BEIJING and URUMQI, China,
Aug. 13, 2018 /PRNewswire/ -- China
Lending Corporation ("China Lending" or the "Company") (Nasdaq:
CLDC), a non-bank direct lending corporation servicing micro, small
and medium sized enterprises (MSME), currently underserved by
commercial banks in China, today
reported its unaudited financial results for the six months ended
June 30, 2018.
Financial Matrix for The Six Months Ended June 30, 2018 and 2017
|
|
For the Six Months
Ended June 30,
|
(USD$
millions, except per share data)
|
|
2018
(Unaudited)
|
|
2017
(Unaudited)
|
|
%
Change
|
|
|
|
|
|
|
|
Interest and fee
income
|
|
$0.05
|
|
$16.23
|
|
-99.7%
|
Interest
expenses
|
|
($3.52)
|
|
($2.46)
|
|
43.1%
|
Provision for loan
losses
|
|
($47.64)
|
|
($2.06)
|
|
2212.6%
|
Net interest income
(loss)
|
|
($51.11)
|
|
$11.71
|
|
-536.5%
|
Non interest
expenses, net
|
|
($1.05)
|
|
($1.82)
|
|
-42.3%
|
Income (loss) before
taxes
|
|
($52.16)
|
|
$9.89
|
|
-627.4%
|
Income tax
expenses
|
|
-
|
|
($1.67)
|
|
-100.0%
|
Net income
(loss)
|
|
($52.16)
|
|
$8.22
|
|
-734.5%
|
Dividend - Series A
convertible preferred stock
|
|
-
|
|
($0.34)
|
|
-100.0%
|
Net income
(loss)/income attributable to common
shareholders
|
|
($52.16)
|
|
$7.88
|
|
-761.9%
|
Earnings (Loss) Per
Share - Basic
|
|
($2.83)
|
|
$0.49
|
|
-677.6%
|
Earnings (Loss) Per
Share - Diluted
|
|
($2.83)
|
|
$0.47
|
|
-702.1%
|
The Company issued 3 loans with an aggregate amount of
$1.21 million during the first half
of 2018, compared to 265 loans with an aggregate amount of
$156.3 million for the same period in
2017.
- Interest and fee income decreased by $16.18 million, or 99.7%, to $0.05 million from $16.23
million for the same period of 2017 mainly due to a
significant decrease in loans issued since the second half of
2017.
- Net loss attributable to ordinary shareholders was $52.16 million, or net loss of $2.83 per diluted share for the first half of
2018 compared to net income attributable to ordinary shareholders
of $7.88 million, or net income of
$0.47 per diluted share, for the
first half of 2017.
- Loans receivable was $69.06
million as of June 30, 2018,
compared to $117.26 million at the
end of 2017. Provision for loan losses was $47.64 million for the first half of 2018,
compared to $2.06 million for the
same period in 2017. The increase was mainly related to certain
overdue loans as certain customers, particularly tire supply chain
financing customers, were facing financial difficulties during the
first half of 2018.
Financial Results for the Six Months Ended June 30, 2018
Interest and fee income
For the six months ended June 30,
2018, total interest and fee income, which include interest
and fees on direct lending loans, financial advisory fees and
interest on deposits with banks, decreased by $16.18 million, or 99.7%, to $0.05 million from $16.23
million for the same period in 2017. The decrease was mainly
due to a significant decrease in loans issued since the second half
of last year.
Interest expenses
The Company used borrowed funds, including short-term bank
loans, secured loan and loans from a cost investment investee, to
fund its direct lending business. Total interest expenses accrued
increased by $1.06 million, or 43.1%,
to $3.52 million for the six months
ended June 30, 2018 from $ 2.46 million for the same period of last year
mainly due to increased interest and penalty from overdue loans.
The loans with the amount of $41.83
million were overdue.
Provision for loan losses
Provision for loan losses increased by $45.58 million to $47.64
million for the six months ended June
30, 2018 from $2.06 million
for the same period in 2017. The increase was mainly related to
certain overdue loans as certain customers were facing financial
difficulties during the six months ended June 30, 2018 which caused increased provision
percentages. We are closely monitoring the situation with those
customers.
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. Known bad debts are written off against the
allowance for doubtful accounts when identified. After reviewing
individual balances, we provide a provision of 50% for account
receivables past due more than 90 days but less than one year which
was increased from 25% at the end of 2017, 62.5% for accounts
receivable past due more than 180 days but less than one year which
was increased from 50% at the end of 2017, 100% for accounts
receivable past due beyond one year, plus additional amounts as
necessary. As a result, additional allowance of $25.33million was recorded for the six months
ended June 30, 2018.
Loan aging as of June 30, 2018 and
December 31, 2017 as follows:
|
June 30,
2018
|
December 31,
2017
|
|
$
|
$
|
Current
|
21,775,426
|
95,932,372
|
1-89 Days Past
Due
|
47,533,774
|
38,280,319
|
90-179 Days Past
Due
|
24,529,826
|
35,193,296
|
180-365 Days Past
Due
|
72,071,417
|
4,284,361
|
Over 1 year past
due
|
6,842,102
|
7,866,437
|
Loans
receivable
|
172,752,545
|
181,556,785
|
Allowance for loan
losses
|
(103,691,813)
|
(64,294,690)
|
Loan receivable,
net
|
69,060,732
|
117,262,095
|
Net interest income/ (loss)
After deducting for interest expense and provision for loan
losses, net interest loss was $51.11
million for the six months ended June
30, 2018, a decrease of $62.82
million, or 536.4%, from net interest income of $11.71 million for the same period in 2017 was
mainly due to the decrease in total interest income, increase of
provision for loan losses and increase of total interest
expenses.
Non-interest expenses
Salaries and employee surcharges decreased by $0.39 million, or 61.5%, to $0.25million for the six months ended
June 30, 2018 from $0.64 million for the same period of last year.
Business and other taxes decreased by $0.14
million, or 124.3%, to $0.03million for the six months ended
June 30, 2018 from $0.11 million for the same period in 2017. Other
operating expenses decreased by $0.26
million, or 23.9%, to $0.83million for the six months ended
June 30, 2018 from $1.09 million for the same period in 2017. As a
result, total non-interest expenses decreased by $0.77 million, or 42.3%, to $1.05 million for the six months ended
June 30, 2018 from $1.82 million for the same period in 2017. which
mainly due to the following reasons: (1) the decrease in employee
expenses due to departure of certain employees; (2) the decrease in
business taxes and other taxes in line with the decrease in total
interest income; and (3) the decrease in expenses related to
travel, entertainment and other professional activities as a result
of headcount reduction.
Income/ (loss) before income tax, net income/ (loss) and
EPS
Loss before income taxes was $52.16
million for the six months ended June
30, 2018 compared to income of $9.89
million for the same period of last year.
Income tax expense was nil for the six months ended June 30, 2018, compared to $1.67 million for the same period of last
year.
As a result of the above, net loss was $52.16 million for the six months ended
June 30, 2018 compared to net income
of $8.22 million for the same period
of last year. After deducting for dividend paid for Series A
convertible redeemable preferred stock, net loss allocated to
ordinary shareholders was $52.16
million for the six months ended June
30, 2018 compared to net income of $7.88 million for the same period of last
year.
Basic and diluted loss per share were $2.83 for the six months ended June 30, 2018, compared to basic and diluted
income per share were $0.49 and
$0.47, respectively, for the same
period in 2017.
Loan Portfolio
As of June 30, 2018, the Company's
loans covered over seven industries, including supply chain
financing, commerce & service, agriculture, real estate,
manufacturing, energy and mining and consumer credit. The Company
issued 3 loans with total loan amount of $1.21 million during the six months ended
June 30, 2018.
Financial Condition
As of June 30, 2018, the Company
had cash and cash equivalents of $0.62
million, compared to $1.22
million as of December 31,
2017. Net loans receivable was $69.06
million as of June 30, 2018,
compared to $117.26 million at the
end of 2017. Short-term bank loans, loans from a cost investment
investee and secured loan were $11.72
million, $15.07 million and
$15.04 million, respectively, as of
June 30, 2018, compared to
$11.97 million, $15.37 million and $15.34million, respectively, as of December 31, 2017.
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 going concern
basis assumes that assets are realized and liabilities are
extinguished in the ordinary course of business at amounts
disclosed in the financial statements. The Company's ability to
continue as a going concern depends upon aligning its sources of
funding (debt and equity) with the expenditure requirements of the
Company and repayment of the debt facilities as and when they fall
due.
Although the Company believes that it can realize its current
assets, the Company's ability to repay its current obligations will
depend on the future realization of its current assets. Management
had considered the historical experience, the economy, trends in
the supply chain industry, the expected collectability of the loans
receivables, and provided for an allowance for doubtful accounts as
of June 30, 2018. The Company expects
to realize the balances net of allowances within the normal
operating cycle of twelve months period. If the Company is unable
to realize its current assets within the normal operating cycle of
twelve months period, the Company may have to consider its
available source of funds through the financing from the PRC banks,
third parties and other financial institutions given the Company's
credit history, enhance the collection on the overdue loans from
customers by negotiation new payment terms, repayments of loans
with collateral in the form of rights to cash, securities or
property and equipment, as well as look for strategic investors to
restructure and optimize our assets.
Based on the above considerations, the Company's management is
of the opinion that it has sufficient funds to meet the Company's
working capital requirements and debt obligations. However, there
is no assurance that management will be successful in their plan.
There are a number of factors that could potentially arise that
could result in shortfalls to the Company's plan, such as the
demand for the Company's collateral, economic conditions,
collections of the overdue loans receivables, the Company's
operating results not continuing to deteriorate and the Company's
banks, third parties and shareholders being able to provide
continued financings. If management is unable to execute this plan,
there would likely be a material adverse effect on the Company's
business. All of these factors raise substantial doubt about the
ability of the Company to continue as a going concern. The
consolidated financial statements for the period ended June 30, 2018 have been prepared on a going
concern basis and do not include any adjustments to reflect the
possible future effects on the recoverability and classifications
of assets or the amounts and classifications of liabilities that
may result from the inability of the Company to continue as a going
concern.
The Company's loans included short-term bank loans, secured loan
and loans from a cost investment investee and all the loans were
overdue as of June 30, 2018. The
Company has reached settlement agreements with Zhengxin Financing
Guarantee Co., Ltd and Urumqi Changhe Financing Guarantee Co., Ltd.
to repay the principals and penalties totaled RMB56.02 million no later than October 30, 2020.
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. The case is
in the process. The company is actively negotiating with China
Great Wall Assets Management Co, Ltd and Shanghai Pudong
Development Bank about the debt restructuring, but there is no
agreement achieved.
Recent Update
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 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, Xinjiang Xin Quan Financial Leasing Co. Ltd. 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.
On May 08, 2018, the Company
entered into agreement with Xinjiang Heli Kaiyuan Construction Co.,
Ltd ("Heli Kaiyuan) to transfer
33.33% equity shared of Xinjiang Xin Quan Financial Leasing Co.,
Ltd. ("Xin Quan") with consideration
of $nil. Then, Xin Quan's board of
directors passed a resolution to increase the registered capital to
USD 50 million from USD 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.
About China Lending Corporation
Founded in 2009, China Lending is a non-bank direct lending
corporation and provides services to micro, small and medium sized
enterprises, farmers, and individuals, who are currently
underserved by commercial banks in China. Headquartered in Urumqi, the capital of
Xinjiang Autonomous Region, with a registered capital of
$94.7 million (RMB 600 million) as of June 30, 2018 China Lending is one of the largest
direct lending companies in the region in terms of registered
capital. For more information, please visit:
www.chinalending.com.
Forward-Looking Statements
This press release may include forward-looking statements
within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. All statements, other
than statements of historical facts, included in this press release
that address activities, events or developments that China Lending
expects or anticipates will or may occur in the future are
forward-looking statements and are identified with, but not limited
to, words such as "may," "believe" and "expect." These statements
are based on certain assumptions and analyses made by China Lending
in light of its experience and its perception of historical trends,
current conditions and expected future developments as well as
other factors it believes are appropriate in the circumstances.
Actual results may differ materially from those expressed herein
due to many factors such as, but not limited to, (1) the ability to
obtain or maintain the listing of the Company's securities on the
NASDAQ Capital Market; (2) the risk that our recent business
combination disrupts the Company's current plans and operations;
(3) the ability to recognize the anticipated benefits of our recent
business combination, which may be affected by, among other things,
closing proceeds, competition and the ability of the business to
grow and manage growth profitably; (4) the outcome of any legal
proceedings that may be instituted against the Company; (5) changes
in applicable laws or regulations; (6) the possibility that the
Company may be adversely affected by other economic, business,
and/or competitive factors; and (7) other risks and uncertainties
indicated from time to time in the proxy statement filed by the
Company in connection with the business combination, including
those under "Risk Factors" therein, and other factors identified in
the Company's prior and future filings with the SEC, available
at www.sec.gov.
These forward-looking statements are based on information
available as of the date of this press release and involve a number
of judgments, risks and uncertainties. Accordingly, forward-looking
statements should not be relied upon as representing our views as
of any subsequent date and the Company undertakes no obligation to
update any forward-looking statements contained herein to reflect
events or circumstances which arise after the date of this press
release, whether as a result of new information, future events or
otherwise, except as may be required under applicable securities
law.
For investors and media inquiries please contact:
At the Company:
Katrina Wu
Email: wuxiaoqing@chinalending.com
Phone: +86-991-316-9617
Investor Relations:
Tony Tian, CFA
Weitian Group LLC
Email: ttian@weitianco.com
Phone: +1-732-910-9692
CHINA LENDING
CORPORATION
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
June
30,
2018
|
|
|
December
31,
2017
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
621,122
|
|
|
$
|
1,220,380
|
|
Loans receivable -
third parties, net
|
|
|
68,382,400
|
|
|
|
116,017,356
|
|
Loans receivable
-related parties, net
|
|
|
678,332
|
|
|
|
1,244,739
|
|
Interest and loans
receivable, net
|
|
|
20,773
|
|
|
|
6,035
|
|
Property and
equipment, net
|
|
|
37,388
|
|
|
|
46,334
|
|
Intangible asset,
net
|
|
|
74,621
|
|
|
|
80,729
|
|
Other
assets
|
|
|
766,226
|
|
|
|
1,004,696
|
|
Total
Assets
|
|
$
|
70,580,862
|
|
|
$
|
119,620,269
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Short-term bank
loans
|
|
$
|
11,721,318
|
|
|
$
|
11,969,976
|
|
Loan from a related
party, a cost investment
investee
|
|
|
15,074,044
|
|
|
|
15,367,146
|
|
Secured
loan
|
|
|
15,043,896
|
|
|
|
15,336,412
|
|
Dividends
payable
|
|
|
480,000
|
|
|
|
480,000
|
|
Taxes
payable
|
|
|
689,582
|
|
|
|
763,736
|
|
Other
liabilities
|
|
|
12,139,036
|
|
|
|
8,953,652
|
|
Total
liabilities
|
|
$
|
55,147,876
|
|
|
$
|
52,870,922
|
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
Convertible
Redeemable Class A Preferred
Shares
|
|
|
|
|
|
|
|
|
Preferred Shares, no
par value, unlimited
shares authorized; 715,000 shares issued
and outstanding as of June 30, 2018 and
December 31, 2017.
|
|
|
9,309,327
|
|
|
|
8,966,127
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
|
|
|
Ordinary Shares, no
par value; unlimited
shares authorized; 23,757,667 and
23,758,817 shares issued and outstanding
as of June 30, 2018 and December 31,
2017, respectively
|
|
|
-
|
|
|
|
-
|
|
Additional paid-in
capital
|
|
|
96,634,328
|
|
|
|
96,977,528
|
|
Statutory
reserves
|
|
|
6,621,063
|
|
|
|
6,621,063
|
|
Accumulated
deficit
|
|
|
(93,960,247)
|
|
|
|
(41,807,285)
|
|
Accumulated other
comprehensive loss
|
|
|
(3,171,485)
|
|
|
|
(4,008,086)
|
|
Total
Shareholders' Equity
|
|
|
6,123,659
|
|
|
|
57,783,220
|
|
Total Liabilities
and Shareholders' Equity
|
|
$
|
70,580,862
|
|
|
$
|
119,620,269
|
|
CHINA LENDING
CORPORATION
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
|
COMPREHENSIVE
INCOME (LOSS)
|
|
|
|
For the six months
ended June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Interest and fee
income
|
|
|
|
|
|
|
Interest and fees on
loans
|
|
$
|
51,151
|
|
|
$
|
16,093,554
|
|
Interest and fees on
loans-related parties
|
|
|
|
-
|
|
|
137,427
|
|
Interest on deposits
with banks
|
|
|
264
|
|
|
|
808
|
|
Total interest and
fee income
|
|
|
51,415
|
|
|
|
16,231,789
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
Interest expense on
short-term bank loans
|
|
|
(825,284)
|
|
|
|
(769,503)
|
|
Interest expense and
fees on secured loans
|
|
|
(1,275,128)
|
|
|
|
(807,229)
|
|
Interest expense on
loans from a related party, a cost
investment investee
|
|
|
(1,422,219)
|
|
|
|
(882,418)
|
|
Total interest
expense
|
|
|
(3,522,631)
|
|
|
|
(2,459,150)
|
|
|
|
|
|
|
|
|
|
|
Provision for loan
losses
|
|
|
(47,636,098)
|
|
|
|
(2,060,406)
|
|
Net Interest
(Loss) Income
|
|
|
(51,107,314)
|
|
|
|
11,712,233
|
|
|
|
|
|
|
|
|
|
|
Non-interest
income
|
|
|
-
|
|
|
|
15,312
|
|
|
|
|
|
|
|
|
|
|
Non-interest
expenses
|
|
|
|
|
|
|
|
|
Salaries and employee
surcharges
|
|
|
(246,605)
|
|
|
|
(640,743)
|
|
Business taxes and
other taxes
|
|
|
27,678
|
|
|
|
(113,863)
|
|
Other operating
expenses
|
|
|
(826,342)
|
|
|
|
(1,085,247)
|
|
Total non-interest
expenses, net
|
|
|
(1,045,269)
|
|
|
|
(1,824,541)
|
|
Non-operating
expenses
|
|
|
(157)
|
|
|
|
-
|
|
(Loss)Income
Before Income Taxes Benefits
|
|
|
(52,152,740)
|
|
|
|
9,887,692
|
|
Income tax expenses
(benefits)
|
|
|
-
|
|
|
|
(1,671,221)
|
|
Net
(Loss) Income
|
|
$
|
(52,152,740)
|
|
|
$
|
8,216,471
|
|
|
|
|
|
|
|
|
|
|
Dividend –
Convertible Redeemable Class A preferred
stock
|
|
|
-
|
|
|
|
(343,200)
|
|
Net
(loss) income allocated to ordinary
shareholders
|
|
$
|
(52,152,740)
|
|
|
$
|
7,873,271
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
|
836,602
|
|
|
|
2,948,138
|
|
Comprehensive
(Loss) Income
|
|
$
|
(52,316,138)
|
|
|
$
|
11,164,609
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding – basic
|
|
|
18,422,783
|
|
|
|
15,915,107
|
|
Weighted-average
common shares outstanding – diluted
|
|
|
18,422,783
|
|
|
|
16,630,107
|
|
(Loss)Earnings per
share to ordinary shareholders –
Basic
|
|
$
|
(2.83)
|
|
|
$
|
0.49
|
|
(Loss)Earnings per
share to ordinary shareholders –
Diluted
|
|
$
|
(2.83)
|
|
|
$
|
0.47
|
|
View original
content:http://www.prnewswire.com/news-releases/china-lending-corporation-reports-unaudited-financial-results-for-the-six-months-ended-june-30-2018-300696004.html
SOURCE China Lending Corporation