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China Information Security Technology, Inc. (CIFS)

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Last Post: 4/7/2019 12:08:43 PM - Followers: 13 - Board type: Free - Posts Today: 0

NEWS on 03-25-2019. 

China Internet Nationwide Financial Services Inc. (NASDAQ: CIFS), incorporated in 2014, commenced its business by providing financial advisory services to small and medium size companies ("SMEs"). China Internet Nationwide Financial Services Inc. recently announced that its wholly-owned subsidiary, Beijing Anytrust Science & Technology Co., Ltd has developed an e-commerce big data system for InterPark Chifeng BizMarket, a subsidiary of InterPark Holdings Corporation. The agreement, which was signed earlier this year, is valued at approximately USD 1 Million. 

Per the terms of the agreement, CIFS Anytrust has developed an e-commerce and e-payment system and a warehouse management platform using big data and A.I. technology to assist CF BizMarket in conducting cross-border financial and business transactions, obtaining comprehensive information about buyers/suppliers, performing enterprise credit risk control, etc.  

Mr. Jianxin Lin, Chairman and Chief Executive Officer of CIFS, commented, "We are thrilled to be working with BizMarket, an e-commerce giant in the Korean and Asian markets. The agreement with BizMarket marks the international expansion of our Fintech business, and we are in discussions with other multinational corporations in the region. We hope to sign more service development agreements like this in the near future."


BACKGROUND

Through its wholly-owned Chinese subsidiary, China Public Security is focused on the development and implementation of large scale, high-tech public security and Geographic Information System ("GIS") related projects. The Company provides a broad portfolio of fully integrated solutions and services, including public security information technology (First Responder Coordination Platform, Intelligent Border Control and Intelligent Security Surveillance), Geographic Information System (Police-use GIS and Civil-use GIS), and e- Government Platform services, software sales and maintenance. Through its exclusive contractual arrangement with Shenzhen iASPEC Software Engineering Company Limited (iASPEC), China Public Security has the licenses to 16 registered and copyrighted software applications in China. In addition, iASPEC is considered the Company's variable interest entity, and its financial data and information is consolidated into the Company's accounts. To learn more about the Company, please visit the corporate website at http://www.chinacpby.com 

Company provided information shows an excellent, Nasdaq compliant, fully reporting, undervalued Chinese company. 
  • 52-Wk Range                      0.635 - 39.94
    Market Cap                          42.0M
    Shares Outstanding             22.1M
    EPS (TTM, GAAP)              1.03
    P/E Ratio (TTM, GAAP)     2.04x
% Held by Institutions      2.94

Muddy Waters 2017 report

Muddy Waters is a company that shorts stocks. They write reports on why they short stocks. Below is a summation of their report on CIFS. 

We conclude that China Internet Financial Services Inc. (NASDAQ:CIFS) is a King Zero – just another worthless China fraud.

- We believe zero to almost none of CIFS’s purported business is real. 
- PRC financials show that CIFS overstated its 2016 revenue by 5x.
- Every one of the purported borrowers to which CIFS disclosed having made loans (accounting for 84.2% of loan balances) appears to be a sham counterparty. 
- (The purported borrowers of the remaining 15.8% of reported loan balances were not disclosed; however, we strongly suspect that most – if not all – of these loans and associated income are also fabrications.) 
- Therefore, the associated loans, revenue, and profits appear to be completely fake.
- CIFS has disclosed doing business with two related parties, and even those loans and associated revenue appear to be fraudulent.
- CIFS’s recently announced “big data” company purchase also appears to be a lie.  It is from sham counterparties, and therefore a fraudulent purchase of an empty box, rather than of a real or even promising company.
- 47.3% of CIFS’s reported 2016 net income purportedly was generated by its Kashgar subsidiary; however, that subsidiary existed for only two days in 2016. 
- Further, Kashgar, accurately in our view, reported in its PRC financials zero revenue and income.
- CIFS is too good to be true – claiming to turn a seeming commoditized business model into an overnight juggernaut with purported gross margins over 97% and net margins over 70%. 
- However, Chairman Lin seems to be an obscure and fairly unsuccessful businessman, which in our view makes him about number 450 million in line to pull off a business miracle like this. 
- CIFS is therefore one of the most implausible – if not the most implausible – China fraud stories we have ever come across.
- CIFS’s corporate structure ensures that not only does Chairman Lin get to keep investors’ money, not have to worry about prison or any legal repercussions, but the ownership of his company is not the least bit at risk. 
- In other words, this structure is the coup de grace of the numerous middle fingers he’s extending at U.S. investors.  

The Company has responded on their website. It is below.  

BEIJING, April 30, 2018 /PRNewswire/ -- China Internet Nationwide Financial Services Inc. (NASDAQ: CIFS) ("CIFS" or the "Company"), a leading financial advisory services company, today announced that the independent special committee of the Board of Directors of the Company, comprising three independent directors of the Company, Ms. Sheve Li Tay, Mr. Buting Yang and Mr. Hong Huang (the "Special Committee"), has completed its investigation into the allegations raised in the report issued by Muddy Waters LLC dated December 20, 2017 (the "Report"). The Special Committee commenced its investigation in January 2018 and was assisted by a global law firm that served as independent legal counsel and by the forensic auditors that its counsel retained.

Summary of Major Findings

The Report made allegations against the Company and below is a summary of the major findings of the investigation generally keyed to those allegations:

1.   No material inconsistency between the gross revenue in the Company's books and records and the revenue reported in its SEC reports. Gross revenue in the Company's books and records showed no material inconsistency with the gross revenue reported in its Registration Statement on Form F-1 filed with the Securities and Exchange Commission ("SEC ") on April 17, 2017. It was determined that the Company had underreported its revenue to the PRC's State Administration of Industry & Commerce ("SAIC").

2.   Loans were verified.  The loans to Beijing Ailirui Trading Co., Ltd, Xiamen Jingsu Trading Co. Ltd, Fujian Jin Xin Import Export Trading Co. Ltd and Cai Long Ge (the "borrowers") were in fact made and were repaid with appropriate interest. The borrowers were not "sham" parties.

3.   Transactions with Xiamen Beiruichen Trading Co. Ltd and Xiamen Luye Trading Co. Ltd verified.  The transactions with Xiamen Beiruichen Trading Co. Ltd and Xiamen Luye Trading Co. Ltd have been verified and the Company reported the relevant revenue in its SEC filings.

4.   Acquisition of Beijing Anytrust Science & Technology Co. Ltd ("Anytrust") was a valid transaction.  The Company asked Beijing Tianhuang Tongda Technology Co. Ltd to acquire the "big data" company Anytrust and then, for an additional fee, sell it to the Company because the Company did not want to reveal its identity to the seller of Anytrust for fear that the latter would demand a higher selling price for Anytrust if it knew that it was negotiating with a public company.

5.   Kashgar Sheng Yingxin Enterprise Consulting Co., Ltd. ("Kashgar SYX")'s 2016 revenue verified.   Although Kashgar SYX was only incorporated on December 29, 2016, its reported revenue was significant because customers of its parent, Sheng Ying Xin (Beijing) Management Consulting Co., Ltd ("SYX") in the latter half of 2016, replaced their contracts entered with SYX with Kashgar SYX once Kashgar SYX was incorporated to benefit from certain preferential tax treatments. The revenue from these customers was then booked under Kashgar SYX.

6.   The Company's net profit margin compared.  In order to establish whether the Company's 2016 profit margins were plausible, the Special Committee compared the Company's net profit margin to the net profit margin of two PRC financial services companies listed on the NASDAQ – one had higher margin and the other, lower.

7.   Wealth products services business was sold.  The Company's former wealth products services business, described in the Report as a "P2P business," was sold to a third party approximately 2 years prior to the Company's IPO. Accordingly, the Company did not mislead its investors by not disclosing its prior sold business.

8.   Internet Content Provider ("ICP") license and the Company's Variable Interest Entity ("VIE") structure verified.  The Company's ICP license has been verified and its use of the VIE structure is consistent with its strategy to pursue a line of business where foreign ownership is restricted by China's Ministry of Commerce.

The Special Committee recognizes that its investigation was tailored to investigate the allegations made in the Report, and was not designed to be the equivalent of an audit conducted by the Company's independent auditors. As a result of its investigation, the Special Committee, on behalf of the Company, has adopted, and the management will in the near future implement, a series of measures intended to improve the Company's operations, compliance and internal controls. These measures include, among other things, enhanced corporate policies and practices governing the management of acquisitions and requiring the reconciliation of reports filed with the SAIC and reports filed with the SEC.

An interesting note is that, effective 02-27-2019, the Short Interst in CIFS is only 1.7% - less than 2%. 

CIFS
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CIFS News: Report of Foreign Issuer (6-k) 04/16/2019 04:06:40 PM
CIFS News: Report of Foreign Issuer (6-k) 03/07/2019 04:24:44 PM
CIFS News: Report of Foreign Issuer (6-k) 12/27/2018 04:07:22 PM
CIFS News: Report of Foreign Issuer (6-k) 12/07/2018 06:05:16 AM
CIFS News: Report of Foreign Issuer (6-k) 10/05/2018 12:20:26 PM
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#298   CIFS buy 3.76 stocktrademan 04/07/19 12:08:42 PM
#297   Nicely invested .007% of 0/S.. Collecting for lookoveryourshoulder 04/06/19 10:32:33 PM
#296   ask all right all right 04/02/19 10:07:26 AM
#295   as clay my friend all right all right 04/02/19 10:06:11 AM
#294   Heading UP this AM. Waiting for the boston127 04/02/19 09:02:37 AM
#293   its looking like 9 lives all right all right 04/01/19 03:52:54 PM
#292   cat you train this dead cat to all right all right 04/01/19 03:50:16 PM
#291   can you tell me if the shorts all right all right 04/01/19 03:46:42 PM
#290   420 joke it to high lol all right all right 03/29/19 12:03:57 PM
#289   yepp so much for us high noon is all right all right 03/29/19 12:02:55 PM
#288   So much for the selloff and Shorts. boston127 03/29/19 10:08:54 AM
#287   Minimal retreat this AM. Filling a gap. boston127 03/29/19 10:03:38 AM
#286   In after hours, it kept climbing. boston127 03/29/19 02:13:09 AM
#285   Interesting...Looking good here. Golden_Cross 03/29/19 01:59:09 AM
#284   Thanks for the chart. boston127 03/29/19 01:54:47 AM
#282   cifs has no + pe all right all right 03/28/19 06:47:44 PM
#281   cifs is pump and dump all right all right 03/28/19 06:46:46 PM
#279   dead cat bounce all right all right 03/28/19 06:38:11 PM
#278   MACD ready to turn into bull territory. RSI Golden_Cross 03/28/19 06:34:36 PM
#277   videos on this mean it will go down all right all right 03/28/19 06:27:37 PM
#276   this stock is a dead cat all right all right 03/28/19 06:25:17 PM
#275   * * $CIFS Video Chart 03-28-2019 * * ClayTrader 03/28/19 05:33:27 PM
#271   opppss its quite and down lol as all right all right 03/28/19 02:23:42 PM
#270   Your comments make no sense. boston127 03/28/19 02:22:27 PM
#266   You have no clue what dead cat bounce boston127 03/28/19 01:15:34 PM
#265   yaaa 6.3 down to 2 is real all right all right 03/28/19 01:00:31 PM
#264   How is this a dead cat??? Dumbest response LowFloatLopes 03/28/19 12:42:13 PM
#263   wrong dead cat all right all right 03/28/19 12:37:46 PM
#262   Squeeeze is on jonnyvs 03/28/19 12:36:21 PM
#261   Nice GREEN day today, great volume. boston127 03/28/19 09:55:45 AM
#260   Showing down pre-market. Cannot find SEC filings. boston127 03/21/19 09:24:55 AM
#259   When the financials are released, boston127 03/20/19 04:16:05 PM
#258   It may be because of the financials. boston127 03/19/19 11:39:05 PM
#257   I agree. TDA shows after-hours $3.08. boston127 03/19/19 11:38:15 PM
#256   One spot says $3.01 and another says $3.08 locksflooring 03/19/19 09:29:59 PM
#255   I sent 3 emails. No response. tomdoc 03/19/19 05:04:24 PM
#254   No response at all. jsb330 03/19/19 03:54:01 AM
#253   Did the IR ever respond to you? boston127 03/19/19 01:00:55 AM
#252   I thought earnings were due out today. boston127 03/19/19 12:59:09 AM
#251   No earnings yet? Sheesh. tomdoc 03/18/19 10:03:22 PM
#250   took a nice gain on another trade and makingitnow 03/15/19 11:19:47 AM
#249   from 6 to 235 wow nice hold all right all right 03/15/19 11:09:13 AM
#248   lol…. I thought you were hating on the makingitnow 03/14/19 12:33:18 PM
#247   Will open higher tomorrow AM. boston127 03/14/19 01:48:41 AM
#246   what a POS makingitnow 03/13/19 03:07:14 PM
#245   Who knows. I am decreasing my holdings here weekly. boston127 03/13/19 10:59:10 AM
#244   when will China Internet Nationwide Financial Services Inc. Seanblue 03/13/19 10:42:01 AM
#243   jsb: Thanks for the response and tip. boston127 03/12/19 09:22:20 AM
#242   https://www.barchart.com/story/home/1005538/global-stocks-follow-wall-street-hig jsb330 03/12/19 05:46:45 AM
#241   We are almost final in a deal. https://www.bloomberg.com/news/articles/2019-03-1 jsb330 03/12/19 05:26:03 AM
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