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 $2,746,581 in additional debt obligations from individual lenders and $403,421 from institutional lenders for total new debt of $3,150,002 in the nine months ended February 29, 2020. The Company continues to develop its subscription business and its investor relations business. These investor relations 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 2,521,739 shares of Class A Common Stock and 2,320,000 shares of Class B Common Stock 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 February 29, 2020, the Company own 77% of Hemp Logic Inc.

As of February 29, 2020, 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 February 29, 2020, ChineseHempOil.com, Inc. employed two (2) 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 February 29, 2020.

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 cancelled these service agreements and discontinued the platform 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 February 29, 2020, NewCoins168 employed one (1) full-time employees in its Shanghai Office in a variety of administrative and operational capacities.









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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 February 29, 2020, CIIX Online employed one (1) part-time employee in a variety of administrative and operational capacities.

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. On or about February 5, 2020, by unanimous written consent of the Company's Board of Directors, the Company approved a resolution to sell its 24.9% interest in Donald Capital LLC to a qualified buyer on terms to be agreed upon. To date, no buyer has been procured.

Business Environment and Trends

The global marketplace has 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 nine months ended February 29, 2020 compared to three and nine months ended February 28, 2019.

Quarterly Revenues and Expenses

Subscription Revenues: For the three months ended February 29, 2020 and February 28, 2019, revenues were $253,475 and $229,220, respectively. For the nine months ended February 29, 2020 and February 28, 2019, revenues were $621,390 and $680,119, 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 February 29, 2020 and February 28, 2019, revenues were $103,332 and $147,664 respectively. For the nine months ended February 29, 2020 and February 28, 2019, revenues were $1,383,482 and $546,251 respectively. The increases were attributable to an increase in investor relations clients.

Other Revenues: For the three months ended February 29, 2020 and February 28, 2019, revenues were $2 and $6,620 respectively. For the nine months ended February 29, 2020 and February 28, 2019, revenues were $3,863 and $97,447 respectively. The decrease of $93,584 was due to the absence of consulting fees generated from its subsidiary company Newcoins for the nine months ended February 29, 2020.

Sales of CBD/Hemp Products: For the three months ended February 29, 2020 and February 28, 2019, revenues were $86,956 and $1,061,318 respectively, for a decrease of $974,362. For the nine months ended February 29, 2020 and February 28, 2019, revenues were $1,241,919 and $1,493,939 respectively. The $252,020 decrease was attributed to the decreased sales of the Company's industrial hemp products and baijiu liquor products in China. It is believed that the outbreak of Covid-19 in early January 2020 caused a slow of business and a reduction in customers.









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Cost of Revenue: Cost of services for the three months ended February 29, 2020 and 2019 were $297,739 and $253,135 respectively, for an increase of $44,604 over the same period in 2019. Cost of services for the nine months ended February 29, 2020 and 2019 were $1,012,287 and $1,106,084 respectively, for a decrease of $93,797 over the same period in 2019. Cost of products for the three months ended February 29, 2020 and 2019 were $39,355 and $759,369 respectively, for a decrease of $720,014. Cost of products for the nine months ended February 29, 2020 and 2019 were $917,627 and $958,198 respectively, for a decrease of $40,571. This decrease 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 decreased to 17% (gross profit $59,069 on $356,808 of revenue) in the three months ended February 29, 2020 from 34% (gross profit $130,369 on $383,504 of revenue) in the three months ended February 28, 2019. The gross margin decrease for service revenue is due to decreased investor relations clients and revenues generated for these services. The Company's gross margin on service revenue increased to 50% (gross profit $996,448 on $2,008,735 of revenue) in the nine months ended February 29, 2020 from 16.4% (gross profit $217,733 on $1,323,817 of revenue) in the nine months ended February 28, 2019. The Company's gross margin on product sales increased to 55% ($47,601 on $86,956 of revenue) in the three months ended February 29, 2020 from 28% ($301,949 on $1,061,318 of revenue) in the three months ended February 28, 2019. 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 26% ($324,292 on $1,241,919 of revenue) in the nine months ended February 29, 2020 from 36% ($535,741 on $1,493,939 of revenue) in the nine months ended February 28, 2019.

General & Administrative Expenses:For the three months ended February 29, 2020 and February 28, 2019, expenses were $1,757,366 and $3,273,479, respectively for a decrease of $1,516,113 which was related to downsizing of staff and independent contractors. For the nine months ended February 29, 2020 and February 28, 2019, expenses were $6,535,822 and $7,850,987, respectively for a decrease of $1,315,165 which was related to company implemented 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.

Advertising Expenses: For the three months ended February 29, 2020 and February 28, 2019, expenses were $160,811 and $298,297 respectively. The decrease is due to the Company's decreased advertising and news coverage across several different platforms. For the nine months ended February 29, 2020 and 2019, expenses were $720,544 and $977,431 respectively.

Bad Debt Expenses: For the three months ended February 29, 2020 and 2019, expenses were $413,000 and $0 respectively. For the nine months ended February 29, 2020 and 2019, expenses were $593,238 and $0 respectively. These increases are attributable to the bad debt allowance recorded by the Company for stock receivable $173,475 from Ionix Technology Inc. and $413,000 from Luokung Technology Corp for investor relations services performed.

Interest Income (expenses):For the three months ended February 29, 2020 and 2019, interest expense was $228,975 and $146,283, respectively for a difference of $82,692 attributable to the one-year unsecured notes issued to various individual lenders (refer to short-term notes for details). For the nine months ended February 29, 2020 and 2019, interest expense was $599,352 and $195,194 respectively for an increase of $404,158.





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 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.











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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 and the COVID-19 pandemic, 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. Beginning in February 2020, we adjusted our business model and enhanced our YouTube programming to include free live broadcasts providing analysis and updates on the U.S. Equity and Option Markets in a grass roots effort to generate new leads, with no associated advertising fees. Subscriptions to our free YouTube channel have grown from approximately 15,000 to 22,000 in six weeks, with approximately 5%-10% of the free subscribers becoming paid subscribers. This in turn increased our subscription revenues in recent months as follows: approximately $260K in subscription revenues for the month ended February 29, 2020 (the third largest month for subscription revenues in Company history); approximately $510k in subscription revenues for the month ended March 31, 2020 (the highest single month for subscription revenues in Company history); and approximately $80K in subscription revenues for the first week of April 2020. Management will continue to add more content to its YouTube channel over the next 6-12 months. We believe this business model, which has cost the Company $0 in advertising fees, will afford us opportunities unlike we have seen in the last twenty years (during which time the Company averaged $400k- $800k per year in advertising costs for its subscription products). Management is excited about the new market opportunities and if subscription revenues continue as they have in February and March 2020, the Company hopes to become cash flow positive with record revenues over next twelve (12) months.

Moreover, as part of its cost-cutting measures Management has closed two office locations, one in San Gabriel, CA and one in New York City, NY, with plans to close the office in Flushing, NY and one location in Shanghai. In addition Management intends to cut overall advertising costs to less than $10k per month over the next twelve (12) months.

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, the Company has two New Hemp-Infused, Skin-Friendly, Antimicrobial Sanitizer Products in development.

The Company will also continue to recruit and will 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.









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Budgetary Control

General and Administrative Expenses will be controlled and were reduced in both the three and nine month periods ending February 29, 2020 as compared to the same periods last year. As noted above, cash flows used in operations for the nine months ended February 29, 2020 and February 28, 2019 were $5,237,878 and $8,398,744, respectively. The decreased cash used in operations was due to a reduction in general and administrative expenses used in operations. As of the date of this filing, has relinquished one of its commercial leases in San Gabriel, CA and its commercial lease in New York City, New York. 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, marketing, and administrative support functions. The marketing and administrative functions have been largely transferred to existing employees in China.

The management has also implemented 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