Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 15, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | China Commercial Credit Inc | |
Entity Central Index Key | 1,556,266 | |
Trading Symbol | CCCR | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 22,236,579 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
ASSETS | ||
Cash | $ 2,265,145 | $ 2,498,194 |
Restricted cash | 10,205 | 9,841 |
Short-term investments | 384,237 | |
Notes receivable | 15,922 | 147,547 |
Loans receivable, net of allowance for loan losses of $37,594,756 and $36,613,393 at March 31, 2018 and December 31, 2017, respectively | 4,917,923 | 4,064,921 |
Investment in direct financing lease, net of allowance for direct financing lease losses of $2,628,176 and $2,537,008 at March 31, 2018 and December 31, 2017, respectively | ||
Interest receivable | 58,406 | 35,440 |
Property and equipment, net | 14,712 | 16,046 |
Guarantee paid on behalf of guarantee service customers, net of allowance for repayment on behalf of guarantee service customers losses of $1,974,740 and $2,073,282 at March 31, 2018 and December 31, 2017, respectively | ||
Guarantee paid on behalf of a related party, net of allowance for repayment on behalf of a related party losses of $nil and $nil at March 31, 2018 and December 31, 2017, respectively | ||
Other assets | 27,728 | 9,058 |
Total Assets | 7,310,041 | 7,165,284 |
Liabilities | ||
Deposits payable | 270,670 | 261,281 |
Accrual for financial guarantee services | 9,884,388 | 9,270,882 |
Other current liabilities | 94,725 | 166,440 |
Subscription for private placements | 524,974 | 699,974 |
Due to a related party | 382,123 | 398,073 |
Income tax payable | 341,862 | 330,095 |
Other noncurrent liabilities | 261,540 | 1,311,000 |
Total Liabilities | 11,760,282 | 12,437,745 |
Shareholders' Deficit | ||
Common stock (par value $0.001 per share, 100,000,000 shares authorized; 20,013,415 and 19,250,915 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively) | 20,013 | 19,251 |
Subscription receivable | (1,062) | (1,062) |
Additional paid-in capital | 68,430,044 | 67,058,807 |
Statutory reserve | 5,442,150 | 5,442,150 |
Due from a non-controlling shareholder | (1,114,525) | (1,075,864) |
Accumulated deficit | (81,920,294) | (81,534,396) |
Accumulated other comprehensive income | 4,693,433 | 4,818,653 |
Total Shareholders' Deficit | (4,450,241) | (5,272,461) |
Total Liabilities and Shareholders' Deficit | 7,310,041 | 7,165,284 |
Series A Preferred Stock | ||
Shareholders' Deficit | ||
Preferred stock | ||
Series B Preferred Stock | ||
Shareholders' Deficit | ||
Preferred stock |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Allowance for loan losses | $ 37,594,756 | $ 36,613,393 |
Allowance for direct financing lease losses | 2,628,176 | 2,537,008 |
Allowance for repayment on behalf of guarantee service customers losses | 1,974,740 | 2,073,282 |
Allowance for repayment on behalf of a related party losses | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 20,013,415 | 19,250,915 |
Common stock, shares outstanding | 20,013,415 | 19,250,915 |
Series A Preferred Stock | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Series B Preferred Stock | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Interest income | ||
Interests and fees on loans and direct financing lease | $ 96,995 | $ 106,674 |
Interests on deposits with banks | 3,777 | 102 |
Total interest and fee income | 100,772 | 106,776 |
Net interest income | 100,772 | 106,776 |
Reversal of provision (Provision) for loan losses | 330,282 | (782,882) |
Reversal of provision for direct financing lease losses | 36,289 | |
Net interest income (loss) after provision for loan losses and financing lease losses | 431,054 | (639,817) |
Commissions and fees on financial guarantee services | 2,843 | |
(Provision) Reversal of provision for financial guarantee services | (104,391) | 7,207 |
Commission and fee (loss) income on guarantee services, net | (104,391) | 10,050 |
Net Revenue (Loss) | 326,663 | (629,767) |
Non-interest expense | ||
Salaries and employee surcharge | (153,792) | (379,923) |
Rental expenses | (18,589) | (13,641) |
Business taxes and surcharge | (1,845) | |
Changes in fair value of noncurrent liabilities | (147,540) | 57,000 |
Other operating expenses | (392,205) | (259,806) |
Total non-interest expense | (712,126) | (598,215) |
Foreign exchange (loss) gain | (435) | (95) |
Loss Before Income Taxes | (385,898) | (1,228,077) |
Income tax expense | ||
Net Loss | $ (385,898) | $ (1,228,077) |
Loss per Share- Basic and Diluted | $ (0.019) | $ (0.074) |
Weighted Average Shares Outstanding-Basic and Diluted | 19,834,665 | 16,697,532 |
Net Loss | $ (385,898) | $ (1,228,077) |
Other comprehensive loss | ||
Foreign currency translation adjustment | (125,220) | 21,615 |
Comprehensive Loss | $ (511,118) | $ (1,206,462) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (385,898) | $ (1,228,077) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,889 | 1,646 |
(Reversal of provision) Provision for loan losses | (330,282) | 782,882 |
Reversal of provision for direct financing lease losses | (36,289) | |
Provision (Reversal of provision) for financial guarantee services | 104,391 | (7,207) |
Shares issued to executive officers and consultants | 193,180 | |
Changes in fair value of noncurrent liabilities | 147,540 | (57,000) |
Income tax expenses | 20,654 | |
Deferred income tax expenses | (20,654) | |
Interest income arising from restricted cash | (10) | (33) |
Changes in operating assets and liabilities: | ||
Interest receivable | (21,428) | (20,398) |
Other assets | (18,215) | 11,272 |
Unearned income from guarantee services and finance lease services | (8,286) | |
Other current liabilities | (75,178) | 5,229 |
Due to a related party | (31,455) | |
Net Cash Used in Operating Activities | (608,646) | (363,081) |
Cash Flows from Investing Activities: | ||
Originated loans disbursement to third parties | (1,635,683) | |
Loans collection from third parties | 1,402,912 | 121,931 |
Collection from guarantees for loan paid on behalf of customers | 172,544 | 7,258 |
Collection of principal of finance lease, in installments | 72,578 | |
Short-term loan collected from a related party | 473,210 | |
Short-term investments collected from financial institutions | 393,193 | |
Net Cash Provided by Investing Activities | 332,966 | 674,977 |
Cash Flows From Financing Activities: | ||
Net Cash Provided by Financing Activities | ||
Effect of Exchange Rate Changes on Cash | 42,631 | 371 |
Net (Decrease) Increase in Cash | (233,049) | 312,167 |
Cash at Beginning of Period | 2,498,194 | 768,501 |
Cash at End of Period | 2,265,145 | 1,080,768 |
Supplemental Cash Flow Information | ||
Cash paid for interest expense | ||
Cash paid for income tax |
Organization and Principal Acti
Organization and Principal Activities | 3 Months Ended |
Mar. 31, 2018 | |
Organization and Principal Activities [Abstract] | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. ORGANIZATION AND PRINCIPAL ACTIVITIES China Commercial Credit, Inc. (“CCC” or “the Company”) is a holding company that was incorporated under the laws of the State of Delaware on December 19, 2011. On March 22, 2018, the Company set up HC High Summit Holding Limited (“HCHS”), a wholly owned subsidiary, in British Virgin Island (“BVI”). HCHS is authorized to issue 50,000 shares, at par value of $1.00 per share. VIE AGREEMENTS WITH WUJIANG LUXIANG On September 26, 2012, the Company through its indirectly wholly owned subsidiary which was incorporated in China, Wujiang Luxiang Information Technology Consulting Co. Ltd. (“WFOE” ), entered into a series of VIE Agreements with Wujiang Luxiang Rural Microcredit Co., Ltd (“Wujiang Luxiang”) Wujiang Luxiang and the Wujiang Luxiang Shareholders. The purpose of the VIE Agreements is solely to give WFOE the exclusive control over Wujiang Luxiang’s management and operations. The significant terms of the VIE Agreements are summarized below: Exclusive Business Cooperation Agreement 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. Timely Reporting Agreement To ensure Wujiang Luxiang promptly provides all of the information that WFOE and the Company need to file various reports with the SEC, a Timely Reporting Agreement was entered between Wujiang Luxiang and the Company. 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 March 31, 2018, PFL had no continuous financial lease transactions. |
Going Concern
Going Concern | 3 Months Ended |
Mar. 31, 2018 | |
Going Concern [Abstract] | |
GOING CONCERN | 2. GOING CONCERN The accompanying 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 following includes conditions give rise to substantial doubt about the Company’s ability to continue as a going concern within one year from the financial statements issuance date and management’s plans to mitigate these adverse conditions: 1) Limited funds necessary to maintain operations The Company had an accumulated deficit of US$81,920,294 as of March 31, 2018. In addition, the Company had a negative net asset of US$4,450,241 as of March 31, 2018. As of March 31, 2018, the Company had cash of US$2,265,145 and total liabilities other than accrual for financial guarantee services of $1,875,894. 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 financial statement issuance date. The Company is actively seeking other strategic partners with experience in lending business. 2) Recurring operating loss During the three months ended March 31, 2018, the Company incurred operating loss of US$385,898. Affected by the reduction of lending business and guarantee business, the management was in the opinion that recurring operating losses would be made continue within one year from the financial statements issuance date. The Company continues to use its best effort to improve collection of loan receivable and interest receivable. Management engaged one PRC law firm to represent the Company in the legal proceedings against the borrowers and their counter guarantors. 3) Negative operating cash flow During the three months ended March 31, 2018, the Company incurred negative operating cash flow of US$608,646. 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 financial statements issuance date. Since January 1, 2018, the Company is making efforts to introduce new businesses to improve the operating cash flow of the Company. 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. The Company is actively seeking other strategic partners with experience in lending business. ● Financial Support The Company has been actively seeking strategic investors with experience in lending business as well as financial investors. Management had invested in the Company during the year ended December 31, 2017 and will continue to invest in the Company during the year ended December 31, 2018, if necessary. The Company plans to continue to seek financial as well as strategic investors for additional financing. On April 11, 2018, the Company closed a private placement to two individual investors in China for a gross proceeds of US$500,000 at a per share price of US$0.77. The net proceeds of the sale of the shares shall be used by the Company for working capital and general corporate purpose. ● Plan to acquire new business or assets Although we have continued to use our best effort to improve our collection of loan receivable and interest receivable by engaging local law firms in China, it has been very difficult for us to collect from the borrowers. As such, the Company has been actively seeking strategic acquisition of business or assets to improve our liquidity. Since the termination of the Exchange Agreement with Sorghum in last December, we have evaluated a few potential acquisition targets. As of now, the Company plans to acquire certain second-hand luxury cars dealership business assets or other appropriate business deemed to be appropriate by the board of directors. On April 28, 2018, the Company entered into certain securities purchase agreements (the “Initial SPAs”) with certain “non-U.S. Persons” (the “Purchasers”) as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to which the Company agreed to sell 1,336,314 shares of its common stock (“Common Stock”), par value $0.001 per share, at a per share purchase price of $0.78. The net proceeds to the Company from the Initial SPAs Offering will be approximately $1,042,324. The Initial SPAs are part of the subscription the Company received in a private placement offering (the “Offering”) of its Common Stock at a per share purchase price of $0.78 up to an aggregate gross proceeds of three million dollars ($3,000,000) to “non-U.S. Persons” as defined in Regulation S. The Offering shall be on a rolling basis until June 30, 2018 unless the Company extends for an additional 30 days at its sole discretion. The net proceeds of the Offering shall be used by the Company in connection with the Company’s planned operation (the “Planned Business”) of certain used luxurious car leasing or other related business as approved by the board of directors of the Company. On May 10, 2018, the Company issued the 1,336,314 shares of Common Stock to the Purchasers since all the closing conditions of the Initial SPAs have been satisfied when the Company obtained required license to carry out the used luscious car leasing business. Though management had plans to mitigate the conditions or events that raise substantial doubt, there is substantial doubt about the Company’s ability to continue as a going concern within one year from the financial statements issuance date, as there is no assurance that the liquidity plan will be successfully implemented. Failure to successfully implement the 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 Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3. 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 financial information as of March 31, 2018 and for the three months ended March 31, 2018 and 2017 have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “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, 2017 filed with the SEC on April 16, 2018. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s unaudited condensed financial position as of March 31, 2018, its unaudited condensed results of operations for the three months ended March 31, 2018 and 2017, and its unaudited condensed cash flows for the three months ended March 31, 2018 and 2017, as applicable, have been made. The unaudited interim results of operations 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. (b) Recently adopted accounting standards Adoption of ASC Topic 606, “Revenue from Contracts with Customers” (“Topic 606”) Effective January 1, 2018, the Company adopted Topic 606 using modified retrospective approach applied its contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are accounted for and presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with ASC Topic 605 “Revenue Recognition”. We recognize revenue when control of the promised services is transferred to our traders and offering agents. Revenue is measured at the transaction price which is based on the amount of consideration that the Company expects to receive in exchange for transferring the promised services to our loan customers. During the three months ended March 31, 2018, the Company did not generate service fees from direct loan customers. Pursuant to ASC606-10-15-2, the interest income generated by the Company which is in industry of national commercial bank and commission generated from financial guarantee services are scoped out of ASC606. (c) Interest receivable Interest on loans receivable is accrued and credited to income as earned. The Company determines a loan past due status by the number 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 interest 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. During the three months ended March 31, 2018 and 2017, no interest was reversed as interests on aged loan receivables were reversed before the presented periods. (d) Reclassifications Certain items in the financial statements of comparative period have been reclassified to conform to the financial statements for the current period. (e) Use of estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews these estimates using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. Significant accounting estimates reflected in the financial statements include: (i) the allowance for loan losses; (ii) estimates of losses on unexpired loan contracts and guarantee service contracts; (iii) accrued expenses; (iv) useful lives of long-lived assets; (v) the impairment of long-lived assets; (vi) the valuation allowance of deferred tax assets; and (vii) contingencies and litigation. (f) Foreign currency translation The reporting currency of the Company is United States Dollars (“US$”), which is also the Company’s functional currency. The 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 prepared using RMB, are translated into the Company’s reporting currency, 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, 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 in shareholders’ deficit. March 31, December 31, Balance sheet items, except for equity accounts 6.2807 6.5064 For the three months ended 2018 2017 Items in the statements of operations and comprehensive loss, and statements of cash flows 6.3582 6.8891 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 consolidated statements of comprehensive loss. (g) Financial guarantee service contract Financial guarantee service contracts provide guarantee which protects the holder of a debt obligation against default. Pursuant to such guarantee, the Company makes payments if the obligor responsible for making payments fails to do so as scheduled. The contract amounts reflect the extent of involvement the Company has in the guarantee transaction and also represent 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 the normal course of business to meet the financing needs of its customers. Financial instruments representing credit risk are as follows: March 31, 2018 December 31, 2017 Guarantee $ 12,044,836 $ 11,627,013 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” on the consolidated balance sheets. This liability represents probable losses and is increased or decreased by accruing a “(Provision)/ Reversal of provision for financial guarantee services” against the income of commissions and fees on guarantee services. 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. 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: March 31, December 31, Allowance for immature financial guarantee services $ 9,884,388 $ 9,270,882 Allowance for repayment on behalf of guarantee service customers losses 1,974,740 2,073,282 Total allowance for repayment on behalf of guarantee customers losses $ 1,974,740 $ 2,073,282 The Company recorded a provision of US$104,391 and a reversal of provision US$7,207 for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018 and December 31, 2017, the management charged off specific provision for 31 and 31 customers in the amount of US$10,815,328 and US$10,440,156, considering remote collectability from the customers. (h) Non-interest expenses Non-interest expenses primarily consist of changes in fair value of other noncurrent liabilities, salaries and benefits for employees, traveling cost, entertainment expenses, depreciation of equipment, office rental expenses, legal and consulting expenses, office supplies, etc. (i) Income taxes The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases. Deferred tax assets and liabilities are measured using enacted tax rates applicable for the differences that are expected to affect taxable income. (j) Comprehensive loss Comprehensive loss includes net loss and other comprehensive foreign currency adjustments income. 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. (k) Share-based awards We have various share-based awards pursuant to which the employees, consultants and directors of our company are granted share-based compensations. 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. The Company accounts for share-based compensation issued to nonemployees in accordance with the provisions of ASC 505-50 “Equity-Based Payments to Non-Employees” which codified SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 9618, “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services”. Measurement of share based payment transactions with non-employees shall be based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share based payment transaction should be determined at the earlier of performance commitment date or performance completion date. (l) 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. (m) 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. |
Variable Interest Entities and
Variable Interest Entities and Other Consolidation Matters | 3 Months Ended |
Mar. 31, 2018 | |
Variable Interest Entities and Other Consolidation Matters [Abstract] | |
VARIABLE INTEREST ENTITIES AND OTHER CONSOLIDATION MATTERS | 4. VARIABLE INTEREST ENTITIES AND OTHER CONSOLIDATION MATTERS As of March 31, 2018, the Company had only one VIE. The following financial statement amounts and balances of the VIE were included in the audited consolidated financial statements as of March 31, 2018 and December 31, 2017 and for the three months ended March 31, 2018 and 2017: March 31, 2018 December 31, 2017 (unaudited) Total assets $ 5,060,870 $ 4,204,709 Total liabilities $ 11,736,515 $ 10,818,223 For the three months ended 2018 2017 (unaudited) (unaudited) Revenue $ 97,020 $ 69,145 Net loss $ 173,388 $ 706,530 |
Risks
Risks | 3 Months Ended |
Mar. 31, 2018 | |
Risks [Abstract] | |
RISKS | 5. RISKS (a) Credit risk Credit risk is one of the most significant risks for the Company’s business. Credit risk exposures arise principally in lending activities, finance lease and financial guarantee activities which is an off-balance sheet financial instrument. Credit risk is controlled by the application of credit approvals, limits and monitoring procedures. The Company manages credit risk through in-house research and analysis of the Chinese economy and the underlying obligors and transaction structures. To minimize credit risk, the Company requires collateral in the form of rights to cash, securities or property and equipment. The Company identifies credit risk collectively based on industry, geography and customer type. This information is monitored regularly by management. 1.1 Lending activities In measuring the credit risk of lending loans to corporate customers, the Company mainly reflects the “probability of default” by the customer on its contractual obligations and considers the current financial position of the customer and the 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. In addition, the Company calculates the provision amount as below: 1. 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. 2. 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. 3. 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. 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 of the Company’s operating activities and a significant portion of the Company’s assets and liabilities are denominated in RMB, 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. (d) Concentration risk As of March 31, 2018 and December 31, 2017, the Company held cash of US$2,265,145 and US$2,498,194, respectively, that is uninsured by the government authority. 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 March 31, 2018 and December 31, 2017. |
Loans Receivable, Net
Loans Receivable, Net | 3 Months Ended |
Mar. 31, 2018 | |
Loans Receivable, Net [Abstract] | |
LOANS RECEIVABLE, NET | 6. LOANS RECEIVABLE, NET The interest rates on loan issued ranged between 9.6%~ 19.44% and 9.6%~ 19.44% for the three months ended March 31, 2018 and 2017, respectively. 6.1 Loans receivable consist of the following: March 31, 2018 December 31, 2017 (unaudited) Business loans $ 22,716,745 $ 21,267,838 Personal loans 19,795,934 19,410,476 Total Loans receivable 42,512,679 40,678,314 Allowance for loan losses Collectively assessed (49,676 ) (38,731 ) Individually assessed (37,545,080 ) (36,574,662 ) Allowance for loan losses (37,594,756 ) (36,613,393 ) Loans receivable, net $ 4,917,923 $ 4,064,921 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 March 31, 2018 and December 31, 2017, the Company had 37 and 37 business loan customers, and 33 and 34 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. No allowance is made for loans subsequently received. For the three months ended March 31, 2018 and 2017, a reversal of provision of US$330,282 and a provision of US$782,882 were charged to the unaudited condensed consolidated statements of operation, respectively. No write-offs against allowances have occurred for the three months ended March 31, 2018 and 2017. The following table presents nonaccrual loans with aging over 90 days by classes of loan portfolio as of March 31, 2018 and December 31, 2017, respectively: March 31, December 31, (unaudited) Business loans $ 17,749,146 $ 17,394,729 Personal loans 19,795,934 19,410,476 $ 37,545,080 $ 36,805,205 The following table represents the aging of loans as of March 31, 2018 by type of loan: 1-89 Days 90 - 179 Days 180 - 365 Days Over 1 year Total Current Total Loans (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Business loans $ - $ - $ - $ 17,749,146 $ 17,749,146 $ 4,967,599 $ 22,716,745 Personal loans - - - 19,795,934 19,795,934 - 19,795,934 $ - $ - $ - $ 37,545,080 $ 37,545,080 $ 4,967,599 $ 42,512,679 The following table represents the aging of loans as of December 31, 2017 by type of loan: 1-89 Days 90 - 179 Days 180 - 365 Days Over 1 year Total Current Total Loans Business loans $ 676,257 $ - $ - $ 17,394,729 $ 18,070,986 $ 3,196,852 $ 21,267,838 Personal loans - - - 19,410,476 19,410,476 - 19,410,476 $ 676,257 $ - $ - $ 36,805,205 $ 37,481,462 $ 3,196,852 $ 40,678,314 6.2 Analysis of loans by credit quality indicator The following table summarizes the Company’s loan portfolio by credit quality indicator as of March 31, 2018 and December 31, 2017, respectively: Five Categories March 31, 2018 % December 31, 2017 % (unaudited) Pass $ 4,967,599 11.7 % $ 3,873,110 9.5 % Special mention - - - - Substandard - - - - Doubtful - - - - % Loss 37,545,080 88.3 % 36,805,204 90.5 % Total $ 42,512,679 100 % $ 40,678,314 100 % 6.3 Analysis of loans by collateral The following table summarizes the Company’s loan portfolio by collateral as of March 31, 2018: March 31, 2018 Business Loans Personal Loans Total (unaudited) (unaudited) (unaudited) Guarantee backed loans $ 22,716,745 $ 18,953,671 $ 41,670,416 Collateral backed loans - 842,263 842,263 $ 22,716,745 $ 19,795,934 $ 42,512,679 The following table summarizes the Company’s loan portfolio by collateral as of December 31, 2017: December 31, 2017 Business Loans Personal Loans Total Guarantee backed loans $ 21,267,838 $ 18,559,007 $ 39,826,845 Collateral backed loans - 851,469 851,469 $ 21,267,838 $ 19,410,476 $ 40,678,314 Guarantee Backed Loans A guaranteed loan is a loan guaranteed by a third party who is usually a corporation or high net worth individual. As of March 31, 2018 and December 31, 2017, guaranteed loans make up 98.0% and 97.9% 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. |
Allowance for Loan Losses
Allowance for Loan Losses | 3 Months Ended |
Mar. 31, 2018 | |
Allowance for Loan Losses [Abstract] | |
ALLOWANCE FOR LOAN LOSSES | 7. ALLOWANCE FOR LOAN LOSSES The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly 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. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. The allowance is calculated at portfolio-level since our loans portfolio is typically of smaller balance homogenous loans and is collectively evaluated for impairment. Additionally, the management also reviewed the portfolio on a loan by loan basis and individually evaluated for impairment if any. For the purpose of calculating portfolio-level reserves, we have grouped our loans into two portfolio segments: Corporate and Personal. The allowance consists of the combination of a quantitative assessment component based on statistical models, a retrospective evaluation of actual loss information to loss forecasts, value of collaterals and could include a qualitative component based on management judgment. In estimating the probable loss of the loan portfolio, the Company also considers qualitative factors such as current economic conditions and/or events in specific industries and geographical areas, including unemployment levels, trends in real estate values, peer comparisons, and other pertinent factors such as regulatory guidance. Finally, as appropriate, the Company also considers individual borrower circumstances and the condition and fair value of the loan collateral, if any. In addition, the Company calculates the provision amount as below: 1. General Reserve - is based on total loan receivable balance and to be used to cover unidentified probable loan loss. The management assessed the General Reserve is required to be no less than 1% of total loan receivable balance. 2. 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. While management uses the best information available to make loan loss allowance evaluations, adjustments to the allowance may be necessary based on changes in economic and other conditions or changes in accounting guidance. The following tables present the activity in the allowance 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 three months ended March 31, 2018 and 2017: Business Loans Personal Loans Total (unaudited) (unaudited) (unaudited) For the three months ended March 31, 2018 Beginning balance $ 17,433,460 $ 19,179,933 $ 36,613,393 Charged off - - - Recoveries (267,371 ) (72,348 ) (339,719 ) Provisions 9,437 - 9,437 Foreign exchange loss 623,296 688,349 1,311,645 Ending balance 17,798,822 19,795,934 37,594,756 Ending balance: individually evaluated for impairment 17,749,146 19,795,934 37,545,080 Ending balance: collectively evaluated for impairment $ 49,676 $ - $ 49,676 Business Loans Personal Loans Total For the three months ended March 31, 2017 Beginning balance $ 32,356,953 $ 19,351,109 $ 51,708,062 Charge-offs - - - Recoveries (57,337 ) - (57,337 ) Provisions 143,468 696,751 840,219 Foreign exchange loss 251,720 150,351 402,071 Ending balance 32,694,804 20,198,211 52,893,015 Ending balance: individually evaluated for impairment 1,120,277 1,969,191 3,089,468 Ending balance: collectively evaluated for impairment $ 31,574,527 $ 18,229,020 $ 49,803,547 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 March 31, 2018: Pass Special Mention Substandard Doubtful Loss Total (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Business loans $ 4,967,599 $ - $ - $ - $ 17,749,146 $ 22,716,745 Personal loans - - - - 19,795,934 19,795,934 $ 4,967,599 $ - $ - $ - $ 37,545,080 $ 42,512,679 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 December 31, 2017: Pass Special Mention Substandard Doubtful Loss Total Business loans $ 3,873,110 $ - $ - $ - $ 17,394,728 $ 21,267,838 Personal loans - - - - 19,410,476 19,410,476 $ 3,873,110 $ - $ - $ - $ 36,805,204 $ 40,678,314 |
Guarantee Paid on Behalf of Gua
Guarantee Paid on Behalf of Guarantee Customers, Net | 3 Months Ended |
Mar. 31, 2018 | |
Guarantee Paid on Behalf of Guarantee Customers, Net [Abstract] | |
GUARANTEE PAID ON BEHALF OF GUARANTEE CUSTOMERS, NET | 8. GUARANTEE PAID ON BEHALF OF GUARANTEE CUSTOMERS, NET March 31, December 31, (unaudited) Guarantee paid on behalf of guarantee service customers $ 1,974,740 $ 2,073,282 Allowance for repayment on behalf of guarantee service customers losses (1,974,740 ) (2,073,282 ) Guarantee paid on behalf of guarantee service customers, net $ - $ - As of March 31, 2018 and December 31, 2017, guarantee paid on behalf of guarantee service customers represents payment made by the Company to banks on behalf of six of its third-party guarantee service customers who defaulted on their loan repayments to the banks. 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. As of March 31, 2018 and December 31, 2017, the Company charged off allowance for repayment on behalf of customers for 31 and 31 customers in the amount of US$10,815,328 and US$10,440,156, considering remote collectability from the customers. The guarantee paid on behalf of customers were impaired when, based on current information and events, it is probable that the Company would be unable to collect the outstanding balance when due according to the contractual terms of guarantee agreements. Factors considered by management in determining impairment include impairment status, payment ability and intention of counter-guarantee and the probability of collecting scheduled principal and interest payments. |
Net Investment in Direct Financ
Net Investment in Direct Financing Lease | 3 Months Ended |
Mar. 31, 2018 | |
Net Investment in Direct Financing Lease [Abstract] | |
NET INVESTMENT IN DIRECT FINANCING LEASE | 9. NET INVESTMENT IN DIRECT FINANCING LEASE On September 25, 2014, PFL entered into a finance lease 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. 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. Future minimum lease receipts under non-cancellable finance lease arrangements are as follows: March 31, December 31, (unaudited) Within 1 year $ 2,945,532 $ 2,843,355 2 years - - 3 years - - Total minimum lease receipts 2,945,532 2,843,355 Less: amount representing interest (317,355 ) (306,347 ) Present value of minimum lease receipts $ 2,628,177 $ 2,537,008 Following is a summary of the components of the Company’s net investment in direct financing leases as of March 31, 2018 and December 31, 2017: March 31, December 31, (unaudited) Total minimum lease payments to be received $ 2,945,532 $ 2,843,355 Less: Amounts representing estimated executory costs - - Minimum lease payments receivable 2,945,532 2,843,355 Less Allowance for uncollectible (2,628,177 ) (2,537,008 ) Net minimum lease payments receivable 317,355 306,347 Estimated residual value of leased property - - Less: Unearned income (317,355 ) (306,347 ) Net investment in direct financing lease $ - $ - |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2018 | |
Property and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 10. PROPERTY AND EQUIPMENT The Company’s property and equipment used 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 March 31, December 31, (unaudited) Furniture and fixtures 5 $ 23,009 $ 22,210 Electronic equipment 3 146,964 141,866 Less: accumulated depreciation (155,261 ) (148,030 ) Property and equipment, net $ 14,712 $ 16,046 Depreciation expense totaled US$1,889 and US$1,646 for the three months ended March 31, 2018 and 2017, respectively. |
Deposits Payable
Deposits Payable | 3 Months Ended |
Mar. 31, 2018 | |
Deposits Payable [Abstract] | |
DEPOSITS PAYABLE | 11. DEPOSITS PAYABLE Deposits payable are security deposits required from customers in order to obtain loans and guarantees from the Company. The deposits are refundable to the customers when the customers fulfill their obligations under loan and guarantee contracts. |
Other Current Liabilities
Other Current Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Other Current Liabilities [Abstract] | |
OTHER CURRENT LIABILITIES | 12. OTHER CURRENT LIABILITIES Other current liabilities as of March 31, 2018 and December 31, 2017 consisted of: March 31, December 31, (unaudited) Accrued payroll $ 65,927 $ 64,402 Accrued office rental expenses 28,659 36,887 Other tax recoverable (41,808 ) (35,760 ) Other payable 41,947 100,911 $ 94,725 $ 166,440 |
Other Noncurrent Liabilities
Other Noncurrent Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Other Noncurrent Liabilities [Abstract] | |
OTHER NONCURRENT LIABILITIES | 13. OTHER NONCURRENT LIABILITIES March 31, December 31, (unaudited) Accrued provision for share settlement against legal proceedings $ 261,540 $ 1,311,000 $ 261,540 $ 1,311,000 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. The Stipulation resolved 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. The Stipulation also provides, among other things, a settlement payment by the Company of $245,000 in cash and the issuance of 950,000 shares of its common stock (the “Settlement Shares”) to the plaintiff’s counsel and class members. The terms of the Stipulation were subject to approval by the Court following notice to all class members. The issuance of the Settlement Shares are exempt from registration pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended. A fairness hearing was held on May 30, 2017, and the Court approved the settlement. 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 $245,000 in cash and the issuance of 950,000 shares of its common stock to members of the settlement class. On July 28, 2017, the Court amended the order that 1) Attorney’s Fees, Litigation Expenses, and Incentive Awards be paid out of the Settlement Fund; and 2) Levi & Korsinsky be awarded attorney’s fees in the amount of $55,000 in cash and 237,500 shares (Plaintiff Attorney Fee Shares). Thus, cash to be paid to the class shall be $190,000 (“Class Settlement Cash”) and shares to be issued to the class shall be 712,500 (“Class Settlement Shares”). On December 22, 2017, the Court entered a distribution order approving the distribution of the Settlement Stock to the class plaintiffs. The settlement has been finalized, and that thereafter there are no remaining claims outstanding as against the Company with respect to this litigation. As of March 31, 2018, the $245,000 cash portion of the settlement has been paid in full and 712,500 Class Settlement Shares were issued. On April 10, 2018, the 237,500 of plaintiff attorney fee shares were issued to plaintiff’s attorney’s broker account. As of March 31, 2018, the Company accounted for the unissued share settlement of 237,500 shares in the amount of US$261,540 (at market value of $1.10 per share on March 29, 2018) as noncurrent liability. Accordingly the Company recorded expenses of $147,540 for the three months ended March 31, 2018 under the account of “Changes in fair value of noncurrent liabilities”. |
Other Operating Expenses
Other Operating Expenses | 3 Months Ended |
Mar. 31, 2018 | |
Other Operating Expenses [Abstract] | |
OTHER OPERATING EXPENSES | 14. OTHER OPERATING EXPENSES Other operating expenses for the three months ended March 31, 2018 and 2017 consisted of: For the three months ended March 31, 2018 2017 (unaudited) (unaudited) Depreciation and amortization $ 1,889 $ 1,646 Travel expenses 31,770 11 Entertainment expenses 2,630 1,941 Legal and consulting expenses 215,430 117,477 Car expenses 6,917 4,456 Bank charges 1,068 990 Audit-related expense 20,600 71,781 Allowance for other receivable 30,157 - Other expenses 81,744 61,504 Total $ 392,205 $ 259,806 |
Capital Transaction
Capital Transaction | 3 Months Ended |
Mar. 31, 2018 | |
Capital Transaction [Abstract] | |
CAPITAL TRANSACTION | 15. CAPITAL TRANSACTION Common Stock The Company is authorized to issue up to 100,000,000 shares of Common Stock. On December 1, 2017, the Company has entered into a securities purchase agreement with Mr. Yang Jie, a significant shareholder and Vice President of Finance of the Company and Mr. Long Yi, the Chief Financial Officer of the Company to sell 150,000 and 50,000 common shares, respectively, at a per share price of US$3.5, in the total amount of US$525,000 and US$175,000, respectively. On February 20, 2018, the Company issued 50,000 shares of common stocks and warrants to purchase 20,000 shares of common stocks at $4.20 to Mr. Long Yi. As of March 31, 2018, the 150,000 shares of common stocks and related warrants unissued to Mr. Yang Jie. On January 19, 2018, the Company issued 712,500 shares common stocks as the share settlement of 950,000 shares as disclosed in Note 13. As of March 31, 2018, there were 20,013,415 shares of Common Stock issued and outstanding. Warrants As of December 31, 2017, the Company had outstanding warrants to purchase 193,370 shares. On February 20, 2018, the Company issued warrants to purchase 20,000 shares to Mr. Long Yi, as part of the private placements mentioned above. The warrant has an exercise price of $4.2 per share and is exercisable on the date of issuance and expire five years from the date of issuance. The fair value of the warrants aggregated $11,073, estimated by using the Black-Scholes valuation model . As of March 31, 2018, the Company had outstanding warrants to purchase 213,370 shares. |
Loss Per Common Share
Loss Per Common Share | 3 Months Ended |
Mar. 31, 2018 | |
Loss Per Common Share [Abstract] | |
LOSS PER COMMON SHARE | 16. LOSS PER COMMON SHARE The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March 31, 2018 and 2017, respectively: For the Three Months Ended March 31, 2018 2017 Net loss attributable to the common shareholders $ (385,898 ) $ (1,228,077 ) Basic weighted-average common shares outstanding 19,834,665 16,697,532 Effect of dilutive securities - - Diluted weighted-average common shares outstanding 19,834,665 16,697,532 Loss per share: Basic $ (0.019 ) $ (0.074 ) Diluted $ (0.019 ) $ (0.074 ) 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 months ended March 31, 2018 and 2017. The number of warrants is omitted excluded from the computation as the anti-dilutive effect. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Taxes [Abstract] | |
INCOME TAXES | 17. INCOME TAXES Effective January 1, 2008, the New Taxation Law of PRC stipulates that domestic enterprises and foreign invested enterprises (the “FIEs”) are subject to an uniform tax rate of 25%. A preferential income tax rate of 12.5% is provided to micro-credit companies that are located in Jiangsu Province. Thus, the Company’s loan business segment located in Jiangsu Province benefits from the preferential enterprise income tax rate of 12.5%. Under the PRC tax law, companies are required to make quarterly estimate payments based on 25% tax rate; companies that received preferential tax rates are also required to use a 25% tax rate for their installment tax payments. The overpayment, however, will not be refunded and can only be used to offset future tax liabilities. 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 months ended March 31, 2018 and 2017, the Company had no unrecognized tax benefits. As of March 31, 2018, the Company has carry forward net operating losses of US$78,570,841, which will begin to expire as of December 31, 2019. The Company recognized deferred tax assets of US$14,837,696 as of March 31, 2018. However, due to uncertainties surrounding future utilization, the Company estimates there will not be sufficient future income to realize the deferred tax assets. The Company maintains a full valuation allowance on its net deferred tax assets as of March 31, 2018. The Company increased its valuation allowance on deferred tax assets by $ 598,051 from $14,239,645 as of December 31, 2017 to $14,837,696 as of March 31, 2018. 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. The principal components of the Company’s deferred tax assets and liabilities were as follows: March 31, December 31, (Unaudited) Allowance for guarantees $ 2,639,101 $ 2,543,166 Net operating loss carryforwards 12,198,595 11,696,479 Valuation allowance (14,837,696 ) (14,239,645 ) Deferred tax assets, net - - The Company does not have any current and deferred tax expenses for the three months ended March 31, 2018 and 2017. 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 tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the 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 underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB 100,000. In the case of 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, 2018 and December 31, 2017 and the Company does not believe that its unrecognized tax benefits will change over the next twelve months. |
Related Party Transactions and
Related Party Transactions and Balances | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions and Balances [Abstract] | |
RELATED PARTY TRANSACTIONS AND BALANCES | 18. RELATED PARTY TRANSACTIONS AND BALANCES 1) Nature of relationships with related parties Name Relationship with the Company Wujiang Chunjia Textile Trading Co., Ltd (“Chunjia Textile”) Controlled by Huichun Qin Wujiang Xiaocun Shengda Founding Investment Co., Ltd. Controlled by shareholders of Wujiang Luxiang Yang Jie A significant shareholder and Vice President of Finance of the Company Long Yi Chief Finance Officer of the Company Huichun Qin Non-controlling shareholder and former CEO and chairman of board of directors 2) Related party transactions On December 1, 2017, the Company has entered into a securities purchase agreement with Mr. Yang Jie and Mr. Long Yi to sell 150,000 and 50,000 shares of common stocks, respectively, at a per share price of US$3.5, in the total amount of US$525,000 and US$175,000, respectively. The total amount was received as of March 31, 2018. As of March 31, 2018, the Company has issued 50,000 shares of common stocks to Mr. Long Yi. The shares of common stocks have not been issued to Mr. Yang Jie as of the financial statement issuance date. 3) Related party balances Amount due from related parties were as follows: March 31, December 31, (unaudited) Huichun Qin $ 1,114,525 $ 1,075,864 Huichun Qin transferred $1,098,197 (equivalent of RMB 7 million) to his personal account without proper authorization on July 2, 2014. As of March 31, 2018, Huichun Qin has not repaid the balance. The amount was recorded as a deduction of the Company’s equity as of March 31, 2018 and December 31, 2017, respectively. The management is making efforts to collect the outstanding balance from Huichun Qin’s family and was in the opinion that the collection is probable. Amount due to related parties were as follows: March 31, December 31, (unaudited) Wujiang Xiaocun Shengda Founding Investment Co., Ltd. $ 382,123 $ 398,073 Yang Jie 524,974 525,000 Long Yi - 174,974 The balance due to Wujiang Xiaocun Shengda Founding Investment Co., Ltd. represented operating expenses paid by this related party on behalf of the Company. The balance was payable on demand and free of interest. The balances due to Mr. Yang Jie and Mr. Long Yi mainly represented the amount advanced from the management for purchase of shares and warrants in the private placements closed in 2018. As of March 31, 2018, the Company has issued 50,000 shares of common stocks and 20,000 shares of warrants to Mr. Long Yi. The shares of common stocks and warrants have not been issued to Mr. Yang Jie as of the financial statement issuance date. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 19. COMMITMENTS AND CONTINGENCIES 1) Lease Commitments 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. 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. We leased certain office space in New York, NY where we paid a monthly rent of US$3,600 during 2018. The following table sets forth the Company’s contractual obligations as of March 31, 2018 in future periods: Rental payments Year ending March 31, 2019 $ 58,916 Year ending March 31, 2020 20,783 Total $ 79,699 2) Guarantee Commitments The guarantees will terminate upon payment and/or cancellation of the obligation; however, payments by the Company would be triggered by failure 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 March 31, 2018 and December 31, 2017, the loan amount guaranteed by the Company was US$12,044,836 and US$11,627,013, respectively, for its financial guarantee service customers. The Company is involved in various legal actions arising from providing financial guarantee services to defaulted guarantees. As of March 31, 2018, eleven cases against the Company was finally adjudicated by the Court, in which the Company was jointly liable, together with the defaulted customers and other guarantees, to repayment the principal, interest and penalties of $6.91 million. Additionally, three cases against the Company has not been adjudicated by the Court, in which the Company was jointly liable, together with the defaulted customers and other guarantees, to repayment the principal, interest and penalties of $2.97 million. 3) Contingencies The Company is involved in various legal actions arising in the ordinary course of its business to collect delinquent balances from borrowers and guarantees. As of March 31, 2018, 4 cases with an aggregated claim of US$2.3 million have not been finally adjudicated by the Court . At this stage of the proceedings, the Company is not able to estimate the probability of success or loss. a) 2014 Class Action litigation 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 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”) 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. The Stipulation also provides, among other things, a settlement payment by the Company of $245,000 in cash and the issuance of 950,000 shares of its common stock (the “Settlement Shares”) to the plaintiff’s counsel and class members. The terms of the Stipulation were subject to approval by the Court following notice to all class members. The issuance of the Settlement Shares are exempt from registration pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended. A fairness hearing was held on May 30, 2017, and the Court approved the settlement. On December 22, 2017, the Court entered a distribution order approving the distribution of the Settlement Stock to the class plaintiffs. The $245,000 cash portion of the settlement has been paid in full. The 712,500 Class Settlement Shares were issued on or about January 19, 2018. The settlement has been finalized, and that thereafter there are no remaining claims outstanding as against the Company with respect to this litigation. On April 10, 2018, the 237,500 of plaintiff attorney fee shares were issued to plaintiff’s attorney’s broker account. 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 (“Advance Funding Agreement”), under which the CCCR agreed to deposit shares into escrow to fund the advancement obligation, with the initial deposit to be 637,592 shares which was valued at Two Hundred Thousand Dollars ($200,000), based upon 80% of the 30 day volume weighted average trading price for each of the 30 consecutive trading days prior to the date of the agreement. As of the completion of the settlement, an aggregate of 527,078 shares are unused in the escrow account and the Underwriter Defendants acknowledged there is no additional payment of fees and expenses owed to the Underwriter Defendants and the Advance Funding Agreement shall be terminated. The Company has instructed the transfer agent to cancel the 527,078 shares and return them to authorized shares. As of the date of this Quarterly Report, the Company is working with its counsel and the escrow agent to complete such cancelation. b) 2015 Derivative action On February 3, 2015, a purported shareholder KiramKodali filed a putative shareholder derivative complaint in 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 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 a demand upon the Company and alleges that demand is excused. The Company and Mr. Levy are the only defendants who 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, the Company and Mr. Levy staying all proceedings in the derivative case, except for service of process on individual defendants, until the earlier of thirty days of termination of the stipulation, dismissal of the class action with prejudice or the date any of the defendants in the class action file an answer to the CAC. The Company 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. The Court ordered CCCR to answer or otherwise move with respect to this action on or before November 13, 2017. Thereafter, CCCR and Mr. Levy submitted a pre-motion letter to the Court requesting permission to move to dismiss the derivative complaint; submission of this letter stayed the proceedings pending the Court’s review thereof. The Court held a hearing on this pre-motion letter on January 22, 2018, denying permission to file a motion to dismiss the complaint without prejudice and setting forth a schedule under which Kodali must serve the remaining defendants in the derivative litigation. The parties are due to file a joint status report on May 21, 2018. On behalf of the Company and Mr. Levy, this firm is engaged in active settlement discussions with counsel for Kodali, but the parties have not entered into a settlement agreement. c) 2017 Class action The Company and its directors were party to a lawsuit filed on September 1, 2017, by certain a stockholder of the Company on behalf of himself and similarly situated stockholders of the Company CCC in the Chancery Court of the State of Delaware (the “Delaware Chancery Court”) (Case No. 2017-0633-JTL) (the “Action”), Plaintiff stockholders which sought injunctive relief, costs, and attorney’s fees. Plaintiff’s Verified Class Action Complaint (“Complaint”) alleged that the Company’s directors breached their fiduciary duties to the Company’s stockholders by failing to disclose all necessary material information relating to the Company’s entry into an the Exchange Agreement (“Exchange Agreement”) with Sorghum Investment Holdings Limited (“Sorghum”) on August 9, 2017, and preventing the Company’s stockholders from casting 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). On October 10, 2017, 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”) in response 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, the Company and Plaintiff entered into a stipulation (“Stipulation”) wherein Plaintiff agreed to voluntarily dismiss his claims against the Company, 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, 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 or about November 6, 2017, the Company filed Amendment No. 2 to its Preliminary Proxy Statement with the Commission in further response to the Comment Letter. On December 29, 2017, the Company received notice from Sorghum notifying the Company that the Exchange Agreement is terminated. The Company advised Plaintiff of the termination of the Exchange Agreement on January 9, 2018. d) 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 (“Arbitration Demand”) with the American Arbitration Association (“AAA”) against Sorghum in connection with Sorghum’s breach of the Exchange Agreement. On December 21, 2017, prior to filing the Arbitration Demand, the Company provided Sorghum with formal notice of its breaches to the Exchange Agreement. The AAA has forwarded the Company’s Arbitration Demand to Sorghum, and Sorghum’s response to the Arbitration Demand was due on or before February 14, 2018. Sorghum did not provide a written response to the Company’s Arbitration Demand by the deadline. However, in accordance with the Commercial Arbitration Rules of the AAA (“Rules”), Sorghum’s failure to respond is deemed as a general denial of the Company’s claims. On March 14, 2018, the AAA initially appointed a single arbitrator to the matter subject to the parties’ approval. On March 28, 2018, the AAA conducted an initial telephonic conference with Arbitrator Barbara Mentz, but neither Sorghum nor its counsel appeared for the call. On March 28, 2018, after the Company’s counsel appeared for the initial telephonic conference, Sorghum and its counsel contacted the AAA claiming that it was not in receipt of the AAA’s correspondence although the AAA forwarded its correspondence to Sorghum’s Chief Executive Officer’s active email. In response, the AAA scheduled another telephonic conference for April 9, 2018. All parties appeared at the April 9, 2018 conference, and approved Arbitrator Mentz’s appointment. On April 11, 2018, pursuant to the Rules, Sorghum filed its answer and counterclaim. The Company filed a written denial to Sorghum’s counterclaim on April 26, 2018. On May 2, 2018, the parties jointly requested an extension of time to file their respective proposals for resolution with the AAA, and Arbitrator Mentz granted the extension. In accordance with Arbitrator Mentz’s Order, the parties’ proposals are due May 31, 2018. The Company intends to prosecute its claims and defend against Sorghum’s counterclaim vigorously. e) Claim Against Former CEO 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, the Company is evaluating its strategic options. f) FINRA investigation We have been advised that the Financial Industry Regulatory Authority (“FINRA”) (formerly, the NASD) is conducting a review of trading in the Company surrounding the December 27, 2017 Form 8-K filing report, that on December 21, 2017, the company notified Sorghum Investment Holdings, Ltd. that certain recent actions of Sorghum constitute a breach of Sorghum’s covenants under the Share Exchange Agreement dated August 9, 2017 (the “corporate disclosure”). We have been responding to FINRA’s request for information and intend to continue to cooperate in the investigation. Although we cannot, at this time, assess either the duration or the likely outcome or consequences of this investigation, FINRA has the authority to impose sanctions on our Company that could adversely affect its effectiveness in that capacity. |
Correction of Error
Correction of Error | 3 Months Ended |
Mar. 31, 2018 | |
Correction of Error [Abstract] | |
CORRECTION OF ERROR | 20. CORRECTION OF ERROR During the course of preparing the 2017 consolidated financial statements, certain errors to the previously issued unaudited condensed consolidated financial statements appearing in the Quarterly Report on Form 10-Q for the three months ended March 31, 2017 filed with SEC on May 18, 2017, were discovered by management. The errors related to the accounting of the settlement shares agreed upon per the Stipulation (See Note 13). These settlement shares have not been issued until January 19, 2018 and April 10, 2018, respectively. These settlement shares should be recorded in accordance ASC 450-20, Loss Contingencies The effects of the restatement on the Company’s condensed consolidated statements of operations and comprehensive loss and earnings per share for the three months ended March 31, 2017 are as follows: For The Three Months Ended As Previously Reported Adjustments As Restated Changes in fair value of other noncurrent liabilities - 57,000 57,000 Total non-interest expense (655,215 ) 57,000 (598,215 ) Loss Before Income Taxes (1,285,077 ) 57,000 (1,228,077 ) Net Loss (1,285,077 ) 57,000 (1,228,077 ) Loss per Share- Basic and Diluted (0.077 ) 0.003 (0.074 ) Net Loss (1,285,077 ) 57,000 (1,228,077 ) Comprehensive loss $ (1,263,462 ) $ 57,000 $ (1,206,462 ) The effects of the restatement on the Company’s condensed consolidated statements of cash flows for the three months ended March 31, 2017 are as follows: For The Three Months Ended As Previously Reported Adjustments As Restated Net loss $ (1,285,077 ) $ 57,000 $ (1,228,077 ) Changes in fair value of other noncurrent liabilities - (57,000 ) (57,000 ) |
Receipt of Nasdaq Deficiency No
Receipt of Nasdaq Deficiency Notice | 3 Months Ended |
Mar. 31, 2018 | |
Receipt Of Nasadaq Deficiency Notice [Abstract] | |
RECEIPT OF NASDAQ DEFICIENCY NOTICE | 21. RECEIPT OF NASDAQ DEFICIENCY NOTICE On February 28, 2018, the company received a letter (the ” Notification Letter “) from The NASDAQ Stock Market LLC (” Nasdaq “) notifying the Company that it is not in compliance with the minimum Market Value of Listed Securities (MVLS) requirement set forth in Nasdaq Listing Rule 5550(b)(2) for continued listing on the Nasdaq Capital Market. Nasdaq Listing Rule 5550(b)(2) requires listed securities to maintain a minimum MVLS of $35 million. Nasdaq Listing Rule 5810(c)(3)(C) provides that a failure to meet a minimum MVLS exists if the deficiency continues for a period of 30 consecutive business days. Based upon Nasdaq’s review of the Company’s MVLS for the last 30 consecutive business days, the Company no longer meets the minimum MVLS requirement. The Nasdaq staff noted the Company also does not meet the requirements under Listing Rules 5550(b)(1) and 5550(b)(3). The Notification Letter does not impact the Company’s listing on the Nasdaq Capital Market at this time. In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Company has been provided 180 calendar days, or until August 27, 2018, to regain compliance with Nasdaq Listing Rule 5550(b)(2). The Company has been evaluating options available to regain compliance and to timely submit a plan to regain compliance. There can be no assurance that the Company’s plan will be accepted or that, if it is, the Company will be able to regain compliance with the applicable Nasdaq listing requirements. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Event [Abstract] | |
SUBSEQUENT EVENT | 22. SUBSEQUENT EVENT 1) Charged-off loans During the period from April 1, 2018 to the date of this report, the Company assessed the charged-off loan and guarantee balances recorded as of March 31, 2018 and was of the opinion that charged off loan balance of US$22,605,017 and charged off guarantee balance of US$10,815,328 were uncollectible . In addition, the Company assessed the remaining balances of loan receivable and financial guarantee and was of the opinion that it was not necessary to charge-off these balances. 2) Issuance of common stocks On April 10, 2018, the Company issued the remaining 237,500 shares of common stocks as the share settlement of 950,000 shares as disclosed in Note 13 to Levi & Korsinsky. Besides the Company sold 649,350 shares of newly issued common stocks to certain individual investors in exchange of $500,000. 3) Entry into Material Definitive Agreements On April 28, 2018, the Company entered into certain securities purchase agreements (the “Initial SPAs”) with certain “non-U.S. Persons” as defined in Regulation S of the Securities Act of 1933, as amended pursuant to which the Company agreed to sell 1,336,314 shares of its common stock, par value $0.001 per share, at a per share purchase price of $0.78. The net proceeds to the Company from the Initial SPAs Offering will be approximately $1,042,324. 4) Execution of Agreements by and among WFOE, Beijing Youjiao and its shareholders On May 10, 2018, the Company through the WFOE, entered into a series of Agreements with Beijing Youjiao Technology Limited (“Beijing Youjiao”) and Aizhen Li, the sole shareholder of Beijing Youjiao. 5) Establishment of Beijing WFOE and Execution Agreements by and among Beijing WFOE, Beijing Kunlun and its shareholders On April 16, 2018, HCHS set up HC High Summit Limited (“HCHS HK”), a wholly owned subsidiary, in Hong Kong. On April 17, 2018, the Company, through its subsidiary, established Tianxing Haoche Technology (Beijing) Co. Ltd. (“Beijing WFOE”). On May 17, 2018, Beijing WFOE entered into a series of agreements (“Kunlun VIE Agreements”) with Beijing Tianxing Kunlun Technology Co. Ltd. (“Kunlun”) and Shun Li and Jialin Cui, the shareholders of Beijing Kunlun. |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of presentation and principle of consolidation | (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 financial information as of March 31, 2018 and for the three months ended March 31, 2018 and 2017 have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “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, 2017 filed with the SEC on April 16, 2018. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s unaudited condensed financial position as of March 31, 2018, its unaudited condensed results of operations for the three months ended March 31, 2018 and 2017, and its unaudited condensed cash flows for the three months ended March 31, 2018 and 2017, as applicable, have been made. The unaudited interim results of operations 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. |
Recently adopted accounting standards | (b) Recently adopted accounting standards Adoption of ASC Topic 606, “Revenue from Contracts with Customers” (“Topic 606”) Effective January 1, 2018, the Company adopted Topic 606 using modified retrospective approach applied its contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are accounted for and presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with ASC Topic 605 “Revenue Recognition”. We recognize revenue when control of the promised services is transferred to our traders and offering agents. Revenue is measured at the transaction price which is based on the amount of consideration that the Company expects to receive in exchange for transferring the promised services to our loan customers. During the three months ended March 31, 2018, the Company did not generate service fees from direct loan customers. Pursuant to ASC606-10-15-2, the interest income generated by the Company which is in industry of national commercial bank and commission generated from financial guarantee services are scoped out of ASC606. |
Interest receivable | (c) Interest receivable Interest on loans receivable is accrued and credited to income as earned. The Company determines a loan past due status by the number 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 interest 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. During the three months ended March 31, 2018 and 2017, no interest was reversed as interests on aged loan receivables were reversed before the presented periods. |
Reclassifications | (d) Reclassifications Certain items in the financial statements of comparative period have been reclassified to conform to the financial statements for the current period. |
Use of estimates | (e) Use of estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews these estimates using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. Significant accounting estimates reflected in the financial statements include: (i) the allowance for loan losses; (ii) estimates of losses on unexpired loan contracts and guarantee service contracts; (iii) accrued expenses; (iv) useful lives of long-lived assets; (v) the impairment of long-lived assets; (vi) the valuation allowance of deferred tax assets; and (vii) contingencies and litigation. |
Foreign currency translation | (f) Foreign currency translation The reporting currency of the Company is United States Dollars (“US$”), which is also the Company’s functional currency. The 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 prepared using RMB, are translated into the Company’s reporting currency, 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, 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 in shareholders’ deficit. March 31, December 31, Balance sheet items, except for equity accounts 6.2807 6.5064 For the three months ended 2018 2017 Items in the statements of operations and comprehensive loss, and statements of cash flows 6.3582 6.8891 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 consolidated statements of comprehensive loss. |
Financial guarantee service contract | (g) Financial guarantee service contract Financial guarantee service contracts provide guarantee which protects the holder of a debt obligation against default. Pursuant to such guarantee, the Company makes payments if the obligor responsible for making payments fails to do so as scheduled. The contract amounts reflect the extent of involvement the Company has in the guarantee transaction and also represent 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 the normal course of business to meet the financing needs of its customers. Financial instruments representing credit risk are as follows: March 31, 2018 December 31, 2017 Guarantee $ 12,044,836 $ 11,627,013 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” on the consolidated balance sheets. This liability represents probable losses and is increased or decreased by accruing a “(Provision)/ Reversal of provision for financial guarantee services” against the income of commissions and fees on guarantee services. 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. 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: March 31, December 31, Allowance for immature financial guarantee services $ 9,884,388 $ 9,270,882 Allowance for repayment on behalf of guarantee service customers losses 1,974,740 2,073,282 Total allowance for repayment on behalf of guarantee customers losses $ 1,974,740 $ 2,073,282 The Company recorded a provision of US$104,391 and a reversal of provision US$7,207 for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018 and December 31, 2017, the management charged off specific provision for 31 and 31 customers in the amount of US$10,815,328 and US$10,440,156, considering remote collectability from the customers. |
Non-interest expenses | (h) Non-interest expenses Non-interest expenses primarily consist of changes in fair value of other noncurrent liabilities, salaries and benefits for employees, traveling cost, entertainment expenses, depreciation of equipment, office rental expenses, legal and consulting expenses, office supplies, etc. |
Income taxes | (i) Income taxes The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases. Deferred tax assets and liabilities are measured using enacted tax rates applicable for the differences that are expected to affect taxable income. |
Comprehensive loss | (j) Comprehensive loss Comprehensive loss includes net loss and other comprehensive foreign currency adjustments income. 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. |
Share-based awards | (k) Share-based awards We have various share-based awards pursuant to which the employees, consultants and directors of our company are granted share-based compensations. 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. The Company accounts for share-based compensation issued to nonemployees in accordance with the provisions of ASC 505-50 “Equity-Based Payments to Non-Employees” which codified SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 9618, “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services”. Measurement of share based payment transactions with non-employees shall be based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share based payment transaction should be determined at the earlier of performance commitment date or performance completion date. |
Operating leases | (l) 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. |
Commitments and contingencies | (m) 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. |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of adjustments from translations recorded as separate component of accumulated other comprehensive income in shareholders' deficit - Balance sheets | March 31, December 31, Balance sheet items, except for equity accounts 6.2807 6.5064 |
Summary of adjustments from translations recorded as a separate component of accumulated other comprehensive income in shareholders' deficit - statements of operations and comprehensive income components | For the three months ended 2018 2017 Items in the statements of operations and comprehensive loss, and statements of cash flows 6.3582 6.8891 |
Schedule of financial instruments represents credit risk | March 31, 2018 December 31, 2017 Guarantee $ 12,044,836 $ 11,627,013 |
Schedule of allowance | March 31, December 31, Allowance for immature financial guarantee services $ 9,884,388 $ 9,270,882 Allowance for repayment on behalf of guarantee service customers losses 1,974,740 2,073,282 Total allowance for repayment on behalf of guarantee customers losses $ 1,974,740 $ 2,073,282 |
Variable Interest Entities an30
Variable Interest Entities and Other Consolidation Matters (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Variable Interest Entities and Other Consolidation Matters [Abstract] | |
Schedule of VIE | March 31, 2018 December 31, 2017 (unaudited) Total assets $ 5,060,870 $ 4,204,709 Total liabilities $ 11,736,515 $ 10,818,223 For the three months ended 2018 2017 (unaudited) (unaudited) Revenue $ 97,020 $ 69,145 Net loss $ 173,388 $ 706,530 |
Loans Receivable, Net (Tables)
Loans Receivable, Net (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Loans Receivable, Net [Abstract] | |
Schedule of loans receivable | March 31, 2018 December 31, 2017 (unaudited) Business loans $ 22,716,745 $ 21,267,838 Personal loans 19,795,934 19,410,476 Total Loans receivable 42,512,679 40,678,314 Allowance for loan losses Collectively assessed (49,676 ) (38,731 ) Individually assessed (37,545,080 ) (36,574,662 ) Allowance for loan losses (37,594,756 ) (36,613,393 ) Loans receivable, net $ 4,917,923 $ 4,064,921 |
Schedule of nonaccrual loans by classes of loan | March 31, December 31, (unaudited) Business loans $ 17,749,146 $ 17,394,729 Personal loans 19,795,934 19,410,476 $ 37,545,080 $ 36,805,205 |
Schedule of the aging of loans | The following table represents the aging of loans as of March 31, 2018 by type of loan: 1-89 Days 90 - 179 Days 180 - 365 Days Over 1 year Total Current Total Loans (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Business loans $ - $ - $ - $ 17,749,146 $ 17,749,146 $ 4,967,599 $ 22,716,745 Personal loans - - - 19,795,934 19,795,934 - 19,795,934 $ - $ - $ - $ 37,545,080 $ 37,545,080 $ 4,967,599 $ 42,512,679 The following table represents the aging of loans as of December 31, 2017 by type of loan: 1-89 Days 90 - 179 Days 180 - 365 Days Over 1 year Total Current Total Loans Business loans $ 676,257 $ - $ - $ 17,394,729 $ 18,070,986 $ 3,196,852 $ 21,267,838 Personal loans - - - 19,410,476 19,410,476 - 19,410,476 $ 676,257 $ - $ - $ 36,805,205 $ 37,481,462 $ 3,196,852 $ 40,678,314 |
Schedule of loans portfolio by credit quality indicator | Five Categories March 31, 2018 % December 31, 2017 % (unaudited) Pass $ 4,967,599 11.7 % $ 3,873,110 9.5 % Special mention - - - - Substandard - - - - Doubtful - - - - % Loss 37,545,080 88.3 % 36,805,204 90.5 % Total $ 42,512,679 100 % $ 40,678,314 100 % |
Schedule of loans portfolio by collateral | March 31, 2018 Business Loans Personal Loans Total (unaudited) (unaudited) (unaudited) Guarantee backed loans $ 22,716,745 $ 18,953,671 $ 41,670,416 Collateral backed loans - 842,263 842,263 $ 22,716,745 $ 19,795,934 $ 42,512,679 December 31, 2017 Business Loans Personal Loans Total Guarantee backed loans $ 21,267,838 $ 18,559,007 $ 39,826,845 Collateral backed loans - 851,469 851,469 $ 21,267,838 $ 19,410,476 $ 40,678,314 |
Allowance for Loan Losses (Tabl
Allowance for Loan Losses (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Allowance for Loan Losses [Abstract] | |
Schedule of allowance for loan losses and related recorded investment | Business Loans Personal Loans Total (unaudited) (unaudited) (unaudited) For the three months ended March 31, 2018 Beginning balance $ 17,433,460 $ 19,179,933 $ 36,613,393 Charged off - - - Recoveries (267,371 ) (72,348 ) (339,719 ) Provisions 9,437 - 9,437 Foreign exchange loss 623,296 688,349 1,311,645 Ending balance 17,798,822 19,795,934 37,594,756 Ending balance: individually evaluated for impairment 17,749,146 19,795,934 37,545,080 Ending balance: collectively evaluated for impairment $ 49,676 $ - $ 49,676 Business Loans Personal Loans Total For the three months ended March 31, 2017 Beginning balance $ 32,356,953 $ 19,351,109 $ 51,708,062 Charge-offs - - - Recoveries (57,337 ) - (57,337 ) Provisions 143,468 696,751 840,219 Foreign exchange loss 251,720 150,351 402,071 Ending balance 32,694,804 20,198,211 52,893,015 Ending balance: individually evaluated for impairment 1,120,277 1,969,191 3,089,468 Ending balance: collectively evaluated for impairment $ 31,574,527 $ 18,229,020 $ 49,803,547 |
Schedule of loan portfolio by the aggregate pass rating and the classified ratings | 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 March 31, 2018: Pass Special Mention Substandard Doubtful Loss Total (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Business loans $ 4,967,599 $ - $ - $ - $ 17,749,146 $ 22,716,745 Personal loans - - - - 19,795,934 19,795,934 $ 4,967,599 $ - $ - $ - $ 37,545,080 $ 42,512,679 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 December 31, 2017: Pass Special Mention Substandard Doubtful Loss Total Business loans $ 3,873,110 $ - $ - $ - $ 17,394,728 $ 21,267,838 Personal loans - - - - 19,410,476 19,410,476 $ 3,873,110 $ - $ - $ - $ 36,805,204 $ 40,678,314 |
Guarantee Paid on Behalf of G33
Guarantee Paid on Behalf of Guarantee Customers, Net (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Guarantee Paid on Behalf of Guarantee Customers, Net [Abstract] | |
Schedule of guarantee paid on behalf of guarantee customers, net | March 31, December 31, (unaudited) Guarantee paid on behalf of guarantee service customers $ 1,974,740 $ 2,073,282 Allowance for repayment on behalf of guarantee service customers losses (1,974,740 ) (2,073,282 ) Guarantee paid on behalf of guarantee service customers, net $ - $ - |
Net Investment in Direct Fina34
Net Investment in Direct Financing Lease (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Net Investment in Direct Financing Lease [Abstract] | |
Summary of future minimum lease receipts under non-cancellable finance lease | March 31, December 31, (unaudited) Within 1 year $ 2,945,532 $ 2,843,355 2 years - - 3 years - - Total minimum lease receipts 2,945,532 2,843,355 Less: amount representing interest (317,355 ) (306,347 ) Present value of minimum lease receipts $ 2,628,177 $ 2,537,008 |
Summary of components of net investment in direct financing leases | March 31, December 31, (unaudited) Total minimum lease payments to be received $ 2,945,532 $ 2,843,355 Less: Amounts representing estimated executory costs - - Minimum lease payments receivable 2,945,532 2,843,355 Less Allowance for uncollectible (2,628,177 ) (2,537,008 ) Net minimum lease payments receivable 317,355 306,347 Estimated residual value of leased property - - Less: Unearned income (317,355 ) (306,347 ) Net investment in direct financing lease $ - $ - |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property and Equipment [Abstract] | |
Summary of property and equipment | Useful Life March 31, December 31, (unaudited) Furniture and fixtures 5 $ 23,009 $ 22,210 Electronic equipment 3 146,964 141,866 Less: accumulated depreciation (155,261 ) (148,030 ) Property and equipment, net $ 14,712 $ 16,046 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Other Current Liabilities [Abstract] | |
Schedule of other current liabilities | March 31, December 31, (unaudited) Accrued payroll $ 65,927 $ 64,402 Accrued office rental expenses 28,659 36,887 Other tax recoverable (41,808 ) (35,760 ) Other payable 41,947 100,911 $ 94,725 $ 166,440 |
Other Noncurrent Liabilities (T
Other Noncurrent Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Other Noncurrent Liabilities [Abstract] | |
Schedule of other noncurrent liabilities | March 31, December 31, (unaudited) Accrued provision for share settlement against legal proceedings $ 261,540 $ 1,311,000 $ 261,540 $ 1,311,000 |
Other Operating Expenses (Table
Other Operating Expenses (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Other Operating Expenses [Abstract] | |
Schedule of other operating expense | For the three months ended March 31, 2018 2017 (unaudited) (unaudited) Depreciation and amortization $ 1,889 $ 1,646 Travel expenses 31,770 11 Entertainment expenses 2,630 1,941 Legal and consulting expenses 215,430 117,477 Car expenses 6,917 4,456 Bank charges 1,068 990 Audit-related expense 20,600 71,781 Allowance for other receivable 30,157 - Other expenses 81,744 61,504 Total $ 392,205 $ 259,806 |
Loss Per Common Share (Tables)
Loss Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Loss Per Common Share [Abstract] | |
Summary of computation of basic and diluted earnings per common share | For the Three Months Ended March 31, 2018 2017 Net loss attributable to the common shareholders $ (385,898 ) $ (1,228,077 ) Basic weighted-average common shares outstanding 19,834,665 16,697,532 Effect of dilutive securities - - Diluted weighted-average common shares outstanding 19,834,665 16,697,532 Loss per share: Basic $ (0.019 ) $ (0.074 ) Diluted $ (0.019 ) $ (0.074 ) |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Income Taxes [Abstract] | |
Schedule of deferred tax liabilities | March 31, December 31, (Unaudited) Allowance for guarantees $ 2,639,101 $ 2,543,166 Net operating loss carryforwards 12,198,595 11,696,479 Valuation allowance (14,837,696 ) (14,239,645 ) Deferred tax assets, net - - |
Related Party Transactions an41
Related Party Transactions and Balances (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions and Balances [Abstract] | |
Summary of nature relationships with related parties | Name Relationship with the Company Wujiang Chunjia Textile Trading Co., Ltd (“Chunjia Textile”) Controlled by Huichun Qin Wujiang Xiaocun Shengda Founding Investment Co., Ltd. Controlled by shareholders of Wujiang Luxiang Yang Jie A significant shareholder and Vice President of Finance of the Company Long Yi Chief Finance Officer of the Company Huichun Qin Non-controlling shareholder and former CEO and chairman of board of directors |
Summary of amount due from related parties | March 31, December 31, (unaudited) Huichun Qin $ 1,114,525 $ 1,075,864 |
Summary of amount due to related parties | March 31, December 31, (unaudited) Wujiang Xiaocun Shengda Founding Investment Co., Ltd. $ 382,123 $ 398,073 Yang Jie 524,974 525,000 Long Yi - 174,974 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies [Abstract] | |
Summary of contractual obligations in future periods | Rental payments Year ending March 31, 2019 $ 58,916 Year ending March 31, 2020 20,783 Total $ 79,699 |
Correction of Error (Tables)
Correction of Error (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Correction of Error [Abstract] | |
Schedule of error corrections and prior period adjustments | For The Three Months Ended As Previously Reported Adjustments As Restated Changes in fair value of other noncurrent liabilities - 57,000 57,000 Total non-interest expense (655,215 ) 57,000 (598,215 ) Loss Before Income Taxes (1,285,077 ) 57,000 (1,228,077 ) Net Loss (1,285,077 ) 57,000 (1,228,077 ) Loss per Share- Basic and Diluted (0.077 ) 0.003 (0.074 ) Net Loss (1,285,077 ) 57,000 (1,228,077 ) Comprehensive loss $ (1,263,462 ) $ 57,000 $ (1,206,462 ) For The Three Months Ended As Previously Reported Adjustments As Restated Net loss $ (1,285,077 ) $ 57,000 $ (1,228,077 ) Changes in fair value of other noncurrent liabilities - (57,000 ) (57,000 ) |
Organization and Principal Ac44
Organization and Principal Activities (Details) - $ / shares | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 22, 2018 | Feb. 20, 2018 | Dec. 31, 2017 | |
Organization and Principal Activities (Textual) | ||||
Entity Incorporation, Date of Incorporation | Dec. 19, 2011 | |||
Business co-operation agreement, description | The Exclusive Business Cooperation Agreement shall remain in effect for ten years unless it is terminated by WFOE with 30-day prior notice. | |||
Common stock, shares authorized | 100,000,000 | 100,000,000 | ||
Common stock, par value | $ 0.001 | $ 4.20 | $ 0.001 | |
HCHS [Member] | ||||
Organization and Principal Activities (Textual) | ||||
Common stock, shares authorized | 50,000 | |||
Common stock, par value | $ 1 |
Going Concern (Details)
Going Concern (Details) - USD ($) | May 10, 2018 | Apr. 11, 2018 | Apr. 10, 2018 | Apr. 28, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Feb. 20, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Going Concern (Textual) | |||||||||
Accumulated deficit | $ (81,920,294) | $ (81,534,396) | |||||||
Net asset | (4,450,241) | (5,272,461) | |||||||
Cash and cash equivalents | 2,265,145 | $ 1,080,768 | $ 2,498,194 | $ 768,501 | |||||
Liabilities other than accrual for financial guarantee services | 1,875,894 | ||||||||
Operating cash flow | (608,646) | (363,081) | |||||||
Operating loss | $ (385,898) | $ (1,228,077) | |||||||
Common stock, par value | $ 0.001 | $ 4.20 | $ 0.001 | ||||||
Subsequent Event [Member] | |||||||||
Going Concern (Textual) | |||||||||
Common stock, par value | $ 0.001 | ||||||||
Common stock issuance shares | 1,336,314 | 649,350 | 1,336,314 | ||||||
Financial Support [Member] | |||||||||
Going Concern (Textual) | |||||||||
Share price, per share | $ 3.50 | ||||||||
Private Placement [Member] | Financial Support [Member] | Subsequent Event [Member] | |||||||||
Going Concern (Textual) | |||||||||
Gross proceeds | $ 500,000 | $ 3,000,000 | |||||||
Net proceeds to the Initial SPAs Offering | $ 1,042,324 | ||||||||
Share price, per share | $ 0.77 | $ 0.78 | |||||||
Sale of common stock, shares | 1,336,314 | ||||||||
Common stock, par value | $ 0.001 |
Summary of Significant Accoun46
Summary of Significant Accounting Policies (Details) | Mar. 31, 2018 | Dec. 31, 2017 |
Summary of Significant Accounting Policies [Abstract] | ||
Balance sheet items, except for equity accounts | 6.2807 | 6.5064 |
Summary of Significant Accoun47
Summary of Significant Accounting Policies (Details 1) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | ||
Items in the statements of operations and comprehensive loss, and statements of cash flows | 6.3582 | 6.8891 |
Summary of Significant Accoun48
Summary of Significant Accounting Policies (Details 2) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Summary of Significant Accounting Policies [Abstract] | ||
Guarantee | $ 12,044,836 | $ 11,627,013 |
Summary of Significant Accoun49
Summary of Significant Accounting Policies (Details 3) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Summary of Significant Accounting Policies [Line Items] | ||
Allowance for immature financial guarantee services | $ 9,884,388 | $ 9,270,882 |
Allowance for repayment on behalf of guarantee service customers losses | 1,974,740 | 2,073,282 |
Total allowance for repayment on behalf of guarantee customers losses | $ 1,974,740 | $ 2,073,282 |
Summary of Significant Accoun50
Summary of Significant Accounting Policies (Details Textual) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018USD ($)Customer | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($)Customer | |
Summary of Significant Accounting Policies (Textual) | |||
Reversal of provision for financial guarantee services | $ (104,391) | $ 7,207 | |
Charged off amount | $ 10,815,328 | $ 10,440,156 | |
Number of customers | Customer | 31 | 31 |
Variable Interest Entities an51
Variable Interest Entities and Other Consolidation Matters (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Variable Interest Entities and Other Consolidation Matters [Abstract] | |||
Total assets | $ 5,060,870 | $ 4,204,709 | |
Total liabilities | 11,736,515 | $ 10,818,223 | |
Revenue | 97,020 | $ 69,145 | |
Net loss | $ 173,388 | $ 706,530 |
Risks (Details)
Risks (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | |
Risks (Textual) | ||||
General reserve, percentage | 1.00% | |||
Cash | $ 2,265,145 | $ 2,498,194 | $ 1,080,768 | $ 768,501 |
Concentration risk, percentage | 10.00% | 10.00% |
Loans Receivable, Net (Details)
Loans Receivable, Net (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total Loans receivable | $ 42,512,679 | $ 40,678,314 | ||
Allowance for loan losses | ||||
Collectively assessed | (49,676) | (38,731) | $ (49,803,547) | |
Individually assessed | (37,545,080) | (36,574,662) | (3,089,468) | |
Allowance for loan losses | (37,594,756) | (36,613,393) | $ (52,893,015) | $ (51,708,062) |
Loans receivable, net | 4,917,923 | 4,064,921 | ||
Business loans [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total Loans receivable | 22,716,745 | 21,267,838 | ||
Personal loans [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total Loans receivable | $ 19,795,934 | $ 19,410,476 |
Loans Receivable, Net (Details
Loans Receivable, Net (Details 1) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Nonaccrual loans by classes of loan portfolio | $ 37,545,080 | $ 36,805,205 |
Business loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Nonaccrual loans by classes of loan portfolio | 17,749,146 | 17,394,729 |
Personal loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Nonaccrual loans by classes of loan portfolio | $ 19,795,934 | $ 19,410,476 |
Loans Receivable, Net (Detail55
Loans Receivable, Net (Details 2) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
1-89 Days Past Due | $ 676,257 | |
90 - 179 Days Past Due | ||
180 - 365 Days Past Due | ||
Over 1 year Past Due | 37,545,080 | 36,805,205 |
Total Past Due | 37,545,080 | 37,481,462 |
Current | 4,967,599 | 3,196,852 |
Total Loans | 42,512,679 | 40,678,314 |
Business loans [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
1-89 Days Past Due | 676,257 | |
90 - 179 Days Past Due | ||
180 - 365 Days Past Due | ||
Over 1 year Past Due | 17,749,146 | 17,394,729 |
Total Past Due | 17,749,146 | 18,070,986 |
Current | 4,967,599 | 3,196,852 |
Total Loans | 22,716,745 | 21,267,838 |
Personal loans [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
1-89 Days Past Due | ||
90 - 179 Days Past Due | ||
180 - 365 Days Past Due | ||
Over 1 year Past Due | 19,795,934 | 19,410,476 |
Total Past Due | 19,795,934 | 19,410,476 |
Current | ||
Total Loans | $ 19,795,934 | $ 19,410,476 |
Loans Receivable, Net (Detail56
Loans Receivable, Net (Details 3) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans receivable by credit quality indicator | $ 42,512,679 | $ 40,678,314 |
Percentage of loan receivable by credit quality indicator | 100.00% | 100.00% |
Pass [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans receivable by credit quality indicator | $ 4,967,599 | $ 3,873,110 |
Percentage of loan receivable by credit quality indicator | 11.70% | 9.50% |
Special mention [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans receivable by credit quality indicator | ||
Percentage of loan receivable by credit quality indicator | ||
Substandard [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans receivable by credit quality indicator | ||
Percentage of loan receivable by credit quality indicator | ||
Doubtful [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans receivable by credit quality indicator | ||
Percentage of loan receivable by credit quality indicator | ||
Loss [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans receivable by credit quality indicator | $ 37,545,080 | $ 36,805,204 |
Percentage of loan receivable by credit quality indicator | 88.30% | 90.50% |
Loans Receivable, Net (Detail57
Loans Receivable, Net (Details 4) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans receivable by credit quality indicator | $ 42,512,679 | $ 40,678,314 |
Guarantee backed loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans receivable by credit quality indicator | 41,670,416 | 39,826,845 |
Collateral backed loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans receivable by credit quality indicator | 842,263 | 851,469 |
Business loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans receivable by credit quality indicator | 22,716,745 | 21,267,838 |
Business loans [Member] | Guarantee backed loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans receivable by credit quality indicator | 22,716,745 | 21,267,838 |
Business loans [Member] | Collateral backed loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans receivable by credit quality indicator | ||
Personal loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans receivable by credit quality indicator | 19,795,934 | 19,410,476 |
Personal loans [Member] | Guarantee backed loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans receivable by credit quality indicator | 18,953,671 | 18,559,007 |
Personal loans [Member] | Collateral backed loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Loans receivable by credit quality indicator | $ 842,263 | $ 851,469 |
Loans Receivable, Net (Detail58
Loans Receivable, Net (Details Textual) | 3 Months Ended | ||
Mar. 31, 2018USD ($)Customer | Mar. 31, 2017USD ($) | Dec. 31, 2017Customer | |
Loans Receivable, Net (Textual) | |||
Guarantee loans percentage | 98.00% | 97.90% | |
Reversal of provision for loan losses | $ | $ 330,282 | $ 782,882 | |
Write-offs allowances | $ | |||
Minimum [Member] | |||
Loans Receivable, Net (Textual) | |||
Loan interest rate | 9.60% | 9.60% | |
Maximum [Member] | |||
Loans Receivable, Net (Textual) | |||
Loan interest rate | 19.44% | 19.44% | |
Business loans [Member] | |||
Loans Receivable, Net (Textual) | |||
Number of customers | Customer | 37 | 37 | |
Personal loans [Member] | |||
Loans Receivable, Net (Textual) | |||
Number of customers | Customer | 33 | 34 |
Allowance for Loan Losses (Deta
Allowance for Loan Losses (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Allowance for Loan Losses [Line Items] | ||
Beginning balance | $ 36,613,393 | $ 51,708,062 |
Charged off | ||
Recoveries | (339,719) | (57,337) |
Provisions | (330,282) | 782,882 |
Foreign exchange loss | 1,311,645 | 402,071 |
Ending balance | 37,594,756 | 52,893,015 |
Ending balance: individually evaluated for impairment | 37,545,080 | 3,089,468 |
Ending balance: collectively evaluated for impairment | 49,676 | 49,803,547 |
Business Loans [Member] | ||
Allowance for Loan Losses [Line Items] | ||
Beginning balance | 17,433,460 | 32,356,953 |
Charged off | ||
Recoveries | (267,371) | (57,337) |
Provisions | 9,437 | 143,468 |
Foreign exchange loss | 623,296 | 251,720 |
Ending balance | 17,798,822 | 17,433,460 |
Ending balance: individually evaluated for impairment | 17,749,146 | 1,120,277 |
Ending balance: collectively evaluated for impairment | 49,676 | 31,574,527 |
Personal Loans [Member] | ||
Allowance for Loan Losses [Line Items] | ||
Beginning balance | 19,179,933 | 19,351,109 |
Charged off | ||
Recoveries | (72,348) | |
Provisions | 696,751 | |
Foreign exchange loss | 688,349 | 150,351 |
Ending balance | 19,795,934 | 20,198,211 |
Ending balance: individually evaluated for impairment | 19,795,934 | 1,969,191 |
Ending balance: collectively evaluated for impairment | $ 18,229,020 |
Allowance for Loan Losses (De60
Allowance for Loan Losses (Details 1) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | $ 42,512,679 | $ 40,678,314 |
Pass [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 4,967,599 | 3,873,110 |
Special Mention [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | ||
Substandard [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | ||
Doubtful [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | ||
Loss [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 37,545,080 | 36,805,204 |
Business Loans [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 22,716,745 | 21,267,838 |
Business Loans [Member] | Pass [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 4,967,599 | 3,873,110 |
Business Loans [Member] | Special Mention [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | ||
Business Loans [Member] | Substandard [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | ||
Business Loans [Member] | Doubtful [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | ||
Business Loans [Member] | Loss [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 17,749,146 | 17,394,728 |
Personal Loans [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | 19,795,934 | 19,410,476 |
Personal Loans [Member] | Pass [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | ||
Personal Loans [Member] | Special Mention [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | ||
Personal Loans [Member] | Substandard [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | ||
Personal Loans [Member] | Doubtful [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | ||
Personal Loans [Member] | Loss [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Loans | $ 19,795,934 | $ 19,410,476 |
Guarantee Paid on Behalf of G61
Guarantee Paid on Behalf of Guarantee Customers, Net (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Guarantee Paid on Behalf of Guarantee Customers, Net [Abstract] | ||
Guarantee paid on behalf of guarantee service customers | $ 1,974,740 | $ 2,073,282 |
Allowance for repayment on behalf of guarantee service customers losses | (1,974,740) | (2,073,282) |
Guarantee paid on behalf of guarantee service customers, net |
Guarantee Paid on Behalf of G62
Guarantee Paid on Behalf of Guarantee Customers, Net (Details Textual) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018USD ($)Customer | Dec. 31, 2017USD ($)Customer | |
Guarantee Paid on Behalf of Guarantee Customers, Net (Textual) | ||
Charged off allowance for repayment on behalf of customers | $ | $ 10,815,328 | $ 10,440,156 |
Number of customers | Customer | 31 | 31 |
Net Investment in Direct Fina63
Net Investment in Direct Financing Lease (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Future minimum lease receipts under non-cancellable finance lease | ||
Within 1 year | $ 2,945,532 | $ 2,843,355 |
2 years | ||
3 years | ||
Total minimum lease receipts | 2,945,532 | 2,843,355 |
Less: amount representing interest | (317,355) | (306,347) |
Present value of minimum lease receipts | $ 2,628,177 | $ 2,537,008 |
Net Investment in Direct Fina64
Net Investment in Direct Financing Lease (Details 1) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Components of the Company' s net investment in direct financing leases | ||
Total minimum lease payments to be received | $ 2,945,532 | $ 2,843,355 |
Less: Amounts representing estimated executory costs | ||
Minimum lease payments receivable | 2,945,532 | 2,843,355 |
Less Allowance for uncollectible | (2,628,177) | (2,537,008) |
Net minimum lease payments receivable | 317,355 | 306,347 |
Estimated residual value of leased property | ||
Less: Unearned income | (317,355) | (306,347) |
Net investment in direct financing lease |
Net Investment in Direct Fina65
Net Investment in Direct Financing Lease (Details Textual) - USD ($) $ in Thousands | Oct. 13, 2014 | Sep. 25, 2014 |
Net Investment in Direct Financing Lease (Textual) | ||
Total lease receivable | $ 2,880 | $ 2,730 |
Lease bears an interest rate per annum | 11.11% | 10.36% |
Lease expiration, term | 3 years | 2 years |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | ||
Furniture and fixtures | $ 23,009 | $ 22,210 |
Electronic equipment | 146,964 | 141,866 |
Less: accumulated depreciation | (155,261) | (148,030) |
Property and equipment, net | $ 14,712 | $ 16,046 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life (years) | 5 years | |
Electronic equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life (years) | 3 years |
Property and Equipment (Detai67
Property and Equipment (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Property and Equipment (Textual) | ||
Percentage of salvage value of property and equipment | 5.00% | |
Depreciation expense | $ 1,889 | $ 1,646 |
Other Current Liabilities (Deta
Other Current Liabilities (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Other Current Liabilities [Abstract] | ||
Accrued payroll | $ 65,927 | $ 64,402 |
Accrued office rental expenses | 28,659 | 36,887 |
Other tax recoverable | (41,808) | (35,760) |
Other payable | 41,947 | 100,911 |
Other current liabilities total | $ 94,725 | $ 166,440 |
Other Noncurrent Liabilities (D
Other Noncurrent Liabilities (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Other Noncurrent Liabilities [Abstract] | ||
Accrued provision for share settlement against legal proceedings | $ 261,540 | $ 1,311,000 |
Other noncurrent liabilities | $ 261,540 | $ 1,311,000 |
Other Noncurrent Liabilities 70
Other Noncurrent Liabilities (Details Textual) - USD ($) | Apr. 10, 2018 | Dec. 22, 2017 | Jan. 19, 2018 | Nov. 22, 2017 | Jul. 28, 2017 | May 30, 2017 | Nov. 22, 2016 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Other Current Liabilities (Textual) | ||||||||||
Accrued liability | $ 245,000 | |||||||||
Settlement of accrued liability, shares | 950,000 | 950,000 | 950,000 | |||||||
Stipulation settlement payment, description | The $245,000 cash portion of the settlement has been paid in full. The 712,500 Class Settlement Shares were issued on or about January 19, 2018. The settlement has been finalized, and that thereafter there are no remaining claims outstanding as against the Company with respect to this litigation. On April 10, 2018, the 237,500 of plaintiff attorney fee shares were issued to plaintiff's attorney's broker account. | (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 $245,000 in cash and the issuance of 950,000 shares of its common stock to members of the settlement class. | The Stipulation also provides, among other things, a settlement payment by the Company of $245,000 in cash and the issuance of 950,000 shares of its common stock (the "Settlement Shares") to the plaintiff's counsel and class members. | |||||||
Settlement of accrued liability | $ 261,540 | $ 1,311,000 | ||||||||
Settlement market value per share | $ 0.10 | |||||||||
Litigation settlement expenses | $ 55,000 | |||||||||
Litigation settlement expenses, shares | 950,000 | 237,500 | 237,500 | |||||||
Cash portion of settlement paid amount | $ 245,000 | $ 190,000 | $ 245,000 | $ 245,000 | ||||||
Settlement payment | $ 261,540 | |||||||||
Issuance of common stock | 712,500 | 712,500 | 712,500 | |||||||
Changes in fair value of noncurrent liabilities | $ 147,540 | $ (57,000) | ||||||||
Forecasting [Member] | ||||||||||
Other Current Liabilities (Textual) | ||||||||||
Issuance of common stock | 237,500 | |||||||||
Subsequent Event [Member] | ||||||||||
Other Current Liabilities (Textual) | ||||||||||
Settlement of accrued liability, shares | 950,000 |
Other Operating Expenses (Detai
Other Operating Expenses (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Other Operating Expenses [Abstract] | ||
Depreciation and amortization | $ 1,889 | $ 1,646 |
Travel expenses | 31,770 | |
Entertainment expenses | 2,630 | |
Legal and consulting expenses | 215,430 | |
Car expenses | 6,917 | |
Bank charges | 1,068 | |
Audit-related expense | 20,600 | |
Other expenses | 30,157 | |
Allowance for other receivable | 81,744 | |
Total | $ 392,205 |
Capital Transaction (Details)
Capital Transaction (Details) - USD ($) | Feb. 20, 2018 | Dec. 01, 2017 | Jan. 19, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Capital Transaction (Textual) | |||||
Common stock, shares authorized | 100,000,000 | 100,000,000 | |||
Common stock, par value | $ 4.20 | $ 0.001 | $ 0.001 | ||
Common stock, shares issued | 50,000 | 712,500 | 20,013,415 | 19,250,915 | |
Common stock, shares outstanding | 20,013,415 | 19,250,915 | |||
Common stocks and related warrants unissued shares | 150,000 | ||||
Settlement shares | 950,000 | ||||
Warrant [Member] | |||||
Capital Transaction (Textual) | |||||
Warrants to purchase issued shares | 20,000 | ||||
Warrant exercise price | $ 4.2 | ||||
Fair value of warrants | $ 11,073 | ||||
Warrants to purchase outstanding | 213,370 | 193,370 | |||
Securities Purchased Agreement [Member] | |||||
Capital Transaction (Textual) | |||||
Shares issued, price per shares | $ 3.5 | ||||
Securities Purchased Agreement [Member] | Mr. Yang Jie [Member] | |||||
Capital Transaction (Textual) | |||||
Stock issued during period for services, shares | 150,000 | ||||
Stock issued during period for services | $ 525,000 | ||||
Securities Purchased Agreement [Member] | Mr. Long Yi [Member] | |||||
Capital Transaction (Textual) | |||||
Stock issued during period for services, shares | 50,000 | ||||
Stock issued during period for services | $ 175,000 |
Loss Per Common Share (Details)
Loss Per Common Share (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Loss Per Common Share [Abstract] | ||
Net loss attributable to the common shareholders | $ (385,898) | $ (1,228,077) |
Basic weighted-average common shares outstanding | 19,834,665 | 16,697,532 |
Effect of dilutive securities | ||
Diluted weighted-average common shares outstanding | 19,834,665 | |
Loss per share: | ||
Basic | $ (0.019) | |
Diluted | $ (0.019) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Income Taxes [Abstract] | ||
Allowance for guarantees | $ 2,639,101 | $ 2,543,166 |
Net operating loss carryforwards | 12,198,595 | 11,696,479 |
Valuation allowance | (14,837,696) | (14,239,645) |
Deferred tax assets, net |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | Jan. 01, 2008 | Mar. 31, 2018 | Dec. 31, 2017 |
Income Taxes (Textual) | |||
Uniform tax rate | 25.00% | 25.00% | |
Preferential tax rate | 12.50% | ||
Income tax examination, description | The New Taxation Law of PRC stipulates that domestic enterprises and foreign invested enterprises (the "FIEs") are subject to an uniform tax rate of 25%. A preferential income tax rate of 12.5% is provided to micro-credit companies that are located in Jiangsu Province. Thus, the Company's loan business segment located in Jiangsu Province benefits from the preferential enterprise income tax rate of 12.5%. Under the PRC tax law, companies are required to make quarterly estimate payments based on 25% tax rate; companies that received preferential tax rates are also required to use a 25% tax rate for their installment tax payments. | ||
Operating loss carry-forward tax | $ 78,570,841 | ||
Increase to liability for unrecognized tax benefit, description | Next 12 months. | ||
Operating loss expiration date | December 31, 2019. | ||
Deferred income tax assets | $ 14,837,696 | ||
Uncertainty income taxes approach, description | The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the 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 underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB 100,000. In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. | ||
Valuation allowance on deferred tax assets | $ 14,837,696 | $ 14,239,645 | |
Maximum [Member] | |||
Income Taxes (Textual) | |||
Valuation allowance on deferred tax assets | 14,239,645 | ||
Minimum [Member] | |||
Income Taxes (Textual) | |||
Valuation allowance on deferred tax assets | $ 598,051 |
Related Party Transactions an76
Related Party Transactions and Balances (Details) | 3 Months Ended |
Mar. 31, 2018 | |
Long Yi [Member] | |
Related Party Transaction [Line Items] | |
Relationship with the Company | Chief Finance Officer of the Company |
Wujiang Chunjia Textile Trading Co., Ltd ("Chunjia Textile") [Member] | |
Related Party Transaction [Line Items] | |
Relationship with the Company | Controlled by Huichun Qin |
Wujiang Xiaocun Shengda Founding Investment [Member] | |
Related Party Transaction [Line Items] | |
Relationship with the Company | Controlled by shareholders of Wujiang Luxiang |
Yang Jie [Member] | |
Related Party Transaction [Line Items] | |
Relationship with the Company | A significant shareholder and Vice President of Finance of the Company |
Huichun Qin [Member] | |
Related Party Transaction [Line Items] | |
Relationship with the Company | Non-controlling shareholder and former CEO and chairman of board of directors |
Related Party Transactions an77
Related Party Transactions and Balances (Details 1) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Huichun Qin [Member] | ||
Related Party Transaction [Line Items] | ||
Amount due from related parties | $ 1,114,525 | $ 1,075,864 |
Related Party Transactions an78
Related Party Transactions and Balances (Details 2) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Wujiang Chunjia Textile Trading Co., Ltd [Member] | ||
Related Party Transaction [Line Items] | ||
Amount dur to related parties | $ 382,123 | $ 398,073 |
Yang Jie [Member] | ||
Related Party Transaction [Line Items] | ||
Amount dur to related parties | 524,974 | 525,000 |
Long Yi [Member] | ||
Related Party Transaction [Line Items] | ||
Amount dur to related parties | $ 174,974 |
Related Party Transactions an79
Related Party Transactions and Balances (Details Textual) $ / shares in Units, ¥ in Millions | Dec. 01, 2017USD ($)$ / sharesshares | Mar. 31, 2018shares | Jul. 02, 2014USD ($) | Jul. 02, 2014CNY (¥) |
Yang Jie [Member] | ||||
Related Party Transactions and Balances (Textual) | ||||
Common stock issuance shares | 150,000 | |||
Shares issued, price per shares | $ / shares | $ 3.5 | |||
Value of common stock, issued | $ | $ 525,000 | |||
Mr. Long Yi [Member] | ||||
Related Party Transactions and Balances (Textual) | ||||
Common stock issuance shares | 50,000 | |||
Shares issued, price per shares | $ / shares | $ 3.5 | |||
Value of common stock, issued | $ | $ 175,000 | |||
Number of shares issued | 50,000 | |||
Number of warrant issued | 20,000 | |||
Huichun Qin [Member] | ||||
Related Party Transactions and Balances (Textual) | ||||
Amount due from related parties | $ 1,098,197 | ¥ 7 |
Commitments and Contingencies80
Commitments and Contingencies (Details) | Mar. 31, 2018USD ($) |
Commitments and Contingencies [Abstract] | |
Year ending March 31, 2019 | $ 58,916 |
Year ending March 31, 2020 | 20,783 |
Total | $ 79,699 |
Commitments and Contingencies81
Commitments and Contingencies (Details Textual) - USD ($) | Aug. 06, 2014 | Nov. 22, 2016 | Mar. 16, 2016 | Mar. 31, 2018 | Dec. 31, 2016 | Dec. 31, 2017 | Nov. 22, 2017 |
Commitments and Contingencies (Textual) | |||||||
Lease commitments, description | 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. The Stipulation resolved 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. The Stipulation also provides, among other things, a settlement payment by the Company of $245,000 in cash and the issuance of 950,000 shares of its common stock (the "Settlement Shares") to the plaintiff's counsel and class members. The terms of the Stipulation were subject to approval by the Court following notice to all class members. The issuance of the Settlement Shares are exempt from registration pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended. A fairness hearing was held on May 30, 2017, and the Court approved the settlement. On December 22, 2017, the Court entered a distribution order approving the distribution of the Settlement Stock to the class plaintiffs. The $245,000 cash portion of the settlement has been paid in full. The 712,500 Class Settlement Shares were issued on or about January 19, 2018. The settlement has been finalized, and that thereafter there are no remaining claims outstanding as against the Company with respect to this litigation. On April 10, 2018, the 237,500 of plaintiff attorney fee shares were issued to plaintiff's attorney's broker account. | We leased certain office space in New York, NY where we paid a monthly rent of US$3,600 during 2018. | Lease agreement from January 1, 2017 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. | ||||
Average guarantee expiration terms | 12 to 24 months | ||||||
Loan guarantees amount | $ 12,044,836 | $ 11,627,013 | |||||
Aggregate claim paid | $ 2,300,000 | ||||||
Loan paid behalf of loan guarantee customers | $ 5,400,000 | ||||||
Escrow fund deposit | $ 200,000 | ||||||
Weighted average trading price, description | 80% of the 30 day volume weighted average trading price for each of the 30 consecutive trading days prior to the date of the agreement. As of the completion of the settlement, an aggregate of 527,078 shares are unused in the escrow account and the Underwriter Defendants acknowledged there is no additional payment of fees and expenses owed to the Underwriter Defendants and the Advance Funding Agreement shall be terminated. The Company has instructed the transfer agent to cancel the 527,078 shares and return them to authorized shares. As of the date of this Annual Report, the Company is working with its counsel and the escrow agent to complete such cancelation. | ||||||
WFOE filed a civil complaint against Huichun Qin, description | 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. | ||||||
Settlement payment in cash | $ 245,000 | ||||||
Interest and penalties | $ 6,910,000 | ||||||
Additional amount of interest and penalties | $ 2,970,000 | ||||||
Minimum [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Average percentage of guarantee amount as security deposit | 10.00% | ||||||
Maximum [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Average percentage of guarantee amount as security deposit | 20.00% |
Correction of Error (Details)
Correction of Error (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Changes in fair value of noncurrent liabilities | $ (147,540) | $ 57,000 |
Total non-interest expense | (712,126) | (598,215) |
Loss Before Income Taxes | (385,898) | (1,228,077) |
Net Loss | $ (385,898) | $ (1,228,077) |
Loss per Share- Basic and Diluted | $ (0.019) | $ (0.074) |
Net loss | $ (385,898) | $ (1,228,077) |
Other comprehensive loss | $ (511,118) | (1,206,462) |
As Previously Reported [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Changes in fair value of noncurrent liabilities | 0 | |
Total non-interest expense | (655,215) | |
Loss Before Income Taxes | (1,285,077) | |
Net Loss | $ (1,285,077) | |
Loss per Share- Basic and Diluted | $ (0.077) | |
Net loss | $ (1,285,077) | |
Other comprehensive loss | (1,263,462) | |
Adjustments [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Changes in fair value of noncurrent liabilities | 57,000 | |
Total non-interest expense | 57,000 | |
Loss Before Income Taxes | 57,000 | |
Net Loss | $ 57,000 | |
Loss per Share- Basic and Diluted | $ 0.003 | |
Net loss | $ 57,000 | |
Other comprehensive loss | $ 57,000 |
Correction of Error (Details 1)
Correction of Error (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net loss | $ (385,898) | $ (1,228,077) |
Changes in fair value of noncurrent liabilities | $ (147,540) | 57,000 |
Scenario, Previously Reported [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net loss | (1,285,077) | |
Changes in fair value of noncurrent liabilities | 0 | |
Restatement Adjustment [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net loss | 57,000 | |
Changes in fair value of noncurrent liabilities | $ 57,000 |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) | May 10, 2018 | Apr. 10, 2018 | Dec. 01, 2017 | Apr. 28, 2018 | Nov. 22, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | Feb. 20, 2018 |
Subsequent Event (Textual) | ||||||||
Charged off amount | $ 10,815,328 | $ 10,440,156 | ||||||
Settlement of accrued liability, shares | 950,000 | 950,000 | 950,000 | |||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 4.20 | |||||
Charged off, description | During the period from April 1, 2018 to the date of this report, the Company assessed the charged-off loan and guarantee balances recorded as of March 31, 2018 and was of the opinion that charged off loan balance of US$22,605,017 and charged off guarantee balance of US$10,815,328 were uncollectible. | |||||||
Subsequent Events [Member] | ||||||||
Subsequent Event (Textual) | ||||||||
Settlement of accrued liability, shares | 950,000 | |||||||
Stock issued during period for services, shares | 237,500 | |||||||
Common stock issuance shares | 1,336,314 | 649,350 | 1,336,314 | |||||
Value of common stock, issued | $ 500,000 | |||||||
Common stock, par value | $ 0.001 | |||||||
Purchase price | $ 0.78 | |||||||
Total amount | $ 1,042,324 | |||||||
Mr. Yang Jie [Member] | ||||||||
Subsequent Event (Textual) | ||||||||
Common stock issuance shares | 150,000 | |||||||
Value of common stock, issued | $ 525,000 | |||||||
Sell of common shares | 150,000 | |||||||
Purchase price | $ 3.5 | |||||||
Total amount | $ 525,000 | |||||||
Mr. Long Yi [Member] | ||||||||
Subsequent Event (Textual) | ||||||||
Common stock issuance shares | 50,000 | |||||||
Value of common stock, issued | $ 175,000 | |||||||
Sell of common shares | 50,000 | |||||||
Purchase price | $ 3.5 | |||||||
Total amount | $ 175,000 |