| Summary of Significant Accounting Policies | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (a) Basis of presentation The consolidated financial statements
of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America
(“U.S. GAAP”). (b) Principle of Consolidation The consolidated financial statements
include the financial statements of all the subsidiaries and VIEs of the Company. All transactions and balances between the Company
and its subsidiaries and VIEs have been eliminated upon consolidation. (c) Foreign currency translation
and transactions The functional currency of CIFS and
HKFS is United States dollars (“US$” or “$”).The functional currency of Yingxin Yijia, Sheng Ying Xin,
Kashgar Sheng Ying Xin, Fuhui, Yin Da Xin Cheng and Anytrust, are Renminbi (“RMB”), and PRC is the primary economic
environment in which the Company operates. Transactions denominated in currencies
other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of
the transactions. The resulting exchange differences are included in the determination of net income for the respective periods. For financial reporting purposes, the
financial statements of the Company’s PRC subsidiary and the financial statements of VIEs are prepared using RMB are translated
into Company’s reporting currency, the US$. Assets and liabilities are translated using the exchange rate at each balance
sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and Shareholders’
equity is translated at historical exchange rates except for the change in retained earnings during the year which is the result
of the income. The cumulative translation adjustments are recorded in accumulated other comprehensive income in the accompanying
consolidated statements of shareholders’ equity. The exchange rates applied are as follows:
December 31, 2017 December 31, 2016
RMB exchange rate at balance sheets dates, 6.5342 6.937
Year Ended December 31,
2017 2016 2015
Average exchange rate for each year 6.7518 6.6423 6.2264
No representation is made that the RMB
amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. The source of the exchange
rates is generated from People’s Bank of China. (d) Use of estimates The preparation of these consolidated
financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues and expenses and the related disclosures of contingent assets and liabilities. Management
makes its estimates based on historical experience and on various other assumptions it believes to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could
differ from those estimates. Significant accounting estimates reflected in the Company’s consolidated financial statements
mainly include the allowance for doubtful accounts, the valuation allowance of deferred tax assets, the estimated useful lives
of long-lived assets, the impairment assessment of goodwill, intangibles and other long-lived assets, the fair value of identifiable
assets and liabilities acquired through business combination. (e) Cash Cash represents cash on hand and deposits
held with banks. (f) Accounts receivable and loans
to third parties Accounts receivable and loans to third
parties are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts as
needed. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the
Company’s existing accounts receivable and loans receivable. The Company determines the allowance based on aging data, historical
collection experience, customer specific facts and economic conditions. Based on management’s assessment of the collectability
of the accounts receivable and loans to third party, no allowance was deemed necessary as of December 31, 2017 and 2016. The value-added
tax receivable from customers included in the accounts receivable in the balance sheet were $356,038 and $457,840 as of December
31, 2017 and 2016, respectively. (g) Property and Equipment The Company states equipment at cost less
accumulated depreciation. The Company computes depreciation using the straight-line method over the estimated useful lives of the
assets with 5% residual value for electronic equipment, and 5% residual value for furniture and 0% residual value for leasehold
improvement. Estimated useful lives of equipment:
Useful Life
Furniture 10 years
Electronic equipment 3 years
Leasehold improvement 3 years The Company eliminates the cost and
related accumulated depreciation of assets sold or otherwise retired from the accounts and includes any gain or loss in the statement
of income. The Company charges maintenance, repairs and minor renewals directly to expenses as incurred. (h) Intangible Assets Intangible assets, comprising accounting
software and big data platform, which are separable from the property and equipment, are stated at cost less accumulated amortization.
Amortization is computed using the straight-line method over the estimated useful lives of the assets. (i) Impairment of Long-lived Assets The Company reviews long-lived assets
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future net undiscounted
cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured
by the amount by which the carrying amount of the assets exceeds the fair value of the assets. For the years ended December 31,
2017, 2016 and 2015, the Company did not recognize any impairment loss of its long-lived assets. (j) Statutory Reserve The Company is required to make appropriations
to reserve funds, comprising the statutory surplus reserve and discretionary surplus reserve, based on after-tax net income determined
in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus
reserve is required to be at least 10% of the after tax net income determined in accordance with PRC GAAP until the reserve is
equal to 50% of the entities’ registered capital. Appropriations to the discretionary surplus reserve are made at the discretion
of Board of Directors. (k) Revenue recognition Revenue principally consists of consulting
service revenue. Revenue comprises the fair value of the consideration received or receivable for the provision of services in
the ordinary course of the Company’s activities and is recorded net of value added tax (“VAT”). Consistent with
the criteria of ASC 605 “Revenue Recognition” (“ASC 605”), the Company recognizes revenue when the following
four revenue recognition criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services
have been provided, (iii) the selling price is fixed or determinable, and (iv) collectability is reasonably assured. The Company’s services include
commercial payment advisory services, intermediary bank loan advisory services, international corporate financing advisory services
and technical services. For commercial payment advisory after
signing contracts with the client, the Company starts to identify and select banks and financial products, coordinate with banks
to structure financing solutions for the client. Then the client prepares application materials and sends them to the bank. When
approved by the bank, the client will deposit cash with the bank or purchases wealth management products sold by the bank. After
this step, the bank will issue a letter of guarantee, which the client will pledge as security for the acceptance bills. The letter
of guarantee is a document that the bank provides certifying itself as guarantor. The Company’s service fee is a percentage
of the amount of cash deposited with or wealth management products purchased from the bank by the client. The Company recognizes
revenue after the client receives a bank credit contract from the bank and when the Company receives a contract completion confirmation
from the client. For intermediary bank loan advisory
services, the Company matches small-to-medium sized enterprises (“SMEs”) with financing sources. The Company charges
borrowers an introduction fee which is calculated at a percentage of the loan. The Company recognizes revenue after the client
receives a bank credit contract from the bank and when the Company receives a contract completion confirmation from the client.
The Company typically receives the contract completion confirmation when the client receives the bank financing and signs off on
the contract completion confirmation. For international corporate financing
advisory services, the Company works with overseas banks to structure and provide clients with financing solutions to obtain facilities
from overseas banks for the clients’ offshore affiliates. After signing contracts with the client, the Company starts to
identify overseas banks and domestic banks, structure financing solutions and facilitate application processes. After the client
provides security to the domestic bank, the domestic bank will issue a letter of guarantee to the overseas bank. The overseas bank
will provide credit to the affiliate designated by client. The Company’s service fee is a percentage of credit granted by
the overseas bank to the offshore affiliate. The Company recognizes revenue after the offshore affiliate receives credit approval
notice from the offshore bank and when the Company receives a contract completion confirmation from the client. The Company typically
receives the contract completion confirmation when the affiliate receives the bank financing and the client signs off on the contract
completion confirmation. For technical services, after signing
the contract, the Company provides the clients with the technical services and charges their clients for the technical service
fees. The Company recognizes revenue when the services are rendered. There is no claw back provisions or
other guarantees. Full service fee are due upon the contract completion confirmation from the client. (l) Taxation The Company follows the guidance of
ASC Topic 740 “Income taxes” and uses liability method to account for income taxes. Under this method, deferred tax
assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities
using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records
a valuation allowance to offset deferred tax assets, if based on the weight of available evidence, it is more-likely-than-not that
some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is
recognized in statement of income and comprehensive income in the period that includes the enactment date. The Company adopts a more likely than
not threshold and a two-step approach for the measurement of tax position and financial statement recognition. Under the two-step
approach, the first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates
that it is more likely than not that the position will be sustained, including the resolution of related appeals or litigation
process, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized
upon settlement. The Company has elected to classify
interest related to an uncertain tax position (if and when required) to interest expense, and classify penalties related to an
uncertain tax position (if and when required) as part of other expense in the consolidated statements of comprehensive income. The tax authority of the PRC government
conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises had completed
their relevant tax filings, hence the Company’s tax filings may not be finalized. It is therefore uncertain as to whether
the PRC tax authority may take different views about the Company’s tax filings which may lead to additional tax liabilities.
The tax returns of the Company’s PRC subsidiaries and VIEs are subject to examination by the relevant tax authorities. According
to the PRC Tax Administration Law on the Levying and Collection of Taxes, the statute of limitations is three years if the underpayment
of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to
five years under special circumstances, where the underpayment of taxes is more than RMB100,000. In the case of transfer pricing
issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. The Company did not
have any material interest or penalties associated with tax positions for the years ended December 31, 2017, 2016 and 2015 and
did not have any significant unrecognized uncertain tax positions as of December 31, 2017, 2016 and 2015, respectively. The Company
does not expect that the position of unrecognized tax benefits will significantly increase or decrease within 12 months of December
31, 2017. (m) Cost of revenues The Company’s cost of revenues mainly
consist revenue-generating staff costs. (n) Comprehensive income The Company presents comprehensive income
in accordance with ASC 220, “Comprehensive Income” (o) Earnings per Share Earnings
per share (“EPS”) are calculated in accordance with ASC Topic 260, “Earnings Per Share”. Basic earnings
per share is computed by dividing income attributable to common shareholders by the weighted average number of shares of common
stock outstanding during the period. Diluted earnings per share reflect the potential dilution that could occur if securities or
other contracts to issue common shares were exercised or converted into common stock. Common shares issuable upon the conversion
of the convertible preferred shares are included in the computation of diluted earnings per share on an “if-converted”
basis when the impact is dilutive. The dilutive effect of outstanding common share warrants and options are reflected in the diluted
earnings per share by application of the treasury stock method when the impact is dilutive. Potential common shares that have an
anti-dilutive effect are excluded from the calculation of diluted EPS. There is no dilutive effect for the years ended December
31, 2017, 2016 and 2015. (p) Fair Value of Financial Instruments The carrying value of cash and cash
equivalents, accounts receivable and short term loans approximate their fair values because of the short-term nature of these instruments. (q) Deferred offering costs The Company capitalized all direct and
incremental professional fees incurred relating to the Company’s Initial public offering (“IPO”), which were
offset against the gross proceeds of the offering. Total deferred offering costs as of December 31, 2016 and December 31, 2017
are $312,202 and $nil, respectively. During the year ended December 31, 2017, deferred offering cost of $864,673 was deducted from
the proceeds from IPO. (r) Goodwill Goodwill
is the excess of the consideration transferred over the fair value of the acquired assets and assumed liabilities in a business
combination. The
Company tests goodwill for impairment at the reporting unit level on an annual basis as of December 31, 2017 and between annual
tests when an event occurs or circumstances change that could indicate that the asset might be impaired. The Company first has
the option to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit
is less than its carrying amount. If the company decides, as a result of its qualitative assessment, that it is more-likely-than-not
that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is mandatory. Otherwise,
no further testing is required. (s) Jobs Act accounting election The Company is an “emerging growth
company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act,
emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS
Act until such time as those standards apply to private companies. The Company has elected to use the extended transition period
for complying with new or revised ac-counting standards under Section 102(b)(2) of the Jobs Act, that allows the Company to delay
the adoption of new or revised accounting standards that have different effective dates for public and private companies until
those standards apply to private companies. As a result of this election, the financial statements may not be comparable to companies
that comply with public company effective dates. (t) Recently issued accounting
standards FASB Accounting Standards Update
No. 2014-09 In May 2014, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts
with Customers, which was subsequently modified in August 2015 by ASU No. 2015-14, Revenue from Contracts with Customers, Deferral
of the Effective Date, which defers the effective date of the new revenue recognition standard by one year. As a result, the ASU
No. 2014-09 is effective for fiscal years and interim periods within those years beginning after December 15, 2017 for public companies
other than emerging growth companies (“EGC”). The core principle of ASU No. 2014-09 is that companies should recognize
revenue when the transfer of promised goods or services to customers occurs in an amount that reflects what the company expects
to receive. It requires additional disclosures to describe the nature, amount, timing and uncertainty of revenue and cash flows
from contracts with customers. In 2016, the FASB issued additional ASUs that clarify the implementation guidance on principal versus
agent considerations (ASU 2016-08), on identifying performance obligations and licensing (ASU 2016-10), and on narrow-scope improvements
and practical expedients (ASU 2016-12) as well as on the revenue recognition criteria and other technical corrections (ASU 2016-20).”
Companies may use either a full retrospective or modified retrospective approach to adopt this ASU. Management is developing an
adoption plan based on which the Company is in the process of evaluating the effects of adopting Topic 606, including the selection
of the adoption method, the identification of differences using sample contracts, if any, from the application of current revenue
recognition standard and the impact of such differences, if any, on its consolidated financial statements. The Company, as an EGC,
will adopt these ASU related to ASC topic 606 from January 1, 2019. Management is currently in the process of evaluating the impact
of the adoption of these ASU on the Company’s consolidated financial statements. FASB Accounting Standards Update
No. 2016-02 In February 2016, the FASB issued Accounting
Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The amendments
in this update create Topic 842, Leases, and supersede the leases requirements in Topic 840, Leases. Topic 842 specifies the accounting
for leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information
to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The main difference
between Topic 842 and Topic 840 is the recognition of lease assets and lease liabilities for those leases classified as operating
leases under Topic 840. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria
for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing
between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance
leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of operations
and the statement of cash flows is largely unchanged from previous GAAP. The amendments in ASU 2016-02 are effective for fiscal
years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020 for EGCs. Early
application of the amendments in ASU 2016-02 is permitted. Management is currently in the process of evaluating the impact of the
adoption of ASU 2016-02 on The Company’s consolidated financial statements. FASB Accounting Standards Update
No. 2016-13 In June 2016, the FASB issued ASU 2016-13,
"Financial Instruments—Credit Losses", which will require the measurement of all expected credit losses for financial
assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.
The guidance is effective for EGC for annual reporting periods beginning after December 15, 2020, and interim periods within fiscal
years beginning after December 15, 2021. The Company is currently evaluating this statement and its impact on the Company consolidated
financial statements. FASB Accounting Standards Update
No. 2016-15 In August 2016, the FASB issued ASU No.
2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” The amendments
in this Update provide guidance on eight specific cash flow issues including: 1) Debt Prepayment or Debt Extinguishment Costs,
2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation
to the Effective Interest Rate of the Borrowing, 3) Contingent Consideration Payments Made after a Business, 4) Proceeds from the
Settlement of Insurance Claims Combination, 5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including
Bank-Owned Life Insurance Policies, 6) Distributions Received from Equity Method Investees, 7) Beneficial Interests in Securitization
Transactions and 8) Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments in this Update
are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within fiscal
years beginning after December 15, 2019 for EGCs. Early adoption is permitted, including adoption in an interim period. The adoption
of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of
operations. FASB Accounting Standards Update
No. 2017-01 In January 2017, the FASB issued ASU No.
2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business
with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions
or disposals of assets or businesses. The standard is effective for fiscal years beginning after December 15, 2018, and interim
periods within annual periods beginning after December 15, 2019 for EGCs. Early adoption is permitted. The standard should be applied
prospectively on or after the effective date. Management is currently in the process of evaluating the impact of the adoption of
ASU 2017-01 on the Company’s consolidated financial statements. FASB Accounting Standards Update
No. 2017-04 In January 2017, the FASB issued Accounting
Standards Update (“ASU”) 2017-04, “Simplifying the Test for Goodwill Impairment.” The guidance removes
Step 2 of a goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be
the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.
The guidance should be adopted on a prospective basis for the annual or any interim goodwill impairment tests in fiscal years beginning
after December 15, 2021. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates
after January 1, 2017. The Company currently has early adopted this standard on its consolidated financial statements and there
is no material impact. Other accounting pronouncements that
have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are
not expected to have a material impact on the Company’s consolidated financial statements upon adoption. |
