Document and Entity Information
Document and Entity Information | 12 Months Ended |
Mar. 31, 2018shares | |
Document and Entity Information | |
Entity Registrant Name | Hexindai Inc. |
Entity Central Index Key | 1,702,318 |
Document Type | 20-F |
Document Period End Date | Mar. 31, 2018 |
Amendment Flag | false |
Current Fiscal Year End Date | --03-31 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Common Stock, Shares Outstanding | 47,958,550 |
Document Fiscal Year Focus | 2,018 |
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2018 | Mar. 31, 2017 | |
ASSETS | |||
Cash and cash equivalents | $ 132,622,467 | $ 19,232,275 | |
Prepayments and other current assets | 1,248,562 | 4,139,354 | |
Amounts due from related parties | 4,182,502 | ||
Loans receivable | 28,696,234 | ||
Interest receivable | 555,502 | ||
Property, equipment and software, net | 767,087 | 427,938 | |
Deferred tax assets | 400,062 | ||
TOTAL ASSETS | 163,889,852 | 28,382,131 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Accounts payable and accrued expenses | 3,786,955 | 789,129 | |
Taxes payable | 20,059,828 | 4,088,646 | |
TOTAL LIABILITIES | 23,846,783 | 4,877,775 | |
COMMITMENTS AND CONTINGENCIES (Note 14) | |||
SHAREHOLDERS' EQUITY: | |||
Ordinary shares US$0.0001 par value, 500,000,000 shares authorized, 47,958,550 and 42,921,600 shares issued and outstanding as of March 31, 2018 and 2017, respectively | [1] | 4,796 | 4,292 |
Additional paid-in capital | 58,417,971 | 13,285,717 | |
Retained earnings | 77,241,073 | 11,759,100 | |
Accumulated other comprehensive income (loss) | 4,379,229 | (1,544,753) | |
TOTAL SHAREHOLDERS' EQUITY | 140,043,069 | 23,504,356 | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 163,889,852 | $ 28,382,131 | |
[1] | The shares are presented on a retroactive basis to reflect the nominal share issuance. See Note 15. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2018 | Mar. 31, 2017 |
CONSOLIDATED BALANCE SHEETS | ||
Ordinary shares, par value | $ 0.0001 | $ 0.0001 |
Ordinary shares, shares authorized | 500,000,000 | 500,000,000 |
Ordinary shares, shares issued | 47,958,550 | 42,921,600 |
Ordinary shares, shares outstanding | 47,958,550 | 42,921,600 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) | 12 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | ||
NET REVENUE | ||||
Loan facilitation, post-origination and other service, net | $ 108,148,255 | $ 23,092,405 | $ 11,917,870 | |
Business and sales related taxes | (890,414) | (171,862) | (23,644) | |
NET REVENUE | 107,257,841 | 22,920,543 | 11,894,226 | |
OPERATING EXPENSES | ||||
Sales and marketing | 15,241,637 | 5,212,127 | 3,840,143 | |
Service and development | 8,495,768 | 5,149,265 | 2,358,867 | |
General and administrative | 5,816,130 | 2,645,605 | 1,554,833 | |
Share-based compensation | 1,828,868 | 0 | 0 | |
Total operating expenses | 31,382,403 | 13,006,997 | 7,753,843 | |
INCOME FROM OPERATIONS | 75,875,438 | 9,913,546 | 4,140,383 | |
OTHER INCOME (EXPENSE) | ||||
Other income | 683,393 | 198,624 | 37,751 | |
Other expense | (22,516) | (19,095) | (11,481) | |
Total other income, net | 660,877 | 179,529 | 26,270 | |
INCOME BEFORE INCOME TAXES | 76,536,315 | 10,093,075 | 4,166,653 | |
PROVISION FOR INCOME TAXES | 11,025,690 | 1,522,211 | 628,246 | |
NET INCOME | 65,510,625 | 8,570,864 | 3,538,407 | |
Less: net income attributable to non-controlling interest | 28,652 | |||
NET INCOME ATTRIBUTABLE TO HEXINDAI'S SHAREHOLDERS | 65,481,973 | 8,570,864 | 3,538,407 | |
OTHER COMPREHENSIVE INCOME (LOSS) | ||||
Foreign currency translation adjustment | 6,028,143 | (1,080,036) | (482,083) | |
COMPREHENSIVE INCOME | 71,538,768 | 7,490,828 | 3,056,324 | |
Less: comprehensive income attributable to non-controlling interest | 132,814 | |||
COMPREHENSIVE INCOME ATTRIBUTABLE TO HEXINDAI'S SHAREHOLDERS | $ 71,405,954 | $ 7,490,828 | $ 3,056,324 | |
Earnings per common share*-basic (in dollars per share) | [1] | $ 1.46 | $ 0.20 | $ 0.08 |
Earnings per common share*-diluted (in dollars per share) | [1] | $ 1.37 | $ 0.20 | $ 0.08 |
Weighted average number of shares outstanding*-basic | [1] | 44,977,780 | 42,331,200 | 42,080,000 |
Weighted average number of shares outstanding*-diluted | [1] | 47,656,263 | 42,331,200 | 42,080,000 |
[1] | The shares and per share data are presented on a retroactive basis to reflect the nominal share issuance. See Note 15. |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) | Ordinary sharesPrivate placement offering | Ordinary sharesIPO offering | Ordinary shares | Additional paid-in capitalPrivate placement offering | Additional paid-in capitalIPO offering | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income | Non-controlling interest | Private placement offering | IPO offering | Total | ||
Balance at the beginning of the year at Mar. 31, 2015 | $ 4,208 | $ 3,683,182 | $ (350,171) | $ 17,366 | $ 3,354,585 | |||||||||
Balance at the beginning of the year (in shares) at Mar. 31, 2015 | [1] | 42,080,000 | ||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||||||||||||||
Shareholders' contribution | 7,601,048 | 7,601,048 | ||||||||||||
Net income for the year | 3,538,407 | 3,538,407 | ||||||||||||
Foreign currency translation adjustment | (482,083) | (482,083) | ||||||||||||
Balance at the end of the year at Mar. 31, 2016 | $ 4,208 | 11,284,230 | 3,188,236 | (464,717) | 14,011,957 | |||||||||
Balance at the end of the year (in shares) at Mar. 31, 2016 | [1] | 42,080,000 | ||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||||||||||||||
Procceds from issuance of shares | $ 84 | $ 2,000,000 | $ 2,000,084 | |||||||||||
Procceds from issuance of shares (in shares) | [1] | 841,600 | ||||||||||||
Shareholders' contribution | 1,487 | 1,487 | ||||||||||||
Net income for the year | 8,570,864 | 8,570,864 | ||||||||||||
Foreign currency translation adjustment | (1,080,036) | (1,080,036) | ||||||||||||
Balance at the end of the year at Mar. 31, 2017 | $ 4,292 | 13,285,717 | 11,759,100 | (1,544,753) | $ 23,504,356 | |||||||||
Balance at the end of the year (in shares) at Mar. 31, 2017 | 42,921,600 | [1] | 42,921,600 | |||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||||||||||||||
Procceds from issuance of shares | $ 504 | $ 43,273,198 | $ 43,273,702 | |||||||||||
Procceds from issuance of shares (in shares) | [1] | 5,036,950 | ||||||||||||
Share-based compensation | 1,828,868 | $ 1,828,868 | ||||||||||||
Capital contribution from non-controlling interest ("NCI") | $ 4,507,205 | 4,507,205 | ||||||||||||
Net income for the year | 65,481,973 | 28,652 | 65,510,625 | |||||||||||
Foreign currency translation adjustment | 5,923,982 | 104,161 | 6,028,143 | |||||||||||
Purchase of shares from NCI | 30,188 | $ (4,640,018) | (4,609,830) | |||||||||||
Balance at the end of the year at Mar. 31, 2018 | $ 4,796 | $ 58,417,971 | $ 77,241,073 | $ 4,379,229 | $ 140,043,069 | |||||||||
Balance at the end of the year (in shares) at Mar. 31, 2018 | 47,958,550 | [1] | 47,958,550 | |||||||||||
[1] | The shares are presented on a retroactive basis to reflect the nominal share issuance. See Note 15. |
CONSOLIDATED STATEMENTS OF CHA6
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - USD ($) | 1 Months Ended | 12 Months Ended |
Nov. 30, 2017 | Mar. 31, 2018 | |
IPO offering | ||
Offering costs | $ 7,095,798 | $ 7,095,798 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASHFLOWS - USD ($) | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 65,510,625 | $ 8,570,864 | $ 3,538,407 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 174,384 | 92,224 | 61,392 |
Deferred tax | 415,623 | 135,641 | (366,498) |
Share-based compensation | 1,828,868 | ||
Accrued interest on loans receivable | (525,914) | ||
Changes in operating assets and liabilities: | |||
Prepayments and other current assets | 3,111,369 | (2,456,342) | (972,276) |
Accrued expenses and other current liabilities | 2,464,363 | (2,562,903) | 1,177,828 |
Taxes payable | 14,743,689 | 2,170,343 | 1,534,277 |
Liabilities from risk reserve fund guarantee | 2,287,537 | 1,872,509 | |
Amounts due to related parties | (47,620) | 179,803 | |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 87,723,007 | 8,189,744 | 7,025,442 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Originated loans disbursement to third parties | (34,714,361) | ||
Loans collection from third parties | 7,546,600 | ||
Acquisitions of property, equipment and software | (456,030) | (287,765) | (120,461) |
NET CASH USED IN INVESTING ACTIVITIES | (27,623,791) | (287,765) | (120,461) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Net proceeds from IPO | 43,273,702 | ||
Capital contributions by shareholders | 1,487 | 7,601,048 | |
Capital contributions by NCI | 4,507,205 | ||
Purchase of shares from NCI | (4,609,830) | ||
Proceeds from private placement offering | 2,000,000 | ||
Amounts due from related parties | (5,945,298) | (10,009,630) | |
Repayments from related parties | 4,345,181 | 8,232,457 | 2,651,848 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 47,516,258 | 4,288,646 | 243,266 |
EFFECT OF EXCHANGE RATE CHANGE ON CASH | 5,774,718 | (777,286) | (283,992) |
NET INCREASE IN CASH | 113,390,192 | 11,413,339 | 6,864,255 |
CASH - beginning of year | 19,232,275 | 7,818,936 | 954,681 |
CASH - end of year | 132,622,467 | 19,232,275 | $ 7,818,936 |
SUPPLEMENTAL CASH FLOW DISCLOSURES: | |||
Cash paid for income tax | $ 1,016,958 | 300,601 | |
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES: | |||
Risk reserve liability balance paid to third party insurance company by Hexin Group on behalf of the Company | $ 4,893,590 |
BUSINESS DESCRIPTION
BUSINESS DESCRIPTION | 12 Months Ended |
Mar. 31, 2018 | |
BUSINESS DESCRIPTION | |
BUSINESS DESCRIPTION | Note 1—BUSINESS DESCRIPTION Organization and description of business Hexindai Inc. (“Hexindai” or the “Company”), through its subsidiaries and variable interest entity (“VIE”), is an online marketplace connecting borrowers and investors in the People’s Republic of China (“PRC” or “China”). Hexindai is a limited company established under the laws of the Cayman Islands on April 26, 2016. Mr. Xiaobo An, the Chairman of the Board of the Company, is the ultimate controlling shareholder (“the Controlling Shareholder”) of the Company. Starting August 2017, the Company also engaged in microlending business through one of its VIEs, Wusu Hexin Internet Small Loan Co., Ltd (“Wusu Company”). As of March 31, 2018, the Company’s principal subsidiaries and consolidated VIEs are as follows: Date of Place of Percentage of Principal activities Wholly owned subsidiaries Hexindai Hong Kong Limited (“HK Hexindai”) May 17, 2016 Hong Kong Investment holding Beijing Hexin Yongheng Technology Development Co., Ltd (“WOFE”) August 8, 2016 PRC Consultancy and information technology (“IT”) support VIE Hexin E-Commerce Co., Ltd (“Hexin E-Commerce”) March 7, 2014 PRC Consolidated VIE An online marketplace connecting borrowers and investors Wusu Hexin Internet Small Loan Co., Ltd (“Wusu Company”) * August 28, 2017 PRC Consolidated VIE Online microlending business Hexin E-Commerce’s subsidiaries Xizang Qinghe E-Commerce Co., Ltd (“Xizang Qinhe”) April 14, 2017 PRC Consolidated VIE Consultancy and IT support Tianjin Qinghe E-Commerce Co., Ltd (“Tianjin Qinhe”) July 14, 2017 PRC Consolidated VIE Consultancy and IT support Tianjin Bozhishuntai Technology Co., Ltd (“Tianjin Bozhishuntai”) October 27, 2017 PRC Consolidated VIE Consultancy and IT support Horgos Qinhe Electronic Technology Co., Ltd (“Horgos Qinhe”) November 29, 2017 PRC Consolidated VIE Consultancy and IT support Horgos Bozhishuntai Venture Capital Co., Ltd. (“Horgos Bozhishuntai”) November 28, 2017 PRC Consolidated VIE Investment Consultancy * Hexin E-commerce contributed RMB 70.0 million (US$11.2 million) to Wusu Company with its own funds. Reorganization In anticipation of an initial public offering (“IPO”) of its equity securities, the Company undertook a reorganization and became the ultimate holding company of HK Hexindai and WOFE, which were all controlled by the same shareholders before and after the Reorganization. Effective on November 1, 2016, shareholders of Hexin E-Commerce and WOFE entered into a series of contractual agreements (“VIE Agreements” which are described below). As a result, the Company, through its wholly owned subsidiaries HK Hexindai and WOFE, has been determined to be the primary beneficiary of Hexin E-Commerce and the Company treats Hexin E-Commerce as a VIE. Accordingly, the Company consolidates Hexin E-Commerce’s operations, assets and liabilities. The VIE arrangements regarding Hexin E-commerce Foreign ownership of internet-based businesses, including distribution of online information (such as an online marketplace connecting borrowers and investors), is subject to restrictions under current PRC laws and regulations. The Company is a Cayman Islands company and WOFE (its PRC subsidiary) is considered foreign invested enterprise. To comply with these regulations, the Company conducts the majority of its activities in PRC through its VIE, Hexin E-Commerce. Hexin E-Commerce holds the requisite licenses and permits necessary to conduct the Company’s online marketplace connecting borrowers and investors business. WOFE has entered into the following contractual arrangements with shareholders of Hexin E-Commerce, that enable the Company to (1) have power to direct the activities that most significantly affects the economic performance of Hexin E-Commerce, and (2) receive the economic benefits of Hexin E-Commerce that could be significant to Hexin E-Commerce. The Company is fully and exclusively responsible for the management of Hexin E-Commerce, assumes all of risk of losses of Hexin E-Commerce and has the exclusive right to exercise all voting rights of Hexin E-Commerce’s shareholder. Therefore, in accordance with ASC 810 “Consolidation”, the Company is considered the primary beneficiary of Hexin E-Commerce and has consolidated Hexin E-Commerce’s assets, liabilities, results of operations, and cash flows in the accompanying consolidated financial statements. Exclusive Business Cooperation Agreement. On November 1, 2016, WOFE entered into an Exclusive Business Cooperation Agreement with Hexin E-Commerce to enable WOFE to receive substantially all of the assets and business of Hexin E-Commerce in China. Under this Agreement, WOFE has the exclusive right to provide Hexin E-Commerce with comprehensive technical support, consulting services and other services during the term of this Agreement, including but not limited to software licensing; development, maintenance and update of software, network system, hardware and database; technical support and training for employees; consultancy on technology and market information; business management consultation; marketing and promotion services, etc. WOFE has the right to determine the fees associated with the services it provides based on the technical difficulty and complexity of the services, the actual labor costs it incurs for providing the services and some other factors during the relevant period. This Agreement became effective on November 1, 2016 and will remain effective unless otherwise terminated in writing by WOFE. Equity Pledge Agreements Pursuant to the three Equity Pledge Agreements dated November 1, 2016 among Hexin E-Commerce, each of the Shareholders of Hexin E-Commerce and WOFE, each Shareholder of Hexin E-Commerce agreed to pledge his equity interest in Hexin E-Commerce to WOFE to secure the performance of the VIEs’ obligations under the Exclusive Business Cooperation Agreement and any such agreements to be entered into in the future. Shareholders of Hexin E-Commerce agreed not to transfer, sell, pledge, dispose of or otherwise create any encumbrance on their equity interests in Hexin E-Commerce without the prior written consent of WOFE. The Pledge became effective on such date when the pledge of the Equity Interest contemplated herein is registered with relevant administration for industry and commerce (the “AIC”) and will remain effective until all contract obligations have been fully performed and all secured indebtedness have been fully paid. Exclusive Option Agreements Pursuant to the three Exclusive Option Agreements entered into on November 1, 2016 among WOFE, Hexin E-Commerce and each of the Shareholders of Hexin E-Commerce, each of the Shareholders of Hexin E-Commerce irrevocably grant WOFE an irrevocable and exclusive right to purchase, or designate one or more persons (including individuals, corporations, partnerships, partners, enterprises, trusts or non-corporate organizations) to purchase the equity interests in Hexin E-Commerce then held by such Shareholder of Hexin E-Commerce once or at multiple times at any time in part or in whole at WOFE’s sole and absolute discretion to the extent permitted by Chinese laws at the price of RMB 1 or at the price of the minimum amount of consideration permitted by applicable PRC law at the time when such purchase occurs. These three Agreements became effective on November 1, 2016 and will remain effective until all equity interests held by the shareholders of Hexin E-Commerce in Hexin E-Commerce have been transferred or assigned to WOFE and/or its designees. Loan Agreements Pursuant to the three Loan Agreements dated November 1, 2016 between each of the Shareholders of Hexin E-Commerce and WOFE, WOFE agreed to lend each of the Shareholders of Hexin E-Commerce a loan only to subscribe registered capital of Hexin E-Commerce. The repayment of the loan shall be made by permitting WOFE to execute its exclusive right to purchase shares from the shareholders of Hexin E-Commerce under the Exclusive Option Agreement as the repayment is equivalent with the consideration of the purchased shares. The term of these loans is 10 years from November 1, 2016, which may be extended upon mutual written consent of both parties. Power of Attorney On November 1, 2016, each Shareholder of Hexin E-Commerce, executed Power of Attorney agreement with WOFE and Hexin E-Commerce, whereby Shareholders of Hexin E-Commerce irrevocably appoint and constitute WOFE as their attorney-in-fact to exercise on the shareholders’ behalf any and all rights that Shareholders of Hexin E-Commerce have in respect of their equity interests in Hexin E-Commerce. These three Power of Attorney documents became effective on November 1, 2016 and will remain irrevocable and continuously effective and valid as long as the original shareholders of Hexin E-Commerce remains as the Shareholders of Hexin E-Commerce. The VIE arrangements regarding Wusu Company On August 28, 2017, Wusu Company was incorporated by three shareholders —Hexin E-commerce, Mr. Wu and Mr. Jia. Each had 70%, 5% and 25% ownership, respectively, in which Mr. Wu and Mr. Jia together as non-controlling interest shareholders . Effective on January 1, 2018, shareholders of Wusu Company and WOFE entered into a series of contractual agreements (“VIE Agreements” which are described below). As a result, the Company, through its wholly owned subsidiary WOFE, has been determined to be the primary beneficiary of Wusu Company and the Company treats Wusu Company as a VIE. Accordingly, the Company consolidates Wusu Company’s operation, assets and liabilities. As of March 31, 2018, Wusu Company is majority (70%) owned by Hexin E-commerce and is accounted for as a VIE by WOFE. Due to PRC legal restrictions on foreign ownership and investment in value-added telecommunications services, and Internet content provision services in particular, we currently conduct these activities through Wusu Company, which we effectively control through a series of contractual arrangements. These contractual arrangements allow us to: (1) have power to direct the activities that most significantly affects the economic performance of Wusu Company, (2) receive the economic benefits of Wusu Company that could be significant to Wusu Company, and (3) be fully and exclusively responsible for the management of Wusu Company, assume all of risk of losses of Wusu Company and allow the Company to exercise the voting right of Wusu Company ‘s shareholders. Therefore, in accordance with ASC 810 “Consolidation”, the Company is considered the primary beneficiary of Wusu Company and has consolidated Wusu Company’s assets, liabilities, results of operations, and cash flows in the accompanying consolidated financial statements. Exclusive Business Cooperation Agreement. Under the exclusive business cooperation agreement between WOFE and Wusu Company, WOFE has the exclusive right to provide Wusu Company with technical support, consulting services and other services. Without WOFE’s prior written consent, Wusu Company agrees not to accept the same or any similar services provided by any third party. WOFE may designate other parties to provide services to Wusu Company. Wusu Company agrees to pay service fees on a monthly basis and at an amount determined by WOFE after taking into account multiple factors, such as the complexity and difficulty of the services provided, the time consumed, the content and commercial value of services provided and the market price of comparable services. WOFE owns the intellectual property rights arising out of the performance of this agreement. In addition, Wusu Company has granted WOFE an irrevocable and exclusive option to purchase any or all of the assets and businesses of Wusu Company at the lowest price permitted under PRC law. Unless otherwise agreed by the parties or terminated by WOFE unilaterally, this agreement will remain effective permanently. Equity Interest Pledge Agreements. Pursuant to the equity interest pledge agreements, each shareholder of Wusu Company has pledged all of its equity interest in Wusu Company to guarantee the shareholder’s and Wusu Company’s performance of their obligations under the exclusive business cooperation agreement, loan agreement, exclusive option agreement and power of attorney. If Wusu Company or any of its shareholders breaches their contractual obligations under these agreements, WOFE, as pledgee, will be entitled to certain rights regarding the pledged equity interests, including being paid in priority based on the monetary valuation that the equity interest is converted into or receiving proceeds from the auction or sale of the pledged equity interests of Wusu Company in accordance with the PRC law. Each of the shareholders of Wusu Company agrees that, during the term of the equity interest pledge agreements, he will not transfer the pledged equity interests or place or permit the existence of any security interest or encumbrance on the pledged equity interests without the prior written consent of WOFE. The equity interest pledge agreements remain effective until Wusu Company and its shareholders discharge all of their obligations under the contractual arrangements. We have registered the equity pledge with the relevant office of the Administration for Industry and Commerce in accordance with the PRC Property Rights Law. Exclusive Option Agreements. Pursuant to the exclusive option agreements, each shareholder of Wusu Company has irrevocably granted WOFE an exclusive option to purchase, or have its designated person or persons to purchase, at its discretion, to the extent permitted under PRC law, all or part of the shareholder’s equity interests in Wusu Company. The purchase price is RMB10 or the minimum price required by PRC law. If WOFE exercises the option to purchase part of the equity interest held by a shareholder, the purchase price shall be calculated proportionally. Wusu Company and each of its shareholders have agreed to appoint any persons designated by WOFE to act as Wusu Company’s directors. Without WOFE’s prior written consent, Wusu Company shall not amend its articles of association, increase or decrease the registered capital, sell or otherwise dispose of its assets or beneficial interest, create or allow any encumbrance on its assets or other beneficial interests, provide any loans to any third parties, enter into any material contract with a value of more than RMB100,000 (US$15,942) (except those contracts entered into in the ordinary course of business), merge with or acquire any other persons or make any investments, or distribute dividends to the shareholders. The shareholders of Wusu Company have agreed that, without WOFE’s prior written consent, they will not dispose of their equity interests in Wusu Company or create or allow any encumbrance on their equity interests. These agreements will remain effective until all equity interests of Wusu Company held by its shareholders have been transferred or assigned to WOFE or its designated person(s). Loan Agreements Pursuant to the three loan agreements between WOFE and the shareholders of Wusu Company on January 1, 2018, WOFE agreed to lend an aggregate amount of RMB100.0 million (US$15.1 million) to the shareholders of Wusu Company solely for the capitalization of Wusu Company, including RMB 70.0 million (US$10.6 million) to Hexin E-commerce and RMB 30.0 million (US$4.5 million) to the non-controlling interest shareholders. As of March 31, 2018, only the two loans totaling RMB30.0 million (US$4.5 million) to the non-controlling interest shareholders were funded. Pursuant to the loan agreement, the method of repayment shall be at the sole discretion of WOFE. At the option of WOFE, shareholders shall repay the loans by the transfer of all their equity interest in Wusu Company to WOFE or its designated person(s) pursuant to their respective exclusive option agreements. The shareholders must pay all of the proceeds from sale of such equity interests to Wusu Company. In the event that shareholders sell their equity interests to WOFE or its designated person(s) with a price equivalent to or less than the amount of the principal, the loans will be interest free. If the price is higher than the amount of the principal, the excess amount will be paid to WOFE as the loan interest. The loan must be repaid immediately under certain circumstances, including, among others, if a foreign investor is permitted to hold majority or 100% equity interest in Wusu Company and WOFE elects to exercise its exclusive equity purchase option. The term of the loans is ten years and can be extended upon mutual written consent of the parties. Powers of Attorney. Pursuant to the powers of attorney, each shareholder of Wusu Company has irrevocably appointed WOFE to act as such shareholder’s exclusive attorney-in-fact to exercise all shareholder rights, including, but not limited to, voting on all matters of Wusu Company requiring shareholder approval, disposing of all or part of the shareholder’s equity interest in Wusu Company, and appointing directors and executive officers. WOFE is entitled to designate any person to act as such shareholder’s exclusive attorney-in-fact without notifying or the approval of such shareholder, and if required by PRC law, WOFE shall designate a PRC citizen to exercise such right. Each power of attorney will remain in force for so long as the shareholder remains a shareholder of Wusu Company. Each shareholder has waived all the rights which have been authorized to WOFE and will not exercise such rights. Spousal Consent Letter. The spouse of Mr. Ming Jia signed a spousal consent letter on January 1, 2018. Mr. Ming Jia holds 25.0% equity interest in Wusu Company. Under the spousal consent letter, the signing spouse unconditionally and irrevocably agreed to Mr. Ming Jia’s execution of the equity interest pledge agreement, the exclusive option agreement, the power of attorney and the loan agreement. The signing spouse undertook not to make any assertions upon those shares. The signing spouse further confirmed that her authorization and consent are not needed for any amendment or termination of the abovementioned agreements and undertook to execute and take all necessary measures to ensure the appropriate performance of those agreements. Risks in relation to the VIE structure The Company believes that the contractual arrangements with its VIEs and their respective shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could: · revoke the business and operating licenses of the Company’s PRC subsidiary and VIEs; · discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiary and VIEs; · limit the Group’s business expansion in China by way of entering into contractual arrangements; · impose fines or other requirements with which the Company’s PRC subsidiary and VIEs may not be able to comply; · require the Company or the Company’s PRC subsidiary and VIEs to restructure the relevant ownership structure or operations; or · restrict or prohibit the Company’s use of the proceeds of the additional public offering to finance the Group’s business and operations in China. The Company’s ability to conduct its online Peer to Peer (“P2P”) Marketplace business and microlending business may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. As a result, the Company may not be able to consolidate its VIEs in its consolidated financial statements as it may lose the ability to exert effective control over the VIEs and their respective shareholders and it may lose the ability to receive economic benefits from the VIEs. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company, its PRC subsidiary and VIEs. The interests of the shareholders of VIEs may diverge from that of the Company and that may potentially increase the risk that they would seek to act contrary to the contractual terms, for example by influencing VIEs not to pay the service fees when required to do so. The Company cannot assure that when conflicts of interest arise, shareholders of VIEs will act in the best interests of the Company or that conflicts of interests will be resolved in the Company’s favor. Currently, the Company does not have existing arrangements to address potential conflicts of interest the shareholders of VIEs may encounter in its capacity as beneficial owners and directors of VIEs, on the one hand, and as beneficial owners and directors of the Company, on the other hand. The Company believes the shareholders of VIEs will not act contrary to any of the contractual arrangements and the exclusive option agreements provide the Company with a mechanism to remove the current shareholders of VIEs should they act to the detriment of the Company. The Company relies on certain current shareholders of VIEs to fulfill their fiduciary duties and abide by laws of the PRC and act in the best interest of the Company. If the Company cannot resolve any conflicts of interest or disputes between the Company and the shareholders of VIE, the Company would have to rely on legal proceedings, which could result in disruption of its business, and there is substantial uncertainty as to the outcome of any such legal proceedings. Total assets and liabilities presented on the Company’s consolidated balance sheets and revenue, expense, net income presented on Consolidated Statement of Comprehensive Income as well as the cash flow from operating, investing and financing activities presented on the Consolidated Statement of Cash Flows are substantially the financial position, operation and cash flow of the Company’s VIEs, Hexin E-Commerce and Wusu Company, and their subsidiaries (collectively “VIEs”). The Company has not provided any financial support to VIEs for the years ended March 31, 2018 and 2017. The assets and liabilities of the consolidated VIEs as of March 31, 2018 and 2017 are listed below: March 31, 2018 March 31, 2017 Total assets $ $ Total liabilities $ $ Initial Public Offering In November 2017, the Company completed an initial public offering (“IPO”) with new issuance of 5,036,950 American depositary shares (“ADS”) at US$10.00 per ADS for total offering size of approximately US$50.4 million before deducting commissions and expenses. The net proceeds from the IPO was approximately US$43.3 million, net of offering costs of $7.1 million. Each ADS represents one ordinary share of the Company. The ADSs began trading on the NASDAQ Global Market on November 3, 2017 under the ticker symbol “HX”. Deferred offering costs Deferred offering costs consist principally of legal, printing and registration costs in connection with the Company’s IPO. Such costs are deferred until the closing of the offering, at which time the deferred costs are offset against the offering proceeds. Deferred offering costs as of March 31, 2018 and 2017 amounted to Nil and US$0.4 million and were included in other assets. At the completion of the IPO, US$7,095,798 offering costs was charged to additional paid-in capital. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Mar. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S GAAP”) and have been consistently applied. Basis of consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries, VIEs and the subsidiaries of the VIEs. All inter-company transactions and balances have been eliminated. Uses of estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during each reporting period. Significant accounting estimates reflected in the Company’s consolidated financial statements include, but are not limited to estimates and judgments applied in the impairment assessment of long-lived assets, valuation allowance for deferred tax assets, valuation of share-based compensation expenses, allowance for loan principal and interest receivables,and uncertain tax positions. Actual results could differ from those estimates. Revenue recognition Revenue is recognized when all of the following conditions are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price is fixed or determinable, and (4) collectability is reasonably assured. These criteria as they relate to each of the following major revenue generating activities are described below: Loan facilitation revenue The Company generates loan facilitation service fees from borrowers by connecting investors to qualified credit loan borrowers and facilitating loan arrangements between the parties. Loan facilitation revenue is recognized at loan inception, when the facilitation service is provided and collectability is assured. Loan management revenue The Company generates loan management service fees from borrowers by providing loan management service on reviewing the secured loan borrower’s pledged asset condition and updating secured asset information and status over the term of the loan period. Loan management fee is recognized monthly over the lives of the related loans, as well as collectability is assured, as the service is provided over the term of the loan period. Post-origination revenue The Company generates post-origination service fees from investors by providing post-origination services, including monitoring payments from borrowers to investors and maintaining investors’ account portfolios. Post-origination revenue is recognized when service is provided, the price is fixed or determinable as well as collectability is assured, which is normally at the end of related investment period. Interest income The Company lends funds to borrowers up to their approved credit limit through Wusu Company since its inception on August 28, 2017. Interest on loans receivable is accrued based on the contractual interest rates of the loan as earned. Accrual of interest is generally discontinued when reasonable doubt exists as to the full, timely collection of interest or principal. When a loan is discontinued from interest accrual, the Company stops accruing interest and reverses all accrued but unpaid interest as of such date. Interest income was US$590,122 for the fiscal year ended March 31, 2018, which was included as net revenue in the accompanying statements of comprehensive income. Cash incentives reward program To expand its market presence, the Company provides cash incentives to qualified investor within a limited period. During the relevant incentive program period, the Company sets certain thresholds for the investor to qualify for the cash incentive. When qualified investment is made, the cash incentive is provided to the investor. The cash incentives are accounted for as reduction of revenue in accordance with ASC Topic 605. Risk reserve liability Since inception, the Company launched an investor protection service in the form of risk reserve policy. In accordance with the risk reserve policy agreed upon between the Company and its investors, if a loan facilitated by the Company defaults, the Company is obligated to guarantee the certain portion of unpaid principal and interest repayment of the defaulted loan up to the balance of the risk reserve liability on a portfolio basis. Pursuant to the Company’s public announcement on its website to all investors, the Company grouped loans facilitated in the Company’s marketplace into two portfolios: Credit loans (loans without pledged assets) and Secured loans (loans with pledged assets). In accordance with the term of risk reserve agreed by the Company and investors, the risk reserve liability being set aside equals total of 1% and 2% of the loan principal amount plus interest for loans facilitated on our marketplace under all secured loans and credit loans, respectively (“Risk Reserve Rate”). The Company reserves the right to revise the percentage upwards or downwards as a result of the Company’s continuing evaluation of factors such as working capital and market conditions. There is no limit on the period of time in which an investor can receive payments for unpaid interest and principal from the risk reserve policy, but the Company’s obligation under the risk reserve liability to make payments is limited to the balance of the risk reserve liability at any point in time. Starting on February 1, 2017, the Company entered into a series of agreements (“Insurance Agreement”) with a third party insurance company. Pursuant to the Insurance Agreement, the insurance company charges borrowers an insurance fee at 2% of the loan principal amount plus interest for loans facilitated on our marketplace under credit loan starting from February 1, 2017. Additionally, the Company transferred the balance of the risk reserve liability as of January 31, 2017 of approximately US$4.9 million to the insurance company at the inception of the Insurance Agreement. In return, the insurance company assumes the risk reserve obligation of the Company on the outstanding loan balances that were covered under the risk reserve policy as of January 31, 2017 and insures future defaults. Starting from February 2017, the Company no longer records risk reserve liability. Material Terms and Conditions of the Insurance Agreement The Insurance Agreement was effective in February 2017. The term of the Insurance Agreement is one year, which can be automatically renewed prior to expiry each year. Under the Insurance Agreement, the insurance company is responsible for providing insurance coverage to investors who provide loans to borrowers who are qualified under the Company's credit and risk assessment procedures, subject to the satisfaction of prescribed insurance requirements of the insurance company. Upon the completion of loan origination, the borrower shall pay the loan default risk premium to the insurance company directly. The Company is responsible for assisting the insurance company’s collection of late payments. In the event that insurance company suffers losses from the insurance policies due to our failure in reviewing the qualification of the borrowers, the insurance company is entitled to require us to compensate for all the losses and relevant expenses incurred. As of the date of this report, there have been no such claims for compensation from the insurance company to the Company. The Company has assessed this contingency in accordance with ASC Topic 450, and concluded that no contingent liability should be recorded as of March 31, 2018 and 2017. On February 1, 2018, the Company renewed the Insurance Agreement with the insurance company. The movement of risk reserve liability for the years ended March 31, 2017 and 2016 is as follows: For the Years Ended March 31, (US$) (US$) 2017 2016 Opening balance $ $ Liability arising at the inception of loans Release on expiration ) ) Payout ) ) Foreign exchange translation impact ) ) Sub-total Transferred to insurance company ) — Ending Balance $ — $ Cash and cash equivalents Cash and cash equivalents represent cash on hand, demand deposits, and other short-term highly liquid investments placed with banks, which have original maturities of three months or less and are readily convertible to known amounts of cash. The Company maintains certain cash and cash equivalents with financial institutions in the People’s Republic of China (“PRC”) which are not insured or otherwise protected. Should any of these institutions holding the Company’s cash become insolvent, or if the Company is unable to withdraw funds for any reason, the Company could lose the cash on deposit with that institution. Loans receivable Loans receivable are recorded at unpaid principal balances, net of allowance for loan losses that reflects the Company’s best estimate of the amounts that will not be collected. The allowance for loan losses is determined at a level believed to be reasonable to absorb probable losses inherent in the loan portfolio as of each balance sheet date. The allowance is provided based on an assessment performed on a portfolio basis. All loans are assessed individually depending on factors such as delinquency rate, size, and other risk characteristics of the portfolio. Management performs a quarterly evaluation of the adequacy of the allowance. The establishment of the allowance is based on the Company’s past loan loss history, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, composition of the loan portfolio, current economic conditions and other relevant factors. As of March 31, 2018, the Company did not provide any provision for loan losses. Loan principal are charged off when a settlement is reached for an amount that is less than the outstanding balance or when the Company has determined the balance is uncollectable. In accordance with ASC 310-10-35-41, the Company determines that any loans with outstanding balance that are 90 days past due are deemed uncollectible and therefore charged-off. Property, equipment and software, net Property, equipment and software acquired are recorded at cost. Depreciation and amortization is provided in amounts sufficient to amortize the cost of the related assets over their useful lives using the straight line method, as follows: Useful life Office equipment 3-5 years Vehicle 5 years Software 5 years Leasehold improvements over shorter of the lease term or expected useful life The Company eliminates the cost and related accumulated depreciation and amortization of assets sold or otherwise retired from the accounts and includes any gain or loss in the statement of comprehensive income. The Company charges maintenance, repairs and minor renewals directly to expenses as incurred; major additions and betterment to equipment are capitalized. Long-lived assets The carrying value of the long-lived assets are reviewed for impairment, whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of assets to future undiscounted net cash flows expected to be generated by the assets. Such assets are considered to be impaired if the sum of the expected undiscounted cash flow is less than carrying amount of the assets. The impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. No impairment loss was recognized, for the fiscal years ended March 31, 2018, 2017 and 2016, respectively. Value added tax (“VAT”) The Company is subject to VAT at the rate of 6% and related surcharges on revenue generated from providing services. The Company reported revenue net of VAT. VAT payable balance is included in the taxes payable on the face of consolidated balance sheets. Advertising and promotion expenses Advertising expenses represent expenses for placing advertisements on television, radio and newspaper, as well as on Internet websites and search engines. Advertising and promotion cost are expensed as incurred. For the years ended March 31, 2018, 2017 and 2016, the advertising and promotion expense was US$11,925,499, US$3,500,611 and US$2,358,494, respectively. Research and development costs Research and development costs are mainly labor cost of research and development department. For the years ended March 31, 2018, 2017 and 2016, research and development expense was US$2,816,991, US$1,567,738 and US$895,993, respectively, and included in service and development expense. Service and development expense Service and development expense consists primarily of variable expenses and vendor costs, including costs related to credit assessment, customer and system support, payment processing services and collection associated with facilitating and servicing loan. Share-based compensation Under the Company’s 2016 Equity Incentive Plan, the Company granted share options to the Company’s selected employees and directors. Awards granted to employees with service conditions attached are measured at the grant date fair value and are recognized as an expense using straight-line method, net of estimated forfeitures, over the requisite service period, which is generally the vesting period. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of share-based compensation expense to be recognized in future periods. Awards granted to employees with performance conditions attached are measured at fair value on the grant date and are recognized as the compensation expenses in the period and thereafter when the performance goal becomes probable to achieve. Awards granted to employees with market conditions attached are measured at fair value on the grant date and are recognized as compensation expenses over the estimated requisite service period, regardless of whether the market condition has been satisfied if the requisite service period is fulfilled. Awards granted to non-employees are measured at fair value at the earlier of the commitment date or the date the services are completed, and are recognized using straight-line method over the period the service is provided. Binomial option-pricing models are adopted to measure the value of awards at each grant date or measurement date. The determination of fair value is affected by assumptions relating to a number of complex and subjective variables, including but not limited to the expected share price volatility, actual and projected employee and non-employee share option exercise behavior, risk-free interest rates and expected dividends. The use of the option-pricing model requires extensive actual employee and non-employee exercise behavior data for the relative probability estimation purpose, and a number of complex assumptions. Income taxes The Company’s subsidiary and VIEs in China are subject to the income tax laws of the relevant tax jurisdictions. No taxable income was generated outside the PRC for the years ended March 31, 2018, 2017 and 2016. The Company accounts for income tax under the asset and liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes will be recognized if significant temporary differences between tax and financial statements occur. Valuation allowances are established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. As of March 31, 2018 and 2017, no valuation allowance is considered necessary. The Company may be subject to challenges from taxing authorities regarding the amounts of taxes due. These challenges may alter the timing or amount of taxable income or deductions. Management determines whether the benefits of its tax positions are more-likely-than-not of being sustained upon audit based on the technical merits of the tax position. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of March 31, 2018 and 2017, the Company did not have any significant unrecognized uncertain tax positions. All tax returns since the Company’s inception are still subject to examination by tax authorities. The Company does not believe that its unrecognized tax benefits will change over the next twelve months. Earnings per share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires public companies with capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Foreign currency translation Since the Company operates primarily in the PRC, the Company’s functional currency is the Chinese Yuan (“RMB”). The Company’s financial statements have been translated into the reporting currency, the United States Dollar (“USD”). Assets and liabilities of the Company are translated at the exchange rate at each reporting period end date. Equity is translated at historical rates. Income and expense accounts are translated at the average exchange rate during the reporting period. The resulting translation adjustments are reported under accumulated other comprehensive income (loss). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the consolidated statements of income and comprehensive income. The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into USD at the rates used in translation. March 31, 2018 March 31, 2017 March 31,2016 Balance sheet items, except for equity accounts, as of US$ 1=RMB6.2726 US$ 1=RMB6.8832 US$ 1=RMB6.4494 Amounts included in the statements of operations and cash flows for the years ended US$ 1=RMB6.6255 US$ 1=RMB6.7248 US$ 1=RMB6.3271 Fair value of financial instruments The Company follows the provisions of Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2 — Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3 — Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the balance sheets for cash, loans receivable and risk reserve liability, approximate their fair value based on the short-term maturity of these instruments. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Topic 606 also impacts certain other areas, such as the accounting for costs to obtain or fulfill a contract. The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The company has completed its analysis of Topic 606 and has concluded that the measurement of revenue and the timing of recognizing revenue is not expected to change for the loan facilitation fees, loan management fees, and post-origination service fees. The Company has adopted Topic 606 on April 1, 2018 using the modified retrospective method. Based on our analysis, the Company did not identify a material cumulative catch-up adjustment to the opening balance sheet of retained earnings at April 1, 2018. Our future financial statements will include additional disclosures as required by Topic 606. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 requires an entity to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about the entity’s leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. A modified retrospective approach is required. The Company is evaluating the impact this ASU will have on its consolidated financial statements. In June 2016, the FASB amended guidance related to impairment of financial instruments as part of ASU 2016-13 Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which will be effective in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The guidance replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss. The Company is evaluating the impact this ASU will have on its consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09 (“ASU 2017-09”) to provide guidance to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the changes in terms or conditions. ASU 2017-09 is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted and application is prospective. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements. In June, 2018, the FASB issued ASU No. 2018-07 to provide guidance to reduce cost and complexity and to improve financial reporting for share-based payments issued to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements. |
PREPAYMENTS AND OTHER CURRENT A
PREPAYMENTS AND OTHER CURRENT ASSETS | 12 Months Ended |
Mar. 31, 2018 | |
PREPAYMENTS AND OTHER CURRENT ASSETS | |
PREPAYMENTS AND OTHER CURRENT ASSETS | Note 3—PREPAYMENTS AND OTHER CURRENT ASSETS March 31, 2018 March 31, 2017 Funds receivable from investors (i) $ — $ Rental deposit Prepayments to suppliers and others Deferred offering costs — Refundable acquisition deposit (ii) — Staff advances Consideration receivables from nominal share issuance — $ $ (i) In order to attract investors, the Company launched a “monthly interest-back wallet” arrangement with a group of independent investors in July 2016 and this arrangement was ended on June 28, 2017. Under this arrangement, investors were obligated to invest in the principal of certain loan portfolio for a fixed short term period, and the Company agreed to advance the accrued interest from loan portfolio to investors prior to the due date of the loans. The investors are obligated to repay the company the advance amounts upon the due date of the loans. The arrangement is advantageous for investors as they can receive the interest payments in advance, which provides higher liquidity to the investors over the life of the loan products. The arrangement is a one- time arrangement. (ii) The Company made a deposit of US$653,766 to an unrelated party for a potential business cooperation. The transaction was cancelled in February 2017 and the deposit was refunded back to the Company on June 30, 2017. |
LOANS RECEIVABLE
LOANS RECEIVABLE | 12 Months Ended |
Mar. 31, 2018 | |
LOANS RECEIVABLE | |
LOANS RECEIVABLE | Note 4—LOAN RECEIVABLE March 31, 2018 March 31, 2017 Loans $ $ — Allowance for loan losses — — Loan receivable $ $ — During the year ended March 31, 2018, the Company started to engage in microlending business through Wusu Company, a licensed loan provider under the PRC regulations, to individual borrowers in China. The loans are short-term loans with typical loan terms within 12 months period. The interest rate for the loans is 8% per annum. The Company accrued the interest income on a monthly basis as it’s earned. The Company does not charge loan origination fees to those borrowers. All of the loans are credit loans. No secured assets or collateral is required. |
PROPERTY, EQUIPMENT AND SOFTWAR
PROPERTY, EQUIPMENT AND SOFTWARE, NET | 12 Months Ended |
Mar. 31, 2018 | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | Note 5—PROPERTY, EQUIPMENT AND SOFTWARE, NET March 31, 2018 March 31, 2017 Office equipment $ $ Vehicle — Leasehold improvements Software Total property, equipment and software Accumulated depreciation and amortization ) ) Property, equipment and software, net $ $ Depreciation and amortization expense on property, equipment and software for the years ended March 31, 2018, 2017 and 2016 were US$174,384, US$92,224 and US$61,392 respectively. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Mar. 31, 2018 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | Note 6—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES March 31, 2018 March 31, 2017 Accrued payroll and welfare $ $ Professional fee and other accrued expenses Custodian Bank service fee (i) — $ $ (i) In January 2017, we integrated our asset custody system with Jiangxi Bank. Under the terms of the agreement, all borrower and investor funds will be managed by Jiangxi Bank to ensure security and compliance with relevant PRC laws and regulations. Jiangxi Bank independently administers payments to borrowers, investors and the Company as well as clearance and fund settlements associated with these payments. Jiangxi Bank charged us depositary service fee, recharge and collection fees and withdrawal fees according to the types of service it provided. |
RELATED PARTY BALANCES AND TRAN
RELATED PARTY BALANCES AND TRANSACTIONS | 12 Months Ended |
Mar. 31, 2018 | |
RELATED PARTY BALANCES AND TRANSACTIONS | |
RELATED PARTY BALANCES AND TRANSACTIONS | Note 7—RELATED PARTY BALANCES AND TRANSACTIONS Hexin Information Services Co., Ltd. and Hexin Financial Information Services (Beijing) Co., Ltd. (together "Hexin Group") were incorporated and owned by Mr. Xiaobo An, the Chairman of the Board (the “Controlling Shareholder”). The Company historically utilized Hexin Group’s centralized banking systems for its own cash and banking management, which resulted in a significant balance of amount due from related party-Hexin Group. In addition, Hexin Group also paid expense on behalf of the Company. The Company has recorded all expenses paid by Hexin Group on behalf of the Company in the related historical periods presented in its consolidated financial statements. Since January 12, 2017, the Company has separated its treasury management function from the Hexin Group. On March 17, 2017, Hexin E-Commerce entered into a cooperation agreement with Hexin Group , whereby Hexin Group provided referral services of offline borrowers to the Company without charging the Company. The agreement has an indefinite term. The agreement can be terminated with mutual consent of all parties. No penalty shall be imposed on any party for the termination of the agreement. During the fiscal years ended March 31, 2018, 2017 and 2016, majority of our credit loan borrowers were referred from the Hexin Group. Amount due from related parties consists of: March 31, 2018 March 31, 2017 Due from Hexin Group (i) $ — $ (i) Amount due from Hexin Group mainly represents the transactions fees and services fees received by Hexin Group through the external payment network on behalf of the Company, offset with the expense and obligations paid by the Hexin Group on behalf of the Company. On September 27, 2017, the total balance of US$ 4,182,502 due from Hexin Group was paid to the Company in full. |
EMPLOYEE RETIREMENT BENEFIT
EMPLOYEE RETIREMENT BENEFIT | 12 Months Ended |
Mar. 31, 2018 | |
EMPLOYEE RETIREMENT BENEFIT | |
EMPLOYEE RETIREMENT BENEFIT | Note 8—EMPLOYEE RETIREMENT BENEFIT The Company has made employee benefit contribution in accordance with PRC relevant regulations, including retirement insurance, unemployment insurance, medical insurance, work injury insurance and maternity insurance. The Company recorded the contribution in the salary and employee charges at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government from time to time. The contributions made by the Company were US$1,956,917, US$1,024,927 and US$437,815 for the years ended March 31, 2018, 2017 and 2016, respectively. |
TAXES PAYABLE
TAXES PAYABLE | 12 Months Ended |
Mar. 31, 2018 | |
TAXES PAYABLE | |
TAXES PAYABLE | Note 9—TAXES PAYABLE March 31, 2018 March 31, 2017 Income tax payable $ $ Value added tax payable Other taxes payable Total taxes payable $ $ |
INCOME TAX
INCOME TAX | 12 Months Ended |
Mar. 31, 2018 | |
INCOME TAX | |
INCOME TAX | Note 10—INCOME TAX Cayman Islands Hexindai Inc. was incorporated in the Cayman Islands and is not subject to income taxes or capital gain under current laws of Cayman Islands. Hong Kong HK Hexindai is an investment holding company registered in Hong Kong and are exempted from income tax on its foreign-derived income. PRC The Company subsidiaries and VIEs established in the PRC are subject to the PRC statutory income tax rate of 25%, according to the PRC Enterprise Income Tax (“EIT”) law. The Company’s VIE Hexin E-Commerce has been granted the “high technology enterprise” status in 2015 and is qualified to a preferred income tax rate of 15% since January 1, 2015. Horgos Qinhe and Horgos Bozhishuntai enjoy a preferred income tax rate of 0% for five years since inception, as they were incorporated in Horgos Economic District. i) The components of the income tax provision (benefit) are as follows: For the year ended For the year ended For the year ended Current $ $ $ Deferred ) Total $ $ $ ii) The following table summarizes net deferred tax assets resulting from differences between financial accounting basis and tax basis of assets and liabilities: As of As of Accrued expense $ — $ Total net deferred tax assets $ — $ As of March 31, 2017, no valuation allowance against the deferred tax assets was considered necessary since the Company believed that it would more likely than not utilize the future benefits. In the fiscal year 2018, the deferred tax assets carried forward from last fiscal year was realized. The Company had no net operating loss carry forward as of March 31, 2018 and 2017. The following table reconciles the PRC statutory rates to the Company’s effective tax rate for the years ended March 31, 2018, 2017 and 2016. For the year ended For the year ended For the year ended PRC Income tax statutory rate % % % Effect of preferred tax rate )% )% )% Effect of tax exempt entities % — — Non-deductible items in China % % % Effective tax rate % % % Aggregate undistributed earnings of the Company’s subsidiaries and VIEs located in the PRC that are available for distribution at March 31, 2018 are considered to be indefinitely reinvested and accordingly, no provision has been made for the Chinese dividend withholding taxes that would be payable upon the distribution of those amounts to any entity within the Group that is outside the PRC. As of March 31, 2018 and 2017, the Company has not declared any dividends. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Mar. 31, 2018 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | Note 11—EARNINGS PER SHARE Basic earnings per share (“EPS”) is the amount of net earnings available to each share of ordinary shares outstanding during the reporting period. Diluted EPS is the amount of net earnings available to each share of ordinary shares outstanding during the reporting period adjusted to include the effect of potentially dilutive ordinary shares. The following table details the computation of the basic and diluted net earnings per share: For the year For the year For the year Numerator: Net income attributable to Hexixndai’s shareholders $ $ $ Denominator: Weighted average number of shares outstanding*-basic Ordinary shares issuable upon the exercise of outstanding stock options using the treasury stock method — — Weighted average number of shares outstanding*-diluted Earnings per common share*-basic $ $ $ Earnings per common share*-diluted $ $ $ * The Company believes it is appropriate to reflect the nominal share issuance on a retroactive basis similar to stock split or dividend pursuant to ASC 260. The Company has retroactively restated all shares and per share data for all the periods presented. Please see Note 15 to the consolidated financial statements for additional information related to the nominal share issuance. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Mar. 31, 2018 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | Note 12—SHAREHOLDERS’ EQUITY Hexindai Inc. was established under the laws of the Cayman Islands on April 26, 2016. The authorized number of ordinary shares is 500,000,000 shares with par value of US$0.0001 each. As of March 31, 2018 and 2017, 47,958,550 and 42,921,600 ordinary shares were issued and outstanding. The shares are presented on a retroactive basis to reflect the nominal share issuance. Please see Note 15 to the consolidated financial statements for additional information related to the nominal share issuance. Private Placement Offering On December 12, 2016, the Company completed a private placement to issue an aggregated of 841,600 ordinary shares to two investors and received an aggregated proceed of US$2.0 million. 2016 Equity Incentive Plan On April 1, 2016 (the “Award date”), to reward the Company’s employees and further align their interests with the Company in the future, the Company granted stock options to purchase 6,312,000 ordinary shares under the 2016 Equity Incentive Plan, adjusted for the nominal share issuance (please see Note 15 to the consolidated financial statements for additional information related to the nominal share issuance), to the Company’s officers, and key employees with the exercise price equal to US$1.28. The Company determined the grant date to be April 1, 2016 in accordance with ASC 718-10-20 and 718-10-25-5. It is because the Company and employee have reached a mutual understanding of the key terms and conditions of these stock option awards on April 1, 2016 including a specific exercise price and vesting and exercise condition. All necessary approvals for the stock option awards were obtained and communicated to employees on April 1, 2016. The Options vested and became exercisable in three equal installments with the first vesting commencement date being the later of the first anniversary of the grant date or the closing date of a Qualified IPO. Subject to the continued employment or service through each applicable vesting date of the option holder, shares subject to the Option shall become vested as to the remaining two-thirds of the total number of share options under the 2016 Equity Incentive Plan in two (2) substantially equal annual installments, with the first installment vesting on the second anniversary of the grant date and the second installment vesting on the third anniversary of the grant date; provided that a Qualified IPO shall have occurred on or prior to the second anniversary of the grant date. A “Qualified IPO” is defined as an underwritten initial public offering of not less than 15% of the shares (i) pursuant to an effective registration statement under the Securities Act or (ii) on the basis of an approved prospectus and/or pursuant to a valid registration, qualification or filing under the applicable law of another jurisdiction, in each case of the shares or other equity securities of the Company; provided, however, that a Qualified IPO shall not include a registration relating solely to employee benefit plans or to a Rule 145 transaction under the Securities Act or to similar registrations under applicable law of another jurisdiction The maximum contractual term is 4 years from the April 1, 2016. These options expire on March 31, 2020 and cannot be exercised if they have not vested by the expiration date or the termination date of the options. If a Qualified IPO does not occur within two years of April 1, 2016, such option will immediately expire to the extent unvested. As vesting is triggered only upon a Qualified IPO, such unvested options will be forfeited. The Company believes the options contain an explicit service condition (i.e., the options vest at each of three years following a successful initial public offering) and a performance condition (i.e., the options can only be exercised upon successful completion of an initial public offering by employees that are still employed by the Company upon the completion of the initial public offering). Under ASC 718-10-55-76, if the vesting (or exercisability) of an award is based on the satisfaction of both a service and performance condition, the entity must initially determine which outcomes are probable and recognize the compensation cost over the longer of the explicit or implicit service period. Because an initial public offering generally is not considered to be probable until the initial public offering is effective, no compensation cost will be recognized until the initial public offering occurs. The Company has elected to recognize share-based compensation expense using a straight-line method for the entire employee equity awards granted with graded vesting based on service conditions provided that the amount of compensation cost recognized at any date is at least equal to the portion of the grant-date value of the equity awards that are vested at that date. Upon successful completion of a Qualified IPO, the Company will recognize share-based compensation for the portion of the requisite service that has been rendered as of that date for the portion for the period from April 1, 2016 to the date of the Completion of Qualified IPO on November 3, 2017. The Company is responsible for determining the fair value of options granted to employees and uses the Binomial option-pricing model assuming As of the valuation date, the fair market value per share was US$1.41, exercise price per share was US$1.28, the risk-free interest rate was 1.81%, the dividend yield was 0%. For the options granted under 2016 Equity Incentive Plan, the expiry data was March 31, 2020, the life of option was 4 years, volatility was 47.4% and exercise multiple was 2.2. The following table sets forth the stock option shares activities under the Company’s 2016 Equity Incentive Plan for the years ended March 31, 2018, 2017 and 2016. Number of Weighted Weighted Grant Date Aggregate Outstanding as of March 31, 2016 — $ — — — — Option granted $ — Option forfeited — $ — — — — Option exercised — — — — — Outstanding as of March 31, 2017 $ $ — Option granted — — — — Option forfeited ) — ) ) Option exercised — — — — — Outstanding, March 31, 2018 $ $ Vested and exercisable, March 31, 2016 — — — — — Vested and exercisable, March 31, 2017 — — — — — Vested and exercisable, March 31, 2018 $ $ The fair value of the stock option on the grant date was approximately US$3.5 million. The Company accrues the compensation cost based on the number of awards that are expected to vest. The estimated forfeiture rate for the awards in fiscal years ended March 31, 2018, 2017 and 2016 is 13.04%, Nil and Nil, respectively. The forfeiture rate is estimated based on the historical employee turnover rates and expectations about the future. For the years ended March 31, 2018, 2017 and 2016, the Company recognized US$1,828,868, Nil and Nil share-based compensation expense based on estimated forfeitures, respectively. As of March 31, 2018 and 2017, the unrecognized compensation cost was US$1,163,825 and US$3,512,693, respectively. As of March 31, 2018, the unrecognized compensation cost was expected to be recognized over 1 year. Statutory Reserve Pursuant to the Company Law of the PRC, each of the PRC entity is required to appropriate 10% of its net income to the statutory reserve on an annual basis until the aggregated amount of the reserve reaches 50% of its registered capital. Statutory reserve is not distributable. Subject to the approval of the shareholders, the statutory reserve may be used to offset accumulated losses or converted into capital of the company. As of March 31, 2018 and 2017, the statutory reserve amounted to $7,475,902 and $1,211,063, respectively, which was included as retained earnings in the accompanying consolidated balance sheets. Restricted Net Assets As a result of PRC laws and regulations and the requirement that distributions by the PRC entity can only be paid out of distributable profits computed in accordance with the PRC GAAP, the PRC entity is restricted from transferring a portion of their net assets to the Company. The restricted net assets consist of paid in capital, capital reserve and statutory reserves of the Company's PRC entities. As of March 31, 2018 and 2017, the restricted net assets that are not available for distribution amounted to approximately $51.0 million and $12.5 million, respectively, which was included in the Additional paid-in capital on the consolidated balance sheets. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Mar. 31, 2018 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | Note 13—SEGMENT REPORTING The Company’s chief operating decision maker, the Chief Executive Officer, reviews the consolidated results when making decisions about allocating resources and accessing performance of the Company as a whole and hence, the Company has only one reportable segment. The Company does not distinguish between markets or segments for the purpose of internal reporting. The Company’s long-lived assets are substantially all located in the PRC and substantially all of the Company’s revenue and expense are derived from within the PRC. Therefore, no geographical segments are presented. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Mar. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | Note 14—COMMITMENTS AND CONTINGENCIES Operating Lease Commitments The Company has entered into various operating lease agreements principally for its office spaces in China. Rental expenses under operating leases for the years ended March 31, 2018, 2017 and 2016 were $1,163,326, $720,314 and $702,005, respectively. The Company conducted most of its operations from leased offices spaces which will expire over the next three years. There is no contingent rental payments beside minimum lease payment. In most circumstances, management expects that in the normal course of business, leases will be renewed or replaced by other leases. Future minimum lease payments under non-cancelable operating lease agreements as of March 31, 2018 are follows: Minimum lease payment Years ending March 31, 2019 $ 2020 2021 Total $ Contingencies In the ordinary course of business, the Company may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Company records contingent liabilities resulting from such claims, when a loss is assessed to be probable and the amount of the loss is reasonably estimable. As of March 31, 2018 and 2017, no such contingent liability is assessed as probable. |
NOMINAL SHARE ISSUANCE
NOMINAL SHARE ISSUANCE | 12 Months Ended |
Mar. 31, 2018 | |
NOMINAL SHARE ISSUANCE | |
NOMINAL SHARE ISSUANCE | Note 15—NOMINAL SHARE ISSUANCE On September 15, 2017, in order to optimize the Company’s share capital structure, the Company issued ordinary shares pro-rata to the shareholding as of such date, comprising (i) 31,900,848 ordinary shares to Hexin Holding Limited, at a price of US$0.0001 per share and total consideration of US$3,190.08, (ii) 7,975,212 ordinary shares to Anhe Holding Limited, at a price of US$0.0001 per share and total consideration of US$797.52, (iii) 2,098,740 ordinary shares to Velencia Holdings Limited, at a price of US$0.0001 per share and total consideration of US$209.87, (iv) 419,748 ordinary shares to Long Harvest Fund Management LLC at a price of US$0.0001 per share and total consideration of US$41.97 and (v) 419,748 ordinary shares to Dragon Gate Investment Partners Limited, at a price of US$0.0001 per share and total consideration of US$41.97. The Company believes it is appropriate to reflect the nominal share issuance on a retroactive basis similar to share split, in accordance with SEC SAB Topic 4. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Mar. 31, 2018 | |
SUBSEQUENT EVENT | |
SUBSEQUENT EVENT | Note 16—SUBSEQUENT EVENT On July 19, 2018, the board of directors approved an annual dividend policy. Under this policy, annual dividends will be set at an amount equivalent to approximately 15-25% of the Company’s anticipated net income after tax in each year commencing from fiscal year 2018. On July 19, 2018, the board of directors also approved a special cash dividend of US$0.13 per ordinary share (or US$0.13 per American Depositary Share (“ADS”), each of which represents one ordinary share). The declaration of future cash dividends, pursuant to the Company’s dividend policy, is subject to final discretion of the board of directors and is based on a number of factors, including but not limited to, the Company’s future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. On July 19, 2018, the board of directors declared a cash dividend of $0.40 per ordinary share, which is equivalent to US$0.40 ADS. Holders of the Company’s ordinary shares, including ordinary shares represented by ADSs, at 5:00 pm on August 2, 2018 (U.S. Eastern Time) will be entitled to receive the cash dividend. The cash dividend will consist of an annual dividend pursuant to the newly adopted annual dividend policy of US$0.27 per ordinary share (or US$0.27 per ADS), and a special cash dividend of US$0.13 per ordinary share (or US$0.13 per ADS). |
CONDENSED FINANCIAL INFORMATION
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY | 12 Months Ended |
Mar. 31, 2018 | |
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY | |
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY | Note 17—CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY The Company’s PRC VIEs and VIEs’subsidiary are restricted in their ability to transfer a portion of their net assets to the Company. The payment of dividends by entities organized in China is subject to limitations, procedures and formalities. Regulations in the PRC currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China. The Company’s subsidiaries and its VIEs are also required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its statutory reserves account until the accumulative amount of such reserves reaches 50% of its respective registered capital. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. In addition, the Company’s operations and revenues are conducted and generated in China, all of the Company’s revenues being earned and currency received are denominated in RMB. RMB is subject to the foreign exchange control regulation in China, and, as a result, the Company may be unable to distribute any dividends outside of China due to PRC foreign exchange control regulations that restrict the Company’s ability to convert RMB into US Dollars. Regulation S-X requires the condensed financial information of registrant shall be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of the above test, restricted net assets of consolidated subsidiaries shall mean that amount of the registrant’s proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party. The condensed parent company financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X as the restricted net assets of the Company’s PRC subsidiary and VIE exceed 25% of the consolidated net assets of the Company. The condensed financial information of the parent company has been prepared in accordance with SEC Regulation S-X Rule 5-04 and Rule 12-04, using the same accounting policies as set out in the Company ’s consolidated financial statements, except that the Company uses the equity method to account for investments in its subsidiaries, VIEs and VIEs’ subsidiaries. The footnote disclosures generally included in financial statements prepared in accordance with U.S. GAAP have been condensed and omitted. The footnote disclosures contain supplemental information relating to the operations of the Company, as such, these statements are not the general-purpose financial statements of the reporting entity and should be read in conjunction with the notes to the consolidated financial statements of the Company. HEXINDAI INC. As of March 31 As of March 31 ASSETS: Cash $ $ Prepayment and other assets Investments in subsidiaries, VIEs and VIEs’ subsidiaries TOTAL ASSETS $ $ LIABILITIES: Accrued expenses and other current liabilities — SHAREHOLDERS’ EQUITY: Ordinary shares, $0.0001 par value, 500,000,000 shares authorized, 47,958,550 and 42,921,600 shares issued and outstanding as of March 31, 2018 and 2017, respectively. $ $ Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) ) TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHEREHOLDERS’ EQUITY $ $ HEXINDAI INC. For The Years Ended March 31, 2018 2017 2016 Equity in earnings of subsidiaries, VIEs and VIEs’ subsidiaries $ $ $ General administrative expense and others ) ) — NET INCOME OTHER COMPREHENSIVE INCOME Foreign currency translation adjustment ) ) COMPREHENSIVE INCOME $ $ HEXINDAI INC. For The Years Ended March 31, 2018 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ $ $ Adjustments to reconcile net income to net cash provided by operating activities: Equity in subsidiaries, VIEs and VIEs’ subsidiaries ) ) ) Stock based compensation — — Changes in operating assets and liabilities: Prepayments and other current assets ) — Accrued expenses and other current liabilities — — NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ) — CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from private placement offering — — Proceeds from IPO, net of offering costs of US$7,095,758 — — NET CASH PROVIDED BY FINANCING ACTIVITIES — NET INCREASE IN CASH — CASH—beginning of year — — CASH—end of year $ $ $ — SUPPLEMENTAL CASH FLOW DISCLOSURES: Cash paid for income tax $ — $ — $ — Cash paid for interest $ — $ — $ — |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Mar. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of presentation | Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S GAAP”) and have been consistently applied. |
Basis of consolidation | Basis of consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries, VIEs and the subsidiaries of the VIEs. All inter-company transactions and balances have been eliminated. |
Uses of estimates | Uses of estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during each reporting period. Significant accounting estimates reflected in the Company's consolidated financial statements include, but are not limited to estimates and judgments applied in the impairment assessment of long-lived assets, valuation allowance for deferred tax assets, valuation of share-based compensation expenses, allowance for loan principal and interest receivables,and uncertain tax positions. Actual results could differ from those estimates. |
Revenue recognition | Revenue recognition Revenue is recognized when all of the following conditions are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price is fixed or determinable, and (4) collectability is reasonably assured. These criteria as they relate to each of the following major revenue generating activities are described below: Loan facilitation revenue The Company generates loan facilitation service fees from borrowers by connecting investors to qualified credit loan borrowers and facilitating loan arrangements between the parties. Loan facilitation revenue is recognized at loan inception, when the facilitation service is provided and collectability is assured. Loan management revenue The Company generates loan management service fees from borrowers by providing loan management service on reviewing the secured loan borrower’s pledged asset condition and updating secured asset information and status over the term of the loan period. Loan management fee is recognized monthly over the lives of the related loans, as well as collectability is assured, as the service is provided over the term of the loan period. Post-origination revenue The Company generates post-origination service fees from investors by providing post-origination services, including monitoring payments from borrowers to investors and maintaining investors’ account portfolios. Post-origination revenue is recognized when service is provided, the price is fixed or determinable as well as collectability is assured, which is normally at the end of related investment period. Interest income The Company lends funds to borrowers up to their approved credit limit through Wusu Company since its inception on August 28, 2017. Interest on loans receivable is accrued based on the contractual interest rates of the loan as earned. Accrual of interest is generally discontinued when reasonable doubt exists as to the full, timely collection of interest or principal. When a loan is discontinued from interest accrual, the Company stops accruing interest and reverses all accrued but unpaid interest as of such date. Interest income was US$590,122 for the fiscal year ended March 31, 2018, which was included as net revenue in the accompanying statements of comprehensive income. |
Cash incentives reward program | Cash incentives reward program To expand its market presence, the Company provides cash incentives to qualified investor within a limited period. During the relevant incentive program period, the Company sets certain thresholds for the investor to qualify for the cash incentive. When qualified investment is made, the cash incentive is provided to the investor. The cash incentives are accounted for as reduction of revenue in accordance with ASC Topic 605. |
Risk reserve liability | Risk reserve liability Since inception, the Company launched an investor protection service in the form of risk reserve policy. In accordance with the risk reserve policy agreed upon between the Company and its investors, if a loan facilitated by the Company defaults, the Company is obligated to guarantee the certain portion of unpaid principal and interest repayment of the defaulted loan up to the balance of the risk reserve liability on a portfolio basis. Pursuant to the Company’s public announcement on its website to all investors, the Company grouped loans facilitated in the Company’s marketplace into two portfolios: Credit loans (loans without pledged assets) and Secured loans (loans with pledged assets). In accordance with the term of risk reserve agreed by the Company and investors, the risk reserve liability being set aside equals total of 1% and 2% of the loan principal amount plus interest for loans facilitated on our marketplace under all secured loans and credit loans, respectively (“Risk Reserve Rate”). The Company reserves the right to revise the percentage upwards or downwards as a result of the Company’s continuing evaluation of factors such as working capital and market conditions. There is no limit on the period of time in which an investor can receive payments for unpaid interest and principal from the risk reserve policy, but the Company’s obligation under the risk reserve liability to make payments is limited to the balance of the risk reserve liability at any point in time. Starting on February 1, 2017, the Company entered into a series of agreements (“Insurance Agreement”) with a third party insurance company. Pursuant to the Insurance Agreement, the insurance company charges borrowers an insurance fee at 2% of the loan principal amount plus interest for loans facilitated on our marketplace under credit loan starting from February 1, 2017. Additionally, the Company transferred the balance of the risk reserve liability as of January 31, 2017 of approximately US$4.9 million to the insurance company at the inception of the Insurance Agreement. In return, the insurance company assumes the risk reserve obligation of the Company on the outstanding loan balances that were covered under the risk reserve policy as of January 31, 2017 and insures future defaults. Starting from February 2017, the Company no longer records risk reserve liability. Material Terms and Conditions of the Insurance Agreement The Insurance Agreement was effective in February 2017. The term of the Insurance Agreement is one year, which can be automatically renewed prior to expiry each year. Under the Insurance Agreement, the insurance company is responsible for providing insurance coverage to investors who provide loans to borrowers who are qualified under the Company's credit and risk assessment procedures, subject to the satisfaction of prescribed insurance requirements of the insurance company. Upon the completion of loan origination, the borrower shall pay the loan default risk premium to the insurance company directly. The Company is responsible for assisting the insurance company’s collection of late payments. In the event that insurance company suffers losses from the insurance policies due to our failure in reviewing the qualification of the borrowers, the insurance company is entitled to require us to compensate for all the losses and relevant expenses incurred. As of the date of this report, there have been no such claims for compensation from the insurance company to the Company. The Company has assessed this contingency in accordance with ASC Topic 450, and concluded that no contingent liability should be recorded as of March 31, 2018 and 2017. On February 1, 2018, the Company renewed the Insurance Agreement with the insurance company. The movement of risk reserve liability for the years ended March 31, 2017 and 2016 is as follows: For the Years Ended March 31, (US$) (US$) 2017 2016 Opening balance $ $ Liability arising at the inception of loans Release on expiration ) ) Payout ) ) Foreign exchange translation impact ) ) Sub-total Transferred to insurance company ) — Ending Balance $ — $ |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents represent cash on hand, demand deposits, and other short-term highly liquid investments placed with banks, which have original maturities of three months or less and are readily convertible to known amounts of cash. The Company maintains certain cash and cash equivalents with financial institutions in the People’s Republic of China (“PRC”) which are not insured or otherwise protected. Should any of these institutions holding the Company’s cash become insolvent, or if the Company is unable to withdraw funds for any reason, the Company could lose the cash on deposit with that institution. |
Loans receivable | Loans receivable Loans receivable are recorded at unpaid principal balances, net of allowance for loan losses that reflects the Company’s best estimate of the amounts that will not be collected. The allowance for loan losses is determined at a level believed to be reasonable to absorb probable losses inherent in the loan portfolio as of each balance sheet date. The allowance is provided based on an assessment performed on a portfolio basis. All loans are assessed individually depending on factors such as delinquency rate, size, and other risk characteristics of the portfolio. Management performs a quarterly evaluation of the adequacy of the allowance. The establishment of the allowance is based on the Company’s past loan loss history, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, composition of the loan portfolio, current economic conditions and other relevant factors. As of March 31, 2018, the Company did not provide any provision for loan losses. Loan principal are charged off when a settlement is reached for an amount that is less than the outstanding balance or when the Company has determined the balance is uncollectable. In accordance with ASC 310-10-35-41, the Company determines that any loans with outstanding balance that are 90 days past due are deemed uncollectible and therefore charged-off. |
Property, equipment and software, net | Property, equipment and software, net Property, equipment and software acquired are recorded at cost. Depreciation and amortization is provided in amounts sufficient to amortize the cost of the related assets over their useful lives using the straight line method, as follows: Useful life Office equipment 3-5 years Vehicle 5 years Software 5 years Leasehold improvements over shorter of the lease term or expected useful life The Company eliminates the cost and related accumulated depreciation and amortization of assets sold or otherwise retired from the accounts and includes any gain or loss in the statement of comprehensive income. The Company charges maintenance, repairs and minor renewals directly to expenses as incurred; major additions and betterment to equipment are capitalized. |
Long-lived assets | Long-lived assets The carrying value of the long-lived assets are reviewed for impairment, whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of assets to future undiscounted net cash flows expected to be generated by the assets. Such assets are considered to be impaired if the sum of the expected undiscounted cash flow is less than carrying amount of the assets. The impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. No impairment loss was recognized, for the fiscal years ended March 31, 2018, 2017 and 2016, respectively. |
Value added tax ("VAT") | Value added tax (“VAT”) The Company is subject to VAT at the rate of 6% and related surcharges on revenue generated from providing services. The Company reported revenue net of VAT. VAT payable balance is included in the taxes payable on the face of consolidated balance sheets. |
Advertising and promotion expenses | Advertising and promotion expenses Advertising expenses represent expenses for placing advertisements on television, radio and newspaper, as well as on Internet websites and search engines. Advertising and promotion cost are expensed as incurred. For the years ended March 31, 2018, 2017 and 2016, the advertising and promotion expense was US$11,925,499, US$3,500,611 and US$2,358,494, respectively. |
Research and development costs | Research and development costs Research and development costs are mainly labor cost of research and development department. For the years ended March 31, 2018, 2017 and 2016, research and development expense was US$2,816,991, US$1,567,738 and US$895,993, respectively, and included in service and development expense. |
Service and development expense | Service and development expense Service and development expense consists primarily of variable expenses and vendor costs, including costs related to credit assessment, customer and system support, payment processing services and collection associated with facilitating and servicing loan. |
Share-based compensation | Share-based compensation Under the Company’s 2016 Equity Incentive Plan, the Company granted share options to the Company’s selected employees and directors. Awards granted to employees with service conditions attached are measured at the grant date fair value and are recognized as an expense using straight-line method, net of estimated forfeitures, over the requisite service period, which is generally the vesting period. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of share-based compensation expense to be recognized in future periods. Awards granted to employees with performance conditions attached are measured at fair value on the grant date and are recognized as the compensation expenses in the period and thereafter when the performance goal becomes probable to achieve. Awards granted to employees with market conditions attached are measured at fair value on the grant date and are recognized as compensation expenses over the estimated requisite service period, regardless of whether the market condition has been satisfied if the requisite service period is fulfilled. Awards granted to non-employees are measured at fair value at the earlier of the commitment date or the date the services are completed, and are recognized using straight-line method over the period the service is provided. Binomial option-pricing models are adopted to measure the value of awards at each grant date or measurement date. The determination of fair value is affected by assumptions relating to a number of complex and subjective variables, including but not limited to the expected share price volatility, actual and projected employee and non-employee share option exercise behavior, risk-free interest rates and expected dividends. The use of the option-pricing model requires extensive actual employee and non-employee exercise behavior data for the relative probability estimation purpose, and a number of complex assumptions. |
Income taxes | Income taxes The Company’s subsidiary and VIEs in China are subject to the income tax laws of the relevant tax jurisdictions. No taxable income was generated outside the PRC for the years ended March 31, 2018, 2017 and 2016. The Company accounts for income tax under the asset and liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes will be recognized if significant temporary differences between tax and financial statements occur. Valuation allowances are established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. As of March 31, 2018 and 2017, no valuation allowance is considered necessary. The Company may be subject to challenges from taxing authorities regarding the amounts of taxes due. These challenges may alter the timing or amount of taxable income or deductions. Management determines whether the benefits of its tax positions are more-likely-than-not of being sustained upon audit based on the technical merits of the tax position. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of March 31, 2018 and 2017, the Company did not have any significant unrecognized uncertain tax positions. All tax returns since the Company’s inception are still subject to examination by tax authorities. The Company does not believe that its unrecognized tax benefits will change over the next twelve months. |
Earnings per share | Earnings per share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires public companies with capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. |
Foreign currency translation | Foreign currency translation Since the Company operates primarily in the PRC, the Company’s functional currency is the Chinese Yuan (“RMB”). The Company’s financial statements have been translated into the reporting currency, the United States Dollar (“USD”). Assets and liabilities of the Company are translated at the exchange rate at each reporting period end date. Equity is translated at historical rates. Income and expense accounts are translated at the average exchange rate during the reporting period. The resulting translation adjustments are reported under accumulated other comprehensive income (loss). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the consolidated statements of income and comprehensive income . The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into USD at the rates used in translation. March 31, 2018 March 31, 2017 March 31,2016 Balance sheet items, except for equity accounts, as of US$ 1=RMB6.2726 US$ 1=RMB6.8832 US$ 1=RMB6.4494 Amounts included in the statements of operations and cash flows for the years ended US$ 1=RMB6.6255 US$ 1=RMB6.7248 US$ 1=RMB6.3271 |
Fair value of financial instruments | Fair value of financial instruments The Company follows the provisions of Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2 — Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3 — Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the balance sheets for cash, loans receivable and risk reserve liability, approximate their fair value based on the short-term maturity of these instruments. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Topic 606 also impacts certain other areas, such as the accounting for costs to obtain or fulfill a contract. The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The company has completed its analysis of Topic 606 and has concluded that the measurement of revenue and the timing of recognizing revenue is not expected to change for the loan facilitation fees, loan management fees, and post-origination service fees. The Company has adopted Topic 606 on April 1, 2018 using the modified retrospective method. Based on our analysis, the Company did not identify a material cumulative catch-up adjustment to the opening balance sheet of retained earnings at April 1, 2018. Our future financial statements will include additional disclosures as required by Topic 606. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 requires an entity to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about the entity’s leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. A modified retrospective approach is required. The Company is evaluating the impact this ASU will have on its consolidated financial statements. In June 2016, the FASB amended guidance related to impairment of financial instruments as part of ASU 2016-13 Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which will be effective in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The guidance replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss. The Company is evaluating the impact this ASU will have on its consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09 (“ASU 2017-09”) to provide guidance to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the changes in terms or conditions. ASU 2017-09 is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted and application is prospective. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements. In June, 2018, the FASB issued ASU No. 2018-07 to provide guidance to reduce cost and complexity and to improve financial reporting for share-based payments issued to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements. |
BUSINESS DESCRIPTION (Tables)
BUSINESS DESCRIPTION (Tables) | 12 Months Ended |
Mar. 31, 2018 | |
BUSINESS DESCRIPTION | |
Schedule of the Company's principal subsidiaries and consolidated VIEs | As of March 31, 2018, the Company’s principal subsidiaries and consolidated VIEs are as follows: Date of Place of Percentage of Principal activities Wholly owned subsidiaries Hexindai Hong Kong Limited (“HK Hexindai”) May 17, 2016 Hong Kong Investment holding Beijing Hexin Yongheng Technology Development Co., Ltd (“WOFE”) August 8, 2016 PRC Consultancy and information technology (“IT”) support VIE Hexin E-Commerce Co., Ltd (“Hexin E-Commerce”) March 7, 2014 PRC Consolidated VIE An online marketplace connecting borrowers and investors Wusu Hexin Internet Small Loan Co., Ltd (“Wusu Company”) * August 28, 2017 PRC Consolidated VIE Online microlending business Hexin E-Commerce’s subsidiaries Xizang Qinghe E-Commerce Co., Ltd (“Xizang Qinhe”) April 14, 2017 PRC Consolidated VIE Consultancy and IT support Tianjin Qinghe E-Commerce Co., Ltd (“Tianjin Qinhe”) July 14, 2017 PRC Consolidated VIE Consultancy and IT support Tianjin Bozhishuntai Technology Co., Ltd (“Tianjin Bozhishuntai”) October 27, 2017 PRC Consolidated VIE Consultancy and IT support Horgos Qinhe Electronic Technology Co., Ltd (“Horgos Qinhe”) November 29, 2017 PRC Consolidated VIE Consultancy and IT support Horgos Bozhishuntai Venture Capital Co., Ltd. (“Horgos Bozhishuntai”) November 28, 2017 PRC Consolidated VIE Investment Consultancy * Hexin E-commerce contributed RMB 70.0 million (US$11.2 million) to Wusu Company with its own funds. |
Schedule of the assets and liabilities of the consolidated VIE | March 31, 2018 March 31, 2017 Total assets $ $ Total liabilities $ $ |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Mar. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of movement of risk reserve liability | For the Years Ended March 31, (US$) (US$) 2017 2016 Opening balance $ $ Liability arising at the inception of loans Release on expiration ) ) Payout ) ) Foreign exchange translation impact ) ) Sub-total Transferred to insurance company ) — Ending Balance $ — $ |
Schedule of estimated useful lives of property, equipment and software, net | Useful life Office equipment 3-5 years Vehicle 5 years Software 5 years Leasehold improvements over shorter of the lease term or expected useful life |
Schedule of foreign currency translation rates | March 31, 2018 March 31, 2017 March 31,2016 Balance sheet items, except for equity accounts, as of US$ 1=RMB6.2726 US$ 1=RMB6.8832 US$ 1=RMB6.4494 Amounts included in the statements of operations and cash flows for the years ended US$ 1=RMB6.6255 US$ 1=RMB6.7248 US$ 1=RMB6.3271 |
PREPAYMENTS AND OTHER CURRENT28
PREPAYMENTS AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Mar. 31, 2018 | |
PREPAYMENTS AND OTHER CURRENT ASSETS | |
Schedule of prepayments and other current assets | March 31, 2018 March 31, 2017 Funds receivable from investors (i) $ — $ Rental deposit Prepayments to suppliers and others Deferred offering costs — Refundable acquisition deposit (ii) — Staff advances Consideration receivables from nominal share issuance — $ $ (i) In order to attract investors, the Company launched a “monthly interest-back wallet” arrangement with a group of independent investors in July 2016 and this arrangement was ended on June 28, 2017. Under this arrangement, investors were obligated to invest in the principal of certain loan portfolio for a fixed short term period, and the Company agreed to advance the accrued interest from loan portfolio to investors prior to the due date of the loans. The investors are obligated to repay the company the advance amounts upon the due date of the loans. The arrangement is advantageous for investors as they can receive the interest payments in advance, which provides higher liquidity to the investors over the life of the loan products. The arrangement is a one- time arrangement. (ii) The Company made a deposit of US$653,766 to an unrelated party for a potential business cooperation. The transaction was cancelled in February 2017 and the deposit was refunded back to the Company on June 30, 2017. |
LOANS RECEIVABLE (Tables)
LOANS RECEIVABLE (Tables) | 12 Months Ended |
Mar. 31, 2018 | |
LOANS RECEIVABLE | |
Schedule of loans receivable | March 31, 2018 March 31, 2017 Loans $ $ — Allowance for loan losses — — Loan receivable — |
PROPERTY, EQUIPMENT AND SOFTW30
PROPERTY, EQUIPMENT AND SOFTWARE, NET (Tables) | 12 Months Ended |
Mar. 31, 2018 | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | |
Schedule of Property, equipment and software, net | March 31, 2018 March 31, 2017 Office equipment $ $ Vehicle — Leasehold improvements Software Total property, equipment and software Accumulated depreciation and amortization ) ) Property, equipment and software, net $ $ |
ACCRUED EXPENSES AND OTHER CU31
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Mar. 31, 2018 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of Accrued Expenses and Other Current Liabilities | March 31, 2018 March 31, 2017 Accrued payroll and welfare Professional fee and other accrued expenses Custodian Bank service fee (i) — $ $ (i) In January 2017, we integrated our asset custody system with Jiangxi Bank. Under the terms of the agreement, all borrower and investor funds will be managed by Jiangxi Bank to ensure security and compliance with relevant PRC laws and regulations. Jiangxi Bank independently administers payments to borrowers, investors and the Company as well as clearance and fund settlements associated with these payments. Jiangxi Bank charged us depositary service fee, recharge and collection fees and withdrawal fees according to the types of service it provided. |
RELATED PARTY BALANCES AND TR32
RELATED PARTY BALANCES AND TRANSACTIONS (Tables) | 12 Months Ended |
Mar. 31, 2018 | |
RELATED PARTY BALANCES AND TRANSACTIONS | |
Schedule of amount due from related parties | March 31, 2018 March 31, 2017 Due from Hexin Group (i) $ — $ (i) Amount due from Hexin Group mainly represents the transactions fees and services fees received by Hexin Group through the external payment network on behalf of the Company, offset with the expense and obligations paid by the Hexin Group on behalf of the Company. On September 27, 2017, the total balance of US$ 4,182,502 due from Hexin Group was paid to the Company in full. |
TAXES PAYABLE (Tables)
TAXES PAYABLE (Tables) | 12 Months Ended |
Mar. 31, 2018 | |
TAXES PAYABLE | |
Schedule of taxes payable | March 31, 2018 March 31, 2017 Income tax payable $ $ Value added tax payable Other taxes payable Total taxes payable $ $ |
INCOME TAX (Tables)
INCOME TAX (Tables) | 12 Months Ended |
Mar. 31, 2018 | |
INCOME TAX | |
Schedule of components of the income tax provision (benefit) | For the year ended For the year ended For the year ended Current $ $ $ Deferred ) Total $ $ $ |
Summary of net deferred tax assets resulting from differences between financial accounting basis and tax basis of assets and liabilities | As of As of Accrued expense $ — $ Total net deferred tax assets $ — $ |
Reconciliation of the PRC statutory rates to the company's effective tax rate | For the year ended For the year ended For the year ended PRC Income tax statutory rate % % % Effect of preferred tax rate )% )% )% Effect of tax exempt entities % — — Non-deductible items in China % % % Effective tax rate % % % |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Mar. 31, 2018 | |
EARNINGS PER SHARE | |
Schedule of computation of the basic and diluted net earnings per share information | For the year For the year For the year Numerator: Net income attributable to Hexixndai’s shareholders $ $ $ Denominator: Weighted average number of shares outstanding*-basic Ordinary shares issuable upon the exercise of outstanding stock options using the treasury stock method — — Weighted average number of shares outstanding*-diluted Earnings per common share*-basic $ $ $ Earnings per common share*-diluted $ $ $ * The Company believes it is appropriate to reflect the nominal share issuance on a retroactive basis similar to stock split or dividend pursuant to ASC 260. The Company has retroactively restated all shares and per share data for all the periods presented. Please see Note 15 to the consolidated financial statements for additional information related to the nominal share issuance. |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended |
Mar. 31, 2018 | |
SHAREHOLDERS' EQUITY | |
Schedule of stock option shares activities under 2016 Equity Incentive Plan | Number of Weighted Weighted Grant Date Aggregate Outstanding as of March 31, 2016 — $ — — — — Option granted $ — Option forfeited — $ — — — — Option exercised — — — — — Outstanding as of March 31, 2017 $ $ — Option granted — — — — Option forfeited ) — ) ) Option exercised — — — — — Outstanding, March 31, 2018 $ $ Vested and exercisable, March 31, 2016 — — — — — Vested and exercisable, March 31, 2017 — — — — — Vested and exercisable, March 31, 2018 $ $ |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Mar. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of future minimum lease payments under non-cancelable operating lease agreements | Minimum lease payment Years ending March 31, 2019 $ 2020 2021 Total $ |
CONDENSED FINANCIAL INFORMATI38
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (Tables) - Parent Company | 12 Months Ended |
Mar. 31, 2018 | |
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY | |
Schedule of parent company condensed balance sheet | As of March 31 As of March 31 ASSETS: Cash $ $ Prepayment and other assets Investments in subsidiaries, VIEs and VIEs’ subsidiaries TOTAL ASSETS $ $ LIABILITIES: Accrued expenses and other current liabilities — SHAREHOLDERS’ EQUITY: Ordinary shares, $0.0001 par value, 500,000,000 shares authorized, 47,958,550 and 42,921,600 shares issued and outstanding as of March 31, 2018 and 2017, respectively. $ $ Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) ) TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHEREHOLDERS’ EQUITY $ $ |
Schedule of parent company condensed statement of comprehensive income | For The Years Ended March 31, 2018 2017 2016 Equity in earnings of subsidiaries, VIEs and VIEs’ subsidiaries $ $ $ General administrative expense and others ) ) — NET INCOME OTHER COMPREHENSIVE INCOME Foreign currency translation adjustment ) ) COMPREHENSIVE INCOME $ $ |
Schedule of parent company condensed statement of cash flow | For The Years Ended March 31, 2018 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ $ $ Adjustments to reconcile net income to net cash provided by operating activities: Equity in subsidiaries, VIEs and VIEs’ subsidiaries ) ) ) Stock based compensation — — Changes in operating assets and liabilities: Prepayments and other current assets ) — Accrued expenses and other current liabilities — — NET CASH PROVIDED BY (USED) IN OPERATING ACTIVITIES ) — CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from private placement offering — — Proceeds from IPO, net of offering costs of US$7,095,758 — — NET CASH PROVIDED BY FINANCING ACTIVITIES — NET INCREASE IN CASH — CASH—beginning of year — — CASH—end of year $ $ $ — SUPPLEMENTAL CASH FLOW DISCLOSURES: Cash paid for income tax $ — $ — $ — Cash paid for interest $ — $ — $ — |
BUSINESS DESCRIPTION (Details)
BUSINESS DESCRIPTION (Details) | Jan. 01, 2018CNY (¥)agreement¥ / shares | Jan. 01, 2018USD ($) | Nov. 01, 2016itemagreement | Mar. 31, 2018CNY (¥)agreement | Mar. 31, 2018USD ($) | Mar. 31, 2018USD ($)agreement | Jan. 01, 2018USD ($)agreement | Aug. 28, 2017item |
BUSINESS DESCRIPTION | ||||||||
Number of equity pledge agreements | 3 | |||||||
Number of exclusive option agreements | 3 | |||||||
Number of loan agreements | 3 | 3 | 2 | 2 | 3 | |||
Term of the loan (in years) | 10 years | |||||||
Number of power of attorney documents | item | 3 | |||||||
Aggregate amount of loans to shareholders of Wusu Company | ¥ 30,000,000 | $ 4,500,000 | ||||||
Wusu Company | ||||||||
BUSINESS DESCRIPTION | ||||||||
Number of shareholders | item | 3 | |||||||
Beijing Hexin Yongheng Technology Development Co., Ltd ("WOFE") | Wusu Company | ||||||||
BUSINESS DESCRIPTION | ||||||||
Term of the loan (in years) | 10 years | 10 years | ||||||
Purchase price of exclusive option | ¥ / shares | ¥ 10 | |||||||
Threshold value to enter into material contracts without the consent of the shareholders | ¥ 100,000 | $ 15,942 | ||||||
Equity interest held by foreign investor (as a percent) | 100.00% | 100.00% | ||||||
Hexin E-Commerce | Wusu Company | ||||||||
BUSINESS DESCRIPTION | ||||||||
Ownership percentage in subsidiary | 70.00% | |||||||
Ownership interest held by Non-controlling interest shareholders | 70.00% | 70.00% | ||||||
Mr.Wu | Wusu Company | ||||||||
BUSINESS DESCRIPTION | ||||||||
Ownership interest held by Non-controlling interest shareholders | 5.00% | |||||||
Mr.Ming Jia | Wusu Company | ||||||||
BUSINESS DESCRIPTION | ||||||||
Ownership interest held by Non-controlling interest shareholders | 25.00% | |||||||
Hexin E-Commerce | Wusu Company | ||||||||
BUSINESS DESCRIPTION | ||||||||
Amount contributed | ¥ 70,000,000 | $ 11,200,000 | ||||||
Two shareholders | Beijing Hexin Yongheng Technology Development Co., Ltd ("WOFE") | ||||||||
BUSINESS DESCRIPTION | ||||||||
Aggregate amount of loans to shareholders of Wusu Company | ¥ 30,000,000 | $ 4,500,000 | ||||||
Beijing Hexin Yongheng Technology Development Co., Ltd ("WOFE") | shareholders of Wusu Company | ||||||||
BUSINESS DESCRIPTION | ||||||||
Aggregate amount of loans to shareholders of Wusu Company | ¥ 100,000,000 | $ 15,100,000 | ||||||
Beijing Hexin Yongheng Technology Development Co., Ltd ("WOFE") | Hexin E-Commerce | ||||||||
BUSINESS DESCRIPTION | ||||||||
Aggregate amount of loans to shareholders of Wusu Company | 70,000,000 | $ 10,600,000 | ||||||
Beijing Hexin Yongheng Technology Development Co., Ltd ("WOFE") | Two shareholders | ||||||||
BUSINESS DESCRIPTION | ||||||||
Aggregate amount of loans to shareholders of Wusu Company | ¥ | ¥ 30,000,000 | |||||||
Hexindai Hong Kong Limited ("HK Hexindai") | ||||||||
BUSINESS DESCRIPTION | ||||||||
Ownership percentage in subsidiary | 100.00% | 100.00% | ||||||
Beijing Hexin Yongheng Technology Development Co., Ltd ("WOFE") | ||||||||
BUSINESS DESCRIPTION | ||||||||
Ownership percentage in subsidiary | 100.00% | 100.00% |
BUSINESS DESCRIPTION - Assets a
BUSINESS DESCRIPTION - Assets and liabilities of the consolidated VIE (Details) - Hexin E-Commerce - USD ($) | Mar. 31, 2018 | Mar. 31, 2017 |
Assets and liabilities of consolidated VIE | ||
Total assets | $ 163,889,852 | $ 28,382,131 |
Total liabilities | $ 23,846,783 | $ 4,877,775 |
BUSINESS DESCRIPTION - Initial
BUSINESS DESCRIPTION - Initial Public Offering and Deferred offering costs (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Nov. 30, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
BUSINESS DESCRIPTION | |||
Net proceeds from IPO | $ 43,273,702 | ||
Deferred offering costs | 0 | $ 399,079 | |
IPO offering | |||
BUSINESS DESCRIPTION | |||
Issuance of shares | 43,273,702 | ||
Offerings costs charged to additional paid-in capital | $ 7,095,798 | $ 7,095,798 | |
American depositary shares ("ADS") | IPO offering | |||
BUSINESS DESCRIPTION | |||
Procceds from issuance of shares (in shares) | 5,036,950 | ||
Issuance of shares, price per share (in dollars per share) | $ 10 | ||
Issuance of shares | $ 50,400,000 | ||
Net proceeds from IPO | $ 43,300,000 | ||
Number of ordinary share represented by each American depositary shares | 1 |
SUMMARY OF SIGNIFICANT ACCOUN42
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Interest income and Risk reserve liability (Details) | Feb. 01, 2017 | Mar. 31, 2018USD ($)item | Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) |
Interest income | ||||
Interest income | $ 590,122 | |||
Investor protection service | ||||
Risk reserve liability | ||||
Number of portfolios | item | 2 | |||
Time limit on receiving payment for unpaid interest and principle | 0 years | |||
Movement of risk reserve liability | ||||
Opening balance | $ 2,717,335 | $ 927,763 | ||
Liability arising at the inception of loans | 7,041,697 | 5,715,313 | ||
Release on expiration | (2,168,547) | (3,699,071) | ||
Payout | (2,470,347) | (143,733) | ||
Foreign exchange translation impact | (226,548) | (82,937) | ||
Subtotal | 4,893,590 | 2,717,335 | ||
Transferred to insurance company | $ (4,893,590) | |||
Ending Balance | $ 2,717,335 | |||
Investor protection service | Insurance Agreement | ||||
Risk reserve liability | ||||
Term of agreement | 1 year | |||
Secured loans | Investor protection service | ||||
Risk reserve liability | ||||
Risk reserve liability rate for loan principal amount plus interest | 1.00% | |||
Credit loans | Investor protection service | ||||
Risk reserve liability | ||||
Risk reserve liability rate for loan principal amount plus interest | 2.00% | |||
Credit loans | Investor protection service | Insurance Agreement | ||||
Risk reserve liability | ||||
Percentage of insurance fee on borrowings | 2.00% |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, equipment and software, net (Details) | 12 Months Ended |
Mar. 31, 2018 | |
Vehicle | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | |
Estimated Useful Life | 5 years |
Software | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | |
Estimated Useful Life | 5 years |
Minimum | Office equipment | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | |
Estimated Useful Life | 3 years |
Maximum | Office equipment | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | |
Estimated Useful Life | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN44
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Long-lived assets, Value added tax ("VAT"), Advertising and promotion expenses and Research and development costs (Details) - USD ($) | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Impairment of long-lived assets | $ 0 | $ 0 | $ 0 |
VAT percentage of revenue from services | 6.00% | ||
Advertising and promotion expenses | $ 11,925,499 | 3,500,611 | 2,358,494 |
Research and development costs | $ 2,816,991 | $ 1,567,738 | $ 895,993 |
SUMMARY OF SIGNIFICANT ACCOUN45
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income taxes (Details) - USD ($) | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Taxable income was generated outside the PRC | $ 0 | $ 0 | $ 0 |
Valuation allowance | 0 | 0 | |
Unrecognized uncertain tax positions | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN46
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Foreign currency translation (Details) | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | |
Foreign exchange transactions | |||
Balance sheet items, except for equity accounts, as of | 0.1594 | 0.1453 | 0.1551 |
Amounts included in the statements of operations and cash flows for the years ended | 0.1509 | 0.1487 | 0.1581 |
PREPAYMENTS AND OTHER CURRENT47
PREPAYMENTS AND OTHER CURRENT ASSETS (Details) - USD ($) | Mar. 31, 2018 | Mar. 31, 2017 |
PREPAYMENTS AND OTHER CURRENT ASSETS | ||
Funds receivable from investors | $ 2,169,124 | |
Rental deposit | $ 404,409 | 264,704 |
Prepayments to suppliers and others | 781,049 | 608,263 |
Deferred offering costs | 0 | 399,079 |
Refundable acquisition deposit | 653,766 | |
Staff advances | 63,104 | 40,137 |
Consideration receivables from nominal share issuance | 4,281 | |
Total prepayment and other assets | $ 1,248,562 | $ 4,139,354 |
LOANS RECEIVABLE (Details)
LOANS RECEIVABLE (Details) | 12 Months Ended |
Mar. 31, 2018USD ($) | |
LOANS RECEIVABLE | |
Loans | $ 28,696,234 |
Loans receivable | $ 28,696,234 |
Interest rate on loans receivable | 8.00% |
PROPERTY, EQUIPMENT AND SOFTW49
PROPERTY, EQUIPMENT AND SOFTWARE, NET (Details) - USD ($) | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | |||
Total property, equipment and software | $ 1,131,401 | $ 592,078 | |
Accumulated depreciation and amortization | (364,314) | (164,140) | |
Property, equipment and software, net | 767,087 | 427,938 | |
Depreciation and amortization expense | 174,384 | 92,224 | $ 61,392 |
Office equipment | |||
PROPERTY, EQUIPMENT AND SOFTWARE, NET | |||
Total property, equipment and software | 590,801 | 263,318 | |
Vehicle | |||
PROPERTY, EQUIPMENT AND SOFTWARE, NET | |||
Total property, equipment and software | 58,405 | ||
Leasehold improvements | |||
PROPERTY, EQUIPMENT AND SOFTWARE, NET | |||
Total property, equipment and software | 150,612 | 137,251 | |
Software | |||
PROPERTY, EQUIPMENT AND SOFTWARE, NET | |||
Total property, equipment and software | $ 331,583 | $ 191,509 |
ACCRUED EXPENSES AND OTHER CU50
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Mar. 31, 2018 | Mar. 31, 2017 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
Accrued payroll and welfare | $ 2,036,472 | $ 706,511 |
Professional fee and other accrued expenses | 760,769 | 82,618 |
Custodian Bank service fee | 989,714 | |
Total accounts payable and accrued expenses | $ 3,786,955 | $ 789,129 |
RELATED PARTY BALANCES AND TR51
RELATED PARTY BALANCES AND TRANSACTIONS (Details) - USD ($) | Sep. 27, 2016 | Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 |
Amount due from related parties: | ||||
Amounts due from related parties | $ 4,182,502 | |||
Repayment amount from related parties | $ 4,345,181 | 8,232,457 | $ 2,651,848 | |
Due from Hexin Group | ||||
Amount due from related parties: | ||||
Amounts due from related parties | $ 4,182,502 | |||
Repayment amount from related parties | $ 4,182,502 |
EMPLOYEE RETIREMENT BENEFIT (De
EMPLOYEE RETIREMENT BENEFIT (Details) - USD ($) | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | |
EMPLOYEE RETIREMENT BENEFIT | |||
Amount of Contributions | $ 1,956,917 | $ 1,024,927 | $ 437,815 |
TAXES PAYABLE (Details)
TAXES PAYABLE (Details) - USD ($) | Mar. 31, 2018 | Mar. 31, 2017 |
TAXES PAYABLE | ||
Income tax payable | $ 12,558,211 | $ 2,210,235 |
Value added tax payable | 6,725,654 | 1,759,015 |
Other taxes payable | 775,963 | 119,396 |
Total taxes payable | $ 20,059,828 | $ 4,088,646 |
INCOME TAX (Details)
INCOME TAX (Details) | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | |
INCOME TAX | |||
Statutory tax rate (as a percent) | 25.00% | 25.00% | 25.00% |
PRC | |||
INCOME TAX | |||
Statutory tax rate (as a percent) | 25.00% | ||
PRC | Hexin E-Commerce | High Technology Enterprises | |||
INCOME TAX | |||
Preferential tax rate (as a percent) | 15.00% | ||
Horgos Economic District | Horgos Qinhe | |||
INCOME TAX | |||
Preferential tax rate (as a percent) | 0.00% | ||
Period for preferred income tax rate | 5 years | ||
Horgos Economic District | Horgos Bozhishuntai | |||
INCOME TAX | |||
Preferential tax rate (as a percent) | 0.00% | ||
Period for preferred income tax rate | 5 years |
INCOME TAX - Components of the
INCOME TAX - Components of the income tax provision (benefit) (Details) - USD ($) | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | |
INCOME TAX | |||
Current | $ 10,610,067 | $ 1,386,570 | $ 994,744 |
Deferred | 415,623 | 135,641 | (366,498) |
Total | $ 11,025,690 | $ 1,522,211 | $ 628,246 |
INCOME TAX - Net deferred tax a
INCOME TAX - Net deferred tax assets resulting from differences between financial accounting basis and tax basis of assets and liabilities (Details) - USD ($) | Mar. 31, 2018 | Mar. 31, 2017 |
INCOME TAX | ||
Accrued expense | $ 400,062 | |
Total net deferred tax assets | 400,062 | |
Valuation allowance | $ 0 | 0 |
Net operating loss carry forward | $ 0 | $ 0 |
INCOME TAX - Reconciles the PRC
INCOME TAX - Reconciles the PRC statutory rates to the company's effective tax rate (Details) - USD ($) | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | |
INCOME TAX | |||
PRC Income tax statutory rate | 25.00% | 25.00% | 25.00% |
Effect of preferred tax rate | (11.60%) | (10.00%) | (10.00%) |
Effect of tax exempt entities | 0.90% | ||
Non-deductible items in China | 0.10% | 0.10% | 0.10% |
Effective tax rate | 14.40% | 15.10% | 15.10% |
Provision for dividend withholding taxes | $ 0 | ||
Dividends declared | $ 0 | $ 0 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) | 12 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | ||
Numerator: | ||||
Net income attributable to Hexixndai's shareholders | $ 65,481,973 | $ 8,570,864 | $ 3,538,407 | |
Denominator: | ||||
Weighted average number of shares outstanding*-basic | [1] | 44,977,780 | 42,331,200 | 42,080,000 |
Ordinary shares issuable upon the exercise of outstanding stock options using the treasury stock method | 2,678,483 | |||
Weighted average number of shares outstanding*-diluted | [1] | 47,656,263 | 42,331,200 | 42,080,000 |
Earnings per common share*-basic (in dollars per share) | [1] | $ 1.46 | $ 0.20 | $ 0.08 |
Earnings per common share*-diluted (in dollars per share) | [1] | $ 1.37 | $ 0.20 | $ 0.08 |
[1] | The shares and per share data are presented on a retroactive basis to reflect the nominal share issuance. See Note 15. |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) - $ / shares | Mar. 31, 2018 | Mar. 31, 2017 |
SHAREHOLDERS' EQUITY | ||
Ordinary shares, shares authorized | 500,000,000 | 500,000,000 |
Ordinary shares, par value | $ 0.0001 | $ 0.0001 |
Ordinary shares, shares issued | 47,958,550 | 42,921,600 |
Ordinary shares, shares outstanding | 47,958,550 | 42,921,600 |
SHAREHOLDERS' EQUITY - Private
SHAREHOLDERS' EQUITY - Private Placement Offering (Details) | Dec. 12, 2016USD ($)itemshares | Mar. 31, 2017USD ($) |
Private Placement Offering | ||
Proceeds from private placement | $ 2,000,000 | |
Private placement offering | ||
Private Placement Offering | ||
Ordinary shares issued | shares | 841,600 | |
Number of investors | item | 2 | |
Proceeds from private placement | $ 2,000,000 |
SHAREHOLDERS' EQUITY - 2016 Equ
SHAREHOLDERS' EQUITY - 2016 Equity Incentive Plan (Details) | Mar. 31, 2018USD ($)$ / sharesshares | Mar. 31, 2017USD ($)$ / sharesshares | Apr. 01, 2016$ / sharesshares | Mar. 31, 2018USD ($)Optioninstallment$ / sharesshares | Mar. 31, 2017USD ($)$ / sharesshares | Mar. 31, 2016USD ($) |
2016 Equity Incentive Plan | ||||||
Compensation cost | $ 1,828,868 | $ 0 | $ 0 | |||
Aggregate Intrinsic Value | ||||||
Unrecognized compensation cost | $ 1,163,825 | $ 3,512,693 | $ 1,163,825 | $ 3,512,693 | ||
Period of unrecognized compensation cost expected to be recognized (in years) | 1 year | |||||
Forfeiture percentage | 13.04% | 0.00% | 0.00% | |||
2016 Equity Incentive Plan | ||||||
2016 Equity Incentive Plan | ||||||
Option granted (in shares) | shares | 6,312,000 | 6,312,000 | ||||
Option granted (in dollars per shares) | $ / shares | $ 1.28 | $ 1.28 | ||||
Number of installments for vested and become exercisable | installment | 3 | |||||
Percentage of remaining options to be vested | 67.00% | |||||
Options vested remaining installments | installment | 2 | |||||
Maximum contractual term (in years) | 4 years | |||||
Threshold for the unvested options to expire (in years) | 2 years | |||||
Stock options, vesting period (in years) | 3 years | |||||
Compensation cost | $ 0 | |||||
Fair value of options granted to employees | ||||||
Fair market value per share | $ / shares | $ 1.41 | |||||
Exercise price per share | $ / shares | $ 1.28 | $ 1.28 | ||||
Risk-free interest rate | 1.81% | |||||
Dividend yield | 0.00% | |||||
Life of option | 4 years | |||||
Volatility | 47.40% | |||||
Exercise multiple | Option | 2.2 | |||||
Number of options | ||||||
Outstanding at beginning of year (in shares) | shares | 6,312,000 | |||||
Option granted (in shares) | shares | 6,312,000 | 6,312,000 | ||||
Option forfeited (in shares) | shares | (128,000) | |||||
Outstanding at end of year (in shares) | shares | 6,184,000 | 6,312,000 | 6,184,000 | 6,312,000 | ||
Vested and exercisable (in shares) | shares | 2,061,333 | 2,061,333 | ||||
Weighted Average Exercise Price | ||||||
Outstanding at beginning of year (in dollars per shares) | $ / shares | $ 1.28 | |||||
Option granted (in dollars per shares) | $ / shares | $ 1.28 | $ 1.28 | ||||
Option forfeited (in dollars per shares) | $ / shares | 1.28 | |||||
Outstanding at end of year (in dollars per shares) | $ / shares | $ 1.28 | $ 1.28 | 1.28 | $ 1.28 | ||
Vested and exercisable (in dollars per share) | $ / shares | $ 1.28 | $ 1.28 | ||||
Weighted Average Remaining Life in Years | ||||||
Option granted (in years) | 4 years | |||||
Outstanding at end of period | 2 years | 3 years | ||||
Grant Date Fair Value | ||||||
Outstanding at beginning of year | $ 3,512,693 | |||||
Option granted | $ 3,512,693 | |||||
Option forfeited | (71,233) | |||||
Outstanding at end of year | $ 3,441,460 | $ 3,512,693 | 3,441,460 | $ 3,512,693 | ||
Vested and exercisable | 1,147,153 | |||||
Aggregate Intrinsic Value | ||||||
Forfeited | (1,283,840) | (1,283,840) | ||||
Outstanding | 62,025,520 | 62,025,520 | ||||
Vested and exercisable | $ 20,675,173 | $ 20,675,173 | ||||
2016 Equity Incentive Plan | Minimum | ||||||
2016 Equity Incentive Plan | ||||||
Percentage of shares underwritten | 15.00% |
SHAREHOLDERS' EQUITY - Statutor
SHAREHOLDERS' EQUITY - Statutory Reserve (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
SHAREHOLDERS' EQUITY | ||
Required percentage of net income allocated to statutory surplus reserve | 10.00% | |
Threshold percentage of statutory surplus reserves of the registered capital, used as criteria of allocation requirement | 50.00% | |
Statutory reserve | $ 7,475,902 | $ 1,211,063 |
Restricted net assets | $ 51,000,000 | $ 12,500,000 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) | 12 Months Ended |
Mar. 31, 2018segment | |
SEGMENT REPORTING | |
Number of reportable segments | 1 |
COMMITMENTS AND CONTINGENCIES64
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | |
Operating Lease Commitments | |||
Rental expenses under operating leases | $ 1,163,326 | $ 720,314 | $ 702,005 |
Lease term | 3 years | ||
Future minimum lease payments under non cancelable operating lease agreements | |||
2,019 | 1,904,999 | ||
2,020 | 1,513,330 | ||
2,021 | 705,574 | ||
Total | 4,123,903 | ||
Contingencies | |||
Contingent liability | $ 0 | $ 0 |
NOMINAL SHARE ISSUANCE (Details
NOMINAL SHARE ISSUANCE (Details) - USD ($) | Sep. 15, 2017 | Mar. 31, 2017 |
Disclosure of nominal share issuance | ||
Proceeds from private placement | $ 2,000,000 | |
Nominal share issuance | Hexin Holding Limited | ||
Disclosure of nominal share issuance | ||
Procceds from issuance of shares (in shares) | 31,900,848 | |
Price per share | $ 0.0001 | |
Proceeds from private placement | $ 3,190.08 | |
Nominal share issuance | Anhe Holding Limited | ||
Disclosure of nominal share issuance | ||
Procceds from issuance of shares (in shares) | 7,975,212 | |
Price per share | $ 0.0001 | |
Proceeds from private placement | $ 797.52 | |
Nominal share issuance | Velencia Holdings Limited | ||
Disclosure of nominal share issuance | ||
Procceds from issuance of shares (in shares) | 2,098,740 | |
Price per share | $ 0.0001 | |
Proceeds from private placement | $ 209.87 | |
Nominal share issuance | Long Harvest Fund Management LLC | ||
Disclosure of nominal share issuance | ||
Procceds from issuance of shares (in shares) | 419,748 | |
Price per share | $ 0.0001 | |
Proceeds from private placement | $ 41.97 | |
Nominal share issuance | Dragon Gate Investment Partners Limited | ||
Disclosure of nominal share issuance | ||
Procceds from issuance of shares (in shares) | 419,748 | |
Price per share | $ 0.0001 | |
Proceeds from private placement | $ 41.97 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - Subsequent event | Jul. 19, 2018$ / shares |
SUBSEQUENT EVENT | |
Common stock, dividends declared (in dollars per share) | $ 0.40 |
Annual dividend | |
SUBSEQUENT EVENT | |
Common stock, dividends declared (in dollars per share) | 0.27 |
Special cash dividend | |
SUBSEQUENT EVENT | |
Common stock, dividends declared (in dollars per share) | $ 0.13 |
Minimum | |
SUBSEQUENT EVENT | |
Percentage of dividend (in percentage) | 15.00% |
Maximum | |
SUBSEQUENT EVENT | |
Percentage of dividend (in percentage) | 25.00% |
American depositary shares ("ADS") | |
SUBSEQUENT EVENT | |
Common stock, dividends declared (in dollars per share) | $ 0.40 |
American depositary shares ("ADS") | Annual dividend | |
SUBSEQUENT EVENT | |
Common stock, dividends declared (in dollars per share) | 0.27 |
American depositary shares ("ADS") | Special cash dividend | |
SUBSEQUENT EVENT | |
Common stock, dividends declared (in dollars per share) | $ 0.13 |
CONDENSED FINANCIAL INFORMATI67
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY - RETAINED EARNINGS (Details) | 12 Months Ended |
Mar. 31, 2018 | |
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY | |
Required percentage of net income allocated to statutory surplus reserve | 10.00% |
Threshold percentage of statutory surplus reserves of the registered capital, used as criteria of allocation requirement | 50.00% |
CONDENSED FINANCIAL INFORMATI68
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY - PARENT COMPANY CONDENSED BALANCE SHEETS (Details) - USD ($) | Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
ASSETS: | |||||
Cash and cash equivalents | $ 132,622,467 | $ 19,232,275 | $ 7,818,936 | $ 954,681 | |
Prepayments and other assets | 1,248,562 | 4,139,354 | |||
TOTAL ASSETS | 163,889,852 | 28,382,131 | |||
LIABILITIES: | |||||
Accounts payable and accrued expenses | 3,786,955 | 789,129 | |||
SHAREHOLDERS' EQUITY: | |||||
Ordinary shares US$0.0001 par value, 500,000,000 shares authorized, 47,958,550 and 42,921,600 shares issued and outstanding as of March 31, 2018 and 2017, respectively | [1] | 4,796 | 4,292 | ||
Additional paid-in capital | 58,417,971 | 13,285,717 | |||
Retained earnings | 77,241,073 | 11,759,100 | |||
Accumulated other comprehensive income (loss) | 4,379,229 | (1,544,753) | |||
TOTAL SHAREHOLDERS' EQUITY | 140,043,069 | 23,504,356 | |||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 163,889,852 | $ 28,382,131 | |||
Ordinary shares, par value | $ 0.0001 | $ 0.0001 | |||
Ordinary shares, shares authorized | 500,000,000 | 500,000,000 | |||
Ordinary shares, shares issued | 47,958,550 | 42,921,600 | |||
Ordinary shares, shares outstanding | 47,958,550 | 42,921,600 | |||
Parent Company | |||||
ASSETS: | |||||
Cash and cash equivalents | $ 47,387,922 | $ 1,949,877 | |||
Prepayments and other assets | 9,995 | 54,290 | |||
Investments in subsidiaries, VIEs and VIEs' subsidiaries | 95,543,469 | 21,500,189 | |||
TOTAL ASSETS | 142,941,386 | 23,504,356 | |||
LIABILITIES: | |||||
Accounts payable and accrued expenses | 2,898,317 | ||||
SHAREHOLDERS' EQUITY: | |||||
Ordinary shares US$0.0001 par value, 500,000,000 shares authorized, 47,958,550 and 42,921,600 shares issued and outstanding as of March 31, 2018 and 2017, respectively | [2] | 4,796 | 4,292 | ||
Additional paid-in capital | 58,417,971 | 13,285,717 | |||
Retained earnings | 77,241,145 | 11,759,100 | |||
Accumulated other comprehensive income (loss) | 4,379,157 | (1,544,753) | |||
TOTAL SHAREHOLDERS' EQUITY | 140,043,069 | 23,504,356 | |||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 142,941,386 | $ 23,504,356 | |||
Ordinary shares, par value | $ 0.0001 | $ 0.0001 | |||
Ordinary shares, shares authorized | 500,000,000 | 500,000,000 | |||
Ordinary shares, shares issued | 47,958,550 | 47,958,550 | |||
Ordinary shares, shares outstanding | 42,921,600 | 42,921,600 | |||
[1] | The shares are presented on a retroactive basis to reflect the nominal share issuance. See Note 15. | ||||
[2] | The shares and per share data are presented on a retroactive basis to reflect the nominal share issuance. See Note 15. |
CONDENSED FINANCIAL INFORMATI69
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY - PARENT COMPANY CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Details) - USD ($) | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | |
PARENT COMPANY CONDENSED STATEMENTS OF COMPREHENSIVE INCOME | |||
General administrative expense and others | $ (5,816,130) | $ (2,645,605) | $ (1,554,833) |
NET INCOME ATTRIBUTABLE TO HEXINDAI'S SHAREHOLDERS | 65,481,973 | 8,570,864 | 3,538,407 |
OTHER COMPREHENSIVE INCOME | |||
Foreign currency translation adjustment | 6,028,143 | (1,080,036) | (482,083) |
COMPREHENSIVE INCOME ATTRIBUTABLE TO HEXINDAI'S SHAREHOLDERS | 71,405,954 | 7,490,828 | 3,056,324 |
Parent Company | |||
PARENT COMPANY CONDENSED STATEMENTS OF COMPREHENSIVE INCOME | |||
Equity in earnings of subsidiaries VIE and VIEs' subsidiaries | 68,117,762 | 8,570,978 | 3,538,407 |
General administrative expense and others | (2,607,137) | (114) | |
NET INCOME ATTRIBUTABLE TO HEXINDAI'S SHAREHOLDERS | 65,510,625 | 8,570,864 | 3,538,407 |
OTHER COMPREHENSIVE INCOME | |||
Foreign currency translation adjustment | 6,028,143 | (1,080,036) | (482,083) |
COMPREHENSIVE INCOME ATTRIBUTABLE TO HEXINDAI'S SHAREHOLDERS | $ 71,538,768 | $ 7,490,828 | $ 3,056,324 |
CONDENSED FINANCIAL INFORMATI70
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY - PARENT COMPANY CONDENSED STATEMENTS OF CASH FLOWS (Details) - USD ($) | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income (loss) for the year | $ 65,481,973 | $ 8,570,864 | $ 3,538,407 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Share-based compensation | 1,828,868 | ||
Changes in operating assets and liabilities: | |||
Prepayments and other current assets | 3,111,369 | (2,456,342) | (972,276) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 87,723,007 | 8,189,744 | 7,025,442 |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from private placement offering | 2,000,000 | ||
Proceeds from IPO, net of offering costs of US$7,095,758 | 43,273,702 | ||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 47,516,258 | 4,288,646 | 243,266 |
NET INCREASE IN CASH | 113,390,192 | 11,413,339 | 6,864,255 |
CASH - beginning of year | 19,232,275 | 7,818,936 | 954,681 |
CASH - end of year | 132,622,467 | 19,232,275 | 7,818,936 |
SUPPLEMENTAL CASH FLOW DISCLOSURES: | |||
Cash paid for income tax | 1,016,958 | 300,601 | |
Parent Company | |||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income (loss) for the year | 65,510,625 | 8,570,864 | 3,538,407 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Equity in subsidiaries, VIEs and VIEs' subsidiaries | (68,117,762) | (8,570,978) | (3,538,407) |
Share-based compensation | 1,828,868 | ||
Changes in operating assets and liabilities: | |||
Prepayments and other current assets | 44,295 | (50,009) | |
Accrued expenses and other current liabilities | 2,898,317 | ||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 2,164,343 | (50,123) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from private placement offering | 2,000,000 | ||
Proceeds from IPO, net of offering costs of US$7,095,758 | 43,273,702 | ||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 43,273,702 | 2,000,000 | |
NET INCREASE IN CASH | 45,438,045 | 1,949,877 | |
CASH - beginning of year | 1,949,877 | ||
CASH - end of year | 47,387,922 | 1,949,877 | |
SUPPLEMENTAL CASH FLOW DISCLOSURES: | |||
Offering costs | $ 7,095,758 | $ 7,095,758 | $ 7,095,758 |