☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~(Address of principal executive offices)~~

Room 104, No. 33 Section D,

No. 6 Middle Xierqi Road,

Haidian District, Beijing, China

100085

(Address of principal executive offices)

(Zip Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November 10, 2017, 19,030,915~~June 26, 2020, 68,585,806 shares of the Company’s Common Stock, $0.001 par value per share, were issued and outstanding.

On March 4, 2020 the Securities and Exchange Commission issued an Order (Release No. 34-88318) under Section 36 of the Exchange Act granting exemptions from specified provisions of the Exchange Act and certain rules thereunder (the “Order”). The Order provides that a registrant subject to the reporting requirements of Exchange Act Section 13(a) or 15(d), and any person required to make any filings with respect to such a registrant, is exempt from any requirement to file or furnish materials with the Commission under Exchange Act Sections 13(a), 13(f), 13(g), 14(a), 14(c), 14(f), 15(d) and Regulations 13A, Regulation 13D-G (except for those provisions mandating the filing of Schedule 13D or amendments to Schedule 13D), 14A, 14C and 15D, and Exchange Act Rules 13f-1, and 14f-1, as applicable, where certain conditions are satisfied.

As a result of the global outbreak of the COVID-19 virus, the Company had to spend additional time in preparing for the filing of its Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and was unable to timely prepare this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2020. Based on the foregoing, on May 15, 2020, the Company filed a Current Report on Form 8-K to avail itself of a 45-day extension to file this Form 10-Q relying on the exemptions provided by the Order. This Form 10-Q is being filed in reliance on the Order.

~~See~~The accompanying notes toare an integral part of the unaudited condensed consolidated financial statements.

~~CHINA COMMERCIAL CREDIT,~~

TD HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the Three Months Ended March 31, 2020 and 2019

(Expressed in U.S. dollars, except for the number of shares)

For the Three Months
Ended
September 30,

For the Nine Months
Ended
September 30,

2017
(Unaudited)

2016
(Unaudited)

2017
(Unaudited)

2016
(Unaudited)
Interest income
Interests and fees on loans and direct financing lease $ 128,460 $ 722,117 $ 290,566 $ 1,203,663
Interests on deposits with banks 4,042 263 4,728 3,526
Total interest and fee income 132,502 722,380 295,294 1,207,189

Interest expense
Interest expense on short-term bank loans - - - (30,057 )
Net interest income 132,502 722,380 295,294 1,177,132

Reversal of provision/(Provision) for loan losses 452,786 226,694 (2,420,698 ) 133,177
(Provision)/Reversal of provision for direct financing lease losses (18,616 ) 242,180 (66,113 ) 242,180
Net interest income/(loss) after provision for loan losses and financing lease losses 566,672 1,191,254 (2,191,517 ) 1,552,489

Commissions and fees on financial guarantee services - 9,117 2,843 26,308
(Provision)/Reversal of provision for financial guarantee services (1,142,807 ) (599,808 ) (830,140 ) 385,352
Commission and fee (loss)/income on guarantee services, net (1,142,807 ) (590,691 ) (827,297 ) 411,660
　　　　
Net (Loss)/Revenue (576,135 ) 600,563 (3,018,814 ) 1,964,149

Non-interest income
Other non-interest income - - - 48,945
Total non-interest income - - - 48,945

Non-interest expense
Salaries and employee surcharge (180,461 ) (120,130 ) (707,012 ) (548,978 )
Rental expenses (13,975 ) (28,132 ) (41,242 ) (64,850 )
Business taxes and surcharge (1,376 ) 9,617 (3,221 ) (21,798 )
Transaction costs relating to acquisition (1,356,285 ) - (2,136,285 ) -
Litigation and settlement cost for the shareholders’ lawsuit - - (1,838,500 ) (690,000 )
Other operating expenses (387,003 ) (1,086,092 ) (784,815 ) (1,893,027 )
Total non-interest expense (1,939,100 ) (1,224,737 ) (5,511,075 ) (3,218,653 )

Foreign exchange loss (57 ) (271 ) (355 ) (557 )

Loss Before Income Taxes (2,515,292 ) (624,445 ) (8,530,244 ) (1,206,116 )
Income tax expense - - - -
Net Loss $ (2,515,292 ) $ (624,445 ) $ (8,530,244 ) $ (1,206,116 )

Loss per Share- Basic and Diluted (0.139 ) (0.039 ) (0.491 ) (0.086 )

Weighted Average Shares Outstanding-Basic and Diluted 18,092,369 15,889,853 17,371,183 14,026,815

Net Loss (2,515,292 ) (624,445 ) (8,530,244 ) (1,206,116 )
Other comprehensive income
Foreign currency translation adjustment 14,699 260,803 43,987 205,546
Comprehensive Loss $ (2,500,593 ) $ (363,642 ) $ (8,486,257 ) $ (1,000,570 )

	For the Three Months Ended March 31,
	2020			2019
Revenues
- Revenue from sales of commodity products	$	1,053,632		$	-
- Revenue from supply chain management services		415,377			-
- Income from operating leases		14,051			399,999
Total revenue		1,483,060			399,999

Cost of revenue
- Cost of revenue - commodity product sales - related party		(1,055,143	)		-
- Cost of revenue - supply chain management services		(717	)		-
- Cost of operating lease		(99,314	)		(237,651	)
Total cost of revenue		(1,155,174	)		(237,651	)

Gross profit		327,886			162,348

Operating expenses
Selling, general, and administrative expenses		(425,115	)		(1,906,319	)
Impairment of leasing business assets		-			(96,318	)
Total operating expenses		(425,115	)		(2,002,637	)

Net Operating Loss		(97,229	)		(1,840,289	)

Other income, net
Interest income		140,012			10,463
Interest expenses		(134,375	)		-
Total other income, net		5,637			10,463

Loss Before Income Taxes		(91,592	)		(1,829,826	)

Income tax expenses		(48,380	)		-

Net Loss		(139,972	)		(1,829,826	)

Less: Net loss attributable to non-controlling interests		4,269			-

Net loss attributable to TD Holdings, Inc.’s Stockholders		(135,703	)		(1,829,826	)

Comprehensive Loss
Net Loss		(139,972	)		(1,829,826	)
Foreign currency translation adjustment		(5,576	)		57,743
Comprehensive loss		(145,548	)		(1,772,083	)
Less: Total comprehensive loss attributable to non-controlling interests		4,269			-
Comprehensive loss attributable to TD Holdings, Inc.	$	(141,279	)	$	(1,772,083	)

Loss per share - basic and diluted
Net loss per share – basic and diluted	$	(0.01	)	$	(0.35	)

Weighted Average Shares Outstanding-Basic and Diluted		13,673,023			5,169,041

~~See~~The accompanying notes toare an integral part of the unaudited condensed consolidated financial statements.

TD HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three Months Ended March 31, 2020 and 2019

(Expressed in U.S. dollars, except for the number of shares)

	Common Stock				Additional paid-in		Accumulated			Subscription advanced from a			Accumulated other comprehensive			Non-controlling			Total (Deficit)
	Shares		Amount		capital		Deficit			shareholder			income (loss)			interests			Equity

Balance as at December 31, 2018		5,023,906	$	5,024	$	28,765,346	$	(25,457,090	)	$	-		$	(511,057	)	$	-		$	2,802,223
Issuance of common stock to service providers		502,391		502		883,706		-			-			-			-			884,208
Net loss		-		-		-		(1,829,826	)		-			-			-			(1,829,826	)
Foreign currency translation adjustments		-		-		-		-			-			57,743			-			57,743
Balance as at March 31, 2019		5,526,297	$	5,526	$	29,649,052	$	(27,286,916	)	$	-		$	(453,314	)	$	-		$	1,914,348

Balance as at December 31, 2019		11,585,111	$	11,585	$	38,523,170	$	(32,391,040	)	$	-		$	(334,281	)	$	(8,572	)	$	5,800,862
Issuance of common stocks in connection with private placements		17,000,000		17,000		15,083,000		-			(13,500,000	)		-			-			1,600,000
Net loss		-		-		-		(135,703	)		-			-			(4,269	)		(139,972	)
Foreign currency translation adjustments		-		-		-		-			-			(5,576	)		-			(5,576	)
Balance as at March 31, 2020		28,585,111	$	28,585	$	53,606,170	$	(32,526,743	)	$	-		$	(339,857	)	$	(12,841	)	$	7,255,314

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

~~CHINA COMMERCIAL CREDIT,~~TD HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2020 and 2019

For The Nine Months Ended
September 30,

2017
(Unaudited)

2016
(Unaudited)

Cash Flows from Operating Activities:
Net loss $ (8,530,244 ) $ (1,206,116 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 4,999 46,455
Provision/(Reversal of provision) for loan losses 2,420,698 (133,177 )
Provision/(Reversal of provision) for direct financing lease losses 66,113 (242,180 )
Provision/(Reversal of provision) of provision for financial guarantee services 830,140 (385,352 )
Deferred tax credit - (40,364 )
Income from disposal of property and equipment - (48,945 )
Shares issued to executive officers and professional services 2,159,480 1,354,424
Provision for settlement expenses against legal proceedings 1,843,500 465,000
Changes in operating assets and liabilities:
Restricted cash (34 ) -
Interest receivable (63,967 ) -
Other assets 11,439 8,060
Unearned income from guarantee services and finance lease services (19,406 ) (23,572 )
Other current liabilities 28,653 118,255
Income tax payable - 39,641
Net Cash Used in Operating Activities (1,248,629 ) (47,871 )

Cash Flows from Investing Activities:
Loans collection from third parties 1,155,055 2,147,593
Payment of loans on behalf of guarantees - (127,886 )
Collection from guarantees for loan paid on behalf of customers 44,075 1,825,730
Collection of principal of finance lease, in installments 227,723 484,361
Deposit released from banks for financial guarantee services - 801,530
Deposit paid to banks for financial guarantee services - (694,403 )
Purchases of property and equipment and intangible asset - (48,342 )
Disposal of property and equipment - 56,557
Short-term loan paid to a related party - (1,945,224 )
Short-term loan collected from a related party 478,954 -
Net Cash Provided by Investing Activities 1,905,807 2,499,916

Cash Flows From Financing Activities:
Cash raised in private placement 1,560,000 1,000,000
Repayment of short-term bank borrowings - (2,600,832 )
Net Cash Provided by/ (Used in) Financing Activities 1,560,000 (1,600,832 )

Effect of Exchange Rate Changes on Cash and Cash Equivalents 44,789 9,747

Net Increase In Cash and Cash Equivalents 2,261,967 860,960
Cash and Cash Equivalents at Beginning of Period 768,501 306,401
Cash and Cash Equivalents at End of Period $ 3,030,468 $ 1,167,361

Supplemental Cash Flow Information
Cash paid for interest expense $ - $ 30,057
Cash paid for income tax $ - $ -

(Expressed in U.S. dollar)

	For the Three Months Ended March 31,
	2020			2019
Cash Flows from Operating Activities:
Net loss	$	(139,972	)		(1,829,826	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of leasing business assets		79,578			46,858
Depreciation of property and equipment		388			551
Amortization of right of use assets		88,620			-
Impairment on leasing business assets		-			96,318
Stock-based compensation to service providers		-			884,208
Changes in operating assets and liabilities:
Other current assets		(132,271	)		29,320
Advances from customers		-			23,180
Income tax payable		48,380			-
Other current liabilities		(6,394	)		(9,242	)
Lease liabilities		(94,888	)		-
Net Cash Used in Operating Activities		(156,559	)		(758,633	)

Cash Flows from Investing Activities:
Purchases of leasing business assets		-			(406,757	)
Loans made to related parties		(1,593,260	)		-
Loans made to third parties		(1,831,708	)		(592,724	)
Net Cash Used in Investing Activities		(3,424,968	)		(999,481	)

Cash Flows from Financing Activities:
Proceeds from third party borrowings		-			592,724
Proceeds from borrowings from related parties		1,063,773			-
Net Cash Provided by Financing Activities		1,063,773			592,724

Effect of exchange rate changes on cash and cash equivalents		98,172			21,969

Net decrease in cash and cash equivalents		(2,419,582	)		(1,143,421	)
Cash at beginning of period		2,446,683			1,484,116
Cash at end of period	$	27,101		$	340,695

Supplemental Cash Flow Information
Cash paid for interest expense	$	-		$	-
Cash paid for income tax	$	-		$	-

Supplemental disclosure of Non-cash investing and financing activities
Right-of-use assets obtained in exchange for operating lease obligations	$	455,635		$	-
Issuance of common stocks in connection with private placements, net of issuance costs with proceeds subsequently collected in April 2020	$	13,500,000		$	-
Issuance of common stocks in connection with private placements, net of issuance costs with proceeds collected in advance in November 2019	$	1,600,000		$

~~See~~The accompanying notes toare an integral part of the unaudited condensed consolidated financial statements

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

ORGANIZATION AND ~~PRINCIPAL ACTITIVIES~~BUSINESS DESCRIPTION

~~China Commercial Credit,~~TD Holdings, Inc. (“~~CCC”~~TD” or “the Company”), is a holding company that was incorporated under the laws of the State of Delaware on December 19, 2011. On January 11, 2019, the Company changed its name to China Bat Group, Inc. and on June 3, 2019, further changed its name to Bat Group, Inc. On March 6, 2020, the Company amended its Certificate of Incorporation with the Secretary of State of Delaware to effect a name change to TD Holdings, Inc.

~~VIE AGREEMENTS WITH WUJIANG LUXIANG~~

~~On September 26, 2012,~~Currently, the Company conducts business through ~~its indirectly wholly owned subsidiary, Wujiang Luxiang Information~~two variable interest entities (“VIEs”), Beijing Tianxing Kunlun Technology ~~Consulting~~ Co. Ltd. (“~~WFOE”~~Beijing Tianxing”) andShenzhen Huamucheng Trading Co., ~~entered into a series~~Ltd. (“Huamucheng”).Beijing Tianxing is primarily engaged in operating leasing business of ~~VIE Agreements with Wujiang Luxiang~~used luxurious cars and Huamucheng is engaged in commodity trading business and providing supply chain management services to customers in the ~~Wujiang Luxiang Shareholders. The purpose~~People’s Republic of ~~the VIE Agreements is solely to give WFOE the exclusive control over Wujiang Luxiang’s~~China (“PRC”). Supply chain management services consisted of loan recommendation service and ~~operations.~~commodity product distribution services.

The ~~significant terms~~accompanying consolidated financial statements reflect the activities of Beijing Tianxing, Shenzhen Huamucheng and each of the ~~VIE Agreements are summarized below:~~

~~Exclusive Business Cooperation Agreement~~following holding entities:

Pursuant to the Exclusive Business Cooperation Agreement between Wujiang Luxiang and WFOE, WFOE provides Wujiang Luxiang with technical support, consulting services and other management services relating to its day-to-day business operations and management, on an exclusive basis, utilizing its advantages in technology, human resources, and information. Additionally, Wujiang Luxiang grants an irrevocable and exclusive option to WFOE to purchase from Wujiang Luxiang any or all of its assets at the lowest purchase price permitted under PRC laws. For services rendered to Wujiang Luxiang by WFOE under the Agreement, the service fee Wujiang Luxiang is obligated to pay shall be calculated based on the time of services rendered multiplied by the corresponding rate, which is approximately equal to the net income of Wujiang Luxiang.

The Exclusive Business Cooperation Agreement shall remain in effect for ten years unless it is terminated by WFOE with 30-day prior notice. Wujiang Luxiang does not have the right to terminate the agreement unilaterally. WFOE may unilaterally extend the term of this agreement with prior written notice.

~~Share Pledge Agreement~~

Under the Share Pledge Agreement between the Wujiang Luxiang Shareholders and WFOE, the 12 Wujiang Luxiang Shareholders pledged all of their equity interests in Wujiang Luxiang to WFOE to guarantee the performance of Wujiang Luxiang’s obligations under the Exclusive Business Cooperation Agreement. Under the terms of the agreement, in the event that Wujiang Luxiang or its shareholders breach their respective contractual obligations under the Exclusive Business Cooperation Agreement, WFOE, as pledgee, will be entitled to certain rights, including, but not limited to, the right to collect dividends generated by the pledged equity interests. The Wujiang Luxiang Shareholders also agreed that upon occurrence of any event of default, as set forth in the Share Pledge Agreement, WFOE is entitled to dispose of the pledged equity interest in accordance with applicable PRC laws. The Wujiang Luxiang Shareholders further agree not to dispose of the pledged equity interests or take any actions that would prejudice WFOE’s interest.

~~Exclusive Option Agreement~~

Under the Exclusive Option Agreement, the Wujiang Luxiang Shareholders irrevocably granted WFOE (or its designee) an exclusive option to purchase, to the extent permitted under PRC law, once or at multiple times, at any time, part or all of their equity interests in Wujiang Luxiang. The option price is equal to the capital paid in by the Wujiang Luxiang Shareholders subject to any appraisal or restrictions required by applicable PRC laws and regulations.

~~Power of Attorney~~

Under the Power of Attorney, the Wujiang Luxiang Shareholders authorize WFOE to act on their behalf as their exclusive agent and attorney with respect to all rights as shareholders, including but not limited to: (a) attending shareholders’ meetings; (b) exercising all the shareholder’s rights, including voting, that shareholders are entitled to under the laws of China and the Articles of Association, including but not limited to the sale or transfer or pledge or disposition of shares in part or in whole; and (c) designating and appointing on behalf of shareholders the legal representative, the executive director, supervisor, the chief executive officer and other senior management members of Wujiang Luxiang. The Power of Attorney is coupled with an interest and shall be irrevocable and continuously valid from the date of execution, so long as the Wujiang Shareholder is a shareholder of the Company.

Name	4Background	Ownership
HC High Summit Holding Limited (“HC High BVI”)	● A BVI company ● Incorporated on March 22, 2018 ● A holding company	100% owned by the Company
HC High Summit Limited (“HC High HK”)	● A Hong Kong company ● Incorporated on April 16, 2018 ● A holding company	100% owned by HC High BVI
Hao Limo Technology (Beijing) Co. Ltd. (“Hao Limo”)	● A PRC company and deemed a wholly foreign owned enterprise (“WOFE”) ● Incorporated on May 10, 2018 ● Registered capital of $15 million ● A holding company	WOFE, 100% owned by HC High HK
Beijing Tianxing Kunlun Technology Co. Ltd. (“Beijing Tianxing”)*	● A PRC limited liability company ● Incorporated on April 17, 2018 ● Registered capital of $31,839 (RMB 200,000) ● Engaged in operating leasing business of used luxurious cars	VIE of Hao Limo
Shenzhen Huamucheng Trading Co., Ltd. (“Huamucheng”)	● A PRC limited liability company ● Incorporated on December 30, 2013 ● Registered capital of $1,417,736 (RMB 10 million) with registered capital fully paid-up ● Engaged in commodity trading business and providing supply chain management services to customers	VIE of Hao Limo

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

*	As of March 31, 2020, Beijing Tianxing has six wholly owned subsidiaries, including:

	1.●	~~ORGANIZATION AND PRINCIPAL ACTITIVIES (CONTINUED)~~Beijing Tianrenshijia Apparel Co., Ltd.
	●	Beijing Blue Light Marching Technology Co., Ltd.
	●	Beijing Eighty Weili Technology Co., Ltd.
	●	Beijing Bat Riding Technology Co., Ltd
	●	Beijing Blue Light Riding Technology Co., Ltd., and
	●	Car Master (Beijing) Information Consulting Co., Ltd.

~~Timely Reporting Agreement~~

~~To ensure Wujiang Luxiang promptly provides all~~In addition, the Company has one subsidiary over which the Company has 60% ownership, Beijing Blue Light Super Car Technology Co., Ltd. The remaining 40% of ownership interest is owned by an employee of the ~~information that WFOE~~Company.

Each of these subsidiaries owns a license to hold cars in Beijing or Zhejiang, and was either inactive or generated minimal revenues for the ~~Company need to file various reports with the SEC, a Timely Reporting Agreement was entered between Wujiang Luxiang~~periods ended March 31, 2020 and ~~the Company.~~2019.

Under the Timely Reporting Agreement, Wujiang Luxiang agrees that it is obligated to make its officers and directors available to the Company and promptly provide all information required by the Company so that the Company can file all necessary SEC and other regulatory reports as required.

~~INCORPORATION OF PFL~~

On September 5, 2013, our wholly owned subsidiary, CCC International Investment Holding Ltd. (“CCC HK”), established Pride Financial Leasing (Suzhou) Co. Ltd. (“PFL”) in Jiangsu Province, China. PFL was expected to offer financial leasing of machinery and equipment, transportation vehicles, and medical devices to municipal government agencies, hospitals and SMEs in Jiangsu Province and beyond. As of September 30, 2017, PFL had one finance lease transaction.

~~GOING CONCERN~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)

Basis of Presentation

The interim unaudited condensed interim consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements. The conditions described below raises substantial doubt about the Company’s ability to continue as a going concern within one year from the date of this filing.

1)	~~Limited funds necessary to maintain operations~~

The Company had an accumulated deficit of US$78,764,900 as of September 30, 2017. In addition, the Company had a negative net asset of US$774,251 as of September 30, 2017. As of September 30, 2017, the Company had cash and cash equivalents of US$3,030,468, and total short-term borrowings of nil. Caused by the limited funds, the management assessed that the Company was not able to keep the size of lending business within one year from the filing of Form 10-Q.

~~The Company is actively seeking other strategic investors with experience in lending business. If necessary, the shareholders of Wujiang Luxiang will contribute more capital into Wujiang Luxiang.~~

2)	~~Recurring operating loss~~

During the nine months ended September 30, 2017, the Company incurred operating loss of US$8,530,244. Affected by the reduction of lending business and guarantee business and increased loss loans, the management was in the opinion that recurring operating losses would be made within one year from the issuance of the filing.

The Company continues to use its best effort to improve collection of loan receivable and interest receivable. Management engaged two PRC law firms to represent the Company in the legal proceedings against the borrowers and their counter guarantors.

3)	~~Negative operating cash flow~~

During the nine months ended September 30, 2017, the Company incurred negative operating cash flow of US$1,248,629. Affected by significant balance of charged-off interest receivable, the management assessed the Company would continue to have negative operating cash flow within one year from the issuance of the filing.

~~The Company continues to reduce the redundant headcount and entered into a new office lease with lower rent commitment since January 1, 2017 to improve operating cash flow.~~

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~GOING CONCERN (CONTINUED)~~

4)	~~Downward industry~~

Most loan customers are from textile industry which has been facing downward pressure. Additionally adversely affected by emergence of internet finance entities, the Company was facing fierce competition. Considering the high risks from both customers and competitors, management assessed the Company would further reduced the loan business without strong financial support.

Considering the above factors, the Company, on August 9, 2017, entered into Certain Share Exchange Agreement (“Exchange Agreement”) with the parent company of Sorghum Investment Holdings Limited (“Sorghum”). Pursuant to the terms of the Exchange Agreement, CCCR will acquire 100% of the outstanding shares of Sorghum through issuance of 152,587,000 of its common shares. This transaction will be accounted for as a “reverse acquisition” since, immediately following completion of the transaction, the shareholders of Sorghum immediately prior to the transaction will effectuate control of the Company, through its 87.9% ownership interest in the post-merger entity.

While management believes that the measures in the liquidity plan will be adequate to satisfy its liquidity and cash flow requirements for the twelve months after the financial statements are available to be issued, there is no assurance that the liquidity plan will be successfully implemented. Failure to successfully implement the liquidity plan will have a material adverse effect on the Company’s business, results of operations and financial position, and may materially adversely affect its ability to continue as a going concern.

~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

~~(a)~~

~~Basis of presentation and principle of consolidation~~

~~The unaudited condensed interim~~ consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).

The unaudited condensed ~~interim~~consolidated financial information as of ~~September 30, 2017~~March 31, 2020 and for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016 have~~2019 has been prepared without audit, pursuant to the rules and regulations of the ~~Securities and Exchange Commission (the “SEC”)~~SEC and pursuant to Regulation S-X. Certain information and footnote disclosures, which are normally included in annual financial statements prepared in accordance with U.S. GAAP, have been omitted pursuant to those rules and regulations. The unaudited ~~condensed~~ interim financial information should be read in conjunction with the audited financial statements and the notes thereto, included in the Form 10-K for the fiscal year ended December 31, ~~2016~~2019, which was filed with the SEC on ~~April 6, 2017.~~May 29, 2020.

In the opinion of the management, the accompanying unaudited condensed consolidated financial statements reflect all ~~adjustments (which include~~ normal recurring ~~adjustments)~~adjustments, which are necessary ~~to present~~for a fair ~~statement~~presentation of financial results for the interim periods presented. The Company believes that the disclosures are adequate to make the information presented not misleading. The accompanying unaudited condensed consolidated financial statements have been prepared using the same accounting policies as used in the preparation of the Company’s ~~unaudited condensed~~consolidated financial ~~position as of September 30, 2017, its unaudited condensed~~statements for the year ended December 31, 2019. The results of operations for the three ~~and nine~~ months ended ~~September 30~~March 31, 2020 and ~~2016, and its unaudited condensed cash flows for the nine months ended September 30, 2017 and 2016, as applicable, have been made. The unaudited interim results of operations~~2019 are not necessarily indicative of the ~~operating~~ results for the full ~~fiscal year or any future periods.~~

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

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~years.

(b)

Consolidation of variable interest entities

As of March 31, 2020 and December 31, 2019, the Company’s business was primarily conducted through its two VIEs, Beijing Tianxing and Huamucheng. Beijing Tianxing is engaged in used luxurious car leasing business and Huamucheng is engaged in commodity trading and supply chain management business.

The following financial statement balances reflect the financial positions of Beijing Tianxing and Huamucheng, which were included in the consolidated balance sheets as of March 31, 2020 and December 31, 2019, respectively:

	As of March 31, 2020						As of December 31, 2019
	Beijing Tianxing		Huamucheng		Total		Beijing Tianxing		Huamucheng		Total
	(unaudited)		(unaudited)		(unaudited)
Cash	$	5,780	$	2,184	$	7,964	$	94,380	$	1,730,793	$	1,825,173
Loans receivable from third parties		1,374,581		738,829		2,113,410		1,364,125		-		1,364,125
Due from TD and Hao Limo*		990,195		-		990,195		966,882		-		966,882
Due from related parties		292,828		4,360,949		4,653,777		470,154		2,840,729		3,310,883
Other current assets		148,404		28,330		176,734		164,922		2,848		167,770
Investment in equity investees		553,154		-		553,154		562,807		-		562,807
Leasing business assets, net		2,306,133		-		2,306,133		2,426,109		-		2,426,109
Other noncurrent assets		43,162		375,363		418,525		18,186		-		18,186
Total Assets	$	5,714,237	$	5,505,654	$	11,219,891	$	6,067,565	$	4,574,370	$	10,641,935

LIABILITIES
Advances from customers	$	14,987	$	-	$	14,987	$	15,249	$	-	$	15,249
Other current liabilities		317,481		496,252		813,733		218,688		207,834		426,522
Third parties loans		2,045,250		141,052		2,186,302		2,080,941		315,729		2,396,670
Due to related parties		234,329		1,062,965		1,297,294		197,733		166,332		364,065
Due to TD and Hao Limo **		5,120,488		2,036,116		7,156,604		5,197,531		2,577,356		7,774,887
Total Liabilities	$	7,732,535	$	3,736,385	$	11,468,920	$	7,710,142	$	3,267,251	$	10,977,393

Receivable due from TD and Hao Limo is eliminated upon consolidation.

Payable due to TD and Hao Limo is eliminated upon consolidation.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(b)

Consolidation of variable interest entities (continued)

~~(b)~~

~~Interest receivable~~

~~Interest on loans receivable is accrued~~The following financial statement amounts reflect the financial performances and ~~credited to income as earned. The Company determines a loan past due status by the number~~cash flows of days that have elapsed since a borrower has failed to make a contractual loan payment. Accrual of interest is generally discontinued when either (i) reasonable doubt exists as to the full, timely collection of interest or principal or (ii) when a loan becomes past due by more than 90 days. Additionally, any previously accrued but uncollected interest is reversed. Subsequent recognition of income occurs only to the extent payment is received, subject to management’s assessment of the collectability of the remaining interestBeijing Tianxing and principal. Loans are generally restored to an accrual status when it is no longer delinquent and collectability of interest and principal is no longer in doubt and past due interest is recognized at that time.

~~The interest reversed due to the above reason was US$2,604,172 and US$2,604,172 as of September 30, 2017 and December 31, 2016, respectively.~~

~~(c)~~

~~Reclassifications~~

~~Certain items~~Huamucheng, which were included in the ~~financial statements of comparative period have been reclassified to conform to the~~consolidated financial statements for the ~~current period.~~three months ended March 31, 2020 and 2019, respectively:

	For the Three Months Ended March 31, 2020									For the Three Months Ended March 31, 2019
	Beijing Tianxing			Huamucheng			Total			Beijing Tianxing			Huamucheng		Total
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)		(unaudited)
Revenue	$	14,051		$	1,469,009		$	1,483,060		$	399,999		$	-	$	399,999
Cost of revenue	$	(99,314	)	$	(1,055,860	)	$	(1,155,174	)	$	(237,651	)	$	-	$	(237,651	)
Operating expenses	$	(70,613	)	$	(264,900	)	$	(335,513	)	$	(702,041	)	$	-	$	(702,041	)
Net (loss) income	$	(213,444	)	$	143,930		$	(69,514	)	$	(529,230	)	$	-	$	(529,230	)

	For the Three Months Ended March 31, 2020									For the Three Months Ended March 31, 2019
	Beijing Tianxing			Huamucheng			Total			Beijing Tianxing			Huamucheng		Total
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)		(unaudited)
Net Cash Used in Operating Activities	$	(94,559	)	$	(295,142	)	$	(389,701	)	$	(342,335	)	$	-	$	(342,335	)
Net Cash Used in by Investing Activities		(34,377	)		(2,343,539	)		(2,377,916	)		(999,481	)		-		(999,481	)
Net Cash Provided by Financing Activities		40,607			913,427			954,034			592,724			-		592,724
Effect of Exchange Rate Changes on Cash		(271	)		(3,355	)		(3,627	)		20,390			-		20,390
Net Decrease in Cash		(88,600	)		(1,728,609	)		(1,817,209	)		(728,702	)		-		(728,702	)
Cash at Beginning of Period		94,380			1,730,793			1,825,173			991,385			-		991,385
Cash at End of Period	$	5,780		$	2,184		$	7,964		$	262,683		$	-	$	262,683

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

~~(d)~~

(c)

Foreign currency translation

The reporting currency of the Company is United States Dollars (“US$”), which is also the Company’s functional currency. HC High BVI and HC High HK maintain their book and records in US$, which is also their functional currency. The Company’s PRC subsidiaries and VIEs maintain their books and records in its local currency, the Renminbi Yuan (“RMB”), which is their functional currencies as being the primary currency of the economic environment in which these entities operate.

For financial reporting purposes, the financial statements of the ~~Company~~PRC subsidiaries and VIEs prepared using RMB, are translated into the Company’s reporting currency, ~~United States Dollars,~~US$, at the exchange rates quoted by www.oanda.com. Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and shareholders’ equity is translated at historical exchange ~~rates.~~rates, except for the change in accumulated deficit during the year which is the result of the income statement translation process. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive ~~income~~loss in ~~shareholders’~~stockholders’ equity. Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective periods:

September 30,
2017 December 31,
2016
Balance sheet items, except for equity accounts 6.6549 6.9448

	March 31, 2020		December 31, 2019

Balance sheet items, except for equity accounts		7.0896		6.9680

For the nine months ended
September 30,
2017 2016
Items in the statements of operations and comprehensive loss, and statements of cash flows 6.8065 6.5802

	For the Three Months Ended March 31,
	2020		2019

Items in the statements of operations, comprehensive loss and statements of cash flows		6.9814		6.7485

Transactions denominated in currencies other than the functional currency are translated into prevailing functional currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange differences are included in the ~~condensed~~ consolidated statements of comprehensive loss.

72.

~~Financial guarantee service~~Leasing business asset, net, represents the automobiles that are underlying our automotive lease contracts ~~provides guarantee which protects~~and is reported at cost, less accumulated depreciation and net of impairment charges and origination fees or costs. Depreciation of vehicles is recorded on a straight-line basis to an estimated residual value over the ~~holder~~useful life of ~~a debt obligation against default. Pursuant to such guarantee,~~nine years. We periodically evaluate our depreciation rate for leased vehicles based on expected residual values and adjust depreciation expense over the ~~Company makes payments~~remaining life of the lease if ~~the obligor responsible for making payments fails to do so as scheduled.~~deemed necessary.

~~The contract amounts reflect the extent of involvement the Company has~~We have significant investments in the ~~guarantee transaction and also~~residual values of the assets in our operating lease portfolio. The residual values represent an estimate of the ~~Company’s maximum exposure to credit loss in its guarantee business.~~

~~The Company is a party to financial instruments with off-balance-sheet risk in~~values of the ~~normal course~~assets at the end of ~~business to meet~~ the ~~financing needs of its customers. Financial instruments representing credit risk are as follows:~~

A provision for possible loss to be absorbed by the Company for the financial guarantee it provides is recorded as an accrued liability when the guarantees are made and recorded as “Accrual for financial guarantee services”lease contracts. At contract inception, we determine pricing based on the ~~condensed consolidated balance sheets.~~projected residual value of the lease vehicle. This ~~liability represents probable losses~~evaluation is primarily based on a proprietary model, which includes variables such as age, expected mileage, seasonality, segment factors, vehicle type, economic indicators, production cycle, automotive manufacturer incentives, and shifts in used vehicle supply. This internally-generated data is ~~increased or decreased by accruing a “(Provision)/ Reversal~~compared against third-party, independent data for reasonableness. Realization of ~~provision for financial guarantee services” against~~ the ~~income of commissions and fees~~residual values is dependent on ~~guarantee services.~~

~~This is done throughout~~our future ability to market the vehicles under the prevailing market conditions. Over the life of the ~~guarantee, as~~lease, we evaluate the adequacy of our estimate of the residual value and make adjustments to the depreciation rates to the extent the expected value of the vehicle at lease termination changes. In addition to estimating the residual value at lease termination, we also evaluate the current value of the leasing business asset and test for impairment to the extent necessary when ~~additional relevant information becomes available. The methodology used~~there is an indication of impairment based on market considerations and portfolio characteristics. Impairment is determined to estimate the liability for possible guarantee loss considers the guarantee contract amount and a variety of factors, which include, depending on the counterparty, latest financial position and performanceexist if fair value of the ~~borrowers, actual defaults, estimated future defaults, historical loss experience, estimated~~leased asset is less than carrying value and it is determined that the net carrying value is not recoverable. The net carrying value of ~~collaterals or guarantees~~a leased asset is not recoverable if it exceeds the ~~customers or third parties offered,~~sum of the undiscounted expected future cash flows expected to result from the lease payments and ~~other economic conditions such~~the estimated residual value upon eventual disposition. If our leasing business assets are considered to be impaired, the impairment is measured as the ~~economy trend~~amount by which the carrying amount of the ~~area and~~assets exceeds the ~~country. The estimates are based upon currently available information.~~

~~Based~~fair value as estimated by discounted cash flows. We recognize rental income on the past experience and expected customer default status of financial guarantee services, the Company estimates the probable loss for immature financial guarantee services to be approximately 62% and 55% of contract amount as of September 30, 2017 and December 31, 2016, respectively, for possible credit risk of its guarantees. In addition, the Company accrued specific provisions for repayment on behalf of guarantee customers who defaulted on their loans. The Company reviews the provision on a quarterly basis. The allowance are detailed in following table:

The Company recorded a provision of US$1,142,807 and US$599,808 for the three months ended September 30, 2017 and 2016, respectively, and recorded a provision of US$830,140 and reversed a provision of US$385,352 for the nine months ended September 30, 2017 and 2016, respectively. As the Company collected from guarantee customers for payments on behalf of in the amount of US$44,075 and US$1,825,730, for the nine month ended September 30, 2017 and 2016, respectively. Among theour operating leases when collection ~~US$44,075 and US$1,825,730 were accrued of 100% allowance as of pervious year end.~~

As of September 30, 2017 and December 31, 2016, the management charged off specific provision for three and two customers in the amount of US$164,220 and US$142,966, considering remote collectability from the customers.

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~is reasonably assured.

Income from operating lease represents lease origination fees and rental fee, netting off lease origination costs. In accordance with ASC 842, Leases, the Company recognized the income from operating lease on a straight-line basis over the scheduled lease term.

~~Non-interest expenses~~The Company generates income or revenue from the following source (1) income from operating lease of luxury cars, which is accounted for in accordance with ASC 842, Leases, the Company recognized the income from operating lease on a straight-line basis over the scheduled lease term; (2) Revenue associated with commodity trading and revenue associated with supply chain management services are accounted for in accordance with ASC 606.

On January 1, 2019, the Company adopted ASC Topic 606 Revenue from Contracts with Customers (“ASC 606”) using the modified retrospective approach. 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. This new guidance provides a five-step analysis in determining when and how revenue is recognized. Under the new guidance, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the new guidance requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company has assessed the impact of the new guidance by reviewing its 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, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of Topic 606 and therefore there was no material changes to the Company’s consolidated financial statements upon adoption of ASC 606.

In December 2019, the Company started its commodity trading business through its VIE Huamucheng. The commodity trading business primarily ~~consist~~involves purchasing non-ferrous metal product, including aluminium ingots, copper, silver, and gold from upstream metal and mineral suppliers and then selling to downstream customers. The Company makes advance payments to upstream suppliers to purchase the metal products, requests suppliers to ship products to designated warehouse. Upon obtaining purchase orders and receipt of ~~salary~~full advance payments from downstream customers, the Company instructs warehouse agent to transfer ownership of products to customers. The transaction is normally completed within a short period of time, ranging from a few days to a month.

The Company’s contracts with customers for metal commodity trading are fixed-price contracts. The Company does not grant customers with incentives or return rights, and ~~benefits~~therefore, there is no variable considerations derived from the contracts. The Company acts as the principal because the Company is responsible for ~~employees, traveling cost, entertainment expenses, depreciation~~fulfilling the promise to provide the specified metal products to customers, is subject to inventory risk before the product ownership and risk are transferred and has the discretion in establishing prices. As a result, revenue is recognized on a gross basis. The Company recognizes revenue when the product ownership is transferred to its customers.

For the three months ended March 31, 2020, the Company sold non-ferrous metal products to two customers and generated revenue of ~~equipment, office rental expenses, professional~~$1,053,632.

In connection with the Company’s commodity sales, in order to help customers to obtain sufficient funds to purchase various metal products and also help upstream metal and mineral suppliers to sell their metal products, the Company launched its supply chain management service business in December 2019, which primarily consisted of loan recommendation service fees and distribution service fees. For the three months ended March 31, 2020, the Company provided loan recommendation services to customers.

The Company recommends customers who have financing need for commodity trading to various financial institutions and assist these customers to obtain loans from the financial institutions. The Company’s services include conducting customer screening and credit check, matching customer with right financial institution and assisting in customer’s applications and related paperwork etc. The Company receives a referral fee ~~office supplies, etc.~~from the customers if funding is secured. Such revenue is recognized at the point when referral services are performed and the related funds are drawdown by customer. For the three months ended March 31, 2020, the Company provided loan recommendation services to six customers and earned revenue of $415,377 from loan recommendation services.

The Company accounts for income taxes in accordance with the U.S. GAAP for income taxes. Under the asset and liability method as required by this accounting standard, the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes.

The charge for taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis. Deferred tax assets are recognized to the extent that it is probable that taxable income to be utilized with prior net operating loss carried forward. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income ~~tax expenses~~taxes are provided for in accordance with the laws of the relevant taxing authorities. As part of the process of preparing financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. The Company accounts for income taxes using the liability approach. Under this method, deferred income taxes are recognized for tax consequences in future years of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates applicable for the differences that are expected to affect taxable income.

~~Comprehensive loss includes net loss and foreign currency adjustments. Comprehensive loss is reported in the statements of operations and comprehensive loss.~~

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

~~(i)~~

~~Share-based awards~~

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

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

~~(j)~~

~~Operating leases~~

~~The Company leases its principal office under a lease agreement that qualifies as an operating lease. The Company records the rental under the lease agreement in the operating expense when incurred.~~

~~(k)~~

~~Commitments and contingencies~~

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations and tax matters. In accordance with ASC No. 450 Sub topic 20, “Loss Contingencies”, the Company records accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

4.2.

~~VARIABLE INTEREST ENTITIES AND OTHER CONSOLIDATION MATTERS~~

~~As of September 30, 2017, the Company had only one VIE.~~

The following financial statement amounts and balances of the VIE were included in the unaudited condensed interim consolidated financial statements as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017, 2017 and 2016:

September 30,
2017
(Unaudited) December 31,
2016
Total assets $ 4,332,304 $ 7,968,077
Total liabilities $ 7,725,585 $ 8,012,892

For the three months
ended
September 30, For the nine months
ended
September 30,
2017
(Unaudited) 2016
(Unaudited) 2017
(Unaudited) 2016
(Unaudited)
Revenue $ 120,030 $ 672,646 $ 239,202 $ 1,151,308
Net (loss)/income $ (641,053 ) $ 2,807 $ (3,271,977 ) $ 910,203

~~RISKS~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

~~(a)~~(g)

Income taxes (continued)

An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Company did not have unrecognized uncertain tax positions or any unrecognized liabilities, interest or penalties associated with unrecognized tax benefit as of March 31, 2020 and December 31, 2019. As of March 31, 2020, all of the Company’s income tax returns for the tax years ended December 31, 2015 through December 31, 2019 remain open for statutory examination by relevant tax authorities.

(h)

Risks and uncertainties

Credit risk

~~Credit~~Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents. The maximum exposure of such assets to credit risk is ~~one~~their carrying amount as at the balance sheet dates. As of March 31, 2020, approximately $17,187 was deposited with a bank in the ~~most significant risks for the Company’s business. Credit risk exposures arise principally in lending activities, finance lease and financial guarantee activities~~United States which ~~is an off-balance sheet financial instrument.~~

~~Credit risk is controlled~~was insured by the ~~application~~government up to $250,000. As of ~~credit approvals, limits~~March 31, 2020 and ~~monitoring procedures. The Company manages~~December 31, 2019, approximately $9,914 and $2,399,300, respectively, were primarily deposited in financial institutions located in Mainland China, which were uninsured by the government authority. To limit exposure to credit risk ~~through in-house research and analysis of the Chinese economy and the underlying obligors and transaction structures. To minimize credit risk,~~relating to deposits, the Company ~~requires collateral~~primarily place cash deposits with large financial institutions in ~~the form~~China which management believes are of ~~rights to cash, securities or property and equipment.~~high credit quality.

The ~~Company identifies credit risk collectively based on industry, geography~~Company’s operations are carried out in Mainland China. Accordingly, the Company’s business, financial condition and ~~customer type. This information is monitored regularly by management.~~

~~1.1 Lending activities~~

~~In measuring the credit risk~~results of ~~lending loans to corporate customers, the Company mainly reflects the “probability of default”~~operations may be influenced by the ~~customer on its contractual obligations~~political, economic and ~~considers~~legal environments in the ~~current financial position~~PRC as well as by the general state of the ~~customer and the exposures to the customer and its likely future development. For individual customers, the Company uses standard approval procedures to manage credit risk for personal loans.~~

PRC’s economy. In addition, the ~~Company calculates~~Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, rates and methods of taxation, and the ~~provision amount as below:~~extraction of mining resources, among other factors.

General Reserve - is based on total loan receivable balance and to be used to cover unidentified probable loan loss. According to management assessment, the General Reserve is required to be no less than 1% of total loan receivable balance.

Special Reserve - is fund set aside covering losses due to risks related to a particular country, region, industry, company or type of loans. The reserve rate could be decided based on management estimate of loan collectability. The Loan portfolio did not include any loans outside of the PRC.

Specific Reserve – is based on a loan by loan basis covering losses due to risks related to the ability and intension of repayment of each customer. The reserve rate was individually assessed based on management estimate of loan collectability

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

5.	~~RISKS (CONTINUED)~~

~~1.2 Guarantee activities~~

~~The off-balance sheet commitments arising from guarantee activities carry similar credit risk to loans and the Company takes a similar approach on risk management.~~

~~Off-balance sheet commitments with credit exposures are also assessed and categorized with reference to the Guideline and include additional amounts on a specific basis.~~

(b)

Liquidity risk

The Company is also exposed to liquidity risk which is risk that it is unable to provide sufficient capital resources and liquidity to meet its commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures. When necessary, the Company will turn to other financial institutions and the owners to obtain short-term funding to meet the liquidity shortage.

(c)

Foreign currency risk

~~A majority~~Substantially all of the Company’s operating activities and ~~a significant portion of~~ the Company’s major assets and liabilities are denominated in RMB, except for the cash deposit of approximately $17,187 which was in U.S. dollars as of March 31, 2020, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the Peoples’ Bank of China (“PBOC”) or other authorized financial institutions at exchange rates quoted by PBOC. Approval of foreign currency payments by the PBOC or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices and signed contracts.

The value of RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. Where there is a significant change in value of RMB, the gains and losses resulting from translation of financial statements of a foreign subsidiary will be significant affected.

(d)

VIE risk

It is possible that the Company’s VIE agreements with Beijing Tianxing, and Huamucheng would not be enforceable in China if PRC government authorities or courts were to find that such contracts contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event that the Company were unable to enforce these contractual arrangements, the Company would not be able to exert effective control over the VIEs. Consequently, the VIEs’ results of operations, assets and liabilities would not be included in the Company’s consolidated financial statements. If such were the case, the Company’s cash flows, financial position, and operating performance would be materially adversely affected.

LOANS RECEIVABLE FROM THIRD PARTIES

Accounts receivable, net consist of the following:

	March 31, 2020		December 31, 2019

Loans receivable from third parties	$	3,785,167	$	2,005,927
Less: loan receivable from third parties, current		3,735,799		1,955,697
Loan receivable from a third party, noncurrent	$	49,368	$	50,230

During the three months ended March 31, 2020 and 2019, the Company entered into loan agreements with three and two third parties, respectively, and advanced an aggregate of $1,831,708 and $592,724, respectively, to these third parties as interest-bearing loans. The interest rate ranges between 9% and 16% per annum. As of March 31, 2020, the balances of loan principal and interest payment were due in September 2020 through August 2021. The Company classified loan receivables due before December 31, 2020 as current assets, and those after December 31, 2020 as noncurrent assets.

Management periodically assesses the collectability of these third-party loans receivable. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. As of March 31, 2020 and December 31, 2019, there was no allowance recorded as the Company considers all of the loans receivable fully collectible. In April 2020, the Company terminated certain third-party loan receivable contracts and collected approximately $1.0 million loans receivable from these third-parties.

Interest income of $85,275 and $12,429 was accrued for the three months ended March 31, 2020 and 2019. As of March 31, 2020 and December 31, 2019, the Company recorded an interest receivable of $216,271 and $133,742 as reflected under “other current assets” in the consolidated balance sheets.

~~(d)~~4.

~~Concentration risk~~INVESTMENTS IN EQUITY INVESTEES

As of ~~September 30, 2017 and December~~March 31, ~~2016,~~2020, the ~~Company held cash and cash equivalent~~Company’s investments in equity investees were comprised of ~~US$3,030,468 and US$768,501, respectively, that is uninsured by~~ the ~~government authority.~~following:

~~To limit exposure to credit risk relating to deposits, the Company primarily places cash deposits only with large financial institutions in the PRC with acceptable credit ratings.~~

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC as well as by the general state of the PRC’s economy. The business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

~~No customer accounted for more than 10% of total loan balance as of September 30, 2017 and December 31, 2016.~~

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

	Investment			% of ownership			Investment dates

Chengdu Jianluo Technology Co., Ltd. (“Chengdu Jianluo”) (a)	$	282,103			40	%	June 28, 2019
Shanghai Huxin Technology Co., Ltd. (“Shanghai Huxin”) (a)		282,103			40	%	July 4, 2019
Hangzhou Yihe Network Technology Co., Ltd. (“Hangzhou Yihe”) (b)		410,000			20	%	December 17, 2019
		974,206
Less: Share of results of equity investees		(11,052	)
	$	963,154

(a)

~~LOANS RECEIVABLE, NET~~On June 28, 2019 and July 4, 2019, the Company made investments of $282,103 (RMB 2,000,000) and $282,103 (RMB 2,000,000), for 40% of the ownership interest in each of these two investees, respectively. The purpose of such investment is to establish a cooperative business partnership with these investees and utilize their marketing strength and customer network to bring in more customers for the Company’s car leasing services in Chengdu and Shanghai markets.

~~The interest rates on loan issued ranged between 9.6%~ 19.44% and 9.6%~ 19.44% % for the nine months ended September 30, 2017 and 2016, respectively.~~

~~6.1 Loans receivable consist of the following:~~

September 30,
2017
(Unaudited) December 31,
2016

Business loans $ 36,783,453 $ 37,786,657
Personal loans 21,483,267 20,736,324
Total Loans receivable 58,266,720 58,522,981
Allowance for loan losses
Collectively assessed (19,835 ) (50,481,240 )
Individually assessed (54,801,352 ) (1,226,822 )
Allowance for loan losses (54,821,187 ) (51,708,062 )
Loans receivable, net $ 3,445,533 $ 6,814,919

The Company originates loans to customers located primarily in Wujiang City, Jiangsu Province. This geographic concentration of credit exposes the Company to a higher degree of risk associated with this economic region.

All loans are short-term loans that the Company has made to either business or individual customers. As of September 30, 2017 and December 31, 2016, the Company had 67 and 70 business loan customers, and 40 and 41 personal loan customers, respectively. Most loans are either guaranteed by a third party whose financial strength is assessed by the Company to be sufficient or secured by collateral. Allowance on loan losses are estimated loan by loan on a quarterly basis based on an assessment of specific evidence indicating doubtful collection, historical experience, loan balance aging and prevailing economic conditions.

(b)

October 14, 2019, the Company entered into an agreement with Hangzhou Yihe and agreed to issue 1,253,814 shares of the Company’s common stock to acquire 20% equity interest in Hangzhou Yihe. Hangzhou Yihe was engaged in car leasing business, and the acquisition was for the purpose of producing synergy between the Company and Hangzhou Yihe so as to promote car leasing business in Zhejiang province.

For the three months ended ~~September 30, 2017~~March 31, 2020, the three equity investees were closed as affected by COVID-19. As a result, the Company had no share of results of equity investees for the period. As of March 31, 2020 and ~~2016, a reversal~~December 31, 2019, the balance of ~~provision~~share of ~~US$452,786~~results of equity investees was $11,052 and ~~US$226,694 were charged~~$11,245, respectively. Because these equity investees gradually resumed work since April, the Company expected the closure was temporary, and the decline in fair value below the carrying value is not other-than-temporary. As of March 31, 2020, the Company did not provide impairment against the investments in equity investees.

LEASING BUSINESS ASSETS, NET

As of March 31, 2020 and December 31, 2019, the Company had investments in eleven and eleven used luxury cars, respectively.

As of March 31, 2020 and December 31, 2019, the Company, by reference to the ~~condensed consolidated statements~~market price, determined the fair value of ~~operation,~~nil and four used luxurious car were below the original carrying amount of the leased asset and had accumulated impairment of $316,683 and $322,210, respectively. For the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, a provision~~2019, the Company recorded impairment of ~~US$2,420,698~~$nil and ~~a reversal~~$96,318, respectively, for these leasing business assets.

As of ~~provision~~the March 31, 2020 and December 31, 2019, the balance of ~~US$133,177 were charged to~~ the ~~condensed consolidated statements~~used luxurious cars is comprised of ~~operation, respectively. Write-offs of $1,579,009 against allowances have occurred for~~the following:

	March 31, 2020			December 31, 2019

Used luxury cars	$	2,747,194		$	2,795,136
Less: accumulated depreciation		(441,061	)		(369,027	)
	$	2,306,133		$	2,426,109

For the three ~~and nine~~ months ended ~~September 30, 2017. No write-offs against allowances have occurred for~~March 31, 2020 and 2019, the ~~three~~Company charged depreciation expenses of $79,578 and ~~nine months ended September 30, 2016,~~$46,858 on used luxurious cars, respectively.

~~The following table presents nonaccrual loans with aging over 90 days by classes~~As of ~~loan portfolio as of September 30, 2017~~March 31, 2020 and December 31, ~~2016, respectively:~~

September 30,
2017
(Unaudited) December 31,
2016

Business loans $ 34,799,952 $ 35,885,947
Personal loans 21,483,267 20,693,126
$ 56,283,219 $ 56,579,073

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

6.	~~LOANS RECEIVABLE, NET (CONTINUED)~~

~~The following table represents the aging~~2019, eight used luxurious cars with an aggregated carrying amount of ~~loans as of September 30, 2017 by type of loan:~~

1-89 Days
Past Due 90 - 179 Days Past Due 180 - 365 Days Past Due Over 1 year Past Due Total Past Due Current Total Loans

Business loans $ - $ - $ 11,437,290 $ 23,362,662 $ 34,799,952 $ 1,983,501 $ 36,783,453
Personal loans - - 6,544,051 14,939,216 21,483,267 - 21,483,267
$ - $ - $ 17,981,341 $ 38,301,878 $ 56,283,219 $ 1,983,501 $ 58,266,720

~~The following table represents the aging of loans as of December 31, 2016 by type of loan:~~

1-89 Days
Past Due 90 - 179 Days Past Due 180 - 365 Days Past Due Over 1 year Past Due Total Past Due Current Total Loans

Business loans $ - $ 10,992,518 $ 5,585,728 $ 19,307,701 $ 35,885,947 $ 1,900,710 $ 37,786,657
Personal loans 43,198 6,234,908 428,956 14,029,262 20,736,324 - 20,736,324
$ 43,198 $ 17,227,426 $ 6,014,684 $ 33,336,963 $ 56,622,271 $ 1,900,710 $ 58,522,981

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

6.	~~LOANS RECEIVABLE, NET (CONTINUED)~~

~~6.2 Analysis of loans by credit quality indicator~~

~~The following table summarizes the Company’s loan portfolio by credit quality indicator as of September 30, 2017 and December 31, 2016, respectively:~~

Five Categories September 30, 2017
(Unaudited) % December 31, 2016 %

Pass $ 1,983,501 3.4 % $ 1,900,710 3.2 %
Special mention - - - -
Substandard - - - -
Doubtful 2,750,359 4.7 % 9,866,430 16.9 %
Loss 53,532,860 91.9 % 46,755,841 79.9 %
Total $ 58,266,720 100 % $ 58,522,981 100 %

~~6.3 Analysis of loans by collateral~~

~~The following table summarizes the Company’s loan portfolio by collateral as of September 30, 2017:~~

September 30, 2017
(Unaudited)
Business Loans Personal Loans Total
Guarantee backed loans $ 34,682,867 $ 20,650,801 $ 55,333,668
Collateral backed loans 2,100,586 832,466 2,933,052
$ 36,783,453 $ 21,483,267 $ 58,266,720

~~The following table summarizes the Company’s loan portfolio by collateral as of December 31, 2016:~~

December 31, 2016
Business Loans Personal Loans Total
Guarantee backed loans $ 35,557,758 $ 19,904,043 $ 55,461,801
Collateral backed loans 2,228,899 832,281 3,061,180
$ 37,786,657 $ 20,736,324 $ 58,522,981

~~Guarantee Backed Loans~~

~~A guaranteed loan is a loan guaranteed by a~~$1,883,879 were pledged for borrowings from third ~~party who is usually a corporation or high net worth individual. As of September 30, 2017 and December 31, 2016, guaranteed loans make up 95.0% and 94.8% of our direct loan portfolio, respectively.~~

~~Collateral Backed Loans~~

A collateral backed loan is a loan in which the borrower puts up an asset under their ownership, possession or control, as collateral for the loan. An asset usually is land use rights, inventory, equipment or buildings. The loan is secured against the collateral and we do not take physical possession of the collateral at the time the loan is made. We will verify ownership of the collateral and then register the collateral with the appropriate government agencies to complete the secured transaction. In the event that the borrower defaults, we can then take possession of the collateral asset and sell it to recover the outstanding balance owed. If the sale proceed of the collateral asset is not sufficient to pay off the debt, we will file a lawsuit against the borrower and seek payment for the remaining balance.

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~parties (Note 6).

7.6.

~~ALLOWANCE FOR LOAN LOSSES~~THIRD PARTIES LOANS PAYABLE

	March 31, 2020		December 31, 2019

Third parties loans payable	$	2,369,669	$	2,367,967

The ~~following tables present~~borrowings are due through December 2020. The purpose of such borrowings was to use the ~~activity in~~funds to purchase used luxurious cars. The interest rate charged on the ~~allowance for loan losses~~borrowings ranged between 7% and ~~related recorded investment in loans receivable by classes of the loans individually and collectively evaluated for impairment as of and for~~11.5%. For the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016:~~2019, the Company accrued interest expenses of $98,115 and $6,869 on the borrowings, respectively.

Business Loans
(Unaudited) Personal Loans
(Unaudited) Total
(Unaudited)
For the three months ended September 30, 2017
Beginning balance $ 35,315,516 $ 20,584,442 $ 55,899,958
Charged off (1,579,009 ) - (1,579,009 )
Recoveries (367,925 ) (113,862 ) (481,787 )
Provisions - - -
Foreign exchange loss 605,711 376,314 982,025
Ending balance 33,974,293 20,846,894 54,821,187
Ending balance: individually evaluated for impairment 33,954,458 20,846,894 54,801,352
Ending balance: collectively evaluated for impairment $ 19,835 $ - $ 19,835

Business Loans
(Unaudited) Personal Loans
(Unaudited) Total
(Unaudited)
For the three months ended September 30, 2016
Beginning balance $ 34,326,727 $ 20,161,476 $ 54,488,203
Recoveries (50,612 ) (121,435 ) (172,047 )
Provisions (360 ) - (360 )
Foreign exchange gain (133,237 ) (78,256 ) (211,493 )
Ending balance 34,142,518 19,961,785 54,104,303
Ending balance: individually evaluated for impairment - - -
Ending balance: collectively evaluated for impairment $ 34,142,518 $ 19,961,785 $ 54,104,303

~~The following tables present the activity in the allowance~~As of March 31, 2020 and December 31, 2019, eight used luxurious cars with an aggregated carrying amount of $1,883,879 were pledged for loan losses and related recorded investment in loans receivable by classes of the loans individually and collectively evaluated for impairment as of and for the nine months ended September 30, 2017 and 2016:

Business Loans
(Unaudited) Personal Loans
(Unaudited) Total
(Unaudited)
For the nine months ended September 30, 2017
Beginning balance $ 32,356,953 $ 19,351,109 $ 51,708,062
Charged off (1,579,009 ) - (1,579,009 )
Recoveries (634,227 ) (149,122 ) (783,349 )
Provisions 2,416,558 787,479 3,204,037
Foreign exchange loss 1,414,018 857,428 2,271,446
Ending balance 33,974,293 20,846,894 54,821,187
Ending balance: individually evaluated for impairment 33,954,458 20,846,894 54,801,352
Ending balance: collectively evaluated for impairment $ 19,835 $ - $ 19,835

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~borrowings from third parties (see Note 5).

~~ALLOWANCE FOR LOAN LOSSES (CONTINUED)~~

Business Loans
(Unaudited) Personal Loans
(Unaudited) Total
(Unaudited)
For the nine months ended September 30, 2016
Beginning balance $ 35,083,738 $ 20,511,915 $ 55,595,653
Recoveries (127,977 ) (1,155 ) (129,132 )
Provisions 125,729 - 125,729
Foreign exchange gain (938,972 ) (548,975 ) (1,487,947 )
Ending balance 34,142,518 19,961,785 54,104,303
Ending balance: individually evaluated for impairment - - -
Ending balance: collectively evaluated for impairment $ 34,142,518 $ 19,961,785 $ 54,104,303

The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard, doubtful and loss within the Company’s internal risk rating system as of September 30, 2017:

Pass
(Unaudited) Special Mention
(Unaudited) Substandard
(Unaudited) Doubtful
(Unaudited) Loss
(Unaudited) Total
(Unaudited)

Business loans $ 1,983,501 $ - $ - $ 1,669,953 $ 33,129,999 $ 36,783,453
Personal loans - - - 1,080,406 20,402,861 21,483,267
$ 1,983,501 $ - $ - $ 2,750,359 $ 53,532,860 $ 58,266,720

Pass
(Unaudited) Special Mention
(Unaudited) Substandard
(Unaudited) Doubtful
(Unaudited) Loss
(Unaudited) Total
(Unaudited)

Business loans $ 1,900,710 $ - $ - $ 7,096,000 $ 28,789,947 $ 37,786,657
Personal loans - - - 2,770,430 17,965,894 20,736,324
$ 1,900,710 $ - $ - $ 9,866,430 $ 46,755,841 $ 58,522,981

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~GUARANTEE PAID ON BEHALF OF GUARANTEE CUSTOMERS, NET~~

September 30,
2017
(Unaudited) December 31,
2016
Guarantee paid on behalf of guarantee service customers $ 12,089,778 $ 11,642,755
Allowance for repayment on behalf of guarantee service customers losses (12,089,724 ) (11,543,868 )
Guarantee paid on behalf of guarantee service customers, net $ 54 $ 98,887
Guarantee paid on behalf of a related party 204,540 196,000
Allowance for repayment on behalf of a related party losses (102,270 ) (98,000 )
Total $ 102,270 $ 98,000

As of September 30, 2017, 2017 and December 31, 2016, guarantee paid on behalf of guarantee service customers represents payment made by the Company to banks on behalf of thirty-two of its third-party guarantee service customers who defaulted on their loan repayments to the banks. Guarantee paid on behalf of a related party represents payment made by the Company to banks on behalf of one and one of its related party customers. Management performs an evaluation of the adequacy of the allowance. The allowance is based on the Company’s past loan loss history, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors.

~~NET INVESTMENT IN DIRECT FINANCING LEASE~~STOCK SUBSCRIPTION ADVANCE FROM SHAREHOLDERS

On ~~September 25, 2014, PFL~~November 21, 2019, the Company entered into a ~~finance lease~~securities purchase agreement ~~for the leasing of manufacturing equipment~~ with a total lease receivable of US$2.73 million, with a lease term of 2 years. The lease bears an interest rate of 10.36% per annum. As of September 30, 2017, the fiancé lease agreement expired with an outstanding investment in finance lease of $976,724. The Company recorded an allowance of $751,326 on the outstanding investment.

On October 13, 2014, PFL entered into another finance lease agreement for the leasing of manufacturing equipment with a total lease receivable of US$2.88 million, with a lease term of 3 years. The lease bears an interest rate of 11.11% per annum. On October 13, 2017, the fiancé lease agreement expired with an outstanding investment in finance lease of $2,089,706. The Company recorded an allowance of $1,864,309 on the outstanding investment.

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NET INVESTMENT IN DIRECT FINANCING LEASE (CONTINUED)~~

~~Following is a summary of the components of the Company’s net investment in direct financing leases as of September 30, 2017 and December 31, 2016:~~

September 30,
2017
(Unaudited) December 31,
2016

Total minimum lease payments to be received $ 3,365,941 $ 3,599,831
Less: Amounts representing estimated executory costs - -
Minimum lease payments receivable 3,365,941 3,599,831
Less Allowance for uncollectible (2,615,635 ) (2,441,663 )
Net minimum lease payments receivable 750,306 1,158,168
Estimated residual value of leased property -
Less: Unearned income (299,511 ) (287,009 )
Net investment in direct financing lease $ 450,795 $ 871,159

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~10.~~

~~PROPERTY AND EQUIPMENT~~

~~The Company’s property and equipment used~~certain investors, pursuant to conduct day-to-day business are recorded at cost less accumulated depreciation. Depreciation expenses are calculated using straight-line method over the estimated useful life with 5% salvage value below:

~~Property and equipment consist of the following:~~

Useful Life
(years) September 30, 2017
(Unaudited) December 31, 2016
Furniture and fixtures 5 $ 21,715 $ 20,808
Electronic equipment 3 137,033 131,314
Leasehold improvement 3 166,617 159,662
Less: accumulated depreciation (309,638 ) (291,815 )
Property and equipment, net $ 15,727 $ 19,969

Depreciation expense totaled US$1,700 and US$11,053 for the three months ended September 30, 2017 and 2016, respectively. Depreciation expense totaled US$4,999 and US$43,062 for the nine months ended September 30, 2017 and 2016, respectively.

~~11.~~

~~OTHER CURRENT LIABILITIES~~

~~Other current liabilities as of September 30, 2017 and December 31, 2016 consisted of:~~

September 30,
2017
(Unaudited)

December 31,
2016

Accrued payroll $ 40,470 $ 37,575
Accrued office rental expenses 28,550 34,558
Other tax recoverable (43,353 ) (44,007 )
Accrued provision for cash settlement against legal proceedings 245,000 225,000
Other payable 53,513 20,321
$ 324,180 $ 273,447

On November 22, 2016, we filed a stipulation and agreement of settlement (“Stipulation”) with all persons and entities that purchased or otherwise acquired CCCR shares between August 14, 2013 and July 25, 2014 (collectively “Led Defendants”). On June 1, 2017, following a final fairness hearing on May 30, 2017 regarding the proposed settlement, the Court entered a final judgment and order that: (i) dismisses with prejudice the claims asserted in the Securities Class Action against all named defendants in connection with the Securities Class Action, includingwhich the Company ~~and releases any claims that were or could have been asserted that arise from or relate~~agreed to ~~the facts alleged in the Securities Class Action, such that every member~~sell an aggregate of ~~the settlement class will be barred from asserting such claims in the future; and (ii) approves the payment of $220,000 in cash and the issuance of 950,000~~2,000,000 shares of its common stock, ~~(the “Settlement Shares”) to members~~par value $0.001 per share, at a per share purchase price of ~~the settlement class. In addition,~~$0.80. As of December 31, 2019, the Company ~~would incur a payment~~received the proceeds of ~~$25,000~~$1,600,000 in ~~cash to class administrator.~~

~~The Company accounted for the cash payment aggregating $245,000 as an accrued liability~~advance from these investors and ~~the share settlement of 950,000 shares in~~recorded the amount ~~of US$2,308,500 (at market value of $2.43 per share on June 1, 2017)~~ as ~~an additional paid-in capital. Accordingly~~“stock subscription advance from shareholder”. On February 5, 2020, the Company ~~recorded expenses~~issued 2,000,000 shares of ~~$1,838,500~~Common Stock to the Purchasers, and ~~$690,000 for~~reversed the ~~nine months ended September 30, 2017 and 2016, respectively, under~~amount in the account of ~~“Litigation and settlement cost for the shareholders’ lawsuit”~~“stock subscription advance from shareholder”. ~~The $245,000 cash portion of the settlement has been paid in October subsequently.~~

As of March 31, 2020 and December 31, 2019, the Company had stock subscription advance from shareholder of $nil and $1,600,000, respectively.

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~12.~~8.

~~OTHER OPERATING EXPENSES~~

~~Other operating expenses for the three and nine months ended September 30, 2017 and 2016 consisted of:~~

For the three months ended
September 30, For the nine months ended
September 30,
2017
(Unaudited) 2016
(Unaudited) 2017
(Unaudited) 2016
(Unaudited)
Depreciation and amortization $ 1,700 $ 12,168 $ 4,999 $ 46,455
Travel expenses 14,633 9,647 29,617 13,134
Entertainment expenses 6,148 42 10,623 11,970
Legal and consulting expenses 220,291 1,002,804 380,003 1,642,316
Car expenses 2,878 3,726 11,489 21,541
Bank charges 707 540 2,313 2,256
Audit-related expense 78,458 31,382 175,944 100,955
Other expenses 62,188 25,783 169,827 54,400
Total $ 387,003 $ 1,086,092 $ 784,815 $ 1,893,027

~~13.~~

CAPITAL ~~TRANSACTION~~TRANSACTIONS

Common Stock

~~The~~On January 22, 2020, the Company ~~is authorized~~entered into certain securities purchase agreement with certain investors, pursuant to ~~issue up~~which the Company agreed to ~~100,000,000~~sell an aggregate of 15,000,000 shares of Common ~~Stock.~~

On March 2, 2017, the Company issued 92,875 and 92,875 unrestricted shares to Long Yi, the Company’s Chief Financial Officer and Yang Jie, the Company’s VP of Finance, respectively. The shares were issued at a market value of US$1.04 per share, in the total amount of US$193,180, for the services provided.

On April 20, 2017, the Company issued 500,000 unregistered shares to four individuals, all of whom are citizens of P.R.C, for their services in seeking financial support for the Company. The Company compensates each of the individuals with 125,000 shares of common stock of the Company as incentive. The transaction was at arm’s length. The shares were issued at a market value of US$1.44 per share, in the total amount of US$720,000, for the services provided.

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~13.~~

~~CAPITAL TRANSACTION (CONTINUED)~~

~~On May 11, 2017 and June 21, 2017, the Company closed two private placements to two third party individual investors to issue 60,000 and 625,000 common shares, respectively,~~Stock, at a per share purchase price of ~~US$1.0 and US$0.8, in the total amount~~$0.90. The transaction was consummated on March 23, 2020 by issuance of ~~US$60,000 and US$500,000, respectively. These transactions were at arm’s length.~~15,000,000 shares of Common Stock. The ~~shares shall be authorized for listing on the NASDAQ capital market before closing, and the net~~Company received proceeds of ~~the sale of the shares shall be used by the Company for working capital and general corporate purpose.~~$13,500,000 in April 2020.

Convertible Promissory Notes

On ~~September 29, 2017,~~January 22, 2020, the Company ~~closed two private placements~~also agreed to ~~two individual investors to issue 452,486 and 100,000 common shares, respectively, at a per share price of US$1.81,~~sell unsecured senior convertible promissory notes (“Notes”) in the ~~total~~aggregate principal amount of US$1,000,000. Among the two individuals, one of them is the Vice President of Finance of the Company (Note 16(2)). These transactions were at arm’s length. The net proceeds of the sale of the shares shall be used$30,000,000 accompanied by ~~the Company for working capital and general corporate purpose, payment of the transactional expenses related~~warrants to the acquisition of all the outstanding issued shares of Sorghum Investment Holding Limited (“Sorghum”) from certain shareholders of Sorghum, and payments related to the securities class action and derivative action disclosed in Note 17(3).

During the three months ended September 30, 2017, the Company issued an aggregation of 470,000 unregistered shares to eight professional service providers for legal and consulting services provided to the Company. The common shares were issued as compensations for the services provided to the Company. The transaction was at arm’s length. The fair value of the services provided was in in the total amount of US$1,226,300~~, at a per share price at the market price of the issuance dates.~~

~~As of September 30, 2017, there were 19,030,915~~purchase 20,000,000 shares of Common Stock issuable upon conversion of the Notes at an exercise price of $1.80.On March 23, 2020, the Company issued the Notes and ~~outstanding.~~Warrants to the investors. In April 2020, the Company received the proceeds of $30,000,000 from the issuance of Notes and Warrants.

The Notes have a maturity date of 12 months with an interest rate of 7.5% per annum. Holders have the right to convert all or any part of the Notes into shares of Common Stock at a conversion price of $1.50 per share 30 days after its date of issuance. The Company retains the right to prepay the Note at any time prior to conversion with an amount in cash equal to 107.5% of the principal that the Company elects to prepay.

The Warrants are exercisable immediately upon the date of issuance at the exercise price of $1.80 for cash (the “Warrant Shares”). The Warrants may also be exercised cashless if at any time after the six-month anniversary of the issuance date. There is no effective registration statement registering, or no current prospectus available for the resale of the Warrant Shares, if exercised, The Warrants will expire five years from date of issuance. The Warrants are subject to anti-dilution provisions to reflect stock dividends and splits or other similar transactions. The Warrants contain a mandatory exercise right for the Company to force exercise of the Warrants if the Company’s common stock trades at or above $3.00 for 20 consecutive trading days, provided, among other things, that the shares issuable upon exercise of the are registered or may be sold pursuant to Rule 144 and the daily trading volume exceeds 300,000 shares of Common stock per trading day on each trading day in a period of 20 consecutive trading days prior to the applicable date.

In April 2020, the Holders elected to convert the Notes at a conversion price of $1.50 per share and also exercise the Warrants at an exercise price of $1.80 per share, and paid a cash consideration of $36,000,000 for the exercise of the Warrants by April 15, 2020. As a result, an aggregate of 40,000,000 shares of the Company’s Common Stock were issued on May 18, 2020.

Because the Company did not receive the proceeds until April 2020, the Holders did not have the conversion rights of either convertible notes or warrants until payment were made. Accordingly the Company did not record accounting book on the transaction.

CAPITAL TRANSACIONS (CONTINUED)

Warrants

A summary of warrants activity for the three months ended March 31, 2020 was as follows:

	Number of shares		Weighted average life	Expiration dates

Balance of warrants outstanding as of December 31, 2019		3,033,370	4.38 years
Grant of warrants during the three months ended March 31, 2020		-
Exercise of warrants during the three months ended March 31, 2020		-
Forfeiture of warrants during the three months ended March 31, 2020		-
Balance of warrants outstanding as of March 31, 2020		3,033,370	3.78 years

As of March 31, 2020 and December 31, ~~2016,~~2019, the Company had ~~outstanding~~3,033,370 shares of warrants, among which 273,370 shares of warrants were issued to ~~purchase 1,123,400 shares.~~two individuals in private placements, and 2,760,000 shares of awrrants were issued in two direct offerings closed on May 20, 2019 (“May Offering”) and April 11, 2019 (“April Offering”)

~~During the nine months ended September 30, 2017, the outstanding warrants to purchase 1,123,400 shares expired.~~

~~On September 29, 2017,~~In connection with April Offering, the Company issued warrants to investors to purchase ~~158,370 and 35,000~~a total of 1,680,000 ordinary shares ~~to two investors, respectively, as part~~with a warrant term of ~~the private placements mentioned above.~~five (5) years. The ~~warrant has~~warrants have an exercise price of ~~$2.26~~$2.20 per ~~share~~share. On May 20, 2019, the exercise price was reduced to $1.32, and ~~is exercisable~~ on August 30, 2019 the ~~date~~exercise price was revised to $2.20.

In connection with May Offering, the Company issued warrants to investors to purchase a total of ~~issuance~~1,080,000 ordinary shares with a warrant term of five and ~~expire five years~~a half (5.5) years. The warrants have an exercise price of $1.32 per share.

On August 30, 2019, the Company updated the estimation of fair value of warrants issued on April 11, 2019 as a result of the change in exercise price of the warrants from $1.32 to $2.20. Accordingly the ~~date of issuance. The~~ fair value of the Replacement Warrant decreased from $1,638,000 to $1,357,440.

Both warrants ~~aggregated $186,268,~~are subject to anti-dilution provisions to reflect stock dividends and splits or other similar transactions, but not as a result of future securities offerings at lower prices. The warrants did not meet the definition of liabilities or derivatives, and as such they are classified as an equity.

On April 11, 2019 and May 20, 2019, the Company estimated byfair value of the both warrants at $1,638,000 and $762,480, respectively, using the Black-Scholes valuation ~~model.~~model, which took into consideration the underlying price of ordinary shares, a risk-free interest rate, expected term and expected volatility. As a result, the valuation of the warrant was categorized as Level 3 in accordance with ASC 820, “Fair Value Measurement”.

CAPITAL TRANSACIONS (CONTINUED)

Warrants (continued)

~~As of September 30, 2017, the Company had outstanding warrants to purchase 193,370 shares.~~The key assumption used in estimates are as follows:

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

	April 11,			August 30,			May 20,
	2019			2019			2019
				(Replacement Warrants)
Terms of warrants		60 months			55.3 months			66 months
Exercise price		1.32			2.20			1.32
Risk free rate of interest		2.77	%		2.77	%		2.77	%
Dividend yield		0.00	%		0.00	%		0.00	%
Annualized volatility of underlying stock		55.6	%		63.45	%		57.04	%

~~14.~~9.

LOSS PER ~~COMMON~~ SHARE

The following table sets forth the computation of basic and diluted ~~earnings~~loss per common share for the three ~~and nine~~ months ended ~~September 30, 2017 and 2016,~~March 31, 2020, respectively:

For the Three Months Ended
September 30, For the Nine Months Ended
September 30,
2017
(Unaudited) 2016
(Unaudited) 2017
(Unaudited) 2016
(Unaudited)

Net loss attributable to the common shareholders $ (2,515,292 ) $ (624,445 ) $ (8,530,244 ) $ (1,206,116 )

Basic weighted-average common shares outstanding 18,092,369 15,889,853 17,371,183 14,026,815
Effect of dilutive securities - - - -
Diluted weighted-average common shares outstanding 18,092,369 15,889,853 17,371,183 14,026,815

Loss per share:
Basic $ (0.139 ) $ (0.039 ) $ (0.491 ) $ (0.086 )
Diluted $ (0.139 ) $ (0.039 ) $ (0.491 ) $ (0.086 )

	For the Three Months Ended March 31,
	2020			2019

Net loss attributable to TD Holdings, Inc.’s Stockholders	$	(135,703	)	$	(1,829,826	)
		��
Weighted Average Shares Outstanding-Basic and Diluted		13,673,023			5,169,041
Loss per share - basic and diluted
Net loss per share – basic and diluted	$	(0.01	)	$	(0.35	)

Basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is the same as basic loss per share due to the lack of dilutive items in the Company for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016.~~2019. The number of warrants is ~~omitted~~excluded from the computation as the anti-dilutive effect.

10.

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~15.~~

INCOME TAXES

Effective January 1, 2008, the New Taxation Law of PRC stipulates that ~~domestically owned~~domestic enterprises and foreign invested enterprises (the “FIEs”) are subject to a uniform tax rate of 25%. ~~While~~Under the ~~New Tax Law equalizes the~~PRC tax law, companies are required to make quarterly estimate payments based on 25% tax rate; companies that received preferential tax rates ~~for FIEs and domestically owned enterprises, preferential tax treatment may continue~~are also required to be given to companies in certain encouraged sectors and to entities classified as high-technology companies, regardless of whether these are domestically-owned enterprises or FIEs. In November 2009, the Jiangsu Province Government issued Su Zheng Ban Fa [2009] No. 132 which stipulates that micro-credit companies in Jiangsu Province is subject to preferentialuse a 25% tax rate ~~of 12.5%. As a result, the Company is subject to the preferential~~for their installment tax ~~rate of 12.5% for its loan business for the periods presented.~~payments. The taxation practice implemented by the tax authority governing the Company is that the Company pays enterprise income taxes at rate of 25% on a quarterly basis, and upon annual tax settlement done by the Company and the tax authority in five (5) months after December 31 the tax authority will refund the Company the excess enterprise income taxes it paid beyond the rate of 12.5%. However since 2015, the excess enterprise income taxes paidoverpayment, however, will not be refunded ~~but~~and can only be used to offset ~~the~~ future ~~income~~ tax ~~payable arising from taxable income.~~liabilities.

10.	INCOME TAXES (CONTINUED)

The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. For the three ~~and nine~~ months ended ~~September 30, 2017 and 2016,~~March 31, 2020, the Company had no unrecognized tax benefits. For the nine months ended September 30, 2017, the Company made net tax operating loss from its PRC subsidiaries and its consolidated VIE of US$3,073,360. As of September 30, 2017, the Company has carry-forward tax operating losses from its PRC subsidiaries and its condensed consolidated VIE of US$64,500,641, which will expire from the year ending December 31, 2019Due to ~~2022. The Company recognized deferred income tax assets of US$12,099,165 as of September 30, 2017. However,~~uncertainties surrounding future utilization, the Company estimates there will not be no sufficient ~~net~~future income ~~before income tax from years ending December 31, 2017 to 2022~~ to realize the deferred ~~income~~ tax ~~assets. The~~assets for certain subsidiaries and a VIE. As of March 31, 2020 and December 31, 2019, the Company ~~provided valuation allowance for~~had deferred ~~income~~ tax assets of ~~US$12,099,165~~$3,635,446 and $3,574,333, respectively. The Company maintains a full valuation allowance on its net deferred tax assets as of ~~September 30, 2017. As such, the effective tax rates for the three and nine months ended September 30, 2017 and 2016 are 0% and 0%, respectively.~~March 31, 2020.

The Company does not anticipate any significant increase to its liability for unrecognized tax benefit within the next 12 months. The Company will classify interest and penalties related to income tax matters, if any, in income tax expense.

~~Deferred~~For the three months ended March 31, 2020 and 2019, the Company had current income tax ~~liability arises from government incentive~~expenses of $48,380 generated by a profitable VIE and $nil, respectively, and deferred income tax expenses of $nil and $nil, respectively.

The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the ~~purpose~~tax position for recognition by determining if the weight of ~~covering the Company’s actual loan losses and ruled~~available evidence indicates that it is more likely than not that the ~~income tax~~position will be ~~imposed~~sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the ~~subsidy~~tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. Interest and penalties related to uncertain tax positions are recognized and recorded as necessary in the provision for income taxes. The Company is subject to income taxes in the PRC. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the ~~purpose~~underpayment of taxes is ~~not fulfilled within 5~~due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years ~~after~~under special circumstances, where the ~~Company receives~~underpayment of taxes is more than RMB 100,000. In the ~~subsidy. As~~case of ~~September 30, 2017~~transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. There were no uncertain tax positions as of March 31, 2020 and December 31, ~~2016, subsidy of US$1,715,510 and US$1,353,810 did not fulfill the purpose within due date~~2019 and the ~~related deferred~~Company does not believe that its unrecognized tax ~~liability was transferred to income tax payable. As of September 30, 2017 and December 31, 2016,~~benefits will change over the ~~deferred tax liability amounted to US$81,901 and US$139,947, respectively.~~next twelve months.

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~16.~~11.

RELATED PARTY TRANSACTIONS AND BALANCES

Nature of relationships with related parties

Name		Relationship with the Company
~~Wujiang Chunjia Textile Trading~~ Chengdu Jianluo Technology Co., ~~Ltd (“Chunjia Textile”~~Ltd. (“Chengdu Jianluo”)		An associate of the Company, over which the Company has 40% equity interest and exercises significant influence
Shanghai Huxin Technology Co., Ltd. (“Shanghai Huxin”)		An associate of the Company, over which the Company has 40% equity interest and exercises significant influence
Shenzhen Qianhai Baiyu Supply Chain Co., Ltd. (“Qianhai Baiyu”)		Controlled by Mr. Zhiping Chen, the legal representative of Huamucheng
Guangzhou Chengji Investment Development Co., Ltd. (“Guangzhou Chengji”)		Controlled by ~~Huichun Qin~~Mr. Weicheng Pan, who is an independent director of the Company.
~~Suzhou Rongshengda Investment Holding Co., Ltd.~~Jiaxi Gao		~~Controlled by shareholders~~Chief Executive Office of ~~Wujiang Luxiang~~the Company prior to January 9, 2020
~~Yang Jie~~Guotao Deng		~~Vice President~~Legal representative of ~~Finance~~an entity over which the Company exercised significant influence
~~Huichun Qin~~Tao Sun		~~Non-controlling shareholder and former CEO and chairman~~Senior Management of ~~board~~the Company
Shun Li		Legal representative of ~~directors~~Beijing Tianxing
Lu Zhao		Senior Management of the Company

11.

RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED)

~~Related party transactions~~Balances with related parties

~~During the year ended~~As of March 31, 2020 and December 31, ~~2016,~~2019, the Company made a loan of US$1,945,224 to Suzhou Rongshengda Investment Holding Co., Ltd., a company controlled by shareholders of Wujiang Luxiang. Due to the short-term borrowing, the Company did not charge any interest or fees. By September 30, 2017, the balance was collected.

On September 29, 2017, the Company closed a private placements to Mr. Yang Jie to issue 452,486 common shares, respectively, at a per share price of US$1.81, in the total amount of US$819,000. These transactions were at arm’s length. The net proceeds of the sale of the shares shall be used by the Company for working capital and general corporate purpose, payment of the transactional expenses related to the acquisition of all the outstanding issued shares of Sorghum Investment Holding Limited (“Sorghum”) from certain shareholders of Sorghum, and payments related to the securities class action and derivative action disclosed in Note 17(3).

3)	~~Related party balances~~

~~Amount due from~~balances with related parties were as follows:

September 30,
2017
(Unaudited)

December 31,
2016

Suzhou Rongshengda Investment Holding Co., Ltd. $ - $ 469,418
Chunjia Textile 204,540 196,001
Huichun Qin $ 1,051,857 $ 1,007,953

As of September 30, 2017, the Company provided financial guarantee service for Chunjia Textile to guarantee loans of US$204,540. The Company accrued provision of US$102,270 on the outstanding balance as of September 30, 2017.

Huichun Qin transferred $1,098,197(equivalent of RMB 7 million) to his personal account without proper authorization on July 2, 2014. As of September 30, 2017, Huichun Qin has not repaid the balance. The amount was recorded as a deduction of the Company’s equity as of September 30, 2017 and December 31, 2016, respectively.

24-

Due from related parties

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

	March 31, 2020		December 31, 2019

Qianhai Baiyu (i)	$	4,360,948	$	2,840,728
Chengdu Jianluo (ii)		444,587		452,346
Shanghai Huxin (iii)		17,503		17,809
Total Due from related parties	$	4,823,038	$	3,310,883

~~17.~~(i)

~~COMMITMENTS AND CONTINGENCIES~~The balance due from Qianhai Baiyu represented a loan principal and interest due from the related party. The Company charged the related party interest rates 10% per annum. Principal and interest are repaid on maturity of the loan. Interest income amounted to $54,193 and $nil for the three months ended March 31, 2020 and 2019. The balance of due from Qianhai Baiyu is fully collected as of the date of this report.

1)(i)

~~Lease Commitments~~As of March 31, 2020, the balance due from Chengdu Jianluo consisted of receivables for transfers of two used luxurious cars at consideration aggregating $461,302, netting off against car-related fees due to the related party of $16,715.

~~During the year ended~~As of December 31, ~~2016,~~2019, the ~~Company leased its new office under a lease agreement~~balance due from ~~January 1, 2017~~Chengdu Jianluo consisted of receivables for transfers of two used luxurious cars at consideration aggregating $461,513, netting off against car-related fees due to ~~December 31, 2019. As a result, in January 2017,~~ the Company terminated the lease agreement for its former principal office which agreement was to expire on May 31, 2021. No default penalty was paid for the earlier termination. The following table sets forth the Company’s contractual obligations asrelated party of ~~September 30, 2017 in future periods:~~$17,006.

Rental payments
(Unaudited)

Year ending September 30, 2018 30,643
Year ending September 30, 2019 25,202
Year ending September 30, 2020 6,392
Total $ 62,237

~~Guarantee Commitments~~

The ~~guarantees will terminate upon payment and/or cancellation~~balance was fully collected as of the ~~obligation; however, payments by the Company would be triggered by failure~~date of the guaranteed party to fulfill its obligation covered by the guarantee. Generally, the average guarantee expiration terms ranged within 12 to 24 months and the average percentage of the guarantee amount as security deposit is 10% ~ 20%. As of September 30, 2017 and December 31, 2016, the loan amount guaranteed by the Company was US$11,367,564 and US$10,893,089, respectively, for its financial guarantee service customers.

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~this report.

~~17.~~(ii)

~~COMMITMENTS~~The balance due from Shanghai Huxin represented a loan due from the related party. The balance is collected on demand, and no interest income is charged to the associate. The balance was fully collected as of the date of this report.

11.

RELATED PARTY TRANSACTIONS AND ~~CONTINGENCIES~~BALANCES (CONTINUED)

3)2)

~~Contingencies~~

The Company is involved in various legal actions arising in the ordinary course of its business. As of September 30, 2017, the Company was involved in 109 lawsuits, among which 76 were related to its loan business and 32 were related to guarantee business and 1 was related to financial lease. The Company initiated legal proceedings to collect delinquent balances from borrowers and guarantees. 84 of these cases with an aggregated claim of US$41.16 million have been adjudicated by the Court in favor of the Company and these cases are settled or in the process of enforcement. The remaining 25 cases with an aggregated claim of US$18.17 million have not been adjudicated by the Court as of September 30, 2017.

On August 6, 2014, a purported shareholder Andrew Dennison filed a putative class action complaint in the United States District Court District of New Jersey (the “N.J. district court”) relating to a July 25, 2014 press release about the Company’s progress in recovering a significant portion of the $5.4 million the Company paid in the first quarter of 2014 on behalf of loan guarantee customers. The action, Andrew Dennison v. China Commercial Credit, Inc., et al., Case No. 2:2014-cv-04956, alleges that the Company and its current and former officers and directors Huichun Qin, Long Yi, Jianming Yin, Jinggen Ling, Xiangdong Xiao, and John F. Levy violated the federal securities laws by misrepresenting in prior public filings certain material facts about the risks associated with its loan guarantee business. On October 2, 2014, purported shareholders Zhang Yun and Sanjiv Mehrotra (the “Yun Group”) asserted substantially similar claims against the same defendants in a putative class action captioned Zhang Yun v. China Commercial Credit, Inc., et al., Case No. 2:14-cv-06136 (D. N.J.). Neither complaint states the amount of damages sought.

On or about October 6, 2014, Dennison, the Yun Group and another purported shareholder, Jason Stark, filed motions to consolidate the cases, be appointed as lead plaintiff and to have their respective counsel appointed as lead counsel. On October 31, 2014, the N.J. district court entered an order consolidating the cases under the caption “~~In re China Commercial Credit Inc. Securities Litigation~~Balances with related parties (continued)~~” and appointing the Yun Group as lead plaintiff (“Class Plaintiff”) and the Yun Group’s counsel as lead counsel.~~

On November 18, 2014, the Yun Group and the Company, which at that point was the only defendant served, entered into a stipulation to transfer of the case to the Southern District of New York. On December 18, 2014, Mr. Levy, who had by then been served, joined in the stipulation. On December 29, 2014, the N.J. district court entered an order transferring the action. The transfer was effected on January 22, 2015, and assigned docket number 1:15-cv-00557-ALC (S.D.N.Y.). (the “Securities Class Action”)

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~17.~~

~~COMMITMENTS AND CONTINGENCIES (CONTINUED)~~

Under the schedule stipulated by the parties, the Yun Group was to file an amended complaint within 60 days of the date that the transfer was effected, and the defendants’ date to answer or move was within 60 days of that filing. On April 7, 2015, the Class Plaintiff filed a Second Amended Class Action Complaint (the “CAC”). The CAC also asserts securities law claims against defendants Axiom Capital Management, Inc., Burnham Securities Inc. and ViewTrade Securities, Inc. (collectively, the “Underwriter Defendants”). The CAC alleges that the Company engaged in a fraudulent scheme by engaging in undisclosed and improper lending practices and made misleading representations regarding its underwriting policies, the loan portfolio quality, the loan loss allowance, compliance with U.S. GAAP and its internal control systems.

In accordance with the Court’s procedures, the Company and Mr. Levy and the Underwriter Defendants requested a Pre-Motion Conference in anticipation of filing a motion to dismiss the CAC, which was held on June 25, 2015. At the conference, the Court adjourned the date to answer or move in order to provide the Class Plaintiff with time to serve certain overseas defendants. After the conference, the Class Plaintiff voluntarily dismissed Jianming Yin, Jinggen Ling and Xiangdong Xiao from the action, and Long Yi agreed to waive service, which left Huichun Qin as the sole remaining defendant to serve.

On November 22, 2016, the Company entered into a Stipulation and Agreement of Settlement (the “Stipulation”) to settle the Securities Class Action. The Stipulation resolves the claims asserted against the Company and certain of its current and former officers and directors in the Securities Class Action without any admission or concession of wrongdoing or liability by the Company or the other defendants. On June 1, 2017, following a final fairness hearing on May 30, 2017 regarding the proposed settlement, the Court entered a final judgment and order that (i) dismisses with prejudice the claims asserted in the Securities Class Action against all named defendants in connection with the Securities Class Action, including the Company, and releases any claims that were or could have been asserted that arise from or relate to the facts alleged in the Securities Class Action, such that every member of the settlement class will be barred from asserting such claims in the future; and (ii) approves the payment of $220,000 in cash and the issuance of 950,000 shares of its common stock (the “Settlement Shares”) to members of the settlement class. In addition, the Company would incur a payment of $25,000 in cash to class administrator. At present, the Company is waiting for the Court to approve the disbursement of the Settlement Shares. Plaintiff is filing a motion to obtain such approval. The $245,000 cash portion of the settlement has been paid in full. The Company accrued settlement cost aggregating US$1,863,500 and US$690,000 during the nine months ended September, 2017 and 2016, respectively.

~~On July 28, 2017, the Court entered a clarifying order to specify the allocation of attorneys’ fees in accordance with the Stipulation.~~

The Settlement Shares are exempt from registration under Section 3(a)(10) of the Securities Act of 1933, as amended. The settlement does not constitute any admission of fault or wrongdoing by the Company or any of the individual defendants.

~~CHINA COMMERCIAL CREDIT, INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~17.~~

~~COMMITMENTS AND CONTINGENCIES (CONTINUED)~~

3)-

~~Contingencies (continued)~~Due to related parties, current

March 31,
2020 December 31,
2019

Guangzhou Chengji (1) $ 1,920,589 $ 970,318
Lu Zhao (2) 70,306 33,269
Jiaxi Gao (3) 7,994 8,134
Tao Sun (3) 6,515 4,206
Guotao Deng (3) 487 1,435
Total $ 2,005,891 $ 1,017,362
(1) The balance due to Guangzhou Chengji represents loan principal and interest due to the related parties. The loan has an interest rate of 8% per annum with a maturity date of September 4, 2020.
(2) As of March 31, 2020 and December 31, 2019, the balance due to Lu Zhao consisted of the operating expenses of $2,821 and $2,870, respectively, which was paid by the related party on behalf the Company and is payable on demand and interest free, and loan principal and interest aggregating $67,485 and $$30,399 due to the related party. The loans have an interest rate of 10% per annum with a maturity date of December 30, 2020
(3) The balances due to Jiaxin Gao, Guotao Deng and Tao Sun represents the operating expenses paid by the related parties on behalf of the Company. The balance is payable on demand and interest free.
- Due to related parties, noncurrent
December 31,
2019 December 31,
2018

Tao Sun $ 149,515 $ 152,124
The balance of related party loan was payable in September 2022, with an interest rate of 9.5% per annum.
For the above mentioned related party borrowings, interest expense amounted to $36,260 and $nil for the three months ended March 31, 2020 and 2019, respectively.
21
11. RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED)
3) Transactions with related parties
- Purchase from a related party and cost of revenue associated with commodity trading business
For the three months ended March 31, 2020, the Company purchased aluminum ingots of $1,055,143 from Qianhai Baiyu, which was controlled by Mr. Zhiping Chen, the legal representative of Huamucheng. For the three months ended March 31, 2020, the Company sold all aluminum ingots to customers and recorded cost of revenue of $1,055,143 associated with commodity product sales.
- Lending to a related party

~~Two~~For the three months ended March 31, 2020, the Company lent loans aggregating $1,593,260 to Qianhai Baiyu, which was controlled by Mr. Zhiping Chen, the legal representative of the ~~Underwriter Defendants, Axiom Capital Management, Inc.~~Company. The Company charged the related party interest rates 10% per annum. For the three months ended March 31, 2020, the Company recognized interest income of $54,193.
- Borrowings from related parties
For the three months ended March 31, 2020, the Company borrowed loans aggregating $36,617 form Mr. Lu Zhao, a senior management of the Company. The loan will expire on December 24, 2020. The interest rate charged on the borrowing was 10%. For the three months ended March 31, 2020, the Company accrued interest expenses of $1,574.
For the three months ended March 31, 2020, the Company borrowed a loan of $948,863. The Loan has an annual interest rate of 8% and a maturity date of December 4, 2020. For the three months ended March 31, 2020, the Company accrued interest expenses of $32,270.

12. SEGMENT REPORTING
In accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision making group, in deciding how to allocate resources and ~~ViewTrade Securities, Inc., have asserted their respective rights to indemnification under~~in assessing performance. The Company uses the ~~Underwriting Agreements entered into~~“management approach” in ~~connection with~~determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s ~~initial public offering~~chief operating decision maker for making operating decisions and ~~secondary offering. On~~assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of different services. For the three months ended March 31, 2020, the Company has two operating business lines, including business with metal products trading and supply chain management services business conducted by Huamucheng (“Commodity Trading and Supply Chain Management Services” or ~~about~~“Huamucheng Business”) and used luxurious car leasing business conducted by Beijing Tianxing (“Used Car Leasing” or “Tianxing Business”). Based on management’s assessment, the Company has determined that the two operating business lines are two operating segments as defined by ASC 280. For the three months ended March ~~16, 2016, CCCR entered into~~31, 2019, the Company had one operating business line and one reporting unit.
The following table presents summary information by segment for the three months ended March 31, 2020 and 2019:
For the Three Months Ended March 31, 2020
Tianxing
Business Huamucheng
Business Unallocated Total
Revenue $ 14,051 $ 1,469,009 $          - $ 1,483,060
Cost of revenue and related tax (99,314 ) (1,055,860 ) - (1,155,174 )
Gross profit $ (85,263 ) $ 413,149 $ - $ 327,886
Interest (expense) income, net $ (57,425 ) $ 44,061 $ 19,001 $ 5,637
Income tax expense $ - $ (48,380 ) $ - $ (48,380 )
Segment (loss) profit $ (213,444 ) $ 143,930 $ (70,458 ) $ (139,972 )
Segment assets as of March 31, 2020 $ 4,724,042 $ 5,505,654 $ 2,384,485 $ 12,614,181
For the Three Months Ended March 31, 2019
Tianxing
Business Huamucheng
Business Unallocated Total
Revenue $ 399,999 $           - $            - $ 399,999
Cost of revenue and related tax (237,651 ) - - (237,651 )
Gross profit $ 162,348 $ - $ - $ 162,348
Interest income, net $ 10,463 $ - $ - $ 10,463
Income tax expense $ - $ - $ - $ -
Segment loss $ (1,829,826 ) $ - $ - $ (1,829,826 )
Segment assets as of March 31, 2019 $ 2,941,747 $ - $ - $ 2,941,747

13. COMMITMENTS AND CONTINGENCIES
1 Lease Commitments
The Company’s VIEs lease their offices which are classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use asset, which is an ~~Advance Funding and Escrow Agreement, under which~~asset that represents the ~~CCCR agreed~~lessee’s right to ~~deposit shares into escrow~~use, or control the use of, a specified asset for the lease term.
The Company leases offices space with terms ranging from one to ~~fund the advancement obligation, with the initial deposit~~two years. The Company considers those renewal or termination options that are reasonably certain to be ~~shares valued at Two Hundred Thousand Dollars ($200,000), based upon 80%~~exercised in the determination of the ~~30 day volume~~lease term and initial measurement of right of use assets and lease liabilities. Lease expense for lease payment is recognized on a straight-line basis over the lease term. Leases with initial term of 12 months or less are not recorded on the balance sheet.
The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company discount lease payments based on an estimate of its incremental borrowing rate.
As of March 31, 2020, the Company had two lease contracts with lease expiration in June 2021 and September 2020, respectively. The lease contract does not contain any material residual value guarantees or material restrictive covenants. The table below presents the operating lease related assets and liabilities recorded on the balance sheet.
March 31,
2020 December 31,
2019

Rights of use lease assets $ 401,034 $ 41,188

Operating lease liabilities, current $ 302,028 $ -
Operating lease liabilities, noncurrent 52,352 -
Total operating lease liabilities $ 354,380 $ -
As of March 31, 2020 and December 31, 2019, the weighted average ~~Trading Price (“VWAP”)~~remaining lease term was 1.09 years and 0.71 years, respectively, and discount rates were 4.75% for ~~each~~all of the ~~30 consecutive trading days prior to~~operating leases.
Lease expenses for the ~~date~~three months ended March 31, 2020 and 2019 were $95,124 and $16,624, respectively.
The following is a schedule, by years, of ~~the Agreement.~~maturities of lease liabilities as of March 31, 2020:
Twelve months ended March 31, 2021 $ 312,413
Twelve months ended March 31, 2022 52,663
Total lease payments 365,076
Less: imputed interest (10,696 )
Present value of lease liabilities $ 354,380

13. COMMITMENTS AND CONTINGENCIES (CONTINUED)
2 Contingencies
a 2015 Derivative Action

On February 3, 2015, a purported shareholder ~~KiramKodali~~Kiran Kodali filed a putative shareholder derivative complaint inagainst the ~~United States District Court for the Southern District of New York, captioned KiranKodali v. Huichun Qin, et al., Case No. 15-cv-806. The action alleges~~Company, alleging that the Company and its ~~current and~~ former officers and directors ~~Huichun Qin, Long Yi, Jianming Yin, Jinggen Ling, Chunfang Shen, John F. Levy, Xiaofang Shen and Chunjiang Yu~~ violated their fiduciary duties, grossly mismanaged the Company and were unjustly enriched based upon the transfer that was the subject of the Internal Review and other grounds substantially similar to those asserted in the class action complaints. ~~Kodali did not serve~~
On July 16, 2019, the Company received a ~~demand upon~~copy of the final order and judgment that the Court entered on July 11, 2019, approving the settlement set forth in the Stipulation. The Stipulation provides for dismissal of the Derivative Action as to the Company and ~~alleges~~the Individual Defendants, and the Company agrees to adopt or maintain certain corporate governance reforms for at least three years. The Stipulation also provides for attorneys’ fees and expenses to be paid by the Individual Defendants’ insurance carriers to plaintiffs’ counsel.
b 2017 Arbitration with Sorghum
On December 21, 2017, the Company delivered notice (“Notice”) to Sorghum notifying Sorghum that certain recent actions of Sorghum constituted breaches of Sorghum’s covenants under the Exchange Agreement. Specifically, we believe that Sorghum is in breach of Section 6.9 (a and Section 6.11 (b of the Exchange Agreement which required Sorghum to use commercially reasonable efforts and to cooperate fully with the other parties to consummate the transactions contemplated by the Exchange Agreement and to make its directors, officers and employees available in connection with responding in a timely manner to SEC comments. According to the terms of the Exchange Agreement, the Company is entitled to terminate the Exchange Agreement if the breach is not cured within twenty (20 days after the Notice is provided to Sorghum.
On January 25, 2018, the Company filed an arbitration demand ~~is excused.~~(“Arbitration Demand” with the American Arbitration Association (“AAA” against Sorghum in connection with Sorghum’s breach of the Exchange Agreement.
On July 30, 2018, Arbitrator entered a reasoned award, accepting the Company’s proposal for resolution, awarding the Company damages of $1,436,522 against Sorghum and denying Sorghum’s Counterclaim against the Company in its entirety with prejudice. Sorghum has sought to vacate the arbitration award by filing a petition to vacate the arbitration award in the Supreme Court for the State of New York, New York County. The ~~Company and Mr. Levy have been served. An amended derivative complaint was filed on April 20, 2015. On May 29, 2015, the~~ Court ~~“so ordered” a stipulation among Kodali,~~heard the Company and ~~Mr. Levy staying all proceedings in~~Sorghum’s arguments on May 1, 2019, and entered an order vacating the ~~derivative case except for service~~arbitration award. The Company vigorously opposed and moved to confirm the arbitration award on May 6, 2019. On June 5, 2019, the Company filed a notice of ~~process~~appeal with the New York Supreme Court Appellate Division First Department. The appeal was scheduled to be mediated on ~~individual defendants until~~November 20, 2019. On November 15, 2019, the ~~earlier of thirty days of termination~~Company withdrew its appeal filed June 5, 2019, upon the stipulation of the ~~stipulation, dismissal of~~parties and accordingly, the ~~class action with prejudice or the date any of the defendants in the class action file an answer~~arbitration award is deemed to the CAC. The Company believes that this lawsuit is without merit and intends to vigorously defend against it. At this stage of the proceedings, the Company is not able to estimate the probability of success or loss.be vacated.

13. COMMITMENTS AND CONTINGENCIES (CONTINUED)
c 2018 Court Matter with Shanghai Nonobank Financial Information Service Co. Ltd.

On May 18, 2015, WFOE filed a civil complaint against Huichun Qin with the Wujiang Region Suzhou City People’s Court claiming Mr. Qin’s misappropriation of RMB 7 million in July 2014. The complaint was rejected due to a procedural issue. The Company has since learned that Mr. Qin has been convicted and sentenced to a term of incarceration of approximately five years. In view of this information,August 2, 2018, the Company ~~is evaluating its strategic options.~~
~~The Company and its directors were parties~~became party to ~~a lawsuit~~an action filed ~~on September 1, 2017,~~ by ~~Juan C. Rojas~~Shanghai Nonobank Financial Information Service Co. Ltd. (“Plaintiff”)~~, on behalf of himself and all other similarly situated stockholders of China Commercial Credit, Inc.,~~ in the ~~Chancery~~Supreme Court offor the State of ~~Delaware (the “Delaware Chancery~~New York, New York County (“NY Supreme Court”~~) (Case~~ (Index No. ~~2017-0633-JTL)~~653834/2018 (the “Action”)~~, which sought injunctive relief, costs,~~. Plaintiff’s complaint seeks to recover approximately $3.5 million of Plaintiff’s funds that were allegedly required to be held in escrow in New York pursuant to an agreement by and ~~attorney’s fees. Plaintiff’s Verified Class Action Complaint (“Complaint”~~between Plaintiff, Yang Jie and Yi Lin (the “Complaint”). Plaintiff has alleged that the ~~Company’s directors breached their fiduciary duties~~funds were required to be held in escrow in a New York attorney trust account pending the Company’s stockholders by failing to disclose all necessary material information relating to the Company’s entry into an Exchange Agreement (“Exchange Agreement”) with Sorghum Investment Holdings Limited (“Sorghum”) on August 9, 2017, and preventing the Company’s stockholders from castingalleged consummation of a fully informed vote on the Company’s acquisition of Sorghum, and other proposals contained in the Company’s preliminary proxy statement, dated August 14, 2017 (“Preliminary Proxy Statement). Plaintiff filed a Motion to Expedite the Proceeding (“Motion to Expedite”) seeking to expedited consideration ofmerger between Plaintiff’s ~~Motion for Preliminary Injunction, which was filed simultaneously with Plaintiff’s Complaint. The Company opposed the Motion to Expedite on September 20, 2017,~~parent company and the ~~Delaware Chancery Court held a hearing on~~Company. Plaintiff alleged two causes of action against the ~~Motion to Expedite on September 22, 2017, wherein it denied Plaintiff’s Motion to Expedite without prejudice.~~Company for fraud/fraudulent inducement and conversion. On ~~September 28, 2017,~~August 30, 2018, the Company filed a motion to dismiss Plaintiff’s ~~Complaint (“Motion to Dismiss”). Plaintiff~~causes of action against the Company. The Court has ~~not responded to~~scheduled oral arguments on the Company’s ~~Motion~~motion to ~~Dismiss.~~dismiss for May 1, 2019.

On ~~October 10, 2017,~~July 15, 2019, the Company ~~filed Amendment No. 1 to its Preliminary Proxy Statement (the “Amended Preliminary Proxy”) with~~received a copy of the ~~U.S. Securities~~decision and ~~Exchange Commission (the “Commission”) in response to~~order the ~~Commission’s September 8, 2017 comment letter (“Comment Letter”). After reviewing the Amended Preliminary Proxy, Plaintiff determined that~~Court entered on July 12, 2019, granting the Company’s ~~Amended Preliminary Proxy rendered~~motion to dismiss the ~~claims asserted~~Complaint in Plaintiff’s Complaint moot and/or otherwise unsuitable for further pursuit. On October 19, 2017, the Company and Plaintiff entered into a stipulation (“Stipulation”) wherein Plaintiff agreed to voluntarily dismiss his claimsits entirety as against the Company without prejudice, with costs and ~~its directors, with prejudice. The Delaware Chancery Court granted the Stipulation on October 20, 2017, and entered an Order dismissing the Action with prejudice. In accordance with the Order,~~disbursements to the Company ~~will advise~~as taxed by the ~~Delaware Chancery Court within fifteen (15) days~~Clerk of the ~~earlier of (a)~~Court, and the ~~stockholder vote on the Exchange Agreement relating~~Clerk is directed to ~~the proposals, or (b) the termination~~enter judgment accordingly in favor of the Exchange Agreement, and whether the parties to the Action have reached an agreement with respect to Plaintiff’s anticipated request for fees and expenses. Currently, no compensation in any form has passed from the Company, or its directors, to Plaintiff or Plaintiff’s attorneys in the Action, and the Company has not made a promise to give any such compensation. On November 6, 2017, the Company filed Amendment No. 2 to its Preliminary Proxy Statement with the Commission in further response to comments from the CommissionCompany.

~~18.~~d ~~SHARE EXCHANGE AGREEMENT~~2020 Court Matter with Harrison Fund

On ~~August 9, 2017, China Commercial Credit, Inc.~~April 6, 2020, the Company filed a law suit against Harrison Fund, LLC (“Harrison Fund”) in the ~~Company” or “CCCR”), has entered into Certain Share Exchange Agreement (“Exchange Agreement”~~United States District Court for the Northern District of California (the “District Court”) ~~with the parent company of Sorghum Investment Holdings Limited (“Sorghum”)~~(Case No. 3:20-cv-2307). ~~Pursuant~~The Company had invested $1,000,000 in Harrison Fund around May 2019. However, Harrison Fund had been reluctant to disclose related investment information to the ~~terms of the Exchange Agreement, CCCR will acquire 100% of the outstanding shares of Sorghum through issuance of 152,587~~Company and it was discovered that certain information presented on Harrison Fund’s brochure appeared to be problematic. The Company demanded a return of its ~~common shares. This transaction will be accounted for as~~investment from Harrison Fund. When the Company failed to obtain a ~~“reverse acquisition” since, immediately following completion of~~response from Harrison Fund, it filed the ~~transaction,~~complaint against Harrison Fund seeking to recover the ~~shareholders of Sorghum immediately prior~~$1,000,000 investment.
Due to the ~~transaction will effectuate control~~uncertainty arising from this pending legal proceeding, a full impairment has been applied against the Company’s investment in financial products.
14. SUBSEQUENT EVENTS
Please see “Note 8 – Capital Transactions” for all subsequent capital transactions

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
As of March 31, 2020, the Company ~~through its 87.9% ownership interest in~~had two business lines, used luxury car leasing business and commodities trading business.
Used luxury car leasing business
Currently the ~~post-merger entity. For accounting purpose, Sorghum will be deemed~~Company has eleven used luxurious cars with net book value of approximately US$2.43 million. In addition, the Company also leased used luxurious cars from peer companies and individuals to provide more varieties of luxurious cars to our customers. To determine the model of vehicles to be purchased, we collect data related to customers’ demands and preferences through sales and online promotions. Our professional procurement personnel will then compare models of vehicles offered by different sellers. The decision to purchase a specific vehicle is based on a number of considerations including time of delivery, vehicle condition, vehicle safety features, mileage, repair and maintenance history, accident history, market scarcity, etc. Due to the ~~accounting acquirer~~effects of COVID-19, we had closed our luxury car rental facilities from the end of January 2020 and ~~CCCR will be deemed to be~~have resumed our operations since April 2020. For the ~~accounting acquiree in~~three months ended March 31, 2020 and 2019, the ~~transaction. As~~Company earned income from operating lease of ~~the date of this filing, the transaction is still in progress.~~
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~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~
~~Overview~~$14,051 and $399,999, respectively.

We rent our luxurious cars to our customers from our offices in Beijing, Shanghai, Zhejiang and Chengdu. We market our cars to targeted potential customers via phone calls or messages. The rental price varies based on the rental term which ranges from one day to one month. The longer the rental term, the cheaper the price. The daily rental price is the highest, while the average weekly rental price and average monthly rental price are 10% to 20% cheaper and 20% to 30% cheaper, respectively, than that of the daily rental price.
We conduct a ~~financial services firm operating~~comprehensive credit check against customers who place orders. We work with credit rating platforms such as JD Wanxiang and TYi Online to evaluate the customer’s credit. We may reject an order for any reason including unacceptable credit ratings. Once an order is accepted, we will require a deposit ranging from US$7,500 to US$15,000 based on the vehicle being ordered and the customer’s credit score. The deposit covers vehicle deposit and traffic violation deposit. Customer can confirm the time and place for vehicle delivery and rental term via SMS messages, phone calls or face-to-face communication with our sales personnel. After that, our sales personnel will deliver the vehicle to the customers at their designated location. The customer, before signing the car rental agreement, will inspect the vehicle in ~~China. Our current operations~~person and pay the lease fee along with the deposit via credit card, Wechat Pay or Alipay. The customer is responsible for the gas, toll fee, fees incurred to return the car, and any other expenses related to the use of the vehicle during the rental term.
We install five GPS trackers on each vehicle to track the location of the vehicles. Once the rental period is over, the vehicle needs to be returned to our designated location. In the event the vehicle is returned with no damage other than normal wear and tear, we will process the refund of the vehicle deposit on the next business day. The traffic deposit will be refunded after we confirm that there are ~~mainly conducted through Wujiang Luxiang,~~no traffic violation records associated with the vehicle from the local police (approximately a ~~fully licensed microcredit company~~month after the return).
Competition
We compete with car rental companies, many of which are more established and have more resources than us. Currently we ~~control through our subsidiaries~~compete primarily with Benson, V-FLY Travel and Wagons.

Commodities trading business
In order to diversify the Company’s business and generate additional revenue, on November 22, 2019, the Company’s wholly-owned subsidiary, Hao Limo Technology (Beijing) Co., Ltd. (“Hao Limo”), entered into a series of contractual agreements (the “Huamucheng VIE Agreements”) with Shenzhen Huamucheng Trading Co., Ltd. (“Huamucheng”) and certain ~~contractual arrangements,~~shareholders of Huamucheng (“Huamucheng Shareholders”), who collectively hold 100% of Huamucheng. The Huamucheng VIE Agreements are designed to provide Hao Limo with the power, rights and ~~consist~~obligations equivalent, in all material respects, to those it would possess as the sole equity holder of ~~providing short-term direct loans~~Huamucheng, including absolute control rights and ~~loan guarantees~~the rights to ~~small~~the management, operations, assets, property and ~~medium enterprises (“SME”s) located in Wujiang City, Jiangsu Province~~revenue of China. As of September 30, 2017, we have built a US$58.3 million portfolio of direct loans to 107 borrowers and a total of US$11.4 million in loan guarantees for 14 borrowers. We were established under the 2008 Guidance on the Small Loan Company PilotHuamucheng. The purpose of the ~~China Banking Regulatory Commission~~VIE Agreements is solely to give Hao Limo the exclusive control over Huamucheng’s management. Through Huamucheng VIE structure, the Company is able to consolidate operations of Huamucheng effective November 22, 2019 and now operates a separate commodity trading business.
The commodity trading business primarily involves purchasing non-ferrous metal product, such as aluminium ingots, copper, silver, and gold, from upstream metal and mineral suppliers and then selling to downstream customers. In connection with the ~~People's Bank~~Company’s commodity sales, in order to help customers to obtain sufficient funds to purchase various metal products and also help upstream metal and mineral suppliers to sell their metal products, the Company launched its supply chain management service in December 2019. The Company primarily generates revenues from bulk non-ferrous commodity products, and from providing related supply chain management services in the PRC.
For the three months ended March 31, 2020, the Company recorded revenue of $1,053,632 from commodities trading business and $415,377 from supply chain management services (all from loan recommendation services), respectively, from Huamucheng’s operations.
Through Huamucheng’s business, the Company sources bulk commodity products from non-ferrous metal and mines or its designated distributors and then sells to manufactures who need these metals in large quantity. The Company works with upstream suppliers in the sourcing of commodities. Major suppliers include various metal and mineral suppliers such as Kunsteel Group, Baosteel Group, Aluminum Corporate of China ~~(“PBOC”) (No.23) (“Circular No. 23”) to extend short term loans~~Limited, Yunnan Benyuan, Yunnan Tin, and ~~loan guarantees to SMEs, a class of borrowers that we believe have been underserved~~Shanghai Copper. Potential customers include large infrastructure companies such as China National Electricity, Datang Power, China Aluminum Foshan International Trade, Tooke Investment (China), CSSC International Trade Co., Ltd., Shenye Group, and Keliyuan.
Competition
The Company mainly competes against other large domestic commodity metal product trading service providers such as Xiamen International Trade and Yijian Shares. Currently, the principal competitive factors in the ~~Chinese lending market. The loans that we provide bridge the gap between Chinese-state run banks that have not traditionally served the capital needs~~non-ferrous metals commodities trading business are price, product availability, quantity, service, and financing terms for purchases and sales of ~~SMEs and high interest rate “underground” lenders, and our loans provide capital at more favorable terms and sustainable interest rates.~~commodities.

~~As the rate of fees~~Applicable Government Regulations
Huamucheng has obtained all material approvals, permits, licenses and ~~commissions generated~~certificates required for our metal product trading operations, including registrations from the ~~guarantee business has been decreasing, the Company has decided that the revenue does not justify the default risks involved, and therefore expects to further reduce the traditional guarantee~~local business and ~~hold off on pursuing~~administrative department authorizing the guarantee business to be provided via the Kaixindai Financing Services Jiangsu Co. Ltd (“Kaixindai”) platform as previously planned. Management may actively resume the guarantee business if economic conditions improve in the future.purchase of raw materials.

On September 5, 2013, our wholly owned subsidiary, CCC International Investment Holding Ltd. (“CCC HK”), established Pride Financial Leasing (Suzhou) Co. Ltd. (“PFL”) in Jiangsu Province, China. PFL was expected to offer financial leasing of machinery and equipment, transportation vehicles, and medical devices to municipal government agencies, hospitals and SMEs in Jiangsu Province and beyond. During the period from its inception to the date of this quarterly report, PFL entered into two financial leasing agreements for an aggregate lease receivable of US$5.61 million. We do not currently have further funds to deploy in the financial leasing business. As of the date of this quarterly report, both financial leasing agreements expired.
Key Factors Affecting Our Results of Operation
The car rental and car service industry in China is competitive and fragmented. The commodities trading industry is also experiencing decreasing demand as a result of China’s overall economic slowdown. We expect competition in both China’s car leasing industry and commodities trading business to persist and intensify.
We have a limited operating history having just launched the car leasing business in May 2018 and started our commodities trading business in late November 2019. We believe our future success depends on our ability to significantly increase sales as well as maintain profitability from our operations. Our limited operating history makes it difficult to evaluate our business and future prospects. You should consider our future prospects in light of the risks and challenges encountered by a company with a limited operating history in an emerging and rapidly evolving industry. These risks and challenges include, among other things,
● our ability to integrate commodities trading business with car leasing business;
● our ability to continue our growth as well as maintain profitability;
● preservation of our competitive position in both of the luxurious car leasing and car service industry and commodities trading industry in China;
● our ability to implement our strategies and make timely and effective responses to competition and changes in customer preferences; and
● recruitment, training and retaining of qualified managerial and other personnel.

Our business requires a significant amount of capital in large part due to needing to continuously grow our fleet, to purchase bulk volume of commodities, and operating results are affected by China’s overall economic growth, local, economic condition, market interest rate and the borrowers’ repayment ability. Unfavorable changes could affect the demand for the services that we provide and could materially and adversely affectexpand our ~~results of operations. Our results of operations are also affected by the regulations and industry policies related to the microcredit industry in the PRC.~~
Our results of operations are also affected by the provision for loan losses and provision for financial guarantee loss which are noncash items and represent an assessment of the risk of future loan losses. Increases in the allowance for loan losses are achieved through provision for loan losses that are charged against net interest income.
Although we have generally benefited from China’s economic growth and the policies to encourage lending to farmers and SMEs, we are also affected by the complexity, uncertainties and changes in the PRC regulations governing the micro lending industry. Due to PRC legal restrictions on foreign equity ownership of and investment in the micro lending sector in China, we rely on contractual arrangements with Wujiang Luxiang, and its shareholders to conduct most of our current business in ~~China. We face risks associated with our control over our variable interest entity, as our control is based upon contractual arrangements rather than equity ownership.~~existing markets and to additional markets where we currently do not have operations.

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Results of Operations

Three Months Ended ~~September 30, 2017~~March 31, 2020 as Compared to Three Months Ended ~~September 30, 2016~~March 31, 2019

For the Three Months Ended
March 31, Change
2020 2019 Amount %
Revenues
Revenue from sales of commodity products $ 1,053,632 $ - $ 1,053,632 100 %
Revenue from supply chain management services 415,377 - 415,377 100 %
Income from operating leases 14,051 399,999 (385,948 ) (96 )%
Total Revenue 1,483,060 399,999 1,083,061 271 %

Cost of revenue
Cost of revenue - commodity product sales - related party (1,055,143 ) - (1,055,143 ) 100 %
Cost of revenue - supply chain management services (717 ) - (717 ) 100 %
Cost of operating lease (99,314 ) (237,651 ) 138,337 (58 )%
Total cost of revenue (1,155,174 ) (237,651 ) (917,523 ) 386 %

Gross profit 327,886 162,348 165,538 102 %

Operating expenses
Selling, general, and administrative expenses (425,115 ) (1,906,319 ) 1,481,204 (78 )%
Impairment on leasing business assets - (96,318 ) 96,318 (100 )%
Total operating cost and expenses (425,115 ) (2,002,637 ) 1,577,522 (79 )%

Other income, net
Interest income, net 5,637 10,463 (4,826 ) (46 )%
Total other income, net 5,637 10,463 (4,826 ) (46 )%

Loss Before Income Taxes (91,592 ) (1,829,826 ) 1,738,234 (95 )%

Income tax expenses (48,380 ) - (48,380 ) 100 %

Net Loss $ (139,972 ) $ (1,829,826 ) $ 1,689,854 (92 )%

For the Three Months Ended
September 30,
Change
2017 2016 Amount %
Interest income
Interests and fees on loans and direct financing lease $ 128,460 $ 722,117 $ (593,657 ) -82 %
Interests on deposits with banks 4,042 263 3,779 1437 %
Total interest and fee income 132,502 722,380 (589,878 ) -82 %

Net interest income 132,502 722,380 (589,878 ) -82 %

Reversal of provision for loan losses 452,786 226,694 226,092 100 %
(Provision)/Reversal of provision for direct financing lease losses (18,616 ) 242,180 (260,796 ) -108 %
Net interest income after provision for loan losses and financing lease losses 566,672 1,191,254 (624,582 ) -52 %

Commissions and fees on financial guarantee services - 9,117 (9,117 ) -100 %
Provision for financial guarantee services (1,142,807 ) (599,808 ) (542,999 ) 91 %
Commission and fee loss on guarantee services, net (1,142,807 ) (590,691 ) (552,116 ) 93 %
　　
Net (Loss)/Revenue (576,135 ) 600,563 (1,176,698 ) -196 %

Non-interest expense
Salaries and employee surcharge (180,461 ) (120,130 ) (60,331 ) 50 %
Rental expenses (13,975 ) (28,132 ) 14,157 -50 %
Business taxes and surcharge (1,376 ) 9,617 (10,993 ) -114 %
Transaction costs relating to acquisition (1,356,285 ) - (1,356,285 ) >100 %
Other operating expenses (387,003 ) (1,086,092 ) 699,089 -181 %
Total non-interest expense (1,939,100 ) (1,224,737 ) (714,363 ) 58 %

Foreign exchange loss (57 ) (271 ) 214 -79 %

Loss Before Income Taxes (2,515,292 ) (624,445 ) (1,890,847 ) 303 %
Income tax expense - - - 0 %
Net Loss (2,515,292 ) $ (624,445 ) (1,890,847 ) 303 %

Loss per Share- Basic and Diluted (0.139 ) (0.039 ) (0.100 ) 256 %

Weighted Average Shares Outstanding-Basic and Diluted 18,092,369 15,889,853 2,202,516 14 %

Net Loss (2,515,292 ) (624,445 ) (1,890,847 ) 303 %
Other comprehensive income
Foreign currency translation adjustment 14,699 260,803 (246,104 ) -94 %
Comprehensive Loss $ (2,500,593 ) $ (363,642 ) $ (2,136,951 ) 588 %
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Revenue
We generate revenue from the following three sources, including (1) revenue from sales of commodity products, (2) revenue from supply chain management services, and (3) income from operating lease. Both revenue from sales of commodity and revenue from supply chain management services were newly incorporated into our operations as a result of the consolidation of Huamucheng through VIE contractual agreements in November 2019. Total revenue increased by $1,083,061 or 271%, from $399,99 for the three months ended March 31, 2019 to $1,483,060 for the three months ended March 31, 2020, among which revenue from commodity trading, supply chain management and car leasing accounted for 71.1%, 28.0% and 0.9%, respectively, of our total revenue for the three months ended March 31, 2020. For the three months ended March 31, 2019, 100% of our revenue was generated from the used luxurious car leasing business.
(1) Revenue from sales of commodity products
For the three months ended March 31, 2020, the Company sold non-ferrous metals to two customers at fixed prices, and earned revenues when the product ownership was transferred to its customers. The Company earned revenues of $1,053,632 from sales of commodity products. There was no such revenue for the three months ended March 31, 2019.
(2) Revenue from supply chain management services
In connection with the Company’s commodity sales, in order to help customers to obtain sufficient funds to purchase various metal products and also help upstream metal and mineral suppliers sell their metal products, the Company launched its supply chain management service business in December 2019, which primarily consisted of loan recommendation services and distribution services. For the three months ended March 31, 2020, the Company provided loan recommendation services to customers.
Loan recommendation service fees

The Company refers customers who have financing needs for metal product trading to various financial institutions and assists these customers in obtain loans from the financial institutions. The Company receives a referral fee from the customers if funding is secured. Such revenue is recognized at the point when referral services are performed and the related funds are drawdown by the customer. The referral service fee is set at 2.5% of the amount of loans obtained by the customers from the financial institutions. The Company earned $415,377 from loan recommendation services from the facilitation of a loan volume of approximately $17.6 million (RMB 123.0 million) with six customers.
(3) Income from operating lease
The Company commenced its business of lease services of used luxurious cars in May 2018. As of March 31, 2020 and 2019, the Company had eleven and eight used luxurious cars, respectively. The lease term is generally within one month. The operating lease income is recognized on a straight-line basis over the scheduled lease term.
As affected by COVID-19, we closed our car rental facilities from the end of January to March 2020, and gradually resumed business in April 2020. As a result, we generated minimal operating lease income for the three months ended March 31, 2020. The extent to which COVID-19 impacts our income from operating lease for the fiscal year 2020 will depend on certain future developments, including the duration and spread of the outbreak, emerging information concerning the severity of COVID-19 and the actions taken by governments and private businesses in attempting to contain the spread of COVID-19, all of which is uncertain at this point.
For the three months ended March 31, 2019, the Company generated operating lease income from used luxurious cars which are either owned by the Company or leased from third party vendors. The Company generated operating lease income of $399,999 for the three months ended March 31, 2019.
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Cost of revenue
Our cost of revenue primarily include cost of revenue associated with commodity product sales, cost of revenue associated with management services of supply chain and cost of operating lease. Total cost of revenue increased by $917,523 or 386% from $237,651 for the three months ended March 31, 2019 to $1,155,174 for the three months ended March 31, 2020, primarily due to an increase of $1,055,143 in cost of revenue associated with commodity product sales which was just launched in December 2019, against a decrease of $138,337 in cost of operating lease as affected by COVID-19.
Cost of revenue associated with commodity trading
Cost of revenue primarily consists of purchase costs of non-ferrous metal products. For the three months ended March 31, 2020, the Company purchased non-ferrous metal products of $1,055,143 from Shenzhen Qianhai Baiyu Supply Chain Co., Ltd. (“Shenzhen Baiyu”), a related party controlled by the legal representative of Huamucheng, and sold non-ferrous metal products to two customers. The Company recorded cost of revenue of $1,055,143. There was no such cost for the three months ended March 31, 2019 because this was a new business launched in December 2019.
Costs associated with Operating lease
The operating lease expense mainly consisted of depreciation expenses on leasing business assets and car related expenses arising from lease of cars.
The depreciation expenses on leasing business assets increased from $46,858 for the three months ended March 31, 2019 to $79,578 for the three months ended March 31, 2020, representing an increase of $32,720, or 70%. The increase was mainly caused by the Company’s continuous investments in used luxurious cars. As of March 31, 2020, the Company had eleven used luxurious cars, as compared with eight cars as of March 31, 2019.
In the three months ended March 31, 2019, the Company officially launched sub-lease of luxurious car business through leasing cars from both third party peer companies and individuals. The Company recorded car leasing expenses of $19,736 and $190,793 for the three months ended March 31, 2020 and 2019, respectively. The decrease was mainly caused by the Company’s closure of car rental facilities from the end of January 2020 to March 2020, as affected by COVID-19.
Selling, general, and administrative expenses
Selling, general and administrative expenses decreased from $1,906,319 for the three months ended March 31, 2019 to $425,115 for the three months ended March 31, 2020, representing a decrease of $1,481,204, or 78%. Selling, general and administrative expenses primarily consisted of salary and employee benefits, office rental expense, business tax and surcharge, professional service fees, office supplies. The decrease was mainly attributable to combined effects of a decrease of other operating expenses of $358,518 as a result of closures of our car rental facilities for the three months ended March 31, 2020, and a decrease of legal and consulting expenses of $1,220,923 as a result of 1) issuance of 502,391 restricted shares as compensation of $884,208 to certain service providers for the three months ended March 31, 2019, while no such issuance for the three months ended March 31, 2020, and 2) a decrease in expenses incurred for the registered direct offerings in April and May 2019, including an increase of audit related fees of $156,659, an increase of commission of $100,000 to a third party vendor for referral of underwriters.
Net loss
As a result of the foregoing, net loss for the three months ended ~~September 30, 2017~~March 31, 2020 was ~~US$2,515,292,~~$139,972, representing ~~an increase~~a decrease of ~~US$1,890,847~~,~~or 303%,~~$1,689,854 from net loss of ~~US$624,445~~$1,829,826 for the three months ended ~~September 30, 2016. The change in net loss for the three months ended September 30, 2017 was the net effect of the changes in the following components:~~
● ~~a decrease in net interest income of US$589,878;~~
● ~~an increase in reversal of provision for loan losses of US$226,092;~~
● ~~an increase in provision for financial guarantee services of US$542,999; and~~
●
~~an increase in total non-interest expense of US$714,363~~
~~The following paragraphs discuss changes in the components of net loss in greater details during the three months ended September 30, 2017, as compared to the three months ended September 30, 2016.~~
30
~~Net Interest Income~~
Net interest income is equal to interest income we generated less interest expenses on short-term bank loans. During the three months ended September 30, 2017 and 2016, the Company did not record any interest expenses on short-term bank loans. As a result, the Company’s net interest income and the interests and fees on loans, direct financing leases and deposits with banks decreased by US$589,878, or 82% to US$132,502 during the three months ended September 30, 2017, as compared to net interest income of US$722,380 during the three months ended September 30, 2016. The decrease is the combined effect of: (2) the decrease in the amount of monthly interest received from long-aged loans resulting from the existing customers’ deteriorating loan quality; and (2) No new loans or renewal of loans during the three months ended September 30, 2017, leading to a significant decrease in interest income.
As a traditional industry, the textile industry, which is the pillar industry in Wujiang area, as well as other industries, has been facing downward pressure. Additionally, the bank lenders usually require an old loan be paid in full upon maturity before they approve a new loan to the same borrower. Some SMEs have to borrow from so-called “underground” lenders, or shadow banks to repay the loans due to the banks. Additionally, the banks denied to extend new loans to some SMEs even after they made the full repayment for the loans due and satisfied other conditions. Management is concerned that the borrowers may use the proceeds from the loans we grant to them as a means of repayment to the other banks or even to the underground lenders, instead of using them in operations. Therefore, management decided to grant new loans in a more cautious manner. During the three months ended September 30, 2017, we did not grant new loans or renew existing loans. As of September 30, 2017, we had 107 loans with an average loan size of US$544,549. The loan balance of $54,821,187 was accrued of an allowance for uncollectibilty which was equal to the loan balance.
Due to the long-term nature of our restricted deposits with third party banks, we utilized these deposits as term deposits which in turn generated interest income on deposits with banks of US$4,042 during the three months ended September 30, 2017 as compared to US$263 during the three months ended September 30, 2016. Caused by the contraction of our traditional guarantee business with banks, we have closed several restricted deposit accounts with banks through which we provided guarantee services to our customers. As a result, the interest income on deposits with bank was insignificant during the three months ended September 30, 2017 and 2016, respectively.
~~Provision for Loan Losses~~
The Company reversed provision for loan losses of US$452,786 and US$226,694 for the three months ended September 30, 2017 and 2016, respectively. The provision for loan losses was determined by comparing the beginning and ending balance of allowance for loan losses for business and personal loans. If the ending balance of the allowance of loan losses after any charge offs (net of recoveries) is less than the beginning balance, it will be recorded as a “reversal”; if it is larger, it will be recorded as a “provision” in the allowance for loan loss. The netting amount of “reversal” and “provision” is presented in the condensed consolidated statements of operations and comprehensive loss and the components of the provision for loan losses were disclosed in Note 6 of financial statements.
Reversal of provision for loan losses increased by $226,092 for the three months ended September 30, 2017, as compared to the same period last year. This is mainly due that less “doubtful” loans rolled to “loss” loans during the three months ended September 30, 2017 as compared to that during the three months ended September 30, 2016. As of September 30, 2017 and December 31, 2016, the “loss” loans accounted for 91.9% and 79.9% of total loan amount, respectively. The fact leads to more reversal of provision on loan losses during the three months ended September 30, 2017 as compared to the same period of 2016.
~~From October 1, 2017 to the date of the report, the Company assessed the charged-off loan balances recorded as of September 30, 2017 and was of the opinion that these balances were uncollectible.~~
31

~~Net Commission and Fees on Guarantee Business~~
The Company also generated net income by charging fees for financial guarantee services provided to our customers to help them obtain loans from other banks. We generally charge a one-time fee of 1.8% - 3.6% multiplied by the amount of loans being guaranteed, based on the nature of the guarantee and whether the customer is new or existing.
As of September 30, 2017, the off-balance-sheet financial guarantee amounted to US$11.4 million. The commissions and fees generated from our financial guarantee services decreased from US$9,117 for the three months ended September 30, 2016 to US$nil for the three months ended September 30, 2017. The reduction was due to the fact that the Company did not increase any financial guarantee business since March 31, ~~2016 as management reduced the guarantee portfolio to control the default risk.~~
As of September 30, 2017, we have provided guarantees for a total of US$11.4 million underlying loans to approximately 14 financial guarantee service customers, as compared to a total of US$10.9 million as of December 31, 2016.
~~Provision on Financial Guarantee Services~~
The Company provided a provision for financial guarantee services of US$1,142,807 for the three months ended September 30, 2017, as compared to US$599,808 for the three months ended September 30, 2017, representing a change of $542,999. The increase was mainly attributable to the increased allowance on guarantee paid on behalf of financial guarantee customers who were classified as “loss customers” as of September 30, 2017.
The methodology the Company used to estimate the liability for probable guarantee loss considers the guarantee contract amount and a variety of factors, which include, dependence on the counterparty, latest financial position and performance of the customers, actual defaults, estimated future defaults, historical loss experience, estimated value of collaterals or guarantees the costumers or third parties offered, and other economic conditions such as the economic trend of the area and the country. The estimates are based upon currently available information. Based on the recent lawsuit results and repayment status by defaulted customers, the Company estimated approximately 50% of off-balance-sheet financial guarantee services may be subject to default and their repayment may be “not likely”. As of September 30, 2017 and December 31, 2016, the Company accrued approximately 62% and 55% of contract amount, respectively.
This is done throughout the life of the guarantee, as necessary when additional relevant information becomes available. The methodology used to estimate the liability for possible guarantee loss considers the guarantee contract amount and a variety of factors, which include, depending on the counterparty, latest financial position and performance of the borrowers, actual defaults, estimated future defaults, historical loss experience, estimated value of collaterals or guarantees the customers or third parties offered, and other economic conditions such as the economy trend of the area and the country. The estimates are based upon currently available information.
Since the beginning of 2016, People’s Bank of China injected a significant amount of liquidity to the market to encourage the development of emerging industries such as online-game, filming and virtual reality, which has made it easier than previous two years for entities in such emerging industries to gain access to capital. However, the bank lenders are still cautious with SMEs in traditional industries. The bank lenders usually require an old loan be paid in full upon maturity before they approve a new loan to the same borrower. Since the end of the year ended December 31, 2014, the banks denied to extend new loans to many SMEs even after they made the full repayment for the loans due and satisfied other conditions. As a result, some of the SME borrowers for which we provided the guarantees decided to default on the bank loans. Therefore the amount of repayment we made to the bank lenders substantially increased since the year ended December 31, 2014. We have brought collection actions against both the borrowers and their counter-guarantors. However, management was advised by counsel in the collection action that the chance of collection is remote given the large scale bad debt prevalent in Wujiang region. As of September 30, 2017 and December 31, 2016, the management charged off specific provision for three and two customers in the amount of US$164,220 and US$142,966, respectively.
~~Non-interest Expenses~~
Non-interest expenses increased from US$1,224,737 for the three months ended September 30, 2016 to US$1,939,100 for the three months ended September 30, 2017, representing an increase of US$714,363 or 58%. Non-interest expenses primarily consisted of salary and employee surcharge, office rental expense, business tax and surcharge, depreciation of equipment, travel expenses, entertainment expenses, professional service fees, and other office supplies. The increase was mainly attributable to net effects of an increase of salaries and employee surcharge by US$60,331 or 50% and an increase in transaction cost relating to acquisition of $1,356,285 netting off against a decrease of other operating expenses by US$699,089, or 181%. The increase of salaries and employee surcharge was mainly caused by increased salary compensations made to management for the efforts in the acquisition of Sorghum Investment Holdings Limited (“Sorghum”). The increase of transaction cost relating to acquisition is primarily attributable to issuance of unregistered shares to the professional service providers for their services in the acquisition of Sorghum. The decrease of other operating expenses is mainly due to a decrease of US$782,513 in legal and consulting expenses as during the three months ended September 30, 2016, the Company issued 300,000 restricted shares at a fair value of $771,000, to a financial service provider who was involved to assist the Company to find out a new business model and increase profitability.
2019.
32

~~Results of Operations~~
~~Nine Months Ended September 30, 2017 as Compared to Nine Months Ended September 30, 2016~~

For the Nine Months Ended
September 30,
Change
2017 2016 Amount %
Interest income
Interests and fees on loans and direct financing lease $ 290,566 $ 1,203,663 $ (913,097 ) -76 %
Interests on deposits with banks 4,728 3,526 1,202 34 %
Total interest and fee income 295,294 1,207,189 (911,895 ) -76 %

Interest expense
Interest expense on short-term bank loans - (30,057 ) 30,057 -100 %
Net interest income 295,294 1,177,132 (881,838 ) -75 %

(Provision)/Reversal of provision for loan losses (2,420,698 ) 133,177 (2,553,875 ) -1918 %
(Provision)/Reversal of provision for direct financing lease losses (66,113 ) 242,180 (308,293 ) -127 %
Net interest (loss)/income after provision for loan losses and financing lease losses (2,191,517 ) 1,552,489 (3,744,006 ) -241 %

Commissions and fees on financial guarantee services 2,843 26,308 (23,465 ) -89 %
(Provision)/Reversal of provision for financial guarantee services (830,140 ) 385,352 (1,215,492 ) -315 %
Commission and fee (loss)/income on guarantee services, net (827,297 ) 411,660 (1,238,957 ) -301 %

Net (Loss)/Revenue (3,018,814 ) 1,964,149 (4,982,963 ) -254 %

Non-interest income
Other non-interest income - 48,945 (48,945 ) -100 %
Total  non-interest income - 48,945 (48,945 ) -100 %

Non-interest expense
Salaries and employee surcharge (707,012 ) (548,978 ) (158,034 ) 29 %
Rental expenses (41,242 ) (64,850 ) 23,608 -36 %
Business taxes and surcharge (3,221 ) (21,798 ) 18,577 -85 %
Transaction costs relating to acquisition (2,136,285 ) - (2,136,285 ) >100 %
Litigation and settlement cost for the shareholders’ lawsuit (1,838,500 ) (690,000 ) (1,148,500 ) 166 %
Other operating expenses (784,815 ) (1,893,027 ) 1,108,212 -58 %
Total non-interest expense (5,511,075 ) (3,218,653 ) (2,292,422 ) 71 %

Foreign exchange loss (355 ) (557 ) 202 -36 %

Loss Before Income Taxes (8,530,244 ) (1,206,116 ) (7,324,128 ) 607 %
Income tax expense - - - 0 %
Net Loss (8,530,244 ) (1,206,116 ) (7,324,128 ) 607 %

Loss per Share-Basic and Diluted (0.491 ) (0.086 ) (0.405 ) 471 %

Weighted Average Shares Outstanding-Basic and Diluted 17,371,183 14,026,815 3,344,368 24 %

Net Loss (8,530,244 ) (1,206,116 ) (7,324,128 ) 607 %
Other comprehensive income
Foreign currency translation adjustment 43,987 205,546 (161,559 ) -79 %
Comprehensive Loss $ (8,486,257 ) $ (1,000,570 ) $ (7,455,702 ) 748 %
The Company’s net loss for the nine months ended September 30, 2017 was US$8,530,244, representing an increase of US$7,324,128, or 607%, from net loss of US$1,206,116 for the nine months ended September 30, 2016. The change in net income for the nine months ended September 30, 2017 was the net effect of the changes in the following components:
● ~~a decrease in net interest income of US$881,838;~~
● ~~an change of US$2,553,875 from a reversal of provision of loan losses to a provision for loan losses;~~
● ~~an change of US$1,215,492 from a reversal of provision for financial guarantee services to a provision for financial guarantee services; and~~
●
~~an increase in total non-interest expense of US$2,292,422.~~
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~~The following paragraphs discuss changes in the components of net loss in greater details during the nine months ended September 30, 2017 as compared to the nine months ended September 30. 2016.~~
~~Net Interest Income~~
Net interest income is equal to interest income we generated less interest expenses on short-term bank loans. The Company’s net interest income decreased by US$881,838 or 75% to US$295,294 during the nine months ended September 30, 2017, as compared to net interest income of US$1,177,132 during the nine months ended September 30, 2016.
The interests and fees on loans, direct financing leases and deposits with banks decreased by US$911,895, or 76% to US$295,294 during the nine months ended September 30, 2017, as compared to net interest income of US$1,207,189 during the nine months ended September 30, 2016. The decrease is the combined effect of: (1) the decrease in the amount of monthly interest received from long-aged loans resulting from the existing customers’ deteriorating loan quality; and (2) No new loans or renewal of loans during the nine months ended September 30, 2017, leading to a significant decrease in interest income.
As a traditional industry, the textile industry, which is the pillar industry in Wujiang area, as well as other industries, has been facing downward pressure. Additionally, the bank lenders usually require an old loan be paid in full upon maturity before they approve a new loan to the same borrower. Some SMEs have to borrow from so-called “underground” lenders, or shadow banks to repay the loans due to the banks. Additionally, the banks denied to extend new loans to some SMEs even after they made the full repayment for the loans due and satisfied other conditions. Management is concerned that the borrowers may use the proceeds from the loans we grant to them as a means of repayment to the other banks or even to the underground lenders, instead of using them in operations. Therefore, management decided to grant new loans in a more cautious manner. During the nine months ended September 30, 2017, we did not grant new loans or renew existing loans. As of September 30, 2017, we had 107 loans with an average loan size of US$544,549. The loan balance of $54,821,187 was accrued of an allowance for uncollectibilty which was equal to the loan balance.
Due to the long-term nature of our restricted deposits with third party banks, we utilized these deposits as term deposits which in turn generated interest income on deposits with banks of US$4,728 during the nine months ended September 30, 2017 as compared to US$3,526 during the nine months ended September 30, 2016. Caused by the contraction of our traditional guarantee business with banks, we have closed several restricted deposit accounts with banks through which we provided guarantee services to our customers. As a result, the interest income on deposits with bank was insignificant during the nine months ended September 30, 2017 and 2016, respectively.
~~Provision for Loan Losses~~
The Company provided a provision for loan losses of US$2,420,698 and reversed a provision for loan losses of US$133,177 for the nine months ended September 30, 2017 and 2016, respectively. The provision for loan losses was determined by comparing the beginning and ending balance of allowance for loan losses for business and personal loans. If the ending balance of the allowance of loan losses after any charge offs (net of recoveries) is less than the beginning balance, it will be recorded as a “reversal”; if it is larger, it will be recorded as a “provision” in the allowance for loan loss. The netting amount of “reversal” and “provision” is presented in the condensed consolidated statements of operations and comprehensive loss and the components of the provision for loan losses were disclosed in Note 8 of financial statements.
Provision for loan losses increased by $2,553,875 for the nine months ended September 30, 2017, as compared to the same period last year. Based on the management assessment over each individual loan in terms the customers’ payment ability and payment intention, more “doubtful” loans rolled to “loss” loans during the nine months ended September 30, 2017 as compared to that during the nine months ended September 30, 2016. The fact leads to more accrual of provision on loan losses during the nine months ended September 30, 2017 as compared to the same period of 2016.
~~From October 1, 2017 to the date of the report, the Company assessed the charged-off loan balances recorded as of September 30, 2017 and was of the opinion that these balances were uncollectible.~~
34

~~Net Commission and Fees on Guarantee Business~~
The Company also generated net income by charging fees for financial guarantee services provided to our customers to help them obtain loans from other banks. We generally charge a one-time fee of 1.8% - 3.6% multiplied by the amount of loans being guaranteed, based on the nature of the guarantee and whether the customer is new or existing.
As of September 30, 2017, the off-balance-sheet financial guarantee amounted to US$11.4 million. The commissions and fees generated from our financial guarantee services decreased from US$26,308 for the nine months ended September 30, 2016 to US$2,843 for the nine months ended September 30, 2017. The reduction was due to the fact that the Company did not increase any financial guarantee business since March 31, 2016 as management reduced the guarantee portfolio to control the default risk.
As of September 30, 2017, we have provided guarantees for a total of US$11.4 million underlying loans to approximately 14 financial guarantee service customers, as compared to a total of US$10.9 million as of December 31, 2016.
~~Provision on Financial Guarantee Services~~
The Company provided a provision for financial guarantee services of US$830,140 for the nine months ended September 30, 2017, as compared to a reversal of provision of US$385,352 for the nine months ended September 30, 2016, representing a change of $1,215,492. The change was mainly attributable to the decrease of repayment from several financial guarantee customers who were classified as “loss customers” as of September 30, 2017.
The methodology the Company used to estimate the liability for probable guarantee loss considers the guarantee contract amount and a variety of factors, which include, dependence on the counterparty, latest financial position and performance of the customers, actual defaults, estimated future defaults, historical loss experience, estimated value of collaterals or guarantees the costumers or third parties offered, and other economic conditions such as the economic trend of the area and the country. The estimates are based upon currently available information. Based on the recent lawsuit results and repayment status by defaulted customers, the Company estimated approximately 50% of off-balance-sheet financial guarantee services may be subject to default and their repayment may be “not likely”. As of September 30, 2017 and December 31, 2016, the Company accrued approximately 62% and 55% of contract amount, respectively.
This is done throughout the life of the guarantee, as necessary when additional relevant information becomes available. The methodology used to estimate the liability for possible guarantee loss considers the guarantee contract amount and a variety of factors, which include, depending on the counterparty, latest financial position and performance of the borrowers, actual defaults, estimated future defaults, historical loss experience, estimated value of collaterals or guarantees the customers or third parties offered, and other economic conditions such as the economy trend of the area and the country. The estimates are based upon currently available information.
Since the beginning of 2016, People’s Bank of China injected a significant amount of liquidity to the market to encourage the development of emerging industries such as online-game, filming and virtual reality, which has made it easier than previous two years for entities in such emerging industries to gain access to capital. However, the bank lenders are still cautious with SMEs in traditional industries. The bank lenders usually require an old loan be paid in full upon maturity before they approve a new loan to the same borrower. Since the end of the year ended December 31, 2014, the banks denied to extend new loans to many SMEs even after they made the full repayment for the loans due and satisfied other conditions. As a result, some of the SME borrowers for which we provided the guarantees decided to default on the bank loans. Therefore the amount of repayment we made to the bank lenders substantially increased since the year ended December 31, 2014. We have brought collection actions against both the borrowers and their counter-guarantors. However, management was advised by counsel in the collection action that the chance of collection is remote given the large scale bad debt prevalent in Wujiang region. As of September 30, 2017 and December 31, 2016, the management charged off specific provision for two customers in the amount of US$164,220 and US$142,966, respectively.
In February and March 2015, the Company revisited the classification of its guarantee portfolios within its rating system to test the adequacy of the allowances calculated thereby. As a result of such testing, the Company decided to reclassify certain guarantees into different categories. The Company reviewed the profile, financial condition and other relevant information and documents of each customer in the guarantee businesses. For customers with several guarantees with different due dates, if one guaranteed loan was past due, the Company decided to reclassify all of this customer's guaranteed loans as past due (even the other loans that were not mature yet). These reclassifications affected numerous customer accounts. We engaged He-Partners Law Firm, one of the largest law firms in Suzhou City, to represent us in the legal proceedings against the borrowers and their counter guarantors, and expect to collect part of the outstanding balance in a period ranging from six twelve months to one and a half year upon adjudication by the court in favor of the Company. The timing of collection and ultimate amount of funds we can recover depend on a few factors, including the repayment ability of the borrower and their counter-guarantors, the execution time of the court, other obligations the borrowers have and priority over the claim for the Company.
35
~~Non-interest Expenses~~
Non-interest expenses increased from US$3,218,653 for the nine months ended September 30, 2016 to US$5,511,075 for the nine months ended September 30, 2017, representing an increase of US$2,292,422, or 71%. Non-interest expenses primarily consisted of salary and employee surcharge, office rental expense, business tax and surcharge, depreciation of equipment, travel expenses, entertainment expenses, professional service fees, and other office supplies. The increase was mainly attributable to net effects of an increase of salaries and employee surcharge by US$158,034, or 29%, an increase of transaction cost relating to acquisition of $2,136,285 and an increase of litigation and settlement cost for the shareholders’ lawsuit of $1,148,500, or 166% netting off against a decrease of other operating expenses by US$1,108,212, or 58%. The increase of salaries and employee surcharge was mainly caused by increased issuance of restricted shares to management for the nine months ended September 30, 2017. The increase of transaction cost relating to acquisition is primarily attributable to issuance of unregistered shares to the professional service providers for their services in the acquisition of Sorghum. The increase of legal and settlement cost of shareholders’ lawsuit was attributable to accrual of expenses on the basis of a final fairness hearing on May 30, 2017 when the share price increased significantly as compared with initial estimation of the contingent expenses. The decrease of other operating expenses is mainly due to a decrease of US$1,262,313 in legal and consulting expenses as during the three months ended September 30, 2016, the Company issued 300,000 restricted shares at a fair value of $771,000, to a financial service provider who was involved to assist the Company to find out a new business model and increase profitability.
~~Loan Portfolio Quality~~
One of our key objectives is to maintain a high level of loan portfolio quality. When a borrower fails to make a scheduled payment, we attempt to cure the deficiency by personally contacting the borrower. Initial contacts typically are made seven days after the date the payment is due, and warning letters are sent by our legal counsel approximately 90 days after the default. In most cases, deficiencies are promptly resolved. If the outstanding amount cannot be collected within 180 days after the maturity date and the parties could not reach an agreement on a specific repayment program, we will initiate legal proceedings.
We also keep the frequency of visits to our customers and observe their daily production on site from time to time to observe their operating condition and collect their financial information. Since most of our customers are in the Jiangsu area, it is also relatively easy to obtain information about our customers.
On loans where the collection of principal or interest payments is doubtful, the accrual of interest income ceases and become “non-accrual” loans. Except for loans that are sufficiently secured and in the process of collection, it is our policy to discontinue accruing additional interest and reverse any interest accrued on any loan which is 90 days or more past due.
We account for our impaired loans in accordance with U.S. GAAP. An impaired loan generally is one for which it is probable, based on current information, that the lender will not collect all the amounts due under the contractual terms of the loan. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment history and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for business and personal loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateralized.
We allow a one-time loan extension with time duration up to the original loan term, which is usually within twelve months. In order to qualify, the borrower must be current with its interest payments. We do not grant concession to borrowers as the principal of the loan remains the same and interest rate is fixed at the current interest rate at the time of extension.
We use a comprehensive methodology to monitor credit quality and prudently manage credit concentration within our portfolio of loans. Currently our loan portfolio concentrates in the textile industry and during the nine months ended September 30, 2017, both the domestic and international demand for textile products have been decreasing. To maintain our loan portfolio quality, we have modified our loan policy to accept only textile companies with real estate as collateral or guaranteed by guarantee companies. During the nine months ended September 30, 2017, we assessed the loan portfolio quality and charged-off loan receivable balances recorded as of September 30, 2017 and were of the opinion that these balances were uncollectible.
~~In addition, we plan to minimize our risks by concentrating on smaller amount loans that are below US$451,000 (or approximately RMB 3.0 million).~~
Currently, the banking industry encourages SMEs to apply for loans as individuals with recourse so that when it is past due, both the SME and the responsible individual are both liable for the past due amount and the individual borrower carries personal liability. As of September 30, 2017, our loan balance did not significant change in both business loans and personal loans as compared to that as of December 31, 2016.
36
~~The following table sets forth the classification of loans receivable as of September 30, 2017 and December 31, 2016, respectively:~~
September 30, 2017
(unaudited)
Amount Percent
of Total December 31,
2016
Amount Percent
of Total

Business loans $ 36,783,453 63.13 % $ 37,786,657 64.57 %
Personal loans 21,483,267 36.87 % 20,736,324 35.43 %
Total Loans receivable $ 58,266,720 100 % $ 58,522,981 100 %
Nonaccrual loans totaled US$56.28 million, or 96.60% of loans receivable as of September 30, 2017, as compared with US$56.58 million, or 96.68% of loans receivable, as of December 31, 2016. The allowance for loan losses was US$54.82 million, representing 94.09% of loans receivable and 97.40% of non-accrual loans as of September 30, 2017. As of December 31, 2016, the allowance for loan losses was US$51.71 million, representing 88.36% of loans receivable and 91.39% of non-accrual loans.
~~The following table sets forth information concerning our nonaccrual loans as of September 30, 2017 and December 31, 2016, respectively:~~
September 30, 2017
(unaudited) December 31,
2016

Nonaccrual loans $ 56,283,219 $ 56,579,073
Allowance for loan losses $ 54,821,187 $ 51,708,062
Loans receivable $ 58,266,720 $ 58,522,981
Total assets $ 7,714,013 $ 9,570,743
Nonaccrual loans to loans receivable 96.60 % 96.68 %
Nonperforming assets to total assets 729.62 % 591.17 %
Allowance for loan losses to loans receivable 94.09 % 88.36 %
Allowance for loan losses to non-accrual loans 97.40 % 91.39 %
As a traditional industry, the textile industry, which is the pillar industry in Wujiang area, as well as other industries, has been facing downward pressure. As the local SMEs’ profitability and repayment ability deteriorates, “special mentioned”, “substandard” and “doubtful’ bank loans drastically increased. As such, our provision for loan losses remained at a high level as of September 30, 2017.
37
Cash Flows and Capital Resources

We have financed our operations primarily through shareholder contributions, cash flow from operations, borrowings from third parties and related parties, and equity financing through public offerings of ~~securities. As a result of~~ our ~~total cash activities, net cash increased from US$768,501 as of December 31, 2016 to US$3,030,468 as of September 30, 2017.~~securities.

For the three months ended March 31, 2020, the Company issued an aggregate of 17,000,000 shares of its common stock, and unsecured senior convertible promissory notes (“Notes”) in the aggregate principal amount of $30,000,000 accompanied by warrants to purchase 20,000,000 shares of Common Stock issuable upon conversion of the Notes at an exercise price of $1.80. In April 2020, the Holders elected to convert the Notes at a conversion price of $1.50 per share and also exercise the Warrants at an exercise price of $1.80 per share. The Company raised an aggregation of $81.1 million from these equity financing transactions, among which $1.6 million was advanced from investors in November 2019, and the remaining $79.5 million was collected in April and May 2020.
Liquidity
During the three months ended March 31, 2020~~Going Concern~~, the Company entered into additional private placement agreements with certain private investors and issued 15,000,000 shares of common stock at $0.90 per share and also soldunsecured senior convertible promissory notes (“Notes”) in the aggregate principal amount of $30,000,000 accompanied by warrants to purchase 20,000,000 shares of Common Stock issuable upon conversion of the Notes at an exercise price of $1.80.On April 14 and 15, 2020, the holders of Notes exercised warrants and paid cash consideration of $36,000,000  to the Company.Total equity financing from this transaction was $79.5 million. The Company received $79.5 million proceeds by April 15, 2020. The Company expects to use the proceeds from this equity financing as working capital to expand its commodity trading business.

~~The unaudited condensed interim consolidated financial statements have been prepared~~Based on ~~a going concern basis, which contemplates~~above financing activities, the ~~realization of assets and~~management believes that the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements. The conditions described below raises substantial doubt about the Company’s ability toCompany will continue as a going concern ~~within one year from~~in the ~~date of this filing.~~
1) ~~Limited funds necessary to maintain operations~~
The Company had an accumulated deficit of US$78,734,900 as of September 30, 2017. In addition, the Company had a negative net asset of US$774,251 as of September 30, 2017. As of September 30, 2017, the Company had cash and cash equivalents of US$3,030,468, and total short-term borrowings of nil. Caused by the limited funds, the management assessed that the Company was not able to keep the size of lending business within one year from the filing of Form 10-Q.following 12 months.

~~The Company is actively seeking other strategic investors with experience in lending business. If necessary, the shareholders of Wujiang Luxiang will contribute more capital into Wujiang Luxiang.~~
2) ~~Recurring operating loss~~
During the nine months ended September 30, 2017, the Company incurred operating loss of US$8,530,244. Affected by the reduction of lending business and guarantee business and increased loss loans, the management was in the opinion that recurring operating losses with be made within one year from the issuance of the filing.
The Company continues to use its best effort to improve collection of loan receivable and interest receivable. Management engaged two PRC law firms to represent the Company in the legal proceedings against the borrowers and their counter guarantors.
3) ~~Negative operating cash flow~~
During the nine months ended September 30, 2017, the Company incurred negative operating cash flow of US$1,248,629. Affected by significant balance of charged-off interest receivable, the management assessed the Company would continue to have negative operating cash flow within one year from the issuance of the filing.
~~The Company continues to reduce the redundant headcount and entered into a new office lease with lower rent commitment since January 1, 2017 to improve operating cash flow.~~
4) ~~Downward industry~~
Most loan customers are from textile industry which has been facing downward pressure. Additionally adversely affected by emergence of internet finance entities, the Company was facing fierce competition. Considering the high risks from both customers and competitors, management assessed the Company would further reduced the loan business without strong financial support.
Considering the above factors, the Company, on August 9, 2017, entered into Certain Share Exchange Agreement (“Exchange Agreement”) with the parent company of Sorghum Investment Holdings Limited (“Sorghum”). Pursuant to the terms of the Exchange Agreement, CCCR will acquire 100% of the outstanding shares of Sorghum through issuance of 152,587,000 of its common shares. This transaction will be accounted for as a “reverse acquisition” since, immediately following completion of the transaction, the shareholders of Sorghum immediately prior to the transaction will effectuate control of the Company, through its 87.9% ownership interest in the post-merger entity.
While management believes that the measures in the liquidity plan will be adequate to satisfy its liquidity and cash flow requirements for the twelve months after the financial statements are available to be issued, there is no assurance that the liquidity plan will be successfully implemented. Failure to successfully implement the liquidity plan will have a material adverse effect on the Company’s business, results of operations and financial position, and may materially adversely affect its ability to continue as a going concern.
38
Statement of Cash Flows

The following table sets forth a summary of our cash ~~flows for~~flows. For the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively:

For the nine months ended September 30,
2017 2016
Net cash used in operating activities $ (1,248,629 ) $ (47,871 )
Net cash provided by investing activities 1,905,807 2,499,916
Net cash provided by (used in) financing activities 1,560,000 (1,600,832 )
Effects of exchange rate changes on cash 44,789 9,747
Net cash inflow $ 2,261,967 $ 860,960
For the Three Months Ended
March 31,
2020 2019
Net Cash Used in Operating Activities (156,559 ) (758,633 )
Net Cash Used in Investing Activities (3,424,968 ) (999,481 )
Net Cash Provided by Financing Activities 1,063,773 592,724
Effect of exchange rate changes on cash and cash equivalents 98,172 21,969
Net decrease in cash and cash equivalents (2,419,582 ) (1,143,421 )

Net Cash Used in Operating Activities

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, we had a cash outflow from operating activities of ~~US$1,248,629, an increase~~$156,559, a decrease of ~~US$1,200,798~~$602,074 from a cash outflow of ~~US$47,871~~$758,633 for the ~~same period last year.~~three months ended March 31, 2019. We ~~generated~~incurred a net loss for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 of ~~US$8,530,244, an increase~~$139,972, a decrease of ~~US$7,324,128~~$1,689,854 from the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2019, during which we ~~incurred~~recorded a net loss of ~~US$1,206,116.~~$1,829,826. In addition to the change in profitability, the decrease in net cash used in operating activities was the result of several factors, including:

●
An increase of ~~provision on loan losses~~$132,271 in changes of ~~US$2,553,875. The Company provided a provision for loan losses of US$2,420,698~~other current assets for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020 because the Company recognized but yet collected interest income of $85,275, and deferred NASDAQ service fees of $33,750, as compared towith a ~~reversal~~decrease of ~~provision~~$29,320 in changes of ~~US$133,177 provided during~~other current assets for the ~~nine~~three months ended ~~September 30, 2016. The increase~~March 31, 2019 as a result of the loan provision is mainly due to the fact that more “doubtful” loans rolling to “loss” loans incurred during the nine months ended September 30, 2017 as compared to the same period ended September 30, 2016;timely collection of petty cash from staff; and
●

An increase of provision on financial guarantee services of US$1,215,492. The Company provided a provision for financial guarantee services of US$830,140 for the nine months ended September 30, 2017, as compared to a reversal of provision of US$385,352 provided during the nine months ended September 30, 2016. The change was mainly attributable to the decrease of repayment from several financial guarantee customers who were classified as “loss customers” as of September 30, 2017;
● ~~An increase in~~502,391 restricted shares were issued to ~~directors and professional~~ service providers as compensation for past services, at a fair value of US$805,056. As an incentive to the efforts made by the Company’s management and professional service providers in acquisition of Sorghum, the Company issued more restricted shares during the nine months ended September 30, 2017.
●
~~An increase in provision for settlement expenses against legal proceeding of US$1,378,500. As we accrued expenses for additional share settlement in the nine months ended September 30, 2017.~~
$884,208

Net Cash ~~Provided by~~Used in Investing Activities

Net cash ~~provided by~~used in investing activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 was US$1,905,807 as compared to net cash provided by investing activities of US$2,499,916 for the nine months ended September 30, 2016. The cash provided by investing activities for the nine months ended September 30, 2017 was net effects of collection of principals of US$1,155,055 from third party customers of direct loan business, collection of principal of US$227,723 from direct financing lease customers, and collection of short-term loans from a related party of US$478,954. The cash provided by investing activities for the nine months ended September 30, 2016 was mainly collection of principals of $2,147,593 from third party customers of direct loan business, collection of $1,427,674 from third party customers of financial guarantee services, netting off against a short-term loan of US$1,945,224 advanced to a related party
~~Net Cash Provided/ (Used) in Financing Activities~~
~~Net cash provided by financing activities for the nine months ended September 30, 2017 was US$1,560,000~~$3,424,968 as compared to net cash used in ~~financing~~investing activities of ~~US$1,600,832~~$999,481 for the ~~nine~~three months ended ~~September 30, 2016.~~ March 31, 2019.

The cash used in investing activities for the three months ended March 31, 2020 was for the loans disbursed to third parties and related parties of $1,831,708 and $1,593,260, respectively.
Net cash used in investing activities for the three months ended March 31, 2019 was combined effects of purchase of two used luxurious cars of $406,757 and loans disbursed to two third parties of $592,724.
Net Cash Provided by Financing Activities
During the three months ended March 31, 2020, the cash provided by financing activities for the nine months ended September 30, 2017 was mainly from private placement of 1,237,486 shares with four individuals. The cash used in financing activities for the nine months ended September 30, 2016 was mainly attributable to borrowings from related parties of $1,063,773. During the ~~repayment~~three months ended March 31, 2019, the cash provided by financing activities was mainly attributable to borrowings from third parties of ~~bank borrowing.~~$592,724.

Off-balance Sheet Arrangements
39

We do not have any off-balance sheet arrangements as of March 31, 2020.

Contractual Obligations

As of ~~September 30, 2017,~~March 31, 2020, the annual amounts of future minimum payments under certain of our contractual obligations were:

Payment due by period Less than
Total Less than
1 year 1-2 years 2-3 years 3-5 years 5 years
and after Total 1 year 1-2 years Thereafter
Contractual obligations: 　　　　
Operating lease (1) (2) 62,237 30,643 25,202 6,392 - -
$ 62,237 $ 30,643 $ 25,202 $ 6,392 $ - $ -
Operating lease (1) $ 365,076 $ 312,413 $ 52,663          -
Total $ 365,076 $ 312,413 $ 52,663 $ -

(1) ~~Our prior~~During the three months ended March 31, 2020, the Company entered into one additional lease ~~for our office in Wujiang commenced on June 1, 2015 and would expire on May~~contract. As of March 31, ~~2021. In January 2017,~~2020, we ~~terminated this~~had one rental free office lease ~~as we leased~~agreement with a ~~new~~third party and four office ~~(see note 2). No penalty was paid for early termination.~~lease agreement with third parties which expire through June 30, 2021, among which two lease agreements have leases term over 12 months.

(2) ~~During the year ended December 31, 2016, the Company leased its new office under a lease agreement from January 1, 2017 to December 31, 2019.~~ The Company ~~has the right to extend the~~classifies these lease ~~before its expiration~~agreements as operating leases in accordance with ~~a one-month's prior written notice.~~Topic 842.

~~Off-Balance Sheet Arrangements~~
These financial guarantee contracts consist of providing guarantees to banks on behalf of borrowers to help them obtain loans from banks. The contract amounts reflect the extent of involvement the Company has in the guarantee business and also represents the Company’s maximum exposure to credit loss.
The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its borrowers. Financial instruments whose contract amounts represent credit risk are as follows.
September 30, 2017
(unaudited) December 31, 2016
Guarantee 11,367,564 10,893,089
Critical Accounting Policies

Please refer to Note 32 of ~~our Condensed~~the Consolidated Financial Statements included in this Form ~~10Q~~10-Q for details of our critical accounting policies.

~~Recently issued accounting standards~~
~~Please refer to Note 3(u) of our Consolidated Financial Statements included in Form 10-K for details of our recently issued accounting standards.~~
40
~~ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.
ITEM 4. CONTROLS AND PROCEDURES

~~ITEM 4. CONTROLS AND PROCEDURES~~
Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were not effective as of ~~September 30, 2017~~March 31, 2020 (please refer to ~~provide reasonable assurance that information required to be disclosed by the Company~~Item 9A. Controls and Procedures enclosed in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission (“SEC”) rules and forms, and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.Form 10-K filed on May 29, 2020).

~~Inherent~~ Limitations ~~Over Internal Controls~~
~~The Company’s~~on the Effectiveness of Disclosure Controls. Readers are cautioned that our management does not expect that our disclosure controls and procedures or our internal control over financial reporting ~~is designed to provide reasonable assurance regarding the reliability of financial reporting~~will necessarily prevent all fraud and ~~the preparation of financial statements for external purposes in accordance with U.S GAAP. The Company’s~~material error. An internal ~~control over financial reporting includes those policies and procedures that:~~
i) ~~pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;~~
~~ii)~~ provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and
~~iii)~~ provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Management, including the Company’s principal executive officer and principal financial officer, does not expect that the Company’s internal controls will prevent or detect all errors and all fraud. A control system, no matter how well ~~designed~~conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. ~~Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.~~ Because of the inherent limitations in all control systems, no evaluation of ~~internal~~ controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. ~~Also,~~The design of any ~~evaluation of the effectiveness~~system of controls also is based in part upon certain assumptions about the likelihood of future ~~periods are subject to the risk~~events, and there can be no assurance that ~~those internal controls may become inadequate because of changes~~any control design will succeed in ~~business conditions, or that the degree of compliance with the policies or procedures may deteriorate.~~achieving its stated goals under all potential future conditions.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended ~~September 30, 2017~~March 31, 2020 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

41

PART II. OTHER INFORMATION
~~ITEM 1. LEGAL PROCEEDINGS~~
ITEM 1. LEGAL PROCEEDINGS

The Company is involved in various legal actions arising in the ordinary course of its business.

On August 6, 2014, a purported shareholder Andrew Dennison filed a putative class action complaint in the United States District Court District of New Jersey (the “N.J. district court”) relating to a July 25, 2014 press release about the Company’s progress in recovering a significant portion of the $5.4 million the Company paid in the first quarter of 2014 on behalf of loan guarantee customers. The action, ~~Andrew Dennison v. China Commercial Credit, Inc.~~, et al., Case No. 2:2014-cv-04956, alleges that the Company and its current and former officers and directors Huichun Qin, Long Yi, Jianming Yin, Jinggen Ling, Xiangdong Xiao, and John F. Levy violated the federal securities laws by misrepresenting in prior public filings certain material facts about the risks associated with its loan guarantee business. On October 2, 2014, purported shareholders Zhang Yun and SanjivMehrotra (the “Yun Group”) asserted substantially similar claims against the same defendants in a putative class action captioned ~~Zhang Yun v. China Commercial Credit, Inc., et al.~~~~, Case No. 2:14-cv-06136 (D. N.J.). Neither complaint states the amount of damages sought.~~
On or about October 6, 2014, Dennison, the Yun Group and another purported shareholder, Jason Stark, filed motions to consolidate the cases, be appointed as lead plaintiff and to have their respective counsel appointed as lead counsel. On October 31, 2014, the N.J. district court entered an order consolidating the cases under the caption “~~In re China Commercial Credit Inc. Securities Litigation~~~~” and appointing the Yun Group as lead plaintiff (“Class Plaintiff”) and the Yun Group’s counsel as lead counsel.~~
On November 18, 2014, the Yun Group and the Company, which at that point was the only defendant served, entered into a stipulation to transfer of the case to the Southern District of New York. On December 18, 2014, Mr. Levy, who had by then been served, joined in the stipulation. On December 29, 2014, the N.J. district court entered an order transferring the action. The transfer was effected on January 22, 2015, and assigned docket number 1:15-cv-00557-ALC (S.D.N.Y.).
Under the schedule stipulated by the parties, the Yun Group was to file an amended complaint within 60 days of the date that the transfer was effected, and the defendants’ date to answer or move was within 60 days of that filing. On April 7, 2015, the Class Plaintiff filed a Second Amended Class Action Complaint (the “CAC”). The CAC also asserts securities law claims against defendants Axiom Capital Management, Inc., Burnham Securities Inc. and ViewTrade Securities, Inc. (collectively, the “Underwriter Defendants”). The CAC alleges that the Company engaged in a fraudulent scheme by engaging in undisclosed and improper lending practices and made misleading representations regarding its underwriting policies, the loan portfolio quality, the loan loss allowance, compliance with U.S. GAAP and its internal control systems.
In accordance with the Court’s procedures, the Company and Mr. Levy and the Underwriter Defendants requested a Pre-Motion Conference in anticipation of filing a motion to dismiss the CAC, which was held on June 25, 2015. At the conference, the Court adjourned the date to answer or move in order to provide the Class Plaintiff with time to serve certain overseas defendants. After the conference, the Class Plaintiff voluntarily dismissed Jianming Yin, Jinggen Ling and Xiangdong Xiao from the action, and Long Yi agreed to waive service, which left Huichun Qin as the sole remaining defendant to serve.
On November 22, 2016, the Company entered into a Stipulation and Agreement of Settlement (the “Stipulation”) to settle the Securities Class Action. The Stipulation resolves the claims asserted against the Company and certain of its current and former officers and directors in the Securities Class Action without any admission or concession of wrongdoing or liability by the Company or the other defendants. On June 1, 2017, following a final fairness hearing on May 30, 2017 regarding the proposed settlement, the Court entered a final judgment and order that: (i) dismisses with prejudice the claims asserted in the Securities Class Action against all named defendants in connection with the Securities Class Action, including the Company, and releases any claims that were or could have been asserted that arise from or relate to the facts alleged in the Securities Class Action, such that every member of the settlement class will be barred from asserting such claims in the future; and (ii) approves the payment of $220,000 in cash and the issuance of 950,000 shares of its common stock (the “Settlement Shares”) to members of the settlement class. In addition, the Company would incur a payment of $25,000 in cash to class administrator. At present, the Company is waiting for the Court to approve the disbursement of the Settlement Shares. Plaintiff is filing a motion to obtain such approval. The $245,000 cash portion of the settlement has been paid in full. The Company accrued settlement cost aggregating US$1,863,500 and US$690,000 during the nine months ended September, 2017 and 2016, respectively.
~~On July 28, 2017, the Court entered a clarifying order to specify the allocation of attorneys’ fees in accordance with the Stipulation.~~
42a) 2015 Derivative Action
The Settlement Shares are exempt from registration under Section 3(a)(10) of the Securities Act of 1933, as amended. The settlement does not constitute any admission of fault or wrongdoing by the Company or any of the individual defendants.
Two of the Underwriter Defendants, Axiom Capital Management, Inc., and ViewTrade Securities, Inc., have asserted their respective rights to indemnification under the Underwriting Agreements entered into in connection with the Company’s initial public offering and secondary offering. On or about March 16, 2016, CCCR entered into an Advance Funding and Escrow Agreement, under which the CCCR agreed to deposit shares into escrow to fund the advancement obligation, with the initial deposit to be shares valued at Two Hundred Thousand Dollars ($200,000), based upon 80% of the 30 day volume weighted average Trading Price (“VWAP”) for each of the 30 consecutive trading days prior to the date of the Agreement.

On February 3, 2015, a purported shareholder ~~KiramKodali~~Kiran Kodali filed a putative shareholder derivative complaint inagainst the ~~United States District Court for the Southern District of New York, captioned KiranKodali v. Huichun Qin, et al., Case No. 15-cv-806. The action alleges~~Company, alleging that the Company and its ~~current and~~ former officers and directors ~~Huichun Qin, Long Yi, Jianming Yin, Jinggen Ling, Chunfang Shen, John F. Levy, Xiaofang Shen and Chunjiang Yu~~ violated their fiduciary duties, grossly mismanaged the Company and were unjustly enriched based upon the transfer that was the subject of the Internal Review and other grounds substantially similar to those asserted in the class action complaints. ~~Kodali did not serve~~
On July 16, 2019, the Company received a ~~demand upon~~copy of the final order and judgment that the Court entered on July 11, 2019, approving the settlement set forth in the Stipulation. The Stipulation provides for dismissal of the Derivative Action as to the Company and ~~alleges~~the Individual Defendants, and the Company agrees to adopt or maintain certain corporate governance reforms for at least three years. The Stipulation also provides for attorneys’ fees and expenses to be paid by the Individual Defendants’ insurance carriers to plaintiffs’ counsel.
b) 2017 Arbitration with Sorghum
On December 21, 2017, the Company delivered notice (“Notice”) to Sorghum notifying Sorghum that certain recent actions of Sorghum constituted breaches of Sorghum’s covenants under the Exchange Agreement. Specifically, we believe that Sorghum is in breach of Section 6.9 (a and Section 6.11 (b of the Exchange Agreement which required Sorghum to use commercially reasonable efforts and to cooperate fully with the other parties to consummate the transactions contemplated by the Exchange Agreement and to make its directors, officers and employees available in connection with responding in a timely manner to SEC comments. According to the terms of the Exchange Agreement, the Company is entitled to terminate the Exchange Agreement if the breach is not cured within twenty (20 days after the Notice is provided to Sorghum.
On January 25, 2018, the Company filed an arbitration demand ~~is excused.~~(“Arbitration Demand” with the American Arbitration Association (“AAA” against Sorghum in connection with Sorghum’s breach of the Exchange Agreement.
On July 30, 2018, Arbitrator entered a reasoned award, accepting the Company’s proposal for resolution, awarding the Company damages of $1,436,522 against Sorghum and denying Sorghum’s Counterclaim against the Company in its entirety with prejudice. Sorghum has sought to vacate the arbitration award by filing a petition to vacate the arbitration award in the Supreme Court for the State of New York, New York County. The ~~Company and Mr. Levy have been served. An amended derivative complaint was filed on April 20, 2015. On May 29, 2015, the~~ Court ~~“so ordered” a stipulation among Kodali,~~heard the Company and ~~Mr. Levy staying all proceedings in~~Sorghum’s arguments on May 1, 2019, and entered an order vacating the ~~derivative case except for service~~arbitration award. The Company vigorously opposed and moved to confirm the arbitration award on May 6, 2019. On June 5, 2019, the Company filed a notice of ~~process~~appeal with the New York Supreme Court Appellate Division First Department. The appeal was scheduled to be mediated on ~~individual defendants until~~November 20, 2019. On November 15, 2019, the ~~earlier of thirty days of termination~~Company withdrew its appeal filed June 5, 2019, upon the stipulation of the ~~stipulation, dismissal of~~parties and accordingly, the ~~class action with prejudice or the date any of the defendants in the class action file an answer~~arbitration award is deemed to the CAC. The Company believes that this lawsuit is without merit and intends to vigorously defend against it. At this stage of the proceedings, the Company is not able to estimate the probability of success or loss.be vacated.
c) 2018 Court Matter with Shanghai Nonobank Financial Information Service Co. Ltd.

On May 18, 2015, WFOE filed a civil complaint against Huichun Qin with the Wujiang Region Suzhou City People’s Court claiming Mr. Qin’s misappropriation of RMB 7 million in July 2014. The complaint was rejected due to a procedural issue. The Company has since learned that Mr. Qin has been convicted and sentenced to a term of incarceration of approximately five years. In view of this information,August 2, 2018, the Company ~~is evaluating its strategic options.~~
~~The Company and its directors were parties~~became party to ~~a lawsuit~~an action filed ~~on September 1, 2017,~~ by ~~Juan C. Rojas~~Shanghai Nonobank Financial Information Service Co. Ltd. (“Plaintiff”)~~, on behalf of himself and all other similarly situated stockholders of China Commercial Credit, Inc.,~~ in the ~~Chancery~~Supreme Court offor the State of ~~Delaware (the “Delaware Chancery~~New York, New York County (“NY Supreme Court”~~) (Case~~ (Index No. ~~2017-0633-JTL)~~653834/2018 (the “Action”)~~, which sought injunctive relief, costs,~~. Plaintiff’s complaint seeks to recover approximately $3.5 million of Plaintiff’s funds that were allegedly required to be held in escrow in New York pursuant to an agreement by and ~~attorney’s fees. Plaintiff’s Verified Class Action Complaint (“Complaint”~~between Plaintiff, Yang Jie and Yi Lin (the “Complaint”). Plaintiff has alleged that the ~~Company’s directors breached their fiduciary duties~~funds were required to be held in escrow in a New York attorney trust account pending the Company’s stockholders by failing to disclose all necessary material information relating to the Company’s entry into an Exchange Agreement (“Exchange Agreement”) with Sorghum Investment Holdings Limited (“Sorghum”) on August 9, 2017, and preventing the Company’s stockholders from castingalleged consummation of a fully informed vote on the Company’s acquisition of Sorghum, and other proposals contained in the Company’s preliminary proxy statement, dated August 14, 2017 (“Preliminary Proxy Statement). Plaintiff filed a Motion to Expedite the Proceeding (“Motion to Expedite”) seeking to expedited consideration ofmerger between Plaintiff’s ~~Motion for Preliminary Injunction, which was filed simultaneously with Plaintiff’s Complaint. The Company opposed the Motion to Expedite on September 20, 2017,~~parent company and the ~~Delaware Chancery Court held a hearing on~~Company. Plaintiff alleged two causes of action against the ~~Motion to Expedite on September 22, 2017, wherein it denied Plaintiff’s Motion to Expedite without prejudice.~~Company for fraud/fraudulent inducement and conversion. On ~~September 28, 2017,~~August 30, 2018, the Company filed a motion to dismiss Plaintiff’s ~~Complaint (“Motion to Dismiss”). Plaintiff~~causes of action against the Company. The Court has ~~not responded to~~scheduled oral arguments on the Company’s ~~Motion~~motion to ~~Dismiss.~~dismiss for May 1, 2019.

On ~~October 10, 2017,~~July 15, 2019, the Company received a copy of the decision and order the Court entered on July 12, 2019, granting the Company’s motion to dismiss the Complaint in its entirety as against the Company without prejudice, with costs and disbursements to the Company as taxed by the Clerk of the Court, and the Clerk is directed to enter judgment accordingly in favor of the Company.
d) 2020 Court Matter with Harrison Fund
On April 6, 2020, the Company filed ~~Amendment No. 1 to its Preliminary Proxy Statement (the “Amended Preliminary Proxy”) with the U.S. Securities and Exchange Commission (the “Commission”~~a law suit against Harrison Fund, LLC (“Harrison Fund”) in ~~response~~the United States District Court for the Northern District of California (the “District Court”) (Case No. 3:20-cv-2307). The Company had invested $1,000,000 in Harrison Fund around May 2019. However, Harrison Fund had been reluctant to the Commission’s September 8, 2017 comment letter (“Comment Letter”). After reviewing the Amended Preliminary Proxy, Plaintiff determined that the Company’s Amended Preliminary Proxy rendered the claims asserted in Plaintiff’s Complaint moot and/or otherwise unsuitable for further pursuit. On October 19, 2017,disclose related investment information to the Company and ~~Plaintiff entered into~~it was discovered that certain information presented on Harrison Fund’s brochure appeared to be problematic. The Company demanded a ~~stipulation (“Stipulation”) wherein Plaintiff agreed to voluntarily dismiss his claims against~~return of its investment from Harrison Fund. When the Company ~~and its directors, with prejudice. The Delaware Chancery Court granted~~failed to obtain a response from Harrison Fund, it filed the ~~Stipulation on October 20, 2017, and entered an Order dismissing~~complaint against Harrison Fund seeking to recover the Action with prejudice. In accordance with the Order, the Company will advise the Delaware Chancery Court within fifteen (15) days of the earlier of (a) the stockholder vote on the Exchange Agreement relating to the proposals, or (b) the termination of the Exchange Agreement, and whether the parties to the Action have reached an agreement with respect to Plaintiff’s anticipated request for fees and expenses. Currently, no compensation in any form has passed from the Company, or its directors, to Plaintiff or Plaintiff’s attorneys in the Action, and the Company has not made a promise to give any such compensation. On November 6, 2017, the Company filed Amendment No. 2 to its Preliminary Proxy Statement with the Commission in further response to comments from the Commission.$1,000,000 investment.

43

ITEM 1A. RISK FACTORS

~~ITEM 1A. RISK FACTORS~~As of the date of this Report, there have been no material changes to the risk factors disclosed in our annual report on Form 10-K filed with the SEC on May 29, 2020.

~~Not applicable.~~
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~
On ~~August 10, 2017,~~January 22, 2020, the Company also agreed to sell unsecured senior convertible promissory notes (“Notes”) in the aggregate principal amount of $30,000,000 accompanied by warrants to purchase 20,000,000 shares of Common Stock issuable upon conversion of the Notes at an exercise price of $1.80. On March 23, 2020, the Company issued ~~4,500~~the Notes and ~~5,500 restricted shares~~Warrants to ~~Axiom Capital Management, Inc. and Michael S. Jacobs, respectively, as compensation for~~the investors. In April 2020, the Company received the proceeds of $30,000,000 from the issuance of Notes and Warrants.
The Notes have a ~~fairness opinion. All these~~maturity date of 12 months with an interest rate of 7.5% per annum. Holders have the right to convert all or any part of the Notes into shares of Common Stock at a conversion price of $1.50 per share 30 days after its date of issuance. The Company retains the right to prepay the Note at any time prior to conversion with an amount in cash equal to 107.5% of the principal that the Company elects to prepay.
The Warrants will be exercisable immediately upon the date of issuance at the exercise price of $1.80 for cash (the “Warrant Shares”. The Warrants may also be exercised cashless if at any time after the six-month anniversary of the issuance date, there is no effective registration statement registering, or no current prospectus available for, the resale of the Warrant Shares, exercised, The Warrants will expire five years from its date of issuance. The Warrants are ~~issued~~subject to anti-dilution provisions to reflect stock dividends and splits or other similar transactions. The Warrants contain a mandatory exercise right for the Company to force exercise of the Warrants if the Company’s common stock trades at or above $3.00 for 20 consecutive trading days, provided, among other things, that the shares issuable upon exercise of the are registered or may be sold pursuant to ~~Section 4(a)(2)~~Rule 144 and the daily trading volume exceeds 300,000 shares of Common stock per trading day on each trading day in a period of 20 consecutive trading days prior to the applicable date.
In April 2020, the Holders elected to convert the Notes at a conversion price of $1.50 per share and also exercise the Warrants at an exercise price of $1.80 per share, and paid a cash consideration of $36,000,000 for the exercise of the ~~Securities Act and/or Regulation D promulgated thereunder.~~
~~On September 14, 2017, the Company issued 460,000 restricted shares to certain advisors and finders as compensation for their services rendered in connection with the acquisition~~Warrants by April 15, 2020. As a result, an aggregate of ~~Sorghum Investment Holdings Limited. All these shares are issued pursuant to Section 4(a)(2) of the Securities Act.~~
On September 27, 2017, the Company entered into a securities purchase Agreement (the “SPA”) with certain accredited and sophisticated investors in connection with a private placement offering (the “Offering”) of 552,486 shares (“Shares”) of common stock, par value $0.001 per share, of the Company, for gross proceeds to the Company of one million dollars. The purchase price per share of the Offering is $1.81. In connection with the purchase of the Shares, the Purchasers received a warrant (the “Warrant”) to purchase up to the number of40,000,000 shares of the Company’s ~~common stock equal to 193,370 of the shares of common stock purchased by the Purchasers pursuant to the SPA. The Warrant has an exercise price of $2.26 per share and is exercisable~~Common Stock were issued on the date of issuance and expire five years form the date of issuance. The Offering closed on September 29, 2017. The Shares issued in the Offering are exempt from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.May 18, 2020.
~~ITEM 3. DEFAULTS UPON SENIOR SECURITIES~~
ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.
~~ITEM 4. MINE SAFETY DISCLOSURES~~
ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.
~~ITEM 5. OTHER INFORMATION~~
ITEM 5. OTHER INFORMATION

None.
~~ITEM 6. EXHIBITS~~
~~The following exhibits are filed herewith:~~
ITEM 6. EXHIBITS

Exhibit
No. Description

3.1* Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.1 of the draft registration statement on Form DRS filed on February 14, 2013)
3.2* Bylaws of Registrant (incorporated by reference to Exhibit 3.2 of the draft registration statement on Form DRS filed on February 14, 2013)
3.3* Articles of Association of Wujiang Luxiang Rural Microcredit Co. Ltd. (incorporated by reference to Exhibit 3.3 of the registration statement on Form S-1/A filed on June 27, 2013)
3.4* Certificate of Approval of Wujiang Luxiang Rural Microcredit Co. Ltd. (incorporated by reference to Exhibit 3.4 of the registration statement on Form S-1 filed on June 7, 2013)
3.5* Certificate of Amendment of the Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.5 of the registration statement on Form S-1/A filed on July 16, 2013)
3.6* Certificate of Amendment to the Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on January 16, 2019)
3.7* Certificate of Amendment to the Certificate of Incorporation of Registrant, incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on June 7, 2019
3.8* Certificate of Amendment to the Certificate of Incorporation of Registrant, incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on March 12, 2020
4.1* Form of Common Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on April 12, 2019
4.2* Form of Common Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on May 22, 2019

4.3* Form of Amended & Restated Common Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.2 of the Current Report on Form 8-K filed on May 22, 2019
4.4* Form of Exchange Warrant, incorporated herein by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on September 3, 2019
10.1* Form of Securities Purchase Agreement, incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on January 22, 2020
10.2* Form of Note Securities Purchase Agreement, incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on January 22, 2020
10.3* Unofficial Translation of Warehousing Agreement dated January 22, 2020, by and between Huamucheng and Foshan Nanchu Storage Management Co., Ltd., incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed on January 22, 2020
10.4* Unofficial Translation of Purchase Agreement dated January 22, 2020, by and between Huamucheng and Shenzhen Qianhai Baiyu Supply Chain Co., Ltd., incorporated by reference to Exhibit 10.4 of the Current Report on Form 8-K filed on January 22, 2020
10.5* Unofficial Translation of Sales Agreement dated January 22, 2020, by and between Huamucheng and Yunfeihu Cross-border E-Commerce Co., Ltd., incorporated by reference to Exhibit 10.5 of the Current Report on Form 8-K filed on January 22, 2020
10.6* Amended and Restated Employment Agreement dated January 9, 2020 by and between Registrant and Renmei Ouyang, incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on January 10, 2020
10.7* Employment Agreement dated January 9, 2020 by and between Registrant and Qun Xie, incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on January 10, 2020
10.8* Director Offer Letter dated January 9, 2020 by and between Registrant and Qun Xie, incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed on January 10, 2020
31.1** Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
31.2** Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1** Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2** Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*101.INS XBRL Instance Document
101.SCH*101.SCH XBRL Taxonomy Extension Schema Document
101.CAL*101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE*101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.
** Furnished herewith.
* Previously filed
44
** Filed herewith
36

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TD HOLDINGS, INC.
~~November 14, 2017~~ ~~CHINA COMMERCIAL CREDIT, INC.~~
Date: June 26, 2020 By: /s/ ~~Mingjie Zhao~~Renmei Ouyang
Name:   ~~Mingjie Zhao~~Renmei Ouyang
Title:
Chief Executive Officer
(Principal Executive Officer)

By: /s/ ~~Long Yi~~Yang An
Name: Yang An
Title: Chief Financial Officer
~~Long Yi~~
~~Chief Financial Officer~~
(Principal Financial and Accounting Officer)

45
~~Exhibit~~
~~No.~~ ~~Description~~
31.1* ~~Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934~~
31.2* ~~Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934~~
32.1** ~~Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
32.2** ~~Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
101.INS* ~~XBRL Instance Document~~
101.SCH* ~~XBRL Taxonomy Extension Schema Document~~
101.CAL* ~~XBRL Taxonomy Extension Calculation Linkbase Document~~
101.DEF* ~~XBRL Taxonomy Extension Definition Linkbase Document~~
101.LAB* ~~XBRL Taxonomy Extension Label Linkbase Document~~
101.PRE* ~~XBRL Taxonomy Extension Presentation Linkbase Document~~

* Filed herewith.
** Furnished herewith.
4637

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001		GLG		Nasdaq Capital Market

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐☒	Smaller reporting company	☒
		Emerging growth company	☒☐

	September 30,
	2017 (Unaudited)			December 31, 2016

ASSETS
Cash and cash equivalent	$	3,030,468		$	768,501
Restricted cash		9,596			9,163
Notes receivable		279,493			107,995
Loans receivable, net of allowance for loan losses of $54,821,187 and $51,708,062 for September 30, 2017 and December 31, 2016, respectively		3,445,533			6,814,919
Investment in direct financing lease, net of allowance for direct financing lease losses of $2,615,635 and $2,441,663 for September 30, 2017 and December 31, 2016, respectively		450,795			871,159
Interest receivable		77,329			11,408
Due from a related party		-			469,418
Property and equipment, net		15,727			19,969
Guarantee paid on behalf of guarantee service customers, net of allowance for repayment on behalf of guarantee service customers losses of $12,089,724 and $11,543,868 for September 30, 2017 and December 31, 2016, respectively		54			98,887
Guarantee paid on behalf of a related party, net of allowance for repayment on behalf of a related party losses of $102,270 and $98,000 for September 30, 2017 and December 31, 2016, respectively		102,270			98,000
Other assets		302,748			301,324
Total Assets	$	7,714,013		$	9,570,743

LIABILITIES AND SHAREHOLDERS’ (DEFICIT) /EQUITY
Liabilities
Deposits payable	$	781,379		$	748,765
Unearned income from financial guarantee services and finance lease services		1,878			20,819
Accrual for financial guarantee services		7,058,187			6,005,608
Other current liabilities		324,180			273,447
Income tax payable		240,739			169,226
Deferred tax liability		81,901			139,947
Total Liabilities		8,488,264			7,357,812

Shareholders' (Deficit)/ Equity
Series A Preferred Stock (par value $0.001 per share, 1,000,000 shares authorized at September 30, 2017 and December 31, 2016, respectively; nil and nil shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively)	$	-		$	-
Series B Preferred Stock (par value $0.001 per share, 5,000,000 shares authorized at September 30, 2017 and December 31, 2016, respectively; nil and nil shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively)		-			-
Common stock (par value $0.001 per share, 100,000,000 shares authorized; 19,030,915 and 16,637,679 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively)		19,030			16,638
Subscription receivable		(1,062	)		(1,062	)
Additional paid-in capital		68,664,627			63,124,040
Statutory reserve		5,442,150			5,442,150
Due from a non-controlling shareholder		(1,051,857	)		(1,007,953	)
Accumulated deficit		(78,764,900	)		(70,234,656	)
Accumulated other comprehensive income		4,917,761			4,873,774
Total Shareholders’ (Deficit)/ Equity		(774,251	)		2,212,931
Total Liabilities and Shareholders’ (Deficit)/Equity	$	7,714,013		$	9,570,743

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017 (Unaudited)			2016 (Unaudited)			2017 (Unaudited)			2016 (Unaudited)
Interest income
Interests and fees on loans and direct financing lease	$	128,460		$	722,117		$	290,566		$	1,203,663
Interests on deposits with banks		4,042			263			4,728			3,526
Total interest and fee income		132,502			722,380			295,294			1,207,189

Interest expense
Interest expense on short-term bank loans		-			-			-			(30,057	)
Net interest income		132,502			722,380			295,294			1,177,132

Reversal of provision/(Provision) for loan losses		452,786			226,694			(2,420,698	)		133,177
(Provision)/Reversal of provision for direct financing lease losses		(18,616	)		242,180			(66,113	)		242,180
Net interest income/(loss) after provision for loan losses and financing lease losses		566,672			1,191,254			(2,191,517	)		1,552,489

Commissions and fees on financial guarantee services		-			9,117			2,843			26,308
(Provision)/Reversal of provision for financial guarantee services		(1,142,807	)		(599,808	)		(830,140	)		385,352
Commission and fee (loss)/income on guarantee services, net		(1,142,807	)		(590,691	)		(827,297	)		411,660

Net (Loss)/Revenue		(576,135	)		600,563			(3,018,814	)		1,964,149

Non-interest income
Other non-interest income		-			-			-			48,945
Total non-interest income		-			-			-			48,945

Non-interest expense
Salaries and employee surcharge		(180,461	)		(120,130	)		(707,012	)		(548,978	)
Rental expenses		(13,975	)		(28,132	)		(41,242	)		(64,850	)
Business taxes and surcharge		(1,376	)		9,617			(3,221	)		(21,798	)
Transaction costs relating to acquisition		(1,356,285	)		-			(2,136,285	)		-
Litigation and settlement cost for the shareholders’ lawsuit		-			-			(1,838,500	)		(690,000	)
Other operating expenses		(387,003	)		(1,086,092	)		(784,815	)		(1,893,027	)
Total non-interest expense		(1,939,100	)		(1,224,737	)		(5,511,075	)		(3,218,653	)

Foreign exchange loss		(57	)		(271	)		(355	)		(557	)

Loss Before Income Taxes		(2,515,292	)		(624,445	)		(8,530,244	)		(1,206,116	)
Income tax expense		-			-			-			-
Net Loss	$	(2,515,292	)	$	(624,445	)	$	(8,530,244	)	$	(1,206,116	)

Loss per Share- Basic and Diluted		(0.139	)		(0.039	)		(0.491	)		(0.086	)

Weighted Average Shares Outstanding-Basic and Diluted		18,092,369			15,889,853			17,371,183			14,026,815

Net Loss		(2,515,292	)		(624,445	)		(8,530,244	)		(1,206,116	)
Other comprehensive income
Foreign currency translation adjustment		14,699			260,803			43,987			205,546
Comprehensive Loss	$	(2,500,593	)	$	(363,642	)	$	(8,486,257	)	$	(1,000,570	)

	For The Nine Months Ended September 30,
	2017 (Unaudited)			2016 (Unaudited)
Cash Flows from Operating Activities:
Net loss	$	(8,530,244	)	$	(1,206,116	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		4,999			46,455
Provision/(Reversal of provision) for loan losses		2,420,698			(133,177	)
Provision/(Reversal of provision) for direct financing lease losses		66,113			(242,180	)
Provision/(Reversal of provision) of provision for financial guarantee services		830,140			(385,352	)
Deferred tax credit		-			(40,364	)
Income from disposal of property and equipment		-			(48,945	)
Shares issued to executive officers and professional services		2,159,480			1,354,424
Provision for settlement expenses against legal proceedings		1,843,500			465,000
Changes in operating assets and liabilities:
Restricted cash		(34	)		-
Interest receivable		(63,967	)		-
Other assets		11,439			8,060
Unearned income from guarantee services and finance lease services		(19,406	)		(23,572	)
Other current liabilities		28,653			118,255
Income tax payable		-			39,641
Net Cash Used in Operating Activities		(1,248,629	)		(47,871	)

Cash Flows from Investing Activities:
Loans collection from third parties		1,155,055			2,147,593
Payment of loans on behalf of guarantees		-			(127,886	)
Collection from guarantees for loan paid on behalf of customers		44,075			1,825,730
Collection of principal of finance lease, in installments		227,723			484,361
Deposit released from banks for financial guarantee services		-			801,530
Deposit paid to banks for financial guarantee services		-			(694,403	)
Purchases of property and equipment and intangible asset		-			(48,342	)
Disposal of property and equipment		-			56,557
Short-term loan paid to a related party		-			(1,945,224	)
Short-term loan collected from a related party		478,954			-
Net Cash Provided by Investing Activities		1,905,807			2,499,916

Cash Flows From Financing Activities:
Cash raised in private placement		1,560,000			1,000,000
Repayment of short-term bank borrowings		-			(2,600,832	)
Net Cash Provided by/ (Used in) Financing Activities		1,560,000			(1,600,832	)

Effect of Exchange Rate Changes on Cash and Cash Equivalents		44,789			9,747

Net Increase In Cash and Cash Equivalents		2,261,967			860,960
Cash and Cash Equivalents at Beginning of Period		768,501			306,401
Cash and Cash Equivalents at End of Period	$	3,030,468		$	1,167,361

Supplemental Cash Flow Information
Cash paid for interest expense	$	-		$	30,057
Cash paid for income tax	$	-		$	-

		September 30, 2017				December 31, 2016
Balance sheet items, except for equity accounts			6.6549				6.9448

	For the nine months ended September 30,
	2017		2016
Items in the statements of operations and comprehensive loss, and statements of cash flows		6.8065		6.5802

		September 30, 2017 (Unaudited)				December 31, 2016
Guarantee		$	11,367,564			$	10,893,089

	September 30, 2017 (Unaudited)		December 31, 2016
Allowance for immature financial guarantee services	$	7,058,187	$	6,005,608

Allowance for repayment on behalf of guarantee service customers losses		12,089,724		11,543,868
Allowance for repayment on behalf of a related party losses		102,270		98,000
Total allowance for repayment on behalf of guarantee customers losses	$	12,191,994	$	11,641,868

	September 30, 2017 (Unaudited)			December 31, 2016

Business loans	$	36,783,453		$	37,786,657
Personal loans		21,483,267			20,736,324
Total Loans receivable		58,266,720			58,522,981
Allowance for loan losses
Collectively assessed		(19,835	)		(50,481,240	)
Individually assessed		(54,801,352	)		(1,226,822	)
Allowance for loan losses		(54,821,187	)		(51,708,062	)
Loans receivable, net	$	3,445,533		$	6,814,919

	1-89 Days Past Due		90 - 179 Days Past Due		180 - 365 Days Past Due		Over 1 year Past Due		Total Past Due		Current		Total Loans

Business loans	$	-	$	-	$	11,437,290	$	23,362,662	$	34,799,952	$	1,983,501	$	36,783,453
Personal loans		-		-		6,544,051		14,939,216		21,483,267		-		21,483,267
	$	-	$	-	$	17,981,341	$	38,301,878	$	56,283,219	$	1,983,501	$	58,266,720

Five Categories	September 30, 2017 (Unaudited)		%			December 31, 2016		%

Pass	$	1,983,501		3.4	%	$	1,900,710		3.2	%
Special mention		-		-			-		-
Substandard		-		-			-		-
Doubtful		2,750,359		4.7	%		9,866,430		16.9	%
Loss		53,532,860		91.9	%		46,755,841		79.9	%
Total	$	58,266,720		100	%	$	58,522,981		100	%

	Business Loans (Unaudited)			Personal Loans (Unaudited)			Total (Unaudited)
For the three months ended September 30, 2017
Beginning balance	$	35,315,516		$	20,584,442		$	55,899,958
Charged off		(1,579,009	)		-			(1,579,009	)
Recoveries		(367,925	)		(113,862	)		(481,787	)
Provisions		-			-			-
Foreign exchange loss		605,711			376,314			982,025
Ending balance		33,974,293			20,846,894			54,821,187
Ending balance: individually evaluated for impairment		33,954,458			20,846,894			54,801,352
Ending balance: collectively evaluated for impairment	$	19,835		$	-		$	19,835

	Pass (Unaudited)		Special Mention (Unaudited)		Substandard (Unaudited)		Doubtful (Unaudited)		Loss (Unaudited)		Total (Unaudited)

Business loans	$	1,983,501	$	-	$	-	$	1,669,953	$	33,129,999	$	36,783,453
Personal loans		-		-		-		1,080,406		20,402,861		21,483,267
	$	1,983,501	$	-	$	-	$	2,750,359	$	53,532,860	$	58,266,720

	September 30, 2017 (Unaudited)			December 31, 2016

Total minimum lease payments to be received	$	3,365,941		$	3,599,831
Less: Amounts representing estimated executory costs		-			-
Minimum lease payments receivable		3,365,941			3,599,831
Less Allowance for uncollectible		(2,615,635	)		(2,441,663	)
Net minimum lease payments receivable		750,306			1,158,168
Estimated residual value of leased property					-
Less: Unearned income		(299,511	)		(287,009	)
Net investment in direct financing lease	$	450,795		$	871,159

	Useful Life (years)	September 30, 2017 (Unaudited)			December 31, 2016
Furniture and fixtures	5	$	21,715		$	20,808
Electronic equipment	3		137,033			131,314
Leasehold improvement	3		166,617			159,662
Less: accumulated depreciation			(309,638	)		(291,815	)
Property and equipment, net		$	15,727		$	19,969

	September 30, 2017 (Unaudited)			December 31, 2016
Accrued payroll	$	40,470		$	37,575
Accrued office rental expenses		28,550			34,558
Other tax recoverable		(43,353	)		(44,007	)
Accrued provision for cash settlement against legal proceedings		245,000			225,000
Other payable		53,513			20,321
	$	324,180		$	273,447

	September 30, 2017 (Unaudited)		December 31, 2016

Suzhou Rongshengda Investment Holding Co., Ltd.	$	-	$	469,418
Chunjia Textile		204,540		196,001
Huichun Qin	$	1,051,857	$	1,007,953

	Rental payments (Unaudited)

Year ending September 30, 2018		30,643
Year ending September 30, 2019		25,202
Year ending September 30, 2020		6,392
Total	$	62,237

	March 31, 2020		December 31, 2019

Guangzhou Chengji (1)	$	1,920,589	$	970,318
Lu Zhao (2)		70,306		33,269
Jiaxi Gao (3)		7,994		8,134
Tao Sun (3)		6,515		4,206
Guotao Deng (3)		487		1,435
Total	$	2,005,891	$	1,017,362

	For the Three Months Ended March 31, 2020
	Tianxing Business			Huamucheng Business			Unallocated			Total
Revenue	$	14,051		$	1,469,009		$	-		$	1,483,060
Cost of revenue and related tax		(99,314	)		(1,055,860	)		-			(1,155,174	)
Gross profit	$	(85,263	)	$	413,149		$	-		$	327,886
Interest (expense) income, net	$	(57,425	)	$	44,061		$	19,001		$	5,637
Income tax expense	$	-		$	(48,380	)	$	-		$	(48,380	)
Segment (loss) profit	$	(213,444	)	$	143,930		$	(70,458	)	$	(139,972	)
Segment assets as of March 31, 2020	$	4,724,042		$	5,505,654		$	2,384,485		$	12,614,181

	For the Three Months Ended March 31, 2019
	Tianxing Business			Huamucheng Business		Unallocated		Total
Revenue	$	399,999		$	-	$	-	$	399,999
Cost of revenue and related tax		(237,651	)		-		-		(237,651	)
Gross profit	$	162,348		$	-	$	-	$	162,348
Interest income, net	$	10,463		$	-	$	-	$	10,463
Income tax expense	$	-		$	-	$	-	$	-
Segment loss	$	(1,829,826	)	$	-	$	-	$	(1,829,826	)
Segment assets as of March 31, 2019	$	2,941,747		$	-	$	-	$	2,941,747

	March 31, 2020		December 31, 2019

Rights of use lease assets	$	401,034	$	41,188

Operating lease liabilities, current	$	302,028	$	-
Operating lease liabilities, noncurrent		52,352		-
Total operating lease liabilities	$	354,380	$	-

Twelve months ended March 31, 2021	$	312,413
Twelve months ended March 31, 2022		52,663
Total lease payments		365,076
Less: imputed interest		(10,696	)
Present value of lease liabilities	$	354,380

	For the Three Months Ended March 31,						Change
	2020			2019			Amount			%
Revenues
Revenue from sales of commodity products	$	1,053,632		$	-		$	1,053,632			100	%
Revenue from supply chain management services		415,377			-			415,377			100	%
Income from operating leases		14,051			399,999			(385,948	)		(96	)%
Total Revenue		1,483,060			399,999			1,083,061			271	%

Cost of revenue
Cost of revenue - commodity product sales - related party		(1,055,143	)		-			(1,055,143	)		100	%
Cost of revenue - supply chain management services		(717	)		-			(717	)		100	%
Cost of operating lease		(99,314	)		(237,651	)		138,337			(58	)%
Total cost of revenue		(1,155,174	)		(237,651	)		(917,523	)		386	%

Gross profit		327,886			162,348			165,538			102	%

Operating expenses
Selling, general, and administrative expenses		(425,115	)		(1,906,319	)		1,481,204			(78	)%
Impairment on leasing business assets		-			(96,318	)		96,318			(100	)%
Total operating cost and expenses		(425,115	)		(2,002,637	)		1,577,522			(79	)%

Other income, net
Interest income, net		5,637			10,463			(4,826	)		(46	)%
Total other income, net		5,637			10,463			(4,826	)		(46	)%

Loss Before Income Taxes		(91,592	)		(1,829,826	)		1,738,234			(95	)%

Income tax expenses		(48,380	)		-			(48,380	)		100	%

Net Loss	$	(139,972	)	$	(1,829,826	)	$	1,689,854			(92	)%

	September 30, 2017 (unaudited) Amount		Percent of Total			December 31, 2016 Amount		Percent of Total

Business loans	$	36,783,453		63.13	%	$	37,786,657		64.57	%
Personal loans		21,483,267		36.87	%		20,736,324		35.43	%
Total Loans receivable	$	58,266,720		100	%	$	58,522,981		100	%

	September 30, 2017 (unaudited)			December 31, 2016

Nonaccrual loans	$	56,283,219		$	56,579,073
Allowance for loan losses	$	54,821,187		$	51,708,062
Loans receivable	$	58,266,720		$	58,522,981
Total assets	$	7,714,013		$	9,570,743
Nonaccrual loans to loans receivable		96.60	%		96.68	%
Nonperforming assets to total assets		729.62	%		591.17	%
Allowance for loan losses to loans receivable		94.09	%		88.36	%
Allowance for loan losses to non-accrual loans		97.40	%		91.39	%

	For the nine months ended September 30,
	2017			2016
Net cash used in operating activities	$	(1,248,629	)	$	(47,871	)
Net cash provided by investing activities		1,905,807			2,499,916
Net cash provided by (used in) financing activities		1,560,000			(1,600,832	)
Effects of exchange rate changes on cash		44,789			9,747
Net cash inflow	$	2,261,967		$	860,960


●	~~An increase in~~502,391 restricted shares were issued to ~~directors and professional~~ service providers as compensation for past services, at a fair value of US$805,056. As an incentive to the efforts made by the Company’s management and professional service providers in acquisition of Sorghum, the Company issued more restricted shares during the nine months ended September 30, 2017.

●	~~An increase in provision for settlement expenses against legal proceeding of US$1,378,500. As we accrued expenses for additional share settlement in the nine months ended September 30, 2017.~~ $884,208

	Payment due by period														Less than
	Total		Less than 1 year		1-2 years		2-3 years		3-5 years		5 years and after		Total		1 year		1-2 years		Thereafter
Contractual obligations:
Operating lease (1) (2)		62,237		30,643		25,202		6,392		-		-
	$	62,237	$	30,643	$	25,202	$	6,392	$	-	$	-
Operating lease (1)													$	365,076	$	312,413	$	52,663		-
Total													$	365,076	$	312,413	$	52,663	$	-

Exhibit No.		Description

3.1*		Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.1 of the draft registration statement on Form DRS filed on February 14, 2013)
3.2*		Bylaws of Registrant (incorporated by reference to Exhibit 3.2 of the draft registration statement on Form DRS filed on February 14, 2013)
3.3*		Articles of Association of Wujiang Luxiang Rural Microcredit Co. Ltd. (incorporated by reference to Exhibit 3.3 of the registration statement on Form S-1/A filed on June 27, 2013)
3.4*		Certificate of Approval of Wujiang Luxiang Rural Microcredit Co. Ltd. (incorporated by reference to Exhibit 3.4 of the registration statement on Form S-1 filed on June 7, 2013)
3.5*		Certificate of Amendment of the Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.5 of the registration statement on Form S-1/A filed on July 16, 2013)
3.6*		Certificate of Amendment to the Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on January 16, 2019)
3.7*		Certificate of Amendment to the Certificate of Incorporation of Registrant, incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on June 7, 2019
3.8*		Certificate of Amendment to the Certificate of Incorporation of Registrant, incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on March 12, 2020
4.1*		Form of Common Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on April 12, 2019
4.2*		Form of Common Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on May 22, 2019

4.3*		Form of Amended & Restated Common Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.2 of the Current Report on Form 8-K filed on May 22, 2019
4.4*		Form of Exchange Warrant, incorporated herein by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on September 3, 2019
10.1*		Form of Securities Purchase Agreement, incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on January 22, 2020
10.2*		Form of Note Securities Purchase Agreement, incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on January 22, 2020
10.3*		Unofficial Translation of Warehousing Agreement dated January 22, 2020, by and between Huamucheng and Foshan Nanchu Storage Management Co., Ltd., incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed on January 22, 2020
10.4*		Unofficial Translation of Purchase Agreement dated January 22, 2020, by and between Huamucheng and Shenzhen Qianhai Baiyu Supply Chain Co., Ltd., incorporated by reference to Exhibit 10.4 of the Current Report on Form 8-K filed on January 22, 2020
10.5*		Unofficial Translation of Sales Agreement dated January 22, 2020, by and between Huamucheng and Yunfeihu Cross-border E-Commerce Co., Ltd., incorporated by reference to Exhibit 10.5 of the Current Report on Form 8-K filed on January 22, 2020
10.6*		Amended and Restated Employment Agreement dated January 9, 2020 by and between Registrant and Renmei Ouyang, incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on January 10, 2020
10.7*		Employment Agreement dated January 9, 2020 by and between Registrant and Qun Xie, incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on January 10, 2020
10.8*		Director Offer Letter dated January 9, 2020 by and between Registrant and Qun Xie, incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed on January 10, 2020
31.1**		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
31.2**		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*101.INS		XBRL Instance Document
101.SCH*101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL*101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

~~November 14, 2017~~	~~CHINA COMMERCIAL CREDIT, INC.~~

Date: June 26, 2020	By:	/s/ ~~Mingjie Zhao~~Renmei Ouyang
	Name:	~~Mingjie Zhao~~Renmei Ouyang
	Title:	Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ ~~Long Yi~~Yang An
	Name:	Yang An
	Title:	Chief Financial Officer
		~~Long Yi~~
		~~Chief Financial Officer~~ (Principal Financial and Accounting Officer)