INVESTOR PRESENTATION September 2018
FORWARD-LOOKING STATEMENTS This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. All statements other than statements of historical fact in this presentation are forward-looking statements and involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These forward-looking statements are based on management's current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates, but involve a number of unknown risks and uncertainties. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. Investors are urged to consider these factors carefully in evaluating the forwardlooking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. 2
COMPANY OVERVIEW CIFS provides clients with creative financial services, FinTech products and industry solutions leveraging big data and AI, aiming to help clients meet their needs for: Commercial payments and financing Data to control operation risks and seek new business opportunities Intelligent financial products and services to monitor investment portfolio Nasdaq (Aug 2017) Offices Geographic Footprint TRADITIONAL BUSINESS: A range of commercial and corporate financial advisory services: commercial payment advisory, intermediary bank loan advisory, and international corporate financing advisory services NEW BUSINESS LINES: Since late 2017, offers supply chain financing, big data analysis & AI reports, intelligent investment research services CLIENTS: Traditional business mostly focused on small-to-medium sized enterprises (SMEs) New business segments, in addition to SMEs also targets financial institutions and individuals CIFS Beijing (4 locations), Hong Kong and New York Beijing, Shanghai, Fujian, Guangdong, Jiangsu, Xinjiang and Hong Kong, etc. Employees 215 (as of Aug. 31, 2018) 3
INVESTMENT HIGHLIGHTS Serving a growing and underserved market o Number of China s SMEs reached 29 million in 2017; expected to grow to 43 million in 2020 (1) o Less than 5% of SMEs have access to capital from commercial banks (2) o Lack of experience in accessing appropriate financial products, leads to huge demand from SMEs History of profitable growth / high margin traditional business o For FY 2017: revenue of $25.1 million (+59%); net income of $24 million and EPS of $1.15 o For 6M 2018: revenue of $11.4 million (+43%); net income of $6.9 million and EPS of $0.31 o Strong growth to continue in the second half of 2018 2018 is a transitional year: CIFS evolved from a traditional financial services provider to a FinTech company o New business segments: Supply Chain Financing, Big Data Analysis & AI Reports, Intelligent Investment Research o Using big data, AI and blockchain technologies, CIFS researches and develops industry specific applications/ solutions for clients o FinTech products to gradually become the catalyst for future growth (expected to generate between 30%-35% of total revenue for FY 2018) o Well capitalized to fund initiatives: cash of $16.3 million as of 6/30/2018 Further expansion through organic growth, acquisitions and strategic partnerships o Expansion in new markets using resources from its existing client base and strong business networks o Expansions through additional acquisitions, investments and strategic partnerships 1) Statista.com - https://www.statista.com/statistics/783899/china-number-of-small-to-medium-size-enterprises/ 2) Ecovis - http://www.ecovis-beijing.com/en/blog-en/articles/887-smes-in-china 4
BUSINESS UNITS Traditional Business Commercial Payment Advisory Intermediary Bank Loan Advisory International Corporate Financing Advisory New Business Lines Supply Chain Financing Intelligent Investment Research Big Data Analysis & AI Reports $2.5 $5.7 FY 2017 Revenues in $ million $16.9 $0.1 Commercial Payment Advisory Int. Corporate Financing Advisory Intermediary Bank Loan Advisory Big Data Analysis & AI Reports 5
TRADITIONAL BUSINESS SEGMENTS
SERVICING A FAST GROWING MARKET Historically, over 30 years, SMEs have grown faster than large State Owned Enterprises (SOEs) (1) The growth of China s economy will continue to come from SMEs SMEs employ ~ 82% of total work force in China (2) SMEs are responsible for ~ 75% of the new jobs created every year (2) Number of SMEs in China (3) CIFS Geographic Footprint 1) Ecovis - http://www.ecovis-beijing.com/en/blog-en/articles/887-smes-in-china 2) China s NBS statistics report - http://www.stats.gov.cn/english/ 3) Statista.com - https://www.statista.com/statistics/783899/china-number-of-small-to-medium-size-enterprises/ 7
COMMERCIAL PAYMENT ADVISORY SERVICES SERVICES PROVIDED Assists clients to Select suitable wealth investment products / corporate agreement deposits Obtain acceptance bills / letters of guarantee / letters of credit from banks for commercial payments Lower financing costs, increase operating and financial efficiency Obtain investment income CLIENTS SERVED SMEs in China, various sectors REVENUE MODEL Service fee of 0.5% to 2% of the credit line amount Traditional Business ($ in million) ($ in million) Commercial Payment Advisory Intermediary Bank Loan Advisory $20.0 $15.0 $10.0 $5.0 $0.0 $1,500 $1,200 $900 $600 $300 $0 Revenue & Gross Profit $10.2 $4.9 19 $459 31 $1,022 International Corporate Financing Advisory $16.5 $11.8 $5.5 $5.1 $4.7 2016 2017 2018 1H Revenue 2H Revenue FY Gross Profit Amount of Financing Advised $463 $454 $403 2016 2017 2018 1H 2H FY Clients 35 30 25 20 15 10 5 0 8
INTERNATIONAL CORP. FINANCING ADVISORY SERVICES SERVICES PROVIDED Assist clients to. Obtain financing to support their overseas trading activities Obtain SBLC from domestic banks, transfer those to overseas banks, which will ultimately help clients offshore affiliates get financing Identify appropriate financing facilities, interest rates and exchange rates Prepare documents and applications, facilitate approval process CLIENTS SERVED China based enterprises seeking to finance their overseas purchasing/trading or investments through their offshore affiliates SMEs in China, various sectors REVENUE MODEL Service fee of 0.2% to 0.4% of the amount financed Traditional Business ($ in million) ($ in million) Commercial Payment Advisory Intermediary Bank Loan Advisory $3.0 $2.0 $1.0 $0.0 $800 $600 $400 $200 $0 $1.2 $0.8 $0.5 $0.8 International Corporate Financing Advisory Revenue & Gross Profit $2.4 $1.7 $1.2 2016 2017 2018 1H Revenue 2H Revenue FY Gross Profit Amount of Financing Advised 4 5 $450 $200 $130 $200 $300 2016 2017 2018 1H 2H FY Clients 5 4 3 2 1 0 9
INTERMEDIARY BANK LOAN ADVISORY SERVICES SERVICES PROVIDED Assist clients to Obtain loan financing from PRC banks Identify suitable loan financing packages from different banks Negotiate terms with banks, prepare applications CLIENTS SERVED SMEs in China, various sectors Traditional Business ($ in million) Commercial Payment Advisory Intermediary Bank Loan Advisory $6.0 $4.0 $2.0 $0.0 Revenue & Gross Profit $4.0 $3.2 $0.9 $5.6 $3.6 $2.1 International Corporate Financing Advisory $5.4 2016 2017 2018 1H Revenue 2H Revenue FY Gross Profit REVENUE MODEL Service fee of 1% to 3% of the amount financed ($ in million) $400 $200 $0 Amount of Financing Advised 6 $164 $55 11 $193 $110 $288 2016 2017 2018 1H 2H Clients 12 8 4 0 10
NEW BUSINESS LINES & OTHER GROWTH OPPORTUNITIES
SUPPLY CHAIN FINANCING SERVICES PROVIDED Short term supply chain financing solutions designed to finance clients purchasing payments, assist them lower financing costs and improve operational efficiency Main focus: healthcare/pharmaceutical segment Operated by: Fu Hui (Shenzhen) Commercial Factoring Co., Ltd. and Fu Hui (Xiamen) Commercial Factoring Co., Ltd., wholly owned subsidiaries of CIFS CLIENTS SERVED SMEs in China Targeting: 1) pharma/healthcare instruments suppliers to Grade A hospitals with Class II or above rankings, 2) suppliers for large pharma/healthcare instruments manufacturers, 3) hospitals that holds accounts receivables from State Administration of Medical Insurance. REVENUE MODEL Finances up to 90% of contracted receivables Revenue: 12-24% of the financed amount (including service fee and interest) New Business Lines Supply Chain Financing Big Data Analysis & AI Reports Intelligent Investment Research Recent Developments / Contracts / Agreements 1. October 2017: Launched its supply chain financing solutions and value-added services business, with an initial focus on supply chains for the healthcare sector. 2. May 2018: RMB 100 million (~$15.7 million) revolving factoring credit line to Sino Pharma Business Factoring Co, a leading factoring services providers serving the healthcare industry and a subsidiary of China National Pharmaceutical Group Corporation. 3. September 2018: RMB 100 million (~$15 million) revolving factoring credit line to CNBM Technology Corporation Ltd. 4. Factoring is expected to be a significant contributor to the Company s 2018 financial performance, and will account for at least 25% of total revenue. 12
BIG DATA ANALYSIS & AI REPORTS SERVICES PROVIDED Develops big data and AI technology to provide clients with industry specific applications and analytics Product: AnyInfo A broad range of public data for over 30 million enterprises Gathers, analyzes, categorizes, and gives users the ability to view and download integrated / standardized (financial and operational) profiles of these enterprises. Products under development: Customized AI reports Blockchain services Operated by: Beijing Anytrust Science & Technology Co., a wholly owned subsidiary of CIFS CLIENTS SERVED Enterprises, government agencies, research institutions, institutional investors and individuals who need information about their buyers/ suppliers, investors, business partners, target subjects etc. REVENUE MODEL Annual fee for standardized application Separate fees for customized application and data services. New Business Lines Supply Chain Financing Big Data Analysis & AI Reports Intelligent Investment Research Recent Developments / Contracts / Agreements 1. November 2017: Acquired Beijing Anytrust Science & Technology Co. for a total cash consideration of RMB12 million (approx. $1.8 million). 2. January 2018: Launched beta version of AnyInfo. 3. June 2018: Launched standardized edition of AnyInfo for general Windows, IOS and Android users at www.anyinfo.cn 4. September 2018: Launched enterprise edition of AnyInfo to facilitate enterprises sales, procurement & risk control, management process. Users can also sign up for intelligence notifications. 13
INTELLIGENT INVESTMENT RESEARCH SERVICES PROVIDED Develops intelligent financial products and services Uses big data, cloud computing, artificial intelligence, blockchain, machine learning, natural language processing etc., to develop its intelligent investment research platform Covers fixed income, equity, funds, assets allocation and macroeconomics, to monitor their financial performance, assess potential risks, facilitate investment decisions Product and services: Intelligent Research Platform ( IRP ) Research Report Customized data and services Operated by: Intruth (Beijing) Information & Consulting Co. Ltd., a wholly owned subsidiary of CIFS CLIENTS SERVED Financial institutions such as banks, insurance and asset management firms, investment funds/fof, and brokerage firms in China REVENUE MODEL Annual service fees for standardized applications Separate fees for customized use of applications New Business Lines Supply Chain Financing Big Data Analysis & AI Reports Intelligent Investment Research Recent Developments / Contracts / Agreements 1. Launched in April 2018 2. Several contracts signed, including: Golden Credit Rating International Co. Ltd., to help build up a credit rating system by using AI technology help Golden Credit to make its rating process much more standardized, neutral and trackable ICBC Credit Suisse Asset Management Co., Ltd. for intelligent research platform on fixed income and investment research services 3. IRP s beta version is presently offered as a trial to certain target clients 14
GROWTH STRATEGY Organic growth of legacy / higher margin financial advisory services Developing potential client base and screening target clients leveraging CIFS big data analysis technology and business network integrated by AI technology Using big data analysis to establish e-processes and operating systems aiming to improve quality control and risk management Expanding its geographical coverage through innovative product offerings Focus on its FinTech Initiative Development of its big data platform by offering data access, analytics, artificial intelligence, machine learning, and intelligent investment research to clients such as SMEs, state-owned enterprises, financial institutions and individuals. Continued investments in key employee recruitment Strategic partnerships, acquisitions or investments in targeted business Expand service portfolio by establishing new entities or acquiring entities Establishing new entities or acquiring entities in order to obtain additional financial service licenses, such as microcredit, credit reporting, financial leasing and pawn mortgage 15
FINANCIAL HIGHLIGHTS
HISTORY OF PROFITABLE GROWTH $28.0 $24.0 $20.0 $16.0 $12.0 $8.0 $4.0 $0.0 $8.9 Revenue ($ in million) $17.2 $6.9 $8.0 H1 $11.4 2016 2017 2018 H2 $28.0 $24.0 $20.0 $16.0 $12.0 $8.0 $4.0 $0.0 $8.7 Gross Profit ($ in million) $16.6 $7.5 $7.8 0 $11.0 2016 2017 2018 H1 H2 $30.0 Net Income ($ in million) H1 H2 $1.50 EPS H1 H2 $24.0 $18.0 $12.0 $6.0 $0.0 $15.8 $8.2 $5.7 $8.2 $6.9 2016 2017 2018 $1.00 $0.50 $0.00 $0.74 $0.41 $0.28 $0.41 $0.31 2016 2017 2018 17
FINANCIAL STATEMENTS (AUDITED) Year Ended December 31, 2017 Year Ended December 31, 2016 Year Ended December 31, 2015 Revenue - Third parties $ 25,116,139 $ 15,821,980 $ 7,360,581 - Related parties - - 421,105 Total revenue 25,116,139 15,821,980 7,781,686 Cost of revenues 729,752 380,072 235,152 Gross profit 24,386,387 15,441,908 7,546,534 Operating expenses Selling and marketing expenses 371,383 245,246 151,489 General and administrative expenses 3,169,855 1,348,862 1,573,262 Research & Development Expense 92,683 - - Donation expenses 148,108 301,101 Total Operating expenses 3,782,029 1,895,209 1,724,751 Income from operations 20,604,358 13,546,699 5,821,783 Other income Interest income on bank deposit 13,600 1,273 292 Gain on disposal of a non-operating department - - 454,836 Other expenses (7,058 (517) (741,112 Interest income from loans to third parties 4,070,600 2,794,134 1,946,974 Total other income, net 4,077,142 2,794,890 1,660,990 Income before income tax expenses 24,681,499 16,341,589 7,482,773 Income tax expenses 633,315 2,452,822 1,870,748 Net Income $ 24,048,184 $ 13,888,767 $ 5,612,025 Other comprehensive loss Foreign currency translation gain/(loss) 2,382,488 (1,468,548) (1,645,416 Comprehensive Income $ 26,430,672 $ 12,420,219 $ 3,966,609 Weighted average number of shares, basic and diluted 20,880,706 20,000,000 20,000,000 Basic and diluted earnings per share $ 1.152 $ 0.694 $ 0.281 18
FINANCIAL STATEMENTS (UNAUDITED) Six Months Ended June 30, 2018 Six Months Ended June 30, 2017 Six Months Ended June 30, 2016 Revenue 11,419,246 7,973,214 6,907,622 Cost of revenues 378,876 182,514 176,321 Gross profit 11,040,370 7,790,700 6,731,301 Operating expenses Selling and marketing expenses 694,292 26,295 19,132 General and administrative expenses 5,464,631 611,860 512,049 Research & Development Expense 1,573,074 - - Donation expenses - - - Total Operating expenses 7,731,997 638,155 531,181 Income from operations 3,308,373 7,152,545 6,200,120 Other income Interest income on bank deposit 13,533 4,618 1,947 Other expenses (28,827) (26,399) (7,428) Interest income from loans to third parties 3,284,745 1,455,692 1,394,078 Total other income, net 3,269,451 1,433,911 1,388,597 Income before income tax expenses 6,577,824 8,586,456 7,588,717 Income tax (benefit)/ expenses (272,316) 347,302 1,895,559 Net Income $ 6,850,140 $ 8,239,154 $ 5,693,158 Other comprehensive loss Foreign currency translation gain/(loss) (934,801) 728,988 (402,257) Comprehensive Income $ 5,915,339 $ 8,968,142 $ 5,290,901 Weighted average number of shares, basic and diluted 22,114,188 20,000,000 20,000,000 Basic and diluted earnings per share $ 0.31 $ 0.41 $ 0.28 19
CONSOLIDATED BALANCE SHEET As of June 30, As of December 31, As of December 31 2018 (Unaudited) 2017 (Audited) 2016(Audited) ASSETS Current assets Cash $ 16,300,063 $ 27,165,262 $ 1,880,425 Accounts receivable 10,609,417 6,290,000 8,088,511 Receivable under Factoring 2,189,946 - - Other receivables 1,411,615 532,028 94,474 Loans to third parties 43,761,056 41,690,640 19,237,422 Prepayments 1,623,962 306,473 - Other current asset 153,647 - - Deferred offering cost - - 312,202 Total Current Assets 76,049,706 75,984,403 29,613,034 Non-current assets Property and Equipment, net 439,710 222,142 28,777 Intangible assets, net 1,339,116 1,428,566 2,772 Long-term office rental deposit 1,360,243 678,419 208,695 Long-term prepayment 12,357 3,807 - Goodwill 742,976 752,345 - Deferred Tax Assets 383,644 133,729 - Total Assets 80,327,752 $ 79,203,411 $ 29,853,278 20
CONSOLIDATED BALANCE SHEET (CONT.) As of June 30, As of December 31, As of December 31, 2018 (Unaudited) 2017 (Audited) 2016 (Audited) LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities Accrued payroll $ 1,107,339 $ 1,265,308 $ 490,875 Accounts payable 19,441 71,136 - Advance from customers 270,855 22,733 - Other payables and accruals 503,461 671,194 53,827 Due to a related party 163,614 163,659 163,361 Taxes payable 1,031,707 5,680,094 3,755,872 Total Current Liabilities 3,096,417 7,874,124 4,463,935 Deferred tax liabilities 200,221 213,511 - Total Liabilities 3,296,638 8,087,635 4,463,935 Shareholders equity Common Stock ($0.001 par value, unlimited shares authorized, 22,114,188 and 20,000,000 share issued and outstanding at 22,114 22,114 20,000 December 31, 2017 and December 31, 2016, respectively) Additional paid in capital 28,441,045 28,441,045 9,147,398 Statutory reserve 1,828,601 1,828,601 1,657,084 Retained earnings 48,406,265 41,556,125 17,679,458 Accumulated other comprehensive loss (1,666,911) (732,109) (3,114,597) Total Shareholders Equity 77,031,114 71,115,776 25,389,343 Total Liabilities and Shareholders Equity $ 80,327,752 $ 79,203,411 $ 29,853,278 21
MANAGEMENT TEAM
EXPERIENCED MANAGEMENT TEAM Jianxin Lin CEO Jinchi Xu Senior VP Lu Sun CFO Zhiqiang Yang VP, CEO of Anytrust Co-Founder of CIFS Founder of Sheng Qi Investment Co. & Color Light Effect Director: China Youth Entrepreneurs Association & The Fujian Chamber of Commerce in Germany MBA in Business Management from Business School Netherlands Co-Founder of CIFS Deputy General Manager at Hongkong Fucheng International Investment Co. Ltd Bachelor Degree in Iconography from Fujian Medical University 10 years of experience in overseas IPOs: familiar with IPO regulations, operating and financial requirements Secretary of BoD; accounting Manager Shineco, Inc. Master degree in Finance from University of International Business and Economics ~2-decades of experience in the development and management of informatization, big data and internet industry Database Specialist at Yongyou Network Co.; CTO & VP at Sinotrust & Experian BSc from University of Science and Technology Beijing Bing Li VP Samanda Shu VP Aurora Zhao VP Yuqing Wang VP, CEO of Intruth In charge of CIFS brand In charge of IR, PR, investment & In charge of administration, COO ~11 years of experience in promotion and strategic M&A of Anytrust investment research and fund risk positioning ~2-decades of experience in ~2-decades of experience in control Experienced in corporate investment banking; specialized in internal management, rich Worked for Yinhua fund, ICBC management, corporate cross-border M&A, PE investment, practical experience in enterprise Credit Suisse Fund, Industrial & strategic governance and brand overseas IPOs and corporate operation, risk and HR strategy Commercial Bank of China management financial advises etc. management Master in Finance from Renmin Bachelor of Law from Capital MBA from Birmingham University In charge of HR management in University (China) Normal University (UK); MA of finance from Renmin China Everbright; CHO of WPP University (China) ; BEc of China, and Administrative VP of a Economics from JiangXi University listed on-line education company; of Finance and Economics (China) Bachelor of Law from Shandong University 23
BOARD OF DIRECTORS Jianxin Lin Chairman of the Board Co-Founder of CIFS Founder of Sheng Qi Investment Co. & Color Light Effect Director: China Youth Entrepreneurs Association & The Fujian Chamber of Commerce in Germany MBA in Business Management from Business School Netherlands Jinchi Xu Executive Director Co-Founder of CIFS Deputy General Manager at Hongkong Fucheng International Investment Co. Ltd Bachelor Degree in Iconography from Fujian Medical University Buting Yang Independent Director Director of China Film Association president of China Film Group Corp; director of Zhejiang Talent Television & Film Co., Beijing Galloping Horse Media Co., Ltd; Chairman of China Film Promotion Int. Corp. and president of China Film Distribution & Screening Association. Bachelor degree in Geology from Jilin University. Sheve Li Tay Independent Director Over 17 years of experience in accounting and auditing Senior Manager in Audit Assurance at Ernst & Young (HongKong) for several public companies that are listed on NASDAQ and NYSE BA in Accounting and Finance from the University of Strathclyde, United Kingdom; Masters degree in Applied Finance from University of Western Sydney. Hong Huang Independent Director Attorney at Beijing Zhanda Law Firm; Partner at Dentons Beijing Bachelor of Law from East China University Master Degree of Law from University of Trier, Germany 24
INVESTMENT SUMMARY Established business platform High margin, cash generating traditional business segments Well capitalized to fund additional significant growth opportunities FinTech segment to become the catalyst of longer-term growth 25
CONTACT US Samanda Shu, Vice President Email: samanda.shu@cifsp.com Office: +86 186 1200 1720 WeChat: Samanda_Shu Web: http://www.cifsp.com/ BEIJING OFFICE: #1510, World Financial Center No. 1, East Third Ring Road Chaoyang District, Beijing 100020 Investor Relations Counsel Lena Cati, Vice President Email: lcati@equityny.com Office: 212 836-9611 26
INVESTOR PRESENTATION September 2018