10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2018

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

For the transition period from ____________ to ____________

Commission file number: 001-36055

China Commercial Credit, Inc.

(Exact name of registrant as specified in its charter)

Delaware	45-4077653
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

No.1 Zhongying Commercial Plaza,

Zhong Ying Road,

Wujiang, Suzhou,

Jiangsu Province, China

(Address of principal executive offices)

+86-10 5944-1080

(Registrant’s telephone number, including area code)

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

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

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

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

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

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

As of November 8, 2018, 24,595,612 shares of the Company’s Common Stock, $0.001 par value per share, were issued and outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Unaudited Condensed Consolidated Balance Sheets	1
	Unaudited Condensed Consolidated Statements of Operations	2
	Unaudited Condensed Consolidated Statement of Changes in Shareholder’s (Deficit) Equity	3
	Unaudited Condensed Consolidated Statements of Cash Flows	4
	Notes to the Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.	Defaults Upon Senior Securities
Item 4.	Mine Safety Disclosures
Item 5.	Other Information
Item 6.	Exhibits
Signatures

i

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CHINA COMMERCIAL CREDIT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

		September 30,			December 31,
	Note	2018			2017
		(unaudited)
ASSETS
Cash		$	838,634		$	1,359,630
Other current assets	7		2,868,404			-
Assets of disposal group classified as held for sale	6		-			5,805,654
Total current assets			3,707,038			7,165,284
Operating lease assets, net	8		1,631,250			-
Property and equipment, net			5,096			-
Total Assets		$	5,343,384		$	7,165,284
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Short-term bank loans			1,397,726
Other current liabilities		$	236,263		$	-
Liabilities directly associated with the assets classified as held for sale	6		-			10,426,771
Total current liabilities			1,633,989			10,426,771
Other noncurrent liabilities	9		-			1,311,000
Total Liabilities			1,633,989			11,737,771
Shareholders’ Equity (Deficit)
Series A Preferred Stock (par value $0.001 per share, 1,000,000 shares authorized at September 30, 2018 and December 31, 2017, respectively; nil and nil shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively)		$	-		$	-
Series B Preferred Stock (par value $0.001 per share, 5,000,000 shares authorized at September 30, 2018 and December 31, 2017, respectively; nil and nil shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively)			-			-
Common stock (par value $0.001 per share, 100,000,000 shares authorized; 24,595,612 and 19,250,915 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively)	11		24,596			19,251
Subscription fee advanced from a shareholder			-			699,974
Additional paid-in capital			28,431,422			71,424,031
Accumulated deficit			(24,621,894	)		(81,534,396	)
Accumulated other comprehensive (loss) income			(124,729	)		4,818,653
Total Shareholders’ Equity (Deficit)			3,709,395			(4,572,487	)
Total Liabilities and Shareholders’ Equity (Deficit)		$	5,343,384		$	7,165,284

See notes to the consolidated financial statements

1

CHINA COMMERCIAL CREDIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

		For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	Note	2018			2017			2018			2017
		(unaudited)			(unaudited)			(unaudited)			(unaudited)
Lease income and other interest income
Income from operating lease		$	140,856		$	-		$	237,577		$	-
Interests on deposits with banks			2,216			-			2,531			35,000
Total lease income and other interest income			143,072			-			240,108			35,000
Net depreciation expense on operating lease assets			(35,336	)		-			(47,794	)		-
Net Revenue			107,736			-			192,314			35,000
Operating expenses
Salaries and employee surcharge			(151,645	)		(155,411	)		(377,244	)		(583,615	)
Rental expenses			(16,234	)		(7,542	)		(42,623	)		(22,322	)
Business taxes and surcharge			(711	)		-			(855	)		-
Changes in fair value of noncurrent liabilities	9		-			313,500			(166,540	)		(1,681,500	)
Other operating expenses	10		(573,172	)		(1,672,235	)		(1,180,313	)		(2,742,401	)
Total operating expenses			(741,762	)		(1,521,688	)		(1,767,575	)		(5,029,838	)
Loss from acquisition of a variable interest entity	1		-			-			(14,004	)		-
Net loss from continuing operations before income taxes			(634,026	)		(1,521,688	)		(1,589,265	)		(4,994,838	)
Income tax expense	13		(991	)		-			(1,011	)		-
Net loss from continuing operations		$	(635,017	)	$	(1,521,688	)	$	(1,590,276	)	$	(4,994,838	)
Net income (loss) from discontinued operations	6		-			(613,604	)		10,072,629			(3,286,906	)
Net income (loss)		$	(635,017	)	$	(2,135,292	)	$	8,482,353		$	(8,281,744	)
Income (loss) per share- basic and diluted	12		(0.026	)		(0.118	)		0.381			(0.477	)
Net loss per share from continuing operations – basic and diluted	12		(0.026	)		(0.084	)		(0.071	)		(0.288	)
Net income (loss) per share from discontinued operations – basic and diluted	12		-			(0.034	)		0.452			(0.189	)
Weighted Average Shares Outstanding-Basic and Diluted			24,595,612			18,092,369			22,290,464			17,371,183
Net income (loss)		$	(635,017	)	$	(2,135,292	)	$	8,482,353		$	(8,281,744	)
Other comprehensive (loss) income
Foreign currency translation adjustment			211,638			14,699			(30,667	)		43,987
Comprehensive income (loss)		$	(423,379	)	$	(2,120,593	)	$	8,451,686		$	(8,237,757	)

See notes to the consolidated financial statements

2

CHINA COMMERCIAL CREDIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

	Common shares				Additional paid-in			Subscription advanced from a			Accumulated			Accumulated other comprehensive
	Number		Amount		capital			shareholder			deficit			income (loss)			Total
Balance as at December 31, 2017		19,250,915		19,251		71,424,031			699,974			(81,534,396	)		4,818,653			(4,572,487	)
Issuance of common stocks and warrants to management		200,000		200		699,774			(699,974	)		-			-			-
Issuance of common stocks in connection with class action settlement		950,000		950		1,476,591			-			-			-			1,477,541
Issuance of common stocks in connection with private placements		4,194,697		4,195		3,261,175			-			-			-			3,265,370
Net income for the year		-		-		-			-			8,482,353			-			8,482,353
Foreign currency translation adjustments		-		-		-			-			-			(30,667	)		(30,667	)
Disposition of CCC BVI (Note 6)		-		-		(48,430,149	)		-			48,430,149			(4,912,715	)		(4,912,715	)
Balance as at September 30, 2018 (unaudited)		24,595,612		24,596		28,431,422			-			(24,621,894	)		(124,724	)		3,709,395

3

CHINA COMMERCIAL CREDIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For The Nine Months Ended June 30,
	2018			2017
	(unaudited)			(unaudited)
Cash Flows from Operating Activities:
Net income (loss)	$	8,482,353		$	(8,281,744	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation of operating lease assets		58,854			-
Depreciation of property and equipment		572			-
Loss on disposal of a used luxurious car		12,202
Gain on disposal of discontinued operations		(9,794,873	)		-
Loss on acquisition of a variable interest entity		14,004			-
Shares issued for settlement against legal proceedings		943,860			-
Shares issued to executive officers and professional services		-			2,159,480
Changes in fair value of noncurrent liabilities		166,540			1,681,500
Changes in operating assets and liabilities:
Accounts receivable
Other assets		(1,047,300	)		-
Other current liabilities		78,664			-
Other noncurrent liabilities		(1,311,000	)		-
Net cash provided by operating activities from discontinued operations		992,334			3,192,135
Net Cash Used in Operating Activities		(1,403,790	)		(1,248,629	)
Cash Flows from Investing Activities:
Proceeds from disposal of a used luxurious car		122,481			-
Proceeds from disposal of discontinued operations		500,000			-
Acquisition of subsidiary, net of cash acquired		245			-
Purchase of operating lease assets		(1,882,476	)		-
Purchase of property and equipment		(5,945	)		-
Loan disbursed to a third party		(1,473,458	)		-
Net cash (used in) provided by investing activities from discontinued operations		(1,270,070	)		1,905,807
Net Cash (Used in) Provided by Investing Activities		(4,009,223	)		1,905,807
Cash Flows From Financing Activities:
Borrowings from bank		1,473,458			-
Borrowings from a related party		153,485			-
Cash raised in private placement		3,265,371			1,560,000
Net Cash Provided by Financing Activities		4,892,314			1,560,000
Effect of Exchange Rate Changes on Cash and Cash Equivalents		(297	)		44,789
Net Increase (Decrease) In Cash and Cash Equivalents		(520,996	)		2,261,967
Cash and Cash Equivalents at Beginning of Period		1,359,630			768,501
Cash and Cash Equivalents at End of Period	$	838,634		$	3,030,468

See notes to the consolidated financial statements

4

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

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 formed HC High Summit Holding Limited (“HC High BVI”), a wholly owned subsidiary, in British Virgin Island (“BVI”). HC High BVI is authorized to issue a maximum of 50,000 shares of one class, at par value of $1.00 per share.

On April 16, 2018, HC High BVI formed a wholly owned subsidiary, HC High Summit Limited (“HC High HK”) in Hong Kong. On April 17, 2018, the Company, through HC High HK, established Hao Limo Technology (Beijing) Co. Ltd.  (“Hao Limo”).

VIE AGREEMENTS WITH BEIJING YOUJIAO

On June 19, 2018, Hao Limo entered into a series of agreements (the “Youjiao VIE Agreements”) with Beijing Youjiao and Aizhen Li. The Youjiao VIE Agreements were designed to provide Hao Limo with the power, rights and obligations equivalent in all material respects to those it would possess as the sole equity holder of Beijing Youjiao, including absolute control rights and the rights to the management, operations, assets, property and revenue of Beijing Youjiao. The purpose of Youjiao VIE Agreements is solely to give Hao Limo the exclusive control over Beijing Youjiao’s management and operations. Beijing Youjiao has the requisite license to carry out used luxurious car leasing business in China. On June 19, 2018, the net liabilities of Beijing Youjiao are comprised of followings:

		June 19,
	Note	2018
			(unaudited)
Cash		$	245
Accrued expenses			13,759
Net liabilities of Youjiao on acquisition date			14,004
Cash consideration for the acquisition			-
Loss on acquisition			14,004

Material terms of each of the Youjiao VIE Agreements are described below:

Exclusive Business Cooperation Agreement

Pursuant to the Exclusive Business Cooperation Agreement between Beijing Youjiao and Hao Limo, Hao Limo provides Beijing Youjiao with technical support, consulting services and management services on an exclusive basis, utilizing its advantages in technology, human resources, and information. Additionally, Beijing Youjiao granted an irrevocable and exclusive option to Hao Limo to purchase from Beijing Youjiao, any or all of Beijing Youjiao’s assets at the lowest purchase price permitted under the PRC laws. Should Hao Limo exercise such option, the parties shall enter into a separate asset transfer or similar agreement. For services rendered to Beijing Youjiao by Hao Limo under this agreement, Hao Limo is entitled to collect a service fee calculated based on the time of services rendered multiplied by the corresponding rate, plus amount of the services fees or ratio decided by the board of directors of Hao Limo based on the value of services rendered by Hao Limo and the actual income of Beijing Youjiao from time to time, which is substantially equal to all of the net income of Beijing Youjiao.

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

5

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

1. ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)

Share Pledge Agreement

Under the Share Pledge Agreement among Beijing Youjiao, Aizhen Li and Hao Limo, Aizhen Li pledged all of her equity interests in Beijing Youjiao to Hao Limo to guarantee the performance of Beijing Youjiao’s obligations under the Exclusive Business Cooperation Agreement. Under the terms of the agreement, in any event of default, as set forth in the Share Pledge Agreement, including that Beijing Youjiao or Aizhen Li breach their respective contractual obligations under the Exclusive Business Cooperation Agreement, Hao Limo, as pledgee, will be entitled to certain rights, including, but not limited to, the right to dispose of the pledged equity interest in accordance with applicable PRC laws. Hao Limo shall have the right to collect any and all dividends declared or generated in connection with the equity interest during the term of pledge.

The Share Pledge Agreement shall be effective until all payments due under the Exclusive Business Cooperation Agreement have been paid by Beijing Youjiao. Hao Limo shall cancel or terminate the Share Pledge Agreement upon Beijing Youjiao’s full payment of fees payable under the Exclusive Business Cooperation Agreement.

Exclusive Option Agreement

Under the Exclusive Option Agreement, Aizhen Li irrevocably granted Hao Limo (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 Beijing Youjiao. The option price is equal to the capital paid in by Aizhen Li subject to any appraisal or restrictions required by applicable PRC laws and regulations.

The agreement remains effective for a term of ten years and may be renewed at Hao Limo’s election.

Power of Attorney

Under the Power of Attorney, Aizhen Li authorized Hao Limo to act on her behalf as her exclusive agent and attorney with respect to all rights as shareholder, 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 of Beijing Youjiao, including but not limited to the sale or transfer or pledge or disposition of shares held by Aizhen Li in part or in whole; and (c) designating and appointing on behalf of Aizhen Li the legal representative, the executive director, supervisor, the chief executive officer and other senior management members of Beijing Youjiao.

Although it is not explicitly stipulated in the Power of Attorney, the term of the Power of Attorney shall be the same as the term of that of the Exclusive Option Agreement.

This Power of Attorney is coupled with an interest and shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as Aizhen Li is a shareholder of Beijing Youjiao.

Timely Reporting Agreement

To ensure Beijing Youjiao promptly provides all of the information that Hao Limo and the Company need to file various reports with the SEC, a Timely Reporting Agreement was entered between Beijing Youjiao and the Company.

Under the Timely Reporting Agreement, Beijing Youjiao agreed 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.

Although it is not explicitly stipulated in the Timely Reporting Agreement, the parties agreed its term shall be the same as that of the Exclusive Business Cooperation Agreement. The Youjiao VIE Agreements became effective immediately upon their execution.

On November 8, 2018, Hao Limo entered certain termination agreement with Beijing Youjiao and Aizhen Li to terminate the June Youjiao VIE Agreements (the “Termination Agreement”). The Termination Agreement became effective immediately upon its execution.

VIE AGREEMENTS WITH BEIJING TIANXING

On May 17, 2018, Hao Limo entered into a series of agreements (the “Tianxing VIE Agreements”) with Beijing Tianxing Kunlun Technology Co. Ltd. (“Beijing Tianxing”) and Shun Li and Jialin Cui, the shareholders of Beijing Tianxing. The Tianxing VIE Agreements are designed to provide Hao Limo with the power, rights and obligations equivalent in all material respects to those it would possess as the sole equity holder of Beijing Tianxing, including absolute control rights and the rights to the management, operations, assets, property and revenue of Beijing Tianxing. The purpose of the VIE Agreements is solely to give Hao Limo the exclusive control over Beijing Tianxing’s management and operations. Beijing Tianxing has the requisite license to carry out used luxurious car leasing business in China.

Material terms of each of the Tianxing VIE Agreements are similar to those of Youjiao VIE Agreements.

6

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

1. ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)

During the nine months ended September 30, 2018, Beijing Tianxing Kunlun Technology Co. Ltd. (“Beijing Tianxing”) has acquired eight subsidiaries, each with a license to hold a car in Beijing  or Zhejiang. On acquisition date, the asset, liability and net asset of the eight companies are comprised of followings:

Name of the company	Acquisition date	Total asset		Total liability		Net asset		Cash consideration
Beijing Tianrenshijia Apparel Co., Ltd.	2018/5/16		-		-		-		-
Beijing Tongxingyi  Feed Co., Ltd.	2018/5/22		-		-		-		-
Beijing Eignty Weili Technology Co., Ltd.	2018/5/23		-		-		-		-
Beijing Hongdu Creative Decoration Design Co., Ltd.	2018/7/23		-		-		-		-
Beijing Saikesheng Garments Co., Ltd.	2018/7/25		-		-		-		-
Beijing Yimingzhu Restaurant Management Co., Ltd.	2018/7/24		-		-		-		-
Beijing Ansitai Technology Co., Ltd.	2018/7/31		-		-		-		-
Zhuji Satellite Orbit Network Technology Co., Ltd.	2018/8/17		-		-		-		-

DESPOSITION OF CCC BVI

On June 19, 2018, the Company, HK Xu Ding Co, Limited, a private limited company duly organized under the laws of Hong Kong (the “Purchaser”) and CCCR International Investment Ltd., a business company incorporated in the British Virgin Islands with limited liability which was previously 100% owned by the Company (“CCC BVI”) entered into certain Share Purchase Agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, the Purchaser agreed to purchase CCC BVI in exchange of cash purchase price of $500,000.

CCC BVI is the sole shareholder of CCC International Investment Ltd. (“CCC HK”), a company incorporated under the laws of the Hong Kong S.A.R. of the PRC, which is the sole shareholder of WFOE. WFOE, via a series of contractual arrangements, controls Wujiang Luxiang. CCC HK is the sole shareholder of PFL.

Upon closing of the disposition on June 21, 2018, the Purchaser became the sole shareholder of CCC BVI and as a result, assume all assets and obligations of all the subsidiaries and VIE entities owned or controlled by CCC BVI, including but not limited to Wujiang Luxiang and PFL.

Below is the Company’s structure chart after the completion of the Termination Agreement, Youjiao VIE Agreements and Purchase Agreement.

7

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

2. 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 September 30, 2018 and for the nine and three months ended September 30, 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 September 30, 2018, its unaudited condensed results of operations for the nine and three months ended September 30, 2018 and 2017, and its unaudited condensed cash flows for the nine months ended Sep 30, 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.

The consolidated financial statements include the accounts of the Company and include the assets, liabilities, revenues and expenses of all wholly owned subsidiary’s VIEs over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. The Company has two VIEs – Beijing Youjiao and Beijing Tianxing, and Beijing Tianxing has eight subsidiaries (See Note 1 for subsidiary information), each of which is entitled to a license to hold a car in Beijing or Zhejiang.

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

(b) Recent accounting pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820). The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance if effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions to its consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), which provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of ASU 2018-02 is permitted, including adoption in any interim period for the public business entities for reporting periods for which financial statements have not yet been issued. The amendments in this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception” (“ASU 2017-11”), which addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. The amendments in Part I of this ASU are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact of the adoption of ASU 2017-11 on its consolidated financial statements.

8

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In February 2016, the FASB issued ASU 2016-02, Amendments to the ASC 842 Leases. This update requires the lessee to recognize the assets and liability (the lease liability) arising from operating leases on the balance sheet for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Within twelve months or less lease term, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. If a lessee makes this election, it should recognize lease expense on a straight-line basis over the lease term. In transition, this update will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is evaluating the effect, if any, on the Company’s consolidated financial statements.

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

(c) Recently adopted accounting standards

In August 2016, the FASB has issued Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. Management is evaluating the effect, if any, on the Company’s consolidated financial statements. The adoption of this guidance did not have a material impact on its consolidated financial statements.

On November 22, 2017, the FASB ASU No. 2017-14, “Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition Topic 605), and Revenue from Contracts with Customers (Topic 606): Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 116 and SEC Release 33-10403.” The ASU amends various paragraphs in ASC 220, Income Statement — Reporting Comprehensive Income; ASC 605, Revenue Recognition; and ASC 606, Revenue From Contracts With Customers, that contain SEC guidance. The amendments include superseding ASC 605-10-S25-1 (SAB Topic 13) as a result of SEC Staff Accounting Bulletin No. 116 and adding ASC 606-10-S25-1 as a result of SEC Release No. 33-10403. The adoption of this guidance did not have a material impact on its consolidated financial statements.

(d) Business Combination

The Company accounts for its business combination using the acquisition method of accounting in accordance with ASC 805 “Business Combinations”. The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities incurred by the Company to the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total costs of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill.

(e) Reclassifications

Certain items in the financial statements of comparative period have been reclassified to conform to the financial statements for the current period.

(f) 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 other current assets; (ii) useful lives of long-lived assets; (iii) the impairment of long-lived assets; (iv) the valuation allowance of deferred tax assets; and (v) contingencies and litigation.

9

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(g) 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 PRC subsidiaries and VIEs 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.

	September 30, 2018		December 31, 2017
Balance sheet items, except for equity accounts		6.8683		6.5064

	For the nine months ended June 30,
	2018		2017
Items in the statements of operations and comprehensive loss, and statements of cash flows		6.5153		6.8065

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 income (loss).

Pursuant to ASC 830-30-40-1, upon sale or upon complete or substantially complete liquidation of an investment in a foreign entity, the amount attributable to that entity and accumulated in the translation adjustment component of equity shall be both:

a. Removed from the separate component of equity

b. Reported as part of the gain or loss on sale or liquidation of the investment for the period during which the sale or liquidation occurs.

10

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(h) Fair value measurement

The Company has adopted ASC Topic 820, Fair Value Measurement and Disclosure, which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. It establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

The carrying value of financial items of the Company including cash and cash equivalents approximate their fair values due to their short-term nature and are classified within Level 1 of the fair value hierarchy.

As of December 31, 2017, the Company’s other noncurrent liabilities represented the share settlement in class actions were measured at fair value within Level 1 by reference to the quoted market price per share as the Company is a public entity. The balance was settled during the nine months ended September 30, 2018.

11

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(i) Operating lease asset, net

Operating lease asset, net, represents the automobiles that are underlying our automotive lease contracts and is reported at cost, less accumulated depreciation and net of impairment charges and origination fees or costs. Depreciation of vehicles is recorded on a straight-line basis to an estimated residual value over the useful life of nine years. We periodically evaluate our depreciation rate for leased vehicles based on expected residual values and adjust depreciation expense over the remaining life of the lease if deemed necessary.

We have significant investments in the residual values of the assets in our operating lease portfolio. The residual values represent an estimate of the values of the assets at the end of the lease contracts. At contract inception, we determine pricing based on the projected residual value of the lease vehicle. This evaluation is primarily based on a proprietary model, which includes variables such as age, expected mileage, seasonality, segment factors, vehicle type, economic indicators, production cycle, automotive manufacturer incentives, and shifts in used vehicle supply. This internally-generated data is compared against third-party, independent data for reasonableness. Realization of the residual values is dependent on our future ability to market the vehicles under the prevailing market conditions. Over the life of the lease, we evaluate the adequacy of our estimate of the residual value and make adjustments to the depreciation rates to the extent the expected value of the vehicle at lease termination changes. In addition to estimating the residual value at lease termination, we also evaluate the current value of the operating lease asset and test for impairment to the extent necessary when there is an indication of impairment based on market considerations and portfolio characteristics. Impairment is determined to exist if fair value of the leased asset is less than carrying value and it is determined that the net carrying value is not recoverable. The net carrying value of a leased asset is not recoverable if it exceeds the sum of the undiscounted expected future cash flows expected to result from the lease payments and the estimated residual value upon eventual disposition. If our operating lease assets are considered to be impaired, the impairment is measured as the amount by which the carrying amount of the assets exceeds the fair value as estimated by discounted cash flows. No impairment was recognized in the three and nine months ended September 30, 2018. We accrue rental income on our operating leases when collection is reasonably assured.

When a lease vehicle is returned to us, either at the end of the lease term or through repossession, the asset is reclassified from operating lease assets to property and equipment, net and recorded at the lower-of-cost or estimated fair value, less costs to sell. Any losses recognized at this time are recorded as depreciation expense. Subsequent decline in value and any gain or loss recognized at the time of sale is recognized as a remarketing gain or loss and presented as a component of depreciation expense.

(j) Income from operating lease

Income from operating lease represents lease origination fees and rental fee, netting off lease origination costs. In accordance with ASC 840, Leases, the Company recognized the income from operating lease on a straight-line basis over the scheduled lease term. For the three and six months ended September 30, 2018, the Company generated income from operating lease of $140,856 and $237,577, respectively.

(k) 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.

12

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(l) Income (loss) per share

Basic income (loss) per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is the same as basic income (loss) per share due to the lack of dilutive items in the Company for the three and nine months ended September 30, 2018 and 2017. The number of warrants is omitted excluded from the computation as the anti-dilutive effect.

(m) Comprehensive income (loss)

Comprehensive income (loss) includes net income (loss) and other comprehensive foreign currency adjustments income. Comprehensive income (loss) is reported in the statements of operations and comprehensive income (loss).

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

(n) 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.

(o) Share-based awards

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

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

(p) Warrants

The Company had warrants to four individuals in private placements, through which the Company issued both common shares and warrants as separable units, and neither instrument is registered when issued. Warrants requiring share settlement are classified as equity.

The capital raised from the private placement is allocated between the fair value of the common stocks and warrants. The Company determined the fair value of warrants by application of the Black-Scholes-Merton formula.

13

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(q) Discontinued operation

In accordance with ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. When all of the criteria to be classified as held for sale are met, including management, having the authority to approve the action, commits to a plan to sell the entity, the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations in accordance with ASC 205-20-45.

As of September 30, 2018, the Company’s microcredit service segment met all the conditions required in order to be classified as a discontinued operation (Note 1). Accordingly, the operating results of microcredit service segment are reported as a gain from discontinued operations in the accompanying consolidated financial statements for all periods presented. In addition, the assets and liabilities related to our microcredit service segment are reported as assets and liabilities of discontinued operations in the accompanying consolidated balance sheets at December 31, 2017. For additional information, see Note 6, “Disposition of CCC BVI”.

(r) Segment reporting

Our business had been organized into two reportable operating segments: (i) our microcredit service segment, and (ii) our luxury car leasing segment. However, due to changes in our organizational structure associated with the microcredit service segment as a discontinued operation (Note 2(p)), management has determined that the Company now operates in one operating segment with one reporting segment. The accounting policies of our one reportable segment are the same as those described in this Note 2.

14

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

3. LIQUIDITY

In assessing the Company’s liquidity and its ability to continue as a going concern, the Company monitors and analyzes its cash and cash equivalent and its ability to generate sufficient cash flow in the future to support its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements and operating expenses obligations.

Since the Company disposed its microcredit business and launched luxurious car leasing business in May 2018. As of September 30, 2018, the Company had cash balance of $838,634 and a positive working capital of $2,073,049. The management estimated the operating expenses obligation for the next twelve months after issuance of the financial statements to be $500,000. Therefore, the management believes that the Company will continue as a going concern in the following 12 months. In addition, the Company’s shareholders will continuously provide financial support to the Company when there is any business expansion plan.

4. VARIABLE INTEREST ENTITIES AND OTHER CONSOLIDATION MATTERS

On May 17, 2018 and June 19, 2018, Hao Limo entered into VIE Agreements with Beijing Youjiao and Beijing Tianxing. The key terms of these VIE Agreements are summarized in “Note 1 - Organization and Nature of Operation” above. As a result of the VIE Agreements, the Company classifies both Beijing Youjiao and Beijing Tianxing as VIEs. 

VIEs are entities that have either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary and must consolidate the VIE. Hao Limo is deemed to have a controlling financial interest and be the primary beneficiary of Beijing Youjiao and Beijing Tianxing, because it has both of the following characteristics:

1.	power to direct activities of a VIE that most significantly impact the entity’s economic performance, and
2.	obligation to absorb losses of the entity that could potentially be significant to the VIE or right to receive benefits from the entity that could potentially be significant to the VIE.

Pursuant to the VIE Agreements, Beijing Youjiao and Beijing Tianxing each pays service fees equal to all of its net income to Hao Limo. At the same time, Hao Limo is entitled to receive all of their expected residual returns. The VIE Agreements are designed so that Beijing Youjiao and Beijing Tianxing each operates for the benefit of the Company. Accordingly, the accounts of Beijing Youjiao and Beijing Tianxing are both consolidated in the accompanying financial statements pursuant to ASC 810-10, Consolidation. In addition, their financial positions and results of operations are included in the Company’s consolidated financial statements.

In addition, as all of these VIE agreements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC, they would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal environment in the PRC is not as developed as in other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could further limit the Company’s ability to enforce these VIE agreements. Furthermore, these contracts may not be enforceable in China if PRC government authorities or courts take a view that such contracts contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event the Company is unable to enforce these VIE agreements, it may not be able to exert effective control over Beijing Youjiao and Beijing Tianxing and its ability to conduct its business may be materially and adversely affected.

All of the Company’s main current operations are conducted through Beijing Youjiao during May and June 2018 and through Beijing Tianxing and its subsidiaries from June. Current regulations in China permit Beijing Youjiao and Beijing Tianxing to pay dividends to the Company only out of its accumulated distributable profits, if any, determined in accordance with their articles of association and PRC accounting standards and regulations. The ability of Beijing Youjiao and Beijing Tianxing to make dividends and other payments to the Company may be restricted by factors including changes in applicable foreign exchange and other laws and regulations.

15

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

4. VARIABLE INTEREST ENTITIES AND OTHER CONSOLIDATION MATTERS (CONTINUED)

The following financial statement amounts and balances of the VIEs were included in the unaudited condensed consolidated financial statements as of September 30, 2018 and December 31, 2017 and for the three and nine months ended September 30, 2018 and 2017:

	September 30, 2018		December 31, 2017
	(unaudited)
Cash		5,849		-
Other assets		3,094,559		-
Operating lease assets, net		1,631,250		-
Property and equipment, net		5,096		-
Total assets	$	4,736,754	$	-
Short-term bank loans		1,397,726		-
Other current liabilities		3,134,494		-
Total liabilities	$	4,532,220	$	-

	For the three months ended September 30,				For the nine months ended September 30,
	2018		2017		2018		2017
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenue	$	140,849	$	-	$	237,885	$	-
Net income	$	338,758	$	-	$	346,765	$	-

5. RISKS

(a) Credit risk

Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents. The maximum exposure of such assets to credit risk is their carrying amount as at the balance sheet dates. As September 30, 2018, approximately $671,174 was deposited with a bank in the United States which was insured by the government up to $250,000. At September 30, 2018 and December 31, 2017, approximately $167,460 and $nil, respectively, were primarily deposited in financial institutions located in Mainland China, which were uninsured by the government authority. To limit exposure to credit risk relating to deposits, the Company primarily place cash deposits with large financial institutions in China which management believes are of high credit quality.

The Company’s operations are carried out in Mainland China. 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. In addition, the Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, rates and methods of taxation, and the extraction of mining resources, among other factors.

16

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

5. RISKS (CONTINUED)

(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

Substantially all of the Company’s operating activities and the Company’s major assets and liabilities are denominated in RMB, except for the cash deposit of approximately $671,174 which was in U.S. dollars at September 30, 2018, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the Peoples’ Bank of China (“PBOC”) or other authorized financial institutions at exchange rates quoted by PBOC. Approval of foreign currency payments by the PBOC or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices and signed contracts. The value of RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. Where there is a significant change in value of RMB, the gains and losses resulting from translation of financial statements of a foreign subsidiary will be significant affected.

(d) VIE risk

It is possible that the VIE Agreements among Beijing Youjiao, Hao Limo, and the Beijing Youjiao Shareholder would not be enforceable in China if PRC government authorities or courts were to find that such contracts contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event that the Company were unable to enforce these contractual arrangements, the Company would not be able to exert effective control over the VIE. Consequently, the VIE’s results of operations, assets and liabilities would not be included in the Company’s consolidated financial statements. If such were the case, the Company’s cash flows, financial position, and operating performance would be materially adversely affected. The Company’s contractual arrangements with Beijing Youjiao, Hao Limo, and the Beijing Youjiao Shareholder are approved and in place. Management believes that such contracts are enforceable, and considers the possibility remote that PRC regulatory authorities with jurisdiction over the Company’s operations and contractual relationships would find the contracts to be unenforceable.

This is the same case for the VIE Agreements among Beijing Tianxing, Hao Limo and the Beijing Tianxing Shareholders.

The Company’s operations and businesses rely on the operations and businesses of its two VIEs, which holds certain recognized revenue-producing assets including the luxury used cars. The VIE also has an assembled workforce, focused primarily on promotion and marketing, whose costs are expensed as incurred. The Company’s operations and businesses may be adversely impacted if the Company loses the ability to use and enjoy assets held by its VIEs.

17

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

6. DESPOSITION OF CCC BVI

On June 19, 2018, the Company, HK Xu Ding Co., Limited, a private limited company duly organized under the laws of Hong Kong (the “Purchaser”) and CCCR International Investment Ltd., a business company incorporated in the British Virgin Islands with limited liability (“CCC BVI”) entered into certain Share Purchase Agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, the Purchaser agreed to purchase CCC BVI in exchange of cash purchase price of $500,000. The consideration was paid as of June 30, 2018.

CCC BVI is the sole shareholder of CCC International Investment Ltd. (“CCC HK”), a company incorporated under the laws of the Hong Kong S.A.R. of the PRC, which is the sole shareholder of WFOE. WFOE, via a series of contractual arrangements, controls Wujiang Luxiang. CCC HK is the sole shareholder of PFL. Upon the Disposition, the Purchaser will become the sole shareholder of CCC BVI and as a result, assume all assets and obligations of all the subsidiaries and VIE entities owned or controlled by CCC BVI. Upon the closing of the transaction, the Company does not bear any contractual commitment or obligation to the microcredit business or the employees of CCC BVI and its subsidiaries and VIEs, nor to the Purchaser.

On June 17, 2018, management was authorized to approve and commit to a plan to sell CCC BVI, therefore the major assets and liabilities relevant to the disposal are reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes, are reported as components of net income (loss) separate from the net loss of continuing operations in accordance with ASC 205-20-45. The assets relevant to the sale of CCC BVI with a carrying value of $6.2 million were classified as assets held for sale as of June 19, 2018. The liabilities relevant to the sale of CCC BVI with a carrying value of $10.5 million were classified as liabilities held for sale as of June 19, 2018. A net gain of $9.8 million was recognized as the net gain from disposal of discontinued operation in 2018.

In accordance with ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. When all of the criteria to be classified as held for sale are met, including management, having the authority to approve the action, commits to a plan to sell the entity, the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations in accordance with ASC 205-20-45.

Reconciliation of the carrying amounts of assets and liabilities of discontinued operations in the unaudited condensed consolidated balance sheet.

	September 30, 2018		December 31, 2017
	(unaudited)
Carrying amounts of major classes of assets held for sale:
Cash	$	-	$	1,138,564
Loan receivable, net		-		4,064,921
Interest receivable		-		35,440
Other assets		-		566,729
Total assets of disposal group classified as held for sale	$	-	$	5,805,654
Carrying amounts of major classes of liabilities of discontinued operations:
Deposit payable	$	-	$	261,281
Accrual for financial guarantee services		-		9,270,882
Other current liabilities		-		166,440
Due to related parties		-		398,073
Income tax payable		-		330,095
Liabilities directly associated with the assets classified as held for sale	$	-		10,426,771

18

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

6. DESPOSITION OF CCC BVI (CONTINUED)

Reconciliation of the Amounts of Major Classes of Income from Operations to be Disposed Classified as Discontinued Operations in the Consolidated Statements of Operations and Comprehensive Income (Loss).

	For the nine months ended September 30,
	2018			2017
	(unaudited)			(unaudited)
Operations discontinued
Total interest and fees income	$	106,985		$	273,137
Reversal of provision (Provision) for loan losses		417,600			(2,486,811	)
(Provision) Reversal of provision for financial guarantee services		(104,229	)		(830,140	)
Non-interest expenses		(142,600	)		(243,092	)
Net gain from discontinued operations		9,794,873			-
Net income (loss) from discontinued operations	$	10,072,629		$	(3,286,906	)

7. OTHER CURRENT ASSETS

	September 30, 2018		December 31, 2017
	(unaudited)
Loan receivable due from a third party		1,397,726		-
Advance to employees for purchase of operating lease assets	$	1,111,626	$	-
Petty cash		212,401
Deferred rental expenses		60,313		-
Due from a shareholder		29,119
Others		52,719		-
	$	2,868,404	$	-

As of September 30, 2018, the balance of advance to employees for purchase of operating lease assets represents the amount advanced to the Company’s management and staff for purchase of used luxurious cars.

During the nine months ended September 30, 2018, the Company disbursed a loan of $1,473,458 to a third party. The loan to the third party is interest free and is due within twelve months since its disbursement.

19

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

8. OPERATING LEASE ASSETS, NET

The Company started its used luxurious car leasing business in China since May 2018.

During the nine months ended September 30, 2018, the Company purchased six used luxurious cars and disposed of one car. As of the September 30, 2018, the Company had investments in five used luxurious cars. The balance of the used luxurious cars is comprised of the following:

	Useful life	September 30, 2018			December 31, 2017
			(unaudited)
Used luxurious cars	9	$	1,683,803		$	-
Less: accumulated depreciation			(52,553	)		-
Operating lease asset, net		$	1,631,250		$	-

During the three and nine months ended September 30, 2018, the Company incurred depreciation expenses on these cars of $58,854. No impairment was recognized in the six months ended June 30, 2018.

In August 2018, the Company sold a used car with net book value $134,683 in exchange for a consideration of $122,481. As a result, the Company incurred a loss of $12,202 from the disposal.

In May and July, 2018, the Company pledged one and one luxurious cars for a one-year period and a three-month period for loan, respectively. In October 15, 2018, the pledge of the latter car was released.

9. OTHER NONCURRENT LIABILITIES

	September 30, 2018		December 31, 2017
	(unaudited)
Accrued provision for share settlement against legal proceedings	$	-	$	1,311,000
	$	-	$	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 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.  

20

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

9. OTHER NONCURRENT LIABILITIES (CONTINUED)

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”). 

The $245,000 cash portion was settled in December 2017.

On December 22, 2017, the Court entered a distribution order approving the distribution of the Settlement Shares 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. On January 19, 2018 and April 10, 2018, the Company issued 712,500 and 237,500 class settlement shares, at the market share price of $1.68 and $1.18 per share, respectively.

The Company recorded expenses of $166,540 and $nil for the nine and three months ended September 30, 2018 under the account of “Changes in fair value of noncurrent liabilities”. As the Company is a public entity with quoted market price, the fair value of other noncurrent liabilities were classified as level 1. The expenses were accrued by reference to the quoted market share price per share on each reporting date. The movement of the other noncurrent liabilities during the nine months ended September 30, 2018 was as follows:

For the nine months ended September 30, 2018

	Number of shares settled			Share price		Other noncurrent liabilities
As of December 31, 2017		950,000		$	1.38	$	1,311,000
Class action settlement expenses – changes in fair value of stock portion		-		$	-		166,540
Share settlement of 712,500 shares		(712,500	)	$	1.68		(1,197,000	)
Share settlement of 237,500 shares		(237,500	)	$	1.18		(280,540	)
As of September 30, 2018		-				$	-

10. OTHER OPERATING EXPENSE

	For the three months ended September 30,				For the nine months ended September 30,
	2018		2017		2018		2017
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Depreciation and amortization	$	26,826	$	-	$	26,924	$	-
Travel expenses		42,344		14,569		103,827		28,113
Entertainment expenses		1,795		-		2,377		-
Promotion expenses		4,981		-		20,924		-
Legal and consulting expenses		338,750		1,530,283		701,184		2,398,283
Car expenses		6,616		-		25,382		-
Bank charges		916		460		1,861		1,150
Audit-related expense		40,000		78,458		78,990		175,944
Maintenance expenses		31,244		-		31,244		-
Other tax expenses		-		-		44,369		-
Other expenses		79,700		48,465		143,231		138,911
Total	$	573,172	$	1,672,235	$	1,180,313	$	2,742,401

21

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

11. 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. On May 15, 2018, the Company issued 150,000 shares of common stocks and warrants to purchase 60,000 shares of common stocks at $4.20 to Mr. Jie Yang.

On January 19, 2018 and April 10, 2018, the Company issued 712,500 and 237,500 shares common stocks as the share settlement of 950,000 shares, respectively, as disclosed in Note 9.

During the three months ended June 30, 2018, the Company raised an aggregation of $3,265,370 from several private placements by issuing 4,194,697 shares of common stock, par value $0.001 per share, at the per share purchase price of $0.77 or $0.78. The shares of common stocks were issued to certain “non-U.S. Persons” as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to the securities purchase agreement (“SPA”) dated April 28, 2018, May 29, 2018 and June 19, 2018, respectively. The details of the issuance of shares of common stock in the private placements are as follows:

	Number of shares issued		Per share purchase price		Capital raised
April 11, 2018		649,350	$	0.77	$	500,000
May 10, 2018		1,336,314	$	0.78		1,042,324
May 29, 2018		658,000	$	0.78		513,240
May 29, 2018		982,996	$	0.78		766,737
June 19, 2018		568,037	$	0.78		443,069
		4,194,697			$	3,265,370

As of September 30, 2018, there were 24,595,612 shares of common stock issued and outstanding.

Warrants

As of December 31, 2017, the Company had outstanding warrants to purchase 193,370 shares with aggregation of fair value of $186,268.

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 $24,662, estimated by using the Black-Scholes valuation model.

On May 15, 2018, the Company issued warrants to purchase 60,000 shares to Mr. Jie Yang, 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 $69,900, estimated by using the Black-Scholes valuation model.

As of September 30, 2018, the Company had outstanding warrants to purchase 273,370 shares with fair value of $280,830.

22

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

11. CAPITAL TRANSACTION (CONTINUED)

The balance of warrants as of September 30, 2018 and December 31, 2017 is comprised of the followings:

	September 30, 2018				December 31, 2017
	Number of warrants		Fair value of warrants		Number of warrants		Fair value of warrants
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Yang Jie	$	218,370	$	222,453	$	158,370	$	152,553
Long Yi		55,000		58,377		35,000		33,715
Total	$	273,370	$	280,830	$	193,370	$	186,268

12. (LOSS) INCOME PER COMMON SHARE

The following table sets forth the computation of basic and diluted earnings per common share for the three and nine months ended September 30, 2018 and 2017, respectively:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net (loss) income	$	(635,017	)	$	(2,135,292	)	$	8,482,353		$	(8,281,744	)
Weighted Average Shares Outstanding-Basic and Diluted	$	24,595,612		$	18,092,369		$	22,290,464		$	17,371,183
(Loss) Income per share- basic and diluted	$	(0.026	)	$	(0.118	)	$	0.381		$	(0.477	)
Net loss per share from continuing operations – basic and diluted	$	(0.026	)	$	(0.084	)	$	(0.071	)	$	(0.288	)
Net (loss) income per share from discontinued operations – basic and diluted	$	-		$	(0.034	)	$	0.452		$	(0.189	)

Basic income (loss) per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is the same as basic income (loss) per share due to the lack of dilutive items in the Company for the three and nine months ended September 30, 2018 and 2017. The number of warrants is excluded from the computation as the anti-dilutive effect.

23

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

13. 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 a uniform tax rate of 25%. 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 and nine months ended September 30, 2018 and 2017, the Company had no unrecognized tax benefits. 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 September 30, 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 Company does not have any current and deferred tax expenses for the three and nine months ended September 30, 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 September 30, 2018 and December 31, 2017 and the Company does not believe that its unrecognized tax benefits will change over the next twelve months.

24

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

14. RELATED PARTY TRANSACTIONS AND BALANCES

1) Due from related parties

As of September 30, 2018 and December 31, 2017, the balance of due from related parties was as follows:

	September 30, 2018		December 31, 2017
		(unaudited)
One shareholder of the Company	$	29,119	$	-
	$	29,119	$	-

2) Related party transactions

During the nine months ended September 30, 2018, the Company disbursed a loan of $29,119 to a shareholder. The loan is interest free and is due on demand.

15. COMMITMENTS AND CONTINGENCIES

1) Lease Commitments

We leased certain office space in New York, NY where we paid a monthly rent of US$3,600 during 2018. In addition, during the nine months ended September 30, 2018, we entered into one rental free office lease agreement with a third party and one office lease agreement with monthly rental fee of $5,506 with a third party which expires in September 2020. The following table sets forth the Company’s contractual obligations as of September 30, 2018 in future periods:  

	Rental payments
Year ending June 30, 2019	$	67,808
Year ending June 30, 2020		-
Total	$	67,808

2) Contingencies  

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” and appointing the Yun Group as lead plaintiff (“Class Plaintiff”) and the Yun Group’s counsel as lead counsel. On November 18, 2014, the Yun Group and the Company, which at that point was the only defendant served, entered into a stipulation to transfer of the case to the Southern District of New York. On December 18, 2014, Mr. Levy, who had by then been served, joined in the stipulation.

On December 29, 2014, the N.J. district court entered an order transferring the action. The transfer was effected on January 22, 2015, and assigned docket number 1:15-cv-00557-ALC (S.D.N.Y.) (the “Securities Class Action”). 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.

25

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

15. COMMITMENTS AND CONTINGENCIES (CONTINUED)

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 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.

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 Form 10-Q, the Company is working with its counsel and the escrow agent to complete such cancelation.

26

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

15. COMMITMENTS AND CONTINGENCIES (CONTINUED)

2) Contingencies (continued)

b) 2015 Derivative action

On February 3, 2015, a purported shareholder Kiran Kodali filed a putative shareholder derivative complaint in the United States District Court for the Southern District of New York, captioned Kiran Kodali v. Huichun Qin, et al., Case No. 15-cv-806 (the “Action”). 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. On April 17, 2015, Plaintiff amended the complaint in the Action. Plaintiff’s Amended Verified Shareholder Derivative Complaint (“Amended Complaint”) has alleged that the individual defendants breached their fiduciary duties as officers and directors of the Company by causing the Company to issue false or misleading statements concerning its: (i) lending and underwriting practices; (ii) loan quality of direct and guarantee loans; (iii) allowance and provision for loan losses; (iv) accrual and provision for financial guarantee loans; (v) liquidity credit risk; (vi) compliance with Generally Accounting Principles (“GAAP”); and (vii) internal controls. Additionally, Plaintiff has alleged in the Amended Complaint that the Individual Defendants breached their fiduciary duties by allegedly allowing Defendant Huichun Qin to pilfer approximately $1.1 million from the Company.

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 August 23, 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. 

On or about August 22, 2018, our litigation counsel noticed their appearance in the Action. The parties filed a Joint Status Report on August 22, 2018, advising the Court that the parties continued to have discussions regarding a potential resolution of the matter. The parties have come to a potential agreement regarding a monetary settlement. However, the parties continue to discuss the non-monetary aspects of a potential resolution, and have filed a Joint Status Report on November 1, 2018, requesting a brief amount of time to complete its settlement discussions and resolve the matter.

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).

27

CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

15. COMMITMENTS AND CONTINGENCIES (CONTINUED)

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. On May 17, 2018, Sorghum requested another extension and Arbitrator Mentz granted the extension. In accordance with Arbitrator Mentz’s Order, the parties’ proposals was due May 31, 2018. On May 30, 2018, due to a delay in receiving additional evidence from a relevant third party, the Company requested an extension of time to file its proposal for resolution, which Arbitrator Mentz granted extending the deadline to June 7, 2018. To provide additional time to allow certain relevant documents to be translated due to the unavailability of the parties’ mutually accepted translator, the Company requested a final extension of time to June 14, 2018, to submit the parties’ proposal for resolution. Arbitrator Mentz granted the Company’s request. On June 14, 2018, the Company submitted its proposal for resolution to the AAA. On July 30, 2018, Arbitrator Mentz entered a reasoned award, accepting the Company’s proposal for resolution, awarding the Company damages of $1,436,521.50 against Sorghum and denying Sorghum’s Counterclaim against the Company in its entirety with prejudice.

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CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

16. 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 and nine months ended September 30, 2017 filed with SEC on November 14, 2017, were discovered by management. The errors related to the accounting of the settlement shares agreed upon per the Stipulation (See Note 9). These settlement shares have not been issued until January 19, 2018 and April 10, 2018, respectively. These settlement shares should be recorded in accordance with ASC 450-20, Loss Contingencies, and as a result the share settlement should be also accounted for as a liability measured at market value of share price rather than accounting for contracts to be settled with the Company’s own equity. After the errors have been quantified, the previously-issued financial statements have been evaluated to determine whether they are materially misstated in accordance with guidance provided in SAB Topic 99 and the Company has concluded the previously-issued 2016 consolidated financial statements are not materially misstated and the errors will be corrected prospectively.  As a result, the Company made the corrections to the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2017 and condensed consolidated statements of cash flows for the three and nine months ended September 30, 2017 contained in this Form 10-Q.

The effects of the restatement on the Company’s condensed consolidated statements of operations and comprehensive loss and earnings per share for the three and nine months ended September 30, 2017 are as follows:

	For The Nine Months Ended September 30, 2017
	As Previously Reported			Adjustments			As Restated
Changes in fair value of other noncurrent liabilities		(1,838,500	)		175,000			(1,681,500	)
Total operating expenses from continuing operations		(5,204,075	)		175,000			(5,029,838	)
Loss Before Income Taxes		(4,994,838	)		175,000			(4,819,838	)
Net Loss		(8,281,744	)		175,000			(8,106,744	)
Loss per Share- Basic and Diluted		(0.477	)		(0.000	)		(0.477	)
Comprehensive loss	$	(8,412,757	)	$	175,000		$	(8,237,757	)

The effects of the restatement on the Company’s condensed consolidated statements of cash flows for the nine months ended September 30, 2017 are as follows:

	For The Nine Months Ended September 30, 2017
	As Previously Reported			Adjustments		As Restated
Net loss	$	(8,281,744	)	$	175,000	$	(8,106,744	)
Changes in fair value of other noncurrent liabilities	$	1,838,500		$	175,000	$	1,681,500

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CHINA COMMERCIAL CREDIT, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

17. 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).

On August 22, 2018, the Company received a letter from Nasdaq notifying the Company that based on the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2018 filed on August 17, 2018, in which it reported stockholders’ equity of $4,132,773, Nasdaq has determined that the Company satisfies the $2.5 million stockholders’ equity requirement under Listing Rule 5550(b)(1) and this matter is now closed.

On September 5, 2018, the Company received a notification letter from the Nasdaq Listing Qualifications Staff of The NASDAQ Stock Market LL notifying the Company that the minimum bid price per share for its common shares has been below $1.00 for a period of 30 consecutive business days and the Company therefore no longer meets the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2).

The notification received has no immediate effect on the listing of the Company’s common stock on Nasdaq. Under the Nasdaq Listing Rules, the Company has until March 4, 2019 to regain compliance. If at any time during such 180-day period the closing bid price of the Company’s common shares is at least $1 for a minimum of 10 consecutive business days, Nasdaq will provide the Company written confirmation of compliance.

If the Company does not regain compliance during such 180-day period, the Company may be eligible for an additional 180 calendar days, provided that the Company meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq except for Nasdaq Listing Rule 5550(a)(2), and provide a written notice of its intention to cure this deficiency during the second compliance period, by effecting a reverse stock split, if necessary.

The Company has been evaluating options available to regain compliance and to timely submit evidence of 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.

18. SUBSEQUENT EVENT

1) On October 16, 2018, the Company completed private placement of convertible promissory notes to certain “non-U.S. Persons” as defined in Regulation S of the Securities Act in the original principal amount of $312,170, convertible into shares of common stock of the Company at a per share conversion price of $0.6. If the notes are fully converted, the Company will issue an aggregate of 520,283 shares of common stock. In addition, the Company is obliged to pay interest on the outstanding balance of principal amount at the rate of 8% per annum until the note is paid in full. The net proceeds of the private placement was used by the Company as working capital.

2) TX Kunlun obtained necessary license to conduct the used luxurious car leasing business and other related business on June 2018. Since then TX Kunlun has been our major operating entity. Management decided to terminate Beijing Youjiao via agreement to improve efficiency and save administrative costs.

On November 8, 2018, Hao Limo entered certain termination agreement with Beijing Youjiao and Aizhen Li to terminate the June Youjiao VIE Agreements (the “Termination Agreement”). The Termination Agreement became effective immediately upon its execution.

3) On November 15, 2018, Mr. Chenguang Kang resigned from his positions as Chief Executive Officer (“CEO”), President and a director of the Company effective November 20, 2018. Mr. Kang’s resignation is not as a result of any disagreement with the Company relating to its operations, policies or practices.

The Company’s board of directors (the “Board”), upon recommendation by the Nomination Committee of the Board, appointed Mr. Jiaxi Gao as CEO and President of the Company and elected him as a director of the Board of to fill the vacancy to be created by the resignation of Mr. Gao effective November 20, 2018.

The Company entered into an executive employment agreement (the “Employment Agreement”) with Mr. Gao on November 15, 2018, pursuant to which he shall receive 800,000 restricted shares as inducement for his employment. The Compensation Committee of the Company approved such compensation. Such restricted shares shall vest in four quarterly installments starting from January 2019.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

As of June 30, 2018, the Company had two lines of business: one was the direct loans, loan guarantees and financial leasing services to small-to-medium sized businesses, farmers and individuals in the city of Wujiang, Jiangsu Province; and the other one was the used luxurious car leasing business which was started in May 2018.

On June 19, 2018, the Company, HK Xu Ding Co, Limited, a private limited company duly organized under the laws of Hong Kong (the “Purchaser”) and CCCR International Investment Ltd., a business company incorporated in the British Virgin Islands with limited liability which was previously 100% owned by the Company (“CCC BVI”) entered into certain Share Purchase Agreement (the “Purchase Agreement”). CCC BVI is the sole shareholder of CCC International Investment Ltd. (“CCC HK”), a company incorporated under the laws of the Hong Kong S.A.R. of the PRC, which is the sole shareholder of WFOE. WFOE, via a series of contractual arrangements, controls Wujiang Luxiang. CCC HK is the sole shareholder of PFL. Pursuant to the Purchase Agreement, the Purchaser agreed to purchase CCC BVI in exchange of cash purchase price of $500,000. The transaction contemplated by the Purchase Agreement is hereby referred as Disposition.

Upon closing of the Disposition on June 21, 2018, the Purchaser became the sole shareholder of CCC BVI and as a result, assumed all assets and obligations of all the subsidiaries and VIE entities owned or controlled by CCC BVI, including but not limited to Wujiang Luxiang and PFL.

In May 2018, the Company launched a used luxurious car leasing business, which was carried out by the Company’s VIE entity, Beijing Youjiao Technology Limited (“Beijing Youjiao”) during May and June and by Tianxing Kunlun Technology Co. Ltd (“TX Kunlun”) from June till now.

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VIE agreements with Beijing Youjiao and TX Kunlun

On May 10, 2018. Beijing Youjiao, Aizhen Li, the sole shareholder of Beijing Youjiao and our former indirect subsidiary, Wujiang Luxiang Information Technology Consulting Co. Ltd., (“WFOE”), entered into a series of contractual agreements including, Exclusive Business Cooperation Agreement, Exclusive Option Agreement, Share Pledge Agreement and the Powers of Attorney (the “May Youjiao VIE Agreements”). The May Youjiao VIE Agreements were designed to provide WFOE with the power, rights and obligations equivalent in all material respects to those it would possess as the sole equity holder of Beijing Youjiao, including absolute control rights and the rights to the management, operations, assets, property and revenue of Beijing Youjiao. The purpose of the VIE Agreements is solely to give WFOE the exclusive control over Beijing Youjiao’s management and operations. We entered into the May Youjiao VIE Agreements because Beijing Youjiao has the requisite license to carry out used luxurious car leasing business in China.

In anticipation of the Disposition, on June 19, 2018, WFOE entered into certain termination agreement with Beijing Youjiao and Aizhen Li pursuant to which the May Youjiao VIE Agreements was terminated immediately.

On the same day, our indirectly wholly owned subsidiary Hao Limo Technology (Beijing) Co., Ltd. (“Hao Limo”) entered into a series of agreements (the “June Youjiao VIE Agreements”) with Beijing Youjiao and Aizhen Li. The June Youjiao VIE Agreements were designed to provide Hao Limo with the power, rights and obligations equivalent in all material respects to those it would possess as the sole equity holder of Beijing Youjiao, including absolute control rights and the rights to the management, operations, assets, property and revenue of Beijing Youjiao. The purpose of the Youjiao VIE Agreements is solely to give Hao Limo the exclusive control over Beijing Youjiao’s management and operations.

On May 17, 2018, Hao Limo entered into a series of agreements with Tianxing Kunlun Technology Co. Ltd (“TX Kunlun”) and Shun Li and Jialin Cui, the shareholders of TX Kunlun pursuant to which Hao Limo was provided with the power, rights and obligations equivalent in all material respects to those it would possess as the sole equity holder of TX Kunlun, including absolute control rights and the rights to the management, operations, assets, property and revenue of TX Kunlun. TX Kunlun obtained necessary license to conduct the used luxurious car leasing business and other related business on June 2018. Since then TX Kunlun has been our major operating entity. Management decided to terminate Beijing Youjiao via agreement to improve efficiency and save administrative costs.

On November 8, 2018, Hao Limo entered certain termination agreement with Beijing Youjiao and Aizhen Li to terminate the June Youjiao VIE Agreements (the “Termination Agreement”). The Termination Agreement became effective immediately upon its execution.

Our Current Business

During the quarter ended September 30, 2018, the Company, through Tianxing Kunlun Technology Co. Ltd (“TX Kunlun”), which was controlled by the Company via contractual arrangements, offers our customers the opportunity to rent luxurious pre-owned automobiles in Beijing. During the nine months ended September 30, 2018, the Company purchased six used luxurious cars for operating lease services and generated operating lease income of US$237,577 from the leasing business.

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Our Inventory and Vehicle Acquisition Process

Currently we have six used luxurious cars valued at approximately USD 1.88 million, including a white Ferrari 458, a white Land Rover (Range Rover Executive Edition), a blue Maserati Geberit dark, a blue McLaren 570GT, a red Ferrari 458 Spider and a Tesla Model X 100D. To determine the model of vehicles to be purchased, we collect data related to customers’ demands and preferences through sales and online promotions. Our professional procurement personnel then compare models of vehicles offered by different sellers. The decision to purchase a specific vehicle is based on a number of considerations including time of delivery, vehicle condition, vehicle safety feature, mileage, repaire and maintenance history, accidents history, market scarcity, and etc. All the sellers of the six vehicles we own are individuals.

Pursuant to local Beijing laws, each entity in Beijing has its quotas to purchase and own vehicles, even for auto leasing businesses. Therefore, all the six vehicles are owned by TX Kunlun’s wholly-owned subsidiaries while managed by TX Kunlun. The purchase price of the vehicles we currently own ranges from 50% to 80% of that of the new vehicles.

We intend to purchase thirty pre-owned luxurious vehicles by the end of 2018 assuming we can secure sufficient funding from equity and/or debt financing. Management are under negotiation with a number of Chinese financial institutions, including investment management companies and crowdfunding platforms, regarding capital raising. However, we cannot assure you that we will be able to raise sufficient funds from these or other sources to achieve our business goal.

Renting Process

We rent our luxurious cars to our customers from our store in Beijing. We market our cars to targeted potential customers via phone calls or messages. The rental price varies based on the rental term which ranges from one day to one months. The longer the rental term, the cheaper the price. The daily rental price is the highest, while the average weekly rental price and average monthly rental price are 10% to 20% and 20% to 30% cheaper than that of daily rental price.

We conduct comprehensive credit check against customers who placed orders. We work with credit rating platform such as JD Wanxiang and TYi Onine to evaluate the customer’s credit. We may reject the order for any reason including unacceptable credit rating. Once an order is accepted, we will require deposit ranging from US$7,500 and US$15,000 based on the vehicle being ordered and the customer’s credit score. The deposit consists of vehicle deposit and traffic violation deposit. Customer can confirm the time and place for vehicle delivery and rental term via SNS messages, phone calls or face-to-face communication with our sales personnel. After then, our sales personnel will deliver the vehicle to the customers as designated. The customer, before signing the car rental agreement, will inspect the vehicle in person and pay the rent along with the deposit in credit card, Wechat Pay or Alipay. The customer is responsible for the gas, the toll, and any other expenses related to the use of the vehicle during the rental term. 

We installed five GPS on each vehicle to track the location of the vehicle. Once the rental period is over, the vehicle should be returned to designated place to our salesperson. In the event the vehicle is returned with no damage other than normal wear and tear, we will process the refund of the vehicle deposit on the next business day. The traffic deposit will be refunded after we receive traffic violation records associated with the vehicle from the local police (approximately a month after the return) showing no traffic violation. .

If the following conditions occur, the corresponding fee will be deducted from the deposit. In the event that the amount of deposit to be deduced by the Company to the customer is lower than the payment to the damage or repair cost, the customer shall pay such deficient to the Company. In the event that the amount of deposit to be paid by the Company is greater than the payment to the damage or repair cost, the Company shall refund such differences to the customer:

a) If the vehicle is found to have any damage at the time of return, the vehicle deposit will be used for payment of repair cost;

b) If the mileage exceeds certain threshold, the customer will be required to pay extra fees;

c) If the vehicle has less than 4/5 gasoline filled, certain percentage of the deposit will not be refunded;

d) If the customer violates traffic laws during the rental term, the corresponding penalty will be deducted in the deposit.

In addition to direct renting to customers, we intend to rent to other auto rental companies as a wholesale model. We and our peer companies plan to form vehicle pool consisting of all available pre-owned vehicles.  When a customer placed an order via a company while it does not have such vehicles available, vehicles of company B in such pool will be delivered to company A at its request.

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Marketing

Currently we market our services by our own sales personnel and online promotion. Our operation is branded as “Batcar”. We have launched WeChat public account and Weibo to promote our services. We started to introduce our services via major search engines, such as zhida and baidu. We also started to advertise on major search engines to acquire users. We actively engaged social media such as tieba.baidu.com, Tik Tok, Weibo, WeChat, and zhihu.com. We plan to launch wider and deeper social media marketing in the near future. We also plan to advertise via offline channels.

In the future, we intend to acquire customers by working with more sizeable and established auto business. We have arrangements with Beijing Cuco Technology Co. LTD (“Cuco”) , a general car-rent platform and Beijing EasyCar Life Automobile Service Chain Co. LTD (“EasyCar Life”), a car service chain store in Beijing where Cuco and EasyCar Life may refer customers to us in exchange of commission equals to 20% of the rental price.

Key Factors Affecting Our Results of Operation

The car rental and car service industry in China is competitive and fragmented. We expect competition in China’s car rental and car service industry to persist and intensify.

We have a limited operating history. We just launched the car leasing business in May 2018. We believe our future success depends on our ability to significantly increase revenues as well as maintain profitability from our operations. Our limited operating history makes it difficult to evaluate our business and future prospects. You should consider our future prospects in light of the risks and challenges encountered by a company with a limited operating history in an emerging and rapidly evolving industry. These risks and challenges include, among other things,

l our ability to continue our growth as well as maintain profitability;

l preservation of our competitive position in the luxurious car leasing and car service industry in China;

l our ability to implement our strategies and make timely and effectively respond to competition and changes in customer preferences;

l recruitment, training and retaining of qualified managerial and other personnel

Our business requires a significant amount of capital in large part because we are prompted to continue to grow our fleet and expand our business in existing markets and to additional markets where we currently do not have operations.

The significant increase in the number of vehicles in China, primarily in major cities, and the traffic and pollution resulting from this increase have drawn the attention of both the government and the public. To address this issue, local governments in China have promulgated various policies to limit the increase in the number of vehicles.

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Results of Operations

Three Months Ended September 30, 2018 as Compared to Three Months Ended September 30, 2017

	For the Three Months Ended September 30,						Change
	2018			2017			Amount			%
Lease income and other interest income
Income from operating lease	$	140,856		$	-			140,856			>100%
Interests on deposits with banks		2,216			-			2,216			>100%
Total lease income and other interest income		143,072			-			143,072			>100%
Net depreciation expense on operating lease assets		(35,336	)		-			(35,336	)		>100%
											>100%
Net Revenue		107,736			-			107,736			>100%
Operating expenses
Salaries and employee surcharge		(151,645	)		(155,411	)		3,766			-2	%
Rental expenses		(16,234	)		(7,542	)		(8,692	)		115	%
Business taxes and surcharge		(711	)		-			(711	)		>100%
Changes in fair value of noncurrent liabilities		-			313,500			(313,500	)		-100	%
Other operating expenses		(573,172	)		(1,672,235	)		1,099,063			-66	%
Total operating expenses		(741,762	)		(1,521,688	)		779,926			-51	%
Net loss from continuing operations before income taxes		(634,026	)		(1,521,688	)		887,662			-58	%
Income tax expense		(991	)		-			(991	)		>100%
Net loss from continuing operations		(635,017	)		(1,521,688	)		886,671			-58	%
Net loss from discontinued operations		-			(613,604	)		613,604			-100	%
Net loss	$	(635,017	)	$	(2,135,292	)		1,500,275			-70	%

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Income from operating lease

The Company commenced its new business of lease services of used luxurious cars in May 2018. During the three months ended September 30, 2018, the Company the Company disposed one of the six used luxurious cars. The lease term is generally within one month. The operating lease income is recognized on a straight-line basis over the scheduled lease term. The Company generated operating lease income of US$140,856.

Because we just launched its new business of lease services of used luxury cars in May 2018 and we did not have any operations, we did not generate any revenues for the three months ended September 30, 2017.

Net depreciation expense on operating lease assets

The net depreciation expense on operating lease assets represents the depreciation expenses of used luxurious cars. During the three months ended September 30, 2017, net depreciation expense on operating lease assets was nil.

Operating Expenses

Operating expenses decreased from US$1,521,688 for the three months ended September 30, 2017 to US$741,762 for the three months ended September 30, 2018, representing a decrease of US$779,926, or 51%. Operating expenses primarily consisted of salary and employee surcharge, office rental expense, business tax and surcharge, changes in fair value of other noncurrent liabilities, professional service fees, and other office supplies. The decrease was mainly attributable to combined effects of a change of US$313,500 of changes in fair value of noncurrent liabilities, as the share settlement was closed in April 2018 and no expenses incurred in relation to changes in share price during the three months ended September 30, 2018; and a decrease of transaction expenses of $1,356,285 in relation to the reverse acquisition with Sorghum.

Net loss from discontinued operations

The Company disposed of the discontinued operation in June 2018. During the three months ended September 30, 2018, no net income was generated from discontinued operations.

For details of discontinued operations, please refer to Note 6 of our Unaudited Consolidated Financial Statements included in Form 10-Q.

Net loss

As a result of the foregoing, net loss for the three months ended September 30, 2018 was $635,017 representing a decrease of $1,500,275 from net loss of $2,135,292 for the three months ended September 30, 2017.

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Results of Operations

Nine Months Ended September 30, 2018 as Compared to Nine Months Ended September 30, 2017

	For the Nine Months Ended September 30,						Change
	2018			2017			Amount			%
Lease income and other interest income
Income from operating lease	$	237,577		$	-			237,577			>100	%
Interests on deposits with banks		2,531			35,000			(32,469	)		-93	%
Total lease income and other interest income		240,108			35,000			205,108			586	%
Net depreciation expense on operating lease assets		(47,794	)		-			(47,794	)		>100	%
Net Revenue		192,314			35,000			157,314			449	%
Operating expenses
Salaries and employee surcharge		(377,244	)		(583,615	)		206,371			-35	%
Rental expenses		(42,623	)		(22,322	)		(20,301	)		91	%
Business taxes and surcharge		(855	)		-			(855	)		>100	%
Changes in fair value of noncurrent liabilities		(166,540	)		(1,681,500	)		1,514,960			-90	%
Other operating expenses		(1,180,313	)		(2,742,401	)		1,562,088			-57	%
Total operating expenses		(1,767,575	)		(5,029,838	)		3,262,263			-65	%
Loss from acquisition of a variable interest entity		(14,004	)		-			(14,004	)		>100	%
Net loss from continuing operations before income taxes		(1,589,265	)		(4,994,838	)		3,405,573			-68	%
Income tax expense		(1,011	)		-			(1,011	)		>100	%
Net loss from continuing operations		(1,590,276	)		(4,994,838	)		3,404,562			-68	%
Net income (loss) from discontinued operations		10,072,629			(3,286,906	)		13,359,535			-406	%
Net income (loss)	$	8,482,353		$	(8,281,744	)		16,764,097			-202	%

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Income from operating lease

The Company commenced its new business of lease services of used luxurious cars in May 2018. During the nine months ended September 30, 2018, the Company purchased six used luxurious cars for the purpose of operating lease. Later in August 2018, the Company disposed one of the used luxurious cars. The lease term is generally within one month. The operating lease income is recognized on a straight-line basis over the scheduled lease term. The Company generated operating lease income of US$237,577.

Because we just launched its new business of lease services of used luxury cars in May 2018 and we did not have any operations, we did not generate any revenues for the nine months ended September 30, 2017.

Net depreciation expense on operating lease assets

The net depreciation expense on operating lease assets represents the depreciation expenses of used luxurious cars. During the nine months ended September 30,, 2017, net depreciation expense on operating lease assets was nil.

Operating Expenses

Operating expenses decreased from US$5,029,838 for the nine months ended September 30, 2017 to US$1,767,575 for the nine months ended September 30, 2018, representing a decrease of US$3,262,263, or 65%. Operating expenses primarily consisted of salary and employee surcharge, office rental expense, business tax and surcharge, changes in fair value of other noncurrent liabilities, professional service fees, and other office supplies. The decrease was mainly attributable to combined effects of a decrease of US$1,514,960 of changes in fair value of noncurrent liabilities, as the changes in share price during the period between January 1, 2018 and the date of share settlement is far less than that during the nine months ended September 30, 2017; and a decrease of transaction expenses of $2,136,285 in relation to the reverse acquisition with Sorghum..

Net income (loss) from discontinued operations

During the nine months ended September 30, 2018, the net income from discontinued operations was comprised of a net loss of $277,756 from discontinued operations against a gain of $9,794,873 from disposal of the discontinued operations.

For details of discontinued operations, please refer to Note 6 of our Unaudited Consolidated Financial Statements included in Form 10-Q.

Net income (loss)

As a result of the foregoing, net income for the nine months ended September 30, 2018 was $8,482,353 representing a change of $16,764,097 from net loss of $8,281,744 for the nine months ended September 30, 2017.

Cash Flows and Capital Resources

We have financed our operations primarily through shareholder contributions, cash flow from operations, and public offerings of securities. As a result of net effects of discontinue of microcredit services and startup of used luxurious car business during the nine months ended September 30, 2018, net cash decreased from US$1,359,630 as of December 31, 2017 to US$838,634 as of September 30, 2018.

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Liquidity

In assessing the Company’s liquidity and its ability to continue as a going concern, the Company monitors and analyzes its cash and cash equivalent and its ability to generate sufficient cash flow in the future to support its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements and operating expenses obligations.

Since the Company disposed its microcredit business and launched luxurious car leasing business in May 2018. As of September 30, 2018, the Company had cash balance of $838,634 and a positive working capital of $2,073,049. The management estimated the operating expenses obligation for the next twelve months after issuance of the financial statements to be $500,000. Therefore, the management believes that the Company will continue as a going concern in the following 12 months. In addition, the Company’s shareholders will continuously provide financial support to the Company when there is any business expansion plan.

Statement of Cash Flows

The following table sets forth a summary of our cash flows. For the nine months ended September 30, 2018 and 2017, respectively: 

	For the nine months ended  September 30,
	2018			2017
	(unaudited)			(unaudited)
Net cash used in by operating activities	$	(1,403,790	)	$	(1,248,629	)
Net cash (used in) provided by investing activities		(4,009,223	)		1,905,807
Net cash provided by financing activities		4,892,314			1,560,000
Effects of exchange rate changes on cash		(297	)		44,789
Net cash (outflow)/ inflow	$	(520,996	)	$	2,261,967

Net Cash Used in Operating Activities

During the nine months ended September 30, 2018, we had a cash outflow from operating activities of US$1,403,790, an increase of cash outflow of US$155,161 from a cash outflow of US$1,248,629 for the same period of last year. We generated a net income for the nine months ended September 30, 2018 of US$8,482,353, a change of US$16,764,087 from the nine months ended September 30, 2017, during which we incurred a net loss of US$8,281,734. In addition to the change in profitability, the decrease in net cash used in operating activities was the result of several factors, including:

● A gain on disposal of discontinued operations of US$9,794,873.

● A decrease in the changes in fair value of noncurrent liabilities of US$1,514,960 as a result of the share price fluctuation during the period from January 1, 2018 to share settlement date is far less than that during the nine months ended September 30, 2017, and share settlement of US$1,311,000;

● A decrease in shares issued to executive officers and professional services of US$2,159,480 as the Company did not issue shares to management and professional services during the nine months ended September 30, 2018 while the Company issued shares for the same period ended September 30, 2017 for the efforts in reverse acquisition transaction with Sorghum;

● A decrease in cash provided by operating activities from discontinued operations of US$2,199,791.

Net Cash (Used in) Provided by Investing Activities 

Net cash used in investing activities for the nine months ended September 30, 2018 was US$4,009,223 as compared to net cash provided by investing activities of US$1,905,807 for the nine months ended September 30, 2017. The cash used in investing activities for the nine months ended September 30, 2018 was net effects of purchase of six used luxurious cars of $1,882,476, loan disbursement of $1,473,458 to a third party, and net cash of $1,270,070 used in investing activities from discontinued operation netting off against proceeds of $500,000 from disposal of discontinued operations and proceeds of $122,481 from disposal of one used luxurious car in August 2018. The cash provided by investing activities for the nine months ended September 30, 2017 was mainly caused by net cash provided by investing activities from discontinued operation.

Net Cash Provided by Financing Activities

During the nine months ended September 30, 2018, the cash provided by financing activities is mainly attributable to a bank borrowing of $1,473,458, a loan borrowed from a third party of $153,485, and capital of $3,265,371 raised from private placements.

During the nine months ended September 30, 2017, the Company raised proceeds of $1,560,000 from private placements.

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Contractual Obligations

As of September 30, 2018, the annual amounts of future minimum payments under certain of our contractual obligations were:

	Payment due by period
	Total		Less than  1 year		1-2 years		2-3 years		3-5 years		5 years  and after
Contractual obligations:
Operating lease (1) (2)	$	67,808	$	67,808	$	-		-		-		-
	$	67,808	$	67,808	$	-	$	-	$	-	$	-

(1)	We leased certain office space in New York, NY where we paid a monthly rent of US$3,600 during the year ended December 31, 2018.
(2)	During the nine months ended September 30, 2018, we entered into one rental free office lease agreement with a third party and one office lease agreement with monthly rental fee of $5,506 with a third party which expires in September 2020.

Critical Accounting Policies

Please refer to Note 2 of our Unaudited Condensed Consolidated Financial Statements included in this Form 10Q for details of our critical accounting policies.

Recent Accounting Pronouncements

Please refer to Note 2(b) of our Unaudited Consolidated Financial Statements included in Form 10-Q for details of our recently issued accounting standards.  

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES 

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were not effective as of September 30, 2018.

Limitations on the Effectiveness of Disclosure Controls.  Readers are cautioned that our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error.  An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any control design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2018 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting. 

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PART II.  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

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

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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 Form 10-Q, the Company is working with its counsel and the escrow agent to complete such cancelation.

2) 2015 Derivative Litigation:

On February 3, 2015, a purported shareholder Kiran Kodali filed a putative shareholder derivative complaint in the United States District Court for the Southern District of New York, captioned Kiran Kodali v. Huichun Qin, et al., Case No. 15-cv-806 (the “Action”). 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. On April 17, 2015, Plaintiff amended the complaint in the Action. Plaintiff’s Amended Verified Shareholder Derivative Complaint (“Amended Complaint”) has alleged that the individual defendants breached their fiduciary duties as officers and directors of the Company by causing the Company to issue false or misleading statements concerning its: (i) lending and underwriting practices; (ii) loan quality of direct and guarantee loans; (iii) allowance and provision for loan losses; (iv) accrual and provision for financial guarantee loans; (v) liquidity credit risk; (vi) compliance with Generally Accounting Principles (“GAAP”); and (vii) internal controls. Additionally, Plaintiff has alleged in the Amended Complaint that the Individual Defendants breached their fiduciary duties by allegedly allowing Defendant Huichun Qin to pilfer approximately $1.1 million from the Company.

42

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 August 23, 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. 

On or about August 22, 2018, our litigation counsel noticed their appearance in the Action. The parties filed a Joint Status Report on August 22, 2018, advising the Court that the parties continued to have discussions regarding a potential resolution of the matter. The parties have come to a potential agreement regarding a monetary settlement. However, the parties continue to discuss the non-monetary aspects of a potential resolution, and have filed a Joint Status Report on November 1, 2018, requesting a brief amount of time to complete its settlement discussions and resolve the matter.

3) 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.

4) 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.

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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. On May 17, 2018, Sorghum requested another extension and Arbitrator Mentz granted the extension. In accordance with Arbitrator Mentz’s Order, the parties’ proposals was due May 31, 2018. On May 30, 2018, due to a delay in receiving additional evidence from a relevant third party, the Company requested an extension of time to file its proposal for resolution, which Arbitrator Mentz granted extending the deadline to June 7, 2018. To provide additional time to allow certain relevant documents to be translated due to the unavailability of the parties’ mutually accepted translator, the Company requested a final extension of time to June 14, 2018, to submit the parties’ proposal for resolution. Arbitrator Mentz granted the Company’s request. On June 14, 2018, the Company submitted its proposal for resolution to the AAA. On July 30, 2018, Arbitrator Mentz entered a reasoned award, accepting the Company’s proposal for resolution, awarding the Company damages of $1,436,521.50 against Sorghum and denying Sorghum’s Counterclaim against the Company in its entirety with prejudice.

ITEM 1A. RISK FACTORS

As of the date of this Report, there have been no material changes to the risk factors disclosed in our annual report on Form 10-K filed with the SEC on April 02, 2018 and the 10-Q filed on August 17, 2018.

44

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On October 16, 2018, the Company completed private placement of convertible promissory notes to certain “non-U.S. Persons” as defined in Regulation S of the Securities Act in the original principal amount of $312,170, convertible into shares of common stock of the Company at a per share conversion price of $0.6. If the notes are fully converted, the Company will issue an aggregate of 520,283 shares of common stock. In addition, the Company is obliged to pay interest on the outstanding balance of principal amount at the rate of 8% per annum until the note is paid in full. The net proceeds of the private placement was used by the Company as working capital.

This issuance and sale are exempt from the registration requirements of the Securities Act pursuant to Regulation S promulgated thereunder.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Resignation of Chenguang Kang

On November 15, 2018, Mr. Chenguang Kang resigned from his positions as Chief Executive Officer (“CEO”), President and a director of the Company effective November 20, 2018. Mr. Kang’s resignation is not as a result of any disagreement with the Company relating to its operations, policies or practices.

Appointment of Jiaxi Gao

The Company’s board of directors (the “Board”), upon recommendation by the Nomination Committee of the Board, appointed Mr. Jiaxi Gao as CEO and President of the Company and elected him as a director of the Board of to fill the vacancy to be created by the resignation of Mr. Gao effective November 20, 2018.

The biographical information of Mr. Gao is set forth below.

Mr . Gao has served as the founder and CEO of Beijing Lexiang Technology (Beijing) Co., Ltd, a financial service company for auto from March 2016 to May 2018. Prior to that, Mr. Gao has served as the product architect in Baidu from January 2015 to February 2016. From August 2012 to August 2014, Mr. Gao has been the founder and CEO of Beijing Kuwangke Technology Co., Ltd., which operated the video media APP called LEBO. From March 2011 to June 2012, he served as the city manager in Meituan.com, a Hongkong listed company. Mr. Gao received a bachelor‘s degree in composition in Shenyang Conservatory of Music in 2009.The Board believes Mr. Gao’s extensive experience in online auto financial platform operation, accuse business aptitude and visionary management ability make him qualified as a director of the Company.

Mr. Gao does not have any family relationship with any director or executive officer of the Company and has not been involved in any transaction with the Company during the past two years that would require disclosure under Item 404(a) of Regulation S-K.

The Company entered into an executive employment agreement (the “Employment Agreement”) with Mr. Gao on November 15, 2018, pursuant to which he shall receive 800,000 restricted shares as inducement for his employment. The Compensation Committee of the Company approved such compensation. Such restricted shares shall vest in four quarterly installments starting from January 2019. The Employment Agreement is qualified in its entirety by reference to the complete text of the agreement, which is filed hereto as Exhibits 10.9.

45

ITEM 6. EXHIBITS

Exhibit No.	Description
3.1*	Certificate of Incorporation of Registrant, incorporated herein by reference to Exhibit 3.1 of the draft registration statement on Form DRS filed on February 14, 2013
3.2*	Bylaws of Registrant, incorporated herein by reference to Exhibit 3.2 of the draft registration statement on Form DRS filed on February 14, 2013
3.3*	Articles of Association of Wujiang Luxiang Rural Microcredit Co. Ltd., incorporated herein by reference to Exhibit 3.3 of the registration statement on Form S-1/A filed on June 27, 2013
3.4*	Certificate of Approval of Wujiang Luxiang Rural Microcredit Co. Ltd., incorporated herein by reference to Exhibit 3.4 of the registration statement on Form S-1 filed on June 7, 2013
3.5*	Certificate of Amendment of the Certificate of Incorporation of Registrant , incorporated herein by reference to Exhibit 3.5 of the registration statement on Form S-1/A filed on July 16, 2013
10.1*	Exclusive Business Cooperation Agreement by and between HAO LIMO and Beijing Youjiao dated June 19, 2018 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 25, 2018)
10.2*	Share Pledge Agreement  by and between HAO LIMO and Shareholder of Beijing Youjiao dated June 19, 2018 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on June 25, 2018)
10.3*	Exclusive Option Agreement by and between HAO LIMO and Shareholder of Beijing Youjiao dated June 19, 2018 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on June 25, 2018)
10.4*	Power of Attorney by Shareholder of Beijing Youjiao dated June 19, 2018 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on June 25, 2018)
10.5*	Timely Reporting Agreement by and between the Company and Shareholder of Beijing Youjiao dated June 19, 2018 (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed on June 25, 2018)
10.6*	Termination Agreement by and between WOFE and Shareholder of Beijing Youjiao dated June 19, 2018 (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed on June 25, 2018)
10.7*	Share Purchase Agreement by and among the Company, CCC BVI, and HK XU DING CO, LIMITED dated June 19, 2018 (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed on June 25, 2018)
10.8**	Termination Agreement dated November 8, 2018 by and between Hao Limo Technology (Beijing) Co., Ltd. and Beijing Youjiao Technology Limited
10.9**	Employment Agreement dated November 15, 2018 by and between t China Commercial Credit, Inc. and Jiaxi Gao
16.1*	Letter from Marcum Bernstein and Pinchuk LLP to the Securities and Exchange Commission. (incorporated by reference to Exhibit 16.1 to the Current Report on Form 8-K filed on June 28, 2018)
31.1**	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
31.2**	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1***	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2***	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

*	Previously filed
**	Filed herewith
***	Furnished herewith

46

SIGNATURES

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

CHINA COMMERCIAL CREDIT, INC.  

Date: November 15, 2018	By:	/s/ Chenguang Kang
	Name:	Chenguang Kang
	Title:	Chief Executive Officer (Principal Executive Officer)
	By:	/s/ Long Yi
	Name:	Long Yi
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

47

EX-10.8

Exhibit 10.8

关于《独家业务合作协议》、《独家购买权合同》、《股权质押协议》、《按期申报协议》、《授权委托书》之终止协议

本终止协议（“本协议”）由以下双方于2018年11月8日在北京朝阳签署：

(1) 天行皓车（北京）科技有限公司（下称“天行皓车”），一家中国设立的外商独资企业，地址为北京市朝阳区清河营东路2号院2号楼15层1522号；

(2) 北京有教科技有限公司（下称“北京有教”），一家依照中国法律设立和存在的公司，地址为北京市密云区太师屯镇永安街镇政府办公楼415-2351；

鉴于：

(1) 2018年6月15日，各方签署了《独家业务合作协议》、《独家购买权合同》、《股权质押协议》、《按期申报协议》、《授权委托书》等相关文件（“VIE协议”）。

(2) 各方拟终止投资协议的履行。

经协商一致，各方同意签署本协议：

1. VIE协议终止

1.1 VIE协议全部终止；

1.2 各方不再对对方负有任何权力和义务，未执行的条款不再执行。

2. 协议生效

2.1 本协议自签署之日起，对签署各方产生约束力；

2.2 天行皓车需在本协议签订之日起3日内，向北京有教支付回购款0元。

2.3 本协议自北京有教收到回购款之时，即刻生效。

3. 保密

3.1 未经对方书面许可，任何一方不得向第三方（有关法律、法规、政府部门、证券交易所或其它监管机构要求和甲乙双方的法律、会计、商业及其它顾问、授权雇员除外）泄露本协议的条款的任何内容以及本协议的签订及履行情况，以及通过签订和履行本协议而获知的对方及对方关联公司的任何信息。但是为了境外交易之目的，将本协议披露给本次境外交易的其他投资者除外。

3.2 本协议有效期内及终止后2年内，本保密条款仍具有法律效力。

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4. 违约责任

4.1 违约赔偿。任何一方违反本协议的约定，在收到守约方通知后30个工作日内违约状况仍未改变的，违约方应当赔偿因其违约行为给守约方造成的一切损失、损害、责任、成本或支出，包括但不限于合理的诉讼/仲裁费用、公证费和律师费。

4.2 本协议规定的权利和救济是累积的，并不排斥法律规定的其他权利或者救济。本协议所规定各方的义务是特殊、特定、且非一般性的，因此在任何一方违约时，损害赔偿如不足以弥补损失，非违约方有权要求违约方实际履行。

5. 不可抗力

5.1 不可抗力是指协议各方不能合理控制、不可预见或即使预见亦无法避免的事件，该事件妨碍、影响或延误任何一方根据协议履行其全部或部分义务。该事件包括但不限于政府行为、自然灾害、战争或任何其它类似事件。

5.2 出现不可抗力事件时，知情方应及时、充分地向对方以书面形式发通知，并告知对方该类事件对本协议可能产生的影响，并应当在合理期限内提供相关证明。

5.3 由于以上所述不可抗力事件致使协议的部分或全部不能履行或延迟履行，则协议各方于彼此间不承担任何违约责任。

6. 适用法律及争议解决

6.1 以中华人民共和国法律为本协议的适用法律。

6.2 如果协议各方因本协议或本协议的任何条款的解释或执行而发生争议、索赔或争端（以下总称“争议”），协议各方应一秉善意，及时进行友好协商，以尽量合乎双方意图和目的的方式来解决争议。如果各方无法在三十天内解决此种争议，应将该争端提交仲裁，该种仲裁应当提交北京仲裁委员会根据其现行有效的仲裁规则进行裁决，仲裁裁决具有最终和排它的约束力。

7. 其他

7.1 本协议由各方签字方为有效。

7.2 本协议的任何一方未能及时行使本协议项下的权利不应被视为放弃该权利，也不影响该方在将来行使该权利。

7.3 如果本协议中的任何条款无论因何种原因完全或部分无效或不具有执行力，或违反任何适用的法律，则该条款被视为删除，但本协议的其余条款仍应有效并且有约束力。

7.4 本协议未尽事宜由协议各方友好协商后，以书面形式加以补充，该补充协议与本协议具有同等法律效力。

7.5 本协议附件为本协议不可分割的一部分，与本协议有同等法律效力。

7.6 本协议一式两份，协议各方各持壹份，具有同等法律效力。

（本行以下无正文）

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本页无正文，为《终止协议》之签字页
天行皓车（北京）科技有限公司
授权代表:	/s/ Jialin Cui
北京有教科技有限公司
授权代表:	/s/ Aizhen Li

终止协议签字页

EX-10.9

Exhibit 10.9

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the “Agreement”), is entered into as of November 15, 2018 (the “Effective Date”), by and between China Commercial Credit, Inc., incorporated under the laws of the State of Delaware (the “Company”), and Jiaxi Gao, an individual (the “Executive”). Except with respect to the direct employment of the Executive by the Company, the term “Company” as used herein with respect to all obligations of the Executive hereunder shall be deemed to include the Company and all of its subsidiaries and affiliated entities (collectively, the “Group”).

RECITALS

A. The Company desires to employ the Executive as its Chief Executive Officer and President and to assure itself of the services of the Executive during the term of Employment (as defined below).

B. The Executive desires to be employed by the Company as its Chief Executive Officer and President during the term of Employment and upon the terms and conditions of this Agreement.

AGREEMENT

The parties hereto agree as follows:

1. POSITION

The Executive hereby accepts a position of Chief Executive Officer and President (the “Employment”) of the Company.

2. TERM

Subject to the terms and conditions of this Agreement, the initial term of the Employment shall be two years commencing on the Effective Date, unless terminated earlier pursuant to the terms of this Agreement. The Employment will be renewed automatically for additional one-year terms if neither the Company nor the Executive provides a notice of termination of the Employment to the other party or otherwise proposes to re-negotiate the terms of the Employment with the other party within three months prior to the expiration of the applicable term.

3. DUTIES AND RESPONSIBILITIES

(a) The Executive’s duties at the Company will include all jobs assigned by the Company’s Board of the Directors (the “Board”).

(b) The Executive shall devote all of his working time, attention and skills to the performance of his duties at the Company and shall faithfully and diligently serve the Company in accordance with this Agreement, the Certificate of Incorporation and Bylaws of the Company, as amended and restated from time to time (the “Charter Documents”), and the guidelines, policies and procedures of the Company approved from time to time by the Board.

(c) The Executive shall use his best efforts to perform his duties hereunder. The Executive shall not, without the prior written consent of the Board, become an employee of any entity other than the Company and any subsidiary or affiliate of the Company, and shall not be concerned or interested in any business or entity that engages in the same business in which the Company engages (any such business or entity, a “Competitor”), provided that nothing in this clause shall preclude the Executive from holding any shares or other securities of any Competitor that is listed on any securities exchange or recognized securities market anywhere if such shares or securities represent less than 5% of the competitors outstanding shares and securities. The Executive shall notify the Company in writing of his interest in such shares or securities in a timely manner and with such details and particulars as the Company may reasonably require 

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4. NO BREACH OF CONTRACT

 The Executive hereby represents to the Company that: (i) the execution and delivery of this Agreement by the Executive and the performance by the Executive of the Executive’s duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any other agreement or policy to which the Executive is a party or otherwise bound, except for agreements entered into by and between the Executive and any member of the Group pursuant to applicable law, if any; (ii) that the Executive has no information (including, without limitation, confidential information and trade secrets) relating to any other person or entity which would prevent, or be violated by, the Executive entering into this Agreement or carrying out his duties hereunder; (iii) that the Executive is not bound by any confidentiality, trade secret or similar agreement (other than this) with any other person or entity except for other member(s) of the Group, as the case may be.

5. Intentionally Ommitted

6. COMPENSATION AND BENEFITS

(a) Base Salary. The Executive’s initial base salary shall be 800,000 restricted shares of common stock the Company for the fiscal year 2019, payable in quarterly installments. The Executive’s compensation is subject to annual review and adjustment by the Board.

(b) Bonus. The Executive shall be eligible for Bonuses determined by the Board.

(c) Equity Incentives. To the extent the Company adopts and maintains a share incentive plan, the Executive will be eligible to participate in such plan pursuant to the terms thereof as determined by the Board.

(d) Benefits. The Executive is eligible for participation in any standard employee benefit plan of the Company that currently exists or may be adopted by the Company in the future, including, but not limited to, any retirement plan, life insurance plan, health insurance plan and travel/holiday plan.

(e) Expenses. The Executive shall be entitled to reimbursement by the Company for all reasonable ordinary and necessary travel and other expenses incurred by the Executive in the performance of his duties under this Agreement; provided that he properly accounts for such expenses in accordance with the Company’s policies and procedures.

7. TERMINATION OF THE AGREEMENT

(a) By the Company.

(i) For Cause. The Company may terminate the Employment for cause, at any time, without notice or remuneration (unless notice or remuneration is specifically required by applicable law, in which case notice or remuneration will be provided in accordance with applicable law), if:

(1) the Executive is convicted or pleads guilty to a felony or to an act of fraud, misappropriation or embezzlement,

(2) the Executive has been grossly negligent or acted dishonestly to the detriment of the Company,

(3) the Executive has engaged in actions amounting to willful misconduct or failed to perform his duties hereunder and such failure continues after the Executive is afforded a reasonable opportunity to cure such failure; or

(4) the Executive violates Section 8 or 10 of this Agreement.

Upon termination for cause, the Executive shall be entitled to the amount of base salary earned and not paid prior to termination. However, the Executive will not be entitled to receive payment of any severance benefits or other amounts by reason of the termination, and the Executive’s right to all other benefits will terminate, except as required by any applicable law.

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(ii) For death and disability. The Company may also terminate the Employment, at any time, without notice or remuneration (unless notice or remuneration is specifically required by applicable law, in which case notice or remuneration will be provided in accordance with applicable law), if:

(1) the Executive has died, or

(2) the Executive has a disability which shall mean a physical or mental impairment which, as reasonably determined by the Board, renders the Executive unable to perform the essential functions of his employment with the Company, with or without reasonable accommodation, for more than 120 days in any 12-month period, unless a longer period is required by applicable law, in which case that longer period would apply.

Upon termination for death or disability, the Executive shall be entitled to the amount of base salary earned and not paid prior to termination. However, the Executive will not be entitled to receive payment of any severance benefits or other amounts by reason of the termination, and the Executive’s right to all other benefits will terminate, except as required by any applicable law.

(iii) Without Cause. The Company may terminate the Employment without cause, at any time, upon one-month prior written notice. Upon termination without cause, the Company shall provide the following severance payments and benefits to the Executive: (1) a lump sum cash payment equal to1 months of the Executive’s base salary as of the date of such termination; (2) a lump sum cash payment equal to a pro-rated amount of his target annual bonus for the year immediately preceding the termination, if any; (3) payment of premiums for continued health benefits under the Company’s health plans for 12 months fo1lowing the termination, if any; and (4) immediate vesting of 100% of the then-unvested portion of any outstanding equity awards held by the Executive.

Upon termination without, the Executive shall be entitled to the amount of base salary earned and not paid prior to termination.

(iv) Change of Control Transaction. If the Company or its successor terminates the Employment upon a merger, consolidation, or transfer or sale of all or substantially all of the assets of the Company with or to any other individual(s) or entity (the “Change of Control Transaction”), the Executive shall be entitled to the following severance payments and benefits upon such termination: (1) a lump sum cash payment equal to 1  months of the Executive’s base salary at a rate equal to the greater of his/her annual salary in effect immediate1y prior to the termination, or his/her then current annua1 salary as of the date of such termination; (2) a lump sum cash payment equal to a pro-rated amount of his/her target annual bonus for the year immediately preceding the termination; (3) payment of premiums for continued health benefits under the Company’s health plans for 12 months fo1lowing the termination; and (4) immediate vesting of 100% of the then-unvested portion of any outstanding equity awards held by the Executive.

(b) By the Executive. The Executive may terminate the Employment at any time with a one-month prior written notice to the Company, if (1) there is a material reduction in the Executive’s authority, duties and responsibilities, or (2) there is a material reduction in the Executive’s annual salary. Upon the Executive’s termination of the Employment due to either of the above reasons, the Company shall provide compensation to the Executive equivalent to 1 months of the Executive’s base salary that he is entitled to immediately prior to such termination. In addition, the Executive may resign prior to the expiration of the Agreement if such resignation is approved by the Board or an alternative arrangement with respect to the Employment is agreed to by the Board.

(c) Notice of Termination. Any termination of the Executive’s employment under this Agreement shall be communicated by written notice of termination from the terminating party to the other party. The notice of termination shall indicate the specific provision(s) of this Agreement relied upon in effecting the termination.

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8. CONFIDENTIALITY AND NON-DISCLOSURE

(a) Confidentiality and Non-disclosure. The Executive hereby agrees at all times during the term of the Employment and after his termination, to hold in the strictest confidence, and not to use, except for the benefit of the Company, or to disclose to any person, corporation or other entity without prior written consent of the Company, any Confidential Information. The Executive understands that “Confidential Information” means any proprietary or confidential information of the Company, its affiliates, or their respective clients, customers or partners, including, without limitation, technical data, trade secrets, research and development information, product plans, services, customer lists and customers, supplier lists and suppliers, software developments, inventions, processes, formulas, technology, designs, hardware configuration information, personnel information, marketing, finances, information about the suppliers, joint ventures, franchisees, distributors and other persons with whom the Company does business, information regarding the skills and compensation of other employees of the Company or other business information disclosed to the Executive by or obtained by the Executive from the Company, its affiliates, or their respective clients, customers or partners, either directly or indirectly, in writing, orally or otherwise, if specifically indicated to be confidential or reasonably expected to be confidential. Notwithstanding the foregoing, Confidential Information shall not include information that is generally available and known to the public through no fault of the Executive.

(b) Company Property. The Executive understands that all documents (including computer records, facsimile and e-mail) and materials created, received or transmitted in connection with his work or using the facilities of the Company are property of the Company and subject to inspection by the Company at any time. Upon termination of the Executive’s employment with the Company (or at any other time when requested by the Company), the Executive will promptly deliver to the Company all documents and materials of any nature pertaining to his work with the Company and will provide written certification of his compliance with this Agreement. Under no circumstances will the Executive have, following his   termination, in his possession any property of the Company, or any documents or materials or copies thereof containing any Confidential Information.

(c) Former Employer Information. The Executive agrees that he has not and will not, during the term of his employment, (i) improperly use or disclose any proprietary information or trade secrets of any former employer or other person or entity with which the Executive has an agreement or duty to keep in confidence information acquired by Executive, if any, or (ii) bring into the premises of the Company any document or confidential or proprietary information belonging to such former employer, person or entity unless consented to in writing by such former employer, person or entity. The Executive will indemnify the Company and hold it harmless from and against all claims, liabilities, damages and expenses, including reasonable attorneys’ fees and costs of suit, arising out of or in connection with any violation of the foregoing.

(d) Third Party Information. The Executive recognizes that the Company may have received, and in the future may receive, from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Executive agrees that the Executive owes the Company and such third parties, during the Executive’s employment by the Company and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person or firm and to use it in a manner consistent with, and for the limited purposes permitted by, the Company’s agreement with such third party.

 This Section 8 shall survive the termination of this Agreement for any reason. In the event the Executive breaches this Section 8, the Company shall have right to seek remedies permissible under applicable law.

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9. CONFLICTING EMPLOYMENT.

 The Executive hereby agrees that, during the term of his employment with the Company, he or she will not engage in any other employment, occupation, consulting or other business activity related to the business in which the Company is now involved or becomes involved during the term of the Executive’s employment, nor will the Executive engage in any other activities that conflict with his obligations to the Company without the prior written consent of the Company.

10. NON-COMPETITION AND NON-SOLICITATION

 In consideration of the salary paid to the Executive by the Company and subject to applicable law, the Executive agrees that during the term of the Employment and for a period of one (1) year following the termination of the Employment for whatever reason:

(a) The Executive will not approach clients, customers or contacts of the Company or other persons or entities introduced to the Executive in the Executive’s capacity as a representative of the Company for the purposes of doing business with such persons or entities which will harm the business relationship between the Company and such persons and/or entities;

(b) The Executive will not assume employment with or provide services as a director or otherwise for any Competitor, or engage, whether as principal, partner, licensor or otherwise, in any Competitor; and

(c) The Executive will not seek, directly or indirectly, by the offer of alternative employment or other inducement whatsoever, to solicit the services of any employee of the Company employed as at or after the date of such termination, or in the year preceding such termination.

 The provisions contained in Section 10 are considered reasonable by the Executive and the Company. In the event that any such provisions should be found to be void under applicable laws but would be valid if some part thereof was deleted or the period or area of application reduced, such provisions shall apply with such modification as may be necessary to make them valid and effective.

 This Section 10 shall survive the termination of this Agreement for any reason. In the event the Executive breaches this Section 10, the Executive acknowledges that there will be no adequate remedy at law, and the Company shall be entitled to injunctive relief and/or a decree for specific performance, and such other relief as may be proper (including monetary damages if appropriate). In any event, the Company shall have right to seek all remedies permissible under applicable law.

11. WITHHOLDING TAXES

 Notwithstanding anything else herein to the contrary, the Company may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to this Agreement such national, provincial, local or any other income, employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation.

12. ASSIGNMENT

 This Agreement is personal in its nature and neither of the parties hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder; provided, however, that (i) the Company may assign or transfer this Agreement or any rights or obligations hereunder to any member of the Group without such consent, and (ii) in the event of a Change of Control Transaction, this Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of the Company hereunder.

13. SEVERABILITY

 If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.

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14. ENTIRE AGREEMENT

 This Agreement constitutes the entire agreement and understanding between the Executive and the Company regarding the terms of the Employment and supersedes all prior or contemporaneous oral or written agreements concerning such subject matter, including any prior agreements between the Executive and a member of the Group. The Executive acknowledges that he or she has not entered into this Agreement in reliance upon any representation, warranty or undertaking which is not set forth in this Agreement. Any amendment to this Agreement must be in writing and signed by the Executive and the Company.

15. GOVERNING LAW; JURISDICTION

 This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware and each of the parties irrevocably consents to the jurisdiction and venue of the federal and state courts located in Delaware.

16. AMENDMENT

 This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.

17. WAIVER

 Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

18. NOTICES

 All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and made if (i) delivered by hand, (ii) otherwise delivered against receipt therefor, or (iii) sent by a recognized courier with next-day or second-day delivery to the last known address of the other party.

19. COUNTERPARTS

 This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

 Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.

20. NO INTERPRETATION AGAINST DRAFTER

 Each party recognizes that this Agreement is a legally binding contract and acknowledges that it, he or she has had the opportunity to consult with legal counsel of choice. In any construction of the terms of this Agreement, the same shall not be construed against either party on the basis of that party being the drafter of such terms.

[Remainder of this page has been intentionally left blank.]

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IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.

China Commercial Credit, Inc.
By:	/s/ Long Yi
Name:	Long Yi
Title:	Chief Financial Officer

Executive
Signature:	/s/ Jiaxi Gao
Name:	Jiaxi Gao

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EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Chenguang Kang, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the year ended September 30, 2018 of China Commercial Credit, Inc.;
2	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 15, 2018	By:	/s/ Chenguang Kang
		Chenguang Kang Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Long Yi, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the year ended September 30, 2018 of China Commercial Credit, Inc.;
2	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 15, 2018	By:	/s/ Long Yi
		Long Yi Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF SARBANES-OXLEY ACT OF 2002

I, Chenguang Kang, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1. The Quarterly Report on Form 10-Q of China Commercial Credit, Inc. (the “Company”) for the year ended September 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (U.S.C. 78m or 78o(d)); and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 15, 2018	By:	/s/ Chenguang Kang
		Chenguang Kang
		Chief Executive Officer (Principal Executive Officer)

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document. 

EX-32.2

EXHIBIT 32.2

Certification Pursuant To

Section 906 of Sarbanes-Oxley Act of 2002

I, Long Yi, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1. The Quarterly Report on Form 10-Q of China Commercial Credit, Inc. (the “Company”) for the year ended September 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (U.S.C. 78m or 78o(d)); and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 15, 2018	By:	/s/ Long Yi
		Long Yi
		Chief Financial Officer (Principal Financial and Accounting Officer)

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 08, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	China Commercial Credit Inc
Entity Central Index Key	0001556266
Trading Symbol	GLG
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		24,595,612

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Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2018	Dec. 31, 2017
ASSETS
Cash	$ 838,634	$ 1,359,630
Other current assets	2,868,404
Assets of disposal group classified as held for sale		5,805,654
Total current assets	3,707,038	7,165,284
Operating lease assets, net	1,631,250
Property and equipment, net	5,096
Total Assets	5,343,384	7,165,284
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Short-term bank loans	1,397,726
Other current liabilities	236,263
Liabilities directly associated with the assets classified as held for sale		10,426,771
Total current liabilities	1,633,989	10,426,771
Other noncurrent liabilities		1,311,000
Total Liabilities	1,633,989	11,737,771
Shareholders' Equity (Deficit)
Common stock (par value $0.001 per share, 100,000,000 shares authorized; 24,595,612 and 19,250,915 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively)	24,596	19,251
Subscription fee advanced from a shareholder		699,974
Additional paid-in capital	28,431,422	71,424,031
Accumulated deficit	(24,621,894)	(81,534,396)
Accumulated other comprehensive (loss) income	(124,729)	4,818,653
Total Shareholders' Equity (Deficit)	3,709,395	(4,572,487)
Total Liabilities and Shareholders' Equity (Deficit)	5,343,384	7,165,284
Series A Preferred Stock
Shareholders' Equity (Deficit)
Preferred stock
Series B Preferred Stock
Shareholders' Equity (Deficit)
Preferred stock

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	24,595,612	19,250,915
Common stock, shares outstanding	24,595,612	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

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Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Lease income and other interest income
Income from operating lease	$ 140,856		$ 237,577
Interests on deposits with banks	2,216		2,531	35,000
Total lease income and other interest income	143,072		240,108	35,000
Net depreciation expense on operating lease assets	(35,336)		(47,794)
Net Revenue	107,736		192,314	35,000
Operating expenses
Salaries and employee surcharge	(151,645)	(155,411)	(377,244)	(583,615)
Rental expenses	(16,234)	(7,542)	(42,623)	(22,322)
Business taxes and surcharge	(711)		(855)
Changes in fair value of noncurrent liabilities		313,500	(166,540)	(1,681,500)
Other operating expenses	(573,172)	(1,672,235)	(1,180,313)	(2,742,401)
Total operating expenses	(741,762)	(1,521,688)	(1,767,575)	(5,029,838)
Loss from acquisition of a variable interest entity			(14,004)
Net loss from continuing operations before income taxes	(634,026)	(1,521,688)	(1,589,265)	(4,994,838)
Income tax expense	(991)		(1,011)
Net loss from continuing operations	(635,017)	(1,521,688)	(1,590,276)	(4,994,838)
Net income (loss) from discontinued operations		(613,604)	10,072,629	(3,286,906)
Net income (loss)	$ (635,017)	$ (2,135,292)	$ 8,482,353	$ (8,281,744)
Income (loss) per share- basic and diluted	$ (0.026)	$ (0.118)	$ 0.381	$ (0.477)
Net loss per share from continuing operations - basic and diluted	(0.026)	(0.084)	(0.071)	(0.288)
Net income (loss) per share from discontinued operations - basic and diluted		$ (0.034)	$ 0.452	$ (0.189)
Weighted Average Shares Outstanding-Basic and Diluted	24,595,612	18,092,369	22,290,464	17,371,183
Net income (loss)	$ (635,017)	$ (2,135,292)	$ 8,482,353	$ (8,281,744)
Other comprehensive (loss) income
Foreign currency translation adjustment	211,638	14,699	(30,667)	43,987
Comprehensive income (loss)	$ (423,379)	$ (2,120,593)	$ 8,451,686	$ (8,237,757)

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Condensed Consolidated Statements of Changes in Shareholders' Equity (Deficit) - 9 months ended Sep. 30, 2018 - USD ($)	Total	Common shares	Additional paid-in capital	Subscription advanced from a shareholder	Accumulated deficit	Accumulated other comprehensive income (loss)
Balance at Dec. 31, 2017	$ (4,572,487)	$ 19,251	$ 71,424,031	$ 699,974	$ (81,534,396)	$ 4,818,653
Balance, shares at Dec. 31, 2017		19,250,915
Issuance of common stocks and warrants to management		$ 200	699,774	(699,974)
Issuance of common stocks and warrants to management, shares		200,000
Issuance of common stocks in connection with class action settlement	1,477,541	$ 950	1,476,591
Issuance of common stocks in connection with class action settlement, shares		950,000
Issuance of common stocks in connection with private placements	3,265,370	$ 4,195	3,261,175
Issuance of common stocks in connection with private placements, shares		4,194,697
Net income for the year	8,482,353				8,482,353
Foreign currency translation adjustments	(30,667)					(30,667)
Disposition of CCC BVI (Note 6)	(4,912,715)		(48,430,149)		48,430,149	(4,912,715)
Balance at Sep. 30, 2018	$ 3,709,395	$ 24,596	$ 28,431,422		$ (24,621,894)	$ (124,724)
Balance, shares at Sep. 30, 2018		24,595,612

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash Flows from Operating Activities:
Net income (loss)	$ 8,482,353	$ (8,281,744)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation of operating lease assets	58,854
Depreciation of property and equipment	572
Loss on disposal of a used luxurious car	12,202
Gain on disposal of discontinued operations	(9,794,873)
Loss on acquisition of a variable interest entity	14,004
Shares issued for settlement against legal proceedings	943,860
Shares issued to executive officers and professional services		2,159,480
Changes in fair value of noncurrent liabilities	166,540	1,681,500
Changes in operating assets and liabilities:
Accounts receivable
Other assets	(1,047,300)
Other current liabilities	78,664
Other noncurrent liabilities	(1,311,000)
Net cash provided by operating activities from discontinued operations	992,334	3,192,135
Net Cash Used in Operating Activities	(1,403,790)	(1,248,629)
Cash Flows from Investing Activities:
Proceeds from disposal of a used luxurious car	122,481
Proceeds from disposal of discontinued operations	500,000
Acquisition of subsidiary, net of cash acquired	245
Purchase of operating lease assets	(1,882,476)
Purchase of property and equipment	(5,945)
Loan disbursed to a third party	(1,473,458)
Net cash (used in) provided by investing activities from discontinued operations	(1,270,070)	1,905,807
Net Cash (Used in) Provided by Investing Activities	(4,009,223)	1,905,807
Cash Flows From Financing Activities:
Borrowings from bank	1,473,458
Borrowings from a related party	153,485
Cash raised in private placement	3,265,371	1,560,000
Net Cash Provided by Financing Activities	4,892,314	1,560,000
Effect of Exchange Rate Changes on Cash and Cash Equivalents	(297)	44,789
Net Increase (Decrease) In Cash and Cash Equivalents	(520,996)	2,261,967
Cash and Cash Equivalents at Beginning of Period	1,359,630	768,501
Cash and Cash Equivalents at End of Period	$ 838,634	$ 3,030,468

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Organization and Principal Activities

9 Months Ended

Sep. 30, 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 formed HC High Summit Holding Limited (“HC High BVI”), a wholly owned subsidiary, in British Virgin Island (“BVI”). HC High BVI is authorized to issue a maximum of 50,000 shares of one class, at par value of $1.00 per share.

On April 16, 2018, HC High BVI formed a wholly owned subsidiary, HC High Summit Limited (“HC High HK”) in Hong Kong. On April 17, 2018, the Company, through HC High HK, established Hao Limo Technology (Beijing) Co. Ltd.  (“Hao Limo”).

VIE AGREEMENTS WITH BEIJING YOUJIAO

On June 19, 2018, Hao Limo entered into a series of agreements (the “Youjiao VIE Agreements”) with Beijing Youjiao and Aizhen Li. The Youjiao VIE Agreements were designed to provide Hao Limo with the power, rights and obligations equivalent in all material respects to those it would possess as the sole equity holder of Beijing Youjiao, including absolute control rights and the rights to the management, operations, assets, property and revenue of Beijing Youjiao. The purpose of Youjiao VIE Agreements is solely to give Hao Limo the exclusive control over Beijing Youjiao’s management and operations. Beijing Youjiao has the requisite license to carry out used luxurious car leasing business in China. On June 19, 2018, the net liabilities of Beijing Youjiao are comprised of followings:

		June 19,
	Note	2018
			(unaudited)
Cash		$	245
Accrued expenses			13,759
Net liabilities of Youjiao on acquisition date			14,004
Cash consideration for the acquisition			-
Loss on acquisition			14,004

Material terms of each of the Youjiao VIE Agreements are described below:

Exclusive Business Cooperation Agreement

Pursuant to the Exclusive Business Cooperation Agreement between Beijing Youjiao and Hao Limo, Hao Limo provides Beijing Youjiao with technical support, consulting services and management services on an exclusive basis, utilizing its advantages in technology, human resources, and information. Additionally, Beijing Youjiao granted an irrevocable and exclusive option to Hao Limo to purchase from Beijing Youjiao, any or all of Beijing Youjiao’s assets at the lowest purchase price permitted under the PRC laws. Should Hao Limo exercise such option, the parties shall enter into a separate asset transfer or similar agreement. For services rendered to Beijing Youjiao by Hao Limo under this agreement, Hao Limo is entitled to collect a service fee calculated based on the time of services rendered multiplied by the corresponding rate, plus amount of the services fees or ratio decided by the board of directors of Hao Limo based on the value of services rendered by Hao Limo and the actual income of Beijing Youjiao from time to time, which is substantially equal to all of the net income of Beijing Youjiao.

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

Share Pledge Agreement

Under the Share Pledge Agreement among Beijing Youjiao, Aizhen Li and Hao Limo, Aizhen Li pledged all of her equity interests in Beijing Youjiao to Hao Limo to guarantee the performance of Beijing Youjiao’s obligations under the Exclusive Business Cooperation Agreement. Under the terms of the agreement, in any event of default, as set forth in the Share Pledge Agreement, including that Beijing Youjiao or Aizhen Li breach their respective contractual obligations under the Exclusive Business Cooperation Agreement, Hao Limo, as pledgee, will be entitled to certain rights, including, but not limited to, the right to dispose of the pledged equity interest in accordance with applicable PRC laws. Hao Limo shall have the right to collect any and all dividends declared or generated in connection with the equity interest during the term of pledge.

The Share Pledge Agreement shall be effective until all payments due under the Exclusive Business Cooperation Agreement have been paid by Beijing Youjiao. Hao Limo shall cancel or terminate the Share Pledge Agreement upon Beijing Youjiao’s full payment of fees payable under the Exclusive Business Cooperation Agreement.

Exclusive Option Agreement

Under the Exclusive Option Agreement, Aizhen Li irrevocably granted Hao Limo (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 Beijing Youjiao. The option price is equal to the capital paid in by Aizhen Li subject to any appraisal or restrictions required by applicable PRC laws and regulations.

The agreement remains effective for a term of ten years and may be renewed at Hao Limo’s election.

Power of Attorney

Under the Power of Attorney, Aizhen Li authorized Hao Limo to act on her behalf as her exclusive agent and attorney with respect to all rights as shareholder, 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 of Beijing Youjiao, including but not limited to the sale or transfer or pledge or disposition of shares held by Aizhen Li in part or in whole; and (c) designating and appointing on behalf of Aizhen Li the legal representative, the executive director, supervisor, the chief executive officer and other senior management members of Beijing Youjiao.

Although it is not explicitly stipulated in the Power of Attorney, the term of the Power of Attorney shall be the same as the term of that of the Exclusive Option Agreement.

This Power of Attorney is coupled with an interest and shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as Aizhen Li is a shareholder of Beijing Youjiao.

Timely Reporting Agreement

To ensure Beijing Youjiao promptly provides all of the information that Hao Limo and the Company need to file various reports with the SEC, a Timely Reporting Agreement was entered between Beijing Youjiao and the Company.

Under the Timely Reporting Agreement, Beijing Youjiao agreed 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.

Although it is not explicitly stipulated in the Timely Reporting Agreement, the parties agreed its term shall be the same as that of the Exclusive Business Cooperation Agreement. The Youjiao VIE Agreements became effective immediately upon their execution.

On November 8, 2018, Hao Limo entered certain termination agreement with Beijing Youjiao and Aizhen Li to terminate the June Youjiao VIE Agreements (the “Termination Agreement”). The Termination Agreement became effective immediately upon its execution.

VIE AGREEMENTS WITH BEIJING TIANXING

On May 17, 2018, Hao Limo entered into a series of agreements (the “Tianxing VIE Agreements”) with Beijing Tianxing Kunlun Technology Co. Ltd. (“Beijing Tianxing”) and Shun Li and Jialin Cui, the shareholders of Beijing Tianxing. The Tianxing VIE Agreements are designed to provide Hao Limo with the power, rights and obligations equivalent in all material respects to those it would possess as the sole equity holder of Beijing Tianxing, including absolute control rights and the rights to the management, operations, assets, property and revenue of Beijing Tianxing. The purpose of the VIE Agreements is solely to give Hao Limo the exclusive control over Beijing Tianxing’s management and operations. Beijing Tianxing has the requisite license to carry out used luxurious car leasing business in China.

Material terms of each of the Tianxing VIE Agreements are similar to those of Youjiao VIE Agreements.

During the nine months ended September 30, 2018, Beijing Tianxing Kunlun Technology Co. Ltd. (“Beijing Tianxing”) has acquired eight subsidiaries, each with a license to hold a car in Beijing  or Zhejiang. On acquisition date, the asset, liability and net asset of the eight companies are comprised of followings:

Name of the company	Acquisition date	Total asset		Total liability		Net asset		Cash consideration
Beijing Tianrenshijia Apparel Co., Ltd.	2018/5/16		-		-		-		-
Beijing Tongxingyi  Feed Co., Ltd.	2018/5/22		-		-		-		-
Beijing Eignty Weili Technology Co., Ltd.	2018/5/23		-		-		-		-
Beijing Hongdu Creative Decoration Design Co., Ltd.	2018/7/23		-		-		-		-
Beijing Saikesheng Garments Co., Ltd.	2018/7/25		-		-		-		-
Beijing Yimingzhu Restaurant Management Co., Ltd.	2018/7/24		-		-		-		-
Beijing Ansitai Technology Co., Ltd.	2018/7/31		-		-		-		-
Zhuji Satellite Orbit Network Technology Co., Ltd.	2018/8/17		-		-		-		-

DESPOSITION OF CCC BVI

On June 19, 2018, the Company, HK Xu Ding Co, Limited, a private limited company duly organized under the laws of Hong Kong (the “Purchaser”) and CCCR International Investment Ltd., a business company incorporated in the British Virgin Islands with limited liability which was previously 100% owned by the Company (“CCC BVI”) entered into certain Share Purchase Agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, the Purchaser agreed to purchase CCC BVI in exchange of cash purchase price of $500,000.

CCC BVI is the sole shareholder of CCC International Investment Ltd. (“CCC HK”), a company incorporated under the laws of the Hong Kong S.A.R. of the PRC, which is the sole shareholder of WFOE. WFOE, via a series of contractual arrangements, controls Wujiang Luxiang. CCC HK is the sole shareholder of PFL.

Upon closing of the disposition on June 21, 2018, the Purchaser became the sole shareholder of CCC BVI and as a result, assume all assets and obligations of all the subsidiaries and VIE entities owned or controlled by CCC BVI, including but not limited to Wujiang Luxiang and PFL.

Below is the Company’s structure chart after the completion of the Termination Agreement, Youjiao VIE Agreements and Purchase Agreement.

 

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. 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 September 30, 2018 and for the nine and three months ended September 30, 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 September 30, 2018, its unaudited condensed results of operations for the nine and three months ended September 30, 2018 and 2017, and its unaudited condensed cash flows for the nine months ended Sep 30, 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.

The consolidated financial statements include the accounts of the Company and include the assets, liabilities, revenues and expenses of all wholly owned subsidiary’s VIEs over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. The Company has two VIEs – Beijing Youjiao and Beijing Tianxing, and Beijing Tianxing has eight subsidiaries (See Note 1 for subsidiary information), each of which is entitled to a license to hold a car in Beijing or Zhejiang.

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

(b) Recent accounting pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820). The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance if effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions to its consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), which provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of ASU 2018-02 is permitted, including adoption in any interim period for the public business entities for reporting periods for which financial statements have not yet been issued. The amendments in this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception” (“ASU 2017-11”), which addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. The amendments in Part I of this ASU are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact of the adoption of ASU 2017-11 on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Amendments to the ASC 842 Leases. This update requires the lessee to recognize the assets and liability (the lease liability) arising from operating leases on the balance sheet for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Within twelve months or less lease term, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. If a lessee makes this election, it should recognize lease expense on a straight-line basis over the lease term. In transition, this update will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is evaluating the effect, if any, on the Company’s consolidated financial statements.

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

(c) Recently adopted accounting standards

In August 2016, the FASB has issued Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. Management is evaluating the effect, if any, on the Company’s consolidated financial statements. The adoption of this guidance did not have a material impact on its consolidated financial statements.

On November 22, 2017, the FASB ASU No. 2017-14, “Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition Topic 605), and Revenue from Contracts with Customers (Topic 606): Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 116 and SEC Release 33-10403.” The ASU amends various paragraphs in ASC 220, Income Statement — Reporting Comprehensive Income; ASC 605, Revenue Recognition; and ASC 606, Revenue From Contracts With Customers, that contain SEC guidance. The amendments include superseding ASC 605-10-S25-1 (SAB Topic 13) as a result of SEC Staff Accounting Bulletin No. 116 and adding ASC 606-10-S25-1 as a result of SEC Release No. 33-10403. The adoption of this guidance did not have a material impact on its consolidated financial statements.

(d) Business Combination

The Company accounts for its business combination using the acquisition method of accounting in accordance with ASC 805 “Business Combinations”. The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities incurred by the Company to the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total costs of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill.

(e) Reclassifications

Certain items in the financial statements of comparative period have been reclassified to conform to the financial statements for the current period.

(f) 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 other current assets; (ii) useful lives of long-lived assets; (iii) the impairment of long-lived assets; (iv) the valuation allowance of deferred tax assets; and (v) contingencies and litigation.

(g) 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 PRC subsidiaries and VIEs 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.

	September 30,  2018		December 31, 2017
Balance sheet items, except for equity accounts		6.8683		6.5064

	For the nine months ended June 30,
	2018		2017
Items in the statements of operations and comprehensive loss, and statements of cash flows		6.5153		6.8065

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 income (loss).

Pursuant to ASC 830-30-40-1, upon sale or upon complete or substantially complete liquidation of an investment in a foreign entity, the amount attributable to that entity and accumulated in the translation adjustment component of equity shall be both:

a. Removed from the separate component of equity

b. Reported as part of the gain or loss on sale or liquidation of the investment for the period during which the sale or liquidation occurs.

(h) Fair value measurement

The Company has adopted ASC Topic 820, Fair Value Measurement and Disclosure, which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. It establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

The carrying value of financial items of the Company including cash and cash equivalents approximate their fair values due to their short-term nature and are classified within Level 1 of the fair value hierarchy.

As of December 31, 2017, the Company’s other noncurrent liabilities represented the share settlement in class actions were measured at fair value within Level 1 by reference to the quoted market price per share as the Company is a public entity. The balance was settled during the nine months ended September 30, 2018.

(i) Operating lease asset, net

Operating lease asset, net, represents the automobiles that are underlying our automotive lease contracts and is reported at cost, less accumulated depreciation and net of impairment charges and origination fees or costs. Depreciation of vehicles is recorded on a straight-line basis to an estimated residual value over the useful life of nine years. We periodically evaluate our depreciation rate for leased vehicles based on expected residual values and adjust depreciation expense over the remaining life of the lease if deemed necessary.

We have significant investments in the residual values of the assets in our operating lease portfolio. The residual values represent an estimate of the values of the assets at the end of the lease contracts. At contract inception, we determine pricing based on the projected residual value of the lease vehicle. This evaluation is primarily based on a proprietary model, which includes variables such as age, expected mileage, seasonality, segment factors, vehicle type, economic indicators, production cycle, automotive manufacturer incentives, and shifts in used vehicle supply. This internally-generated data is compared against third-party, independent data for reasonableness. Realization of the residual values is dependent on our future ability to market the vehicles under the prevailing market conditions. Over the life of the lease, we evaluate the adequacy of our estimate of the residual value and make adjustments to the depreciation rates to the extent the expected value of the vehicle at lease termination changes. In addition to estimating the residual value at lease termination, we also evaluate the current value of the operating lease asset and test for impairment to the extent necessary when there is an indication of impairment based on market considerations and portfolio characteristics. Impairment is determined to exist if fair value of the leased asset is less than carrying value and it is determined that the net carrying value is not recoverable. The net carrying value of a leased asset is not recoverable if it exceeds the sum of the undiscounted expected future cash flows expected to result from the lease payments and the estimated residual value upon eventual disposition. If our operating lease assets are considered to be impaired, the impairment is measured as the amount by which the carrying amount of the assets exceeds the fair value as estimated by discounted cash flows. No impairment was recognized in the three and nine months ended September 30, 2018. We accrue rental income on our operating leases when collection is reasonably assured.

When a lease vehicle is returned to us, either at the end of the lease term or through repossession, the asset is reclassified from operating lease assets to property and equipment, net and recorded at the lower-of-cost or estimated fair value, less costs to sell. Any losses recognized at this time are recorded as depreciation expense. Subsequent decline in value and any gain or loss recognized at the time of sale is recognized as a remarketing gain or loss and presented as a component of depreciation expense.

(j) Income from operating lease

Income from operating lease represents lease origination fees and rental fee, netting off lease origination costs. In accordance with ASC 840, Leases, the Company recognized the income from operating lease on a straight-line basis over the scheduled lease term. For the three and six months ended September 30, 2018, the Company generated income from operating lease of $140,856 and $237,577, respectively.

(k) 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.

(l) Income (loss) per share

Basic income (loss) per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is the same as basic income (loss) per share due to the lack of dilutive items in the Company for the three and nine months ended September 30, 2018 and 2017. The number of warrants is omitted excluded from the computation as the anti-dilutive effect.

(m) Comprehensive income (loss)

Comprehensive income (loss) includes net income (loss) and other comprehensive foreign currency adjustments income. Comprehensive income (loss) is reported in the statements of operations and comprehensive income (loss).

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

(n) 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.

(o) Share-based awards

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

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

(p) Warrants

The Company had warrants to four individuals in private placements, through which the Company issued both common shares and warrants as separable units, and neither instrument is registered when issued. Warrants requiring share settlement are classified as equity.

The capital raised from the private placement is allocated between the fair value of the common stocks and warrants. The Company determined the fair value of warrants by application of the Black-Scholes-Merton formula.

(q) Discontinued operation

In accordance with ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. When all of the criteria to be classified as held for sale are met, including management, having the authority to approve the action, commits to a plan to sell the entity, the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations in accordance with ASC 205-20-45.

As of September 30, 2018, the Company’s microcredit service segment met all the conditions required in order to be classified as a discontinued operation (Note 1). Accordingly, the operating results of microcredit service segment are reported as a gain from discontinued operations in the accompanying consolidated financial statements for all periods presented. In addition, the assets and liabilities related to our microcredit service segment are reported as assets and liabilities of discontinued operations in the accompanying consolidated balance sheets at December 31, 2017. For additional information, see Note 6, “Disposition of CCC BVI”.

(r) Segment reporting

Our business had been organized into two reportable operating segments: (i) our microcredit service segment, and (ii) our luxury car leasing segment. However, due to changes in our organizational structure associated with the microcredit service segment as a discontinued operation (Note 2(p)), management has determined that the Company now operates in one operating segment with one reporting segment. The accounting policies of our one reportable segment are the same as those described in this Note 2.

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Liquidity

9 Months Ended

Sep. 30, 2018

Liquidity [Abstract]

LIQUIDITY

3. LIQUIDITY

In assessing the Company’s liquidity and its ability to continue as a going concern, the Company monitors and analyzes its cash and cash equivalent and its ability to generate sufficient cash flow in the future to support its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements and operating expenses obligations.

Since the Company disposed its microcredit business and launched luxurious car leasing business in May 2018. As of September 30, 2018, the Company had cash balance of $838,634 and a positive working capital of $2,073,049. The management estimated the operating expenses obligation for the next twelve months after issuance of the financial statements to be $500,000. Therefore, the management believes that the Company will continue as a going concern in the following 12 months. In addition, the Company’s shareholders will continuously provide financial support to the Company when there is any business expansion plan.

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Variable Interest Entities and Other Consolidation Matters

9 Months Ended

Sep. 30, 2018

Variable Interest Entities and Other Consolidation Matters [Abstract]

VARIABLE INTEREST ENTITIES AND OTHER CONSOLIDATION MATTERS

4. VARIABLE INTEREST ENTITIES AND OTHER CONSOLIDATION MATTERS

On May 17, 2018 and June 19, 2018, Hao Limo entered into VIE Agreements with Beijing Youjiao and Beijing Tianxing. The key terms of these VIE Agreements are summarized in “Note 1 - Organization and Nature of Operation” above. As a result of the VIE Agreements, the Company classifies both Beijing Youjiao and Beijing Tianxing as VIEs. 

VIEs are entities that have either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary and must consolidate the VIE. Hao Limo is deemed to have a controlling financial interest and be the primary beneficiary of Beijing Youjiao and Beijing Tianxing, because it has both of the following characteristics:

1.	power to direct activities of a VIE that most significantly impact the entity’s economic performance, and
2.	obligation to absorb losses of the entity that could potentially be significant to the VIE or right to receive benefits from the entity that could potentially be significant to the VIE.

Pursuant to the VIE Agreements, Beijing Youjiao and Beijing Tianxing each pays service fees equal to all of its net income to Hao Limo. At the same time, Hao Limo is entitled to receive all of their expected residual returns. The VIE Agreements are designed so that Beijing Youjiao and Beijing Tianxing each operates for the benefit of the Company. Accordingly, the accounts of Beijing Youjiao and Beijing Tianxing are both consolidated in the accompanying financial statements pursuant to ASC 810-10, Consolidation. In addition, their financial positions and results of operations are included in the Company’s consolidated financial statements.

In addition, as all of these VIE agreements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC, they would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal environment in the PRC is not as developed as in other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could further limit the Company’s ability to enforce these VIE agreements. Furthermore, these contracts may not be enforceable in China if PRC government authorities or courts take a view that such contracts contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event the Company is unable to enforce these VIE agreements, it may not be able to exert effective control over Beijing Youjiao and Beijing Tianxing and its ability to conduct its business may be materially and adversely affected.

All of the Company’s main current operations are conducted through Beijing Youjiao during May and June 2018 and through Beijing Tianxing and its subsidiaries from June. Current regulations in China permit Beijing Youjiao and Beijing Tianxing to pay dividends to the Company only out of its accumulated distributable profits, if any, determined in accordance with their articles of association and PRC accounting standards and regulations. The ability of Beijing Youjiao and Beijing Tianxing to make dividends and other payments to the Company may be restricted by factors including changes in applicable foreign exchange and other laws and regulations.

The following financial statement amounts and balances of the VIEs were included in the unaudited condensed consolidated financial statements as of September 30, 2018 and December 31, 2017 and for the three and nine months ended September 30, 2018 and 2017:

	September 30, 2018		December 31, 2017
	(unaudited)
Cash		5,849		-
Other assets		3,094,559		-
Operating lease assets, net		1,631,250		-
Property and equipment, net		5,096		-
Total assets	$	4,736,754	$	-
Short-term bank loans		1,397,726		-
Other current liabilities		3,134,494		-
Total liabilities	$	4,532,220	$	-

	For the three months ended September 30,				For the nine months ended September 30,
	2018		2017		2018		2017
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenue	$	140,849	$	-	$	237,885	$	-
Net income	$	338,758	$	-	$	346,765	$	-

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Risks

9 Months Ended

Sep. 30, 2018

Risks [Abstract]

RISKS

5. RISKS

(a) Credit risk

Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents. The maximum exposure of such assets to credit risk is their carrying amount as at the balance sheet dates. As September 30, 2018, approximately $671,174 was deposited with a bank in the United States which was insured by the government up to $250,000. At September 30, 2018 and December 31, 2017, approximately $167,460 and $nil, respectively, were primarily deposited in financial institutions located in Mainland China, which were uninsured by the government authority. To limit exposure to credit risk relating to deposits, the Company primarily place cash deposits with large financial institutions in China which management believes are of high credit quality.

The Company’s operations are carried out in Mainland China. 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. In addition, the Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, rates and methods of taxation, and the extraction of mining resources, among other factors.

(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

Substantially all of the Company’s operating activities and the Company’s major assets and liabilities are denominated in RMB, except for the cash deposit of approximately $671,174 which was in U.S. dollars at September 30, 2018, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the Peoples’ Bank of China (“PBOC”) or other authorized financial institutions at exchange rates quoted by PBOC. Approval of foreign currency payments by the PBOC or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices and signed contracts. The value of RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. Where there is a significant change in value of RMB, the gains and losses resulting from translation of financial statements of a foreign subsidiary will be significant affected.

(d) VIE risk

It is possible that the VIE Agreements among Beijing Youjiao, Hao Limo, and the Beijing Youjiao Shareholder would not be enforceable in China if PRC government authorities or courts were to find that such contracts contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event that the Company were unable to enforce these contractual arrangements, the Company would not be able to exert effective control over the VIE. Consequently, the VIE’s results of operations, assets and liabilities would not be included in the Company’s consolidated financial statements. If such were the case, the Company’s cash flows, financial position, and operating performance would be materially adversely affected. The Company’s contractual arrangements with Beijing Youjiao, Hao Limo, and the Beijing Youjiao Shareholder are approved and in place. Management believes that such contracts are enforceable, and considers the possibility remote that PRC regulatory authorities with jurisdiction over the Company’s operations and contractual relationships would find the contracts to be unenforceable.

This is the same case for the VIE Agreements among Beijing Tianxing, Hao Limo and the Beijing Tianxing Shareholders.

The Company’s operations and businesses rely on the operations and businesses of its two VIEs, which holds certain recognized revenue-producing assets including the luxury used cars. The VIE also has an assembled workforce, focused primarily on promotion and marketing, whose costs are expensed as incurred. The Company’s operations and businesses may be adversely impacted if the Company loses the ability to use and enjoy assets held by its VIEs.

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Desposition of CCC BVI

9 Months Ended

Sep. 30, 2018

Desposition of CCC BVI [Abstract]

DESPOSITION OF CCC BVI

6. DESPOSITION OF CCC BVI

On June 19, 2018, the Company, HK Xu Ding Co., Limited, a private limited company duly organized under the laws of Hong Kong (the “Purchaser”) and CCCR International Investment Ltd., a business company incorporated in the British Virgin Islands with limited liability (“CCC BVI”) entered into certain Share Purchase Agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, the Purchaser agreed to purchase CCC BVI in exchange of cash purchase price of $500,000. The consideration was paid as of June 30, 2018.

CCC BVI is the sole shareholder of CCC International Investment Ltd. (“CCC HK”), a company incorporated under the laws of the Hong Kong S.A.R. of the PRC, which is the sole shareholder of WFOE. WFOE, via a series of contractual arrangements, controls Wujiang Luxiang. CCC HK is the sole shareholder of PFL. Upon the Disposition, the Purchaser will become the sole shareholder of CCC BVI and as a result, assume all assets and obligations of all the subsidiaries and VIE entities owned or controlled by CCC BVI. Upon the closing of the transaction, the Company does not bear any contractual commitment or obligation to the microcredit business or the employees of CCC BVI and its subsidiaries and VIEs, nor to the Purchaser.

On June 17, 2018, management was authorized to approve and commit to a plan to sell CCC BVI, therefore the major assets and liabilities relevant to the disposal are reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes, are reported as components of net income (loss) separate from the net loss of continuing operations in accordance with ASC 205-20-45. The assets relevant to the sale of CCC BVI with a carrying value of $6.2 million were classified as assets held for sale as of June 19, 2018. The liabilities relevant to the sale of CCC BVI with a carrying value of $10.5 million were classified as liabilities held for sale as of June 19, 2018. A net gain of $9.8 million was recognized as the net gain from disposal of discontinued operation in 2018.

In accordance with ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. When all of the criteria to be classified as held for sale are met, including management, having the authority to approve the action, commits to a plan to sell the entity, the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations in accordance with ASC 205-20-45.

Reconciliation of the carrying amounts of assets and liabilities of discontinued operations in the unaudited condensed consolidated balance sheet.

	September 30, 2018		December 31, 2017
	(unaudited)
Carrying amounts of major classes of assets held for sale:
Cash	$	-	$	1,138,564
Loan receivable, net		-		4,064,921
Interest receivable		-		35,440
Other assets		-		566,729
Total assets of disposal group classified as held for sale	$	-	$	5,805,654
Carrying amounts of major classes of liabilities of discontinued operations:
Deposit payable	$	-	$	261,281
Accrual for financial guarantee services		-		9,270,882
Other current liabilities		-		166,440
Due to related parties		-		398,073
Income tax payable		-		330,095
Liabilities directly associated with the assets classified as held for sale	$	-		10,426,771

Reconciliation of the Amounts of Major Classes of Income from Operations to be Disposed Classified as Discontinued Operations in the Consolidated Statements of Operations and Comprehensive Income (Loss).

	For the nine months ended September 30,
	2018			2017
	(unaudited)			(unaudited)
Operations discontinued
Total interest and fees income	$	106,985		$	273,137
Reversal of provision (Provision) for loan losses		417,600			(2,486,811	)
(Provision) Reversal of provision for financial guarantee services		(104,229	)		(830,140	)
Non-interest expenses		(142,600	)		(243,092	)
Net gain from discontinued operations		9,794,873			-
Net income (loss) from discontinued operations	$	10,072,629		$	(3,286,906	)

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Other Current Assets

9 Months Ended

Sep. 30, 2018

Other Current Assets [Abstract]

OTHER CURRENT ASSETS

7. OTHER CURRENT ASSETS

	September 30,  2018		December 31,  2017
	(unaudited)
Loan receivable due from a third party		1,397,726		-
Advance to employees for purchase of operating lease assets	$	1,111,626	$	-
Petty cash		212,401
Deferred rental expenses		60,313		-
Due from a shareholder		29,119
Others		52,719		-
	$	2,868,404	$	-

As of September 30, 2018, the balance of advance to employees for purchase of operating lease assets represents the amount advanced to the Company’s management and staff for purchase of used luxurious cars.

During the nine months ended September 30, 2018, the Company disbursed a loan of $1,473,458 to a third party. The loan to the third party is interest free and is due within twelve months since its disbursement.

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Operating Lease Assets, Net

9 Months Ended

Sep. 30, 2018

Operating Lease Assets, Net [Abstract]

OPERATING LEASE ASSETS, NET

8. OPERATING LEASE ASSETS, NET

The Company started its used luxurious car leasing business in China since May 2018.

During the nine months ended September 30, 2018, the Company purchased six used luxurious cars and disposed of one car. As of the September 30, 2018, the Company had investments in five used luxurious cars. The balance of the used luxurious cars is comprised of the following:

	Useful life	September 30, 2018			December 31, 2017
			(unaudited)
Used luxurious cars	9	$	1,683,803		$	-
Less: accumulated depreciation			(52,553	)		-
Operating lease asset, net		$	1,631,250		$	-

During the three and nine months ended September 30, 2018, the Company incurred depreciation expenses on these cars of $58,854. No impairment was recognized in the six months ended June 30, 2018.

In August 2018, the Company sold a used car with net book value $134,683 in exchange for a consideration of $122,481. As a result, the Company incurred a loss of $12,202 from the disposal.

In May and July, 2018, the Company pledged one and one luxurious cars for a one-year period and a three-month period for loan, respectively. In October 15, 2018, the pledge of the latter car was released.

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Other Noncurrent Liabilities

9 Months Ended

Sep. 30, 2018

Other Noncurrent Liabilities [Abstract]

OTHER NONCURRENT LIABILITIES

9. OTHER NONCURRENT LIABILITIES

	September 30,  2018		December 31, 2017
	(unaudited)
Accrued provision for share settlement against legal proceedings	$	-	$	1,311,000
	$	-	$	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 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”). 

The $245,000 cash portion was settled in December 2017.

On December 22, 2017, the Court entered a distribution order approving the distribution of the Settlement Shares 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. On January 19, 2018 and April 10, 2018, the Company issued 712,500 and 237,500 class settlement shares, at the market share price of $1.68 and $1.18 per share, respectively.

The Company recorded expenses of $166,540 and $nil for the nine and three months ended September 30, 2018 under the account of “Changes in fair value of noncurrent liabilities”. As the Company is a public entity with quoted market price, the fair value of other noncurrent liabilities were classified as level 1. The expenses were accrued by reference to the quoted market share price per share on each reporting date. The movement of the other noncurrent liabilities during the nine months ended September 30, 2018 was as follows:

For the nine months ended September 30, 2018

	Number of shares settled			Share price		Other noncurrent liabilities
As of December 31, 2017		950,000		$	1.38	$	1,311,000
Class action settlement expenses – changes in fair value of stock portion		-		$	-		166,540
Share settlement of 712,500 shares		(712,500	)	$	1.68		(1,197,000	)
Share settlement of 237,500 shares		(237,500	)	$	1.18		(280,540	)
As of September 30, 2018		-				$	-

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Other Operating Expense

9 Months Ended

Sep. 30, 2018

Other Operating Expense [Abstract]

OTHER OPERATING EXPENSE

10. OTHER OPERATING EXPENSE

	For the three months ended September 30,				For the nine months ended September 30,
	2018		2017		2018		2017
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Depreciation and amortization	$	26,826	$	-	$	26,924	$	-
Travel expenses		42,344		14,569		103,827		28,113
Entertainment expenses		1,795		-		2,377		-
Promotion expenses		4,981		-		20,924		-
Legal and consulting expenses		338,750		1,530,283		701,184		2,398,283
Car expenses		6,616		-		25,382		-
Bank charges		916		460		1,861		1,150
Audit-related expense		40,000		78,458		78,990		175,944
Maintenance expenses		31,244		-		31,244		-
Other tax expenses		-		-		44,369		-
Other expenses		79,700		48,465		143,231		138,911
Total	$	573,172	$	1,672,235	$	1,180,313	$	2,742,401

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Capital Transaction

9 Months Ended

Sep. 30, 2018

Capital Transaction [Abstract]

CAPITAL TRANSACTION

11. 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. On May 15, 2018, the Company issued 150,000 shares of common stocks and warrants to purchase 60,000 shares of common stocks at $4.20 to Mr. Jie Yang.

On January 19, 2018 and April 10, 2018, the Company issued 712,500 and 237,500 shares common stocks as the share settlement of 950,000 shares, respectively, as disclosed in Note 9.

During the three months ended June 30, 2018, the Company raised an aggregation of $3,265,370 from several private placements by issuing 4,194,697 shares of common stock, par value $0.001 per share, at the per share purchase price of $0.77 or $0.78. The shares of common stocks were issued to certain “non-U.S. Persons” as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to the securities purchase agreement (“SPA”) dated April 28, 2018, May 29, 2018 and June 19, 2018, respectively. The details of the issuance of shares of common stock in the private placements are as follows:

	Number of shares issued		Per share purchase price		Capital raised
April 11, 2018		649,350	$	0.77	$	500,000
May 10, 2018		1,336,314	$	0.78		1,042,324
May 29, 2018		658,000	$	0.78		513,240
May 29, 2018		982,996	$	0.78		766,737
June 19, 2018		568,037	$	0.78		443,069
		4,194,697			$	3,265,370

As of September 30, 2018, there were 24,595,612 shares of common stock issued and outstanding.

Warrants

As of December 31, 2017, the Company had outstanding warrants to purchase 193,370 shares with aggregation of fair value of $186,268.

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 $24,662, estimated by using the Black-Scholes valuation model.

On May 15, 2018, the Company issued warrants to purchase 60,000 shares to Mr. Jie Yang, 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 $69,900, estimated by using the Black-Scholes valuation model.

As of September 30, 2018, the Company had outstanding warrants to purchase 273,370 shares with fair value of $280,830.

The balance of warrants as of September 30, 2018 and December 31, 2017 is comprised of the followings:

	September 30, 2018				December 31, 2017
	Number of warrants		Fair value of warrants		Number of warrants		Fair value of warrants
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Yang Jie	$	218,370	$	222,453	$	158,370	$	152,553
Long Yi		55,000		58,377		35,000		33,715
Total	$	273,370	$	280,830	$	193,370	$	186,268

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(Loss) Income Per Common Share

9 Months Ended

Sep. 30, 2018

(Loss) Income Per Common Share [Abstract]

(LOSS) INCOME PER COMMON SHARE

12. (LOSS) INCOME PER COMMON SHARE

The following table sets forth the computation of basic and diluted earnings per common share for the three and nine months ended September 30, 2018 and 2017, respectively:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net (loss) income	$	(635,017	)	$	(2,135,292	)	$	8,482,353		$	(8,281,744	)
Weighted Average Shares Outstanding-Basic and Diluted	$	24,595,612		$	18,092,369		$	22,290,464		$	17,371,183
(Loss) Income per share- basic and diluted	$	(0.026	)	$	(0.118	)	$	0.381		$	(0.477	)
Net loss per share from continuing operations – basic and diluted	$	(0.026	)	$	(0.084	)	$	(0.071	)	$	(0.288	)
Net (loss) income per share from discontinued operations – basic and diluted	$	-		$	(0.034	)	$	0.452		$	(0.189	)

Basic income (loss) per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is the same as basic income (loss) per share due to the lack of dilutive items in the Company for the three and nine months ended September 30, 2018 and 2017. The number of warrants is excluded from the computation as the anti-dilutive effect.

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Income Taxes

9 Months Ended

Sep. 30, 2018

Income Taxes [Abstract]

INCOME TAXES

13. 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 a uniform tax rate of 25%. 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 and nine months ended September 30, 2018 and 2017, the Company had no unrecognized tax benefits. 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 September 30, 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 Company does not have any current and deferred tax expenses for the three and nine months ended September 30, 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 September 30, 2018 and December 31, 2017 and the Company does not believe that its unrecognized tax benefits will change over the next twelve months.

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Related Party Transactions and Balances

9 Months Ended

Sep. 30, 2018

Related Party Transactions and Balances [Abstract]

RELATED PARTY TRANSACTIONS AND BALANCES

14. RELATED PARTY TRANSACTIONS AND BALANCES

1) Due from related parties

As of September 30, 2018 and December 31, 2017, the balance of due from related parties was as follows:

	September 30, 2018		December 31, 2017
		(unaudited)
One shareholder of the Company	$	29,119	$	-
	$	29,119	$	-

2) Related party transactions

During the nine months ended September 30, 2018, the Company disbursed a loan of $29,119 to a shareholder. The loan is interest free and is due on demand.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

15. COMMITMENTS AND CONTINGENCIES

1) Lease Commitments

We leased certain office space in New York, NY where we paid a monthly rent of US$3,600 during 2018. In addition, during the nine months ended September 30, 2018, we entered into one rental free office lease agreement with a third party and one office lease agreement with monthly rental fee of $5,506 with a third party which expires in September 2020. The following table sets forth the Company’s contractual obligations as of September 30, 2018 in future periods:  

	Rental payments
Year ending June 30, 2019	$	67,808
Year ending June 30, 2020		-
Total	$	67,808

2) Contingencies  

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” and appointing the Yun Group as lead plaintiff (“Class Plaintiff”) and the Yun Group’s counsel as lead counsel. On November 18, 2014, the Yun Group and the Company, which at that point was the only defendant served, entered into a stipulation to transfer of the case to the Southern District of New York. On December 18, 2014, Mr. Levy, who had by then been served, joined in the stipulation.

On December 29, 2014, the N.J. district court entered an order transferring the action. The transfer was effected on January 22, 2015, and assigned docket number 1:15-cv-00557-ALC (S.D.N.Y.) (the “Securities Class Action”). 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 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.

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 Form 10-Q, 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 Kiran Kodali filed a putative shareholder derivative complaint in the United States District Court for the Southern District of New York, captioned Kiran Kodali v. Huichun Qin, et al., Case No. 15-cv-806 (the “Action”). 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. On April 17, 2015, Plaintiff amended the complaint in the Action. Plaintiff’s Amended Verified Shareholder Derivative Complaint (“Amended Complaint”) has alleged that the individual defendants breached their fiduciary duties as officers and directors of the Company by causing the Company to issue false or misleading statements concerning its: (i) lending and underwriting practices; (ii) loan quality of direct and guarantee loans; (iii) allowance and provision for loan losses; (iv) accrual and provision for financial guarantee loans; (v) liquidity credit risk; (vi) compliance with Generally Accounting Principles (“GAAP”); and (vii) internal controls. Additionally, Plaintiff has alleged in the Amended Complaint that the Individual Defendants breached their fiduciary duties by allegedly allowing Defendant Huichun Qin to pilfer approximately $1.1 million from the Company.

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 August 23, 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. 

On or about August 22, 2018, our litigation counsel noticed their appearance in the Action. The parties filed a Joint Status Report on August 22, 2018, advising the Court that the parties continued to have discussions regarding a potential resolution of the matter. The parties have come to a potential agreement regarding a monetary settlement. However, the parties continue to discuss the non-monetary aspects of a potential resolution, and have filed a Joint Status Report on November 1, 2018, requesting a brief amount of time to complete its settlement discussions and resolve the matter.

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. On May 17, 2018, Sorghum requested another extension and Arbitrator Mentz granted the extension. In accordance with Arbitrator Mentz’s Order, the parties’ proposals was due May 31, 2018. On May 30, 2018, due to a delay in receiving additional evidence from a relevant third party, the Company requested an extension of time to file its proposal for resolution, which Arbitrator Mentz granted extending the deadline to June 7, 2018. To provide additional time to allow certain relevant documents to be translated due to the unavailability of the parties’ mutually accepted translator, the Company requested a final extension of time to June 14, 2018, to submit the parties’ proposal for resolution. Arbitrator Mentz granted the Company’s request. On June 14, 2018, the Company submitted its proposal for resolution to the AAA. On July 30, 2018, Arbitrator Mentz entered a reasoned award, accepting the Company’s proposal for resolution, awarding the Company damages of $1,436,521.50 against Sorghum and denying Sorghum’s Counterclaim against the Company in its entirety with prejudice.

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Correction of Error

9 Months Ended

Sep. 30, 2018

Correction of Error [Abstract]

CORRECTION OF ERROR

16. 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 and nine months ended September 30, 2017 filed with SEC on November 14, 2017, were discovered by management. The errors related to the accounting of the settlement shares agreed upon per the Stipulation (See Note 9). These settlement shares have not been issued until January 19, 2018 and April 10, 2018, respectively. These settlement shares should be recorded in accordance with ASC 450-20, Loss Contingencies, and as a result the share settlement should be also accounted for as a liability measured at market value of share price rather than accounting for contracts to be settled with the Company’s own equity. After the errors have been quantified, the previously-issued financial statements have been evaluated to determine whether they are materially misstated in accordance with guidance provided in SAB Topic 99 and the Company has concluded the previously-issued 2016 consolidated financial statements are not materially misstated and the errors will be corrected prospectively.  As a result, the Company made the corrections to the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2017 and condensed consolidated statements of cash flows for the three and nine months ended September 30, 2017 contained in this Form 10-Q.

The effects of the restatement on the Company’s condensed consolidated statements of operations and comprehensive loss and earnings per share for the three and nine months ended September 30, 2017 are as follows:

	For The Nine Months Ended September 30, 2017
	As Previously Reported			Adjustments			As Restated
Changes in fair value of other noncurrent liabilities		(1,838,500	)		175,000			(1,681,500	)
Total operating expenses from continuing operations		(5,204,075	)		175,000			(5,029,838	)
Loss Before Income Taxes		(4,994,838	)		175,000			(4,819,838	)
Net Loss		(8,281,744	)		175,000			(8,106,744	)
Loss per Share- Basic and Diluted		(0.477	)		(0.000	)		(0.477	)
Comprehensive loss	$	(8,412,757	)	$	175,000		$	(8,237,757	)

The effects of the restatement on the Company’s condensed consolidated statements of cash flows for the nine months ended September 30, 2017 are as follows:

	For The Nine Months Ended September 30, 2017
	As Previously Reported			Adjustments		As Restated
Net loss	$	(8,281,744	)	$	175,000	$	(8,106,744	)
Changes in fair value of other noncurrent liabilities	$	1,838,500		$	175,000	$	1,681,500

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Receipt of Nasdaq Deficiency Notice

9 Months Ended

Sep. 30, 2018

Receipt of Nasdaq Deficiency Notice [Abstract]

RECEIPT OF NASDAQ DEFICIENCY NOTICE

17. 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).

On August 22, 2018, the Company received a letter from Nasdaq notifying the Company that based on the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2018 filed on August 17, 2018, in which it reported stockholders’ equity of $4,132,773, Nasdaq has determined that the Company satisfies the $2.5 million stockholders’ equity requirement under Listing Rule 5550(b)(1) and this matter is now closed.

On September 5, 2018, the Company received a notification letter from the Nasdaq Listing Qualifications Staff of The NASDAQ Stock Market LL notifying the Company that the minimum bid price per share for its common shares has been below $1.00 for a period of 30 consecutive business days and the Company therefore no longer meets the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2).

The notification received has no immediate effect on the listing of the Company’s common stock on Nasdaq. Under the Nasdaq Listing Rules, the Company has until March 4, 2019 to regain compliance. If at any time during such 180-day period the closing bid price of the Company’s common shares is at least $1 for a minimum of 10 consecutive business days, Nasdaq will provide the Company written confirmation of compliance.

If the Company does not regain compliance during such 180-day period, the Company may be eligible for an additional 180 calendar days, provided that the Company meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq except for Nasdaq Listing Rule 5550(a)(2), and provide a written notice of its intention to cure this deficiency during the second compliance period, by effecting a reverse stock split, if necessary.

The Company has been evaluating options available to regain compliance and to timely submit evidence of 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.

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Subsequent Event

9 Months Ended

Sep. 30, 2018

Subsequent Event [Abstract]

SUBSEQUENT EVENT

18. SUBSEQUENT EVENT

1) On October 16, 2018, the Company completed private placement of convertible promissory notes to certain “non-U.S. Persons” as defined in Regulation S of the Securities Act in the original principal amount of $312,170, convertible into shares of common stock of the Company at a per share conversion price of $0.6. If the notes are fully converted, the Company will issue an aggregate of 520,283 shares of common stock. In addition, the Company is obliged to pay interest on the outstanding balance of principal amount at the rate of 8% per annum until the note is paid in full. The net proceeds of the private placement was used by the Company as working capital.

2) TX Kunlun obtained necessary license to conduct the used luxurious car leasing business and other related business on June 2018. Since then TX Kunlun has been our major operating entity. Management decided to terminate Beijing Youjiao via agreement to improve efficiency and save administrative costs.

On November 8, 2018, Hao Limo entered certain termination agreement with Beijing Youjiao and Aizhen Li to terminate the June Youjiao VIE Agreements (the “Termination Agreement”). The Termination Agreement became effective immediately upon its execution.

3) On November 8, 2018, Mr. Chenguang Kang resigned from his positions as Chief Executive Officer (“CEO”), President and a director of the Company effective November 15, 2018. Mr. Kang’s resignation is not as a result of any disagreement with the Company relating to its operations, policies or practices.

The Company’s board of directors (the “Board”), upon recommendation by the Nomination Committee of the Board, appointed Mr. Jiaxi Gao as CEO and President of the Company and elected him as a director of the Board of to fill the vacancy to be created by the resignation of Mr. Gao effective November 15, 2018.

The Company entered into an executive employment agreement (the “Employment Agreement”) with Mr. Gao on November 8, 2018, pursuant to which he shall receive 800,000 restricted shares as inducement for his employment. The Compensation Committee of the Company approved such compensation. Such restricted shares shall vest in four quarterly installments starting from January 2019.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 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 September 30, 2018 and for the nine and three months ended September 30, 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 September 30, 2018, its unaudited condensed results of operations for the nine and three months ended September 30, 2018 and 2017, and its unaudited condensed cash flows for the nine months ended Sep 30, 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.

The consolidated financial statements include the accounts of the Company and include the assets, liabilities, revenues and expenses of all wholly owned subsidiary’s VIEs over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. The Company has two VIEs – Beijing Youjiao and Beijing Tianxing, and Beijing Tianxing has eight subsidiaries (See Note 1 for subsidiary information), each of which is entitled to a license to hold a car in Beijing or Zhejiang.

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

Recent accounting pronouncements

(b) Recent accounting pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820). The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance if effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions to its consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), which provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of ASU 2018-02 is permitted, including adoption in any interim period for the public business entities for reporting periods for which financial statements have not yet been issued. The amendments in this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception” (“ASU 2017-11”), which addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. The amendments in Part I of this ASU are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact of the adoption of ASU 2017-11 on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Amendments to the ASC 842 Leases. This update requires the lessee to recognize the assets and liability (the lease liability) arising from operating leases on the balance sheet for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Within twelve months or less lease term, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. If a lessee makes this election, it should recognize lease expense on a straight-line basis over the lease term. In transition, this update will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is evaluating the effect, if any, on the Company’s consolidated financial statements.

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

Recently adopted accounting standards

(c) Recently adopted accounting standards

In August 2016, the FASB has issued Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. Management is evaluating the effect, if any, on the Company’s consolidated financial statements. The adoption of this guidance did not have a material impact on its consolidated financial statements.

On November 22, 2017, the FASB ASU No. 2017-14, “Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition Topic 605), and Revenue from Contracts with Customers (Topic 606): Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 116 and SEC Release 33-10403.” The ASU amends various paragraphs in ASC 220, Income Statement — Reporting Comprehensive Income; ASC 605, Revenue Recognition; and ASC 606, Revenue From Contracts With Customers, that contain SEC guidance. The amendments include superseding ASC 605-10-S25-1 (SAB Topic 13) as a result of SEC Staff Accounting Bulletin No. 116 and adding ASC 606-10-S25-1 as a result of SEC Release No. 33-10403. The adoption of this guidance did not have a material impact on its consolidated financial statements.

Business Combination

(d) Business Combination

The Company accounts for its business combination using the acquisition method of accounting in accordance with ASC 805 “Business Combinations”. The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities incurred by the Company to the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total costs of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill.

Reclassifications

(e) 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

(f) 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 other current assets; (ii) useful lives of long-lived assets; (iii) the impairment of long-lived assets; (iv) the valuation allowance of deferred tax assets; and (v) contingencies and litigation.

Foreign currency translation

(g) 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 PRC subsidiaries and VIEs 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.

	September 30,  2018		December 31, 2017
Balance sheet items, except for equity accounts		6.8683		6.5064

	For the nine months ended June 30,
	2018		2017
Items in the statements of operations and comprehensive loss, and statements of cash flows		6.5153		6.8065

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 income (loss).

Pursuant to ASC 830-30-40-1, upon sale or upon complete or substantially complete liquidation of an investment in a foreign entity, the amount attributable to that entity and accumulated in the translation adjustment component of equity shall be both:

a. Removed from the separate component of equity

b. Reported as part of the gain or loss on sale or liquidation of the investment for the period during which the sale or liquidation occurs.

Fair value measurement

(h) Fair value measurement

The Company has adopted ASC Topic 820, Fair Value Measurement and Disclosure, which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. It establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

The carrying value of financial items of the Company including cash and cash equivalents approximate their fair values due to their short-term nature and are classified within Level 1 of the fair value hierarchy.

As of December 31, 2017, the Company’s other noncurrent liabilities represented the share settlement in class actions were measured at fair value within Level 1 by reference to the quoted market price per share as the Company is a public entity. The balance was settled during the nine months ended September 30, 2018.

Operating lease asset, net

(i) Operating lease asset, net

Operating lease asset, net, represents the automobiles that are underlying our automotive lease contracts and is reported at cost, less accumulated depreciation and net of impairment charges and origination fees or costs. Depreciation of vehicles is recorded on a straight-line basis to an estimated residual value over the useful life of nine years. We periodically evaluate our depreciation rate for leased vehicles based on expected residual values and adjust depreciation expense over the remaining life of the lease if deemed necessary.

We have significant investments in the residual values of the assets in our operating lease portfolio. The residual values represent an estimate of the values of the assets at the end of the lease contracts. At contract inception, we determine pricing based on the projected residual value of the lease vehicle. This evaluation is primarily based on a proprietary model, which includes variables such as age, expected mileage, seasonality, segment factors, vehicle type, economic indicators, production cycle, automotive manufacturer incentives, and shifts in used vehicle supply. This internally-generated data is compared against third-party, independent data for reasonableness. Realization of the residual values is dependent on our future ability to market the vehicles under the prevailing market conditions. Over the life of the lease, we evaluate the adequacy of our estimate of the residual value and make adjustments to the depreciation rates to the extent the expected value of the vehicle at lease termination changes. In addition to estimating the residual value at lease termination, we also evaluate the current value of the operating lease asset and test for impairment to the extent necessary when there is an indication of impairment based on market considerations and portfolio characteristics. Impairment is determined to exist if fair value of the leased asset is less than carrying value and it is determined that the net carrying value is not recoverable. The net carrying value of a leased asset is not recoverable if it exceeds the sum of the undiscounted expected future cash flows expected to result from the lease payments and the estimated residual value upon eventual disposition. If our operating lease assets are considered to be impaired, the impairment is measured as the amount by which the carrying amount of the assets exceeds the fair value as estimated by discounted cash flows. No impairment was recognized in the three and nine months ended September 30, 2018. We accrue rental income on our operating leases when collection is reasonably assured.

When a lease vehicle is returned to us, either at the end of the lease term or through repossession, the asset is reclassified from operating lease assets to property and equipment, net and recorded at the lower-of-cost or estimated fair value, less costs to sell. Any losses recognized at this time are recorded as depreciation expense. Subsequent decline in value and any gain or loss recognized at the time of sale is recognized as a remarketing gain or loss and presented as a component of depreciation expense.

Income from operating lease

(j) Income from operating lease

Income from operating lease represents lease origination fees and rental fee, netting off lease origination costs. In accordance with ASC 840, Leases, the Company recognized the income from operating lease on a straight-line basis over the scheduled lease term. For the three and six months ended September 30, 2018, the Company generated income from operating lease of $140,856 and $237,577, respectively.

Income taxes

(k) 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.

Income (loss) per share

(l) Income (loss) per share

Basic income (loss) per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is the same as basic income (loss) per share due to the lack of dilutive items in the Company for the three and nine months ended September 30, 2018 and 2017. The number of warrants is omitted excluded from the computation as the anti-dilutive effect.

Comprehensive income (loss)

(m) Comprehensive income (loss)

Comprehensive income (loss) includes net income (loss) and other comprehensive foreign currency adjustments income. Comprehensive income (loss) is reported in the statements of operations and comprehensive income (loss).

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

Commitments and contingencies

(n) 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.

Share-based awards

(o) Share-based awards

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

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

Warrants

(p) Warrants

The Company had warrants to four individuals in private placements, through which the Company issued both common shares and warrants as separable units, and neither instrument is registered when issued. Warrants requiring share settlement are classified as equity.

The capital raised from the private placement is allocated between the fair value of the common stocks and warrants. The Company determined the fair value of warrants by application of the Black-Scholes-Merton formula.

Discontinued operation

(q) Discontinued operation

In accordance with ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. When all of the criteria to be classified as held for sale are met, including management, having the authority to approve the action, commits to a plan to sell the entity, the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations in accordance with ASC 205-20-45.

As of September 30, 2018, the Company’s microcredit service segment met all the conditions required in order to be classified as a discontinued operation (Note 1). Accordingly, the operating results of microcredit service segment are reported as a gain from discontinued operations in the accompanying consolidated financial statements for all periods presented. In addition, the assets and liabilities related to our microcredit service segment are reported as assets and liabilities of discontinued operations in the accompanying consolidated balance sheets at December 31, 2017. For additional information, see Note 6, “Disposition of CCC BVI”.

Segment reporting

(r) Segment reporting

Our business had been organized into two reportable operating segments: (i) our microcredit service segment, and (ii) our luxury car leasing segment. However, due to changes in our organizational structure associated with the microcredit service segment as a discontinued operation (Note 2(p)), management has determined that the Company now operates in one operating segment with one reporting segment. The accounting policies of our one reportable segment are the same as those described in this Note 2.

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Organization and Principal Activities (Tables)

9 Months Ended

Sep. 30, 2018

Organization and Principal Activities [Abstract]

Schedule of net liabilities of Beijing Youjiao

		June 19,
	Note	2018
			(unaudited)
Cash		$	245
Accrued expenses			13,759
Net liabilities of Youjiao on acquisition date			14,004
Cash consideration for the acquisition			-
Loss on acquisition			14,004

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies [Abstract]

Schedule of foreign currency translation, balance sheet components

	September 30,  2018		December 31, 2017
Balance sheet items, except for equity accounts		6.8683		6.5064

Schedule of foreign currency translation, operations and comprehensive loss, and statements of cash flows components

	For the nine months ended June 30,
	2018		2017
Items in the statements of operations and comprehensive loss, and statements of cash flows		6.5153		6.8065

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Variable Interest Entities and Other Consolidation Matters (Tables)

9 Months Ended

Sep. 30, 2018

Variable Interest Entities and Other Consolidation Matters [Abstract]

Schedule of VIE

	September 30, 2018		December 31, 2017
	(unaudited)
Cash		5,849		-
Other assets		3,094,559		-
Operating lease assets, net		1,631,250		-
Property and equipment, net		5,096		-
Total assets	$	4,736,754	$	-
Short-term bank loans		1,397,726		-
Other current liabilities		3,134,494		-
Total liabilities	$	4,532,220	$	-

	For the three months ended September 30,				For the nine months ended September 30,
	2018		2017		2018		2017
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenue	$	140,849	$	-	$	237,885	$	-
Net income	$	338,758	$	-	$	346,765	$	-

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Desposition of CCC BVI (Tables)

9 Months Ended

Sep. 30, 2018

Desposition of CCC BVI [Abstract]

Schedule of reconciliation of the carrying amounts of assets and liabilities of discontinued operations in the unaudited condensed consolidated balance sheet

	September 30, 2018		December 31, 2017
	(unaudited)
Carrying amounts of major classes of assets held for sale:
Cash	$	-	$	1,138,564
Loan receivable, net		-		4,064,921
Interest receivable		-		35,440
Other assets		-		566,729
Total assets of disposal group classified as held for sale	$	-	$	5,805,654
Carrying amounts of major classes of liabilities of discontinued operations:
Deposit payable	$	-	$	261,281
Accrual for financial guarantee services		-		9,270,882
Other current liabilities		-		166,440
Due to related parties		-		398,073
Income tax payable		-		330,095
Liabilities directly associated with the assets classified as held for sale	$	-		10,426,771

Schedule of reconciliation of the amounts of major classes of income from discontinued operations in the consolidated statements of operations and comprehensive income (loss)

	For the nine months ended September 30,
	2018			2017
	(unaudited)			(unaudited)
Operations discontinued
Total interest and fees income	$	106,985		$	273,137
Reversal of provision (Provision) for loan losses		417,600			(2,486,811	)
(Provision) Reversal of provision for financial guarantee services		(104,229	)		(830,140	)
Non-interest expenses		(142,600	)		(243,092	)
Net gain from discontinued operations		9,794,873			-
Net income (loss) from discontinued operations	$	10,072,629		$	(3,286,906	)

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Other Current Assets (Tables)

9 Months Ended

Sep. 30, 2018

Other Current Assets [Abstract]

Schedule of other current assets

	September 30,  2018		December 31,  2017
	(unaudited)
Loan receivable due from a third party		1,397,726		-
Advance to employees for purchase of operating lease assets	$	1,111,626	$	-
Petty cash		212,401
Deferred rental expenses		60,313		-
Due from a shareholder		29,119
Others		52,719		-
	$	2,868,404	$	-

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Operating Lease Assets, Net (Tables)

9 Months Ended

Sep. 30, 2018

Operating Lease Assets, Net [Abstract]

Schedule of operating lease assets, net

	Useful life	September 30, 2018			December 31, 2017
			(unaudited)
Used luxurious cars	9	$	1,683,803		$	-
Less: accumulated depreciation			(52,553	)		-
Operating lease asset, net		$	1,631,250		$	-

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Other Noncurrent Liabilities (Tables)

9 Months Ended

Sep. 30, 2018

Other Noncurrent Liabilities [Abstract]

Schedule of other noncurrent liabilities

	September 30,  2018		December 31, 2017
	(unaudited)
Accrued provision for share settlement against legal proceedings	$	-	$	1,311,000
	$	-	$	1,311,000

	Number of shares settled			Share price		Other noncurrent liabilities
As of December 31, 2017		950,000		$	1.38	$	1,311,000
Class action settlement expenses – changes in fair value of stock portion		-		$	-		166,540
Share settlement of 712,500 shares		(712,500	)	$	1.68		(1,197,000	)
Share settlement of 237,500 shares		(237,500	)	$	1.18		(280,540	)
As of September 30, 2018		-				$	-

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Other Operating Expense (Tables)

9 Months Ended

Sep. 30, 2018

Other Operating Expense [Abstract]

Schedule of other operating expense

	For the three months ended September 30,				For the nine months ended September 30,
	2018		2017		2018		2017
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Depreciation and amortization	$	26,826	$	-	$	26,924	$	-
Travel expenses		42,344		14,569		103,827		28,113
Entertainment expenses		1,795		-		2,377		-
Promotion expenses		4,981		-		20,924		-
Legal and consulting expenses		338,750		1,530,283		701,184		2,398,283
Car expenses		6,616		-		25,382		-
Bank charges		916		460		1,861		1,150
Audit-related expense		40,000		78,458		78,990		175,944
Maintenance expenses		31,244		-		31,244		-
Other tax expenses		-		-		44,369		-
Other expenses		79,700		48,465		143,231		138,911
Total	$	573,172	$	1,672,235	$	1,180,313	$	2,742,401

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Capital Transaction (Tables)

9 Months Ended

Sep. 30, 2018

Capital Transaction [Abstract]

Schedule of issuance of shares of common stock in the private placements

	Number of shares issued		Per share purchase price		Capital raised
April 11, 2018		649,350	$	0.77	$	500,000
May 10, 2018		1,336,314	$	0.78		1,042,324
May 29, 2018		658,000	$	0.78		513,240
May 29, 2018		982,996	$	0.78		766,737
June 19, 2018		568,037	$	0.78		443,069
		4,194,697			$	3,265,370

Schedule of warrants

	September 30, 2018				December 31, 2017
	Number of warrants		Fair value of warrants		Number of warrants		Fair value of warrants
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Yang Jie	$	218,370	$	222,453	$	158,370	$	152,553
Long Yi		55,000		58,377		35,000		33,715
Total	$	273,370	$	280,830	$	193,370	$	186,268

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(Loss) Income Per Common Share (Tables)

9 Months Ended

Sep. 30, 2018

(Loss) Income Per Common Share [Abstract]

Schedule of computation of basic and diluted earnings per common share

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net (loss) income	$	(635,017	)	$	(2,135,292	)	$	8,482,353		$	(8,281,744	)
Weighted Average Shares Outstanding-Basic and Diluted	$	24,595,612		$	18,092,369		$	22,290,464		$	17,371,183
(Loss) Income per share- basic and diluted	$	(0.026	)	$	(0.118	)	$	0.381		$	(0.477	)
Net loss per share from continuing operations – basic and diluted	$	(0.026	)	$	(0.084	)	$	(0.071	)	$	(0.288	)
Net (loss) income per share from discontinued operations – basic and diluted	$	-		$	(0.034	)	$	0.452		$	(0.189	)

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Related Party Transactions and Balances (Tables)

9 Months Ended

Sep. 30, 2018

Related Party Transactions and Balances [Abstract]

Schedule of due from related party

	September 30, 2018		December 31, 2017
		(unaudited)
One shareholder of the Company	$	29,119	$	-
	$	29,119	$	-

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies [Abstract]

Schedule of contractual obligations

	Rental payments
Year ending June 30, 2019	$	67,808
Year ending June 30, 2020		-
Total	$	67,808

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Correction of Error (Tables)

9 Months Ended

Sep. 30, 2018

Correction of Error [Abstract]

Schedule of effects of restatement on condensed consolidated statements of operations and comprehensive loss and earnings per share

	For The Nine Months Ended September 30, 2017
	As Previously Reported			Adjustments			As Restated
Changes in fair value of other noncurrent liabilities		(1,838,500	)		175,000			(1,681,500	)
Total operating expenses from continuing operations		(5,204,075	)		175,000			(5,029,838	)
Loss Before Income Taxes		(4,994,838	)		175,000			(4,819,838	)
Net Loss		(8,281,744	)		175,000			(8,106,744	)
Loss per Share- Basic and Diluted		(0.477	)		(0.000	)		(0.477	)
Comprehensive loss	$	(8,412,757	)	$	175,000		$	(8,237,757	)

Schedule of effects of restatement on condensed consolidated statements of cash flows

	For The Nine Months Ended September 30, 2017
	As Previously Reported			Adjustments		As Restated
Net loss	$	(8,281,744	)	$	175,000	$	(8,106,744	)
Changes in fair value of other noncurrent liabilities	$	1,838,500		$	175,000	$	1,681,500

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Organization and Principal Activities (Details) - Beijing Youjiao [Member]	Jun. 19, 2018 USD ($)
Variable Interest Entity [Line Items]
Cash	$ 245
Accrued expenses	13,759
Net liabilities of Youjiao on acquisition date	14,004
Cash consideration for the acquisition
Loss on acquisition	$ 14,004

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Organization and Principal Activities (Details Textual) - USD ($)	1 Months Ended	9 Months Ended
	Jun. 19, 2018	Sep. 30, 2018	Sep. 05, 2018	Mar. 22, 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 Hao Limo with 30-day prior written notice.
Common stock, shares authorized		100,000,000			100,000,000
Common stock, par value		$ 0.001	$ 1.00		$ 0.001
HC High BVI [Member]
Organization and Principal Activities (Textual)
Common stock, shares authorized				50,000
Common stock, par value				$ 1.00
CCC BVI [Member]
Organization and Principal Activities (Textual)
Exchange of cash purchase price	$ 500,000
Percentage of ownership by company	100.00%

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Summary of Significant Accounting Policies (Details)	Sep. 30, 2018	Dec. 31, 2017
Summary of Significant Accounting Policies [Abstract]
Balance sheet items, except for equity accounts	6.8683	6.5064

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Summary of Significant Accounting Policies (Details 1)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Summary of Significant Accounting Policies [Abstract]
Items in the statements of operations and comprehensive loss, and statements of cash flows	6.5153	6.8065

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Summary of Significant Accounting Policies (Details Textual)	3 Months Ended		9 Months Ended
	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($) Segments	Sep. 30, 2017 USD ($)
Summary of Significant Accounting Policies (Textual)
Vehicles estimated useful life			9 years
Business organized, description			Our business had been organized into two reportable operating segments: (i) our microcredit service segment, and (ii) our luxury car leasing segment.
Number of operating segments			1
Number of reportable segments			2
Income from operating lease | $	$ 140,856		$ 237,577

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Liquidity (Details)	9 Months Ended
	Sep. 30, 2018 USD ($)
Liquidity (Textual)
Cash balance	$ 838,634
Positive working capital	2,073,049
Obligation of operating expenses	$ 500,000

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Variable Interest Entities and Other Consolidation Matters (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Variable Interest Entities and Other Consolidation Matters [Abstract]
Cash	$ 5,849		$ 5,849
Other assets	3,094,559		3,094,559
Operating lease assets, net	1,631,250		1,631,250
Property and equipment, net	5,096		5,096
Total assets	4,736,754		4,736,754
Short-term bank loans	1,397,726		1,397,726
Other current liabilities	3,134,494		3,134,494
Total liabilities	4,532,220		4,532,220
Revenue	140,849		237,885
Net income	$ 338,758		$ 346,765

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Risks (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Risks (Textual)
Deposited with a bank	$ 671,174
Cash insured amount	250,000
Deposited in financial institutions	167,460
Cash deposit	$ 671,174

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Desposition of CCC BVI (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Carrying amounts of major classes of assets held for sale:
Cash		$ 1,138,564
Loan receivable, net		4,064,921
Interest receivable		35,440
Other assets		566,729
Total assets of disposal group classified as held for sale		5,805,654
Carrying amounts of major classes of liabilities of discontinued operations:
Deposit payable		261,281
Accrual for financial guarantee services		9,270,882
Other current liabilities		166,440
Due to related parties		398,073
Income tax payable		330,095
Liabilities directly associated with the assets classified as held for sale		$ 10,426,771

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Desposition of CCC BVI (Details 1) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Operations discontinued
Total interest and fees income	$ 106,985	$ 273,137
Reversal of provision (Provision) for loan losses	417,600	(2,486,811)
(Provision) Reversal of provision for financial guarantee services	(104,229)	(830,140)
Non-interest expenses	(142,600)	(243,092)
Net gain from discontinued operations	9,794,873
Net income (loss) from discontinued operations	$ 10,072,629	$ (3,286,906)

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Desposition of CCC BVI (Details Textual) - CCC BVI [Member]	1 Months Ended
	Jun. 19, 2018 USD ($)
Desposition of CCC BVI (Textual)
Exchange of cash purchase price	$ 500,000
Liabilities held for sale	10,500,000
Assets held for sale	6,200,000
Net gain from disposal of discontinued operation	$ 9,800,000

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Other Current Assets (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Other Current Assets [Abstract]
Loan receivable due from a third party	$ 1,397,726
Advance to employees for purchase of operating lease assets	1,111,626
Petty cash	212,401
Deferred rental expenses	60,313
Due from a shareholder	29,119
Others	52,719
Other current assets	$ 2,868,404

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Other Current Assets (Details Textual)	9 Months Ended
	Sep. 30, 2018 USD ($)
Other Current Assets (Textual)
Loan disbursed to a third party	$ 1,473,458

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Operating Lease Assets, Net (Details) - USD ($)	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Operating Lease Assets, Net [Abstract]
Used luxurious cars	$ 1,683,803
Less: accumulated depreciation	(52,553)
Operating lease asset, net	$ 1,631,250
Used luxurious cars, Useful life	9 years

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Operating Lease Assets, Net (Details Textual) - USD ($)	1 Months Ended	3 Months Ended	9 Months Ended
	Aug. 31, 2018	Sep. 30, 2018	Sep. 30, 2018	Sep. 30, 2017
Operating Lease Assets, Net (Textual)
Depreciation expense on operating lease assets		$ 35,336	$ 47,794
Pledged, description			In May and July, 2018, the Company pledged one and one luxurious cars for a one-year period and a three-month period, respectively. In October 15, 2018, the pledge of the latter car was released.
Proceeds from disposal of a used luxurious car	$ 134,683		$ 122,481
Proceeds from sale of asset	122,481
Loss on disposal of asset	$ 12,202

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Other Noncurrent Liabilities (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Other Noncurrent Liabilities [Abstract]
Accrued provision for share settlement against legal proceedings		$ 1,311,000
Other noncurrent liabilities		$ 1,311,000

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Other Noncurrent Liabilities (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Number of shares settled
Beginning Balance			950,000
Class action settlement expenses - changes in fair value of stock portion
Share settlement of 712,500 shares			(712,500)
Share settlement of 237,500 shares			(237,500)
Ending Balance
Share price
Beginning Balance			$ 1.38
Class action settlement expenses - changes in fair value of stock portion
Share settlement of 712,500 shares			1.68
Share settlement of 237,500 shares			1.18
Ending Balance
Other noncurrent liabilities
Beginning Balance			$ 1,311,000
Class action settlement expenses - changes in fair value of stock portion		$ 313,500	(166,540)	$ (1,681,500)
Share settlement of 712,500 shares			(1,197,000)
Share settlement of 237,500 shares			(280,540)
Ending Balance

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Other Noncurrent Liabilities (Details Textual) - USD ($)		1 Months Ended				3 Months Ended		9 Months Ended		12 Months Ended
	Apr. 10, 2018	Jan. 19, 2018	Jul. 28, 2017	May 30, 2017	Nov. 22, 2016	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Jun. 28, 2018
Other Noncurrent Liabilities (Textual)
Stipulation settlement payment, description				(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.
Settlement market value per share	$ 1.18	$ 1.68
Litigation settlement expenses			$ 55,000
Litigation settlement expenses, shares	237,500	712,500	237,500
Cash portion of settlement paid amount			$ 190,000							$ 245,000
Class settlement shares											712,500
Changes in fair value of noncurrent liabilities							$ (313,500)	$ (166,540)	$ (1,681,500)
Stipulation and Agreement [Member]
Other Noncurrent Liabilities (Textual)
Settlement of accrued liability, shares					950,000
Stipulation settlement payment, description					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.
Cash portion of settlement paid amount					$ 245,000

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Other Operating Expense (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Other Operating Expense [Abstract]
Depreciation and amortization	$ 26,826		$ 26,924
Travel expenses	42,344	14,569	103,827	28,113
Entertainment expenses	1,795		2,377
Promotion expenses	4,981		20,924
Legal and consulting expenses	338,750	1,530,283	701,184	2,398,283
Car expenses	6,616		25,382
Bank charges	916	460	1,861	1,150
Audit-related expense	40,000	78,458	78,990	175,944
Maintenance Expenses	31,244		31,244
Other tax expenses			44,369
Other expenses	79,700	48,465	143,231	138,911
Total	$ 573,172	$ 1,672,235	$ 1,180,313	$ 2,742,401

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Capital Transaction (Details) - USD ($)	3 Months Ended	9 Months Ended
	Jun. 30, 2018	Sep. 30, 2018	Sep. 30, 2017
Subsidiary, Sale of Stock [Line Items]
Number of shares issued	4,194,697
Per share purchase price		$ 0.77
Cash raised in private placement		$ 3,265,371	$ 1,560,000
April 11, 2018 [Member]
Subsidiary, Sale of Stock [Line Items]
Number of shares issued		649,350
Per share purchase price		$ 0.77
May 10, 2018 [Member]
Subsidiary, Sale of Stock [Line Items]
Number of shares issued		1,336,314
Per share purchase price		$ 0.78
May 29, 2018 [Member]
Subsidiary, Sale of Stock [Line Items]
Number of shares issued		658,000
Per share purchase price		$ 0.78
May 29, 2018 [Member]
Subsidiary, Sale of Stock [Line Items]
Number of shares issued		982,996
Per share purchase price		$ 0.78
June 19, 2018 [Member]
Subsidiary, Sale of Stock [Line Items]
Number of shares issued		568,037
Per share purchase price		$ 0.78

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Capital Transaction (Details 1) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Class of Warrant or Right [Line Items]
Number of warrants	273,370	193,370
Fair value of warrants	$ 280,830	$ 186,268
Yang Jie [Member]
Class of Warrant or Right [Line Items]
Number of warrants	218,370	158,370
Fair value of warrants	$ 222,453	$ 152,553
Long Yi [Member]
Class of Warrant or Right [Line Items]
Number of warrants	55,000	35,000
Fair value of warrants	$ 58,377	$ 33,715

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Capital Transaction (Details Textual) - USD ($)					1 Months Ended	3 Months Ended	9 Months Ended		12 Months Ended
	May 15, 2018	Apr. 10, 2018	Feb. 20, 2018	Dec. 01, 2017	Jan. 19, 2018	Jun. 30, 2018	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Sep. 05, 2018
Capital Transaction (Textual)
Common stock, shares authorized							100,000,000		100,000,000
Common stock, par value							$ 0.001		$ 0.001	$ 1.00
Common stock, shares issued							24,595,612		19,250,915
Common stock, shares outstanding							24,595,612		19,250,915
Sale of common stock, shares						4,194,697
Per share purchase price							$ 0.77
Fair value of warrants							$ 280,830		$ 186,268
Raised aggregation several private placements							$ 3,265,371	$ 1,560,000
Warrant [Member]
Capital Transaction (Textual)
Common stock, shares issued			50,000
Warrants to purchase issued shares	60,000		20,000
Warrant exercise price	$ 4.2		$ 4.2
Fair value of warrants	$ 69,900		$ 24,662						$ 186,268
Warrants to purchase outstanding							273,370		193,370
Description of issuance date	Expire five years from the date of issuance.		Expire five years from the date of issuance.
Common Stock [Member]
Capital Transaction (Textual)
Settlement shares		950,000			950,000
Issuance of common stock		237,500			712,500
Private Placement [Member]
Capital Transaction (Textual)
Common stock, par value						$ 0.001
Mr. Yang Jie [Member]
Capital Transaction (Textual)
Sale of common stock, shares	150,000
Warrants to purchase issued shares	60,000
Warrant exercise price	$ 4.20
Mr. Long Yi [Member]
Capital Transaction (Textual)
Sale of common stock, shares				50,000
Sale of common stock				$ 150,000
Securities Purchased Agreement [Member] | Mr. Yang Jie [Member]
Capital Transaction (Textual)
Sale of common stock				$ 525,000
Per share purchase price				$ 3.5
Securities Purchased Agreement [Member] | Mr. Long Yi [Member]
Capital Transaction (Textual)
Sale of common stock				$ 175,000
Per share purchase price				$ 3.5

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(Loss) Income Per Common Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
(Loss) Income Per Common Share [Abstract]
Net income (loss)	$ (635,017)	$ (2,135,292)	$ 8,482,353	$ (8,281,744)
Weighted Average Shares Outstanding-Basic and Diluted	24,595,612	18,092,369	22,290,464	17,371,183
(Loss) Income per share- basic and diluted	$ (0.026)	$ (0.118)	$ 0.381	$ (0.477)
Net loss per share from continuing operations - basic and diluted	(0.026)	(0.084)	(0.071)	(0.288)
Net (loss) income per share from discontinued operations - basic and diluted		$ (0.034)	$ 0.452	$ (0.189)

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Income Taxes (Details)		9 Months Ended
	Jan. 01, 2008	Sep. 30, 2018
Income Taxes (Textual)
Uniform tax rate	25.00%
Preferential tax rate	25.00%
Income tax examination, description	The New Taxation Law of PRC stipulates that domestic enterprises and foreign invested enterprises (the "FIEs") are subject to a uniform tax rate of 25%. 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.
Increase to liability for unrecognized tax benefit, description		Next 12 months.
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.

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Related Party Transactions and Balances (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Related Party Transaction [Line Items]
Due from a shareholder	$ 29,119
One shareholder [Member]
Related Party Transaction [Line Items]
Due from a shareholder	$ 29,119

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Related Party Transactions and Balances (Details Textual)	Sep. 30, 2018 USD ($)
Related Party Transactions and Balances (Textual)
Due from Officers or Stockholders, Current	$ 29,119

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Commitments and Contingencies (Details)	Sep. 30, 2018 USD ($)
Commitments and Contingencies [Abstract]
Year ending June 30, 2019	$ 67,808
Year ending June 30, 2020
Total	$ 67,808

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Commitments and Contingencies (Details Textual) - USD ($)		1 Months Ended		9 Months Ended
	Aug. 06, 2014	Nov. 22, 2016	Mar. 16, 2016	Sep. 30, 2018	Apr. 17, 2015
Commitments and Contingencies (Textual)
Monthly rent				$ 3,600
Lease commitments, description		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.		On June 14, 2018, the Company submitted its proposal for resolution to the AAA. On July 30, 2018, Arbitrator Mentz entered a reasoned award, accepting the Company's proposal for resolution, awarding the Company damages of $1,436,521.50 against Sorghum and denying Sorghum's Counterclaim against the Company in its entirety with prejudice.
Loan paid behalf of loan guarantee customers	$ 5,400,000
Escrow fund deposit			$ 200,000
Escrow deposit, shares			637,592
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 Form 10-Q, the Company is working with its counsel and the escrow agent to complete such cancelation.
Settlement payment in cash					$ 1,100,000
One rental free office lease [Member]
Commitments and Contingencies (Textual)
Monthly rent				$ 5,506
Operating lease expiry term, description				Expires in September 2020.

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Correction of Error (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Changes in fair value of other noncurrent liabilities		$ (313,500)	$ (166,540)	$ (1,681,500)
Total operating expenses from continuing operations	(741,762)	(1,521,688)	(1,767,575)	(5,029,838)
Loss Before Income Taxes	(634,026)	(1,521,688)	(1,589,265)	(4,994,838)
Net Loss	$ (635,017)	$ (2,135,292)	$ 8,482,353	$ (8,281,744)
Loss per Share- Basic and Diluted	$ (0.026)	$ (0.118)	$ 0.381	$ (0.477)
Comprehensive loss	$ (423,379)	$ (2,120,593)	$ 8,451,686	$ (8,237,757)
As Previously Reported [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Changes in fair value of other noncurrent liabilities				(1,838,500)
Total operating expenses from continuing operations				(5,204,075)
Loss Before Income Taxes				(4,994,838)
Net Loss				$ (8,281,744)
Loss per Share- Basic and Diluted				$ (0.477)
Comprehensive loss				$ (8,412,757)
Adjustments [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Changes in fair value of other noncurrent liabilities				175,000
Total operating expenses from continuing operations				175,000
Loss Before Income Taxes				175,000
Net Loss				$ 175,000
Loss per Share- Basic and Diluted				$ (0.000)
Comprehensive loss				$ 175,000

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Correction of Error (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net loss	$ (635,017)	$ (2,135,292)	$ 8,482,353	$ (8,281,744)
Changes in fair value of other noncurrent liabilities				1,681,500
As Previously Reported [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net loss				(8,281,744)
Changes in fair value of other noncurrent liabilities				1,838,500
Adjustments [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net loss				175,000
Changes in fair value of other noncurrent liabilities				$ 175,000

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Receipt of Nasdaq Deficiency Notice (Details) - USD ($)	1 Months Ended
	Aug. 22, 2018	Sep. 05, 2018	Feb. 28, 2018
Receipt of Nasdaq Deficiency Notice (Textual)
Securities to maintain minimum MVLS			$ 35,000,000
Price per share		$ 1.00
Stockholders' equity requirement	$ 2,500,000
Stockholders' equity value	$ 4,132,773

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Subsequent Event (Details) - Subsequent Event [Member]	Oct. 16, 2018 USD ($) $ / shares shares
Subsequent Event [Line Items]
Convertible promissory note original principal amount | $	$ 312,170
Conversion price per share | $ / shares	$ 0.6
Outstanding balance at rate of interest per annum	8.00%
Common stock shares issued	520,283
Restricted shares	800,000