recognize sales equal to the
present value of the minimum lease payments discounted using the implicit
interest rate in the lease and cost of sales equal to carrying amount of the
asset being leased and any initial direct costs incurred, less the present value
of the unguaranteed residual. Interest income from the lease is recognized in
financing revenues over the lease term. Automobile included in arrangements that
do not meet these conditions are accounted for as operating leases and revenue
is recognized over the term of the lease.

We exclude from the measurement of our 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.

We consider the economic life of most of automobile to be three to four years,
since this represents the most frequent contractual lease term for its
automobile and the automobile will be used for Didi driving services. We believe
three to four years is representative of the period during which the automobile
is expected to be economically usable, with normal service, for the purpose for
which it is intended.

A portion of our direct sales of automobile to end customers are made through
bundled lease arrangements which typically include automobile, services
(automobile purchase services, facilitation fees, 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. We consider the fixed payments for purposes of
allocation to the lease elements of the contract. The fixed minimum monthly
payments are multiplied by the number of months in the contract term to arrive
at the total fixed lease payments that the customer is obligated to make over
the lease term. Amounts allocated to the automobile and financing elements are
then subjected to the accounting estimates under ASC 842 to ensure the values
reflect standalone selling prices. The remainder of any fixed payments are
allocated to non-lease elements (automobile purchase services, facilitation
fees, and management and guarantee services), for which these revenues are
recognized in a manner consistent with the guidance for service fees from
automobile purchase services, facilitation fees from automobile transactions,
and service fees from management and guarantee services as discussed above.

Our 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. We reassess our pricing
interest rates quarterly based on changes in the local prevailing rates in the
marketplace. As of June 30, 2021, our pricing interest rate is 6.0% per annum.

(f)Share-based awards

Share-based awards granted to the our employees are measured at fair value on
grant date and share-based compensation expense is recognized (i) immediately at
the grant date if no vesting conditions are required, or (ii) using the
accelerated attribution method, net of estimated forfeitures, over the requisite
service period. The fair value of restricted shares is determined with reference
to the fair value of the underlying shares.

At each date of measurement, we review internal and external sources of
information to assist in the estimation of various attributes to determine the
fair value of the share-based awards granted by us, including but not limited to
the fair value of the underlying shares, expected life, expected volatility and
expected forfeiture rates. We are required to consider many factors and make
certain assumptions during this assessment. If any of the assumptions used to
determine the fair value of the share-based awards changes significantly,
share-based compensation expense may differ materially in the future from that
recorded in the current reporting period.

(h)Leases

We account for leases in accordance with ASC 842. Beginning in the year ended
March 31, 2020, we entered into certain agreements as a lessor under which we
leased automobiles to short-term (usually under twelve months) car service
drivers. We also enter into certain agreements as a lessee to lease automobiles
and to conduct our automobiles rental operations. If any of the following
criteria are met, we classify the lease as a finance lease (as a lessee) or as a
direct financing or sales-type lease (both as a lessor):

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


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? The lease grants the lessee an option to purchase the underlying asset that the

Company is reasonably certain to exercise;

The lease term is for 75% or more of the remaining economic life of the

? underlying asset, unless the commencement date falls within the last 25% of the

economic life of the underlying asset;

? The present value of the sum of the lease payments equals or exceeds 90% of the

fair value of the underlying asset; or

? The underlying asset is of such a specialized nature that it is expected to

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

Leases that do not meet any of the above criteria are accounted for as operating
leases.

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

Finance and operating lease ROU assets and lease liabilities are recognized at
the commencement date based on the present value of lease payments over the
lease term. Since the implicit rate for our leases is not readily determinable,
we use our incremental borrowing rate based on the information available at the
commencement date in determining the present value of lease payments. The
incremental borrowing rate is the rate of interest that we would have to pay to
borrow, on a collateralized basis, an amount equal to the lease payments, in a
similar economic environment and over a similar term.

Lease terms used to calculate the present value of lease payments generally do
not include any options to extend, renew, or terminate the lease, as we do not
have reasonable certainty at lease inception that these options will be
exercised. We generally consider the economic life of its operating lease ROU
assets to be comparable to the useful life of similar owned assets. We have
elected the short-term lease exception, therefore operating lease ROU assets and
liabilities do not include leases with a lease term of twelve months or less.
Its leases generally do not provide a residual guarantee. The operating lease
ROU asset also excludes lease incentives. Lease expense is recognized on a
straight-line basis over the lease term.

We review the impairment of our ROU assets consistent with the approach applied
for our other long-lived assets. We review the recoverability of its long-lived
assets when events or changes in circumstances occur that indicate that the
carrying value of the asset may not be recoverable. The assessment of possible
impairment is based on its ability to recover the carrying value of the asset
from the expected undiscounted future pre-tax cash flows of the related
operations. We have elected to include the carrying amount of operating lease
liabilities in any tested asset group and include the associated operating lease
payments in the undiscounted future pre-tax cash flows.

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