Proxy Soliciting Materials (revised) (prer14a)

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS.

To Be Held on [●], 2017

YOUR VOTE IS VERY IMPORTANT.

PLEASE VOTE YOUR SHARES PROMPTLY.

NOTICE IS HEREBY GIVEN, that you are cordially invited to attend a special meeting (the “ Special Meeting ”) of stockholders of China Commercial Credit Inc., to be held at [10:00] a.m., local time, on ,                              , 2017, at the offices of counsel for CCCR, Hunter Taubman Fischer & Li, LLC, 1450 Broadway, 26th Floor, New York, NY 10018, in order to consider and vote upon:

(1)       The Acquisition Proposal --- to adopt the Exchange Agreement and to approve the Acquisition of Sorghum contemplated by such agreement ;

(2)       The Reverse Split Proposal --- to approve and adopt an amendment to our Certificate of Incorporation (“ Charter Amendment ”) to effect the Reverse Split of our issued and outstanding common stock by a ratio of not less than one-for-two and not more than one-for-ten at any time prior to _______, 2017, with the exact ratio to be set at a whole number within this range, as determined by our board of directors in its sole discretion;

(3)       The Capital Increase Proposal --- to approve and adopt an amendment to the Company’s Certificate of Incorporation to increase the number of shares of common stock that the Company has authority to issue from 100,000,000 to 1,000,000,000 and the number of shares of preferred stock that the Company has authority to issue from 10,000,000 to 100,000,000; and consequently, to increase the total number of shares of all classes of capital stock that the Company has authority to issue from 110,000,000 to 1,100,000,000;

(4)       The Name Change Proposal --- to approve the Charter Amendment to change the Company’s corporate name to “Wheat Finance Service Group”; and

(5)       The Adjournment Proposal --- to approve the adjournment of the special meeting by the chairman thereof to a later date, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve the Acquisition Proposal.

These items of business are described in the attached proxy statement, which we encourage you to read in its entirety before voting. Only holders of record of the Company’s common stock at the close of business on ______, 2017 are entitled to notice of the Special Meeting and to vote and have their votes counted at the Special Meeting and any adjournments or postponements of the Special Meeting.

The affirmative vote of the holders of a majority of the outstanding shares of our common stock is required to approve the Reverse Split Proposal. The affirmative vote of the holders of a majority of votes cast by our shareholders that are present in person or by proxy at our special meeting is required to approve the Acquisition Proposal. Approval of the Adjournment Proposal whether or not a quorum is present, requires the affirmative vote of a majority of the votes cast by the holders of shares of CCCR’s common stock entitled to vote.

Although the Name Change Proposal and Capital Increase Proposal in themselves do not need stockholder vote, the Charter Amendment which includes the reverse split will require approval of majority of the outstanding shares of our common stock.

After careful consideration, the Company’s board of directors has determined that the Reverse Split Proposal, the Capital Increase Proposal, the Name Change Proposal, the Acquisition Proposal, and the Adjournment Proposal are fair to and in the best interests of the Company and its stockholders and unanimously recommends that you vote or give instruction to vote:

YOUR VOTE IS IMPORTANT

WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON, WE ENCOURAGE YOU TO SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE (1) BY TELEPHONE, (2) THROUGH THE INTERNET OR (3) BY MARKING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE POSTAGE-PAID ENVELOPE PROVIDED. You may revoke your proxy or change your vote at any time before the Special Meeting. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished to you by such bank, broker or other nominee, which is considered the stockholder of record, in order to vote. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. Your broker or other agent cannot vote on any of the proposals, including the proposal to approve Reverse Split Proposal, the Capital Increase Proposal, the Name Change Proposal, and the Acquisition Proposal, without your instructions.

If you fail to return your proxy card, grant your proxy electronically over the Internet, or by telephone, or vote by ballot in person at the Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting. If you are a stockholder of record, voting in person by ballot at the Special Meeting will revoke any proxy that you previously submitted. If you hold your shares through a bank, broker or other nominee, you must obtain from the record holder a valid “legal” proxy issued in your name in order to vote in person at the Special Meeting.

We encourage you to read the accompanying proxy statement carefully and in its entirety, as well as the documents we file from time to time with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. If you have any questions concerning the Acquisition, the Special Meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or need help voting your shares of common stock, please contact Long Yi at (86) 512 6396-0022.

Thank you for your participation. We look forward to your continued support.

ANNEXES

QUESTIONS AND ANSWERS ABOUT THE PROPOSAL

The following are answers to some questions that you, as a stockholder of CCCR, may have regarding the Name Change, Reverse Split, the Acquisition and the other matters being considered at CCCR’s Special Meeting, which is referred to herein as the “ Special Meeting .” We urge you to read carefully the remainder of this proxy statement because the information in this section does not provide all the information that might be important to you with respect to the Acquisition and the other matters being considered at the Special Meeting. Additional important information is also contained in the annexes to and the documents incorporated by reference into this proxy statement.

CCCR’s stockholders are being asked to consider and vote upon proposals relating to the Exchange Agreement, and specifically to adopt and approve the Reverse Split Proposal, the Capital Increase Proposal, the Name Change Proposal, and the Acquisition Proposal, which, among other things, provide for: (a) the Reverse Split of our issued outstanding stock by a ratio of not less than one-for-two and not more than one-for-ten at any time prior [    ], 2017, with the exact ratio to be set at a whole number within this range as determined by our board of directors in its sole discretion; (b) the Company’s name to “Wheat Finance Service Group”; (c) the Capital Increase of the common stock that the Company has authority to issue to 1,000,000,000 and the preferred that the Company has authority to issue to 100,000,000; and (d) the Acquisition of Sorghum contemplated by the Exchange Agreement.

CCCR’s stockholders may also be asked to consider and vote upon a proposal to adjourn the meeting to a later date or dates to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, CCCR would not have been authorized to consummate the Acquisition. CCCR will hold the Special Meeting to consider and vote upon these proposals. This proxy statement contains important information about matters to be acted upon at the Special Meeting. Stockholders should read it carefully. The vote of stockholders is important.

In order to complete the Acquisition, CCCR stockholders must vote to approve the Acquisition Proposal, the Capital Increase Proposal, the Reverse Split Proposal, and the Name Change Proposal, all other conditions to the Acquisition must be satisfied or waived.

Stockholders are encouraged to vote as soon as possible after carefully reviewing this proxy statement. If CCCR stockholders fail to adopt the Reverse Split Proposal, the Capital Increase Proposal, the Name Change Proposal, or the Acquisition Proposal, the Acquisition cannot be completed.

The primary negative consequence of the transaction that CCCR’s board of directors considered was the likely decline in the liquidity of CCCR’s common stock. Another negative factor that the board considered was that, following the Acquisition, the CCCR shareholders would own a relatively small percentage of Sorghum common stock. Because CCCR had already received several deficiency notices from NASDAQ and faced the possibility that the common stock had not experienced an active trading market and would ultimately be delisted from NASDAQ, CCCR’s board of directors did not believe that such negative factors outweighed the positive impact of the transaction to CCCR’s shareholders.

Furthermore, if the Acquisition is not completed, and depending on the circumstances that would have caused the Acquisition not to be completed, the price of CCCR’s common stock may decline significantly. If that were to occur, it is uncertain when, if ever, the price of CCCR’s common stock would return to the price at which it traded as of the date of this proxy statement.

Accordingly, if the Acquisition is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of your shares of CCCR’s common stock. If the Acquisition is not completed, CCCR’s board of directors will continue to evaluate and review the Company’s business operations, properties, dividend policy and capitalization, among other things, make such changes as are deemed appropriate and continue to seek to identify strategic alternatives to enhance stockholder value. If the Exchange Agreement is not approved by CCCR’s stockholders or if the Acquisition is not completed for any other reason, there can be no assurance that any other transaction acceptable to CCCR will be offered or that CCCR’s business, prospects or results of operation will not be adversely impacted.

In addition, under specified circumstances, CCCR may be required to reimburse Sorghum’s expenses or pay Sorghum a termination fee, upon the termination of the Exchange Agreement, as described under “Fees and Expenses” beginning on page 14.

The board of directors of Sorghum considered the significant additional legal, accounting and other transaction expenses that it would incur, including costs associated with its future public company reporting requirements, as well as the amount of management’s time that will be required to implement required new or improved controls over financial reporting as the material negative factors in connection with the Acquisition.

Please read with particular care the detailed description of the risks described in “ Risk Factors ” beginning on page 16 of this proxy statement.

The Reverse Split will affect all holders of our common stock uniformly and will not affect any stockholder’s percentage ownership interest in the Company, except that as described below in “Fractional Shares,” record holders of common stock otherwise entitled to a fractional share as a result of the Reverse Split will be rounded up to the next whole number. In addition, the Reverse Split will not affect any stockholder’s proportionate voting power.

The Reverse Split may result in some stockholders owning “odd lots” of less than 100 shares of common stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in “round lots” of even multiples of 100 shares.

Stockholders who hold shares electronically in book-entry form with the transfer agent will not need to take action (the exchange will be automatic) to receive whole shares of post-Reverse Split common stock, subject to adjustment for treatment of fractional shares. We do not currently intend to issue fractional shares in connection with the Reverse Split. Therefore, we will not issue certificates representing fractional shares. In lieu of issuing fractions of shares, we will round up to the next whole number.

“ FOR ” the Acquisition Proposal;

“ FOR ” the Capital Increase Proposal;

“ FOR ” the Name Change Proposal ;

“ FOR ” the Reverse Split Proposal; and

“ FOR ” the Adjournment Proposal, if presented.

You should read “The Acquisition — Reasons for the Acquisition” beginning on page 69 for a discussion of the factors that our board of directors considered in deciding to recommend the approval of the Reverse Split Proposal, the Capital Increase Proposal, the Name Change Proposal and the Acquisition Proposal.

Stockholders of Record

If your shares of CCCR common stock are registered directly in your name with CCCR’s transfer agent, VStock Transfer, LLC, you are the stockholder of record of those shares and these proxy materials have been mailed or e-mailed to you by the Company. You may vote your shares by Internet or by mail as further described below. Your vote authorizes Long Yi, Chief Financial Officer of the Company, as your proxy, with the power to appoint his substitute, to represent and vote your shares as you directed.

Vote by Internet—http://www. ____

Use the Internet to transmit your voting instructions 24 hours a day, seven days a week until 11:59 p.m. (Eastern Time) on ___ , ____, 2017.

Please have your proxy card available and follow the instructions to obtain your records and create an electronic ballot.

Vote by mail

Complete, date and sign your proxy card and return it in the postage-paid envelope provided.

Beneficial Owners

If your shares of CCCR common stock are held in a stock brokerage account, by a bank, broker or other nominee, you are considered the beneficial owner of shares held in street name and these proxy materials are being forwarded to you by your bank, broker or nominee that is considered the holder of record of those shares. As the beneficial owner, you have the right to direct your bank, broker, trustee or nominee on how to vote your shares via the Internet or by telephone if the bank, broker, trustee or nominee offers these options or by signing and returning a proxy card. Your bank, broker, trustee or nominee will send you instructions for voting your shares. Please note that you may not vote shares held in street name by returning a proxy card directly to CCCR or by voting in person at the Special Meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or nominee. Further, brokers, banks and nominees who hold shares of CCCR common stock on your behalf may not give a proxy to CCCR to vote those shares without specific instructions from you.

For a discussion of the rules regarding the voting of shares held by beneficial owners, please see the question below entitled “If I am a beneficial owner of shares of CCCR common stock, what happens if I don’t provide voting instructions? What is discretionary voting? What is a broker non-vote?”

Under the rules of the New York Stock Exchange, each of the proposals to be presented at the Special Meeting is a non-discretionary proposal. Accordingly, if you are a beneficial owner and you do not provide voting instructions to your broker, bank or other holder of record holding shares for you, your shares will not be voted with respect to any of the proposals. A broker non-vote would have the same effect as a vote against the Acquisition Proposal, spinoff proposal and the Adjournment Proposal.

If you choose either of the first two methods, you must submit your notice of revocation or your new proxy to the Secretary of CCCR, as specified in this proxy statement, no later than the beginning of the Special Meeting. If your shares are held in street name by your broker, bank or nominee, you should contact them to change your vote.

FORWARD-LOOKING STATEMENTS

This proxy statement, including information incorporated by reference into this proxy statement, includes forward-looking statements regarding, among other things, CCCR’s plans, strategies and prospects, both business and financial. Although CCCR believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, CCCR cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions including, without limitation, the factors described under “ Risk Factors ” from time to time in CCCR’s filings with the SEC. Many of the forward-looking statements contained in this presentation may be identified by the use of forward-looking words such as “believe”, “expect”, “anticipate”, “should”, “planned”, “will”, “may”, “intend”, “estimated”, “aim”, “on track”, “target”, “opportunity”, “tentative”, “positioning”, “designed”, “create”, “predict”, “project”, “seek”, “would”, “could”, “continue”, “ongoing”, “upside”, “increases” and “potential”, among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this presentation are set forth in other reports or documents that we file from time to time with the SEC, and include, but are not limited to:

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement. All forward-looking statements included herein attributable to any of CCCR, Sorghum or any person acting on either party’s behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, CCCR and Sorghum undertake no obligations to update these forward looking statements to reflect events or circumstances after the date of this proxy statement or to reflect the occurrence of unanticipated events.

Before a stockholder grants its proxy or instructs how its vote should be cast or vote on the Reverse Split Proposal, the Capital Increase Proposal, the Acquisition Proposal or the Adjournment Proposal, it should be aware that the occurrence of the events described in the “ Risk Factors ” section and elsewhere in this proxy statement may adversely affect CCCR and Sorghum.

SUMMARY

This summary highlights selected information from this proxy statement and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the Special Meeting, including the Acquisition, you should read this entire document carefully, including the Exchange Agreement attached as Annex A to this proxy statement. The Exchange Agreement is the legal document that governs the Acquisition and the other transactions that will be undertaken in connection with the Acquisition. It is also described in detail in this proxy statement in the section entitled “The Exchange Agreement.”

Acquisition

The Parties to the Exchange Agreement

CCCR

We are a holding company that was incorporated under the laws of the State of Delaware on December 19, 2011.

We are a financial services firm operating in China. Our mission is to fill the significant void in the market place by offering lending, financial guarantee and financial leasing products and services to a target market which has been significantly under-served by the traditional Chinese financial community. Our current operations consist of providing direct loans, loan guarantees and financial leasing services to small-to-medium sized businesses (“ SMEs ”), farmers and individuals in the city of Wujiang, Jiangsu Province.

Our loan and loan guarantee business is conducted through our indirect wholly-owned subsidiary, Wujiang Luxiang Information Technology Consulting Co. Ltd., a limited liability company formed under the laws of the PRC on September 26, 2012, which we control through our subsidiaries and certain contractual arrangements.

CCCR’s shares of common stock are currently listed on the NASDAQ under the symbol “CCCR”. We intend to continue the listing of our common stock on NASDAQ upon the closing of the Acquisition.

The mailing address of CCCR’s principal executive office is No.1 Zhongying Commercial Plaza, Zhong Ying Road, Wujiang, Suzhou, Jiangsu Province, China and the phone number is +86 512 63960022.

Sorghum

Sorghum is a holding company that was incorporated as a British Virgin Islands company limited by shares under the BVI Business Companies Act, 2004, on March 14, 2017. Sorghum does not have any substantive operations and conducts its business through its wholly-owned subsidiaries and certain contractual arrangements with Shanghai Wheat Asset Management Co., Ltd (“ Wheat ”) and its wholly-owned subsidiaries in China and the U.S. Sorghum and its consolidated subsidiaries are referred to as Sorghum Group.

Sorghum Group is a digital online intermediary connecting investors and borrowers for the provision of peer-to-peer lending facilitation services to individuals and small business owners in China. Sorghum Group’s corporate vision is to make financial services heart-warming and easily accessible for everyone. Sorghum Group is committed to building an open mobile smart financial ecosystem based on the world’s leading mobile internet technology, cloud computing, and big data processing capability. Leveraging its advanced finance technology and extensive experience in serving borrowers and investors through its website and mobile application platforms, Sorghum Group provides efficient and effective information intermediary solutions to address largely underserved investor and individual borrower demands in China.

The mailing address of Sorghum’s principal executive officers is 19-20 Floor, Xujiahui International Building, 1033 Zhaojiabang Road, Shanghai, China, and the phone number is +86 21 64663832.

The Acquisition

On August 9, 2017, we entered into the Exchange Agreement with Sorghum and the equity holders of Sorghum (the “ Sorghum Sellers ”), pursuant to which, among other things and subject to the terms and conditions contained therein, we will acquire all of the outstanding issued shares and other equity interests in Sorghum from the Sorghum Sellers. Pursuant to the Exchange Agreement, in exchange for all of the outstanding shares of Sorghum, we will issue 152,586,795 shares of common stock (the “Exchange Shares”) to the Sorghum Sellers. The Exchange Shares will be allocated among the Sorghum Sellers pro-rata based on each such seller’s ownership of Sorghum prior to the closing.

Upon completion of the Acquisition, we will own 100% of Sorghum, and will be a financial services group operating in both smart financing as well as microfinance sectors in China. It is anticipated immediately upon completion of the Acquisition, our existing shareholders will retain an ownership interest of approximately 12% and the Sorghum Sellers will own approximately 88% of the Company assuming issuance of additional 3 million shares by CCCR prior to closing of the Acquisition.

Pre-Acquisition Structure

(1) Pursuant to a series of contractual arrangements, WFOE effectively controls and manages the business activities of Wujiang Luxiang 

Post-Acquisition Structure

(1) Pursuant to a series of contractual arrangements, WFOE effectively controls and manages the business activities of Wujiang Luxiang.

(2) Pursuant to a series of contractual arrangements, Pang Mai effectively controls and manages the business activities of Wheat.

Conditions to Closing of the Acquisition

The obligation of the parties to complete the Acquisition is subject to the fulfillment or written waiver of certain closing conditions, including:

We cannot provide assurance as to when or if all of the closing conditions will be satisfied or waived by the appropriate party. As of the date of this proxy statement, we have no reason to believe that any of these conditions will not be satisfied.

Termination

The Exchange Agreement may be terminated prior to the closing by:

If the Exchange Agreement is terminated, all further obligations of the parties under the Exchange Agreement will terminate and will be of no further force and effect and no party will have any further liability thereunder to any other party, except that certain obligations related to public announcements, confidential information, fees and expenses, and termination fees and general provisions will continue in effect, and no party shall be relieved of liability for any fraud claims or breach of the Exchange Agreement prior to such termination.

Fees and Expenses

In the event that we terminate the Exchange Agreement for breach by Sorghum or a material adverse effect on Sorghum or its subsidiaries which is uncured and continuing or for the failure to obtain the requisite shareholder vote in favor of the Exchange Agreement and the Acquisition at our special meeting, Sorghum will be required to pay us as liquidated damages a termination fee equal to the transaction expenses incurred by or on behalf of us or any of our affiliates in connection with the Exchange Agreement or the transactions contemplated hereby. In the event Sorghum terminates the Exchange Agreement for breach by us or a material adverse effect on us or our subsidiaries which is uncured and continuing, we will be required to pay Sorghum as liquidated damages a termination fee equal to the transaction expenses incurred by or on behalf of Sorghum or any of its affiliates in connection with the Exchange Agreement or the transactions contemplated hereby.

Other than the termination fee described above, each party will bear its own expenses in connection with the Exchange Agreement and the transactions contemplated thereby.

Board of Directors and Management Following the Acquisition

Immediately following the closing of the Acquisition, our board of directors will continue to consist of five directors, one of whom shall be designated by Sorghum prior to the closing. The current chief executive officer of CCCR shall resign immediately before the closing. Therefore, the chief executive officer of Sorghum shall become the chief executive officer of CCCR immediately before the closing. See section entitled “Post-Closing Board of Directors and Executive Officers.”

Accounting Treatment

Both CCCR and Sorghum prepare their financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). CCCR will acquire 100% of the outstanding shares of Sorghum through issuance of 152,586,795 of its common shares. This transaction will be accounted for as a “reverse acquisition” since, immediately following completion of the transaction, the shareholders of Sorghum immediately prior to the transaction will have effective control of the Company, through its approximately 88% ownership interest in the post-merger entity. For accounting purpose, Sorghum will be deemed to be the accounting acquirer and CCCR will be deemed to be the accounting acquiree in the transaction.

Opinion of Axiom to the Board of Directors of CCCR

CCCR engaged Axiom Capital Management, Inc. (“ Axiom ”) to render an opinion, as of August 10, 2017, as to the fairness of the Acquisition, from a financial point of view to CCCR’s stockholders. Axiom is an investment bank that works regularly in the evaluation of businesses and their securities in connection with acquisitions, corporate restructuring, and financings. CCCR’s board of directors decided to use its services as Axiom represented to the Company that it has requisite experience in similar matters. Axiom rendered its oral opinion to CCCR’s board of directors on July 31, 2017 (which was subsequently confirmed in writing by delivery of Axiom’s written opinion) that the Acquisition was fair, from a financial point of view, to CCCR stockholders.

Axiom’s opinion was provided for the use and benefit of the CCCR board of directors in connection with its consideration of the Acquisition and only addressed the fairness, from a financial point of views, of the Acquisition to CCCR’s stockholders pursuant to the Exchange Agreement, in each case as of the date of the opinion, and did not address any other aspect or implication of the Acquisition.

The summary of Axiom’s opinion in this proxy statement is qualified in its entirety by reference to the full text of the written opinion, which is included as Annex B to this proxy statement and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Axiom in preparing its opinion. However, neither Axiom’s written opinion nor the summary of its opinion and the related analyses set forth in this proxy statement are intended to be, and do not constitute, advice or a recommendation to any stockholder as to how such stockholder should act or vote with respect to any matter relating to the proposed Acquisition.

Interests of CCCR’s Directors and Officers in the Acquisition

As of the Record Date, the directors and executive officers of CCCR as a group owned and were entitled to vote ______ shares of the common stock of the Company, representing _____% of the outstanding shares of CCCR common stock on that date. CCCR expects that its directors and executive officers will vote their shares in favor of the Reverse Split Proposal, the Capital Increase Proposal, the Name Change Proposal, and the Acquisition Proposal, but none of the Company’s directors or executive officers has entered into any agreement obligating any of them to do so.

Besides the equity ownership of CCCR detailed above, the directors and executive officers of the Company do not have interests different than the other stockholders of CCCR.

Regulatory Approvals Required for the Acquisition

The Acquisition and the transactions contemplated by the Exchange Agreement are not subject to any additional federal or state regulatory requirement or approval, except for the approval of NASDAQ for listing of additional shares and the filings with the State of Delaware necessary to effectuate the transactions contemplated by the Exchange Agreement.

The Reverse Split

Our board of directors has adopted resolutions (i) declaring that filing an amendment to the Company’s Certificate of Incorporation to effect the Reverse Split of our issued and outstanding common stock was advisable, and (ii) directing that a proposal to approve the Reverse Split be submitted to the holders of our common stock for their approval. The Reverse Split of our issued and outstanding common stock will be effected by a ratio of not less than one-for-two and not more than one-for-ten at any time prior to , 2017, with the exact ratio to be set at a whole number within this range as determined by our board of directors in its sole discretion.

Our board of directors is submitting the Reverse Split Proposal to our stockholders for approval with the intent of increasing the market price of our common stock to enhance our ability to meet the continued listing requirements of the Nasdaq Capital Market, to make our common stock sufficiently attractive for CCCR to consummate the Acquisition transaction and to ensure that CCCR will be able to meet the initial listing requirements of Nasdaq Capital Market after consummation of the Acquisition transaction. Please see the section entitled “ The Reverse Split ” for more information.

The Name Change

Our board of directors is submitting the Name Change Proposal to our stockholders for approval to better reflect the future business of the combined organization. Although the Company intend to continue its direct lending and guarantee business currently conducted in Wujiang, Jiangsu province, our board of directors believe majority of the future growth will come from the online consumer financing operations conducted by Wheat. This transaction will be accounted for as a “reverse acquisition” since, immediately following completion of the transaction, the shareholders of Sorghum immediately prior to the transaction will have effective control of the Company, through its approximately 88% ownership interest in the post-merger entity. For accounting purpose, Sorghum will be deemed to be the accounting acquirer and CCCR will be deemed to be the accounting acquiree in the transaction.

The Capital Increase

A: Our board of directors is submitting the Capital Increase Proposal to our stockholders for approval to give the Company more flexibility for future capital raising, incentivize directors, officers and employees, strategic acquisitions and other corporate actions.

Risk Factors

In evaluating the proposals to be presented at the Special Meeting, a stockholder should carefully read this proxy statement and especially consider the factors discussed in the section entitled “ Risk Factors .”

Appraisal Rights

CCCR stockholders do not have appraisal rights in connection with the Reverse Split the Capital Increase, the Name Change and/or the Acquisition under the DGCL.

The Special Meeting

The Special Meeting will be held at 10:00 a.m., local time, on ___, ______, 2017, at the offices of Hunter Taubman Fischer & Li, LLC, 1450 Broadway, 26th Floor, New York, NY 10018, to consider and vote upon the Reverse Split Proposal, the Capital Increase Proposal, the Acquisition Proposal and/or if necessary, the Adjournment Proposal to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, CCCR is not authorized to consummate the Reverse Split, the Capital Increase, the Name Change and/or the Acquisition.

Recommendation to Stockholders

After careful consideration, the Company’s board of directors has determined that the Acquisition Proposal, the Capital Increase, the Name Change, and the Adjournment Proposal are fair to and in the best interests of the Company and its stockholders and unanimously recommends that you vote or give instruction to vote “ FOR ” the Reverse Split Proposal, “ FOR ” the Capital Increase Proposal, “ FOR ” the Name Change Proposal, “ FOR ” the Acquisition Proposal and “ FOR ” the Adjournment Proposal, if presented.

RISK FACTORS

You should carefully consider the following risk factors, together with the other information contained in this proxy statement, including the factors discussed in Part I, Item 1A—Risk Factors in CCCR’s annual report on Form 10-K for the year ended December 31, 2016. The risks described below relate to the Reverse Split and the Acquisition, and are in addition to, and should be read in conjunction with, without limitation, the factors discussed in Part I, Item 1A—Risk Factors in CCCR’s annual report on Form 10-K for the year ended December 31, 2016. If any of the following risks and uncertainties develops into actual events, these events could have a material adverse effect on both CCCR’s and Sorghum’s businesses, financial conditions or results of operations. In addition, past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods.

Risks Related to the Acquisition

Subsequent to the consummation of the Acquisition, we may be required to take writedowns or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and share price, which could cause you to lose some or all of your investment.

Although we have conducted due diligence on Sorghum, we cannot assure you that this diligence revealed all material issues that may be present in Sorghum’s business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of our and Sorghum’s control will not later arise. As a result, we may be forced to later write down or write-off assets, restructure its operations, or incur impairment or other charges that could result in losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about the Company or its securities. In addition, charges of this nature may cause us to be unable to obtain future financing on favorable terms or at all.

The unaudited pro forma financial information included in this document may not be indicative of what our actual financial position or results of operations would have been.

The unaudited pro forma financial information in this proxy statement is presented for illustrative purposes only and is not necessarily indicative of what our actual financial position or results of operations would have been had the Acquisition been completed on the dates indicated. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for more information.

We will have limited protection in the event that any of the representations and warranties made by Sellers or Sorghum in the Exchange Agreement ultimately proves to be inaccurate or incorrect.

CCCR and its shareholders will have limited protection if any representation or warranty made by Sellers or Sorghum in the Exchange Agreement proves to be inaccurate or incorrect. Accordingly, to the extent such representations or warranties are incorrect, CCCR would have limited indemnification claims with respect thereto and its financial condition or results of operations could be adversely affected.

We may waive one or more of the conditions to the Acquisition.

We may agree to waive, in whole or in part, some of the conditions to our obligations to complete the Acquisition, to the extent permitted by our charter and applicable laws. For example, it is a condition to our obligations to close the Acquisition and that Sorghum’s representations and warranties are true and correct in all respects as of the closing date, except for such inaccuracies that, individually or in the aggregate, would not result in a Material Adverse Effect (as defined in the Exchange Agreement). However, if our board of directors determines that it is in the shareholders’ best interest to waive any such breach, then the board may elect to waive that condition and close the Acquisition.

Our ability to successfully effect the Acquisition and successfully operate the business thereafter will be largely dependent upon the efforts of certain key personnel, including certain executive officers of CCCR and the key personnel of Sorghum, all of whom we expect to join CCCR following the Acquisition. The loss of such key personnel could negatively impact the operations and profitability of the post-combination business.

Our ability to successfully effect the Acquisition and successfully operate the business is dependent upon the efforts of certain key personnel including Mr. Long Yi, the Chief Financial Officer of CCCR and key personnel of Sorghum. Although we expect all of such key personnel to remain with Sorghum following the Acquisition, it is possible that we will lose some key personnel, the loss of which could negatively impact the operations and profitability of our post-combination business. In addition, we do not have key-man insurance on the life of, any of our directors or executive officers. The unexpected loss of the services of one or more of our directors or executive officers could adversely impact our ability to complete the Acquisition. Furthermore, our assessment of these individuals may not prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.

A market for our common stock may not continue, which would adversely affect the liquidity and price of our common stock.

Following the Acquisition, as well as the anticipated concurrent reverse split, the price of our common stock may fluctuate significantly due to the market’s reaction to the Acquisition and general market and economic conditions. An active trading market for our common stock following the Acquisition may never develop or, if developed, it may not be sustained. In addition, the price of our common stock after the Acquisition can vary due to general economic conditions and forecasts, our general business condition and the release of our financial reports. Additionally, if our common stock are not listed on, or become delisted from, the NASDAQ for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our common stock may be more limited than if we were quoted or listed on the NASDAQ or another national securities exchange. You may be unable to sell your common stock unless a market can be established or sustained.

Although we expect that our common stock will remain listed on the NASDAQ after the Acquisition, there can be no assurance that our common stock will continue to be so listed or, if listed, that we will be able to comply with the continued listing standards of the NASDAQ.

We intend to apply for the continued listing of our common stock on the NASDAQ subsequent to the closing of the Acquisition. To continue listing our common stock on the NASDAQ subsequent to the closing of the Acquisition, we will be required to demonstrate compliance with NASDAQ’s initial listing standards, which are more rigorous than NASDAQ’s continued listing requirements, including that our common stock trade at a minimum of $4.00 per common stock. We cannot assure you that we will be able to meet those initial listing standards at that time.

If, after the Acquisition, the NASDAQ delists our common stock from trading on its exchange due to our failure to meet the NASDAQ’s initial and/or continued listing standards, we and our shareholders could face significant material adverse consequences including:

If the Acquisition’s benefits do not meet the expectations of investors, shareholders or financial analysts, the market price of our securities may decline.

If the benefits of the Acquisition do not meet the expectations of investors or securities analysts, the market price of the Company’s common stock prior to the closing of the Acquisition may decline. The market values of our securities at the time of the Acquisition may vary significantly from their prices on the date the Exchange Agreement was executed, the date of this proxy statement, or the date on which our shareholders vote on the Acquisition.

In addition, following the Acquisition, fluctuations in the price of our common stock could contribute to the loss of all or part of your investment. Prior to the Acquisition, there has not been a public market for Sorghum’s securities. Accordingly, the valuation ascribed to Sorghum and our common stock in the Acquisition may not be indicative of the price that will prevail in the trading market following the Acquisition. If an active market for our common stock develops and continues, the trading price of our common stock following the Acquisition could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our common stock and our common stock may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our common stock may not recover and may experience a further decline.

Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general, and the NASDAQ in particular, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to the Company could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

Following the Acquisition, the Company’s business and share prices may suffer as a result of its lack of public company operating experience of new management and if securities or industry analysts do not publish or cease publishing research or reports about the Company, its business, or its market, or if they change their recommendations regarding our ordinary shares adversely, the price and trading volume of our ordinary shares could decline.

Prior to the completion of the Acquisition, Sorghum has been a privately-held company. Most members of Sorghum’s management team have limited experience managing a publicly-traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. The management team may not successfully or efficiently manage Sorghum’s transition to being a division of a public company that is subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from Sorghum’s senior management and could divert their attention away from the day-to-day management of Sorghum’s business, which could harm Sorghum’s business, results of operations and financial condition.

The obligation to disclose information publicly may put Sorghum at a disadvantage to competitors that are private companies.

Upon completion of this acquisition, Sorghum will become a member of a consolidated group of a publicly listed company in the United States. Sorghum will need to disclose occurrence of matters that are material to the reporting company and its shareholders that Sorghum would not be required to disclose if Sorghum were a private company. Sorghum’s competitors may have access to this information, which would otherwise be confidential. This may give them advantages in competing with Sorghum. To the extent compliance with U.S. laws increases expenses or decreases Sorghum’s competitiveness against such companies, the public listing could affect Sorghum’s results of operations.

Sorghum will incur additional costs as a result of becoming a subsidiary of a public company, which could negatively impact its net income and liquidity.

Upon completion of this acquisition, Sorghum will become a subsidiary of a public company in the United States. As a result, Sorghum will incur additional legal, accounting and other expenses that Sorghum did not incur as a private company. Sorghum expects that the rules and regulations will increase its legal, accounting and financial compliance costs and will make many corporate activities more time-consuming and costly. If Sorghum fails to comply with these rules and regulations, Sorghum could become the subject of a governmental enforcement action, investors may lose confidence in its public parent company and the share price could suffer.

The transition to becoming a division of a public company will require changes in the way Sorghum operates its business.

Private companies often have less regulated methods of operation than public companies. This results in less transparency and presents greater risks of noncompliance with rules and regulations. In anticipation of the proposed transaction, Sorghum management has begun to implement a variety of measures to ensure that the company follows the rules applicable to public companies in the United States. To the extent these new procedures and policies could not change historical behaviors that might be inconsistent with the rules regulating U.S. public company, Sorghum could be at risk of violation or poor reporting as a public company following this transaction.

Completion of the Reverse Split and the Acquisition is subject to a number of conditions and if these conditions are not satisfied or waived, such transactions will not be completed.

CCCR’s obligation and the obligation of Sorghum to complete the Acquisition are subject to satisfaction or waiver of a number of conditions, including, among others:

There can be no assurance that the conditions to closing of the Exchange Agreement will be satisfied or waived or that the Acquisition itself will be completed.

NASDAQ may not list or continue to list our shares and the Exchange Shares on its exchange, which could prevent consummation of the Acquisition or could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

CCCR intends to apply to have the Exchange Shares listed on NASDAQ in connection with consummation of the Acquisition, and it is a closing condition of the Acquisition that our shares continue to be listed on NASDAQ. The post-Acquisition entity will be required to meet the initial listing requirements to be listed. We may not be able to meet those initial listing requirements. Even if our securities are so listed, we may be unable to maintain the listing of our securities in the future. If we fail to meet the initial listing requirements and NASDAQ does not list our securities on its exchange, neither CCCR nor Sorghum would be required to consummate the Acquisition. In the event that each of CCCR and Sorghum elected to waive this condition, CCCR and its stockholders could face significant material adverse consequences, including:

Failure to complete the Acquisition could negatively impact CCCR’s stock price, future business or operations.

If the Acquisition is not completed, CCCR and Sorghum may be subject to a number of material risks, including the following:

Further, if the Acquisition is terminated and either company’s board of directors determines to seek another Acquisition or business combination, there can be no assurance that it will be able to find a partner on terms as attractive as those provided for in the Exchange Agreement. In addition, while the Exchange Agreement is in effect and subject to very narrowly defined exceptions, CCCR is prohibited from soliciting, initiating or encouraging or entering into certain extraordinary transactions, such as a merger, sale of assets or other business combination, other than with Sorghum.

The exercise of CCCR’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of Acquisition may result in a conflict of interest when determining whether such changes to the terms of the Acquisition or waivers of conditions are appropriate and in CCCR’s stockholders’ best interest.

In the period leading up to the closing of the Acquisition, events may occur that, pursuant to the Exchange Agreement, would require CCCR to agree to amend the Exchange Agreement, to consent to certain actions taken by Sorghum or to waive rights that CCCR is entitled to under the Exchange Agreement. Such events could arise because of changes in the course of Sorghum’s business, a request by Sorghum to undertake actions that would otherwise be prohibited by the terms of the Exchange Agreement or the occurrence of other events that would have a material adverse effect on Sorghum’s business. In any of such circumstances, it would be at CCCR’s discretion, acting through its board of directors, to grant its consent or waive those rights. The existence of the financial and personal interests of the directors of CCCR described in the preceding risk factors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is best for CCCR and its stockholders and what he or they may believe is best for himself or themselves in determining whether or not to take the requested action.

As of the date of this proxy statement, CCCR does not believe there will be any changes or waivers that CCCR’s directors and officers would be likely to make after stockholder approval of the Acquisition Proposal has been obtained. While certain changes could be made without further stockholder approval, CCCR will circulate a new or amended proxy statement and resolicit CCCR’s stockholders if changes to the terms of the transaction that would have a material impact on its stockholders are required prior to the vote on the Acquisition Proposal.

Sorghum may not realize anticipated growth opportunities.

Sorghum expects that it will realize growth opportunities and other financial and operating benefits as a result of the Acquisition. Sorghum cannot predict with certainty if or when these growth opportunities and benefits will occur, or the extent to which they actually will be achieved. For example, the benefits from the Acquisition may be offset by costs incurred in obtaining or attempting to obtain regulatory approvals for the Acquisition, or as a result of being a public company. See “Risks Related to Sorghum Industry” for a fuller discussion of the risks relating to Sorghum following the Acquisition.

The Company and Sorghum will incur significant transaction-related costs in connection with the Reverse Split and the Acquisition.

The Company and Sorghum expect to incur a number of nonrecurring costs associated with the Reverse Split and the Acquisition before, at, and after closing the Acquisition. The Company and Sorghum will also incur transaction fees and costs related to formulating and implementing post-Acquisition plans, including facilities and systems implementation costs and employment-related costs. The Company and Sorghum will continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the Acquisition and, Sorghum in particular will assess these costs in relation to post-acquisition activities.

If the Adjournment Proposal is not approved, and an insufficient number of votes have been obtained to authorize the consummation of the Acquisition, CCCR’s board of directors will not have the ability to adjourn the Special Meeting to a later date in order to solicit further votes, and, therefore, the Acquisition will not be approved.

Our board of directors is seeking approval to adjourn the Special Meeting to a later date or dates if, at the Special Meeting, based upon the tabulated votes, there are insufficient votes to approve the consummation of the Reverse Split and the Acquisition. If the Adjournment Proposal is not approved, CCCR’s board will not have the ability to adjourn the Special Meeting to a later date and, therefore, will not have more time to solicit votes to approve the consummation of the Reverse Split and the Acquisition. In such event, the Reverse Split and the Acquisition would not be completed.

Upon consummation of the Acquisition, Ms. Darong Huang, will beneficially own approximately 44.84% of the then issued and outstanding shares of common stock and exert significant influence on our operations.

Upon the consummation of the Acquisition, Broomcorn Holdings Limited, an entity solely owned by Ms. Darong Huang, our chairwoman and chief executive officer upon closing of the Acquisition, will own approximately 44.84% of the then issued and outstanding shares of common stock. Accordingly, Darong Huang, by virtue of her beneficial ownership of these share, will be able to exercise substantial influence over our operations. She may have significant influence over election of directors and other matters requiring shareholder approval. Such concentration of voting power could have the effect of delaying, deterring, or preventing a change of control or other business combination, which may, in turn, have an adverse effect on the market price of our stock or prevent our shareholders from realizing a premium over the then-prevailing market price for their stock.

Ms. Darong Huang, as the principal shareholders of Wheat Finance, have potential conflicts of interest with us, which may   adversely affect our business.

Darong Huang, our Chairwoman and Chief Executive Officer upon closing of the Acquisition, is significant shareholder of Wheat, one of our VIE entities from which majority of our revenue is expected upon closing of the Acquisition. Conflicts of interests between her duty to our Company and Wheat Finance may arise. For example, Ms. Huang could cause Wheat Finance to fail to take actions that are in the best interests of our Company As Ms. Huang will be also CEO and Chairwoman of our Company, she has duties of loyalty and care to us under Delaware law when there are any potential conflicts of interests between our company and Wheat. We cannot assure you, however, that if conflicts of interest arise, she will act completely in our interests or that conflicts of interests will be resolved in our favor. In addition, Ms. Huang could violate her employment agreement with us or her legal duties by diverting business opportunities from us to others. If we cannot resolve any conflicts of interest between us and Mr. Huang, as applicable, we would have to rely on legal proceedings, which could result in the disruption of our business.

Risks Related to CCCR

Risks Relating to Our Lending and Guarantee Business

The substantial and continuing losses, and significant operating expenses incurred in the past few years may cause us to be unable to pursue all of our operational objectives if sufficient financing and/or additional cash from revenues is not realized.

We have an accumulated deficit of US$70,234,656 as of December 31, 2016 and a working capital (total consolidated current assets exceeding total consolidated current liabilities) of US$2,332,909, as of December 31, 2016. Although we have previously been able to attract financing as needed, such financing may not continue to be available at all, or if available, on reasonable terms as required. Further, the terms of such financing may be dilutive to existing shareholders or otherwise on terms not favorable to existing shareholders or us. If we are unable to secure additional financing, as circumstances require, or do not succeed in meeting our sales objectives, we may be required to change or significantly reduce our operations or ultimately may not be able to continue our operations.

Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”

Because of our historical accumulated deficit in working capital, among others, our independent auditor has raised substantial doubt about our ability to continue as a going concern. The financial statements contained elsewhere in this prospectus do not include any adjustments that might result from our inability to consummate this offering or our inability to continue as a going concern.

Our limited operating history makes it difficult to evaluate our business and prospects and we may not be able to adapt to the changing market condition.

Wujiang Luxiang commenced operations in October 2008 and has a limited operating history. It is difficult to evaluate our prospects, as we may not have sufficient experience in addressing the risks to which companies operating in new and rapidly evolving markets such as the microcredit industry, may be exposed. We will continue to encounter risks and difficulties that companies at a similar stage of development frequently experience, including the potential failure to:

As a matter of fact, for the year ended December 31, 2016, we had a net revenue of $2.2 million and a net loss of $2.0 million compared to a loss of $55.8 million and net loss of $61.3 million in 2015, a change of 104% and 97%, respectively. If we are unable to address any or all of the foregoing risks, our business may be materially and adversely affected.

PRC regulation of loans to, and direct investments in, PRC entities by offshore holding companies and the unauthorized transfer of certain funds by our former chief executive officer have prevented us from using the entire proceeds from our initial public offering to increase the registered capital of Wujiang Luxiang.

As an offshore holding company with PRC subsidiaries, we may transfer funds to our PRC subsidiaries or finance our operating entity by means of loans or capital contributions. Any loans to our PRC subsidiaries, which are foreign-invested enterprises, cannot exceed statutory limits based on the difference between the amount of our investments and registered capital in such subsidiaries, and shall be registered with SAFE, State Administration of Foreign Exchange, or its local counterparts. Furthermore, any capital increase contributions we make to our PRC subsidiaries, which are foreign-invested enterprises, shall be approved by MOFCOM, Ministry of Commerce, or its local counterparts. The majority of the net proceeds from our initial public offering completed in August 2013, approximately $7 million, is intended to increase the registered capital of Wujiang Luxiang and therefore its corresponding lending and guarantee capacity. Approximately $5.6 million of the net proceeds have already been contributed to Wujiang Luxiang and approved as an increase of the registered capital of Wujiang Luxiang. An additional $1.4 million was supposed to be transferred from WFOE to Wujiang Luxiang to further increase its registered capital. $1.5 million of the proceeds was initially transferred to WFOE to be used for the registered capital requirements of WFOE. Due to the subsequent reduction of WFOE’s registered capital requirement from $10 million to $100,000, $100,000 was supposed to remain at WFOE to satisfy its new registered capital requirement and the remaining $1.4 million was supposed to be used to further increase the registered capital of Wujiang Luxiang. However, as previously reported by the Company, RMB 7 million (approximately $1.1 million) was transferred from the bank account of WFOE to the personal account of Mr. Huichun Qin, the Company’s former CEO and Chairman of the Board. The Company has not been able to recover the missing funds. The delay and potential failure to use the remaining IPO proceeds to increase Wujiang Luxiang’s registered capital, currently prevents us from further expanding Wujiang Luxiang’s business.

Our current operations in China are geographically limited to the city of Wujiang.

In accordance with the PRC state and provincial laws and regulations with regard to microcredit companies, we are not allowed to make loans and provide guarantees to businesses and individuals located outside of the city of Wujiang. Our future growth opportunities depend on the growth and stability of the economy in the city of Wujiang. A downturn in the local economy or the implementation of local policies unfavorable to SMEs may cause a decrease in the demand for our loan or guarantee services and may negatively affect borrowers’ ability to repay their loans on a timely basis, both of which could have a negative impact on our profitability and business.

If the Jiangsu government subsidy we currently receive from the Jiangsu government for loans to farmers is not renewed, we would suffer a loss of revenues.

Pursuant to certain Jiangsu government policies on promotion of rural economic reform, the interest on loans to farmers is subsidized by the government. Therefore, we charge the farmers at an interest rate lower than that of loans to SME’s. A portion of the difference between the lower rate charged to farmers and the rate charged to SME’s is remitted to us annually by the Jiangsu government as a government subsidy. We also received other types of government subsidies from Jiangsu government which are, among other things, intended to incentivize microcredit companies to establish and maintain strict financial operation systems. Applicants for these subsidies are required to apply for such subsidies annually. The standards for granting this subsidy is presently flexible and the number of applicants applying for such subsidies varies from year to year. In addition, the amount of funds which will be available for the Jiangsu government to use for these government subsidies each year is uncertain and depend on the needs of microeconomic development of Jiangsu province, the government’s budget and other factors. In the event our application for such subsidy in the future is not granted or the funds we receive are reduced, we would suffer loss of revenues.

Changes in the interest rates and spread could have a negative impact on our revenues and results of operations.

Our revenues and financial condition are primarily dependent on interest income, which is the difference between interest earned from loans we provide and interest paid to the lines of credit we obtain from other financial institutions. A narrowing interest rate spread could adversely affect our earnings and financial conditions. If we are not able to control our funding costs or adjust our lending interest rate in a timely manner, our interest margin will decline. In addition, the interest rates we charge to the borrowers in our direct loan business are linked to the PBOC benchmark interest rate (the “PBOC Benchmark Rate”). The PBOC Benchmark Rate may fluctuate significantly due to changes in the PRC government’s monetary policy. Due to the restriction that our interest rate cannot be higher than three times the PBOC Benchmark Rate pursuant to certain Jiangsu banking regulations released in October 2012, if we have to reduce the interest rate we charge the borrowers to reflect the decrease of the PBOC Benchmark Rate, our interest rate spread will be negatively affected.

As a microcredit company, our business is subject to greater credit risks than larger lenders, which could adversely affect our results of operations.

There are inherent risks associated with our lending and guarantee activities, including credit risk, which is the risk that borrowers may not repay the outstanding loans balances in our direct loan business or that we may not recover the full amount of the payment we made to the lender in our guarantee business. As a microcredit company, we extend credits to SMEs, farmer and individuals. These borrowers generally have fewer financial resources in terms of capital or borrowing capacity than larger entities and may have fewer financial resources to weather a downturn in the economy. Such borrowers may expose us to greater credit risks than lenders lending to larger, better-capitalized state-owned businesses with longer operating histories. Conditions such as inflation, economic downturn, local policy change, adjustment of industrial structure and other factors beyond our control may increase our credit risk more than such events would affect larger lenders. In addition, since we are only permitted to provide financial services to borrowers located in the city of Wujiang, our ability to geographically diversify our economic risks is limited by the local markets and economies. Also, decreases in local real estate value could adversely affect the values of the real property used as collateral in our direct loan and guarantee business. Such adverse changes in the local economy may have a negative impact on the ability of borrowers to repay their loans and the value of our collateral and our results of operations and financial condition may be adversely affected.

Our allowance for loan losses may not be sufficient to absorb future losses or prevent a material adverse effect on our business, financial condition, or results of operations.

Our risk assessment procedure uses historical information to estimate any potential losses based on our experience, judgment, and expectations regarding our borrowers and the economic environment in which we and our borrowers operate. The allowance for both loan losses and guarantee services were estimated based on 1% of the quarterly outstanding loan and guarantee portfolio balances. To the extent the mandatory loan loss reserve rate of 1% as required by PBOC differs from management’s estimates, the management elects to use the higher rate. We believe we are required to establish an allowance for loan losses pursuant to “ The Guidance on Provisioning for Loan Losses ” (the “Provision Guidance”) issued by PBOC and “Financial Practices of Rural Microcredit Companies of Jiangsu Province Pilot” (the “Jiangsu Financial Practices”) issued by Finance Office of Jiangsu Province in 2009. However, our implementation of the measurements set forth in the Provision Guidance and the Jiangsu Financial Practices, especially the Five-Tier approach in making the specific reserve, may be deemed not in compliance with the applicable banking regulations. Our loan loss reserves may not be sufficient to absorb future loan losses or prevent a material adverse effect on our business, financial condition, or results of operations.

Increases to the provision for loan losses and provision on financial guarantee services will cause our net income to decrease.

Our business is subject to fluctuations based on local economic conditions. These fluctuations are neither predictable nor within our control and may have a material adverse impact on our operations and financial condition. We may decide to increase our provision for loan losses and provision on financial guarantee services in light of the borrower’s repayment ability and/or the lack of clarity in the applicable banking regulations with regard to microcredit companies. The regulatory authority may also require an increase in the provision for loan losses and provision on financial guarantee services or the recognition of further loan charge-offs, based on judgments different from those of our management. Any increase in the provision for loan losses and provision on financial guarantee services will result in a decrease in net income and may have a material adverse effect on our financial condition and results of operations.

We lack significant product and business diversification. Accordingly, our future revenues and earnings are more susceptible to fluctuations than a more diversified company.

Currently, our primary business activities include offering direct loans and providing guarantee services to our customers. If we are unable to maintain and grow the operating revenues from our business or develop additional revenue streams, our future revenues and earnings are not likely to grow and could decline. Our lack of significant product and business diversification could inhibit the opportunities for growth of our business, revenues and profits.

Competition in the microcredit industry is growing and could cause us to lose market share and revenues in the future.

We believe that the microcredit industry is an emerging market in China. We may face growing competition in the microcredit industry and we believe that the microcredit market is becoming more competitive as this industry matures and begins to consolidate. We currently compete with traditional financial institutions, other microcredit companies, and some cash-rich state-owned companies or individuals that lend to SMEs. Some of our competitors have larger and more established borrower bases and substantially greater financial, marketing and other resources than we do. As a result, we could lose market share and our revenues could decline, thereby adversely affecting our earnings and potential for growth.

If we fail to remediate the material weaknesses in our internal control over financial reporting that have been identified, we may be unable to accurately report our results of operations or prevent misstatements, and investor confidence and the market price of our Common Stock may be materially and adversely affected.

Prior to our IPO, we were a private company with limited accounting personnel and other resources with which to address our internal controls and procedures. Our independent registered public accounting firm is not required to and has not conducted an audit or assessment of our internal control over financial reporting. In August 2014, the Company discovered RMB 7 million (approximately $1.1 million) was transferred (the “Transfer at Issue”) from the bank account of WFOE, without authorization, to the personal account of Mr. Qin, the then CEO of the Company. The Company appointed a special committee (the “Special Committee”) of the Board of Directors to conduct an internal review surrounding the Transfer at Issue. The internal review indicated that the Company’s control deficiencies contributed to the Transfer at Issue. Since Mr. Qin had the sole authority to approve fund transfers, there was a lack of checks and balances over transfers. The Company filed a report with a local Wujiang Police Department charging Mr. Qin with misappropriating RMB 7 million. The Company retained a local law firm to assist the Company in following up with the Police Department with regard to the development of the case and collection of the missing funds. According to the PRC counsel, if the prosecutors agree to criminally indict Mr. Qin, there will be an accompanying civil collection suit. If the prosecutors determined not to criminally indict Mr. Qin, then the Company will initiate a civil proceeding against Mr. Qin to collect such funds. The prosecutors have not notified the Company of their decision as of the date of this prospectus. There is no assurance that we would be able to collect the missing funds, if any.

As a result of the control deficiencies in the fund transfer procedure and other material weaknesses identified, the Company concluded its internal controls over financial reporting were not effective as of December 31, 2016. Such material weaknesses may result in our inability to accurately report our financial results or prevent material misstatements.

Our business depends on the continuing efforts of members of our management. If we lose their services, our business may be severely disrupted.

Our business operations depend on the continuing efforts of members of our management. If one or more of our management were unable or unwilling to continue their employment with us, we might not be able to replace them in a timely manner, or at all. We may incur additional expenses to recruit and retain qualified replacements. Our business may be severely disrupted and our financial condition and results of operations may be materially and adversely affected. In addition, members of our management team may join a competitor or form a competing company. We may not be able to successfully enforce any contractual rights we have with our management team, in particular in China, where all of these individuals reside and where our business is operated through Wujiang Luxiang through various VIE Agreements. As a result, our business may be negatively affected due to the loss of one or more members of our management.

We require highly qualified personnel and if we are unable to hire or retain qualified personnel, we may not be able to grow effectively.

Our future success also depends upon our ability to attract and retain highly qualified personnel. Expansion of our business and our management will require additional managers and employees with industry experience, and our success will be highly dependent on our ability to attract and retain skilled management personnel and other employees. We may not be able to attract or retain highly qualified personnel. Competition for skilled personnel is significant in China. This competition may make it more difficult and expensive to attract, hire and retain qualified managers and employees.

We have no insurance coverage for our lending or guarantee business or our bank accounts, which could expose us to significant costs and business disruption.

Risks associated with our business and operations include, but are not limited to, borrowers’ failure to repay the outstanding principal and interest when due and our loss reserve is not sufficient to cover such failure, losses of key personnel, business interruption due to power shortages or network failure, and risks posed by natural disasters including storms, floods and earthquakes, any of which may result in significant costs or business disruption. We do not maintain any credit insurance, business interruption insurance, general third-party liability insurance, nor do we maintain key-man life insurance or any other insurance coverage except the mandatory social insurance for the employees of Wujiang Luxiang. If we incur any loss that is not covered by our loss reserve, our business, financial condition and results of operations could be materially and adversely affected.

We maintain our cash with various banks. Our cash accounts are not insured or otherwise protected. Should any bank or trust company holding our cash deposits become insolvent, or if we are otherwise unable to withdraw funds, we could lose the cash on deposit with that particular bank or trust company.

Risks Relating to Our Financial Leasing Business

Our financial leasing business is currently on hold.

In February 2015, we signed two leasing contracts worth a total of total $4.88 million. We do not currently have further funds to deploy in the financial leasing business and plan to hold off expansion of the leasing business until otherwise determined by the management based on the economic environment and other considerations. Even if we decide to resume the financial leasing business, we may not be able to develop our financial leasing business as planned and generate significant revenues. The revenue and income potential of our proposed financial leasing business is unproven and the lack of operating history makes it difficult to evaluate the future prospects of this business.

We have no experience in the equipment leasing and financing business and our knowledge of the Chinese financial leasing market is limited.

None of the PFL management has any prior experience in the operation or management of equipment financing and leasing. Our knowledge of the Chinese financial leasing industry and market is very limited. Our perception of the potential customers’ needs and their acceptance of our financial leasing services may not be accurate. We may not be able to work with equipment providers to successfully purchase qualified equipment identified by our customers on terms acceptable to us. We may not be able to establish sound financial modeling in the calculation of the interest rate and residual value. Such inexperience and lack of active knowledge may lead to failure of our financial leasing business.

Lack of knowledge of financial leasing benefits among potential customers may make it difficult for us to market our services.

Currently, a high proportion of Chinese management, especially management of SMEs, still perceive leasing companies as a “second-class bank”, and very few recognize the flexibility and benefits that financial leasing provides. We may need to invest a tremendous amount of time and effort toward lease education so that potential customers can fully appreciate the flexibility leasing offers to deploy their assets. Failure in such education may make it difficult for us to market our financial leasing services.

A protracted economic downturn may cause an increase in defaults under our leases and lower demand for the commercial equipment we lease.

A protracted economic downturn, similar to the one China experienced in recent years, could result in a decline in the demand for some of the types of equipment or services we finance, which could lead to a decline in originations. A protracted economic downturn may slow the development and continued operation of small commercial businesses, which is one of the primary markets for the commercial equipment leased by us. In addition, a protracted downturn could result in an increase in delinquencies and defaults by our lessees and other obligors, which could have an adverse effect on our cash flow and earnings. These factors could have a material adverse effect on our business, financial condition and results of operations.

Our allowance for lease credit losses may prove to be inadequate to cover future credit losses.

We will maintain an allowance for credit losses on our leases, at an amount we believe is sufficient to provide adequate protection against losses on the leases. We cannot be sure that our allowance for credit losses will be adequate over time to cover losses caused by adverse economic factors, or unfavorable events affecting specific leases, industries or geographic areas. Losses in excess of our allowance for credit losses may have a material adverse effect on our business, financial condition and results of operations.

We are vulnerable to changes in the demand for the types of equipment we plan on leasing or price reductions in such equipment.

Our leasing portfolio will be comprised of a wide variety of equipment including, but not limited to, public transportation vehicles such as subway cars, trains, buses, medical equipment, equipment used in textile production and agricultural equipment. Reduced demand for financing of the types of equipment we lease could adversely affect our lease origination volume, which in turn could have a material adverse effect on our business, financial condition and results of operations. Technological advances may lead to a decrease in the price of these types of equipment and a consequent decline in the need for financing of such equipment. These changes could reduce the need for outside financing sources that would reduce our lease financing opportunities and origination volume in such products. In the event that demand for financing the types of equipment that we lease declines, we will need to expand our efforts to provide lease financing for other products.

We may face growing competition, which could cause us to lower our lease rates, hurt our origination volume and strategic position and adversely affect our financial results.

The Chinese financial leasing industry is becoming competitive in recent years. We will compete for customers with a number of international, national, regional and local banks and finance companies and financial leasing companies. Our competitors also include equipment manufacturers that lease or finance the sale of their own products. Our competitors include larger, more established companies, some of which may possess substantially greater financial, marketing and operational resources than us, including lower cost of funds and access to capital markets and other funding sources which may be unavailable to us. If a competitor was to lower its lease rates, we could be forced to follow such trend or be unable to retain origination volume, either of which would have a material adverse effect on our business, financial condition and results of operations.

If PFL were to lose key personnel, its operating results may suffer.

The success of our financial leasing business depends to a large extent upon the abilities and continued efforts of senior management. The loss of the services of one or more of the key members of our senior management before we are able to attract and retain qualified replacement personnel could have a material adverse effect on the development and success of our financial leasing business.

Recently proposed accounting changes may negatively impact the demand for equipment leases.

On August 17, 2010, the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) released a joint exposure draft that would dramatically change lease accounting for both lessees and lessors by requiring balance sheet recognition of all leases. At their June 13, 2012 joint board meeting, the International Accounting Standards Board (IASB) and the FASB (collectively, the “Boards”) agreed on an approach for the accounting for lease expenses as part of their joint project to revise lease accounting. In September 2012, the Boards reached tentative decisions regarding sale and leaseback transactions and other lease accounting issues. The Boards issued revised exposure draft in May 2013, with a 120-day comment period. As part of the deliberation process, the Boards reviewed nearly 800 comment letters and held public roundtable meetings and preparer workshops. A key issue raised by stakeholders in this process was the front-loading of expense recognition for lessees in the proposal. The Boards have tentatively agreed to change the expense recognition pattern and income statement presentation for certain leases. If these accounting changes are adopted in a form that makes equipment leasing less attractive to small business owners, it could result in a reduction in the demand for equipment leases, and could have an adverse effect on our results of operations and financial condition.

Risks Relating to Doing Business in China

PRC regulation of loans to, and direct investments in, PRC entities by offshore holding companies may delay or prevent us from using proceeds from financing activities to make loans or additional capital contributions to our PRC operating subsidiaries.

As an offshore holding company with PRC subsidiaries, we may transfer funds to our PRC subsidiaries or finance our operating entity by means of loans or capital contributions. Any loans to our PRC subsidiaries, which are foreign-invested enterprises, cannot exceed statutory limits based on the difference between the amount of our investments and registered capital in such subsidiaries, and shall be registered with SAFE, or its local counterparts. Furthermore, any capital increase contributions we make to our PRC subsidiaries, which are foreign-invested enterprises, shall be approved by MOFCOM, or its local counterparts. We may not be able to obtain these government registrations or approvals on a timely basis, if at all. If we fail to receive such registrations or approvals, our ability to provide loans or capital to increase contributions to our PRC subsidiaries may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.

A slowdown of the Chinese economy or adverse changes in economic and political policies of the PRC government could negatively impact China’s overall economic growth, which could materially adversely affect our business.

We are a holding company and all of our operations are entirely conducted in the PRC. Although the PRC economy has grown in recent years, such growth may not continue. A slowdown in overall economic growth, an economic downturn or recession or other adverse economic developments in the PRC may materially reduce the demand for our direct lending, guarantee and financial leasing services and may have a materially adverse effect on our business.

China’s economy differs from the economies of most other countries in many respects, including the amount of government involvement in the economy, the general level of economic development, growth rates and government control of foreign exchange and the allocation of resources. While the PRC economy has grown significantly over the past few decades, this growth has remained uneven across different periods, regions and economic sectors.

The PRC government also exercises significant control over China’s economic growth by allocating resources, controlling the payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Any actions and policies adopted by the PRC government could negatively impact the Chinese economy, which could materially adversely affect our business.

Substantial uncertainties and restrictions with respect to the political and economic policies of the PRC government and PRC laws and regulations could have a significant impact upon the business we may be able to conduct in the PRC and accordingly on the results of our operations and financial condition.

Our business operations may be adversely affected by the current and future political environment in the PRC. The Chinese government exerts substantial influence and control over the manner in which we must conduct our business activities. Our ability to operate in China may be adversely affected by changes in Chinese laws and regulations. Under the current government leadership, the government of the PRC has been pursuing economic reform policies that encourage private economic activities and greater economic decentralization. However, the government of the PRC may not continue to pursue these policies, or may significantly alter these policies from time to time without notice.

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business, or the enforcement and performance of our arrangements with borrowers in the event of the imposition of statutory liens, death, bankruptcy or criminal proceedings. Only after 1979 did the Chinese government begin to promulgate a comprehensive system of laws that regulate economic affairs in general, deal with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade, as well as encourage foreign investment in China. Although the influence of the law has been increasing, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. Also, because these laws and regulations are relatively new, and because of the limited volume of published cases and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve significant uncertainties. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. In addition, there have been constant changes and amendments of laws and regulations over the past 30 years in order to keep up with the rapidly changing society and economy in China. Because government agencies and courts provide interpretations of laws and regulations and decide contractual disputes and issues, their inexperience in adjudicating new business and new polices or regulations in certain less developed areas causes uncertainty and may affect our business. Consequently, we cannot clearly foresee the future direction of Chinese legislative activities with respect to either businesses with foreign investment or the effectiveness on enforcement of laws and regulations in China. The uncertainties, including new laws and regulations and changes of existing laws, as well as judicial interpretation by inexperienced officials in the agencies and courts in certain areas, may cause possible problems to foreign investors.

Our microcredit business is subject to extensive regulation and supervision by state, provincial and local government authorities, which may interfere with the way we conduct our business and may negatively impact our financial results.

We are subject to extensive and complex state, provincial and local laws, rules and regulations with regard to our loan and guarantee operations, capital structure, allowance for loan losses, among other things. These laws, rules and regulations are issued by different central government ministries and departments, provincial and local governments while enforced by different local authorities in the city of Wujiang. In addition, it is not clear whether microcredit companies are subject to certain banking regulations the state-owned and commercial banks are subject to, including the regulation with regard to loan loss reserves. Therefore, the interpretation and implementation of such laws, rules and regulations may not be clear and occasionally we have to depend on oral inquiries with local government authorities. As a result of the complexity, uncertainties and constant changes in these laws, rules and regulation, including changes in interpretation and implementation of such, our business activities and growth may be adversely affected if we do not respond to the changes in a timely manner or are found to be in violation of the applicable laws, regulations and policies as a result of a different position from ours taken by the competent authority in the interpretation of such applicable laws, regulations and policies. If we were found to be not in compliance with these laws and regulations, we may be subject to sanctions by regulatory authorities, monetary penalties and/or reputation damage, which could have a material adverse effect on our business operation and profitability.

Lack of financial leasing regulations could negatively impact our business.

Currently, there is no uniform equipment title registration process and system in China, as each municipality adopts different procedures. The pending China Financial Leasing Law is expected to unify the registration procedures and protect the lessor against a “good-faith” third-party claim if the leased assets are registered in the lessor’s name. In the absence of such central title registration system, the lessors’ ownership interest on the leased equipment may be threatened. Loss of ownership to the leased equipment will have a negative effect on our financial position.

We may be subject to administrative sanctions in the event the extension we obtained on contribution of PFL’s registered capital is reversed or determined to be not effective or if we are not able to contribute the remainder of the registered capital as required.

Pursuant to Foreign Wholly-Owned Enterprise Law and relevant implementation rules, 15% of the U.S. $50 million registered capital of PFL is required to be contributed within initial three months of PFL obtaining its business license on September 5, 2013 and the remainder to be contributed within two years after the business license is granted. We did not make any contributions within the three-month period since we expected to fund such contribution with the proceeds from the follow-on offering. Based on our oral inquiries with the local Commission of Commerce of Wujiang, we were told that the required initial installment would be reduced to 10% in 2014 and that the competent authority would refrain from taking specific administrative measures against us once the first installment of capital contribution is paid. In addition, we were told by Wujiang Economic and Technological Development Zone (“WETDZ”), where PFL is incorporated and located, that there will be no penalty for the delayed contribution of the first installment of the registered capital. In the event the orally granted extension or the advice we received from WETDZ is reversed or found to be not valid by a relevant authority, we may be subject to administrative sanctions, including monetary penalties ranging from 5% to 15% of the portion that has not been paid on time, or from $375,000 to $1,125,000 if none was contributed at the time of the sanction. In October 2014, we contributed substantially all of the net proceeds raised in the follow-on offering to the registered capital requirement of PFL.

In addition, the new PRC Company Law that became effective on March 1, 2014, radically changed the registered capital requirements, including deleting the requirement to contribute the registered capital within certain time frames and the minimum registered capital requirement. However, it is unclear whether PFL will be subject to the loosened registered capital requirements under the new PRC Company Law and, as a result, be exempted from contributing the remainder of the registered capital within two years after the business license is granted. If it is later determined that PFL cannot enjoy the loosened registered capital requirement set forth in the new Company Law, we would have to contribute 85% of the then registered capital of PFL prior to September 4, 2015. In the event we are not able to make such contribution, we may be subject to administrative sanctions, including monetary penalties ranging from 5% to 15% of the portion that has not been paid on time, or from $2,125,000 to $6,375,000 if none of the remaining 85% was contributed at the time of the sanction.

Since we conduct substantially all of our operations in China, and almost all of our officers and directors reside outside the United States, our stockholders may face difficulties in protecting their interests and exercising their rights as a stockholder of CCC.

Although we are incorporated in Delaware, we conduct substantially all of our operations in China through Wujiang Luxiang, our consolidated VIE in China and PFL. All of our current officers and almost all of our directors reside outside the United States and substantially all of the assets of those persons are located outside of the United States. It may be difficult for the stockholders to conduct due diligence on the Company or such directors in your election of the directors and attend shareholders meeting if the meeting is held in China. We plan to have one shareholder meeting each year at a location to be determined, potentially alternating between United States and China. As a result of all of the above, our public shareholders may have more difficulty in protecting their interests through actions against our management, directors or major shareholders than would shareholders of a corporation doing business entirely or predominantly within the United States.

Stockholders may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China based upon United States laws, including the federal securities laws or other foreign laws against us or our management.

Substantially all of our operations are conducted in China, and all of our assets are located in China. A majority of our officers are nationals or residents of the PRC and a substantial portion of their assets are located outside the United States. As a result, Dacheng Law Firm, our counsel as to PRC law, advised us that it may be difficult for a shareholder to effect service of process within the United States upon these persons, or to enforce judgments against us which are obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

Dacheng Law Firm further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other form of reciprocity with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC laws, national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.

Dacheng Law Firm also advised us that in the event that shareholders originate an action against a company without domicile in China for disputes related to contracts or other property interests, the PRC courts may accept a course of action if (a) the disputed contract was concluded or performed in the PRC, or the disputed subject matter is located in the PRC, (b) the company (as defendant) has properties that can be seized within the PRC, (c) the company has a representative organization within the PRC, (d) the parties choose to submit to jurisdiction of the PRC courts in the contract, or (e) the contract is executed or performed within the PRC. The action may be initiated by the shareholder through filing a complaint with the PRC courts. The PRC courts will determine whether to accept the complaint in accordance with the PRC Civil Procedures Law. The shareholder may participate in the action by itself or entrust any other person or PRC legal counsel to participate on behalf of such shareholder. Foreign citizens and companies will have the same right as PRC citizens and companies in an action unless such foreign country restricts the rights of PRC citizens and companies.

We may have difficulty in establishing adequate management and financial controls in China.

The PRC has only recently begun to adopt the management and financial reporting concepts and practices that investors in the U.S. are familiar with. We may have difficulty in hiring and retaining employees in China who have the experience necessary to implement the kind of management and financial controls that are required of a U.S. public company. If we cannot establish such controls, or if we are unable to collect the financial data required for the preparation of our financial statements, or if we are unable to keep our books and accounts in accordance with the U.S. accounting standards for business, we may not be able to continue to file required reports with the SEC, which would likely have a material adverse effect on the performance of our shares of Common Stock.

WFOE’s ability to pay dividends to us may be restricted due to foreign exchange control and other regulations of China.

As an offshore holding company, we may rely principally on dividends from our subsidiaries in China, WFOE and PFL, for our cash requirements. Under the applicable PRC laws and regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise in China is required to set aside a portion of its after-tax profit to fund specific reserve funds prior to payment of dividends. In particular, at least 10% of its after-tax profits based on PRC accounting standards each year is required to be set aside towards its general reserves until the accumulative amount of such reserves reach 50% of its registered capital. These reserves are not distributable as cash dividends.

Furthermore, WFOE’s and PFL’s ability to pay dividends may be restricted due to foreign exchange control policies and the availability of its cash balance. Substantially all of our operations are conducted in China and all of our revenue received, by WFOE through VIE arrangement and by PFL, are denominated in RMB. RMB is subject to exchange control regulation in China, and, as a result, WFOE and PFL may be unable to distribute any dividends outside of China due to PRC exchange control regulations that restrict our ability to convert RMB into U.S. dollars.

The lack of dividends or other payments from WFOE may limit our ability to make investments or acquisitions that could be beneficial to our business, pay dividends or otherwise fund, and conduct our business. Our funds may not be readily available to us to satisfy obligations which have been incurred outside the PRC, which could adversely affect our business and prospects or our ability to meet our cash obligations. Accordingly, if we do not receive dividends from WFOE or PFL, our liquidity and financial condition will be materially and adversely affected.

Our global income may be subject to PRC taxes under the PRC Enterprise Income Tax Law, which could have a material adverse effect on our results of operations.

Under the PRC Enterprise Income Tax Law, or the New EIT Law, and its implementation rules, which became effective in January 2008, an enterprise established outside of the PRC with a “de facto management body” located within the PRC is considered a PRC resident enterprise and will be subject to the enterprise income tax at the rate of 25% on its global income. The implementation rules define the term “de facto management bodies” as “establishments that carry out substantial and overall management and control over the manufacturing and business operations, personnel and human resources, finance and treasury, and acquisition and disposition of properties and other assets of an enterprise.” On April 22, 2009, the State Administration of Taxation (the “SAT”), issued a circular, or SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although the SAT Circular 82 only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the determining criteria set forth in the SAT Circular 82 may reflect the SAT’s general position on how the “de facto management body” text should be applied in determining the resident status of all offshore enterprises for the purpose of PRC tax, regardless of whether they are controlled by PRC enterprises or individuals. Although we do not believe that our legal entities organized outside of the PRC constitute PRC resident enterprises, it is possible that the PRC tax authorities could reach a different conclusion. In such case, we may be considered a PRC resident enterprise and may therefore be subject to the 25% enterprise income tax on our global income. If we are considered a resident enterprise and earn income other than dividends from our PRC subsidiary, a 25% enterprise income tax on our global income could significantly increase our tax burden and materially and adversely affect our cash flow and profitability. In addition to the uncertainty regarding how the new PRC resident enterprise classification for tax purposes may apply, it is also possible that the rules may change in the future, possibly with retroactive effect.

Fluctuations in the foreign currency exchange rate between U.S. Dollars and Renminbi could adversely affect our financial condition.

The value of the RMB against the U.S. dollar and other currencies may fluctuate. Exchange rates are affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government. On July 21, 2005, the PRC government changed its policy of pegging the value of the RMB to the U.S. dollar. Under the new policy, the RMB is permitted to fluctuate within a narrow and managed band against a basket of foreign currencies. Following the removal of the U.S. dollar peg, the RMB appreciated more than 20% against the U.S. dollar over three years. From July 2008 until June 2010, however, the RMB traded stably within a narrow range against the U.S. dollar. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, which could result in a further and more significant appreciation of the RMB against foreign currencies. On June 20, 2010, the PBOC announced that the PRC government would reform the RMB exchange rate regime and increase the flexibility of the exchange rate. We cannot predict how this new policy will impact the RMB exchange rate.

Our revenues and costs are mostly denominated in the RMB, and a significant portion of our financial assets are also denominated in the RMB. Any significant fluctuations in the exchange rate between the RMB and the U.S. dollar may materially adversely affect our cash flows, revenues, earnings and financial position, and the amount of and any dividends we may pay on our Common Stock in U.S. dollars. In addition, fluctuations in the exchange rate between the RMB and the U.S. dollar could also result in foreign currency translation losses for financial reporting purposes.

Future inflation in China may inhibit economic activity and adversely affect our operations.

The Chinese economy has experienced periods of rapid expansion in recent years which can lead to high rates of inflation or deflation. This has caused the PRC government to, from time to time, enact various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the PRC government to once again impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China. Any action on the part of the PRC government that seeks to control credit and/or prices may adversely affect our business operations.

PRC laws and regulations have established more complex procedures for certain acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

Further to the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the New M&A Rules, the Anti-monopoly Law of the PRC, the Rules of Ministry of Commerce on Implementation of Security Review System of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors promulgated by MOFCOM or the MOFCOM Security Review Rules, was issued in August 2011, which established additional procedures and requirements that are expected to make merger and acquisition activities in China by foreign investors more time-consuming and complex, including requirements in some instances that MOFCOM be notified in advance of any change of control transaction in which a foreign investor takes control of a PRC enterprise, or that the approval from MOFCOM be obtained in circumstances where overseas companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies. PRC laws and regulations also require certain merger and acquisition transactions to be subject to merger control review and or security review.

The MOFCOM Security Review Rules, effective from September 1, 2011, which implement the Notice of the General Office of the State Council on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors promulgated on February 3, 2011, further provide that, when deciding whether a specific merger or acquisition of a domestic enterprise by foreign investors is subject to the security review by MOFCOM, the principle of substance over form should be applied and foreign investors are prohibited from bypassing the security review requirement by structuring transactions through proxies, trusts, indirect investments, leases, loans, control through contractual arrangements or offshore transactions.

Further, if the business of any target company that we seek to acquire falls into the scope of security review, we may not be able to successfully acquire such company either by equity or asset acquisition, capital contribution or through any contractual arrangement. We may grow our business in part by acquiring other companies operating in our industry. Complying with the requirements of the relevant regulations to complete such transactions could be time consuming, and any required approval processes, including approval from MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to maintain or expand our market share.

In addition, SAFE promulgated the Circular on the Relevant Operating Issues concerning Administration Improvement of Payment and Settlement of Foreign Currency Capital of Foreign-invested Enterprises, or Circular 142, on August 29, 2008. Its subsequent Supplementary Notice on Issues Relating to the Improvement of Business Operations over Payment and Settlement of Foreign Exchange Capital of Foreign-Invested Enterprises was promulgated by SAFE on July 18, 2011. Under Circular 142, registered capital of a foreign-invested company settled in RMB converted from foreign currencies may only be used within the business scope approved by the applicable governmental authority and may not be used for equity investments in the PRC. In addition, foreign-invested companies may not change how they use such capital without SAFE’s approval, and may not in any case use such capital to repay RMB loans if they have not used the proceeds of such loans according to the loan agreement. Furthermore, SAFE promulgated a circular on November 19, 2012, or Circular 59, which requires the authenticity of settlement of net proceeds from offshore offerings to be closely examined and the net proceeds to be settled in the manner described in the offering documents. Circular 142 and Circular 59 may significantly limit our ability to effectively use the proceeds from future financing activities as the WFOE may not convert the funds received from us in foreign currencies into RMB, which may adversely affect our liquidity and our ability to fund and expand our business in the PRC.

Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.

As our ultimate holding Company is a Delaware corporation, we are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some that may compete with us, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices may occur from time-to-time in the PRC. Our employees or other agents may engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.

Recent SEC’s administrative proceedings against the China affiliates of the five multi-national accounting firms may lead to the deregistering of Chinese accounting firms by the PCAOB, which may affect our ability to engage qualified independent auditors.

The SEC recently commenced administrative proceedings against BDO China Dahua Co. Ltd., Deloitte Touche Tohmatsu Certified Public Accountants Ltd., Ernst & Young Hua Ming LLP, KPMG Huazhen (Special General Fund) and PricewaterhouseCoopers Zhong Tian CPAs Limited for refusing to produce audit work papers and other documents related to PRC-based companies under investigation by the SEC for potential accounting fraud against U.S. investors. The SEC has launched an initiative to address concerns arising from reverse mergers and foreign issuers. The SEC charged these accounting firms with violations of the Securities Exchange Act and the Sarbanes-Oxley Act, which requires foreign public accounting firms to provide, upon the request of the SEC, audit work papers involving any company trading on U.S. markets. Under PRC law, auditors are not permitted to hand over audit work papers as books and records of Chinese companies are afforded protection of secrecy laws. We are not in a position to assess the outcome or ramifications of these ongoing proceedings and investigations. Unless the PRC government changes its secrecy laws, there are risks that the Public Company Accounting Oversight Board (“PCAOB”) may deregister Chinese accounting firms whose audit work papers the PCAOB cannot inspect and such deregistering of Chinese accounting firms by the PCAOB would, in turn, make it difficult for us to engage qualified independent auditors.

If we become directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, and our reputation and could result in a loss to our stockholders, especially if such matter cannot be addressed and resolved favorably.

Recently, U.S. public companies that have substantially all of their operations in China, have been the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centered around financial and accounting irregularities, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of many U.S. listed Chinese companies has sharply decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism and negative publicity will have on our company and our business. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend the Company. This situation may be a major distraction to our management. If such allegations are not proven to be groundless, our company and business operations will be severely hampered and your investment in our stock could be rendered worthless.

The disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC.

Our reports and other filings with the SEC are subject to SEC review in accordance with the rules and regulations promulgated by the SEC under the Securities Act and the Exchange Act. Our SEC filings and other disclosure and public pronouncements are not subject to the review or scrutiny of any PRC regulatory authority. For example, the disclosure in our SEC reports and other filings are not subject to the review by CSRC, a PRC regulator that is tasked with oversight of the capital markets in China. Accordingly, you should review our SEC reports, filings and our other public pronouncements with the understanding that no local regulator has done any review of our company, our SEC reports, other filings or any of our other public pronouncements.

Risks Relating to CCCR’s Corporate Structure

We conduct our lending and guarantee business through Wujiang Luxiang by means of contractual arrangements. If the PRC courts or administrative authorities determines that these contractual arrangements do not comply with applicable regulations, we could be subject to severe penalties and our business could be adversely affected. In addition, changes in such Chinese laws and regulations may materially and adversely affect our business.

There are uncertainties regarding the interpretation and application of PRC laws, rules and regulations, including but not limited to the laws, rules and regulations governing the validity and enforcement of the contractual arrangements between WFOE and each of Wujiang Luxiang. Although we were advised by our PRC counsel, Dacheng Law Offices, that based on their understanding of the current PRC laws, rules and regulations, the structure for operating our business in China (including our corporate structure and contractual arrangements with Wujiang Luxiang and its shareholders) comply with all applicable PRC laws, rules and regulations, and do not violate, breach, contravene or otherwise conflict with any applicable PRC laws, rules or regulations, the PRC courts or regulatory authorities may determine that our corporate structure and contractual arrangements violate PRC laws, rules or regulations. We are aware of a recent case involving Chinachem Financial Services where certain contractual arrangements for a Hong Kong Company to gain economic control over a PRC Company were declared to be void by the PRC Supreme People’s Court. If the PRC courts or regulatory authorities determine that our contractual arrangements are in violation of applicable PRC laws, rules or regulations, our contractual arrangements will become invalid or unenforceable.

If WFOE, Wujiang Luxiang or their ownership structure or the contractual arrangements, are determined to be in violation of any existing or future PRC laws, rules or regulations, or WFOE, or Wujiang Luxiang fails to obtain or maintain any of the required governmental permits or approvals, the relevant PRC regulatory authorities would have broad discretion in dealing with such violations, including:

The imposition of any of these penalties would severely disrupt our ability to conduct business and have a material adverse effect on our financial condition, results of operations and prospects.

On or around September 2011, various media sources reported that the China Securities Regulatory Commission (the “CSRC”) had prepared a report proposing pre-approval by a competent central government authority of offshore listings by China-based companies with variable interest entity structures, such as ours, that operate in industry sectors subject to foreign investment restrictions. However, it is unclear whether the CSRC officially issued or submitted such a report to a higher level government authority or what any such report provides, or whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or what they would provide. If our ownership structure, contractual arrangements or businesses of Wujiang Luxiang are found to be in violation of any existing or future PRC laws or regulations, the relevant governmental authorities, including the CSRC, would have broad discretion in dealing with such violation, including levying fines, confiscating our income or the income of Wujiang Luxiang, revoking the business licenses or operating licenses of Wujiang Luxiang, discontinuing or placing restrictions or onerous conditions on our operations, requiring us to undergo a costly and disruptive restructuring, restricting or prohibiting our use of proceeds from overseas financings to finance our business and operations in China, and taking other regulatory or enforcement actions that could be harmful to our business. Any of these actions could cause significant disruption to our business operations and severely damage our reputation, which would in turn materially and adversely affect our business, financial condition and results of operations.

Our contractual arrangements with Wujiang Luxiang may not be effective in providing control over Wujiang Luxiang.

All of our current revenue and net income is derived from Wujiang Luxiang. According to our inquiries with Jiangsu provincial authorities, provincial direct foreign controlling equity ownership in for-profit companies engaged in rural microcredit services in Jiangsu Province has never been approved and such position will not change in the foreseeable future. Therefore, we do not intend to have an equity ownership interest in Wujiang Luxiang but rely on contractual arrangements with Wujiang Luxiang to control and operate its business. However, these contractual arrangements may not be effective in providing us with the necessary control over Wujiang Luxiang and its operations. Any deficiency in these contractual arrangements may result in our loss of control over the management and operations of Wujiang Luxiang, which will result in a significant loss in the value of an investment in our company. Because of the practical restrictions on direct foreign equity ownership imposed by the Jiangsu provincial government authorities, we must rely on contractual rights through our VIE structure to effect control over and management of Wujiang Luxiang, which exposes us to the risk of potential breach of contract by the shareholders of Wujiang Luxiang. In addition, as Wujiang Luxiang is jointly owned by its shareholders, it may be difficult for us to change our corporate structure if such shareholders refuse to cooperate with us.

The failure to comply with PRC regulations relating to mergers and acquisitions of domestic enterprises by offshore special purpose vehicles may subject us to severe fines or penalties and create other regulatory uncertainties regarding our corporate structure.

On August 8, 2006, MOFCOM, joined by the CSRC, the State-owned Assets Supervision and Administration Commission of the State Council, the SAT, the State Administration for Industry and Commerce (the “SAIC”), and SAFE, jointly promulgated regulations entitled the Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”), which took effect as of September 8, 2006, and as amended on June 22, 2009. This regulation, among other things, has certain provisions that require offshore special purpose vehicles formed for the purpose of acquiring PRC domestic companies and controlled directly or indirectly by PRC individuals and companies, to obtain the approval of MOFCOM prior to engaging in such acquisitions and to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock market. On September 21, 2006, the CSRC published on its official website a notice specifying the documents and materials that are required to be submitted for obtaining CSRC approval.

The application of the M&A Rules with respect to our corporate structure remains unclear, with no current consensus existing among leading PRC law firms regarding the scope and applicability of the M&A Rules. We believe that the MOFCOM and CSRC approvals under the M&A Rules were not required in the context of our share exchange transaction because at such time the share exchange was a foreign related transaction governed by foreign laws, not subject to the jurisdiction of PRC laws and regulations. However, we cannot be certain that the relevant PRC government agencies, including the CSRC and MOFCOM, would reach the same conclusion, and we cannot be certain that MOFCOM or the CSRC will not deem that the transactions effected by the share exchange circumvented the M&A Rules, and other rules and notices, or that prior MOFCOM or CSRC approval is required for overseas financing. Further, we cannot rule out the possibility that the relevant PRC government agencies, including MOFCOM, would deem that the M&A Rules required us or our entities in China to obtain approval from MOFCOM or other PRC regulatory agencies in connection with WFOE’s control of Wujiang Luxiang through contractual arrangements.

If the CSRC, MOFCOM, or another PRC regulatory agency subsequently determines that CSRC, MOFCOM or other approval was required for the share exchange transaction and/or the VIE arrangements between WFOE and Wujiang Luxiang, or if prior CSRC approval for overseas financings is required and not obtained, we may face severe regulatory actions or other sanctions from MOFCOM, the CSRC or other PRC regulatory agencies. In such event, these regulatory agencies may impose fines or other penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the repatriation of the proceeds from overseas financings into the PRC, restrict or prohibit payment or remittance of dividends to us or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our Common Stock. The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to delay or cancel overseas financings, to restructure our current corporate structure, or to seek regulatory approvals that may be difficult or costly to obtain.

The M&A Rules, along with certain foreign exchange regulations discussed below, will be interpreted or implemented by the relevant government authorities in connection with our future offshore financings or acquisitions, and we cannot predict how they will affect our acquisition strategy. For example, Wujiang Luxiang’s ability to remit its profits to us, or to engage in foreign-currency-denominated borrowings, may be conditioned upon compliance with the SAFE registration requirements by such Chinese domestic residents, over whom we may have no control.

Regulations relating to offshore investment activities by PRC residents may limit our ability to acquire PRC companies and could adversely affect our business.

In July 2014, SAFE promulgated the Circular on Issues Concerning Foreign Exchange Administration Over the Overseas Investment and Financing and Roundtrip Investment by Domestic Residents Via Special Purpose Vehicles , or Circular 37, which replaced Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Corporate Financing and Roundtrip Investment through Offshore Special Purpose Vehicles , or Circular 75. Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, referred to in Circular 37 as a “special purpose vehicle” for the purpose of holding domestic or offshore assets or interests. Circular 37 further requires amendment to a PRC resident’s registration in the event of any significant changes with respect to the special purpose vehicle, such as an increase or decrease in the capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. Under these regulations, PRC residents’ failure to comply with specified registration procedures may result in restrictions being imposed on the foreign exchange activities of the relevant PRC entity, including the payment of dividends and other distributions to its offshore parent, as well as restrictions on capital inflows from the offshore entity to the PRC entity, including restrictions on its ability to contribute additional capital to its PRC subsidiaries. Further, failure to comply with the SAFE registration requirements could result in penalties under PRC law for evasion of foreign exchange regulations.

As Circular 37 is newly-issued, it is unclear how these regulations will be interpreted and implemented. In addition, different local SAFE branches may have different views and procedures as to the interpretation and implementation of the SAFE regulations, and it may be difficult for our ultimate shareholders or beneficial owners who are PRC residents to provide sufficient supporting documents required by the SAFE or to complete the required registration with the SAFE in a timely manner, or at all. Any failure by any of our shareholders who is a PRC resident, or is controlled by a PRC resident, to comply with relevant requirements under these regulations could subject us to fines or sanctions imposed by the PRC government, including restrictions on WFOE’s ability to pay dividends or make distributions to us and on our ability to increase our investment in the WFOE.

Our agreements with Wujiang Luxiang are governed by the laws of the PRC and we may have difficulty in enforcing any rights we may have under these contractual arrangements.

As all of our contractual arrangements with Wujiang Luxiang are governed by the PRC laws 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 the United States. As a result, uncertainties in the PRC legal system could further limit our ability to enforce these contractual arrangements. 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 we are unable to enforce these contractual arrangements, we may not be able to exert effective control over Wujiang Luxiang, and our ability to conduct our business may be materially and adversely affected.

The Wujiang Luxiang Shareholders have potential conflicts of interest with us, which may adversely affect our business.

All ultimate individual shareholders of the 11 Chinese entities and Mr. Huichun Qin, which collectively own 100% of Wujiang Luxiang’s outstanding equity interests, or their representatives, are beneficial owners of shares of Common Stock of CCC through their BVI entities. Equity interests held by each of these shareholders in CCC is less than its interest in Wujiang Luxiang as a result of our introduction of outside investors as shareholders of CCC. In addition, such shareholders’ equity interest in our company will be further diluted as a result of any future offering of equity securities. As a result, conflicts of interest may arise as a result of such dual shareholding and governance structure.

If such conflicts arise, these shareholders may not act in our best interests and such conflicts of interest may not be resolved in our favor. In addition, these shareholders may breach or cause Wujiang Luxiang to breach or refuse to renew the VIE Agreements that allow us to exercise effective control over Wujiang Luxiang and to receive economic benefits from Wujiang Luxiang. Delaware law provides that directors owe a fiduciary duty to a company, which requires them to act in good faith and in the best interests of the company and not to use their positions for personal gain. If we cannot resolve any conflicts of interest or disputes between us and such shareholders or any future beneficial owners of Wujiang Luxiang, we would have to rely on arbitral or legal proceedings to remedy the situation. Such arbitral and legal proceedings may cost us substantial financial and other resources and result in disruption of our business, the outcome of which may adversely affect the Company.

If Wujiang Luxiang, or PFL fail to maintain the requisite registered capital, licenses and approvals required under PRC law, our business, financial condition and results of operations may be materially and adversely affected.

Foreign investment is highly regulated by the PRC government and the foreign investment in the lending industry is restricted by local authorities. Numerous regulatory authorities of the central PRC government, provincial and local authorities are empowered to issue and implement regulations governing various aspects of the lending industry. Foreign investment in the financial leasing industry is also subject to foreign investment regulations. Each of Wujiang Luxiang and PFL are required to obtain and maintain certain assets relevant to its business as well as applicable licenses or approvals from different regulatory authorities in order to provide their current services. These registered capital and licenses are essential to the operation of our business and are generally subject to annual review by the relevant governmental authorities. Furthermore, Wujiang Luxiang and PFL may be required to obtain additional licenses. If we fail to obtain or maintain any of the required registered capital, licenses or approvals, our continued business operations in the lending, and leasing industries may subject us to various penalties, such as confiscation of illegal net revenue, fines and the discontinuation or restriction of our operations. Any such disruption in the business operations of Wujiang Luxiang or PFL will materially and adversely affect our business, financial condition and results of operations.

Risks Relating to Our Securities

Our Common Stock may be thinly traded and our stockholders may be unable to sell at or near ask prices or at all if they need to sell their shares to raise money or otherwise desire to liquidate their shares.

Our Common Stock may be “thinly-traded”, meaning that the number of persons interested in purchasing our Common Stock at or near bid prices at any given time may be relatively small or non-existent. This situation may be attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and might be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. Broad or active public trading market for our Common Stock may not develop or be sustained.

The market price for our Common Stock may be volatile.

The market price for our Common Stock may be volatile and subject to wide fluctuations due to factors such as:

In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our Common Stock.

Volatility in our Common Stock price may subject us to securities litigation.

The market for our Common Stock may have, when compared to seasoned issuers, significant price volatility and we expect that our share price may continue to be more volatile than that of a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.

As an “emerging growth company” under applicable law, we will be subject to lessened disclosure requirements. Such reduced disclosure may make our Common Stock less attractive to investors.

For as long as we remain an “emerging growth company” as defined in the JOBS Act, we will elect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Because of these lessened regulatory requirements, our stockholders would be left without information or rights available to stockholders of more mature companies. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile.

Our status as an “emerging growth company” under the JOBS Act may make it more difficult to raise capital when we need to do it.

Because of the exemptions from various reporting requirements provided to us as an “emerging growth company”, we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.

We will incur increased costs and demands upon management as a result of complying with the laws and regulations that affect public companies, which could materially adversely affect our results of operations, financial condition, business and prospects.

As a public company and particularly after we cease to be an “emerging growth company,” we will incur significant legal, accounting and other expenses that we did not incur as a private company, including costs associated with public company reporting and corporate governance requirements. These requirements include compliance with Section 404(b) and other provisions of the Sarbanes-Oxley Act, as well as Section 14 rules implemented by the SEC and NASDAQ. In addition, our management team will also have to adapt to the requirements of being a public company. We expect that compliance with these rules and regulations will substantially increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

The increased costs associated with operating as a public company will decrease our net income or increase our net loss, and may require us to reduce costs in other areas of our business or increase the prices of our products or services. Additionally, if these requirements divert our management’s attention from other business concerns, they could have a material adverse effect on our results of operations, financial condition, business and prospects.

Provisions in our By-laws and Delaware laws might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our Common Stock.

Provisions of our by-laws and Delaware laws may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our Common Stock. These provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. These provisions include:

In addition, we are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with an interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder, unless such transactions are approved by our board of directors. The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our Common Stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your Common Stock in an acquisition.

The elimination of monetary liability against our directors, officers and employees under our certificate of incorporation and the existence of indemnification of our directors, officers and employees under Delaware law may result in substantial expenditures by us and may discourage lawsuits against our directors, officers and employees.

Our certificate of incorporation contains provisions which eliminate the liability of our directors for monetary damages to us and our stockholders to the maximum extent permitted under the corporate laws of Delaware. We may also provide contractual indemnification obligations under agreements with our directors, officers and employees. These indemnification obligations could result in our incurring substantial expenditures to cover the cost of settlement or damage awards against directors, officers and employees, which we may be unable to recoup. These provisions and resultant costs may also discourage us from bringing a lawsuit against directors, officers and employees for breach of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors, officers and employees even though such actions, if successful, might otherwise benefit the Company and our shareholders.

Risks Related to Sorghum Group

Sorghum Group has a limited operating history in a new and evolving industry, and its future growth and prospects may be unpredictable and subject to a number of variables.

The online lending financial services industry is a new, growing and evolving industry in China. The PRC regulatory framework for this industry is also evolving and may remain uncertain for the foreseeable future. If China’s online lending financial services industry does not maintain the level of a healthy development in the long term, and particularly if PRC laws and regulations impose undue restrictions on this industry, there may not be an adequate market for the loan products facilitated on Sorghum Group’s platforms. Sorghum Group only began operating its online lending facilitation platforms in 2009 and is subject to all potential risks involved in a developing business enterprise in a new and evolving industry. The likelihood of Sorghum Group’s continued success must be considered in light of the challenges, uncertainties, complications, unpredictable costs and delays frequently encountered in connection with a new and evolving industry and the competitive environment in which it operates.

Potential borrowers and investors may not be familiar with the online lending intermediary services segment and may not be able to distinguishing Sorghum Group’s services from those of its competitors. Attracting new borrowers and investors to transact on Sorghum Group’s platforms is crucial to increasing the volume of loans facilitated through Sorghum Group’s platforms and to the success of its business. In addition, borrowers may not view loan obligations facilitated on Sorghum Group’s platforms as having the same consequences for default as the credit obligations arising from traditional channels, such as bank loans. If a borrower defaults on his or her payment obligations on a loan, the investor funding the loan may not realize the expected return from the investment. This could discourage investors from further lending on Sorghum Group’s platforms and could materially and adversely affect its business.

You should consider, among all other factors, Sorghum Group’s prospects for future operation success in light of the risks and uncertainties encountered by those businesses in their early stages of development. Sorghum Group may not be able to successfully address these risks and uncertainties or implement its operating strategies. If Sorghum Group fails to do so, such failure could materially harm its business to cause it to cease operations.

If new negative publicity arises with respect to the online finance industry or P2P lending industry in general, Sorghum Group’s business prospects and operating results could be adversely affected.

There have been a number of business failures and fraud or unfair dealing allegations against companies in the P2P lending industry in China, especially since 2016. The PRC government has recently issued rules and regulations, including the Guidelines and Interim Measures, to develop a more transparent regulatory environment for the online lending industry. Not all companies in China’s online lending industry have been fully compliant with these regulations, and this has adversely impacted the reputation of China’s P2P finance industry as a whole.

If negative publicity arises concerning the online lending industry or P2P finance industry in general or Sorghum Group as a business in particular, Sorghum Group’s ability and efforts to resolve borrower and investor complaints, improve the experience of borrowers and investors with its services, and manage specific customer concerns or issues in its operations, regulatory challenges or litigation risks could be diminished. If borrowers or investors associate those failed companies or unfair business practices with Sorghum Group, they may be less willing to join Sorghum Group’s platforms or continue to participate in future transactions. Negative reputation can also arise from many other sources, such as misconduct by partners or other third-party service providers. Those negative publicity with respect to Sorghum Group’s partners or service providers could also affect Sorghum Group’s business and operating results to the extent that its operations rely on these partners or if borrowers and investors associate Sorghum Group with those partners. All of those factors could adversely affect the customer confidence in the use of Sorghum Group’s platforms, and as a result, could harm Sorghum Group’s business and operating results.

Sorghum Group’s recent rapid growth may not be indicative of its future prospects, and any significant decrease in customers’ acquisitions of its loan products could adversely affect its business and operation results.

Sorghum Group has been experiencing significant growth since 2015, particularly with respect to the number of participating borrowers and investors and the total number of loans facilitated. Its future growth, however, may not continue at the current rate, or at all. The relatively short operating history of the online finance industry and the current peer-to-peer lending market conditions may not present an adequate basis for evaluating Sorghum Group’s business prospects and financial performance. Like its industry peers, Sorghum Group has a limited operating history under its current business mode. It has and will continue to encounter risks, uncertainties, unforeseeable costs and hurdles as it continues to develop.

To maintain its growth momentum, Sorghum Group must continue to increase loan facilities through its website and mobile platforms by attracting a large number of new borrowers who meet Sorghum Group’s platform borrowing standards. In addition to small size loans, Sorghum Group also needs to increase the facilitation of the number of larger or longer-term loans to its existing borrowers as they demonstrate good credit behavior. In addition, Sorghum Group must also ensure its loan products generate sufficiently high returns to incentivize new and existing investors so that they maintain or increase their investments in different products. Any substantial decrease in the number of borrower and investor participations in Sorghum Group’s transactions could adversely affect its business prospects, results of operations and financial condition.

Sorghum Group’s online facilitation operations require adequate funding from investors, and access to sufficient capital cannot be assured.

Sorghum Group’s business operations are based on the matching of borrowers and investors through its online platforms. The growth and success of its future operations depend on the availability of adequate capital to meet borrower demand for loans offered. A large portion of Sorghum Group’s capital is currently derived from affluent, high net-worth individuals and small business owners. Sorghum Group has also been cooperating with industry peers and institutional investors to attract their investments into its platforms. In order to maintain the requisite level of funding for the loans facilitated on Sorghum Group’s platforms to meet borrower demand, Sorghum Group will need to optimize the investor composition to include more individual investors and also a higher number of institutional investors, which usually invest larger amounts compared to individual investors. If adequate funds are not available to meet borrowers’ demand for loans when they arise, the volume of loans facilitated on its platforms may be significantly impacted. Also, to the extent that investors’ risk appetite changes, investors may choose to not invest in loans facilitated on its platforms. To the extent that it is necessary to obtain additional capital from investors, such capital may not be available to its platforms on acceptable terms or at all. If its platforms are unable to provide potential borrowers with loans or fund the loans on a timely basis due to insufficient capital on its platforms, Sorghum Group may experience a loss of market share or slower than expected growth, which would harm its business, financial condition and results of operations.

If Sorghum Group cannot maintain or increase the volume of loan transactions facilitated through its platforms or unable to retain existing borrowers or investors or attract new borrowers or investors, its business and results of operations will be adversely affected.

The volume of loan transactions facilitated through Sorghum Group’s platforms has grown steadily and rapidly since its inception. Sorghum Group intends to continue to dedicate significant resources to its user acquisition efforts, including establishing new acquisition channels, particularly as it continues to expand its platforms capacities and introduce new loan products. Sorghum Group utilizes online channels, such as search engine marketing, search engine optimization and partnerships with internet companies, as well as offline marketing network for user acquisition. If there are insufficient qualified loan requests, investors may be unable to invest their capital in a timely or efficient manner and may seek other investment opportunities. If there are insufficient investor commitments, borrowers may be unable to obtain capital through its platforms and may turn to other sources for their borrowing needs and investors who wish to exit their investments prior to maturity on the secondary loan market may not be able to do so in a timely manner.

The overall transaction volume may be affected by several factors, including Sorghum Group’s brand recognition and reputation, the interest rates offered to borrowers and investors relative to market rates, the effectiveness of its risk control, the repayment rate of borrowers on its platforms, the efficiency of its platforms, the macroeconomic environment and other factors. In connection with the introduction of new products or in response to general economic conditions, Sorghum Group may also impose more stringent borrower qualifications to ensure the quality of loans on its platforms, which may negatively affect the growth of loan volume. If any of its current customer acquisition channels become less effective, if Sorghum Group is unable to continue to use any of these channels or if Sorghum Group is not successful in using new channels, Sorghum Group may not be able to attract new borrowers and investors in a cost-effective manner or convert potential borrowers and investors into active borrowers and investors, and may even lose its existing borrowers and investors to its competitors. If Sorghum Group is unable to attract qualified borrowers and sufficient investor commitments or if borrowers and investors do not continue to participate in its platforms at the current rates, Sorghum Group might be unable to increase its loan transaction volume and revenues as Sorghum Group expects, and its business and results of operations may be adversely affected.

If Sorghum Group is unable to increase the number of repeat borrowers on its platforms, the credit quality, amount of transaction and service fees and overall profitability of Sorghum Group’s platforms may be adversely affected.

Since inception, Sorghum Group has steadily experienced an increase in repeat borrowing on Sorghum Group’s platforms. Repeat borrowing is crucial to Sorghum Group’s growth strategy, through which Sorghum Group offer small, shorter-term loans to quality borrowers, and use Sorghum Group’s proprietary decisioning technology to proactively offer larger, longer-term to borrowers that demonstrate good credit histories. Repeat borrowing generally contributes to a higher overall credit quality of borrowers on Sorghum Group’s platforms as Sorghum Group only permits borrowers with positive repayment histories to become repeat borrowers. Additional loans facilitated to repeat borrowers contribute to an increase in Sorghum Group’s transaction and service fees. However, the growth in repeat borrowing rate may not immediately translate into profitability if Sorghum Group cannot effectively manage its customer acquisition cost to attract first-time loan borrowers to Sorghum Group’s platforms. Repeat borrowing tends to result in increases in average loan size as borrowers progressively borrow loans with higher principal amounts in subsequent loans on Sorghum Group’s platforms. As repeat borrowers borrow larger amounts of loans over time, Sorghum Group expects to generate cumulative fees exceeding Sorghum Group’s customer acquisition costs and increase Sorghum Group’s overall profitability. While Sorghum Group expects the rate of repeat borrowing on Sorghum Group’s platforms to continue to increase, if Sorghum Group’s repeat borrowing rate decreases in the future, if repeat borrowers do not borrow larger loans or if the repeat borrowing rate is not as high as Sorghum Group’s expectations, Sorghum Group’s overall profitability may be adversely affected.

Sorghum Group relies on data sourced primarily from third parties and prospective borrowers in pricing its loan products, and if the data is inaccurate or cannot be reliably used to assess a potential borrower’s creditworthiness, loan products may lose their values, which may cause Sorghum Group to lose its customers.

Sorghum Group’s ability to evaluate and select quality potential borrowers and attract investors depends on credit assessment, fraud detection, employment and other relevant information that Sorghum Group receives from prospective borrowers and third-party sources, including credit reporting platforms, data vendors and social media and consumer transaction companies. In addition to traditional data used to analyze potential borrowers’ creditworthiness, Sorghum Group also relies on other behavioral data, including internet, social media, other public available information and transactional data.

Unlike many developed countries, China does not have a well-developed centralized credit reporting system. Although Sorghum Group take steps to verify potential borrower data, information obtained may nevertheless be inaccurate or incomplete. For example, Sorghum Group relies on borrower bank’s verification of identity. Moreover, investors do not have access to financial statements of potential borrowers, but instead rely on Sorghum Group’s grading technology to evaluate borrowers’ creditworthiness based on Sorghum Group self-generated credit scores. If customer information from outside sources becomes unavailable or more expensive to obtain, Sorghum Group would have to seek alternative sources of information and consequently Sorghum Group’s operation costs would increase. If investors invest in loan products based on inaccurate, misleading or incomplete information supplied by potential borrowers and third-parties, those investors may not receive their expected returns or may lose their investments entirely, and Sorghum Group’s sources of capital for its platform operations would be materially reduced. As a result, Sorghum Group’s business and results of operations may be adversely affected.

If Sorghum Group’s proprietary credit assessment technology is ineffective, its platforms may be less attractive to potential borrowers and investors, its reputation may be harmed and its market share could decline.

Sorghum Group’s ability to attract potential borrowers and investors to join its platforms is significantly dependent on its ability to effectively evaluate a potential borrower’s credit profile and likelihood of default, and thus maintain low loss ratios for investors on its platforms. Sorghum Group utilizes its proprietary credit assessment technology, which encompasses its credit scoring technology and automated decisioning technology, to assign each potential borrower a score. Its proprietary credit assessment technology allows for the evaluation and analysis of a number of factors, including historical behavioral data, transactional data, social data, and employment information, which may not effectively predict future loan losses.

Sorghum Group further refines its proprietary credit assessment technology based on new data and changing macro and economic conditions. To the extent the credit assessment technology Sorghum Group uses does not adequately identify potential risks, is ineffective or the data provided by potential borrowers or third parties is incorrect, its loan pricing and approval process could be negatively affected, resulting in mispriced loans. The types of errors could make Sorghum Group’s platforms less attractive to potential investors as well as potential borrowers, damage Sorghum Group’s reputation in the market and result in a decline in Sorghum Group’s market share.

Sorghum Group’s platforms and technology systems rely on proprietary software that is highly technical, and if it contains undetected errors, Sorghum Group’s business and results of operations could be adversely affected.

Sorghum Group’s platforms and internal systems rely on software that is highly technical and complex. They depend on the ability of such software to store, retrieve, process and manage immense amounts of data. The software on which Sorghum Group relies has contained, and may now or in the future contain, undetected errors or bugs. Some errors may only be discovered after the code has been released for external or internal use. Errors or other design defects within the software on which Sorghum Group relies may result in a negative experience for borrowers and investors on the platforms, delay introductions of new features or enhancements, result in errors or compromise Sorghum Group’s ability to protect borrower or investor data or its intellectual property. Any errors, bugs or defects discovered in Sorghum Group’s proprietary software could result in disruption to the platforms’ operation, loss of borrowers or investors or liability for damages, any of which could adversely affect its business, results of operations and financial conditions.

Sorghum Group may not be able to prevent others from unauthorized use of its intellectual property, and any infringement on Sorghum Group’s IP rights could adversely affect Sorghum Group’s platform operations and competitive position.

Sorghum Group regards its patent, trademarks, domain names, know-how, proprietary technologies and similar intellectual property as critical to its success, and Sorghum Group relies on a combination of intellectual property laws and contractual arrangements, including confidentiality and non-compete agreements with its employees and others to protect Sorghum Group’s proprietary rights. Sorghum Group cannot assure you that any of its intellectual property rights would not be challenged, invalidated or misappropriated, or such intellectual property would be sufficient to provide Sorghum Group with competitive advantages. In addition, because of the rapid update of technologies in the online finance industry, parts of Sorghum Group’s platform operations depend on technologies developed or licensed by third parties, and Sorghum Group may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms, or at all.

Registering, maintaining and enforcing intellectual property rights in China can often be a challenging task. Statutory laws and regulations are subject to judicial interpretation and enforcement and may not be applied consistently due to the lack of clear guidance on statutory interpretation. Confidentiality, invention assignment and non-compete agreements may be breached by counterparties, and there may not be adequate remedies available to Sorghum Group for any such breach. Accordingly, Sorghum Group may not be able to effectively protect its intellectual property rights or to enforce its contractual rights in China. Preventing any unauthorized use of its intellectual property is difficult and costly and the steps Sorghum Group takes may be inadequate to prevent the misappropriation of its intellectual property. In the event that Sorghum Group has to resort to litigation to enforce its intellectual property rights, such litigation could result in substantial costs and a diversion of Sorghum Group’s managerial and financial resources. Sorghum Group can provide no assurance that it will prevail in such litigation. In addition, its trade secrets may be leaked or otherwise become available to, or be independently discovered by, Sorghum Group’s competitors. If Sorghum Group’s employees or consultants use intellectual property owned by others in their work, disputes may arise as to the rights in related know-how and inventions. Any failure in protecting or enforcing Sorghum Group’s intellectual property rights could have a material adverse effect on Sorghum Group’s business, financial condition and results of operations.

Sorghum Group’s business success depends on the continued efforts of its senior management and key employees. If Sorghum Group fails to retain one or more core members of different functions and teams, its business may be severely disrupted.

Sorghum Group’s business operations depend on the continued services of its senior management and key members of its technical, operational and marketing teams. While Sorghum Group has provided different incentives to its management and other core employees, Sorghum Group cannot assure you that Sorghum Group can continue to retain their services. If one or more of its key executives or employees were unable or unwilling to continue in their present positions, Sorghum Group may not be able to replace them easily or at all, its business may be severely disrupted and its financial condition and results of operations may be materially and adversely affected, and Sorghum Group may incur additional expenses to recruit, train and retain qualified personnel. In addition, although Sorghum Group has entered into confidentiality and non-competition agreements with its key management and employees, there is no assurance that anyone of them will not join its competitors or form a competing business. If any dispute arises between Sorghum Group and its current or former management members or employees, Sorghum Group may have to incur substantial costs and expenses in order to enforce such agreements in China or Sorghum Group may be unable to enforce them at all.

Failure to maintain good relationships with Sorghum Group’s partners or implement Sorghum Group’s strategy to develop new relationships with other potential partners could have a material adverse effect on Sorghum Group’s financial conditions and results of operations.

Sorghum Group considers its relationships with its cooperative partners crucial to its future success, particularly with respect to Sorghum Group’s data sources for its predictive selection, credit scoring and automated decisioning technologies. Sorghum Group cannot predict whether or not its partners would choose to terminate their relationships with Sorghum Group or propose terms that Sorghum Group cannot accept.

One of Sorghum Group’s business strategies is to continue to enter into new relationships with internet companies, e-commerce platforms, online consumer service providers, telecommunication service providers and payment service providers. Sorghum Group intends to explore additional forms of relationships with Sorghum Group’s existing partners and pursue additional relationships with other potential strategic partners, such as social media companies, consumer transaction companies, banks, asset managers and insurance companies. Identifying potential partners and negotiating and maintaining relationships with existing partners requires significant time and resources as does integrating third-party data and services. Sorghum Group’s current cooperation with Sorghum Group’s partners also does not prohibit them from working with Sorghum Group’s competitors or from offering competing services. Sorghum Group’s competitors may be effective in providing incentives to Sorghum Group’s partners to favor their products or services over Sorghum Group’s, which could have the effect of reducing the volume of loans facilitated through Sorghum Group’s platforms if Sorghum Group’s partners were to direct potential borrowers to other platforms or otherwise endorse Sorghum Group’s competitors’ products over Sorghum Group’s. Also, Sorghum Group’s partners may choose to offer a competing platform and become a competitor themselves. In addition, these partners may not perform as expected, the benefits to Sorghum Group may not be as favorable as Sorghum Group expects and Sorghum Group may have disagreements or disputes with such partners, any of which could adversely affect Sorghum Group’s brand and reputation as well as Sorghum Group’s business operations. If Sorghum Group cannot successfully enter into and maintain effective relationships with partners, Sorghum Group’s results of operations and financial conditions may be adversely affected.

If delinquencies or defaults on loans facilitated through Sorghum Group’s platforms increase, and Sorghum Group’s Reserve Liability Program cannot adequately cover the delinquencies or defaults, investment returns for investors funding those loans would be adversely affected and existing or potential investors may choose not to invest on Sorghum Group’s platforms.

An investor will receive returns on its investments only if the loan borrowers make timely payments on the corresponding loans. If borrowers do not make payments on a loan, the investor may not have its investment fully repaid under the terms of the investment. All platform investors have received the protection of the Reserve Liability Program in their investment products since the inception of the Program, and the Reserve Liability Program is able to cover investor losses from borrower defaults. Notwithstanding the protection, investors still face the risk that the borrowers on Sorghum Group’s platforms may fail to repay their loans in full or the Reserve Liability Program may be underfunded or depleted. If the Reserve Liability Program is not adequately funded at the time of loan execution to cover defaulting borrowers’ payment obligations in the future and an investor does not receive his or her expected return, the investor may become dissatisfied with Sorghum Group’s performance. As a result, Sorghum Group’s reputation could be damaged, which could adversely affect future investor participation on Sorghum Group’s platforms.

Additionally, borrowers may have unexpected changes of personal or financial conditions, and those potential external risks lie largely outside Sorghum Group’s control. Following credit assessment or qualification evaluation, a potential borrower may take on additional debt, suffer a loss of income, be delinquent in the payment of outstanding obligations or defaulted on a pre-existing debt obligation. Sorghum Group currently is unable to verify whether borrowers have outstanding loans from other financing channels when they obtain loans from Sorghum Group investors. This creates the risk that a borrower may borrow through Sorghum Group’s platforms in order to pay off loans from other channels, and vice versa. If a borrower incurs additional debt before paying off a Sorghum Group loan, the additional debt may impair the borrower’s ability to make payments on his or her Sorghum Group loans or the borrower may choose to make payments to other creditors rather than to Sorghum Group investors. The additional debt may adversely affect the borrower’s creditworthiness and could result in the financial distress or insolvency of the borrower. Therefore, the borrower’s additional debts increase the risk the investor may not receive expected returns or suffer a total loss. If investors do not receive returns that meet their expectations, they may be deterred from participation on Sorghum Group’s platforms and Sorghum Group’s brand reputation may be harmed and Sorghum Group may lose investor confidence. Consequently, Sorghum Group’s business operations and financial condition could be adversely affected.

Fraudulent activities occurring on or through Sorghum Group’s platforms could negatively impact Sorghum Group’s operating results, harm its brand and reputation, and cause the use of Sorghum Group products and services to decrease.

Sorghum Group are subject to the risk of fraud and fraudulent activities occurring on or through Sorghum Group’s platforms, including but not limited to, borrowers providing fraudulent documentation or illegally inducing investors to lend capital. Although Sorghum Group takes significant fraud prevention measures, including through its data verification, Sorghum Group’s resources, technologies and fraud prevention tools may be insufficient to accurately detect and prevent fraud. As a result, Sorghum Group’s brand and reputation would be damaged and its market share would be reduced, which would lead to its taking additional steps to reduce fraud risk and an substantial increase in its operational costs.

Personal data and other confidential information of borrowers, investors and partners which Sorghum Group collects or is provided access to may subject Sorghum Group to liabilities imposed by relevant governmental regulations or expose it to risks of cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions.

Sorghum Group receives, transmits and stores a large volume of personally identifiable information and other confidential data from borrowers, investors and Sorghum Group’s partners. There are a number of laws and regulations governing privacy and the storing, sharing, use, disclosure and protection of personally identifiable information and user data. Specifically, personally identifiable and other confidential information is increasingly subject to legislation and regulations in numerous domestic and international jurisdictions, the intent of which is to protect the privacy of personal information that is collected, processed and transmitted in or from the governing jurisdiction. This regulatory framework for privacy issues in China and worldwide is currently evolving and is likely to remain changing for the foreseeable future. In addition, there may be limits on the cross-border transmission of user data even to the extent that such transmission is within Sorghum Group’s company. Sorghum Group could be adversely affected if legislation or regulations are expanded to require changes in business practices or privacy policies, or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect Sorghum Group’s business, financial condition and results of operations.

In addition to rules and regulations, industry groups or other private parties may propose new and different privacy standards. Because the interpretation and application of privacy and data protection laws and privacy standards are still evolving, it is possible that Sorghum Group’s current practices may inadvertently fail to fully comply with certain aspects of those rules or privacy standards. Any inability to adequately address privacy concerns, even if unfounded, or to comply with applicable privacy or data protection laws, regulations and privacy standards, could result in additional costs and liabilities, damage Sorghum Group’s reputation, inhibit the use of Sorghum Group’s platforms and adversely affect Sorghum Group’s growth.

The data Sorghum Group possesses and the automated nature of Sorghum Group’s platforms may make it an easy target for and potentially vulnerable to, cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions. Furthermore, some of the data Sorghum Group possesses is stored on Sorghum Group’s servers, which are hosted by third parties. While Sorghum Group and Sorghum Group’s third-party hosting facilities have taken steps to protect confidential information to which Sorghum Group has access, Sorghum Group’s security measures may be breached in the future. Any accidental or willful security breaches or other unauthorized access to Sorghum Group’s platforms could cause confidential borrower, investor or partner information to be stolen and used for criminal purposes. Security breaches or unauthorized access to confidential information could also expose us to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity. If Sorghum Group’s security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in Sorghum Group’s software are exposed and exploited, Sorghum Group’s relationships with borrowers, investors and partners could be severely damaged, and Sorghum Group could incur significant liability.

In addition, malwares or other techniques that may potentially be used to sabotage or obtain unauthorized access to Sorghum Group’s systems change frequently and generally are not recognized until they are launched against a target, and Sorghum Group and Sorghum Group’s third-party hosting facilities may be unable to anticipate these techniques or implement adequate preventative measures. Any security breach, whether actual or perceived, would harm Sorghum Group’s reputation, and could cause it to lose borrowers, investors and partners and adversely affect Sorghum Group’s business and results of operations.

If Sorghum Group is unable to maintain relationships with Sorghum Group’s third-party service providers, Sorghum Group’s business will suffer.

Sorghum Group relies on third-party service providers to operate various aspects of Sorghum Group’s business and platforms. For instance, Sorghum Group rely on Sorghum Group’s depository bank to provide fund depository services and third-party payment companies to serve as payment channels to ensure compliance with various laws and regulations. Most of Sorghum Group’s agreements with third-party service providers are non-exclusive and do not prohibit the third-party service provider from working with Sorghum Group’s competitors or from offering competing services. Sorghum Group’s third-party service providers could decide that working with us is not in their interests, could decide to enter into exclusive or more favorable relationships with Sorghum Group’s competitors or could themselves become Sorghum Group’s competitor. Although Sorghum Group have changed third-party service providers in the past without difficulty, switching to new third-party service providers could cause temporary disruptions to Sorghum Group’s business.

In addition, Sorghum Group’s third-party service providers may not perform as expected under Sorghum Group’s agreements or Sorghum Group could in the future have disagreements or disputes with Sorghum Group’s third-party service providers, which could negatively impact Sorghum Group’s operations or threaten Sorghum Group’s relationships with Sorghum Group’s third-party service providers.

Third-party payment companies and depository banks in China, including a depository bank that takes deposits and transfers funds on Sorghum Group’s platforms and the third-party payment company with which it works, are subject to oversight by the PBOC and must comply with complex rules and regulations, licensing and examination requirements, including, but not limited to, minimum registered capital, maintenance of payment business licenses, anti-money laundering regulations and management personnel requirements. Some third-party payment companies have been required by the PBOC to suspend their credit card pre-authorization and payment services in certain areas of China. If the third-party service providers that take deposits and transfer funds on, or serve as payment channels for, Sorghum Group’s platforms were to suspend, limit or cease their operations, or if Sorghum Group’s relationships with Sorghum Group’s third-party service providers were to otherwise terminate, Sorghum Group would need to implement substantially similar arrangements with other third-party service providers. Negative publicity about Sorghum Group’s or other third-party service providers or the industry in general may also adversely affect investors’ or borrowers’ confidence and trust in the use of third-party payment companies and depository banks to carry out the payment and depository functions in connection with the facilitation of loans on Sorghum Group’s platforms. If any of these were to happen, the operation of Sorghum Group’s platforms could be materially impaired and Sorghum Group’s results of operations would suffer.

If Sorghum Group cannot promote and maintain its brand in an effective and cost-efficient way, its business and results of operations may be harmed.

Sorghum Group believes that developing and maintaining awareness of Sorghum Group’s brand effectively is critical to attracting new and retaining existing borrowers and investors to Sorghum Group’s platforms. Successful promotion of Sorghum Group’s brand and Sorghum Group’s ability to attract qualified borrowers and sufficient investors depend largely on the effectiveness of Sorghum Group’s marketing efforts and the success of the channels Sorghum Group’s use to promote Sorghum Group’s platforms. Sorghum Group’s efforts to build Sorghum Group’s brand have caused us to incur significant expenses, and it is likely that Sorghum Group’s future marketing efforts will require us to incur significant additional expenses. These efforts may not result in increased revenues in the immediate future or at all and, even if they do, any increases in revenues may not offset the expenses incurred. If Sorghum Group’s fail to successfully promote and maintain Sorghum Group’s brand while incurring substantial expenses, Sorghum Group’s results of operations and financial condition would be adversely affected, which may impair Sorghum Group’s ability to grow Sorghum Group’s business.

Sorghum Group’s quarterly results may fluctuate significantly and may not fully reflect the underlying performance of Sorghum Group’s business.

Sorghum Group’s quarterly results of operations, including Sorghum Group’s operating revenue, expenses, number of loans and other key metrics, may vary significantly in the future and period-to-period comparisons of Sorghum Group’s operating results may not be meaningful. Accordingly, the results for any one quarter are not necessarily an indication of future performance. Sorghum Group’s quarterly financial results may fluctuate due to a variety of factors, some of which are outside of Sorghum Group’s control and, as a result, may not fully reflect the underlying performance of Sorghum Group’s business. Fluctuation in quarterly results may adversely affect the price of Sorghum Group’s shares. Factors that may cause fluctuations in Sorghum Group’s quarterly results include:

In addition, Sorghum Group experiences seasonal changes in demand for loans, which is generally higher in the third and fourth quarters due to the timing of national holidays as well as consumer spending patterns. Sorghum Group’s operating results could be affected by such seasonality in the future.

If Sorghum Group cannot compete effectively in its targeted markets, Sorghum Group’s operating results could be adversely affected.

China’s lending and investment markets are intensely competitive and rapidly evolving. Sorghum Group competes with its industry peers that actively attempt to attract potential borrowers, investors or both. With respect to borrowers, Sorghum Group primarily competes with other online platforms that facilitate personal credits. With respect to investors, Sorghum Group primarily compete with other P2P facilitation platforms, wealth management centers and traditional banks in China.

Some of Sorghum Group’s current or potential competitors have significantly more financial, technical, marketing and other resources than Sorghum Group does and may be able to devote greater resources to the development, promotion, sale and support of their platforms and distribution channels. Their business models may also ultimately prove more successful or more adaptable to new regulatory, technological and other developments. Sorghum Group’s current or potential competitors may also have longer operating histories, more extensive customer bases, more data and distribution channels, greater brand recognition and brand loyalty and broader customer and partnership relationships than Sorghum Group has. For example, established internet companies, including social media companies that possess large, existing customer bases, substantial financial resources and established distribution channels have entered and may continue to enter the market. Sorghum Group’s competitors may be better equipped to develop new products, respond quickly to new technologies and undertake more extensive marketing campaigns. If Sorghum Group is unable to compete with such companies or meet the need for innovation in Sorghum Group’s industry, the demand for Sorghum Group’s platforms could stagnate or substantially decline, Sorghum Group could experience reduced revenue or Sorghum Group’s platforms could fail to achieve or maintain more widespread market acceptance, any of which could harm Sorghum Group’s business.

When new competitors seek to enter Sorghum Group’s target market, or when existing market participants seek to increase their market shares, they sometimes dramatically reduce prevailing market price or common terms in a particular market, which could adversely affect Sorghum Group’s market share or ability to explore new market opportunities. In addition, since the P2P lending industry is a relatively recent development in China, potential investors and borrowers may not fully understand how Sorghum Group’s platforms work and may not be able to fully appreciate the additional customer protections and features that Sorghum Group has invested in and adopted on Sorghum Group’s platforms as compared to other platforms. Sorghum Group’s pricing and terms could deteriorate if Sorghum Group fails to act to meet these competitive challenges. Further, to the extent that Sorghum Group’s competitors are able to offer more attractive terms to Sorghum Group’s partners, such cooperation partners may choose to terminate their relationships with Sorghum Group. All of the foregoing could adversely affect Sorghum Group’s business, results of operations, financial condition and future growth.

If Sorghum Group fails to implement and maintain an effective system of internal control or fails to remediate the material weaknesses in its internal control over financial reporting that have been identified, Sorghum Group may be unable to accurately report its results of operations or prevent fraud or fail to meet its reporting obligations, and investor confidence and the market price of the stock of the Company following the proposed Acquisition may be materially and adversely affected.

Sorghum Group has been operating as a private company with limited accounting personnel and other resources with which to address its internal controls and procedures. Sorghum Group’s independent registered public accounting firm had not conducted an audit of the internal control over financial reporting prior to filing this Proxy Statement in connection with the proposed Acquisition. In connection with the audit of the consolidated financial statements, Sorghum Group and its independent registered public accounting firm, however, identified two material weaknesses in its internal control over financial reporting, as defined in the standards established by the Public Company Accounting Oversight Board of the United States, or PCAOB, and other control deficiencies.  One material weakness that has been identified related to Sorghum Group’s lack of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting and compliance requirements. The other material weakness that has been identified related to its lack of comprehensive accounting policies and procedures manual in accordance with U.S. GAAP. Either of these material weaknesses, if not timely remedied, may lead to significant misstatements in its consolidated financial statements in the future. To remediate the identified material weaknesses, Sorghum Group intends to adopt several measures to improve its internal control over financial reporting. However, the implementation of these measures may not fully address the material weaknesses in Sorghum Group’s internal control over financial reporting. Its failure to correct the material weaknesses or failure to discover and address any other material weaknesses or control deficiencies could result in inaccuracies in its financial statements and could also impair its ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, Sorghum Group’s business, financial condition, results of operations and prospects, as well as the trading price of the post-Acquisition Company, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders its ability to prevent fraud.

Upon completion of the proposed Acquisition, Sorghum Group will become a consolidated subsidiary of a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of this Act will require that the post-Acquisition Company include a report of management on its internal control over financial reporting in its annual report on Form10-K for the fiscal year ending December 31, 2017. In addition, once the Company ceases to be an “emerging growth company,” as such term is defined in the JOBS Act, the Company’s independent registered public accounting firm must attest to and report on the effectiveness of the Company’s internal control over financial reporting. The post-Acquisition Company management may conclude that the Company’s internal control over financial reporting is not effective. Moreover, even if the Company’s management concludes that its internal control over financial reporting is effective, its independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with the Company’s internal controls or the level at which its controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from the Company. In addition, after Sorghum Group becomes a public company, a public company’s reporting obligations may place a significant strain on its management, operational and financial resources and systems for the foreseeable future. The Company may be unable to timely complete its evaluation testing and any required remediation. All of these factors may materially and adversely affect the Company’s business, financial condition, results of operations and prospects.

Misconduct, errors and underperformance by Sorghum Group’s employees and third-party service providers could harm its business and reputation.

Sorghum Group is exposed to many types of operational risks, including the risk of misconduct and errors by its employees and third-party service providers. Sorghum Group’s business depends on its employees and third-party service providers to interact with potential borrowers and investors, process large numbers of transactions and support the loan collection process, all of which involve the use and disclosure of personal information. Sorghum Group could be materially adversely affected if transactions were redirected, misappropriated or otherwise improperly executed, if personal information was disclosed to unintended recipients or if an operational breakdown or failure in the processing of transactions occurred, whether as a result of human error, purposeful sabotage or fraudulent manipulation of Sorghum Group’s operations or systems. In addition, the manner in which Sorghum Group stores and uses certain personal information and interact with borrowers and investors through its platforms is governed by various PRC laws. It is not always possible to identify and deter misconduct or errors by employees or third-party service providers, and the precautions Sorghum Group takes to detect and prevent such types of activity may not be effective in controlling unknown or unmanaged risks or losses. If any of its employees or third-party service providers take, convert or misuse funds, documents or data or fail to follow protocol when interacting with borrowers and investors, Sorghum Group could be liable for damages and subject to regulatory actions and penalties. Sorghum Group could also be perceived to have facilitated or participated in the illegal misappropriation of funds, documents or data, or the failure to follow protocol, and therefore be subject to civil or criminal liability.

As Sorghum Group rely on certain third-party service providers, such as external third party online payment platforms and custodian and settlement service providers, to conduct Sorghum Group’s business, if these third-party service providers failed to function properly, Sorghum Group cannot assure you that Sorghum Group would be able to find an alternative in a timely and cost-efficient manner or at all. Any of these occurrences could result in Sorghum Group’s diminished ability to operate its business, potential liability to borrowers and investors, inability to attract borrowers and investors, reputational damage, regulatory intervention and financial harm, which could negatively impact Sorghum Group’s business, financial condition and results of operations.

Sorghum Group’s platform operations depend on the performance of the internet infrastructure and fixed telecommunications networks in China.

Almost all access to the internet in China is maintained through state-owned telecommunication operators under the administrative control and regulatory supervision of the Ministry of Industry and Information Technology, or the MIIT. Sorghum Group primarily relies on a limited number of telecommunication service providers to provide data communications capacity through local telecommunications lines and internet data centers to host its servers. Sorghum Group has limited access to alternative networks or services in the event of disruptions, failures or other problems with China’s internet infrastructure or the fixed telecommunications networks provided by telecommunication service providers. With the expansion of its business, Sorghum Group may be required to upgrade Sorghum Group’s technology and infrastructure to keep up with the increasing traffic on Sorghum Group’s platform. Sorghum Group cannot assure you that the internet infrastructure and the fixed telecommunications networks in China will be able to support the demands associated with the continued growth in internet usage.

In addition, Sorghum Group has no control over the costs of the services provided by telecommunication service providers. If the prices Sorghum Group pays for telecommunications and internet services rise significantly, its results of operations may be adversely affected. Furthermore, if internet access fees or other charges to internet users increase, Sorghum Group’s user traffic may decline and its business may be harmed.

Sorghum Group’s success and future growth depend significantly on Sorghum Group’s marketing and brand promotion efforts, and if Sorghum Group is unable to attract new borrowers and investors to Sorghum Group’s platforms, Sorghum Group’s business and financial results may be adversely affected.

Sorghum Group intends to continue to dedicate significant resources to Sorghum Group’s marketing and brand promotion efforts, particularly as Sorghum Group continues to grow Sorghum Group’s platforms. Sorghum Group’s ability to attract quality potential borrowers and sufficient numbers of investors to Sorghum Group’s platforms depends in large part on the success of Sorghum Group’s marketing efforts, the success of the marketing channels Sorghum Group uses to promote Sorghum Group’s platforms and the experiences of borrowers and investors gained on Sorghum Group’s platforms. Sorghum Group’s marketing channels include social media, the traditional media, strategic relationships with key Internet companies, search engine optimization, search engine marketing, billboard and mail-to-web. If any of Sorghum Group’s current marketing channels become less effective, if Sorghum Group are unable to continue to use any of these channels, if the cost of using these channels were to significantly increase or if Sorghum Group is not successful in generating new channels, Sorghum Group may not be able to attract new borrowers and investors in a cost-effective manner or convert potential borrowers and investors into active borrowers and investors on Sorghum Group’s platforms. In addition, Sorghum Group believes that developing and maintaining awareness of Sorghum Group’s brand in a cost-effective manner is critical to retaining existing borrowers and investors and attracting new ones to Sorghum Group’s platforms. Sorghum Group’s efforts to build its brand have required significant expenditures, and it is likely that Sorghum Group’s future marketing efforts will continue to require significant additional expenses. Any failure to successfully promote Sorghum Group’s brand and develop a broader base of borrowers and investors could result in a loss of market share or slower growth, which would harm Sorghum Group’s business, financial condition and results of operations.

If new loan products and enhancements of Sorghum Group’s platforms do not achieve sufficient market acceptance, Sorghum Group’s financial results and competitive position would be harmed.

Sorghum Group incurs expenses and expend resources upfront to develop, acquire and market new loan products and platform enhancements to Sorghum Group’s platforms to incorporate additional features, improve functionality or otherwise make Sorghum Group’s platforms more desirable to potential borrowers and investors. New loan products or platform enhancements must achieve high levels of market acceptance.

Any new loan products and changes to Sorghum Group’s platforms could fail to attain sufficient market acceptance for many reasons, including:

If the new loan products facilitated on Sorghum Group’s platforms or platforms enhancements do not achieve adequate acceptance in the market, Sorghum Group’s competitive position, revenue and operating results could be harmed. The adverse effect on Sorghum Group’s financial results may be particularly acute because of the significant development, marketing, sales and other expenses Sorghum Group will have incurred in connection with the new loan products or platforms enhancements.

If the scale and size of the market for the loans facilitated by Sorghum Group’s platforms is smaller than Sorghum Group believes, Sorghum Group’s revenue may be adversely affected and Sorghum Group’s business may suffer.

It is very difficult to estimate the total addressable market for the loans facilitated by Sorghum Group’s platforms due to factors such as market demand, PRC regulations of the online finance industry, competition, general economic conditions and the relatively short history of online lending industry in China. Sorghum Group believes that its main market of borrowers consists of individuals and small business owners seeking affordable, convenient and flexible credits. However, if there is less demand than Sorghum Group anticipates for the loans facilitated on Sorghum Group’s platforms, it would significantly and negatively impact Sorghum Group’s business, financial condition and results of operations.

Competition for Sorghum Group’s employees is intense, and Sorghum Group may not be able to attract and retain the highly skilled employees needed to support Sorghum Group’s business.

As Sorghum Group continues to experience rapid growth, Sorghum Group believes its success depends on the efforts and talents of Sorghum Group’s employees, including software engineers, financial personnel and marketing professionals. Sorghum Group’s future success depends on Sorghum Group’s continued ability to attract, develop, motivate and retain highly qualified and skilled employees. Competition for highly skilled sales, technical and financial personnel is extremely intense in today’s China finance industry. Sorghum Group may not be able to hire and retain these personnel at a level consistent with Sorghum Group’s existing compensation and salary structure. Many of the companies with which Sorghum Group competes for experienced employees have greater resources than Sorghum Group does and may be able to offer more attractive terms of employment.

Sorghum Group has incurred net losses in the recent past, and may incur losses again in the future.

Sorghum Group has incurred net losses in the past. Sorghum Group anticipates that its operating expenses will increase in the foreseeable future as Sorghum Group seeks to continue to grow its business, attract potential borrowers, investors and partners, and further develop and diversify the loan products available for investors and borrowers on its platforms. These efforts may be more expensive than anticipated, and Sorghum Group may not succeed in increasing its revenues sufficiently to offset these higher expenses. If Sorghum Group is unable to execute its product development strategy or if it is unable to generate sufficient amount of services fees from repeat borrowers, it may not achieve the net income it targets. Sorghum Group may incur net losses or may be unable to maintain profitability on a quarterly or annual basis for the foreseeable future.

Sorghum Group has incurred substantial debt and may incur additional debts in the future, which may adversely and negatively affect its financial condition and results of operations.

Sorghum Group has incurred and still owe substantial debts as of this date. The incurrence of debt could have a variety of negative effects, including:

The occurrence of any of these risks could adversely affect Sorghum Group’s operations or financial condition.

If Sorghum Group cannot maintain its corporate culture as it grows, Sorghum Group could lose the innovation, collaboration and focus that contribute to Sorghum Group’s business.

Sorghum Group believes that a critical component of its success is its corporate culture, and Sorghum Group fosters innovation, encourages teamwork and cultivates creativity. As Sorghum Group develops the infrastructure of a public company and continues to grow, Sorghum Group may find it difficult to maintain these valuable aspects of its corporate culture. Any failure to preserve Sorghum Group’s culture could negatively impact Sorghum Group’s future success, including its ability to attract and retain employees, encourage innovation and teamwork and effectively focus on and pursue its corporate objectives.

Sorghum Group does not have any business insurance coverage.

Insurance companies in China currently do not offer as extensive an array of insurance products as insurance companies in more developed economies. Currently, Sorghum Group does not have any business liability or disruption insurance to cover its operations. Sorghum Group has determined that the costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for it to have such insurance. Any uninsured business disruptions may result in Sorghum Group’s incurring substantial costs and the diversion of resources, which could have an adverse effect on Sorghum Group’s results of operations and financial condition.

Sorghum Group’s business and operating results may be impacted by adverse economic and market conditions.

Many factors, including factors that are beyond Sorghum Group’s control, may have a detrimental impact on borrowers’ willingness to seek loans and investors’ ability and desire to lend, and consequentially have a negative effect on Sorghum Group’s business and results of operations. These factors include general economic conditions, the general interest rate environment, unemployment rates, residential home values and the availability of other investment opportunities. If any of these factors arise, Sorghum Group’s revenue and transactions on Sorghum Group’s platforms would decline and Sorghum Group’s business would be negatively impacted.

There can be no assurance that economic conditions will remain favorable for Sorghum Group’s business or that demand for Sorghum Group’s loans will remain at current levels. Reduced demand for, or increase in the default rate of, Sorghum Group’s loans would negatively impact Sorghum Group’s growth and revenue. If an insufficient number of qualified individuals apply for Sorghum Group’s loans or Sorghum Group’s access to investors’ capital for loans on Sorghum Group’s platforms decreases, Sorghum Group’s growth and revenue could decline.

Fluctuations in interest rates could negatively affect transaction volume.

All loans facilitated through Sorghum Group’s platforms are usually issued with fixed interest rates. If interest rates rise, investors who have already committed capital may lose the opportunity to take advantage of the higher rates. If interest rates decrease after a loan is made, borrowers through Sorghum Group’s platforms may prepay their loans to take advantage of the lower rates. Investors through its platforms would lose the opportunity to collect the above-market interest rates payable on the prepaid loans and might delay or reduce future loan investments. As a result, fluctuations in the interest rate environment may discourage investors and borrowers from participating in Sorghum Group’s platforms, which may adversely affect its business.

Risks Related to Doing Business in China

The laws and regulations governing the online lending intermediary service industry in China are developing and evolving and subject to changes. If Sorghum Group fail to obtain and maintain requisite approvals, licenses or permits applicable to Sorghum Group’s business, Sorghum Group’s business, financial condition and results of operations would be materially and adversely affected.

Due to the relatively short history of the online lending information intermediary service industry in China, the PRC government has yet to establish a comprehensive regulatory framework governing Sorghum Group’s industry. Before any industry-specific regulations were introduced in mid-2015, the PRC government simply relied on general and basic laws and regulations in governing the online lending information intermediary service industry, including the PRC Contract Law, the General Principles of the Civil Law of the PRC, and related judicial interpretations promulgated by the Supreme People’s Court.

In July 2015, the China Banking Regulatory Commission, or the CBRC, together with nine other PRC regulatory agencies jointly issued a series of policy measures applicable to the online lending information intermediary service industry titled the Guidelines on Promoting the Healthy Development of Online Finance Industry, or the Guidelines. The Guidelines formally introduced for the first time the regulatory framework and basic principles for administering the online lending information intermediary service industry in China. Based on the core principles of the Guidelines, in August 2016, the CBRC together with three other PRC regulatory agencies jointly issued Interim Measures on Administration of Business Activities of Online Lending Information Intermediaries, or the Interim Measures. The Interim Measures require online lending information intermediaries and their branches that propose to carry out the online lending information intermediary services to file a record with the local financial regulatory department at the place where it is registered within ten business days after obtaining the business license. Local financial regulatory departments have the power to assess and classify the online lending information intermediaries which have filed a record, and to publicize the record-filing information and the classification results on their official websites. An online lending information intermediary must apply for appropriate telecommunication business license in accordance with the relevant requirements of telecommunication authorities subsequent to completion of the filing, and is required to explicitly identify itself as an online lending information intermediary in its business scope.

In accordance with the Guidelines and the Interim Measures, the relevant authorities are in the process of making detailed implementation rules regarding, among other things, filing procedures, assessment standards and classification rules for online lending information intermediaries, and specific rules and procedures regarding, among other things, application for appropriate telecommunication business license and change of business scope by existing online lending information intermediaries have yet to be formulated and issued. Sorghum Group is unable to predict with certainty the impact, if any, that future legislation, judicial precedents, rules or regulations relating to the online lending information intermediary service industry will have on its business, financial condition and results of operations. According to the Circular of the General Office of the State Council on Issuing the Implementation Plan for Special Rectification on Risks in Internet Financial promulgated in April 2016, competent authorities are in the process of evaluating existing practices of online lending information intermediaries in the market and requesting rectification of those that have been identified during the evaluation as in conflict with the Guidelines and the Interim Measures. Pursuant to the Guideline of CBRC on Risk Prevention and Control in Banking Industry promulgated by CBRC on April 7, 2017, the promotion for the special risk rectification for internet lending platform (P2P) shall be continued. Internet lending intermediaries shall not market the borrowers who do not have the repayment ability; and they are also prohibited to provide Internet loan services to university students who are under the age of 18. Furthermore, a Notification for Further Strengthening on Administration for Campus Loans was issued by CBRC, Ministry of Education of the PRC and Ministry of Human Resources and Social Security of the PRC on May 27, 2017 stipulated that any Campus loans business conducted by internet lending platform shall be suspended. Sorghum Group cannot assure you that Sorghum Group’s practices will not be required to be rectified or Sorghum Group’s rectification measures and results will be satisfactory to the relevant authorities, and Sorghum Group cannot assure you that Sorghum Group will be able to successfully make filings, obtain and maintain requisite licenses and meet other regulatory requirements set forth in applicable laws, rules and regulations. If Sorghum Group fails to conduct Sorghum Group’s business in a manner required by the relevant authorities, or take rectification measures when required by the relevant authorities, or obtain and maintain any requisite approvals, licenses or permits or meet other requirements applicable to Sorghum Group’s business, Sorghum Group’s business, financial condition and results of operations would be materially and adversely affected.

If Sorghum Group’s business practice is deemed to violate any PRC laws, rules or regulations, its business, financial condition and results of operations would be materially and adversely affected.

According to the Guidelines issued in 2015 and the Interim Measures issued in 2016 to specifically regulate the online lending information intermediary service industry in China, intermediaries that provide online lending information intermediary services must not engage in certain activities, including, among other things, (i) fund raising for the intermediary itself, (ii) holding investors’ funds or setting up capital pool with investors’ funds, (iii) providing security or guarantee to investors as to the principals and returns of the investments, (iv) issuing or selling any wealth management or other financial products, or acting as an agent in selling financial products, (v) mismatch between an investor’s expected timing of exit and the maturity date, (vi) conducting securitization or equivalent businesses, (vii) promoting its financing products on physical premises other than through the permitted electronic channels, such as telephones, mobile phones and internet, and (viii) equity crowd-funding. The Interim Measures also require the intermediaries that provide online lending information intermediary services to strength their risk management, enhance screening and verifying efforts on the borrowers and investors’ information, and set up custody accounts with qualified banks to hold customer funds, among other things. Sorghum Group believes the Guidelines and the Interim Measures represent the beginning of the PRC government’s measures to regulate the online lending information intermediary service industry, which will be followed by more implementation rules and regulations. In addition, pursuant to the Guideline of CBRC on Risk Prevention and Control in Banking Industry promulgated by CBRC on April 7, 2017, the promotion for the special risk rectification for internet lending platform (P2P) shall be continued. Internet lending intermediaries shall not market the borrowers who do not have the repayment ability; and they are also prohibited from providing Internet loan services to university students who are under the age of 18. It is also emphasized that the advertisement and sales which are fraud or false shall be prohibited. Sorghum Group facilitated student loans in the past and is currently under the process of rectification and start new business. Sorghum Group, however, cannot assure you that its rectification and new business will be successful.

To comply with existing laws, rules and regulations relating to the online lending information intermediary service industry, Sorghum Group has implemented various policies and procedures, and is also under the process for ceasing the business practices for the provision of loans to university students. However, the laws, rules and regulations are expected to continue to evolve in this emerging industry. The PRC government is expected to provide detailed implementation rules on certain key requirements of the Interim Measures, and the interpretation of the Interim Measures by the local authorities may be different from Sorghum Group’s understanding. Sorghum Group cannot be certain that its existing or previous practices would not be deemed to violate any existing or future laws, rules and regulations. For instance, Sorghum Group’s automated investing tool automatically allocates committed funds from multiple investors among multiple approved borrowers, which goes beyond the simple one-to-one matching between investors and borrowers and could be viewed as creating mismatch between an investor’s expected timing of exit and the maturity date and offering wealth management products; if automated investing tool fails to match committed investors with approved borrowers in a timely manner, Sorghum Group might be deemed to hold investors’ funds and form a capital pool incidentally. Moreover, the Interim Measures require that the balance of money borrowed by the same individual must not exceed RMB200,000 (US$28,806) on an online lending information intermediary platform and not exceed RMB1 million (US$144,030) on all online lending information intermediary platforms in the PRC. Although Sorghum Group is in the process of adjusting its relevant policy and plans to stop facilitating loans with principal over RMB200,000 (US$28,806), certain loans on its platform that have been facilitated in the past have an outstanding balance over such limit. In addition, due to lack of industry-wide information sharing arrangement, Sorghum Group cannot assure you that the aggregate amount of loans taken out by a borrower on its platform and other online lending information intermediary platforms at a point in time does not exceed the limit set in the Interim Measures. Furthermore, for investor protection purpose, Sorghum Group set up the Reserve Liability Program with the purposes of limiting investors’ potential losses due to borrower defaults. Although the program is different from providing investors with guarantees in relation to the return of loan principal and interest, the Reserve Liability Program might be deemed by the PRC regulatory authorities as credit enhancement services or a form of guarantee prohibited by the Interim Measures. Additionally, following the Acquisition, the Company will become a consolidated financial services group and will operate in two separate and distinct business segments, including Sorghum Group’s digital online information intermediary services and CCCR’s direct lending, loan guarantees and financial leasing services (generally limited to the city of Wujiang, Jiangsu Province, geographically). Although the two separate lines of business will be segregated in the short term and CCCR will not provide guarantees for loans facilitated on Sorghum Group’s platforms, the PRC regulatory authority may treat the two segments as an integrated business and attribute CCCR’s loan guarantee services to Sorghum Group’s P2P lending facilitation services. We cannot assure you that the post-Acquisition Company’s business practice will not be deemed as violating the guarantee prohibition of the Interim Measures by the PRC regulatory authority.

As of this date, Sorghum Group has not been subject to any material fines or penalties under any PRC laws, rules or regulations including those governing the online lending information intermediary service industry in China. However, if its practice is deemed to violate any laws, rules or regulations, Sorghum Group may face, among others, regulatory warning, correction order, condemnation, fines and criminal liability. Sorghum Group cannot assure you that its business practices, such as Campus Loans will not be required to be rectified or its rectification measures and results will be satisfactory to the relevant authorities. If such situations occur, Sorghum Group’s business, financial condition and prospects would be materially and adversely affected.

Sorghum Group may be required to obtain a value-added telecommunication business certificate and be subject to foreign investment restrictions.

PRC regulations impose sanctions for engaging in Internet information services of a commercial nature without having obtained an Internet content provider, or ICP, certificate. PRC regulations also impose sanctions for engaging in the operation of online data processing and transaction processing without having obtained an online data processing and transaction processing, or ODPTP, certificate (ICP and ODPTP are both sub-sets of value-added telecommunication business certificates). These sanctions include corrective orders and warnings from the PRC communication administration authority, fines and confiscation of illegal gains and, in the case of significant infringements, the websites may be ordered to cease operation. Nevertheless, the PRC regulatory authorities’ enforcement of such regulations in the context of online lending platforms remains unclear. The Interim Measures provide that online lending information intermediaries must apply for value-added telecommunications business licenses in accordance with the relevant provisions of telecommunications authorities after filing with a local financial regulator. However, PRC regulatory authorities to date have not explicitly stipulated whether the operator of a lending platform (including in the form of a website or mobile Internet application) is engaging in Internet information services requiring an ICP certificate or an ODPTP certificate. If Sorghum Group could not obtain such value-added telecommunication certificates pursuant to the relevant regulations, Sorghum Group may not be able to conduct online lending intermediaries’ services, but it is unclear whether online lending intermediaries would be deemed to be engaged in a commercial information provider business or online data processing and transaction processing business or whether an ICP certificate or an ODPTP certificate is required. To the extent that the PRC regulatory authorities require such value-added telecommunication certificate to be obtained or set forth rules that impose additional requirements, and Sorghum Group does not obtain such certificate, Sorghum Group may be subject to the sanctions described above. Sorghum Group plans to apply for filing immediately after the filing procedures are clarified by the relevant authorities, and apply for the corresponding value-added telecommunication business certificates after completing the filing, provided that the relevant telecommunication authority clarify which sub-set of telecommunication business certificates need to be obtained by market lending platforms and how to apply for such certificate.

According to the Provisions on the Administration of Foreign-invested Telecommunication Enterprises, the ratio of investment by foreign investors in a foreign-invested telecommunication enterprise that engages in the operation of a value-added telecommunication business shall not exceed 50%. Foreign investors are only permitted to invest up to 50% of the registered capital in a foreign-invested telecommunication enterprise that engages in the operation of commercial Internet information services or general online data processing and transaction processing services.

As an exception, the Circular of Ministry of Industry and Information Technology concerning Lifting Restrictions on the Proportion of Foreign Equity in Online Data Processing and Transaction Processing Business (E-commerce), or Circular 196, which was promulgated on June 19, 2015, provides that foreign investors are permitted to invest up to 100% of the registered capital in a foreign-invested telecommunication enterprise engaging in the operation of online data processing and transaction processing (E-commerce). While Circular 196 permits foreign ownership, in whole or in part, of online data processing and transaction processing businesses (E-commerce), a sub-set of value-added telecommunications services, there is still uncertainty regarding whether foreign investment restrictions may be applied to Sorghum Group’s business and industry.

Further, under either circumstance, the largest foreign investor will be required to have a satisfactory business track record and operational experience in the value-added telecommunication business. If regulatory authorities were to treat platforms lending intermediary businesses as Internet information services of a commercial nature, which is a form of a value-added telecommunication business, Sorghum Group’s platform may be subject to such foreign investment restrictions and Sorghum Group may be required to restructure its operations by establishing a joint venture with foreign capital equal to no more than 50% of its total capital or a domestic enterprise with no foreign capital through variable interest entities to obtain a telecommunication business certificate. Any such restructuring may be costly and may involve interruptions to Sorghum Group’s business. If Sorghum Group is unable to obtain the telecommunication business certificate in a timely fashion, Sorghum Group’s results of operations and business prospects may be materially and adversely affected.

As the regulatory framework for the online finance industry evolves, domestic and foreign governments may draft and propose new laws, regulations, notices or interpretive releases to regulate marketplace lending, including Sorghum Group’s online and mobile-based channels, which may negatively affect its business operations and financial conditions.

The peer-to-peer lending industry in China has historically been largely unregulated. In July 2015, ten PRC central government ministries and regulators, including the PBOC, the CBRC, the Ministry of Finance, the Ministry of Public Security and the Cyberspace Administration of China, together released the Guidelines, which provide regulatory principles for Internet financing businesses, including those in the online marketplace lending industry. In August 2016, the CBRC and other regulators collectively announced the Interim Measures, which proposed the implementation of new requirements including, among others, filing, reporting, fund depository, risk and information disclosure, loan management and the permitted business scope for participants in the online marketplace lending industry. In November 2016, the CBRC, the MIIT and the Industry and Commerce Administration Department, jointly issued the Guidance to the Administration of Filling and Registration of Online Lending Information Intermediaries, or the Guidance of Administration, which provides general filing rules for online lending intermediaries, and authorizes local financial regulators to make detailed implementation rules regarding filing procedures according to their local practices. Since 2017, local financial regulators have been conducting thorough investigations and inspections of online lending intermediaries and require a rectification if any illegality is discovered. After local financing regulators have completed their investigation and examination, Sorghum Group may be permitted to submit a filing application. In February 2017, the CBRC released the Guidance to regulate funds depositories for online lending intermediaries, which defines several obligations and responsibilities of online lending intermediaries and commercial banks involved in the online funds depository business. Nevertheless, it is uncertain as to how the Interim Measures will be further interpreted and implemented. The relevant local authorities are also in the process of making detailed implementation rules regarding filing procedures. However, the final content and timing of the final implementation rules and other related new rules are uncertain. To the extent that Sorghum Group is not able to fully comply with the new regulations in the grace period of twelve months or any new regulations differ from Sorghum Group’s expectations, Sorghum Group may be materially and adversely affected. Sorghum Group is unable to predict with certainty the impact, if any, that future legislation, judicial precedents, or regulations relating to the marketplace lending industry will have on Sorghum Group’s business, financial condition and results of operations. Furthermore, the increasing growth in popularity of marketplace lending and borrowing increases the likelihood that the PRC government will seek to further regulate the marketplace lending industry.

In addition, the regulatory framework for Internet commerce, including online marketplaces such as Sorghum Group’s, with respect to Sorghum Group’s online and mobile-based channels, is evolving, and it is possible that new laws and regulations will be adopted domestically and internationally, or existing laws and regulations may be interpreted in new ways, which, along with possible changes needed to fully comply with any newly released regulation, could affect the operation of Sorghum Group’s marketplace and the way in which Sorghum Group interact with borrowers and investors. The cost to comply with such laws or regulations would increase Sorghum Group’s operating expenses, and Sorghum Group may be unable to pass those costs on to borrowers and investors in the form of increased fees. In addition, governmental or regulatory agencies may decide to impose taxes on services provided over the Internet or by online marketplaces. These taxes could discourage the use of Sorghum Group’s marketplace, which would adversely affect the viability of Sorghum Group’s business.

Changes in PRC regulations relating to interest rates for P2P lending could have a material adverse effect on Sorghum Group’s business.

The interest rate permitted to be charged on loans facilitated by Sorghum Group’s platforms is subject to limitations set forth in the Provisions of the Supreme People’s Court on Application of Laws to the Hearing of Private Lending Cases, or the Provisions on Private Lending Cases, which provide that (i) when the interest rate agreed between the borrower and investor does not exceed an annual interest rate of 24%, the People’s Court will uphold the interest rate charged by the investor, and (ii) when the interest rate agreed between the borrower and investor exceeds an annual interest rate of 36%, the portion in excess of 36% is void and the People’s Court will uphold the borrower’s claim for return of the excess portion to the borrower. For loans with interest rates per annum between 24% and 36%, if the interest on the loans has already been paid to the investor, and so long as such payment has not damaged the interest of the state, the community or any third parties, the courts will likely not enforce the borrower’s demand for the return of such interest payment.

Sorghum Group’s operations may need to be modified to comply with existing and future requirements set forth by the CBRC or laws or regulations promulgated by other PRC authorities regulating the marketplace lending industry in China.

In April 2014, the CBRC announced four principles regarding the marketplace lending industry in China: (i) marketplace lending platforms shall be treated as agencies, (ii) marketplace lending platforms shall not provide guarantee services, (iii) marketplace lending platforms shall not maintain a fund pool, and (iv) marketplace lending platforms shall not illegally conduct fundraising.

In July 2015, ten PRC central government ministries and regulators, including the PBOC, the CBRC, the Ministry of Finance, the Ministry of Public Security and the Cyberspace Administration of China, together released the Guidelines, which identified the CBRC as the supervisory regulator for the online lending industry. According to the Guidelines, online marketplace lending platforms may only serve as intermediaries to provide information services to borrowers and investors, and may not provide credit enhancement services or illegally conduct fundraising. The Guidelines also outlined certain regulatory propositions, which would require Internet finance companies, including online marketplace lending platforms, to (i) complete website filing procedures with the administrative departments overseeing telecommunications; (ii) use banking financial institutions’ depository accounts to hold lending capital, and engage an independent auditor to audit such accounts and publish audit results to customers; (iii) improve the disclosure of operational and financial information, provide sufficient risk disclosure, and set up thresholds for qualified investors to provide better protections to investors; (iv) enhance online security management to protect customers’ personal and transactional information; and (v) take measures against anti-money laundering and other financial crimes.

In August 2016, the CBRC and other regulators collectively announced the publication of the Interim Measures. The Interim Measures also stipulated a twelve-month transition period from the time of their effectiveness for online lending intermediaries to make necessary adjustments. Apart from what had already been emphasized in the Guidelines and other previously released principles, the Interim Measures also include: (i) general principles; (ii) filing administration; (iii) business rules and risk management guidelines; (iv) protection measures for investors and borrowers; (v) rules on information disclosure; (vi) supervision and administrative mechanisms; and (vii) legal liabilities.

In November 2016, the CBRC, the MIIT and the Industry and Commerce Administration Department, jointly issued the Guidance of Administration, which provides the general filing rules for online lending intermediaries and delegates the filing authority to the local financial authorities. Since 2017, local financial regulators have been conducting investigations on the online lending intermediaries, and if Sorghum Group failed to be in full compliance with any regulations, Sorghum Group may be required to rectify mistakes within a certain period as stipulated in the rectification order of local financial regulators. After local financing regulators have completed their investigation and examination, Sorghum Group may be permitted to submit a filing application.

In February 2017, the CBRC released the Guidance to regulate funds depositories for online lending intermediaries, which defines several obligations and responsibilities of online lending intermediaries and commercial banks involved in the online funds depository business. To the extent Sorghum Group’s current arrangements with commercial banks are deemed to be not-compliant with any of the Guidance’s requirements, Sorghum Group may need to adjust Sorghum Group’s operations within the six-month grace period, and as a result, Sorghum Group’s business may be materially and adversely impacted.

Some aspects of Sorghum Group’s platform operations may not currently be operating in full compliance with the Guidelines, the Interim Measures, the Guidance and the other principles that have been announced in recent years. For example, the Guidelines, the Interim Measures, the Guidance and other regulations are not clear about the definition of “credit enhancement service,” nor do they address whether a marketplace lending platform’s affiliated enterprise could provide a “credit enhancement service.” If Sorghum Group’s Reserve Liability Program is classified as a “credit enhancement service” as such definition is clarified, Sorghum Group may be required to make changes within the specified twelve-month transition period to the way in which Sorghum Group conducts its business. In this case, Sorghum Group may not be able to use this program to attract investors to invest in its platform and therefore the revenue may be declined in line with the decline of the transactions. Additionally, the Interim Measures provide upper limits on the loan balance of a single borrower. Sorghum Group may need to rely on the information provided by borrowers to determine whether their lending amounts from all intermediaries have reached the upper limits, and the information they provide may contain misrepresentation or omission or otherwise be unreliable. Moreover, the Interim Measures require online lending intermediaries to file with the local financial regulators and to include serving as an Internet lending information intermediary in their business scope. Sorghum Group plans to make all requisite filings and changes to Sorghum Group’s business scope to the extent necessary when such filing procedures are clarified by the relevant authorities. Although Sorghum Group does not anticipate any material difficulties in making the requisite filings or changing Sorghum Group’s business scope, any failure to do so within the specified twelve-month transition period may result in the violation of the Interim Measures. In addition, the Interim Measures stipulate that online lending intermediaries shall not operate businesses other than risk management and necessary business processes such as information collection and confirmation, post-loan tracking and pledge management in accordance with online-lending regulations, via offline physical locations. However, the Interim Measures do not clearly set forth the types of business process that are not permitted to operate through offline physical locations.

Furthermore, the Interim Measures proposed requirements including with respect to certain prohibited activities, risk disclosure, borrower information disclosure and online dispute resolution, examination and verification functions, anti-fraud measures, risk education and training, information reporting, anti-money laundering, anti-terrorist financing, systems, facilities and technologies, service fees, electronic signatures, loan management, risk assessment, auditing and authentication, reporting obligations and information security. To the extent that Sorghum Group’s business is deemed to be non-compliant with any of these requirements of the Interim Measures, Sorghum Group may need to make necessary adjustments to comply within the specified twelve-month transition period and, as a result, Sorghum Group’s business may be materially and adversely affected.

The facilitation of loans through Sorghum Group’s online platforms could give rise to liabilities under PRC laws and regulations that prohibit illegal fundraising.

PRC laws and regulations prohibit persons and companies from raising funds through advertising to the public a promise to repay premium or interest payments over time through payments in cash or in kind except with the prior approval of the applicable government authorities. Failure to comply with these laws and regulations may result in penalties imposed by the PBOC, the Administration for Industry and Commerce, or AIC, and other governmental authorities, and can lead to civil or criminal lawsuits.

To date, Sorghum Group has not been subject to any fines or other penalties under any PRC laws and regulations that prohibit illegal fundraising. In this capacity, Sorghum Group does not raise funds or promise repayment of premium or interest obligations. Nevertheless, considerable uncertainties exist with respect to the PBOC, AIC and other governmental authorities’ interpretations of the fundraising-related laws and regulations. While Sorghum Group’s agreements with investors require investors to guarantee the legality of all funds investors put on Sorghum Group’s platforms, Sorghum Group is unable to fully verify the source of investors’ funds individually, and therefore, to the extent that investors’ funds are obtained through illegal fundraising, Sorghum Group may be negligently liable as a facilitator of illegal fundraising. In addition, while Sorghum Group’s loan agreements contain provisions that require borrowers to use the proceeds for purposes listed in their loan applications, Sorghum Group is unable to monitor the borrowers’ use of funds on an on-going basis, and therefore, to the extent that borrowers use proceeds from the loans for illegal activities, Sorghum Group may be negligently liable as a facilitator of an illegal use. Although Sorghum Group has designed and implemented procedures to identify and eliminate instances of fraudulent activities on Sorghum Group’s platforms, as the number of borrowers and investors on Sorghum Group’s platforms increase, Sorghum Group may not be able to identify all fraudulent conduct that may violate illegal fundraising laws and regulations.

The facilitation of loans through Sorghum Group’s platforms could give rise to liabilities under PRC laws and regulations that prohibit unauthorized public offerings.

The PRC Securities Law stipulates that no organization or individual is permitted to issue securities for public offering without obtaining prior approval in accordance with the provisions of the law. The following offerings are deemed the be public offerings under the PRC Securities Law: (i) offering of securities to non-specific targets; (ii) offering of securities to more than 200 specific targets; and (iii) other offerings provided by the laws and administrative regulations. Additionally, private offerings of securities shall not be carried out through advertising, open solicitation and disguised publicity campaigns. If any transaction between one borrower and multiple investors on Sorghum Group’s platforms is identified as a public offering by PRC government authorities, Sorghum Group may be subject to sanctions under PRC laws and Sorghum Group’s business may be adversely affected.

Sorghum Group may be subject to risks if Sorghum Group has to restructure its relationship with a controlled variable interest entity and obtain a telecommunication business license.

Sorghum Group has contractual arrangements with a VIE through which it operates its online lending facilitation platforms. There are uncertainties regarding the interpretation and application of PRC laws, rules and regulations, including but not limited to the laws, rules and regulations governing the validity and enforcement of the contractual arrangements between Pang Mai and Wheat. The PRC government including local financial regulators may determine that the contractual arrangements necessary to form and control the VIE, or the Contractual Arrangements, do not comply with PRC licensing, registration, policies, legal or regulatory requirements, or with requirements or policies that may be adopted in the future and Sorghum Group could be subject to severe penalties, material difficulties in making the requisite filings or registrations, or be forced to relinquish Sorghum Group’s interests in certain operations. Although Sorghum Group believes the Contractual Arrangements comply with all applicable PRC laws, rules and regulations, and do not violate, breach, contravene or otherwise conflict with any applicable PRC laws, rules or regulations, the PRC courts or regulatory authorities may determine that Sorghum Group’s corporate structure and contractual arrangements violate PRC laws, rules or regulations. Sorghum Group is aware of a recent case involving Chinachem Financial Services where certain contractual arrangements for a Hong Kong Company to gain economic control over a PRC Company were declared to be void by the PRC Supreme People’s Court. If the PRC courts or regulatory authorities determine that Sorghum Group’s Contractual Arrangements are in violation of applicable PRC laws, rules or regulations, Sorghum Group’s Contractual Arrangements will become invalid or unenforceable.

If Pang Mai, Wheat or their ownership structure or the Contractual arrangements are determined to be in violation of any existing or future PRC laws, rules or regulations, or Pang Mai or Wheat fails to obtain or maintain any of the required governmental permits or approvals, the relevant PRC regulatory authorities would have broad discretion in dealing with such violations, including:

The imposition of any of these penalties would severely disrupt Sorghum Group’s ability to conduct business and have a material adverse effect on Sorghum Group’s financial condition, results of operations and prospects.

Sorghum Group has relied and expects to continue to rely on contractual arrangements with Wheat and its shareholders to operate its business. These contractual arrangements may not be as effective as direct ownership in providing us with control over Sorghum Group’s consolidated variable interest entities. For example, Wheat and its shareholders could breach their contractual arrangements by, among other things, failing to conduct their operations, including maintaining its website and using the domain names and trademarks, in an acceptable manner or taking other actions that are detrimental to Sorghum Group’s interests. If Sorghum Group had direct ownership of Wheat, Sorghum Group would be able to exercise Sorghum Group’s rights as a shareholder to effect changes in the board of directors of Wheat, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the current contractual arrangements, Sorghum Group relies on the performance of the Contractual Arrangements in place with a VIE which operates its online platforms, which may not be as effective in providing it with control over such operations as Sorghum Group would have with direct ownership of such VIE. The shareholders of Wheat may not act in the best interests of Sorghum Group or may not perform their obligations under these contracts. Such risks exist throughout the period in which Sorghum Group intends to operate its business through the contractual arrangements with Wheat. Although Sorghum Group has the right to replace any shareholder of Wheat under their respective contractual arrangements, if any shareholder of Wheat is uncooperative or any dispute relating to these contracts remains unresolved, Sorghum Group will have to enforce Sorghum Group’s rights under these contracts through the operations of PRC laws and arbitration, litigation and other legal proceedings and therefore will be subject to uncertainties in the PRC legal system. Therefore, Sorghum Group’s contractual arrangements with Wheat, its consolidated variable interest entity, may not be as effective in ensuring Sorghum Group’s control over the relevant portion of its business operations as direct ownership would be.

If Sorghum Group’s consolidated variable interest entity or its shareholders fail to perform their respective obligations under the contractual arrangements, Sorghum Group may have to incur substantial costs and expend additional resources to enforce such arrangements. Sorghum Group may also have to rely on legal remedies under PRC laws, including seeking specific performance or injunctive relief, and claiming damages, which Sorghum Group cannot assure you will be effective under PRC laws. For example, if the shareholders of Wheat were to refuse to transfer their equity interest in Wheat, as the case may be, to Sorghum Group or its designee if Sorghum Group exercises the purchase option pursuant to these contractual arrangements, or if they were otherwise to act in bad faith, then Sorghum Group may have to take legal actions to compel them to perform their contractual obligations.

All the agreements under Sorghum Group’s contractual arrangements are governed by PRC laws and provide for the resolution of disputes through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC laws and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit Sorghum Group’s ability to enforce these contractual arrangements. Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a consolidated variable interest entity should be interpreted or enforced under PRC laws. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, under PRC laws, rulings by arbitrators are final and parties cannot appeal arbitration results in court unless such rulings are revoked or determined unenforceable by a competent court. If the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would require additional expenses and delay. In the event that Sorghum Group is unable to enforce these contractual arrangements, or if Sorghum Group suffers significant delay or other obstacles in the process of enforcing these contractual arrangements, Sorghum Group may not be able to exert effective control over its consolidated variable interest entities, and Sorghum Group’s ability to conduct its business may be negatively affected.

In January 2015, MOFCOM published a consultation draft of the Foreign Investment Law soliciting the public’s comments, or the Draft Foreign Investment Law, which expands the definition of foreign investment and introduces the principle of “actual control” in determining whether a company is considered a foreign-invested enterprise. Under the Draft Foreign Investment Law, a VIE would be deemed to be a foreign-invested enterprise if it is ultimately “controlled” by foreign investors, and accordingly it would be subject to restrictions on foreign investments. However, the Draft Foreign Investment Law does not address what actions will be taken with respect to the existing companies with structures similar to VIEs, whether or not these companies are controlled by Chinese parties. It is uncertain when the draft will become law and whether the final version will differ from the draft. If any Contractual Arrangements Sorghum Group may implement are found to be in violation of any existing or future PRC laws or regulations, or if Sorghum Group fails to obtain or maintain any of the required permits or approvals, the relevant governmental authorities would have broad discretion in dealing with such violation, including levying fines, confiscating the income of Sorghum Group’s PRC subsidiary or consolidated VIE, revoking the business licenses or operating licenses of Sorghum Group’s PRC subsidiaries or consolidated VIE, prohibiting Sorghum Group’s use of proceeds from future public investors’ investments to finance Sorghum Group’s business and operations in the PRC, and taking any other regulatory or enforcement actions that could be harmful to Sorghum Group’s business. Any of these actions could cause significant disruption to Sorghum Group’s operations and adversely affect Sorghum Group’s business. If any of these occurrences results in Sorghum Group’s inability to direct the activities of the consolidated VIE and/or Sorghum Group’s failure to receive economic benefits from a consolidated VIE, Sorghum Group may not be able to consolidate its results into Sorghum Group’s consolidated financial statements in accordance with U.S. GAAP.

Moreover, the shareholders of the consolidated VIE that Sorghum Group controls may have potential conflicts of interest with Sorghum Group, which may materially and adversely affect Sorghum Group’s business and financial condition. The shareholders of the VIE may breach or refuse to renew the Contractual Arrangements with Sorghum Group that allow it to effectively control such VIE, and receive economic benefits from its operations. There is a risk that they would not always act in the best interests of Sorghum Group. Sorghum Group may not have effective arrangements to address potential conflicts of interest between these individuals and Sorghum Group. Sorghum Group would rely on these individuals to abide by the contract laws of China and honor their contracts in order for Sorghum Group to effectively control the VIE and to receive the economic benefits deriving from Sorghum Group’s contracts with them. If Sorghum Group is unable to resolve any conflicts of interest or disputes with the shareholders of the VIE or if the shareholders of the VIE breach Sorghum Group’s agreements with them, Sorghum Group would have to rely on legal proceedings, which may result in disruption to Sorghum Group’s business. There is also substantial uncertainty as to the outcome of any such legal proceedings. In addition, Contractual Arrangements in relation to a consolidated VIE may be subject to scrutiny by the PRC tax authorities, which may determine that Sorghum Group or the consolidated VIE owe additional taxes, which could negatively affect Sorghum Group’s financial condition. In the event of bankruptcy, dissolution or liquidation of the VIE, Sorghum Group may lose the ability to use certain assets held by the VIE that are material to Sorghum Group’s business.

Sorghum Group’s payment management services may need to be modified to comply with future PRC laws and regulations regarding the debt collection industry in China.

In 2000, the State Economic and Trade Commission, the Ministry of Public Security and the State Administration for Industry and Commerce issued the Notice on Prohibition of All Types of Debt Collection Companies and Raids on Illegal Debt Collection Activities (GuoJingMaoZong He (2000) 568), or the Notice on Prohibition, which regulates the activities on debt collection companies, including the prohibition on the use of threats, intimidation, harassment or disclosure of private information in collection efforts. While Sorghum Group believes that its payment management services team, which engages in collection efforts primarily by means of phone calls, is in compliance with the Notice on Prohibition, Sorghum Group may need to modify its payment management services in the future to comply with changes to debt collection regulations.

China’s M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for Sorghum Group to pursue growth through acquisitions in China.

The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investor, or the M&A Rules, and other recently adopted regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex. For example, the M&A Rules require that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that impact or may impact national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of the National People’s Congress on August 30, 2007 and effective as of August 1, 2008 requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by MOFCOM before they can be completed. In addition, on February 3, 2011, the General Office of the State Council promulgated a Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Lenders, or Circular 6, which officially established a security review system for mergers and acquisitions of domestic enterprises by foreign investors. Further, on August 25, 2011, MOFCOM promulgated the Regulations on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Lenders, or the MOFCOM Security Review Regulations, which became effective on September 1, 2011, to implement Circular 6. Under Circular 6, a security review is required for mergers and acquisitions by foreign investors having “national defense and security” concerns and mergers and acquisitions by which foreign investors may acquire the “de facto control” of domestic enterprises with “national security” concerns. Under the MOFCOM Security Review Regulations, MOFCOM will focus on the substance and actual impact of the transaction when deciding whether a specific merger or acquisition is subject to security review. If MOFCOM decides that a specific merger or acquisition is subject to security review, it will submit it to the Inter-Ministerial Panel, an authority established under the Circular 6 led by the National Development and Reform Commission, or NDRC, and MOFCOM under the leadership of the State Council, to carry out the security review. The regulations prohibit foreign investors from bypassing the security review by structuring transactions through trusts, indirect investments, leases, loans, control through contractual arrangements or offshore transactions. There is no explicit provision or official interpretation stating that the merger or acquisition of a company engaged in the peer-to-peer lending intermediary facilitation business requires security review.

In the future, Sorghum Group may grow its business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from MOFCOM or its local counterparts may delay or inhibit Sorghum Group’s ability to complete such transactions. It is unclear whether Sorghum Group’s business would be deemed to be in an industry that raises “national defense and security” or “national security” concerns. However, MOFCOM or other government agencies may publish explanations in the future determining that Sorghum Group’s business is in an industry subject to the security review, in which case Sorghum Group’s future acquisitions in the PRC, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited.

Sorghum relies on dividends and other distributions on equity paid by its PRC subsidiary to fund any cash and financing requirements it may have, and any limitation on the ability of Sorghum’s PRC subsidiary and other consolidated entities to pay dividends, other distributions, repay debts or make inter-entity payments could limit Sorghum’s abilities to distribute profits to its shareholders, including U.S. investors following the proposed Acquisition.

Sorghum is a holding company and relies on dividends or other distributions paid by its PRC subsidiary for its cash requirements, including the funds necessary to pay dividends and other cash distributions to its shareholders, to service any debts it may incur, and to pay its operating expenses. PRC regulations currently permit payments of dividends only out of accumulated profits, as determined in accordance with the accounting standards and regulations in China, which differ in many aspects from generally accepted accounting principles in other jurisdictions. Sorghum Group’s PRC subsidiaries are required to allocate certain percentages of any accumulated profits after tax each year to their statutory common reserve fund as required under the PRC Company Law until the aggregate accumulated statutory common reserve funds exceed fifty percent of its registered capital. Such reserve funds cannot be distributed as cash dividends. In addition, if Sorghum Group’s PRC subsidiaries incur debts on their own or enter into certain agreements in the future, the instruments governing the debt or such other agreements may restrict their ability to pay dividends or make other distributions to their shareholders. Therefore, these restrictions on the availability and usage of Sorghum Group’s major source of funding may materially and adversely affect its ability to pay dividends to its shareholders and to service its debts. In addition, the PRC tax authorities may require Sorghum’s PRC subsidiary, Pang Mai, to adjust its taxable income under the contractual arrangements it currently has in place with Sorghum Group’s consolidated variable interest entity in a manner that would materially and adversely affect its ability to pay dividends and other distributions to Sorghum and its shareholders.

Moreover, the ability of Sorghum’s PRC subsidiary, Pang Mai, to pay dividends and other distributions may be restricted due to foreign exchange control policies and the availability of its cash balance. Substantially all of Sorghum Group’s operations are conducted in China and Sorghum Group’s PRC consolidated subsidiaries receive substantially all of their revenue in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of its PRC subsidiary to use its Renminbi revenues to pay dividends to Sorghum and its shareholders, including U.S. investors following the proposed Acquisition. Additionally, Sorghum Group’s funds may not be readily available to satisfy obligations which may incur outside the PRC, which could adversely affect Sorghum Group’s business and prospects or the ability to meet its cash obligations. If Sorghum does not receive dividends from its PRC subsidiary, Sorghum Group’s liquidity and financial condition will be materially and adversely affected.

In response to the persistent capital outflow in China and RMB’s depreciation against U.S. dollar in the fourth quarter of 2016, the PBOC and the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures over recent months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. For instance, on January 26, 2017, SAFE issued the Notice of State Administration of Foreign Exchange on Improving the Check of Authenticity and Compliance to further Promote Foreign Exchange Control, or the SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting the profits. The PRC government may continue to strengthen its capital controls, and more restrictions and substantial vetting process may be put in place by SAFE for cross-border transactions falling under both the current account and the capital account. Any limitation on the ability of Sorghum’s PRC subsidiary to pay dividends or make other kinds of payments to its shareholders, including U.S. investors following the proposed Acquisition, could substantially affect the Company shareholders’ confidence and materially and adversely limit its ability to grow, make investments or acquisitions that could be beneficial to its business, pay dividends, or otherwise fund and conduct its business.

PRC regulations relating to offshore investment activities by PRC residents and PRC entities may limit Sorghum Group’s PRC subsidiaries’ ability to increase their registered capital or distribute profits or otherwise expose Sorghum Group to liability and penalties under PRC law.

SAFE promulgated the Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, in July 2014 that requires PRC residents or entities to register with SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such PRC residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating to any change of basic information (including change of such PRC citizens or residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions.

SAFE Circular 37 was issued to replace the Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments via Overseas Special Purpose Vehicles, or SAFE Circular 75. SAFE further enacted the Notice on Further Simplifying and Improving the Foreign Exchange Management Policies for Direct Investment effective from June 1, 2015, or SAFE Circular 13, which allows PRC residents or entities to register with qualified banks in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.

If Sorghum Group’s shareholders who are PRC residents or entities do not complete their registration with the local SAFE branches or qualified banks as required by SAFE Circular 37 and other related rules, Sorghum Group’s PRC subsidiaries may be prohibited from distributing their profits and proceeds from any reduction in capital, share transfer or liquidation, and Sorghum Group may be restricted in its ability to contribute additional capital to its PRC subsidiaries. Moreover, failure to comply with the SAFE registration described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.

Sorghum Group has requested PRC residents whom Sorghum Group knows hold direct or indirect interests in Sorghum Group to make the necessary applications, filings and amendments as required under SAFE Circular 37 and other related rules. The shareholders who are PRC resident is under the process for procurement of filings. However, Sorghum Group cannot assure you that the registration will be duly and timely completed with the local SAFE branch or qualified banks. As a result, Sorghum Group cannot assure you that all of Sorghum Group’s shareholders or beneficial owners who are PRC residents or entities have complied with, and will in the future make or obtain any applicable registrations or approvals required by, SAFE regulations. Failure by such shareholders or beneficial owners to comply with SAFE regulations, or failure by Sorghum Group to amend the foreign exchange registrations of Sorghum Group’s PRC subsidiary, could subject it to fines or legal sanctions, restrict Sorghum Group’s overseas or cross-border investment activities, limit Sorghum Group subsidiaries’ ability to make distributions or pay dividends or affect Sorghum Group’s ownership structure, which could adversely affect Sorghum Group’s business and prospects.

Sorghum Group’s leased property interests may be defective and its right to the leased the properties affected by such defects may be challenged, which could cause significant disruption to Sorghum Group’s business.

Under PRC laws, all lease agreements are required to be registered with the local housing authorities. Sorghum Group presently leases certain premises in China, and certain landlords of these premises have not completed the registration of their ownership rights or the registration of Sorghum Group’s leases with the relevant authorities. Failure to complete these required registrations may expose Sorghum Group’s landlords, lessors and Sorghum Group to potential monetary fines or may require Sorghum Group to relocate its offices and incur the associated losses. If there is a third-party claim with respect to ownership of the premises, Sorghum Group’s business may be affected.

The approval of the CSRC may be required in connection with the proposed Acquisition under PRC law.

The M&A Rules, which were adopted in 2006 by six PRC regulatory agencies, including the CSRC, purport to require offshore special purpose vehicles that are controlled by PRC domestic companies or individuals and that have been formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of PRC domestic companies or assets to obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange. The interpretation and application of the regulations remain unclear, and the CSRC has not issued any definitive rule of interpretation concerning whether transactions like the proposed acquisition are subject to CSRC approval procedures under the M&A Rules. This transaction may ultimately require approval from the CSRC. If CSRC approval is required, it is uncertain how long it will take us to obtain the approval and any failure to obtain or delay in obtaining CSRC approval for this transaction would subject us to sanctions imposed by the CSRC and other PRC regulatory agencies, which could include fines and penalties on Sorghum Group’s operations in China, restrictions or limitations on Sorghum Group’s ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect Sorghum Group’s business, results of operations and financial condition.

Sorghum Group cannot assure you that relevant PRC government agencies, including the CSRC, would reach the same conclusion as Sorghum Group’s PRC counsel, and hence Sorghum Group may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on Sorghum Group’s operations in China, limit Sorghum Group’s operating privileges in China, delay or restrict the repatriation of the proceeds from investments by future public investors into China or take other actions that could have a material adverse effect on Sorghum Group’s business, financial condition, results of operations and prospects. In addition, if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that Sorghum Group obtain their approvals for this transaction, Sorghum Group may be unable to obtain a waiver of such approval requirements. Any uncertainties and/or negative publicity regarding such approval requirement could have a material adverse effect on Sorghum Group’s results of operations.

The future development of money laundering and anti-terrorism regulations in the PRC may increase Sorghum Group’s obligations to supervise and report transactions between borrowers and investors on its platforms, thereby increasing Sorghum Group’s costs and exposure to the risk of criminal or administrative sanctions.

PRC laws and regulations relating to money laundering and anti-terrorism have undergone considerable development over recent years. The Guidelines and the Interim Measures require us to take effective measures to verify customer identities, monitor and report suspicious transactions and keep client information and transaction records safe. Sorghum Group is also required to assist in investigations by judicial authorities and the public security bureau. Sorghum Group currently relies primarily on the depository bank and third-party payment companies transferring funds on Sorghum Group’s platforms to carry out anti-money laundering due diligence of Sorghum Group’s customers. Current PRC laws stipulate specific obligations and steps that the banks and third-party payment companies should follow for anti-money laundering due diligence. While the Guidelines and the Interim Measures do not stipulate explicit standards for Sorghum Group’s anti-money laundering obligations, any new requirement under money laundering laws to supervise and report transactions with Sorghum Group’s customers could have the effect of increasing Sorghum Group’s costs, and may expose it to potential criminal or administrative sanctions if Sorghum Group fails to comply.

In January 2016, the Standing Committee of the National People’s Congress announced the Anti-Terrorism Law of the People’s Republic of China, or the Anti-Terrorism Law. According to this law, telecommunications operators and Internet service providers shall implement supervision systems for network security and information content as well as technical safety precautions in accordance with the relevant laws and administrative regulations to prevent the dissemination of information involving terrorism and extremism. If such information is found, the corresponding data transmission will be immediately stopped, relevant records will be saved, relevant information will be deleted and a report shall be made to the public security organizations or related departments. Furthermore, telecommunications, Internet, finance, accommodations, long-distance passenger transportation and motor vehicle leasing business operators and service providers shall check the identities of their customers. No services are permitted to be provided to unidentified customers or those who refuse to comply with identification checks. While Sorghum Group believes that Sorghum Group is in compliance with the Anti-Terrorism Law, to the extent that Sorghum Group’s operations are not in compliance, Sorghum Group may be exposed to potential criminal or administrative sanctions.

Sorghum Group may be subject to penalties under relevant PRC laws and regulations due to failure to make full social security and housing fund contributions for some of Sorghum Group’s employees.

In the past, contributions by some of Sorghum Group’s PRC subsidiaries for some of their employees to the social security and housing funds may not have been in compliance with relevant PRC regulations. Pursuant to the Regulation on the Administration of Housing Accumulation Funds, as amended in 2002, the relevant housing fund authority may order an enterprise to pay outstanding contributions within a prescribed time limit. Pursuant to the PRC Social Insurance Law promulgated in 2010, the social security authority may order an enterprise to pay the outstanding contributions within a prescribed time limit, and may impose penalties if there is a failure to do so. Although Sorghum Group has made what Sorghum Group believes to be sufficient accruals to address these risks, some of Sorghum Group’s PRC subsidiaries may be required to pay outstanding contributions and penalties to the extent they did not make full contributions to the social security and housing funds.

THE SPECIAL MEETING

Date, Time and Place of the Special Meeting

The Special Meeting will be held at 10:00 a.m., local time, on August _ ___ , 2017, at the offices of Hunter Taubman Fischer & Li, LLC, 1450 Broadway, 26th Floor, New York, NY 10018, to consider and vote upon the Reverse Split Proposal, the Capital Increase Proposal, the Name Change Proposal, the Acquisition Proposal and/or if necessary, the Adjournment Proposal to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, CCCR is not authorized to consummate the Reverse Split, the Capital Increase, the Name Change and/or Acquisition.

Purpose of the Special Meeting

At the Special Meeting, CCCR is asking its stockholders as of the record date of ______ , 2017 (the “ Record Date ”) to consider and vote upon:

(1)       a proposal to effect the Reverse Split of our issued and outstanding common stock by a ratio of not less than one-for-two and not more than one-for-ten at any time prior to ____ , 2017, with the exact ratio to be set at a whole number within this range as determined by our board of directors in its sole discretion— we refer to this proposal as the “ Reverse Split Proposal ”;

(2)       a proposal to adopt an amendment to the Company’s Certificate of Incorporation to increase the number of shares of common stock that the Company has authority to issue from 100,000,000 to 1,000,000,000 and the number of shares of preferred stock that the Company has authority to issue from 10,000,000 to 100,000,000; and consequently, to increase the total number of shares of all classes of capital stock that the Company has authority to issue from 110,000,000 to 1,100,000,000 — we refer to this proposal as the “ Capital Increase Proposal ”;

(3)       a proposal to change the Company’s corporate name to “Wheat Finance Service Group”— we refer to this proposal as the “ Name Change Proposal ”;

(4)       a proposal to adopt the Exchange Agreement and to approve the transactions contemplated by such agreement — we refer to this proposal as the “ Acquisition Proposal ”; and

(5)       a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, CCCR is not authorized to consummate the transactions contemplated by the Reverse Split Proposal, the Name Change Proposal and Acquisition Proposal — we refer to this proposal as the “ Adjournment Proposal .”

Record Date; Shares Entitled to Vote; Quorum

Stockholders will be entitled to vote or direct votes to be cast at the Special Meeting if they owned shares of CCCR common stock on the Record Date. Stockholders will have one vote for each share of CCCR common stock owned at the close of business on the Record Date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. On the Record Date, there were ___________ shares of CCCR common stock outstanding.

A quorum of CCCR stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if a majority of the outstanding shares entitled to vote at the meeting are represented in person or by proxy. Abstentions and broker non-votes will count as present for the purposes of establishing a quorum.

Vote Required; Abstentions and Broker Non-Votes

The affirmative vote of the holders of a majority of the outstanding shares of our common stock is required to approve the Reverse Split Proposal. The affirmative vote of the holders of a majority of votes cast by our shareholders that are present in person or by proxy at our special meeting is required to approve the Acquisition Proposal. Approval of the Adjournment Proposal whether or not a quorum is present, requires the affirmative vote of a majority of the votes cast by our shareholders entitled to vote.

Although the Name Change and Capital Increase Proposals in themselves do not require stockholder vote, the Charter Amendment which includes the reverse split will require approval of majority of the outstanding shares of our common stock.

Abstentions and broker non-votes will have the same effect as a vote “against” the Acquisition Proposal, the Reverse Split Proposal, the Capital Increase Proposal, the Name Change Proposal and the Adjournment Proposal, if presented.

Shares Held by CCCR’s Directors and Executive Officers

As of the Record Date, the directors and executive officers of CCCR as a group owned and were entitled to vote _____ shares of the common stock of the Company, representing approximately [    ] % of the outstanding shares of CCCR common stock on that date. CCCR expects that its directors and executive officers will vote their shares in favor of the Reverse Split Proposal, the Name Change Proposal, and Acquisition Proposal, but none of the Company’s directors or executive officers has entered into any agreement obligating any of them to do so.

Voting of Proxies

If your shares are registered in your name with our transfer agent, VStock Transfer, LLC, you may cause your shares to be voted by returning a signed proxy card, or you may vote in person at the special meeting. Additionally, you may submit electronically over the Internet or by phone a proxy authorizing the voting of your shares by following the instructions on your proxy card. You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to submit a proxy electronically over the Internet or by telephone. Based on your proxy cards or Internet and telephone proxies, the proxy holders will vote your shares according to your directions.

If you plan to attend the Special Meeting and wish to vote in person, you will be given a ballot at the meeting. If your shares are registered in your name, you are encouraged to vote by proxy even if you plan to attend the Special Meeting in person. If you attend the Special Meeting and vote in person, your vote by ballot will revoke any proxy previously submitted.

Voting instructions are included on your proxy card. All shares represented by properly executed proxies received in time for the Special Meeting will be voted at the Special Meeting in accordance with the instructions of the stockholder. Properly executed proxies that do not contain voting instructions will be voted “ FOR ” approval of the Reverse Split Proposal, “ FOR ” approval of the Capital Increase Proposal, “ FOR ” approval of the Name Change Proposal, “ FOR ” the Acquisition Proposal, and “ FOR ” the Adjournment Proposal, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Exchange Agreement at the time of the Special Meeting.

If your shares are held in “street name” through a broker, bank or other nominee, you may vote through your broker, bank or other nominee by completing and returning the voting form provided by your broker, bank or other nominee, or by the Internet or telephone through your broker, bank or other nominee if such a service is provided. To vote via the Internet or telephone through your broker, bank or other nominee, you should follow the instructions on the voting form provided by your broker, bank or other nominee. If you do not return your bank’s, broker’s or other nominee’s voting form, do not vote via the Internet or telephone through your broker, bank or other nominee, if possible, or do not attend the special meeting and vote in person with a proxy from your broker, bank or other nominee, it will have the same effect as if you voted “ AGAINST ” the Reverse Split Proposal, the Capital Increase Proposal, the Acquisition Proposal, the Name Change Proposal, and the Adjournment Proposal, if presented.

Revocability of Proxies

If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the Special Meeting by:

Please note that to be effective, your new proxy card, internet or telephonic voting instructions or written notice of revocation must be received by us prior to the Special Meeting and, in the case of internet or telephonic voting instructions, must be received before 11:59 p.m. Eastern time on ____, 2017. If you have submitted a proxy, your appearance at the Special Meeting, in the absence of voting in person or submitting an additional proxy or revocation, will not have the effect of revoking your prior proxy.

If you hold your shares of common stock in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote in person at the special meeting if you obtain a valid “legal” proxy from your bank, broker or other nominee. Any adjournment, recess or postponement of the Special Meeting for the purpose of soliciting additional proxies will allow CCCR stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Special Meeting as adjourned, recessed or postponed.

Board of Directors’ Recommendation

After careful consideration, the Company’s board of directors has determined that the Reverse Split Proposal, the Capital Increase Proposal, the Acquisition Proposal, the Name Change Proposal, and the Adjournment Proposal are fair to and in the best interests of the Company and its stockholders and unanimously recommends that you vote or give instruction to vote:

The Acquisition, the Name Change, the Reverse Split and the Capital Increase proposals are conditioned upon the adoption of each other.

Solicitation of Proxies

The expense of soliciting proxies in the enclosed form will be borne by CCCR. Proxies may also be solicited by some of our directors, officers and employees, personally or by telephone, facsimile, email or other means of communication. No additional compensation will be paid for such services.

Anticipated Date of Completion of the Acquisition

Assuming timely satisfaction of necessary closing conditions, including the approval by our stockholders of the proposal to approve the Exchange Agreement, we anticipate that the Reverse Split, the Capital Increase, the Name Change, and the Acquisition will be consummated in the fourth calendar quarter of 2017.