Overview
ChineseInvestors.com, Inc. and subsidiaries.("the Company", "we" or "us")
endeavors to be an innovative company, specializing in (a) providing real-time
market commentary, analysis, and educational related endeavors in Chinese
language character sets (traditional and simplified), (b) providing support
services to our various partners wishing to have a Chinese language
communications component, (c) providing consultative services to smaller private
companies considering becoming a public company, (d) providing various
advertising as well as public relation support services, and (e) other services
we may identify having the potential to create value or partnership opportunity
with our existing services.
The Company incurred $2,316,581 in additional debt obligations from individual
lenders and $96,697 from institutional lenders for total new debt of $2,413,278
in the six months ended November 30, 2019. Also see Subsequent Events for
disclosure of $448,000 in debt obligations that the Company has incurred after
November 30, 2019.The Company continues to develop its investor relations
business. These clients represent companies whose shares are traded in various
public markets including the OTCBB, NASDAQ, and NYSE exchanges.
XiBiDi Biotechnology Co., Ltd.
In March 2017, the Company established and registered XiBiDi Biotechnology Co.
Ltd./CBD Biotechnology Co. Ltd. ("CBD Biotech") in Pudong Free-Trade Area in
Shanghai, Peoples Republic of China, founded as a wholly owned foreign
enterprise ("WOFE") of ChineseInvestors.com Inc. CBD Biotech's primary focus is
online and retail sales of industrial hemp-infused skincare products and liquor
in the PRC. CBD Biotech's first product launch was CBD Magic Hemp Series, an
industrial hemp-infused skincare line.
Thereafter in November 2017, CBD Biotech obtained Wholesale Alcohol License from
the Shanghai Wine Monopoly Bureau, effective October 24, 2017 for a three-year
term, which allows CBD Biotech to act as a liquor distributor. CBD Biotech
entered into a wholesale agreement with China GuiZhou HanTai Wine, Inc. to
distribute its liquor product - Yantai 1985. The Company announced plans to spin
off CBD Biotech in February 2018, which was later postponed. Thereafter, in
December 2018, the Company announced that it had retained an underwriter for the
planned Initial Public Offering ("IPO") of CBD Biotech concurrently with a
listing on a national securities exchange.
On or about February 27, 2019, CBD Biotech, Inc., an exempted company with
limited liability incorporated in the Cayman Islands, was formed ("CBD Biotech
Cayman"). CBD Biotech Cayman is solely owned by Wei Wang, ChineseInvestors.com,
Inc.'s Chief Executive Officer, and Alex Hamilton, Chairman and Chief Financial
Officer of CBD Biotech. The Company was prepared to enter into a Share Exchange
Agreement with CBD Biotech and the shareholders of CBD Biotech Cayman (the
"Share Exchange Agreement"). However, on or about November 11, 2019, Hemp Logic,
CBD Biotech and ChineseInvestors.com, Inc. entered into a Share Exchange
Agreement ("SEA") pursuant to which the Company sold/transferred to Hemp Logic
its one hundred percent (100%) equity interest in CBD Biotech in exchange for
newly issued Class A Common Stock, par value $0.0001 and Class B Common Stock,
par value $0.0001. CBD Biotech become a wholly-owned subsidiary of Hemp Logic
and the Company become a majority owner of Hemp Logic. Hemp Logic issued the
Company an aggregate of four million eight hundred fort- one thousand seven
hundred thirty-nine (4,841,739) newly-issued Class A Common Stock, par value
$0.0001 per share and Class B Common Stock, par value $0.0001 per share of Hemp
Logic in the aggregate (the "Hemp Logic Shares"), After the SEA, one hundred
percent ("100%") of the equity interests of CBD Biotech are owned by Hemp Logic
and approximately 83.9% of Hemp Logic is owned by the Company. The closing of
the exchange took place on December 31, 2019. All operations will be conducted
through Hemp Logic and CBD Biotech will continue to operate two business lines,
cosmetics and liquor.
As of November 30, 2019, CBD Biotech employed fifteen (15) full-time employees
in its Shanghai Office in a variety of administrative and operational
capacities. Its CFO, Alex Hamilton, is based in the Company's New York office.
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ChineseHempOil.com, Inc.
In April 2017, the Company established ChineseHempOil.com, Inc. dba "Chinese
Wellness Center," a Delaware corporation ("CHO"), as a wholly owned subsidiary
of the Company. CHO is responsible for online and retail sales of industrial
hemp products in the United States. Chinese Wellness Center is the Company's
retail store located in the predominantly Chinese community of San Gabriel,
California, next to the Company's headquarters. In or about February 2018, the
Company announced its plans to spin off CHO, which was later postponed. In
December 2018, the Company announced that it had retained an underwriter for the
planned Initial Public Offering ("IPO") of CBD Biotech, concurrently with a
listing on a national securities exchange. CHO will no longer be part of this
planned spin-off.
As of November 30, 2019, ChineseHempOil.com, Inc. employed three (3) full-time
employees in the United States.
CBD Biotechnology Co. Ltd.
In June 2017, the Company formed CBD Biotechnology Ltd. ("CBD Canada"), a
corporation incorporated in the Province of British Columbia, which is
anticipated to focus on the sales of industrial hemp- products, via online and
other distribution channels. CBD Canada has not generated any income as of
November 30, 2019.
Newcoins168.com LTD
On or about January 25, 2018, a certificate of incorporation was filed with the
Registrar in St. Vincent and the Grenadines establishing Newcoins168.com, LTD
("Newcoins Grenadine"). Pursuant to the Certificate of Incumbency, issued on May
28, 2018, the Registered Office for Newcoins Grenadine is Suite 305, Griffith
Corporate Centre, Beachmont, P.O. Box 15 1 O, Kingstown. Saint Vincent and the
Grenadines. All of Newcoins Grenadine's registered shares, 1000 shares, were
issued to ChineseInvestors.com, Inc.'s CEO, Wei Wang. Wei Wang holds these
shares as agent for ChneseInvestors.com, Inc. Newcoins Grenadine's total
authorized capital is $1,000,000.
Newcoins Grenadine was established to develop a full-service retail Forex and
CFD platform that connects with one of the market's leading trading platforms to
provide customers with Forex/CFD market trading service, as well as offering
education, market information, and insights for customers related to the
Forex/CFD market. The platform had 992 subscribers in the Philippines, Malaysia,
Indonesia, Russia, Hong Kong, Brunei and India and no registered users in the
US. Newcoins Grenadine's registered users never funded their accounts.
On or about February 27, 2019 Newcoins Grenadine entered into a Technology
Solution Agreement with Match-Trade Technologies ("MTT"), pursuant to which MTT
agreed to provide Newcoins Grenadine with a trading infrastructure (integrated
electronic systems and software) designed to offer a platform to Newcoins
Grenadine's clients for the trading of financial products, i.e., Forex and/or
CFDs and/or other financial instruments offered to Newcoins Grenadine's clients.
In or about March 2019, Newcoins Grenadine entered into an agreement with
Forexstreet S.L. ("FS") pursuant to which FS agreed to provide daily news feeds
and updates. Newcoins Grenadine platform has not generated any revenues to date.
Given the platform's target audience is outside of the US and China, it has been
challenging to convert leads generated as a result of advertising and marketing
efforts into account deposits that will lead to trading due to the significant
language barrier. The Company has determined that the expense that would be
required to hire and trains native speakers to assist the platform's potential
account holders/traders would outweigh the potential gain and has decided to
focus its efforts on the Company's core, traditional business lines. In an
effort to reduce fixed costs associated with the platform, the Company has
cancelled these service agreements and discontinued the platform as of in August
2019.
Newcoins168.com Digital Media Technology Ltd.
In April 2018, the Company established a wholly owned foreign enterprise,
NewCoins168.com Digital Media Technology Ltd (Shanghai), registered in China
Free Trade Zone with registered capital of 10 million RMB. As of November 30,
2019, NewCoins168 employed one (1) full-time employees in its Shanghai Office in
a variety of administrative and operational capacities.
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Bitcoin Trading Academy, LLC
In or about March 2018, the Company established Bitcoin Trading Academy, LLC, a
California limited liability company, formerly known as Stock Surge Momentum.
LLC, a California limited liability company ("BTA LLC"), with Warren (Wei) Wang,
the Company's CEO, as its sole managing member. Mr. Wang has transferred all of
his interest in BTA LLC to the Company for $1 consideration. BTA LLC began
offering in person and on-line courses on cryptocurrency investment and trading
in July 2018. BTA LLC has since ceased to offer its cryptocurrency news and
courses due to decreased consumer demand, presumably related to the 2018
Cryptocurrency Crash. Although the cryptocurrency market is slowly rebounding,
currently, the Company does not have short-term plans to resume these programs.
CIIX Online LTD
In August 2018, the Company formed CIIX Online Ltd. ("CIIX Online"), a
corporation incorporated in the Province of British Columbia, which is
anticipated to focus on the sales of the Company's subscription service to
consumers.
As of November 30, 2019, CIIX Online employed one (1) full-time employees in its
Canada Office in a variety of administrative and operational capacities.
Blue Ocean Capital Holding LLC
On November 11, 2018, the Company established Blue Ocean Capital Holding LLC
("BO"), a Delaware limited liability company. On January 23, 2019, BO entered
into an Equity Transfer Agreement ("ETA") with The Connell Company ("CC")
whereby CC would sell its 100% ownership stake in Connell Securities LLC ("CS")
to BO. CS is a registered broker-dealer and member of FINRA. BO is a Delaware
limited liability company with two members - Wei Wang, the Company's chief
executive officer, who owns 10% of the issued and outstanding member units and
CIIX, which owns 90% of the issued and outstanding member units. Pursuant to the
ETA, the purchase price of CS was $75,000 and was subject to review and approval
of FINRA before the sale can be consummated. In accordance with the ETA, BO's
$75,000 purchase price was held in escrow to be disbursed to CC upon closing or
returned to BO if no closing occurred. Prior to the ETA in or about August 2017
the Company explored purchasing a broker-dealer, Global Emerging Capital Group,
LLC fka Radnor Research & Trading ("GEC"). Claudette Burgess-Gay was the CEO,
CCO, CFO, FINOP for GEC. With regard to this transaction, GEC was represented by
William Uchimoto, Esq. The Company declined to proceed with the acquisition of
GEC. Thereafter, on or about October 1, 2018, the Company entered into a
compensation agreement with Ms. Burgess-Gay, pursuant to which Ms. Burgess-Gay
was to receive compensation in the amount of $5,000/month in exchange for her
efforts to locate a full-service broker-dealer being offered for sale, to assist
in negotiating the terms with the seller for acquisition of 100% of the
broker-dealer and to ensure full compliance with all broker-dealer requisites.
Mr. Uchimoto represents the Company's subsidiary, BO, with regard to its efforts
to purchase CS. Following closing of the purchase of CS, Ms. Burgess-Gay was to
be the President, Chief Compliance Officer, Chief Anti-Money Laundering Officer
and Financial and Operations Principal of the broker-dealer that would be
renamed AMC International Securities LLC. In September 2019, the Company
reconsidered its decision to acquire CC and revoked the ETA. The escrow agent
returned the deposit, less fees of $5,578, for a refund of $69,422.
Donald Capital, LLC
Donald Capital, LLC, is a Delaware limited liability company established on May
7, 2018. In exchange for capital contributions totaling $160,000 from
ChineseInvestors.com, Inc., the Company received a 24.9% interest in Donald
Capital LLC. The remaining 75.1% is held equally by Hamilton Strategy Group,
Inc. and McDonald Global Enterprises LLC. Alex Hamilton is the CFO of Hemp
Logic, Inc. and is the President of Donald Capital LLC. Mr. Hamilton is also the
owner of Hamilton Strategy Group. Donald Capital LLC is a registered broker
dealer approved by FINRA effective May 14, 2019. Donald Capital LLC will serve
clients around the globe in the private, micro, small and middle capitalization
arenas through pre-capital raise and strategic advisory, capital raise and other
services that will be offered through network partners.
35
Business Environment and Trends
The global marketplace has been gradually recovered. We understand that our
business is dependent upon the health of the financial markets as well as the
financial health of the participants in those markets. With the recovery of the
financial market, more market participants willing to subscribe our financial
market analysis programs and public companies eager to spend more on increasing
media exposure and developing investor relations.
For three and six months ended November 30, 2019 compared to three and six
months ended November 30, 2018
Quarterly Revenues and Expenses
Subscription Revenues: For the three months ended November 30, 2019 and 2018,
revenues were $181,462 and $224,587, respectively. For the six months ended
November 30, 2019 and 2018, revenues were $367,914 and $450,899, respectively.
The decline in revenues was due to a decrease in the Company's subscribers to
such services.
Investor Relations-Service Revenues:For the three months ended November 30, 2019
and 2018, revenues were $458,789 and $127,340 respectively. For the six months
ended November 30, 2019 and 2018, revenues were $1,280,150 and $398,588
respectively. The increases were attributable to an increase in investor
relations clients.
Other Revenues: For the three months ended November 30, 2019 and 2018, revenues
were $3,465 and $5,481 respectively. For the six months ended November 30, 2019
and 2018, revenues were $3,861 and $78,517 respectively. The decrease of $74,656
was due to the absence of referral fees generated from cryptocurrency referrals
for the six months ended November 30, 2019.
Sales of CBD/Hemp Products: For the three months ended November 30, 2019 and
2018, revenues were $206,212 and $290,857 respectively, for a decrease of
$84,645. For the six months ended November 30, 2019 and 2018, revenues were
$1,154,963 and $432,621 respectively. The $722,342 increase was attributed to
the increased sales of the Company's industrial hemp products and baijiu liquor
products.
Cost of Revenue: Cost of services for the three months ended November 30, 2019
and 2018 were $289,890 and $461,132 respectively, for a decrease of $171,242
over the same period in 2018. Cost of services for the six months ended November
30, 2019 and 2018 were $714,547 and $852,949 respectively, for a decrease of
$138,402 over the same period in 2018. Cost of products for the three months
ended November 30, 2019 and 2018 were $65,658 and $126,084 respectively, for a
decrease of $60,426. Cost of products for the six months ended November 30, 2019
and 2018 were $878,272 and $198,829 respectively, for an increase of $679,443.
This significant increase was due to the Company's sale of its industrial hemp
and baijiu liquor products.
Gross profit (loss) and gross margin: The Company's gross margin on service
revenue increased to 55% (gross profit $353,826 on $643,716 of revenue) in the
three months ended November 30, 2019 from negative 29% (gross loss $103,724 on
$357,408 of revenue) in the three months ended November 30, 2018. The gross
margin increase for service revenue is due to increased investor relations
clients and revenues generated for these services. The Company's gross margin on
service revenue increased to 57% (gross profit $937,378 on $1,651,925 of
revenue) in the six months ended November 30, 2019 from 8% (gross profit $75,055
on $928,004 of revenue) in the six months ended November 30, 2018. The Company's
gross margin on product sales increased to 68% ($140,554 on $206,212 of revenue)
in the three months ended November 30, 2019 from 57% ($164,773 on $290,857 of
revenue) in the three months ended November 30, 2018. The increase in gross
margin for product sales was due to reduced product retail pricing on industrial
hemp products and reduced sales expenses. The Company's gross margin on product
sales decreased to 24% ($276,691 on $1,154,963 of revenue) in the six months
ended November 30, 2019 from 54% ($233,792 on $432,621 of revenue) in the six
months ended November 30, 2018.
36
General & Administrative Expenses:For the three months ended November 30, 2019
and 2018, expenses were $1,798,317 and $2,689,224, respectively for a decrease
of $890,907 which was related to downsizing of staff and independent
contractors. For the six months ended November 30, 2019 and 2018, expenses were
$4,778,456 and $4,578,465, respectively for an increase of $199,991 which was
related to the issuance of stock compensation to staff and independent
contractors.
Advertising Expenses: For the three months ended November 30, 2019 and 2018,
expenses were $181,229 and $361,843 respectively. The decrease is due to the
Company's decreased advertising and news coverage in several different. For the
six months ended November 30, 2019 and 2018, expenses were $559,733 and $679,134
respectively.
Bad Debt Expenses: For the three months ended November 30, 2019 and 2018,
expenses were $173,475 and $0 respectively. For the six months ended November
30, 2019 and 2018, expenses were $180,238 and $0 respectively. Both increases
were due to the Company recorded bad debt allowance for IR stock receivable
$173,475 from Ionix Technology Inc.
Interest Income (expenses): For the three months ended November 30, 2019 and
2018, interest expense was $211,834 and interest income was $63,922,
respectively for a difference of $275,756 attributable to the one-year unsecured
notes issued to various individual lenders (refer to short-term notes for
details). For the six months ended November 30, 2019 and 2018, interest expense
was $370,376 and $48,911 respectively for an increase of $321,465.
Liquidity
The Company is currently addressing its liquidity concerns by building upon its
revenue generating subscription service products, increasing its
advertising-based revenues, increasing its offerings of other consulting
services, and sale of industrial hemp and liquor products. Since its inception
in 1997, the Company has, at times, relied primarily upon proceeds from private
placements and sales of shares of its equity securities to fund its operations.
In the last two years the Company raised $5,000,043 through the issuance of its
Series C-2016 convertible preferred stock and $10,371,050 through the issuance
of its Series D-2017 convertible preferred stock. We anticipate continuing to
rely on sales of our securities as well as increasing our general revenues in
order to continue to fund our business operations.
Plan of Continued Operations
Management's Plan for the fiscal year 2020
Business Development
Management recognizes that one of the Company's most significant assets is its
unique network of Chinese investors in the United States and worldwide; thus,
one of Management's immediate short-term goals is to focus on achieving
brand-marketing goals for both its core subscription and investor relations
business and its industrial hemp/CBD business. Management believes that this
demographic is likely to continue to grow, especially at the upper end of the
income scale, partly because Chinese are believed to be highly adaptive to the
economy, are believed to have the ability to see the bigger picture when it
comes to monetary investments in the stock market, and are believed to have the
ability to recognize and appreciate new trends in capital markets. Moreover,
Management also believes Chinese are an affluent demographic and they accumulate
disposable savings over and above other demographics. Having access to this
market that is open to the new ideas and opportunities gives the Company a
competitive edge over other companies that market to other demographics.
Management believes that its unique network not been maximized to capture its
full monetary value to the Company.
In light of current political events, Management believes that the Chinese
investor is even more focused and engaged when it comes to staying up to date on
investment markets, and is seeking new products, subscription offerings and
investor tools to serve such needs. The Company recognizes this need and is
responding through development of the same. In addition, management is exploring
joint venture opportunities with partners that are looking to reach our unique
network of consumers. With regard to its industrial hemp/CBD business in China,
products slated for release in 2020 are on track including the Company's
industrial hemp/CBD pain relief cream and wrinkle cream.
As part of this analysis, the Company will also recruit and seek to retain a
talented and knowledgeable workforce and more specifically, will work to
strengthen its existing sales force through enhanced training, allocation of
resources and providing cross-selling opportunities. As such, the Company does
not contemplate any further layoffs of its sales force other than in the normal
course.
37
Budgetary Control
General and Administrative Expenses will be controlled. The primary reason for
recent increases in our General and Administrative Expenses was Management's
expansion of the Company's business operations including further expansion of
ChineseHempOil.com, Inc and CBD Biotech in the Pudong Free-Trade Area in
Shanghai. These entities focus on the marketing and distribution of industrial
hemp products, including skincare/cosmetics (in the US and China) and liquor (in
China). As part of the business expansion in February 2017, the Company leased
additional office space in San Gabriel, CA, in the same business center where
the headquarters is located, and in April 2018 the Company hired additional
staff, management and legal professionals. As of the date of this filing, the
Company has relinquished one of its three leased spaces in San Gabriel and has
downsized its space in New York City, New York significantly. In addition the
Company has been forced to lay off employees in both the New York and California
offices whose primary duties related to cryptocurrency products and offering and
marketing and administrative support functions. The marketing and administrative
functions have been largely transferred to existing employees in China.
The management will implement budgetary control on certain expenditures such as
office utilities, other general office expenses, and company travel and
entertainment in an effort to reduce the total amount of General and
Administrative Expenses to approximately $300,000 USD each month from the
current expenses of approximately $400,000, excluding current debt due and
owing.
Financing
The Company anticipates continuing to rely on sales of its securities to fund a
portion of its business operations in fiscal year 2020, plans to meet all of its
obligations, and will conform to all of the requirements to remaining a fully
reporting a public company, while increasing its market presence as well as
services offering spectrum.
© Edgar Online, source Glimpses
CHINESEINVESTORS.COM, INC. 