China Lending Corporation (NASDAQ:CLDC)

BEIJING, URUMQI, China and HANGZHOU, China, Sept. 6, 2019 /PRNewswire/ -- China Lending Corporation ("China Lending" or the "Company") (NASDAQ: CLDC) today was notified by The Nasdaq Stock Market ("Nasdaq") that the Nasdaq Hearings Panel denied the Company's recent appeal and determined to delist the Company's common shares from Nasdaq. The decision to delist the Company's common shares was reached as a result of the Company's inability to regain compliance with the continued listing requirement of a minimum of $2.5 million in stockholders' equity, as set forth in Nasdaq Listing Rule 5550(b)(1). Accordingly, it is expected that the trading of the Company's common shares on Nasdaq will cease at the opening of business on September 6, 2019. Subsequently, Nasdaq will file a Form 25-NSE with the Securities and Exchange Commission to effect the removal of the Company's securities from listing and registration on the Nasdaq Capital Market.

The Company anticipates that its securities will be quoted on the OTC Pink Open Market (the "Pink Sheets"), a centralized electronic quotation service for over-the-counter ‎securities, following the Nasdaq delisting; the trading symbol for the Company's securities will remain unchanged. Such quotation will continue so long as market makers demonstrate an interest in trading in the Company's common ‎shares; however, the Company can give no assurance that trading in its common shares will continue on ‎the Pink Sheets or any other securities exchange or quotation medium.‎ Further, trading of the Company's common shares on the Pink Sheets may be restricted depending on the jurisdiction in which potential purchasers or sellers of shares reside.

The Company will remain a reporting company under the Securities Exchange Act of 1934 and continue to be subject to the public reporting requirements of the Securities and Exchange Commission.

BEIJING, URUMQI, China and HANGZHOU, China, Aug. 20, 2019 /PRNewswire/ -- China Lending Corporation ("China Lending" or the "Company") (CLDC), a non-bank financial corporation servicing micro, small and medium sized enterprises in China, today announced that it received a notification letter from Nasdaq Listing Qualifications advising the Company that based upon the closing bid price for the Company's common shares for the past 30 consecutive business days, the Company no longer met the minimum $1.00 per share Nasdaq continued listing requirement set forth in Nasdaq Listing Rule 5555(a)(2). The notification also stated that the Company would be provided 180 calendar days, or until February 11, 2020, to regain compliance with the foregoing listing requirement. To do so, the bid price of the Company's common stock must close at or above $1.00 per share for a minimum of 10 consecutive business days prior to that date.

If the Company does not regain compliance by the compliance deadline, the Company may be eligible for additional time to regain compliance. To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of its intention to remedy the deficiency during the second compliance period, by effecting a reverse stock split, if necessary. If the Company meets these requirements, the Nasdaq staff will inform the Company that it has been granted an additional 180 calendar days. However, if it appears to the Nasdaq staff that the Company will not be able to remedy the deficiency, or if the Company is otherwise not eligible, the staff will provide notice that its securities will be subject to delisting. The Company cannot provide any assurance that its common shares will trade at levels necessary to regain and maintain compliance with the above-referenced bid price rule before the compliance deadline. The Company intends to continue to monitor the bid price for its common stock. If the Company's common shares do not trade at a level that is likely to regain compliance with the Nasdaq requirements, the Company's Board of Directors will consider alternative options that may be available to achieve compliance.

BEIJING, URUMQI and HANGZHOU, China, Aug. 12, 2019 /PRNewswire/ -- China Lending Corporation ("China Lending" or the "Company") (CLDC), a non-bank financial corporation servicing micro, small and medium sized enterprises in China, today announced that its subsidiary, China Industrial Financial Holding Group Co., Ltd. has entered into a framework agreement (the "Agreement") with Zhejiang Zhongfeng Investment Management Co., Ltd. ("Zhongfeng"), pursuant to which Zhongfeng will either acquire a 100% equity interest in Urumqi Fenghui Direct Lending Co., Ltd. ("Feng Hui"), a variable interest entity of the Company primarily engaged in the microloan business, or obtain control over and become the primary beneficiary of Feng Hui through contractual arrangements for a cash consideration of no less than RMB15,000,000. Feng Huiprimarily provides loan facilitation services to micro, small and medium sized enterprises in the Xinjiang Uygur Autonomous Region.

Ms. Jingping Li, co-founder and chief executive officer of China Lending, commented, "The disposal of Feng Hui allows us to improve our liability position and convert our accounts receivables into cash. The disposal will further improve our liquidity while eliminating the majority of our debt and financing costs so that we can commit our resources to the development of other financing business lines with more promising prospects such as supply chain financing, asset management, and insurance facilitation. In 2019, our investments in new business lines through two subsidiaries have already achieved meaningful results. We are currently in a step-by-step process of developing financing services beyond direct lending in China's economically developed regions. The disposal of Feng Hui is a decisive step towards reinvigorating our growth." 

BEIJING, URUMQI, China and HANGZHOU, China, July 29, 2019 /PRNewswire/ -- China Lending Corporation ("China Lending" or the "Company") (CLDC), a non-bank financial corporation servicing micro, small and medium sized enterprises in China, today announced that it has entered into a five-year strategic partnership with Zhong Lian Jin An Insurance Brokers Co., Ltd. ("ZLJA"), a leading insurance brokerage company in China with over 90 branches across the nation.

The partnership will enable both companies to further expand each other's customer bases and to develop superior, customized consumer financing and insurance products by leveraging their industry expertise, service capabilities, and industry networks. China Lending will utilize its market resources to help ZLJA to effectively expand and manage its insurance customer base and sales channels. In return, ZLJA will leverage its existing customer base to identify potential sales leads for the Company's consumer financing services.

The Company also facilitated a tripartite cooperation agreement between ZLJA, Urumqi Haoyi Yuntian Information Technology Co., Ltd. ("Haoyi Yuntian"), a business partner of China Lending, and Gongdao Network Technology Co., Ltd. ("Gongdao") which is focused on developing online litigation solutions. Pursuant to the cooperation agreement, ZLJA will acquire customers seeking litigation guarantee insurance products from Gongdao's online litigation portal and serve as the exclusive insurance broker for such customers in the Xinjiang Uyghur Autonomous Region, and Haoyi Yuntian will provide intellectual property support for the litigation guarantee insurance business. China Lending expects to benefit economically from the transactions by virtue of its partnerships with ZLJA and Haoyi Yuntian.

Ms. Jingping Li, co-founder and chief executive officer of China Lending, commented, "We believe that our partnerships with both ZLJA and Gongdao will facilitate our expansion into the insurance business in the Xinjiang Uyghur Autonomous Region. We expect that such expansion will enable us to expand our customer base, diversify our revenue streams, and explore additional monetization opportunities. Our partnerships with industry leaders such as ZLJA and Gongdao are representative of our ongoing efforts to expand into new business verticals while enhancing the quality of our product offerings. Going forward, we will continue to focus on cultivating synergies with our partners. We will also continue to explore new business opportunities with our partners to expand our customer bases and increase our market share while promoting the mutual development of our businesses."

BEIJING, URUMQI, China and HANGZHOU, China, July 29, 2019 /PRNewswire/ -- China Lending Corporation ("China Lending" or the "Company") (CLDC), a non-bank financial corporation servicing micro, small and medium sized enterprises in China, today announced that it has entered into a five-year strategic partnership with Zhong Lian Jin An Insurance Brokers Co., Ltd. ("ZLJA"), a leading insurance brokerage company in China with over 90 branches across the nation.

The partnership will enable both companies to further expand each other's customer bases and to develop superior, customized consumer financing and insurance products by leveraging their industry expertise, service capabilities, and industry networks. China Lending will utilize its market resources to help ZLJA to effectively expand and manage its insurance customer base and sales channels. In return, ZLJA will leverage its existing customer base to identify potential sales leads for the Company's consumer financing services.

The Company also facilitated a tripartite cooperation agreement between ZLJA, Urumqi Haoyi Yuntian Information Technology Co., Ltd. ("Haoyi Yuntian"), a business partner of China Lending, and Gongdao Network Technology Co., Ltd. ("Gongdao") which is focused on developing online litigation solutions. Pursuant to the cooperation agreement, ZLJA will acquire customers seeking litigation guarantee insurance products from Gongdao's online litigation portal and serve as the exclusive insurance broker for such customers in the Xinjiang Uyghur Autonomous Region, and Haoyi Yuntian will provide intellectual property support for the litigation guarantee insurance business. China Lending expects to benefit economically from the transactions by virtue of its partnerships with ZLJA and Haoyi Yuntian.

Ms. Jingping Li, co-founder and chief executive officer of China Lending, commented, "We believe that our partnerships with both ZLJA and Gongdao will facilitate our expansion into the insurance business in the Xinjiang Uyghur Autonomous Region. We expect that such expansion will enable us to expand our customer base, diversify our revenue streams, and explore additional monetization opportunities. Our partnerships with industry leaders such as ZLJA and Gongdao are representative of our ongoing efforts to expand into new business verticals while enhancing the quality of our product offerings. Going forward, we will continue to focus on cultivating synergies with our partners. We will also continue to explore new business opportunities with our partners to expand our customer bases and increase our market share while promoting the mutual development of our businesses."

BEIJING, URUMQI, China and HANGZHOU, China, July 18, 2019 /PRNewswire/ -- China Lending Corporation ("China Lending" or the "Company") (CLDC), a non-bank financial corporation servicing micro, small and medium sized enterprises in China, today announced that Nasdaq has scheduled the Company's hearing before the Nasdaq Hearings Panel (the "Panel") for August 22, 2019. At the hearing, the Company will present its plan to regain compliance with the Nasdaq Listing Rules and request the continued listing of the Company's securities on the Nasdaq Capital Market pending the Company's compliance therewith.

As previously announced, on July 11, 2019, the Company received a delisting determination letter from Nasdaq, indicating that the Company's securities would be subject to delisting from the Nasdaq Capital Market based on its non-compliance with the continued listing requirements, unless the Company timely requests a hearing before the Nasdaq Hearings Panel (the "Panel"). The Company filed the hearing request on July 15, 2019, which has stayed the delisting action of the Company's securities by Nasdaq pending the Panel's final decision. There can be no assurance that the Panel will grant the Company's request for continued listing.

The Company is doing everything within its control to regain compliance with the Nasdaq listing rules. If the Panel upholds the delisting determination following the hearing, the Company's securities may be eligible for quotation on the OTC Bulletin Boards or in the "pink sheets."

BEIJING, URUMQI, China and HANGZHOU, China, July 15, 2019 /PRNewswire/ -- China Lending Corporation ("China Lending" or the "Company") (CLDC), a non-bank financial corporation servicing micro, small and medium sized enterprises in China, today announced that it has entered into a five-year strategic partnership agreement with Rui Xin Insurance Technology (Ningbo) Co., Ltd ("Rui Xin"), a financial technology company providing comprehensive insurance solutions. Through the partnership, each party expects to jointly grow their businesses and help each other to expand their customer base by leveraging each other's unique and complementary strength as well as resource in financial technology, the consumer finance market and the insurance industry.

China Lending will work with Rui Xin to develop its own consumer financial platform. In collaboration with Rui Xin and its partners, the Company expects to provide value-added consumer financial services to insurance consumers of Rui Xin and its partners. Benefiting from the anticipated size of the business and the good credit record of insurance consumers, China Lending will improve its asset quality and maintain sustainable business growth through the partnership. In addition, China Lending and Rui Xin will also explore collaboration opportunities in areas such as insurance consumer acquisition, development of insurance products, expansion of insurance business, and customization of consumer financial solutions.

Moreover, China Lending will benefit from Rui Xin and its partners' advanced technological capabilities in big data and artificial intelligence to improve its risk management and enhance its customer experience.

Through this partnership, Rui Xin will be able to explore new business opportunities and increase its competency to eventually expand its customer base in the insurance industry by benefiting from China Lending's financial service expertise, bank credit facility resource, and client base in certain regional markets. 

Ms. Jingping Li, co-founder and chief executive officer of China Lending, commented, "Our entering into the partnership conforms with our long-term goal of providing individuals and enterprises in China with our quality financial service products. We will continue to improve our operating efficiencies, diversify our product offerings, and strengthen our collaborations with partners in different segments. Through our partnership with Rui Xin, we will develop a customer base for consumer financial services and serve customers with long-term financing needs. We will also benefit from assisting Rui Xin and its partners with the expansion of insurance business. Rui Xin and its partners' capabilities and experience in applying advanced financial technologies will enhance our risk management capability and help us to achieve innovations of financial products to better satisfy diversified customer demands."

"We are excited to collaborate with China Lending. We believe the partnership will create synergies for both parties in technological and commercial areas. Going forward, we will continue to promote the integration of our resources, explore potential business opportunities, and expand our customer bases to boost the business growth of both parties," said Mr. Yanliang Zhuang, vice president of Rui Xin.

BEIJING, May 2, 2019 /PRNewswire/ -- China Lending Corporation ("China Lending" or the "Company") (CLDC), a non-bank direct lending corporation servicing micro, small and medium sized enterprises currently underserved by commercial banks in China, today announced that on May 1, 2019 (the "Notification Date"), the Company received a notification letter from Nasdaq Listing Qualifications ("Nasdaq") notifying that the Company is no longer in compliance with the Nasdaq Capital Market's continued listing requirement of a minimum of US$2,500,000 in stockholders' equity, as set forth in Nasdaq Listing Rule 5550(b)(1) (the "Nasdaq Listing Rules"). The Nasdaq Listing Rules requires listed companies to maintain stockholders' equity of at least US$2.5 million. In the Company's Form 20-F for the period ended December 31, 2018, the Company reported a negative stockholders' equity of approximately US$36 million, which is below the minimum stockholders' equity required for continued listing pursuant to the Nasdaq Listing Rules. Nasdaq also determined that the Company does not meet the alternatives of market value of listed securities or net income from continuing operations for continued listing.

The Nasdaq notification letter does not result in the immediate delisting of the Company's ordinary shares. The Company has 45 calendar days from the Notification Date, or until June 17, 2019, to submit a plan to Nasdaq to regain compliance with the minimum stockholders' equity standard. If the plan is accepted by Nasdaq, the Company may be granted a compliance period of up to 180 calendar days from the Notification Date to evidence compliance. The Company's management is looking into various options available to regain compliance and maintain its continued listing on The NASDAQ Capital Market.

BEIJING and URUMQI, China, April 26, 2019 /PRNewswire/ – China Lending Corporation ("China Lending" or the "Company") (CLDC), a non-bank direct lending corporation servicing micro, small and medium sized enterprises (MSME), currently underserved by commercial banks in China, reported today its financial results for the twelve months ended December 31, 2018.

Full Year 2018 Financial

• Revenues for 2018 was $0.26 vs. the previous year of $16.53 for a percentage change of -98.4%
  
• Basic and diluted loss per share were $3.89 for the year of 2018, compared to $3.20 for the prior year.  

Full Year 2018 Financial Results

Interest and fee income

For the year of 2018, total interest and fee income, which include interest and fees on its direct lending loans, management and assessment service fees and interest on deposits with banks, was $0.26 million, compared to $16.53 million for the prior year. The significant decrease in loans issued was caused by a combined effect of business slow-down of the direct lending loans in Xinjiang area as a result of management assessment of economic environment in supply chain financing in Urumqi and increasing past due loan receivable and interest receivable which resulted in reversal of interest income. since the second half of 2017.

Interest expenses

The Company used borrowed funds, including short-term bank loans, secured loan and loans from third parties, to fund its direct lending business. Total interest expenses decreased by $0.47 million, or 6.4%, to $6.90 million for the year of 2018 from $ 7.37 million for the prior year mainly due to interest penalty from overdue loans. The loans with the amount of $154.41 million were overdue.

Provision for loan losses

In June 2016, the FASB issued new accounting guidance ASU 2016-13 for recognition of credit losses on financial instruments, which is effective January 1, 2020, with early adoption permitted on January 1, 2019. The guidance introduces a new credit reserving model known as the Current Expected Credit Loss (CECL) model, which is based on expected losses, and differs significantly from the incurred loss approach used today. The CECL model requires measurement of expected credit losses not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information and will likely result in earlier recognition of credit reserves.

CECL adoption will have broad impact on the financial statements of financial services firms, which will affect key profitability and solvency measures. Some of the more notable expected changes include:

• Higher loan loss reserve levels and related deferred tax assets. While different asset types will be impacted differently, the expectation is that reserve levels will generally increase across the board for all financial firms.
• Increased reserve levels may lead to a reduction in capital levels.

As a result of higher reserving levels, the expectation is that CECL will reduce cyclicality in financial firms' results, as higher reserving in "good times" will mean that less dramatic reserve increases will be loan related income (which will continue to be recognized on a periodic basis based on the effective interest method) and the related credit losses (which will be recognized up front at origination). This will make periods of loan expansion seem less profitable due to the immediate recognition of expected credit losses. Periods of stable or declining loan levels will look comparatively profitable as the income trickles in for loans, where losses had been previously recognized.

Provision for loan losses increased by $30.42 million, or 55%, to $85.72 million for the year of 2018 from $55.30 million for the prior year. The increase was mainly related to more loans past due over 180 days as compared to that during the year ended December 31, 2017 as certain customers were facing financial difficulties since the second half of 2017 that caused increased provision rate charged for loan losses for the year 2018. During the year ended December 31, 2018, management continued to assess the adequacy of the allowances in a cautious manner. Management assessed the collectability of loan receivable balances on an individual basis and concluded the collection from certain borrowers is remote . The following table summarizes provisions for loan losses.At the end of each period, we conduct an aging analysis of each customer's arrears to determine whether the allowance for doubtful accounts is adequate. In establishing the allowance for doubtful accounts, we consider historical experience, the economic environment, trends in the construction industry, expected collectability of amounts receivable that are past due, and the expected collectability of overdue receivables. An estimate of doubtful accounts is recorded when collection of the full amount is no longer probable. As a result, total allowance of $128.93 million was recorded for the year of 2018, compared to $64.29 million for the prior year. As of December 31, 2018 and 2017, the Company had 75 and 59 business loan customers, and 159 and 174 personal loan customers, respectively. The Company continues to use its best effort to improve collection of loan receivable and interest receivable, which would result in reversal of provision for loan losses and recognition of interest income which was past due over 90 days and thus an increase in net profit. 

Net interest loss

After deducting for interest expense and provision for loan losses, net interest loss was $92.35 million for the year of 2018, compared to $46.14 million for the prior year. This was primarily due to decreased interest income, and increased provision for loan losses.

Non-interest expenses

Salaries and employee surcharges increased by $0.02 million, or 2.7%, to $0.83 millionfor the year of 2018 from $0.81 million for the prior year. Business and other tax credit was $195 for the year of 2018, compared to business and other taxes of $0.14 million for the prior year. Other operating expenses decreased by $0.37 million, or 18.2%, to $1.68 million for the year of 2018 from $2.05 million for the prior year. The Company booked investment impairment charge of $3.70 million for 2017 versus $nil for the year of 2018. 2018 also benefitted from favorable changes of $0.75 million in fair value of warrant liabilities. As a result, total non-interest expenses decreased by $4.94 million, or 73.7%, to $1.76 million for the year of 2018 from $6.70 million for the prior year.

Loss before income tax, net loss and loss per share

Loss before income taxes was $94.11 million for the year of 2018, compared to $52.03 million for the prior year.

Income tax expense was $0.02 million for the year of 2018, compared to $2.75 million for the prior year.

As a result of the above, net loss was $94.13 million for the year of 2018, compared to $54.78 million for the prior year. After deducting for dividend paid for Series A convertible redeemable preferred stock and net income attributable to noncontrolling interests, net loss attributable to ordinary shareholders was $94.81 million for the year of 2018, compared to $55.47 million for the prior year.

Basic and diluted loss per share were $3.89 for the year of 2018, compared to $3.20 for the prior year.  

Financial Condition and Going Concern

As of December 31, 2018, the Company had cash and cash equivalents of $1.31 million, compared to $1.22 million as of December 31, 2017. Net loans receivable was $92.58 million as of December 31, 2018, compared to $117.26 million at the end of 2017. Short-term bank loans, loans from a cost method investee, loans from third parties and secured loan were $7.98 million, $14.54 million, $3.31 million and $79.21 million, respectively, as of December 31, 2018, compared to $11.97 million, $15.37 million, $nil and $15.34 million, respectively, as of December 31, 2017.

Most of our customers are MSMEs and individual proprietors located in Urumqi, Xinjiang Province and Hangzhou, Zhejiang Province. Our customers are involved in the commerce and service, energy and mining, real estate, agriculture and husbandry, supply chain financing, construction and decoration, manufacturing, consumer credit and other industries. In particular, during the years ended December 31, 2018 and 2017, loans to the tire supply chain financing industry accounts for 35.9% and 46.5% of total amounts of loans originated by the Company, loans to commerce and service industry accounts for 24.9% and 39.8% of total amount of loans, and loans to construction and decoration industry accounts for 23.0% and nil of total amount of loans. The capital liquidity of the Company was also influenced consequently due to a decrease in cash inflows provided by operating activities. The company's operating results for future periods are subject to numerous uncertainties and if the Company will be able to maintain profitability and continue growth for the foreseeable future. If management is not able to increase revenue and /or manage operating expense in line with revenue forecasts, the Company may not be able to maintain profitability.

The Company's accounts have been prepared assuming that the Company will continue as a going concern basis. The following includes conditions give rise to substantial doubt about the Company's ability to continue as a going concern within one year from the financial statement issuance date and management's plans to mitigate these adverse conditions:

The Company had an accumulated deficit of $136.62 million, negative net asset of $36 million and total liabilities of $122.02 million as of December 31, 2018. Assessing that the Company was not able to keep the size of lending business within one year from the financial statement issuance date, the Company established Zhiyuan and Zeshi in November 2018, through which the Company plans to launch new supply chain financing services in the near future, including business factoring program, financing products design, related corporate financing solutions, investments and asset management, etc. as part of its restructuring plan. As of December 31, 2018, Zhiyuan disbursed loans of aggregating $64.7 million to four customers.

For the year ended December 31, 2018, the Company incurred operating loss of $94.13 million. Affected by the reduction of lending business and increased loans losses, the management was in the opinion that recurring operating losses would be made continue within one year from the financial statement issuance date. The Company continues to use its best effort to improve collection of loan receivable and interest receivable, which would result in reversal of provision for loan losses and recognition of interest income which was past due over 90 days and thus an increase in net profit.

For the year ended December 31, 2018, the Company incurred negative operating cash flow of $2.20 million. However with the establishment of Zhiyuan and Zeshi, through which the Company plans to launch new supply chain financing services in the near future, the management assessed the Company would have a positive operating cash flow within one year from the financial statement issuance date.

The Company has been actively seeking for strategic investors with experience in lending business as well as financial investors. On July 10, 2018, the Company closed a registered direct offering pursuant to a previously announced securities purchase agreement with certain institutional investors, raising approximately $1.69 million, net of issuance costs, from selling its ordinary shares at a price of $2.60 per share. The Company plans to continue to seek fund resources as well as strategic investors for additional financing.

Though management had plans to mitigate the conditions or events that raise substantial doubt, there is substantial doubt about the Company's ability to continue as a going concern within one year from the financial statements issuance date, as there is no assurance that the liquidity plan will be successfully implemented. Failure to successfully implement the plan will have a material adverse effect on the Company's business, results of operations and financial position, and will materially adversely affect its ability to continue as a going concern. 

On January 16, 2018, the Company received a subpoena from Xinjiang superior people's court. China Great Wall Assets Management Co, Ltd. sued the Company and its guarantors for a default on the loan, plus penalties. On September 18, 2018, Xinjiang Superior People's Court adjudicated that the Company shall repay the principal, interest and penalties owed to China Great Wall Assets Management Co, Ltd, aggregating US$16.4 million. The Company is now in the process of appeal and is actively negotiating with China Great Wall Assets Management Co, Ltd about the debt restructuring, but there is no agreement achieved as of the date of the announcement.

For the year ended December 31, 2018, the Company was involved in five lawsuits with its loan customers for the aggregated claim of delinquent balances of $2.95 million, and in which the Company is a defendant. The amount which the Company is being sued for delinquent balances owned to two third parties is approximately $4.64 million.

Recent Updates

In April 2019, the Board of Directors unanimously approved the disposition of Xinjiang Xin Quan Financial Leasing Co., Ltd. ("Xin Quan"). As of the date of disposition, Xin Quanwas not engaged in any operations, nor had any net assets.

On February 4, 2019, the Company announced that it entered into a framework agreement to acquire up to 80.46% of equity interest in Zhejiang Lixin Enterprise Management Holding Co., Ltd. ("Lixin"), a diversified financial service company which the Company currently holds a 1% equity interest following a transaction completed in January 2019. Pursuant to such framework agreement, the Company will acquire the equity interest in Lixin from six selling shareholders of Lixin by issuing new shares and/or using cash on hand. The proposed transaction is expected to be consummated through multiple closings with the first closing by June 30, 2019, subject to further review and approval of the Company's Board of Directors and/or shareholders, if needed, as well as other customary closing conditions. There is no guarantee that the transaction contemplated under the framework agreement will be consummated as planned or at all. The Company expects that the acquisition of equity interests in Lixin, if consummated, has the potential of transforming the Company into a profitable and well diversified financial services company with geographical outreach well beyond the Xinjiang Uyghur Autonomous Region. The Company also announced that its business factoring services business, which the Company launched in late November through its recently incorporated subsidiary, Zhiyuan Factoring (Guangzhou) Co., Ltd. ("Zhiyuan"), has disbursed loans of aggregating US$64.7 million to four customers.

On December 7, 2018, the Company announced the expansion of its service offerings with the launch of its business factoring program (the "Program"). The Program aims to provide owners of small to medium sized enterprises with much needed liquidity to finance operations and growth and will be carried out through Zhiyuan, a newly incorporated, majority owned subsidiary of the Company.

On October 8, 2018, the Company announced that it has entered into a strategic cooperation agreement with Lixin to allow it take full use of its related resources in helping China Lending revitalize its business through possible reorganization and restructuring as well as assisting the Company to explore potential merger and acquisition opportunities.

On August 6, 2018, the Company's wholly owned subsidiary, Xin Quan that engages in the business of financial leasing, increased its registered capital from US$30.0 million to US$50.0 million. Upon completion of the transaction, the Company, through China Fenghui Financial Holdings Group, holds a 60% interest in Xin Quan and Xinjiang Heli Kaiyuan Construction Co., Ltd. ("Heli Kaiyuan") holds a 40% interest in Xin Quan.

On July 6, 2018, the Company entered into a securities purchase agreement with two institutional investors for a registered direct placement of approximately $2.0 million gross proceeds from selling its ordinary shares at a price of $2.60 per share. The Company issued a total of 769,232 ordinary shares to institutional investors. As part of the transaction, the Company issued to the investors Series A warrants to purchase up to 576,924 ordinary shares at an exercise price of $2.60 per share, which warrants have a term of four (4) years from the date of issuance. The investors also received Series B warrants with an initial face amount of 200,000 ordinary shares, which are subject to adjustment not in excess of an aggregate of 462,843 ordinary shares for nominal consideration. The transaction was closed on July 10, 2018.

On May 21, 2018, the Company announced the expansion of its service offerings with the launch of its financial leasing services.  The financial leasing services will be operated through its two wholly-owned subsidiaries, Xin Quan and Ningbo Ding Tai Financial Leasing Co. Ltd., which are registered in Khorgas Boarder of Xinjiang Uygur Autonomous Region, and Ningbo of Zhejiang Province, respectively. Both subsidiaries will benefit from a corporate income tax exemption for their initial five years, and half exemption for following five years. There are no business operations of the two subsidiaries as of the date of the announcement.

On May 08, 2018, the Company entered into agreement with Heli Kaiyuan to transfer 33.33% equity shared of Xin Quan, with consideration of $nil. Then, Xin Quan's board of directors passed a resolution to increase the registered capital to $50 million from $30 million. And on the same day, the Company signed shareholding entrustment agreement with Heli Kaiyuan to state that Heli Kaiyuan holds 20% equity interest in Xin Quan on behalf of the Company. As a result, the Company holds 60% equity interest in Xin Quan. On August 06, 2018, the change in registration has been completed

Item 2.01. Completion of Acquisition of Disposition of Assets.

THE SHARE EXCHANGE AND RELATED TRANSACTIONS

The Share Exchange

On January 11, 2016, DT Asia entered into a Share Exchange Agreement with Adrie, the Sellers, the DT Representative, and the Seller Representative, pursuant to which DT Asia effected an acquisition of Adrie and its subsidiaries, including certain wholly foreign-owned enterprises registered in China which contractually control Urumqi Feng Hui Direct Lending Limited, a registered company in Xinjiang China (Adrie and its controlled entities, collectively, the “China Lending Group”) by acquiring from the Sellers all outstanding equity interests of Adrie (the “Business Combination”). The Business Combination closed on July 6, 2016 and pursuant to the terms of the Share Exchange Agreement, Adrie became a wholly-owned subsidiary of the Company.

Pursuant to the Business Combination, we acquired the business of the China Lending Group, which is to engage in the business of providing loan facilities to micro, small and medium sized enterprises (“MSMEs”) and sole proprietors in the Xinjiang Uyghur Autonomous Region (“Xinjiang Province”) of the People’s Republic of China (“PRC” or “China”). As a result, we have ceased to be a shell company.

At the closing of the Business Combination, pursuant to the Share Exchange Agreement, Adrie’s 20,000,000 shares of capital stock issued and outstanding immediately prior to the closing of the Business Combination were exchanged for an aggregate of 20,000,000 of our ordinary shares (the “Exchange Shares”), with 8,000,000 of the Exchange Shares (the “Escrow Shares”) being held in escrow and subject to forfeiture (along with dividends and other earnings otherwise payable with respect to such Escrow Shares) in the event that we fail to meet certain minimum financial performance targets or in the event that the DT Representative successfully brings an indemnification claim under the Share Exchange Agreement on behalf of DT Asia’s pre-Business Combination shareholders.

The Share Exchange Agreement contains customary representations and warranties, pre- and post-closing covenants of each party and customary closing conditions. In consummating the Business Combination, the parties to the Share Exchange Agreement waived certain closing conditions, including, but not limited to the wavier of (i) the $12 million PIPE investment condition which required that DT Asia shall have completed the PIPE Offering for at least $12 million and (ii) the $10 million minimum closing proceeds condition which required that upon the closing of the Business Combination and after giving effect to the completion of the redemptions of the ordinary shares and the PIPE Offering, there would be at least $10 million in closing proceeds. Breaches of the representations and warranties are subject to indemnification claims and, other than claims based on fraud, willful misconduct or intentional misrepresentations, are limited to the value of the Escrow Shares.

The Business Combination will be treated as a “reverse acquisition” of the Company for financial accounting purposes, Adrie will be considered the acquirer for accounting purposes, and the historical financial statements of DT Asia before the Business Combination will be replaced with the historical financial statements of Adrie and its consolidated entities before the Business Combination in all future filings with the SEC.

The issuance of our ordinary shares to holders of Adrie’s capital stock in connection with the Business Combination has not been registered under the Securities Act, in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act, which exempts transactions by an issuer not involving any public offering, and Regulation D and/or Regulation S promulgated by the SEC under that section. The Exchange Shares may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement.

The foregoing description of the Share Exchange Agreement does not purport to be complete and is qualified in its entirety by reference to the Share Exchange Agreement, a copy of which is filed herewith as Exhibit 2.1 and is incorporated herein by reference. There are representations and warranties contained in the Share Exchange Agreement which were made by the parties to each other as of specific dates. The assertions embodied in these representations and warranties were made solely for purposes of the Share Exchange Agreement and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating their terms. Moreover, certain representations and warranties may not be accurate or complete as of any specified date because they are subject to a contractual standard of materiality that is different from certain standards generally applicable to shareholders or were used for the purpose of allocating risk between the parties rather than establishing matters as facts. Based on the foregoing reasons, investors should not rely on the representations and warranties as statements of factual information.