LOAN RECEIVABLES

9 Months Ended

Sep. 30, 2016

4. LOAN RECEIVABLES

In order to meet the Company’s working capital needs in US Dollars, the Company entered into the following transactions:

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On July 15, 2016, Shanghai Takung entered into an interest-free loan toan individual, Xiaohui Wang (“Ms. Wang”), a national of the People’s Republic of China, of RMB10.08 million (equivalent to US$1.5 million) with a maturity of December 31, 2016. On August 24, 2016, an additional loan to Ms. Wang of RMB13.35 million (equivalent to US$2 million) was made with the same maturity date and on the same terms. Both loans are guaranteed by Chongqing Wintus (New Star) Enterprises Group (“Chongqing”) and Ms. Wang is a shareholder and the legal representative of Chongqing. Both Chongqing and Ms, Wang are the non-related parties to the Company.

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Also, on July 15, 2016, Hong Kong Takung entered into a loan agreement with Merit Crown Limited,a Hong Kong company (“Merit Crown) , to borrow US$1.5 million with interest accruing at a rate of 8% per annum pro-rated through the maturity date of December 31, 2016. On August 24, 2016, Hong Kong Takung borrowed another US$2 million from Merit Crown on similar terms. Merit Crown is a non-related party to the Company.

The US$1.5 million and US$2 million are collectively the US Dollar Loan (the “US Dollar Loans”). The RMB10.08 million and RMB13.35 million are collectively the RMB Loan (the “RMB Loans”).

Through an understanding between Ms. Wang and Merit Crown, the US Dollar Loans are “secured” by the RMB Loans. Further details on the RMB Loans are disclosed in Note 10. It is the understanding between the parties that when the US Dollar Loans are repaid, the RMB Loans will similarly be repaid.

As of September 30, 2016 and December 31, 2015, the Company has $3,513,534 and nil of loan receivable from Xiaohui Wang.