10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2018

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period __________ to __________

Commission File Number: 000-54207

ChineseInvestors.com, Inc.

(Exact name of registrant as specified in its charter)

Indiana	35-2089868
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification Number)

227 W Valley Blvd. STE 208A San Gabriel, CA 91776

Wei Wang, Chief Executive Officer (800)958-8561

Copies to: Michael E. Shaff, Esq., Irvine Venture Law Firm, LLP

19900 MacArthur Boulevard, Suite 530, Irvine, CA 92612 Telephone (949) 660-7700

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of November 30, 2018 there were outstanding 39,039,497 shares of the issuer’s common stock, par value $0.001 per share and 445,000 shares of the issuer’s Series 2012 convertible preferred stock, par value $0.001 per share and 356,000 shares of the issuer’s Series A-2014 convertible preferred stock, par value $0.001 per share and 493,000 shares of the issuer’s Series C-2016 convertible preferred stock, par value $0.001 per share and 6,757,050 shares of the Series D-2017 convertible preferred stock, par value $0.001 per share.

CHINESEINVESTORS.COM, INC. AND SUBSIDIARIES

FORM 10-Q for the Quarter Ended November 30, 2018

INDEX

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements		3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		25
Item 4.	Controls and Procedures		25
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings		26
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds		26
Item 3.	Defaults Upon Senior Securities		26
Item 4.	Mine Safety Disclosures		26
Item 5.	Other Information		26
Item 6.	Exhibits		26
Signatures			27

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

CHINESEINVESTORS.COM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

Expressed in U.S. Dollars

	November 30,			May 31,
	2018			2018
Assets
Current assets
Cash and cash equivalents	$	1,933,886		$	1,390,258
Accounts receivable, net		23,409			9,815
Marketable equity securities		3,201,191			1,230,754
Inventories		100,035			130,679
Due from related party		168,793			87,379
Other current assets		686,108			331,628
Total current assets		6,113,422			3,180,513
Non-current assets
Long-term investments		175,000			250,000
Property and equipment, net		147,990			65,250
Website development, net		158,851			104,278
Other assets		50,230			76,271
Total non-current assets		532,071			495,799
Total assets	$	6,645,493		$	3,676,312
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	274,141		$	359,597
Short-term notes		3,161,800			1,058,084
Deferred revenue, current		660,185			787,557
Other current liabilities		525,945			430,538
Total current liabilities		4,622,071			2,635,776
Non-current liabilities
Long-term deferred revenue		152,491			114,875
Total Non-current Liabilities		152,491			114,875
Total liabilities		4,774,562			2,750,651
Commitments and Contingencies (Note 11)
Shareholders’ equity
Preferred stock, series 2012, $0.001 par value 20,000,000 authorized, 445,000 and 445,000 were issued and outstanding at November 30, 2018 and May 31, 2018, respectively		445			445
Preferred stock, series A-2014, $0.001 par value 20,000,000 authorized, 356,000 and 606,000 were issued and outstanding at November 30, 2018 and May 31, 2018, respectively		356			606
Preferred stock, series C-2016, $0.001 par value 20,000,000 authorized, 493,000 and 622,958 were issued and outstanding at November 30, 2018 and May 31, 2018, respectively		493			623
Preferred stock, series D-2017, $0.001 par value 20,000,000 authorized, 6,757,050 and 6,643,050 were issued and outstanding at November 30, 2018 and May 31, 2018, respectively		6,757			6,643
Common stock $0.001 par value 80,000,000 authorized 39,039,497 and 29,520,560 were issued and outstanding November 30, 2018 and May 31, 2018, respectively		39,040			29,522
Additional paid-in capital		42,071,868			36,651,070
Accumulated deficit		(40,245,175	)		(35,268,062	)
Accumulated other comprehensive income (loss)		(2,853	)		(495,186	)
Total Shareholders' equity		1,870,931			925,661
Total liabilities and shareholders’ equity	$	6,645,493		$	3,676,312

See accompanying notes to the financial statements

3

CHINESEINVESTORS.COM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) 

For the Three and Six Months Ended November 30, 2018 and 2017

Expressed in U.S. Dollars

	Three Months Ended November 30,						Six Months Ended November 30,
	2018			2017			2018			2017
Operating revenues
Investor relations service	$	127,340		$	246,667		$	398,588		$	505,033
Subscription		224,587			179,333			450,899			315,596
Sales of products		290,857			39,603			432,621			57,568
Other		5,481			–			78,517			4,754
Total revenue		648,265			465,603			1,360,625			882,951
Cost of revenue
Products		126,084			15,050			198,829			19,951
Services		461,132			385,588			852,949			658,219
		587,216			400,638			1,051,778			678,170
Gross profit (loss)		61,049			64,965			308,847			204,781
Operating Expenses
General and administrative expense		2,689,224			1,887,872			4,578,465			3,109,803
Advertising expense		361,843			303,977			679,134			529,219
Total operating expenses		3,051,067			2,191,849			5,257,599			3,639,022
Net loss from operations		(2,990,018	)		(2,126,884	)		(4,948,752	)		(3,434,241	)
Other income/(expense)
Other income		6,272			1,715			19,169			8,875
Interest income (expense)		63,922			(7,693	)		(48,911	)		(14,534	)
Loss from security investments		–			–			(268,600	)		–
Unrealized (loss) gain on equity securities		1,101,113			–			1,976,237			–
Unrealized (loss) gain on cryptocurrencies		(30,189	)		–			(38,334	)		–
Total other income(expense)		1,141,118			(5,978	)		1,639,561			(5,659	)
Loss before income taxes		(1,848,900	)		(2,132,862	)		(3,309,191	)		(3,439,900	)
Income tax expense		–			–			–			–
Net loss	$	(1,848,900	)	$	(2,132,862	)	$	(3,309,191	)	$	(3,439,900	)
Deemed dividend for the beneficial conversion of convertible preferred stock		(797,700	)		(1,803,720	)		(967,100	)		(3,048,342	)
Preferred stock dividends		(105,474	)		(81,283	)		(214,034	)		(155,539	)
Net loss attributable to common shareholders		(2,752,074	)		(4,017,865	)		(4,490,325	)		(6,643,781	)
Other comprehensive income(loss)
Unrealized investment (loss)		–			(3,185	)		–			(92,267	)
Foreign currency translation loss		21,778			–			5,546			–
Comprehensive loss attributable to common shareholders	$	(2,730,296	)	$	(4,021,050	)	$	(4,484,779	)	$	(6,736,048	)
Loss per share-basic and diluted	$	(0.08	)	$	(0.18	)	$	(0.13	)	$	(0.38	)
Weighted average number of shares outstanding - basic & diluted		36,396,456			21,931,055			33,413,481			17,577,939

See accompanying notes to the financial statements

4

CHINESEINVESTORS.COM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statement of Cash Flows

For the Six Months Ended November 30, 2018 and 2017

Expressed in U.S. Dollars

	2018			2017
Cash flows from operating activities
Net loss	$	(3,309,191	)	$	(3,439,900	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
Non-cash revenue received as available for sale securities		(278,088	)		(455,033	)
Investment loss on marketable securities		268,600			–
Unrealized gain on equity securities		(1,976,237	)		–
Unrealized loss on cryptocurrencies		38,334			–
Stock compensation expenses		224,433			724,220
Depreciation and amortization		32,632			12,947
Changes in operating assets and liabilities
Accounts receivable		(4,906	)		(38,589	)
Inventory		24,720			(72,999	)
Other current assets		(396,076	)		(33,101	)
Accounts payable		(84,191	)		(80,233	)
Accrued interest		(7,798	)		(35,185	)
Deferred revenue		(74,331	)		209,188
Customer deposit		3,840			–
Other accrued liabilities		6,140			65,797
Net cash (used in) operating activities		(5,532,119	)		(3,142,888	)
Cash flows from investing activities
Purchase of equipment		(161,774	)		(26,576	)
Sale of investment		75,000			–
Net cash used in investing activities		(86,774	)		(26,576	)
Cash flows from financing activities
Proceeds of issuance of common stock		610,450			–
Proceeds of issuance of preferred stock, series D-2017		3,548,000			2,750,000
Payments made for preferred stock dividends		(179,375	)		(150,831	)
Investor deposit		–			(210,100	)
Repayments of debts		(945,140	)		(410,000	)
Proceeds of issuance of new debts		3,111,800			965,140
Net cash provided by financing activities		6,145,735			2,944,209
Effects of currency translation on cash and cash equivalents		16,786			1,887
Net increase in cash and cash equivalents		543,628			(223,368	)
Cash and cash equivalents - beginning of period		1,390,258			1,770,729
Cash and cash equivalents - end of period	$	1,933,886		$	1,547,361
Supplemental cash flow disclosures
Cash paid for interest	$	59,708		$	42,217
Cash paid for income taxes	$	–		$	9,878

Supplemental disclosure of non-cash activity

During the three and six months ended November 30, 2018, the company received one stock valued (FMV) at $262,800 and $262,800 for investor relations (“IR”) services which will be performed over one year.

During the three and six months ended November 30, 2017, the company received various stocks valued (FMV) at $422,200 and $1,006,575, respectively, for providing one to twelve months of investor relations (“IR”) services.

See accompanying notes to the financial statements

5

Notes to the Unaudited Condensed Consolidated Financial Statements

1. Organization and Nature of Operations:

Business Description

Chineseinvestors.com, Inc. (the “Company”) was incorporated on January 6, 1997 in the State of Indiana under the corporate name “MAS Acquisition LII Corp.” Prior to June 12, 2000, the Company was a ‘blank check’ company seeking a business combination with an unidentified business.

On June 12, 2000, the Company acquired 8,200,000 shares of common stock, representing 100% of the outstanding shares of Chineseinvestors.com, Inc., which was incorporated in the State of California on June 15, 1999. In connection with this acquisition, Aaron Tsai, our former sole officer and director, was replaced by Chineseinvestors.com, Inc.’s officers and directors.

The stockholders of Chineseinvestors.com, Inc. were issued 8,200,000 shares of our common stock, or approximately 96% of our total outstanding common shares. After giving effect to the acquisition, Chineseinvestors.com, Inc. became a wholly owned subsidiary and we changed our name to Chineseinvestors.com, Inc. Immediately prior to the acquisition of Chineseinvestors.com, Inc., MAS Capital Inc. returned 8,200,000 shares of common stock for cancellation without any consideration.

Chineseinvestors.com, Inc. was established as an ‘in language’ (Chinese) financial information web portal, offering various levels of information relative to the US Equity and Financial Markets, as well as certain other specific financial markets (including China A Shares, FOREX, etc.). Over the years, various informational components have been added and the general content improved as the Company continues to derive a material portion of its income from various subscription services it offers to its customers. We offer subscription services to provide education about investing and news and analysis on the stock market as well as news about particular stocks that we are following. Nevertheless, we do not provide our subscribers with individualized investment advice and never have investment discretion over any subscribers’ or site visitors’ funds. As described below, providing investor relations services for other companies, especially those requiring Mandarin language support, now account for our most significant revenue sources.

The registrant’s investor relations agreements typically obligate the registrant to provide translations of the client’s releases into English from Mandarin or from English into Mandarin, to feature advertisements about the client on the www.chinesefn.com website, and otherwise to assist the client in achieving its goals, which may be increasing the client’s stock price, increasing awareness of the clients and its stock or helping the client to move from pink sheets to an established public securities market. Not all of those goals are shared by every client. Promotions geared to the Chinese American market is the underlying common thread, generally in the form of advertisements on the chinesefn.com website. The registrant provides other services intended to increase awareness and knowledge of its clients’ businesses and stock within the Chinese American community.

The registrant generally receives a fee consisting of cash and the client’s securities for its services. The securities clearly offer success incentives and align the interests of the registrant and the client.

Chineseinvestors.com, Inc. has been in continuous operation since July 1999 using the web domains (uniform resource locators) of www.chineseinvestors.com and www.chinesefn.com.

We established a Representative Office business presence in leased office space in Shanghai, China in late 2000 from which we fulfill most of our support types of service and also have a leased office presence in San Gabriel, California, New York City, NY and Flushing, NY and most recently in Richmond, British Columbia.

In 2010, the Company filed a Form 10 registration statement for us to become a public reporting company under the Exchange Act of 1934 in order to facilitate the Company’s ability to raise capital on the public market.

6

The Company selected Glendale Securities who has offices in Sherman Oaks, California as the market maker for our common stock, the price of which is quoted on the OTC:QB marketplace.

As of November 30, 2018, the Company employed twenty-eight (28) people in its Shanghai Office in a variety of administrative and operational capacities. All are employed full time. The Company also has approximately forty-one (41) full-time employees and approximately eight (8) independent contractors in the US.

XiBiDi (“CBD”) Biotechnology Co., Ltd.

In March 2017, the Company established and registered XiBiDi Biotechnology Co. Ltd. (“CBD Biotech”) in Pudong Free-Trade Area in Shanghai, PRC as a wholly owned foreign enterprise (“WOFE”). CBD Biotech’s primary engages at online and retail sales of hemp-based health products and other complimentary products in PRC. The initial focus of CBD Biotech was the launch of CBD Magic Hemp Series, a hemp-infused cosmetics line.

CBD Biotech obtained Wholesale Alcohol License in November 2017 from 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 its plans to spin off CBD Biotech in February 2018, which was later postponed to after May 31, 2018. Recently in December 2018, the Company announced that it has retained Boustead Securities, LLC as underwriter for the planned Initial Public Offering (“IPO”) of CBD Biotech, concurrently with a listing on a national securities exchange.

ChineseHempOil.com, Inc.

In April 2017, the Company established ChineseHempOil.com, Inc. dba “Chinese Wellness Center” a Delaware corporation, as a subsidiary of the Company. ChineseHempoil.com, Inc. responsible for the development and operation of the online and retail sales of hemp-based products in the United States. Chinese Wellness Center is the retail store located in the predominantly Chinese community of San Gabriel, California, located next to the Company’s headquarters. In addition, ChineseInvestors.com, Inc. announced the release of its first hemp oil product line, OptHemp, a premium, private label oil, made from full-spectrum, Colorado grown, GMO-Free, hemp, manufactured using a CO2 Extraction process. The Company announced its plans to spin off ChineseHempOil.com, Inc. in February 2018, which was later postponed until after May 31, 2018. Recently in December 2018, the Company announced that it has retained Boustead Securities, LLC as underwriter for the planned Initial Public Offering (“IPO”) of CBD Biotech, concurrently with a listing on a national securities exchange. ChineseHempOil.com, Inc. will no longer be part of this planned spin off.

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 hemp-infused consumer products similar to those marketed by the Company’s other subsidiaries via online and other distribution channels.

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.

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, with Warren (Wei) Wang, the Company’s CEO, as its sole managing member. Mr. Wang has transferred all of his interest in Bitcoin Trading Academy, LLC to the Company for $1 consideration. Bitcoin Trading Academy LLC began offering in person and on-line courses on cryptocurrency investment and trading in July 2018.

7

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.

2. Liquidity and Capital Resources:

Cash Flows – During the six months ended November 30, 2018, the Company primarily generated cash and cash equivalents, from issuances of its common and preferred stock to fund its operations. The Company received total proceeds of $10,341,050 of proceeds from the issuance of Series “D-2017” convertible preferred stock by November 30, 2018, of which $6,793,050 was received for the year ended May 31, 2018 and $3,548,000 was received for the six months ended November 30, 2018.

Cash flows used in operations for the six months ended November 30, 2018 and 2017 were $5,532,119 and $3,142,888, respectively. The increased cash used in operations was due to increased general and administrative expenses used in operations.

Capital Resources – As of November 30, 2018, the Company had cash and cash equivalents of $1,933,886 as compared to cash and cash equivalents of $1,390,258 as of May 31, 2018.

Since inception in 1997, the Company has primarily relied upon proceeds from private placements of its equity securities to fund its operations. The Company anticipates continuing to rely on sales of our securities in order to continue to fund business operations. Issuances of additional shares will result in dilution to its existing stockholders. There is no assurance that the Company will be able to complete any additional sales of our equity securities or that it be able arrange for other financing to fund our planned business activities.

Going Concern – The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. There is potential that the Company will not continue as a going concern. The recoverability of recorded property and equipment, intangible assets, and other asset amounts shown in the accompanying financial statements is dependent upon the Company’s ability to continue as a going concern and to achieve a level of profitability. The Company intends on financing its future activities and its working capital needs largely from the sale of equity securities until such time that funds provided by operations are sufficient to fund working capital requirements. However, there can be no assurance that the Company will be successful in its efforts. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

3. Critical Accounting Policies and Estimates:

Basis of Presentation – The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete audited consolidated financial statement  s. The accompanying unaudited financial information should be read in conjunction with the audited consolidated financial statements, including the notes thereto, as of and for the year ended May 31, 2018, included in our 2018 Annual Report on Form 10-K filed with the SEC. The information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. The results of operations for the six months ended November 30, 2018 are not necessarily indicative of the results for the year ending May 31, 2019 or for any future period.

The consolidated financial statements include the accounts of Chineseinvestors.com Inc. and its subsidiaries (collectively the “Company”). The Company’s subsidiaries include 100% of ChineseHempOil.com Inc., XiBiDi Biotechnology Co, Ltd., Hemp Logic, Inc., CIIX Online, Inc., NewCoins168.com Digital Media Technology Ltd. (Shanghai). Bitcoin Trading Academy LLC and CIIX Online Ltd.

Intercompany accounts and transactions have been eliminated upon consolidation.

8

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The financial statements include some amounts that are based on management's best estimates and judgments. The most significant estimates relate to depreciation and useful lives, and contingencies. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant.

Recently Adopted Accounting Pronouncements:

Revenue from Contracts with Customers

On June 1, 2018, the Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2014-09, with regard to FASB ASC 606 Revenue from Contracts with Customers, and have revised certain related accounting policies in connection with revenue recognition and deferred costs, as follows:

The Company’s revenue was mainly derived from four sources:

1. Investor-relations service income

Investor-relations service income is earned by the Company in return for delivering current, publicly available information related to our customers.

a. Identify contracts with customers. The Company signs service agreements with customer. The Company always discloses the nature of the contract including that contact price.

b. Identify performance obligations in the contract. Many of our investor-relations service contracts contain multiple performance obligations. For these contracts, the performance obligations include presentation of customers’ information on Chinesefn.com, translation of all materials to be released, and monthly presentation in the newsletter the Company sends to its registered members. We account for individual performance obligations separately if they are distinct. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.

c. Determine the transaction price. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. Judgment is required to determine the standalone selling price for each distinct performance obligation. We typically have more than one standalone selling price for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, we determine the standalone selling price based on our overall pricing objectives, taking into consideration contract term, industry relevance and other factors. Fees are fixed based on rates specified in the service provided agreements, which do not provide for any refunds or adjustments. In determining the transaction price, the effects of the time value of money is not accounted as the normal term of our service provider agreements is one year or less.

d. The service contract amount is valued based upon the fair market value of the client’s stock closing price at the contract date multiplied by the numbers of shares earned when the service is paid by customers’ common stocks other than cash. For the performance obligations, such as the availability of our customer’s information in our website, the revenue is recognized over the term of the services period while the services are being provided.

e. For the performance obligations will be surrendered at a point of time, the revenue is recognized after the service is provided. In addition, the Company is applying the definition of readily determinable fair value presented at Accounting Standards Codification 820-10-15-5 in assessing the amount to recognize in each accounting period.

9

There is no significant adjustment from the implementation of ASU 2014-09.

2. Subscription income is recognized over the term of the subscription membership. Subscription fees for our registered members are charged on a per-month basis. Our customers do not have rights to the underlying software code of our solutions, and accordingly, we recognize subscription revenue over time on a straight-line basis over the contract term beginning on the date that our service is made available to the customer. Subscription terms are generally between one to three years but can occasionally be as short as one month or as long as 60 months. Long term deferred revenues are recognized from subscriptions over twelve months.

3. The Company recognizes revenue of product sales of hemp-related products and liquor distribution upon transfer of title to the customer. Customer purchase orders and/or contracts are generally used to determine the existence of contract. Shipping documents and terms and the completion of any customer acceptance requirements, when applicable, are used to verify product delivery, or to satisfy the performance obligation. The Company determines and allocates the transaction price based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company has no product returns or sales discounts and allowances because goods delivered and accepted by customers are normally not returnable.

4. Other revenues include various fee income earned through banner advertisement, webpage hosting and maintenance, on-line promotion and translation services, advertising and promotion fees in the Company’s website, sponsorship fees from investment seminars, road shows, forums at the Company’s website, and referral fee from cryptocurrency transactions. The sales prices of these services are fixed and determinable at the time the contracts are signed and there are no provisions for refunds contained in the contracts. These revenues are recognized when all significant performance obligations have been satisfied and collection of the resulting receivable is reasonably assured.

The Company recognizes revenue pursuant to revenue recognition principles presented in SAB Topic 13 prior to May 31, 2018. First, persuasive evidence of an arrangement. Second, deliver has occurred, or services have been rendered, thirdly the seller’s price to the buyer is fixed or determinable and lastly collectability is reasonably assured. We adopted ASU 2014-09, or ASC 606, on June 1, 2018 and it did not have a material impact on our financial position or results of operations. The guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Financial Instruments – Recognition and Measurement

Recognition and measurement of financial assets and financial liabilities- In January 2016, the FASB issued ASU 2016-01 amending various aspects of the recognition, measurement, presentation, and disclosure requirements for financial instruments. The changes mainly relate to the requirement to measure equity investments in unconsolidated subsidiaries, other than those accounted for under the equity method of accounting, at fair value with changes in fair value recognized in earnings. However, this ASU permits entities to elect to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This ASU is effective for the Company as of June 1, 2018.

As a result of the adoption of this ASU, the Company reclassified $486,789 in the net unrealized losses, net of tax, on equity securities previously classified as available-for-sale, from accumulated other comprehensive loss to accumulated deficit. In addition, changes in value due to the revaluation of equity securities are recorded in unrealized gain on equity securities, net in the consolidated statement of comprehensive (loss) and income.

The equity investment without readily determinable fair value held by the Company is the long-term investment at Breakwater MB, LLC. The Company elects to measure the equity investment using measurement alternative and records the investment at cost minus impairment, if any, plus or minus changes resulting from qualifying observable prices changes. In addition, the existing impairment model has been replaced with a new one-step qualitative impairment model. No initial adoption adjustment was recorded for these instruments since the guidance is required to be applied prospectively for securities measured using the measurement alternative. There is no adjustment to the cost of the equity investment in Breakwater MB, LLC for the six months ended November 30, 2018 as no impairment indicator observed by management.

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Cash and Cash Equivalents – The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents. There were no cash equivalents as of November 30, 2018 and May 31, 2018.

Accounts Receivable, Net – The Company extends unsecured credit to its customers in the ordinary course of business. Accounts receivable are reported at their outstanding unpaid principal balances net of allowances for uncollectible accounts. The Company provides for allowances for uncollectible receivables based on management’s estimate of uncollectible amounts considering age, collection history, and any other factors considered appropriate. The Company writes off accounts receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible.

As of November 30, 2018 and May 31, 2018, the Company determined that an allowance was not needed.

Concentration of Credit Risk – The Company maintains cash at banks in the United States and People’s Republic of China (“PRC”). Should any bank holding cash become insolvent, or if the Company is otherwise unable to withdraw funds, the Company would lose the cash deposited with that bank; however, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts. In the PRC, a depositor has up to RMB 500,000 insured by the People’s Bank of China Financial Stability Bureau (“FSD”), whereas the standard insurance amount is $250,000 per depositor in a bank insured by the Federal Deposit Insurance Corporation (“FDIC”) in the United States. As of November 30, 2018 and May 31, 2018, the Company has $1,390,899 and $780,726 cash balances uninsured, respectively.

Major customers and vendors- For the six-month period ended November 30, 2018, two customers accounted for 30% of total service revenue of the Company with no accounts receivable outstanding as of November 30, 2018. Two customers accounted for 52% of the total service revenue of the Company for the six months ended November 30, 2017 without accounts receivable outstanding as of November 30, 2017.

There was no vendor concentration for the Company as of and for the six months period ended November 30, 2018 and November 30, 2017.

The Company has operations in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy.

Marketable equity securities – Marketable equity securities is comprised of publicly traded stocks received in return for providing investor relations services to the Company’s customers. The service terms range from one month to a year. The Company considers the securities to be liquid and convertible to cash in under a year. The Company has the ability and intent to liquidate any security that the Company holds to fund operations over the next twelve months, if necessary, and as such has classified all of its marketable securities as short-term.

In accordance with the provisions of topic 820-10-15-5, which states that an equity security has a readily determinable fair value if it meets the condition of having a “sales prices or bid-and-asked quotations which are currently available on a securities exchange registered with the U.S. Securities and Exchange Commission (SEC) or in the over-the-counter market, provided that those prices or quotations for the over-the-counter market are publicly reported by the National Association of Securities Dealers Automated Quotation systems or by the OTC Markets Group Ins. Restricted stock meets that definition if the restriction terminates within one year.” These shares were classified as marketable securities in accordance with ASC 320-10-25-1 as the Companies intention is to sell them in the near-term (less than one year). In compliance with ASC 320-10-35-1, equity securities that have readily determinable fair values that are classified as marketable securities shall be measured subsequently at fair value in the statement of financial position. The Company has adopted ASU 2016-01 from June 1, 2018, and as a result, unrealized holding gains and losses for marketable equity securities (including those classified as current assets) shall be reported as unrealized gain (loss) in the consolidated statement of operation and comprehensive income (loss) under loss before income taxes.

As these shares will be earned over the term of the contracts, the Company will defer the recognition of the earnings of the revenue over the period the services are performed. The value recorded will be determined by multiplying the average of the closing price on the last day of the month for the period being reported based on closing market price per share.

Inventories – Inventories include Hemp-related finished products and liquor, stated at the lower of cost or net realizable value using the weighted average cost method. Management reviews inventories for obsolescence and cost in excess of net realizable value at least annually and records a reserve against the inventory and additional cost of goods sold when the carrying value exceeds net realizable value. There was no reserve needed for inventory obsolescence and slow-moving as of November 30, 2018 and May 31, 2018.

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Equity Method Investment – Under equity method, the Company records its proportionate share of the investee’s profit or loss based on the specified profit and loss percentage. Distributions received from equity method investees are accounted for as returns on investment and classified as cash inflows from operating activities, unless the Company’s cumulative distributions received less distributions received in prior periods that were determined to be returns of investment exceed cumulative equity in earnings recognized by the Company. When such an excess occurs, the current year distribution up to this excess would be considered a return of investment and classified as cash inflows from investing activities.

In September 2017, the Company entered a letter of intent to invest $60,000 (44.45% of ownership) to jointly operate Beijing New Sino-North America Financial Information Co., Ltd and its subsidiaries (“Sino-U.S. Finance”) with three Chinese individuals to operate a mobile application under the name of “Sino-U.S. Finance” which will provide a platform of information and analysis for Chinese-speaking investors in the PRC and US.

The Company started to account the investment under equity method in the year ended May 31, 2018 and the proportional operation losses picked up for the year ended of May 31, 2018 was $93,562, higher than the $60,000 investment amount. According to ASC 323-10-35-19, if the carrying amount of the investment is reduced to zero, and there are no other investments in the investee, the equity method normally is discounted, and investee losses are no longer reported on the income statement. Thus, the Company recorded $60,000 investment loss for Sino-U.S. Finance for the year ended May 31, 2018 and with $0 balance under long-term investment as of November 30, 2018 and May 31, 2018.

Property and Equipment, net – Property and equipment are stated at cost. Depreciation and amortization of property and equipment is provided using the straight-line method over estimated useful lives ranging from three to five years. Leasehold improvements are amortized over the life of the lease.

Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Gains and losses from retirement or replacement are included in operations.

Depreciation on equipment is provided on a straight-line basis over their expected useful lives at the following annual rates.

Computer equipment	3 years
Furniture & fixtures	3 years
Leasehold improvements	Term of the lease

Website Development, Net – The Company accounts for its development costs in accordance with ASC 350-50, “Accounting for Website Development Costs.” The Company’s website comprises multiple features and offerings that are currently developed with ongoing refinements. In connection with the development of its products, the Company has incurred external costs for hardware, software, and consulting services, and internal costs for payroll and related expenses of its technology employees directly involved in the development. All hardware costs are capitalized as fixed assets. Purchased software costs are capitalized in accordance with ASC 350-50-25 related to accounting for the costs of computer software developed or obtained for internal use. All other costs are reviewed to determine whether they should be capitalized or expensed.

Impairment of Long-life Assets – In accordance with ASC 360, the Company reviews its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There was no impairment for the periods ended November 30, 2018 and May 31, 2018.

Deferred Revenue – The Company receives payment for subscription revenues in advance before the subscription service is granted. The Company recognizes the revenue as being earned as the services are delivered. The amount paid for which services have not yet been delivered related to subscription revenues is recorded as a liability in the current or long-term portion of the liabilities section of the balance sheet.

The Company also receives shares of stocks and warrants as means of payments for the investor relationship (“IR”) service provided. The fair market value of the stocks and warrants on the contract date are amortized and recognized as IR revenue over the contract terms. When these services are prepaid by customers, the amount of the prepayment is initially recorded as an asset with an offsetting unearned revenue liability.

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As of November 30, 2018 and May 31, 2018, the deferred revenue compromised as following:

	November 30, 2018			May 31, 2018
Deferred subscription	$	560,226		$	587,194
Unearned IR revenue		252,450			315,238
Total		812,676			902,432
Current		(660,185	)		(787,557	)
Noncurrent	$	152,491		$	114,875

Fair Value of Financial Instruments – Fair value accounting establishes a framework for measuring fair value and expands disclosure about fair value measurements. Fair value, which is defined as an exit price or the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

· Level one – Quoted market prices in active markets for identical assets or liabilities;

· Level two – Inputs other than level one inputs that are either directly or indirectly observable; and

· Level three – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

The carrying amount of cash and cash equivalents, marketable equity securities, accounts receivable, due from related party, other current assets, accounts payable, and short-term notes approximates fair value because of the short-term nature of these instruments and the fair values close to its carrying value for the non-current deferred revenue.

The following table summarizes the fair value and carrying value of the Company’s financial instruments as of November 30, 2018:

	Fair Value						Carrying
	Level 1		Level 2		Level 3		Value
Assets -
Cash and cash equivalent	$	1,933,886	$	–	$	–	$	1,933,886
Marketable equity securities		3,201,191		–		–		3,201,191
Cryptocurrency		22,774		–		–		22,774
Liability -
Short-term notes	$	–	$	3,161,800	$	–	$	2,848,806

The following table summarizes the fair value and carrying value of the Company’s financial instruments as of May 31, 2018:

	Fair Value						Carrying
	Level 1		Level 2		Level 3		Value
Assets -
Cash and cash equivalent	$	1,390,258	$	–	$	–	$	1,390,258
Marketable equity securities		1,230,754		–		–		1,230,754
Cryptocurrency		31,479		–		–		31,479
Liability -
Short-term notes	$	–	$	998,192	$	–	$	1,058,084

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Short-term notes – The fair value of such notes payable had been determined based on 10% and 6% annual interest rates and the proximity to the issuance date as of November 30, 2018 and May 31, 2018, respectively.

The Company uses Level 1 of the fair value hierarchy to measure the fair value of digital currencies and revalues its digital currencies at every reporting period and recognizes gains or losses in the consolidated statements of operations that are attributable to the change in the fair value of the cryptocurrencies.

Other Revenue – Other revenue is comprised of revenue related to Forex service fees, referral commissions and other miscellaneous service revenues generated which is recognized over the period the term of the service term. For the three-month periods ended November 30, 2018 and November 30, 2017. Details as below:

	November 30, 2018		November 30, 2017
Misc. service revenue	$	5,481	$	–
Bitcoin trading class revenue		–		–
Total	$	5,481	$	–

For the six-month periods ended November 30, 2018 and November 30, 2017. Details as below:

	November 30, 2018		November 30, 2017
Misc. service revenue	$	45,619	$	4,754
Bitcoin trading class revenue		32,898		–
Total	$	78,517	$	4,754

Costs of Services/Products Sold – Costs of services provided are the total direct cost of the Company’s operations in Shanghai and the US. Cost of products sold includes cost of inventory sold during the period, net of discounts and inventory allowances, freight and shipping costs, warranty and rework costs.

Income Taxes – Income taxes are accounted for under the asset and liability method of ASC 740. Deferred tax assets and liabilities are recognized for net operating loss and other credit carry forwards and the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the tax effect of transactions are expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the year that includes the enactment date.

Deferred tax assets are reduced by a full valuation allowance since it is more likely than not that the amount will not be realized. Deferred tax assets and liabilities are classified as current or noncurrent based on the classification of the underlying asset or liability giving rise to the temporary difference or the expected date of utilization of the carry forwards.

On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) passed that significantly reforms the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The TCJA, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, effective as of January 1, 2018; limitation of the tax deduction for interest expense; limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such tax losses may be carried forward indefinitely); and repeal of the federal corporate Alternative Minimum Tax (“AMT”).

In connection with the analysis of the impact of the TCJA, the Company determined that it does not have any impact on the financial statements.

The Company considers the earnings of the non-U.S. subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs.

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Advertising Costs – Advertising costs are expensed when incurred.

Earnings (Loss) Per Share – Earnings (loss) per share is computed using the weighted average number of common shares outstanding during the period. The Company has adopted ASC 260 “Earnings Per Share”. Fully diluted loss per share are not calculated and presented on the financial statements as the calculation would be antidilutive.

Stock Based Compensation – The Company accounts for share-based payments pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards using the Black-Scholes option pricing model.

Stock compensation expense for stock options is recognized over the vesting period of the award or expensed immediately under ASC 718 when stock or options are awarded for previous or current service without further recourse.

We periodically issue shares of our common stock to non-employees in non-capital raising transactions for fees and services. We account for stock issued to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees, whereas the value of the stock compensation is based upon the measurement date as determined at either (a) the date at which a performance commitment is reached, or (b) at the date at which the necessary performance to earn the equity instruments is complete.

Preferred Stock Beneficial Convertible Feature – Upon issuance of preferred stock convertible in shares of common stock at a price lower than the fair market value of common stock on the date of issuance, in accordance with the guidance provided in ASC 505-10-50, we have recorded the intrinsic value of this beneficial conversion feature (“BCF”).

In according to ASC 470-20-30-6 Intrinsic value shall be calculated at the commitment date as the differences between the conversion price and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible. In according to ASC 470-20-30-8, if the intrinsic value of the beneficial conversion feature is greater than the proceeds allocated to the convertible instrument, the amount of the discount assigned to the beneficial conversion feature shall be limited to the amount of the proceeds allocated to the convertible instrument. Since all the preferred stocks are issued on different date, we calculate the intrinsic value for each individual preferred stock issuance based on stock issuance date. If the intrinsic value exceeds actual proceeds we received, actual proceeds will be BCF, otherwise, the intrinsic value is the BCF.

Foreign Currency – The Company has operations in the PRC as a representative office in the PRC, the functional and reporting currency is in U.S. dollars.

The functional currency of the two subsidiaries operated in PRC, CBD Biotech and Newcoins168, is the Chinese Renminbi (“RMB”). The functional currency of the subsidiary operated in Canada, CIIX Online Ltd. is the Canadian Dollar (“CAD”). Assets and liabilities are translated at the exchange rates as of the balance sheet date. Shareholders’ contribution is translated at historical rate. Income and expenditures are translated at the average exchange rate of the period. The RMB is not freely convertible into foreign currency and all foreign currency exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US dollar at the rates used in translation. 

The exchange rates used were as follows:

November 30, 2018
Spot rate	RMB 6.82 to US $1.00
Average rate for the three months ended November 30, 2018	RMB 6.91 to US $1.00
Average rate for the six months ended November 30, 2018	RMB 6.79 to US $1.00
Spot rate	CAD 1.33 to US $1.00
Average rate for the six months ended November 30, 2018	CAD 1.32 to US $1.00
May 31, 2018
Spot rate	RMB 6.40 to US $1.00
Average rate for the three months ended November 30, 2017	RMB 6.62 to US $1.00
Average rate for the six months ended November 30, 2017	RMB 6.67 to US $1.00

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New Accounting Pronouncements – Upon issuance of final pronouncements, we review the new accounting literature to determine its relevance, if any, to our business. The Company is in the progress of evaluating the following accounting updates: 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either operating or financing, with such classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact ASU 2016-02 will have on its consolidated financial statements and associated disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, for public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact will have on its consolidated financial statements and associated disclosures.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, Effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company is currently evaluating the impact will have on its consolidated financial statements and associated disclosures.

In August 2018, the FASB issued ASU 2018-13, air Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. Effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this Update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this Update and delay adoption of the additional disclosures until their effective date. The Company is currently evaluating the impact will have on its consolidated financial statements and associated disclosures.

Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the unaudited condensed consolidated financial position, statements of operations and cash flows.

4. Stockholders’ Equity:

As of November 30, 2018 and May 31, 2018, the Company was authorized to issue 80,000,000 shares of common stock, $0.001 par value per share. In addition, 20,000,000 shares of $0.001 par value preferred stock were authorized. All common stock shares have full dividend rights. However, it is not anticipated that the Company will be declaring distributions in the foreseeable future.

Series 2012 Convertible Preferred Stock

During the third quarter of fiscal year 2013, effective February 29, 2012, the Company issued 2,003,776 shares of preferred stock as Series 2012 convertible preferred stock for total proceeds of $2,003,776. The terms of the preferred stock allow the holder to convert each share of preferred stock into 1.25 shares of common stock at any time after nine months from the date of issuance. The holders of shares of preferred stock were entitled to receive a dividend of $0.06 per share per annum for the first two years from the issuance of the instruments. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary.

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During the six months period ended November 30, 2018, the shareholders of preferred stock series-2012 converted 0 shares of preferred stock. During the six months period ended November 30, 2017, the shareholders of preferred stock Series 2012 converted 150,000 shares of preferred stock for 187,500 shares of common stock shares at a conversion rate of 1 share of Series 2012 preferred stock for 1.25 shares of common stock.

Series A-2014 Convertible Preferred Stock

In the years ended May 31, 2016 and 2015 the Company issued 720,000 and 1,885,000 shares of preferred stock as Series A-2014 convertible preferred stock for total proceeds of $2,605,000. The terms of the preferred stock allow the holder to convert each share of preferred stock into 2.5 shares of common stock at any time after nine months from the date of issuance. The holders of shares of preferred stock shall have the right to one vote for each share of common stock into which such preferred stock could convert. The holders of shares of preferred stock are entitled to receive a dividend of $0.06 per share per annum for the first two years from the issuance of the instruments, which has been recorded as an accrued dividend on the liabilities section of the balance sheet. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary.

During the six months period ended November 30, 2018, the shareholders of preferred stock series A-2014 converted 250,000 shares of preferred stock for 625,000 of common stock shares at a conversion rate of 1 share of preferred stock series A-2014 for 2.50 shares of common stock. During the six months period ended November 30, 2017 the shareholders of preferred stock Series A-2014 converted 994,000 shares of preferred stock for 2,485,000 of common stock shares at a conversion rate of 1 share of Series A-2014 preferred stock for 2.50 shares of common stock.

Series C-2016 Convertible Preferred Stock

In December 2016, the Company issued 5,000,043 shares of its Series C-2016 Preferred Stock at a price of $1.00 per share for total proceeds of $5,000,043. The terms of the Series C-2016 preferred stock allow the holder to convert each share of preferred stock into 3 shares of common stock at any time after nine months from the date of issuance. The holders of shares of preferred stock are entitled to receive a dividend of $0.06 per share per annum for the first year from the issuance of the instruments, which has been recorded as an accrued dividend on the liabilities section of the balance sheet. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary.

We calculated the BCF of the Series C-2016 Preferred Stock as $4,930,143. The BCF would be recorded as paid-in capital with an offsetting debit to convertible preferred stock. The discount attributable to the BCF, however, is amortized as a deemed dividend over the period from issuance to the date the convertible preferred stock becomes convertible. In our case, preferred stock-series C-2016 is convertible from the date of issuance. We then amortize the BCF over six months period and recorded $1,244,622 and $3,685,520 as deemed dividend that increased accumulated deficit for the periods ended May 31, 2018 and 2017, respectively.

During the six months period ended November 30, 2018, the shareholders of preferred stock series C-2016 converted 129,958 shares of preferred stock for 389,874 of common stock shares at a conversion rate of 1 share of preferred stock series C-2016 for 3.00 shares of common stock. During the six months period ended November 30, 2017, the shareholders of preferred stock C-2016 converted 2,908,085 shares of preferred stock for 8,724,255 of common stock shares at a conversion rate of 1 Series C-2016 share of preferred stock for 3.00 shares of common stock. 

Series D-2017 Convertible Preferred Stock

For the year ended May 31, 2018, the Company issued 6,793,050 shares of its Series D-2017 Convertible Preferred Stock at a price of $1.00 per share for total proceeds of $6,793,050. The terms of the preferred stock allow the holder to convert each share of preferred stock into 2 shares of common stock at any time from the date of issuance. The holders of shares of preferred stock are entitled to receive a dividend of $0.06 per share per annum for the first two years from the issuance, which has been recorded as an accrued dividend on the liabilities section of the balance sheet. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary.

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We calculated the BCF of the preferred shares as $3,933,443. The BCF would be recorded as paid-in capital with an offsetting debit to convertible preferred stock. The discount attributable to the BCF, however, is amortized as a deemed dividend over the period from issuance to the date the convertible preferred stock becomes convertible. In our case, preferred stock-series D-2017 is convertible at any time from the date of issuance. We recorded $3,933,443 as deemed dividend that increases accumulated deficit as of May 31, 2018. During the year ended May 31, 2018, 150,000 shares of Series D-2017 Convertible Preferred Stock were converted into common stocks.

For the six months ended November 30, 2018, the Company issued shares of its Series D-2017 Preferred Stock at a price of $1.00 per share for total proceeds of $3,548,000. The terms of the Series D-2017 preferred stock allow the holder to convert each share of preferred stock into 2 shares of common stock at any time from the date of issuance. The holders of shares of preferred stock are entitled to receive a dividend of $0.06 per share per annum for the first two years from the issuance of the instruments, which has been recorded as an accrued dividend on the liabilities section of the balance sheet. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary.

We calculated the BCF of the preferred shares issued during the six-month ended November 30, 2018 as $967,100. The BCF would be recorded as paid-in capital with an offsetting debit to convertible preferred stock. The discount attributable to the BCF, however, is amortized as a deemed dividend over the period from issuance to the date the convertible preferred stock becomes convertible. In our case, preferred stock-series D-2017 is convertible at any time from the date of issuance. We recorded $967,100 as deemed dividend that increased accumulated deficit as of November 30, 2018.

During the six months period ended November 30, 2018, the shareholders of preferred stock series D-2017 converted 3,434,000 shares of preferred stock for 6,868,000 of common stock shares at a conversion rate of 1 share of preferred stock series D-2017 for 2 shares of common stock.

Common stock

In October 2018, the Company issued 1,109,818 shares of the Company’s common stock at $0.55 per share to accredited investors for total proceeds of $610,450.

Stock compensation and stock payable

On July 26, 2018, the Company entered into a Consulting Agreement with Regal Consulting, LLC (“Regal”). The agreement has a five-month term ending January 2, 2019, pursuant to which Regal will receive 20,000 shares of the Company’s common stock per month for the term of the Agreement for a total of 100,000 shares, in addition to other compensation. $53,600 share-based compensation expense has been recorded associated with the award for the six months ended November 30, 2018.

On August 9, 2018, the Company entered into a Services Agreement with IRTH Communications LLC (“IRTH”). The agreement has a one-year term, pursuant to which ITRH was to receive $100,000 worth of shares of the Company’s common stock in addition to other compensation. On August 22, 2018, the Company adopted a resolution authorizing the issuance of 226,245 shares of the Company’s common stock to IRTH for its professional services to be provided during the term of the agreement. $33,333 share-based compensation expense has been recorded associated with the award for the six months ended November 30, 2018.

On August 9, 2018, the Company entered into a Consulting Agreement with Axis Partners, Inc. (“Axis”). The agreement is for a six-month term, pursuant to which Axis is to receive 150,000 shares of the Company’s common stock for the term of the agreement. On August 22, 2018, the Company adopted a resolution authorizing the issuance of 150,000 shares of the Company’s common stock to Axis for its professional service to be provided during the term of the agreement. $100,500 share-based compensation expense has been recorded associated with the award for the six months ended November 30, 2018.

On August 24, 2018, the Board adopted a resolution ratifying the award to Melissa Armstrong of an additional 50,000 shares of common stock, for a total award of 100,000 shares, effective October 26, 2016. All services to be performed in conjunction with this award have been fully performed and the shares were fully vested as of the effective date of the award. $33,500 share-based compensation expense was recorded associated with the award for the six months ended November 30, 2018.

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On September 11, 2018, the Company issued stock certificates total 526,245 shares for the stock compensation granted to service providers in August 2018. There is no stock compensation payable as of November 30, 2018 and May 31, 2018.

5. Other Current Assets:

Other current assets consist of deposits in Chinese Renminbi on building space under an operating lease and are stated at the current exchange rate at period end. Security deposits of office rent in United States, purchase deposits to vendors for the Hemp oil purchase, prepaid expenses in both United States and Shanghai, details as below:

	November 30,		May 31,
	2018		2018
Prepaid expense	$	498,123	$	79,822
Purchase deposit		72,868		145,376
Cryptocurrency on hands		22,774		31,479
Other current assets		92,343		74,951
	$	686,108	$	331,628

6. Long-term investments

Long-term investments include: 1) investment at Breakwater MB, LLC accounted as equity investment without readily available fair value since the Company does not have the significant influence, and 2) investment at Sino-U.S. Finance accounted for equity method (see Note 3).

In March 2017, the Company made a $250,000 investment in Breakwater MB, LLC, a cannabis-focused investment and consulting company, formed by Paul Dickman, the CFO and board member of ChineseInvestors.com, Inc., as a means to invest capital in and provide consulting services to private, cannabis-focused companies as they transition into the public market. The invested capital will primarily be used to cover the costs of becoming a publicly traded company, a strategy the Company expects will provide significant investment appreciation and opportunity for liquidity. All opportunities will be evaluated by the investment committee comprised of ChineseInvestors.com, Inc.’s CEO Warren Wang, Medicine Man Technologies CEO Andy Williams, and Paul Dickman. Mr. Dickman is the managing member of Breakwater MB, LLC and Warren Wang serves as an advisor receiving no compensation for his services.

Breakwater MB, LLC completed its planned raise of $1,000,000 for 50% of Breakwater MB, LLC’s equity by December 2017. The Company’s equity position in Breakwater MB, LLC stands at 8.75% and 12.5% as of November 30, 2018 and May 31, 2018, respectively. ChineseInvestors.com, Inc.’s board reviewed and approved the investment with Mr. Dickman abstaining from voting. Mr. Dickman held 30% of the equity of Breakwater MB LLC as of May 31, 2018 after a $5,000 cash investment in equity in addition to the services that Mr. Dickman renders to Breakwater MB, LLC.

Subsequently in August 23, 2018, the Company entered into a Redemption Agreement and Mutual Release with Mr. Dickman to liquidate 40% of the Company’s investment in Breakwater MB, LLC. Mr. Dickman agreed to pay an aggregate purchase price of $100,000 ($75,000 at the closing and $25,000 no later than September 15, 2018) to redeem the portion of equity (the “Redemption Agreement”). The Redemption Agreement provides for a mutual release and waiver with regard to any claims the parties to the Redemption Agreement ever had, owned or held, or now have, own or hold, as against one another resulting from, arising out of or in any manner relating to or based on the Company’s investment in Breakwater MB LLC, the redemption, or otherwise relating to CIIX’s relationship with Breakwater MB LLC. As of November 30, 2018, the Company had received the $75,000 payment but not the $25,000 payment due September 15, 2018. The redemption agreement will be amended to reflect the payment by Breakwater MB, LLC in the amount of $75,000 only.  The Company’s equity position in Breakwater MB, LLC currently stands at 8.75% as of November 30, 2018.

7. Property and Equipment:

Property and equipment are recorded at cost, net of accumulated depreciation and are comprised of the following:

	November 30, 2018			May 31, 2018
Furniture & Fixtures	$	175,995		$	154,748
Leasehold Improvements		123,760			35,176
		299,755			189,924
Less: Accumulated Depreciation		(151,765	)		(124,674	)
	$	147,990		$	65,250

Depreciation expense for the six months ending November 30, 2018 and 2017 was $27,090 and $7,795, respectively.

19

8. Website development, net:

Website development is comprised of the following:

	November 30, 2018			May 31, 2018
Website development	$	280,714		$	220,598
Less: Accumulated Amortization		(121,863	)		(116,320	)
	$	158,851		$	104,278

Amortization is calculated over a straight-line basis using the economic life of the asset. Amortization expense for the six months ended November 30, 2018 and 2017 was $5,542 and $5,152 respectively.

9. Short-term notes:

On October 2017, the Company issued one-year promissory notes (the “2017 Notes”) totaling of $995,140 to various individuals. The interest rate for the 2017 Notes is 6% annum. Of the $995,140, as noted above, $116,669 was rolled over from the 2016 Notes with renegotiated terms. The 2017 Notes were to be secured by the stocks of the following companies held by the Company:

Company name	Shares Secured for Loan
Nemaura Medical, Inc. (NMRD)	100,000
Recon Technology LTD (RCON)	49,999
Solbright Group Inc. (SBRT)	195,122
Nengfa Weiye Energy (NFEC)	218,779
SGOCO Group LTD (SGOC)	29,412

As of November 30, 2018, the Company transferred NMRD shares held to the Collateral Agent. It was determined that with the exception of 2017 Notes secured by NMRD shares, the remaining 2017 Notes were not properly secured. The Company offered the lenders of the unsecured 2017 Notes the option to either rescind the notes or allow the notes to remain in place as unsecured notes in April 2018. $360,000 out of the total $620,000 unsecured 2017 Notes were rescinded.  The $995,140 in short term 2017 Notes were repaid, including all principal and interest pursuant to the note terms. As of November 30, 2018, the Company paid $945,140 short loan and interest.

Pursuant to the 2017 Notes, the Company/Borrower, at its sole discretion, could at any time during the term of the 2017 Notes, sell the above referenced stocks, or in the case of the 2017 Notes properly secured by shares in NMRD, instruct the Collateral Agent to sell the above reference stocks, at which time the principal and accrued interest under the 2017 Notes would be accelerated and would become due and owing, and in addition, an incentive would be due and owing in an amount equal to 20% of the appreciation, if any, of the pledged collateral/stocks sold. None of the respective stocks/pledged collateral was sold during the term of the 2017 Notes, and as noted above, the 2017 Notes were paid full according to their terms and the 2017 Notes were effectively cancelled; therefore, no incentives are due and owing to any of these Lenders. As of November 30, 2018, the Company paid $945,140 of the total $995,140 short term 2017 Notes, the remaining $50,000 short term 2017 Notes was repaid in December 2018.

On August 2018, the board of directors of the Company approved the Company to offer unsecured one-year term notes (the “2018 Notes-10%”) to individual investors for a maximum $3,000,000 with 10% annual interest rate. As of November 30, 2018, the Company has issued 2018 Notes-10% in the total amount of $3,050,000 from various individual lenders.

On October 2018, the board of directors of the Company approved the Company to offer unsecured one-year term notes (the “2018 Notes-8%”) to individual investors for a maximum $3,000,000 with 8% annual interest rate. As of November 30, 2018, the Company has issued 2018 Notes-8% in the total amount of $61,800 from various individual lenders.

20

As of November 30, 2018 and May 31, 2018, the short-term notes are compromised as follows:

	November 30, 2018		May 31, 2018
Short-term 2017 notes
Secured short term notes, due on October 2018, 6% annual interest rate	$	50,000	$	635,140
Debt incentive to the secured short-term notes above		–		41,539
Short term notes, due on April and May 2018, 6% annual interest rate		–		360,000
Debt incentive related to the short-term notes above		–		21,405
Total short-term 2017 notes	$	50,000	$	1,058,084
Short-term 2018 notes-annual interest rate 10%	$	3,050,000	$	–
Short-term 2018 notes-annual interest rate 8%	$	61,800		–
Total Short-term notes	$	3,161,800	$	1,058,084

10. Other Current Liabilities:

Other current liabilities compromise as following:

	November 30, 2018		May 31, 2018
Accrued dividends	$	213,877	$	179,218
Accrued interests and others		92,195		32,721
Accrued payroll and taxes		219,873		218,599
Total	$	525,945	$	430,538

Accrued dividends as of November 30, 2018 are comprised of dividends payable to the preferred stock holders, Series D-2017 in the amount of $213,877. Accrued dividends as of May 31, 2018 are comprised of dividends payable to the preferred stock holders, Series C-2016 and Series D-2017, in the amount of $14,981 and $164,237, respectively.

Accrued interest as of November 30, 2018 represents interest payable for the 2018 Notes and 2017 Notes. Accrued interest as of May 31, 2018 represents interest payable for the 2017 Notes.

11. Commitments and Contingencies:

Operating Leases

The Company currently maintains leased space in Shanghai, China (as described in the Financials) as well as an office presence in San Gabriel, California, New York City, NY, Flushing, NY and Richmond Canada. It also maintains a correspondence address in Arcadia, California on a month to month basis  .

On September 4, 2018, the Company entered into a lease agreement in New York at 40 Wall St., Room 2877, New York, NY 10005 as a support office. The lease term is 24 months and monthly rent at $7,500.

21

Future minimum lease commitments for office facilities as of November 30, 2018 are as follows:

For the fiscal years ending May 31,
2019 (6 months)	$	269,224
2020		360,966
2021		176,989
2022		–
	$	807,179

Litigation – The Company is involved in legal proceedings from time to time in the ordinary course of its business.

When entering the 2016 Note Agreements, the Company believed that the SINO contract would be executed, and SINO shares would be delivered upon signing the IR service contract. However, the service contract was not executed due to a disagreement among SINO’s management, and as a result, the Company has not obtained the SINO shares as of November 30, 2018. On January 9, 2018, the Company filed a lawsuit in the Los Angeles County Superior Court, Case No. EC067692 for breach of contract and common counts against SINO-GLOBAL SHIPPING AMERICA LTD. Currently the case is pending assignment of an arbitration date.

12. Related Party Transactions:

As of November 30, 2018, the Company advanced $168,793 to the Company's CEO, Warren Wang, to reimburse Mr. Wang for advances he made on the Company's behalf to cover then Company's daily operating expenses.  These expenses have not yet been reconciled, but reconciliation is in process and should be completed by the end of the Company's next reporting period.

The Company made a long-term investment of $250,000 to Breakwater MB LLC in March 2017 formed by the Company’s board member and CFO, Paul Dickman. In September 2018, Breakwater MB LLC returned $75,000 of investment to the Company. The Company’s equity position in Breakwater MB, LLC stands at 8.75% as of November 30, 2018. Refer to Note 6 for investment details.

Mrs. Lan Jiang is the spouse of the Company’s CEO, Mr. Warren Wang. During the three months ended November 30, 2018 and 2017, she received salary compensation of $45,000 and $89,000, respectively. During the six months ended November 30, 2018 and 2017, she received salary compensation of $90,000 and $128,000, respectively.

The Company purchased the shares of Medicine Man Technologies, Inc. (“MDCL”) in April 2014 using the equity method of accounting initially and accounted for the ownership as an investment available for sale as of May 31, 2015 as the Company no longer had “significant influence” over MDCL as a result of shares issuance. The Company liquidated 1,306,378 shares of MDCL for $1,996,939 cash during the year ended May 31, 2017. As of November 30, 2018 and May 31, 2018, the Company still held 41,238 shares of MDCL stock representing $63,816 and $76,496, respectively, of value based upon the closing market price of $1.55 and $1.86, respectively.

13. Subsequent event:

On October, the Company began offering on a best efforts basis (“Offering”), a maximum of $3,000,000 in original issue price (“Maximum Offering”) of its 8% one-year term notes (the “Notes”). As of December 28, 2018, the Company has received net proceeds for the Notes in the total amount of $1,099,800.

There is no other subsequent event after November 30, 2018 through the date of issuance of these unaudited financial statements.

22

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 continued 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 Biotech”) in Pudong Free-Trade Area in Shanghai, PRC as a WOFE. CBD Biotech primarily engages at online and retail sales of hemp-based health products and other complimentary products in PRC. The initial focus of CBD Biotech was the launch of CBD Magic Hemp Series.

CBD Biotech obtained Wholesale Alcohol License in November 2017 from 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 its plans to spin off CBD Biotech in February 2018, which was later postponed to after May 31, 2018. Recently in December 2018, the Company announced that it has retained Boustead Securities, LLC as underwriter for the planned Initial Public Offering (“IPO”) of CBD Biotech, concurrently with a listing on a national securities exchange.

ChineseHempOil.com, Inc.

In April 2017, the Company established ChineseHempOil.com, Inc. dba “Chinese Wellness Center” a Delaware corporation, as a subsidiary of the Company. ChineseHempoil.com, Inc. responsible for the development and operation of the online and retail sales of hemp-based health products in the United States. Chinese Wellness Center is the retail store located in the predominantly Chinese community of San Gabriel, California, located next to the Company’s headquarters. In addition, ChineseInvestors.com, Inc. announced the release of its first hemp oil product line, OptHemp, a premium, private label oil, made from full-spectrum, Colorado grown, GMO-Free, hemp, manufactured using a CO2 Extraction process. The Company announced its plans to spin off ChineseHempOil.com, Inc. in February 2018, which was later postponed until after May 31, 2018. Recently in December 2018, the Company announced that it has retained Boustead Securities, LLC as underwriter for the planned Initial Public Offering (“IPO”) of CBD Biotech, concurrently with a listing on a national securities exchange. ChineseHempOil.com, Inc. will no longer be part of this planned spin off.

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 hemp infused skin care products infused with hemp extract, via online and other distribution channels. The consumer product line may expand to other types of products as the Company sees fit in the future.

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.

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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, with Warren (Wei) Wang, the Company’s CEO, as its sole managing member. Mr. Wang has transferred all of his interest in Bitcoin Trading Academy, LLC to the Company for $1 consideration. Bitcoin Trading Academy LLC began offering in person and on-line courses on cryptocurrency investment and trading in July 2018.

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

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, 2018 compared to three and six months ended November 30, 2017

Quarterly Revenues and Expenses

Subscription Revenue: For the three months ended November 30, 2018 and 2017, revenues were $224,587 and $179,333, respectively. For the six months ended November 30, 2018 and 2017, subscription revenues were $450,899 and $315,596 respectively. Both increases  were due to the Company’s increased marketing expenses to attract more individual customers.

Investor Relations-Service Revenue: For the three months ended November 30, 2018 and 2017, revenues were $127,340 and $246,667 respectively. For the six months ended November 30, 2018 and 2017, revenues were $398,588 and $505,033 respectively. The decreases were due to less investor relation clients.

Other Revenue: For the three months ended November 30, 2018 and 2017, revenues were $5,481 and $0 respectively. The increase of $5,481 was due to the bitcoin trading class revenues of $5,481 generated. For the six months ended November 30, 2018 and 2017, other revenues were $78,517 and $4,754 respectively, for an increase of $73,763. This increase was due to offering bitcoin trading education programs and mining revenue generated from cryptocurrencies.

Sales of Products: For the three months ended November 30, 2018 and 2017, revenues were $290,857 and $39,603 respectively, for an increase of $251,254. For the six months ended November 30, 2018 and 2017, revenues were $432,621 and $57,568 respectively, for an increase of $375,053. Both increases were due to the increased sales of the Company’s hemp products and baijiu liquor products.

Cost of Revenue: Cost of services for the three months ended November 30, 2018 and 2017 were $461,132 and $385,588 respectively, for an increase of $75,544 over the same period in 2017. Cost of services for the six months ended November 30, 2018 and 2017 were $852,949 and $658,219 respectively, for an increase of $194,730 over the same period in 2017. Cost of products for the three months ended November 30, 2018 and 2017 were $126,084 and $15,050 respectively for an increase of $111,034. Cost of products for the six months ended November 30, 2018 and 2017 were $198,829 and $19,951 respectively for an increase of $178,878. This significant increase was due to the Company’s sale of its hemp and baijiu liquor products.

Gross profit (loss) and gross margin: The Company’s gross margin on service revenue decreased to negative 29% (gross loss $103,724 on $357,408 of revenue) in the three months ending November 30, 2018 from 9% (gross profit $40,412 on $426,000 of revenue) in the three months ended November 30, 2017. The Company’s gross margin on service revenue decreased to 8% ($75,055 on $928,004 of revenue) in the six months ending November 30, 2018 from 20% ($167,164 on $825,383 of revenue) in the six months ended November 30, 2017. The gross margin decrease for service revenue is due to increased personnel expenses related to the service revenue generated. The Company’s gross margin on product sales decreased to 57% ($164,773 on $290,857 of revenue) in the three months ending November 30, 2018 from 62% ($24,553 on $39,603 of revenue) in the three months ended November 30, 2017. The Company’s gross margin on product sales decreased to 54% ($233,792 on $432,621 of revenue) in the six months ending November 30, 2018 from 65% ($37,617 on $57,568 of revenue) in the six months ended November 30, 2017. The decrease in gross margin for product sales was due to the price reduction on hemp related products.

24

General & Administrative Expenses: For the three months ended November 30, 2018 and 2017, expenses were $2,689,224 and $1,887,872, respectively for an increase of $801,352 which was related to the addition of staff and independent contractors. For the six months ended November 30, 2018 and 2017, expenses were $4,578,465  and $3,109,803, respectively for an increase of $1,468,662.

Advertising Expenses: For the three months ended November 30, 2018 and 2017, expenses were $361,843 and $303,977 respectively. For the six months ended November 30, 2018 and 2017, expenses were $679,134 and $529,219 respectively. The increase is due to the Company’s increased advertising and news coverage in several different cities and in different languages.

Interest Income (expenses) : For the three months ended November 30, 2018 and 2017, interest income was $63,922 and interest expenses were $7,693 respectively. The interest income is due to the adjustment for previous accrued interest incentive for 2017 Notes, the 2017 Notes were paid full according to their terms and the 2017 Notes were effectively cancelled; therefore, no incentives are due and owing to any of these Lenders. For the six months ended November 30, 2018 and 2017, interest expenses were $48,911 and $14,534 respectively. The increase in interest expense is due to the Company having issued one-year notes to investors (refer to short-term notes for details).

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 Hemp related 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. The Company is currently engaged in a private placement of its Series D-2017 convertible preferred stock. The Company has received $10,341,050 from various investors. 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

The Company plans to continue to meet all of its obligations as well as conform to all of the requirements of remaining a fully reporting a public company while increasing its market presence as well as services offering spectrum.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The information required by this item is included in Part I Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and is incorporated herein by reference.

Item 4. Controls and Procedures

Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Interim Report on Form 10-Q, have concluded that, based on such evaluation, our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Refer to our annual report on Form 10-K for the year ended May 31, 2018 PART II Item 9A Controls and Procedures.

25

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is not a party to any legal proceeding that it believes will have a material adverse effect upon its business or financial position.

Item 1A. Risk Factors.

Not required for smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

See Section 4. Stockholder’s Equity, page 18.

Item 3. Defaults Upon Senior Securities.

There have been no defaults upon senior securities.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit 31.1	Certification of the Chief Executive Officer pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2	Certification of Chief Financial Officer pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1	Certification pursuant to Section 906 Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).

101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.DEF	XBRL Definition Linkbase Document
101.LAB	XBRL Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document

26

Signatures

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

	ChineseInvestors.com, Inc.
	(Registrant)
Date: January 14, 2019	By:	/s/ Paul Dickman
		Paul Dickman
		Chief Financial Officer
Date: January 14, 2019	By:	/s/ Wei Wang
		Wei Wang
		Chief Executive Officer

27

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Wei Wang,  certify that:

1. I have reviewed this quarterly report on Form 10-Q of ChineseInvestors.com, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) -15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 14, 2019

/s/ Wei Wang      

Wei Wang
Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Paul Dickman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ChineseInvestors.com, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 14, 2019

/s/ Paul Dickman     

Pau Dickman

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned hereby certifies, in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his or her capacity as an officer of ChineseInvestors.com (the "Company"), that, to his or her knowledge, the Quarterly Report of the Company on Form 10-Q for the period ended November 30, 2018 fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date: January 14, 2019

/s/  Wei Wang      

Wei Wang

Chief Executive Officer

Date: January 14, 2019

/s/ Paul Dickman      

Paul Dickman

Chief Financial Officer

XML

Document and Entity Information	6 Months Ended
	Nov. 30, 2018 shares
Document And Entity Information
Entity Registrant Name	Chineseinvestors.com, Inc.
Entity Central Index Key	0001459482
Document Type	10-Q
Document Period End Date	Nov. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--05-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding	39,039,497
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2019

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Nov. 30, 2018	May 31, 2018
Current assets
Cash and cash equivalents	$ 1,933,886	$ 1,390,258
Accounts receivable, net	23,409	9,815
Marketable equity securities	3,201,191	1,230,754
Inventory	100,035	130,679
Due from related party	168,793	87,379
Other current assets	686,108	331,628
Total current assets	6,113,422	3,180,513
Long-term investments	175,000	250,000
Property and equipment, net	147,990	65,250
Website development, net	158,851	104,278
Other assets	50,230	76,271
Total non-current assets	532,071	495,799
Total assets	6,645,493	3,676,312
Current liabilities
Accounts payable	274,141	359,597
Short-term notes	3,161,800	1,058,084
Deferred revenue, current	660,185	787,557
Other current liabilities	525,945	430,538
Total current liabilities	4,622,071	2,635,776
Non-current liabilities
Long-term deferred revenue	152,491	114,875
Total Non-current Liabilities	152,491	114,875
Total liabilities	4,774,562	2,750,651
Commitments and Contingencies (Note 11)
Shareholders' equity
Common stock $0.001 par value 80,000,000 authorized 39,039,497 and 29,520,560 were issued and outstanding November 30, 2018 and May 31, 2018, respectively	39,040	29,522
Additional paid-in capital	42,071,868	36,651,070
Accumulated deficit	(40,245,175)	(35,268,062)
Accumulated other comprehensive income (loss)	(2,853)	(495,186)
Total Shareholders' equity	1,870,931	925,661
Total liabilities and shareholders' equity	6,645,493	3,676,312
Preferred Stock Series 2012 [Member]
Shareholders' equity
Preferred stock	445	445
Preferred Stock Series A-2014 [Member]
Shareholders' equity
Preferred stock	356	606
Preferred Stock Series C-2016 [Member]
Shareholders' equity
Preferred stock	493	623
Preferred Stock Series D-2017 [Member]
Shareholders' equity
Preferred stock	$ 6,757	$ 6,643

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Nov. 30, 2018	May 31, 2018
Stockholders' equity [note 3]
Common stock par value	$ 0.001	$ 0.001
Common stock authorized	80,000,000	80,000,000
Common stock issued	39,039,497	29,520,560
Common stock outstanding	39,039,497	29,520,560
Preferred Stock Series 2012 [Member]
Stockholders' equity [note 3]
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock authorized	20,000,000	20,000,000
Preferred stock issued	445,000	445,000
Preferred stock outstanding	445,000	445,000
Preferred Stock Series A-2014 [Member]
Stockholders' equity [note 3]
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock authorized	20,000,000	20,000,000
Preferred stock issued	356,000	606,000
Preferred stock outstanding	356,000	606,000
Preferred Stock Series C-2016 [Member]
Stockholders' equity [note 3]
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock authorized	20,000,000	20,000,000
Preferred stock issued	493,000	622,958
Preferred stock outstanding	493,000	622,958
Preferred Stock Series D-2017 [Member]
Stockholders' equity [note 3]
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock authorized	20,000,000	20,000,000
Preferred stock issued	6,757,050	6,643,050
Preferred stock outstanding	6,757,050	6,643,050

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Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Nov. 30, 2018	Nov. 30, 2017	Nov. 30, 2018	Nov. 30, 2017
Operating revenues
Total revenues	$ 648,265	$ 465,603	$ 648,265	$ 465,603
Cost of revenue
Total cost of revenues	587,216	400,638	1,051,778	678,170
Gross profit (loss)	61,049	64,965	308,847	204,781
Operating expenses
General and administrative expenses	2,689,224	1,887,872	4,578,465	3,109,803
Advertising expense	361,843	303,977	679,134	529,219
Total operating expenses	3,051,067	2,191,849	5,257,599	3,639,022
Net loss from operations	(2,990,018)	(2,126,884)	(4,948,752)	(3,434,241)
Other income (expense)
Other income	6,272	1,715	19,169	8,875
Interest income (expense)	63,922	(7,693)	(48,911)	(14,534)
Loss from security investments	0	0	(268,600)	0
Unrealized (loss) gain on equity securities	1,101,113	0	1,976,237	0
Unrealized (loss) gain on cryptocurrencies	(30,189)	0	(38,334)	0
Total other income (expense)	1,141,118	(5,978)	1,639,561	(5,659)
Loss before income taxes	(1,848,900)	(2,132,862)	(3,309,191)	(3,439,900)
Income tax expense	0	0	0	0
Net loss	(1,848,900)	(2,132,862)	(3,309,191)	(3,439,900)
Deemed dividend for beneficial conversion of convertible preferred stock	(797,700)	(1,803,720)	(967,100)	(3,048,342)
Preferred stock dividends	(105,474)	(81,283)	(214,034)	(155,539)
Net loss attributable to common shareholders	(2,752,074)	(4,017,865)	(4,490,325)	(6,643,781)
Other comprehensive income (loss)
Unrealized investment (loss)	0	(3,185)	0	(92,267)
Foreign currency translation loss	21,778	0	5,546	0
Comprehensive loss attributable to common shareholders	$ (2,730,296)	$ (4,021,050)	$ (4,484,779)	$ (6,736,048)
Loss per share - basic and diluted	$ (0.08)	$ (0.18)	$ (0.13)	$ (0.38)
Weighted average number of shares outstanding - basic and diluted	36,396,456	21,931,055	33,413,481	17,577,939
Services [Member]
Operating revenues
Total revenues	$ 127,340	$ 246,667	$ 398,588	$ 505,033
Cost of revenue
Total cost of revenues	561,132	385,588	852,949	658,219
Subscription [Member]
Operating revenues
Total revenues	224,587	179,333	450,899	315,596
Products [Member]
Operating revenues
Total revenues	290,857	39,603	432,621	57,568
Cost of revenue
Total cost of revenues	126,084	15,050	198,829	19,951
Other Revenues [Member]
Operating revenues
Total revenues	$ 5,481	$ 0	$ 78,517	$ 4,754

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Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
Cash flows from operating activities
Net loss	$ (3,309,191)	$ (3,439,900)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Non-cash revenue received as available for sale securities	(278,088)	(455,033)
Investment loss on marketable securities	268,600	0
Unrealized gain on equity securities	(1,976,237)	0
Unrealized loss on cryptocurrencies	38,334	0
Stock compensation expenses	224,433	724,220
Depreciation and amortization	32,632	12,947
Changes in operating assets and liabilities
Accounts receivable	(4,906)	(38,589)
Inventory	24,720	(72,999)
Other current assets	(396,076)	(33,101)
Accounts payable	(84,191)	(80,233)
Accrued interest	(7,798)	(35,185)
Deferred revenue	(74,331)	209,188
Customer deposit	3,840	0
Other accrued liabilities	6,140	65,797
Net cash (used in) operating activities	(5,532,119)	(3,142,888)
Cash flows from investing activities
Purchase of equipment	(161,774)	(26,576)
Sale of investment	75,000	0
Net cash used in investing activities	(86,774)	(26,576)
Cash flows from financing activities
Proceeds from issuance of common stock	610,450	0
Proceeds of issuance of preferred stock, series D-2017	3,548,000	2,750,000
Payments made for preferred stock dividends	(179,375)	(150,831)
Investor deposit	0	(210,100)
Repayments of debts	(945,140)	(410,000)
Proceeds of issuance of new debts	3,111,800	965,140
Net cash provided by financing activities	6,145,735	2,944,209
Effects of currency translation on cash and cash equivalents	16,786	1,887
Net increase in cash and cash equivalents	543,628	(223,368)
Cash and cash equivalents - beginning of period	1,390,258	1,770,729
Cash and cash equivalents - end of period	1,933,886	1,547,361
Supplemental cash flow disclosures
Cash paid for interest	59,708	42,217
Cash paid for income taxes	0	9,878
Supplemental disclosure of non-cash activity
Stock received for investor relations	$ 262,800	$ 1,006,575

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1. Organization and Nature of Operations

6 Months Ended

Nov. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Nature of Operations

1. Organization and Nature of Operations:

Business Description

Chineseinvestors.com, Inc. (the “Company”) was incorporated on January 6, 1997 in the State of Indiana under the corporate name “MAS Acquisition LII Corp.” Prior to June 12, 2000, the Company was a ‘blank check’ company seeking a business combination with an unidentified business.

On June 12, 2000, the Company acquired 8,200,000 shares of common stock, representing 100% of the outstanding shares of Chineseinvestors.com, Inc., which was incorporated in the State of California on June 15, 1999. In connection with this acquisition, Aaron Tsai, our former sole officer and director, was replaced by Chineseinvestors.com, Inc.’s officers and directors.

The stockholders of Chineseinvestors.com, Inc. were issued 8,200,000 shares of our common stock, or approximately 96% of our total outstanding common shares. After giving effect to the acquisition, Chineseinvestors.com, Inc. became a wholly owned subsidiary and we changed our name to Chineseinvestors.com, Inc. Immediately prior to the acquisition of Chineseinvestors.com, Inc., MAS Capital Inc. returned 8,200,000 shares of common stock for cancellation without any consideration.

Chineseinvestors.com, Inc. was established as an ‘in language’ (Chinese) financial information web portal, offering various levels of information relative to the US Equity and Financial Markets, as well as certain other specific financial markets (including China A Shares, FOREX, etc.). Over the years, various informational components have been added and the general content improved as the Company continues to derive a material portion of its income from various subscription services it offers to its customers. We offer subscription services to provide education about investing and news and analysis on the stock market as well as news about particular stocks that we are following. Nevertheless, we do not provide our subscribers with individualized investment advice and never have investment discretion over any subscribers’ or site visitors’ funds. As described below, providing investor relations services for other companies, especially those requiring Mandarin language support, now account for our most significant revenue sources.

The registrant’s investor relations agreements typically obligate the registrant to provide translations of the client’s releases into English from Mandarin or from English into Mandarin, to feature advertisements about the client on the www.chinesefn.com website, and otherwise to assist the client in achieving its goals, which may be increasing the client’s stock price, increasing awareness of the clients and its stock or helping the client to move from pink sheets to an established public securities market. Not all of those goals are shared by every client. Promotions geared to the Chinese American market is the underlying common thread, generally in the form of advertisements on the chinesefn.com website. The registrant provides other services intended to increase awareness and knowledge of its clients’ businesses and stock within the Chinese American community.

The registrant generally receives a fee consisting of cash and the client’s securities for its services. The securities clearly offer success incentives and align the interests of the registrant and the client.

Chineseinvestors.com, Inc. has been in continuous operation since July 1999 using the web domains (uniform resource locators) of www.chineseinvestors.com and www.chinesefn.com.

We established a Representative Office business presence in leased office space in Shanghai, China in late 2000 from which we fulfill most of our support types of service and also have a leased office presence in San Gabriel, California, New York City, NY and Flushing, NY and most recently in Richmond, British Columbia.

In 2010, the Company filed a Form 10 registration statement for us to become a public reporting company under the Exchange Act of 1934 in order to facilitate the Company’s ability to raise capital on the public market.

The Company selected Glendale Securities who has offices in Sherman Oaks, California as the market maker for our common stock, the price of which is quoted on the OTC:QB marketplace.

As of November 30, 2018, the Company employed twenty-eight (28) people in its Shanghai Office in a variety of administrative and operational capacities. All are employed full time. The Company also has approximately forty-one (41) full-time employees and approximately eight (8) independent contractors in the US.

XiBiDi (“CBD”) Biotechnology Co., Ltd.

In March 2017, the Company established and registered XiBiDi Biotechnology Co. Ltd. (“CBD Biotech”) in Pudong Free-Trade Area in Shanghai, PRC as a wholly owned foreign enterprise (“WOFE”). CBD Biotech’s primary engages at online and retail sales of hemp-based health products and other complimentary products in PRC. The initial focus of CBD Biotech was the launch of CBD Magic Hemp Series, a hemp-infused cosmetics line.

CBD Biotech obtained Wholesale Alcohol License in November 2017 from 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 its plans to spin off CBD Biotech in February 2018, which was later postponed to after May 31, 2018. Recently in December 2018, the Company announced that it has retained Boustead Securities, LLC as underwriter for the planned Initial Public Offering (“IPO”) of CBD Biotech, concurrently with a listing on a national securities exchange.

ChineseHempOil.com, Inc.

In April 2017, the Company established ChineseHempOil.com, Inc. dba “Chinese Wellness Center” a Delaware corporation, as a subsidiary of the Company. ChineseHempoil.com, Inc. responsible for the development and operation of the online and retail sales of hemp-based products in the United States. Chinese Wellness Center is the retail store located in the predominantly Chinese community of San Gabriel, California, located next to the Company’s headquarters. In addition, ChineseInvestors.com, Inc. announced the release of its first hemp oil product line, OptHemp, a premium, private label oil, made from full-spectrum, Colorado grown, GMO-Free, hemp, manufactured using a CO2 Extraction process. The Company announced its plans to spin off ChineseHempOil.com, Inc. in February 2018, which was later postponed until after May 31, 2018. Recently in December 2018, the Company announced that it has retained Boustead Securities, LLC as underwriter for the planned Initial Public Offering (“IPO”) of CBD Biotech, concurrently with a listing on a national securities exchange. ChineseHempOil.com, Inc. will no longer be part of this planned spin off.

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 hemp-infused consumer products similar to those marketed by the Company’s other subsidiaries via online and other distribution channels.

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.

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, with Warren (Wei) Wang, the Company’s CEO, as its sole managing member. Mr. Wang has transferred all of his interest in Bitcoin Trading Academy, LLC to the Company for $1 consideration. Bitcoin Trading Academy LLC began offering in person and on-line courses on cryptocurrency investment and trading in July 2018.

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.

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2. Liquidity and Capital Resources

6 Months Ended

Nov. 30, 2018

Cash and Cash Equivalents [Abstract]

Liquidity and Capital Resources

2. Liquidity and Capital Resources:

Cash Flows – During the six months ended November 30, 2018, the Company primarily generated cash and cash equivalents, from issuances of its common and preferred stock to fund its operations. The Company received total proceeds of $10,341,050 of proceeds from the issuance of Series “D-2017” convertible preferred stock by November 30, 2018, of which $6,793,050 was received for the year ended May 31, 2018 and $3,548,000 was received for the six months ended November 30, 2018.

Cash flows used in operations for the six months ended November 30, 2018 and 2017 were $5,532,119 and $3,142,888, respectively. The increased cash used in operations was due to increased general and administrative expenses used in operations.

Capital Resources – As of November 30, 2018, the Company had cash and cash equivalents of $1,933,886 as compared to cash and cash equivalents of $1,390,258 as of May 31, 2018.

Since inception in 1997, the Company has primarily relied upon proceeds from private placements of its equity securities to fund its operations. The Company anticipates continuing to rely on sales of our securities in order to continue to fund business operations. Issuances of additional shares will result in dilution to its existing stockholders. There is no assurance that the Company will be able to complete any additional sales of our equity securities or that it be able arrange for other financing to fund our planned business activities.

Going Concern – The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. There is potential that the Company will not continue as a going concern. The recoverability of recorded property and equipment, intangible assets, and other asset amounts shown in the accompanying financial statements is dependent upon the Company’s ability to continue as a going concern and to achieve a level of profitability. The Company intends on financing its future activities and its working capital needs largely from the sale of equity securities until such time that funds provided by operations are sufficient to fund working capital requirements. However, there can be no assurance that the Company will be successful in its efforts. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

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3. Critical Accounting Policies and Estimates

6 Months Ended

Nov. 30, 2018

Accounting Policies [Abstract]

Critical Accounting Policies and Estimates

3. Critical Accounting Policies and Estimates:

Basis of Presentation – The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete audited consolidated financial statement  s. The accompanying unaudited financial information should be read in conjunction with the audited consolidated financial statements, including the notes thereto, as of and for the year ended May 31, 2018, included in our 2018 Annual Report on Form 10-K filed with the SEC. The information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. The results of operations for the six months ended November 30, 2018 are not necessarily indicative of the results for the year ending May 31, 2019 or for any future period.

The consolidated financial statements include the accounts of Chineseinvestors.com Inc. and its subsidiaries (collectively the “Company”). The Company’s subsidiaries include 100% of ChineseHempOil.com Inc., XiBiDi Biotechnology Co, Ltd., Hemp Logic, Inc., CIIX Online, Inc., NewCoins168.com Digital Media Technology Ltd. (Shanghai). Bitcoin Trading Academy LLC and CIIX Online Ltd.

Intercompany accounts and transactions have been eliminated upon consolidation.

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The financial statements include some amounts that are based on management's best estimates and judgments. The most significant estimates relate to depreciation and useful lives, and contingencies. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant.

Recently Adopted Accounting Pronouncements:

Revenue from Contracts with Customers

On June 1, 2018, the Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2014-09, with regard to FASB ASC 606 Revenue from Contracts with Customers, and have revised certain related accounting policies in connection with revenue recognition and deferred costs, as follows:

The Company’s revenue was mainly derived from four sources:

1. Investor-relations service income

Investor-relations service income is earned by the Company in return for delivering current, publicly available information related to our customers.

a. Identify contracts with customers. The Company signs service agreements with customer. The Company always discloses the nature of the contract including that contact price.

b. Identify performance obligations in the contract. Many of our investor-relations service contracts contain multiple performance obligations. For these contracts, the performance obligations include presentation of customers’ information on Chinesefn.com, translation of all materials to be released, and monthly presentation in the newsletter the Company sends to its registered members. We account for individual performance obligations separately if they are distinct. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.

c. Determine the transaction price. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. Judgment is required to determine the standalone selling price for each distinct performance obligation. We typically have more than one standalone selling price for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, we determine the standalone selling price based on our overall pricing objectives, taking into consideration contract term, industry relevance and other factors. Fees are fixed based on rates specified in the service provided agreements, which do not provide for any refunds or adjustments. In determining the transaction price, the effects of the time value of money is not accounted as the normal term of our service provider agreements is one year or less.

d. The service contract amount is valued based upon the fair market value of the client’s stock closing price at the contract date multiplied by the numbers of shares earned when the service is paid by customers’ common stocks other than cash. For the performance obligations, such as the availability of our customer’s information in our website, the revenue is recognized over the term of the services period while the services are being provided.

e. For the performance obligations will be surrendered at a point of time, the revenue is recognized after the service is provided. In addition, the Company is applying the definition of readily determinable fair value presented at Accounting Standards Codification 820-10-15-5 in assessing the amount to recognize in each accounting period.

There is no significant adjustment from the implementation of ASU 2014-09.

2. Subscription income is recognized over the term of the subscription membership. Subscription fees for our registered members are charged on a per-month basis. Our customers do not have rights to the underlying software code of our solutions, and accordingly, we recognize subscription revenue over time on a straight-line basis over the contract term beginning on the date that our service is made available to the customer. Subscription terms are generally between one to three years but can occasionally be as short as one month or as long as 60 months. Long term deferred revenues are recognized from subscriptions over twelve months.

3. The Company recognizes revenue of product sales of hemp-related products and liquor distribution upon transfer of title to the customer. Customer purchase orders and/or contracts are generally used to determine the existence of contract. Shipping documents and terms and the completion of any customer acceptance requirements, when applicable, are used to verify product delivery, or to satisfy the performance obligation. The Company determines and allocates the transaction price based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company has no product returns or sales discounts and allowances because goods delivered and accepted by customers are normally not returnable.

4. Other revenues include various fee income earned through banner advertisement, webpage hosting and maintenance, on-line promotion and translation services, advertising and promotion fees in the Company’s website, sponsorship fees from investment seminars, road shows, forums at the Company’s website, and referral fee from cryptocurrency transactions. The sales prices of these services are fixed and determinable at the time the contracts are signed and there are no provisions for refunds contained in the contracts. These revenues are recognized when all significant performance obligations have been satisfied and collection of the resulting receivable is reasonably assured.

The Company recognizes revenue pursuant to revenue recognition principles presented in SAB Topic 13 prior to May 31, 2018. First, persuasive evidence of an arrangement. Second, deliver has occurred, or services have been rendered, thirdly the seller’s price to the buyer is fixed or determinable and lastly collectability is reasonably assured. We adopted ASU 2014-09, or ASC 606, on June 1, 2018 and it did not have a material impact on our financial position or results of operations. The guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Financial Instruments – Recognition and Measurement

Recognition and measurement of financial assets and financial liabilities- In January 2016, the FASB issued ASU 2016-01 amending various aspects of the recognition, measurement, presentation, and disclosure requirements for financial instruments. The changes mainly relate to the requirement to measure equity investments in unconsolidated subsidiaries, other than those accounted for under the equity method of accounting, at fair value with changes in fair value recognized in earnings. However, this ASU permits entities to elect to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This ASU is effective for the Company as of June 1, 2018.

As a result of the adoption of this ASU, the Company reclassified $486,789 in the net unrealized losses, net of tax, on equity securities previously classified as available-for-sale, from accumulated other comprehensive loss to accumulated deficit. In addition, changes in value due to the revaluation of equity securities are recorded in unrealized gain on equity securities, net in the consolidated statement of comprehensive (loss) and income.

The equity investment without readily determinable fair value held by the Company is the long-term investment at Breakwater MB, LLC. The Company elects to measure the equity investment using measurement alternative and records the investment at cost minus impairment, if any, plus or minus changes resulting from qualifying observable prices changes. In addition, the existing impairment model has been replaced with a new one-step qualitative impairment model. No initial adoption adjustment was recorded for these instruments since the guidance is required to be applied prospectively for securities measured using the measurement alternative. There is no adjustment to the cost of the equity investment in Breakwater MB, LLC for the six months ended November 30, 2018 as no impairment indicator observed by management.

Cash and Cash Equivalents – The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents. There were no cash equivalents as of November 30, 2018 and May 31, 2018.

Accounts Receivable, Net – The Company extends unsecured credit to its customers in the ordinary course of business. Accounts receivable are reported at their outstanding unpaid principal balances net of allowances for uncollectible accounts. The Company provides for allowances for uncollectible receivables based on management’s estimate of uncollectible amounts considering age, collection history, and any other factors considered appropriate. The Company writes off accounts receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible.

As of November 30, 2018 and May 31, 2018, the Company determined that an allowance was not needed.

Concentration of Credit Risk – The Company maintains cash at banks in the United States and People’s Republic of China (“PRC”). Should any bank holding cash become insolvent, or if the Company is otherwise unable to withdraw funds, the Company would lose the cash deposited with that bank; however, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts. In the PRC, a depositor has up to RMB 500,000 insured by the People’s Bank of China Financial Stability Bureau (“FSD”), whereas the standard insurance amount is $250,000 per depositor in a bank insured by the Federal Deposit Insurance Corporation (“FDIC”) in the United States. As of November 30, 2018 and May 31, 2018, the Company has $1,390,899 and $780,726 cash balances uninsured, respectively.

Major customers and vendors- For the six-month period ended November 30, 2018, two customers accounted for 30% of total service revenue of the Company with no accounts receivable outstanding as of November 30, 2018. Two customers accounted for 52% of the total service revenue of the Company for the six months ended November 30, 2017 without accounts receivable outstanding as of November 30, 2017.

There was no vendor concentration for the Company as of and for the six months period ended November 30, 2018 and November 30, 2017.

The Company has operations in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy.

Marketable equity securities – Marketable equity securities is comprised of publicly traded stocks received in return for providing investor relations services to the Company’s customers. The service terms range from one month to a year. The Company considers the securities to be liquid and convertible to cash in under a year. The Company has the ability and intent to liquidate any security that the Company holds to fund operations over the next twelve months, if necessary, and as such has classified all of its marketable securities as short-term.

In accordance with the provisions of topic 820-10-15-5, which states that an equity security has a readily determinable fair value if it meets the condition of having a “sales prices or bid-and-asked quotations which are currently available on a securities exchange registered with the U.S. Securities and Exchange Commission (SEC) or in the over-the-counter market, provided that those prices or quotations for the over-the-counter market are publicly reported by the National Association of Securities Dealers Automated Quotation systems or by the OTC Markets Group Ins. Restricted stock meets that definition if the restriction terminates within one year.” These shares were classified as marketable securities in accordance with ASC 320-10-25-1 as the Companies intention is to sell them in the near-term (less than one year). In compliance with ASC 320-10-35-1, equity securities that have readily determinable fair values that are classified as marketable securities shall be measured subsequently at fair value in the statement of financial position. The Company has adopted ASU 2016-01 from June 1, 2018, and as a result, unrealized holding gains and losses for marketable equity securities (including those classified as current assets) shall be reported as unrealized gain(loss) in the consolidated statement of operation and comprehensive income (loss) under loss before income taxes.

As these shares will be earned over the term of the contracts, the Company will defer the recognition of the earnings of the revenue over the period the services are performed. The value recorded will be determined by multiplying the average of the closing price on the last day of the month for the period being reported based on closing market price per share.

Inventories – Inventories include Hemp-related finished products and liquor, stated at the lower of cost or net realizable value using the weighted average cost method. Management reviews inventories for obsolescence and cost in excess of net realizable value at least annually and records a reserve against the inventory and additional cost of goods sold when the carrying value exceeds net realizable value. There was no reserve needed for inventory obsolescence and slow-moving as of November 30, 2018 and May 31, 2018.

Equity Method Investment – Under equity method, the Company records its proportionate share of the investee’s profit or loss based on the specified profit and loss percentage. Distributions received from equity method investees are accounted for as returns on investment and classified as cash inflows from operating activities, unless the Company’s cumulative distributions received less distributions received in prior periods that were determined to be returns of investment exceed cumulative equity in earnings recognized by the Company. When such an excess occurs, the current year distribution up to this excess would be considered a return of investment and classified as cash inflows from investing activities.

In September 2017, the Company entered a letter of intent to invest $60,000 (44.45% of ownership) to jointly operate Beijing New Sino-North America Financial Information Co., Ltd and its subsidiaries (“Sino-U.S. Finance”) with three Chinese individuals to operate a mobile application under the name of “Sino-U.S. Finance” which will provide a platform of information and analysis for Chinese-speaking investors in the PRC and US.

The Company started to account the investment under equity method in the year ended May 31, 2018 and the proportional operation losses picked up for the year ended of May 31, 2018 was $93,562, higher than the $60,000 investment amount. According to ASC 323-10-35-19, if the carrying amount of the investment is reduced to zero, and there are no other investments in the investee, the equity method normally is discounted, and investee losses are no longer reported on the income statement. Thus, the Company recorded $60,000 investment loss for Sino-U.S. Finance for the year ended May 31, 2018 and with $0 balance under long-term investment as of November 30, 2018 and May 31, 2018.

Property and Equipment, net – Property and equipment are stated at cost. Depreciation and amortization of property and equipment is provided using the straight-line method over estimated useful lives ranging from three to five years. Leasehold improvements are amortized over the life of the lease.

Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Gains and losses from retirement or replacement are included in operations.

Depreciation on equipment is provided on a straight-line basis over their expected useful lives at the following annual rates.

Computer equipment	3 years
Furniture & fixtures	3 years
Leasehold improvements	Term of the lease

Website Development, Net – The Company accounts for its development costs in accordance with ASC 350-50, “Accounting for Website Development Costs.” The Company’s website comprises multiple features and offerings that are currently developed with ongoing refinements. In connection with the development of its products, the Company has incurred external costs for hardware, software, and consulting services, and internal costs for payroll and related expenses of its technology employees directly involved in the development. All hardware costs are capitalized as fixed assets. Purchased software costs are capitalized in accordance with ASC 350-50-25 related to accounting for the costs of computer software developed or obtained for internal use. All other costs are reviewed to determine whether they should be capitalized or expensed.

Impairment of Long-life Assets – In accordance with ASC 360, the Company reviews its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There was no impairment for the periods ended November 30, 2018 and May 31, 2018.

Deferred Revenue – The Company receives payment for subscription revenues in advance before the subscription service is granted. The Company recognizes the revenue as being earned as the services are delivered. The amount paid for which services have not yet been delivered related to subscription revenues is recorded as a liability in the current or long-term portion of the liabilities section of the balance sheet.

The Company also receives shares of stocks and warrants as means of payments for the investor relationship (“IR”) service provided. The fair market value of the stocks and warrants on the contract date are amortized and recognized as IR revenue over the contract terms. When these services are prepaid by customers, the amount of the prepayment is initially recorded as an asset with an offsetting unearned revenue liability.

As of November 30, 2018 and May 31, 2018, the deferred revenue compromised as following:

	November 30, 2018			May 31, 2018
Deferred subscription	$	560,226		$	587,194
Unearned IR revenue		252,450			315,238
Total		812,676			902,432
Current		(660,185	)		(787,557	)
Noncurrent	$	152,491		$	114,875

Fair Value of Financial Instruments – Fair value accounting establishes a framework for measuring fair value and expands disclosure about fair value measurements. Fair value, which is defined as an exit price or the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

· Level one – Quoted market prices in active markets for identical assets or liabilities;

· Level two – Inputs other than level one inputs that are either directly or indirectly observable; and

· Level three – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

The carrying amount of cash and cash equivalents, marketable equity securities, accounts receivable, due from related party, other current assets, accounts payable, and short-term notes approximates fair value because of the short-term nature of these instruments and the fair values close to its carrying value for the non-current deferred revenue.

The following table summarizes the fair value and carrying value of the Company’s financial instruments as of November 30, 2018:

	Fair Value						Carrying
	Level 1		Level 2		Level 3		Value
Assets -
Cash and cash equivalent	$	1,933,886	$	–	$	–	$	1,933,886
Marketable equity securities		3,201,191		–		–		3,201,191
Cryptocurrency		22,774		–		–		22,774
Liability -
Short-term notes	$	–	$	3,161,800	$	–	$	2,848,806

The following table summarizes the fair value and carrying value of the Company’s financial instruments as of May 31, 2018:

	Fair Value						Carrying
	Level 1		Level 2		Level 3		Value
Assets -
Cash and cash equivalent	$	1,390,258	$	–	$	–	$	1,390,258
Marketable equity securities		1,230,754		–		–		1,230,754
Cryptocurrency		31,479		–		–		31,479
Liability -
Short-term notes	$	–	$	998,192	$	–	$	1,058,084

Short-term notes – The fair value of such notes payable had been determined based on 10% and 6% annual interest rates and the proximity to the issuance date as of November 30, 2018 and May 31, 2018, respectively.

The Company uses Level 1 of the fair value hierarchy to measure the fair value of digital currencies and revalues its digital currencies at every reporting period and recognizes gains or losses in the consolidated statements of operations that are attributable to the change in the fair value of the cryptocurrencies.

Other Revenue – Other revenue is comprised of revenue related to Forex service fees, referral commissions and other miscellaneous service revenues generated which is recognized over the period the term of the service term. For the three-month periods ended November 30, 2018 and November 30, 2017. Details as below:

	November 30, 2018		November 30, 2017
Misc. service revenue	$	5,481	$	–
Bitcoin trading class revenue		–		–
Total	$	5,481	$	–

For the six-month periods ended November 30, 2018 and November 30, 2017. Details as below:

	November 30, 2018		November 30, 2017
Misc. service revenue	$	45,619	$	4,754
Bitcoin trading class revenue		32,898		–
Total	$	78,517	$	4,754

Costs of Services/Products Sold – Costs of services provided are the total direct cost of the Company’s operations in Shanghai and the US. Cost of products sold includes cost of inventory sold during the period, net of discounts and inventory allowances, freight and shipping costs, warranty and rework costs.

Income Taxes – Income taxes are accounted for under the asset and liability method of ASC 740. Deferred tax assets and liabilities are recognized for net operating loss and other credit carry forwards and the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the tax effect of transactions are expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the year that includes the enactment date.

Deferred tax assets are reduced by a full valuation allowance since it is more likely than not that the amount will not be realized. Deferred tax assets and liabilities are classified as current or noncurrent based on the classification of the underlying asset or liability giving rise to the temporary difference or the expected date of utilization of the carry forwards.

On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) passed that significantly reforms the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The TCJA, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, effective as of January 1, 2018; limitation of the tax deduction for interest expense; limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such tax losses may be carried forward indefinitely); and repeal of the federal corporate Alternative Minimum Tax (“AMT”).

In connection with the analysis of the impact of the TCJA, the Company determined that it does not have any impact on the financial statements.

The Company considers the earnings of the non-U.S. subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs.

Advertising Costs – Advertising costs are expensed when incurred.

Earnings (Loss) Per Share – Earnings (loss) per share is computed using the weighted average number of common shares outstanding during the period. The Company has adopted ASC 260 “Earnings Per Share”. Fully diluted loss per share are not calculated and presented on the financial statements as the calculation would be antidilutive.

Stock Based Compensation – The Company accounts for share-based payments pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards using the Black-Scholes option pricing model.

Stock compensation expense for stock options is recognized over the vesting period of the award or expensed immediately under ASC 718 when stock or options are awarded for previous or current service without further recourse.

We periodically issue shares of our common stock to non-employees in non-capital raising transactions for fees and services. We account for stock issued to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees, whereas the value of the stock compensation is based upon the measurement date as determined at either (a) the date at which a performance commitment is reached, or (b) at the date at which the necessary performance to earn the equity instruments is complete.

Preferred Stock Beneficial Convertible Feature – Upon issuance of preferred stock convertible in shares of common stock at a price lower than the fair market value of common stock on the date of issuance, in accordance with the guidance provided in ASC 505-10-50, we have recorded the intrinsic value of this beneficial conversion feature (“BCF”).

In according to ASC 470-20-30-6 Intrinsic value shall be calculated at the commitment date as the differences between the conversion price and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible. In according to ASC 470-20-30-8, if the intrinsic value of the beneficial conversion feature is greater than the proceeds allocated to the convertible instrument, the amount of the discount assigned to the beneficial conversion feature shall be limited to the amount of the proceeds allocated to the convertible instrument. Since all the preferred stocks are issued on different date, we calculate the intrinsic value for each individual preferred stock issuance based on stock issuance date. If the intrinsic value exceeds actual proceeds we received, actual proceeds will be BCF, otherwise, the intrinsic value is the BCF.

Foreign Currency – The Company has operations in the PRC as a representative office in the PRC, the functional and reporting currency is in U.S. dollars.

The functional currency of the two subsidiaries operated in PRC, CBD Biotech and Newcoins168, is the Chinese Renminbi (“RMB”). The functional currency of the subsidiary operated in Canada, CIIX Online Ltd. is the Canadian Dollar (“CAD”). Assets and liabilities are translated at the exchange rates as of the balance sheet date. Shareholders’ contribution is translated at historical rate. Income and expenditures are translated at the average exchange rate of the period. The RMB is not freely convertible into foreign currency and all foreign currency exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US dollar at the rates used in translation. 

The exchange rates used were as follows:

November 30, 2018
Spot rate	RMB 6.82 to US $1.00
Average rate for the three months ended November 30, 2018	RMB 6.91 to US $1.00
Average rate for the six months ended November 30, 2018	RMB 6.79 to US $1.00
Spot rate	CAD 1.33 to US $1.00
Average rate for the six months ended November 30, 2018	CAD 1.32 to US $1.00
May 31, 2018
Spot rate	RMB 6.40 to US $1.00
Average rate for the three months ended November 30, 2017	RMB 6.62 to US $1.00
Average rate for the six months ended November 30, 2017	RMB 6.67 to US $1.00

New Accounting Pronouncements – Upon issuance of final pronouncements, we review the new accounting literature to determine its relevance, if any, to our business. The Company is in the progress of evaluating the following accounting updates: 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either operating or financing, with such classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact ASU 2016-02 will have on its consolidated financial statements and associated disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, for public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact will have on its consolidated financial statements and associated disclosures.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, Effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company is currently evaluating the impact will have on its consolidated financial statements and associated disclosures.

In August 2018, the FASB issued ASU 2018-13, air Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. Effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this Update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this Update and delay adoption of the additional disclosures until their effective date. The Company is currently evaluating the impact will have on its consolidated financial statements and associated disclosures.

Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the unaudited condensed consolidated financial position, statements of operations and cash flows.

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4. Stockholders' Equity

6 Months Ended

Nov. 30, 2018

Equity [Abstract]

Stockholders' Equity

4. Stockholders’ Equity:

As of November 30, 2018 and May 31, 2018, the Company was authorized to issue 80,000,000 shares of common stock, $0.001 par value per share. In addition, 20,000,000 shares of $0.001 par value preferred stock were authorized. All common stock shares have full dividend rights. However, it is not anticipated that the Company will be declaring distributions in the foreseeable future.

Series 2012 Convertible Preferred Stock

During the third quarter of fiscal year 2013, effective February 29, 2012, the Company issued 2,003,776 shares of preferred stock as Series 2012 convertible preferred stock for total proceeds of $2,003,776. The terms of the preferred stock allow the holder to convert each share of preferred stock into 1.25 shares of common stock at any time after nine months from the date of issuance. The holders of shares of preferred stock were entitled to receive a dividend of $0.06 per share per annum for the first two years from the issuance of the instruments. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary.

During the six months period ended November 30, 2018, the shareholders of preferred stock series-2012 converted 0 shares of preferred stock. During the six months period ended November 30, 2017, the shareholders of preferred stock Series 2012 converted 150,000 shares of preferred stock for 187,500 shares of common stock shares at a conversion rate of 1 share of Series 2012 preferred stock for 1.25 shares of common stock.

Series A-2014 Convertible Preferred Stock

In the years ended May 31, 2016 and 2015 the Company issued 720,000 and 1,885,000 shares of preferred stock as Series A-2014 convertible preferred stock for total proceeds of $2,605,000. The terms of the preferred stock allow the holder to convert each share of preferred stock into 2.5 shares of common stock at any time after nine months from the date of issuance. The holders of shares of preferred stock shall have the right to one vote for each share of common stock into which such preferred stock could convert. The holders of shares of preferred stock are entitled to receive a dividend of $0.06 per share per annum for the first two years from the issuance of the instruments, which has been recorded as an accrued dividend on the liabilities section of the balance sheet. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary.

During the six months period ended November 30, 2018, the shareholders of preferred stock series A-2014 converted 250,000 shares of preferred stock for 625,000 of common stock shares at a conversion rate of 1 share of preferred stock series A-2014 for 2.50 shares of common stock. During the six months period ended November 30, 2017 the shareholders of preferred stock Series A-2014 converted 994,000 shares of preferred stock for 2,485,000 of common stock shares at a conversion rate of 1 share of Series A-2014 preferred stock for 2.50 shares of common stock.

Series C-2016 Convertible Preferred Stock

In December 2016, the Company issued 5,000,043 shares of its Series C-2016 Preferred Stock at a price of $1.00 per share for total proceeds of $5,000,043. The terms of the Series C-2016 preferred stock allow the holder to convert each share of preferred stock into 3 shares of common stock at any time after nine months from the date of issuance. The holders of shares of preferred stock are entitled to receive a dividend of $0.06 per share per annum for the first year from the issuance of the instruments, which has been recorded as an accrued dividend on the liabilities section of the balance sheet. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary.

We calculated the BCF of the Series C-2016 Preferred Stock as $4,930,143. The BCF would be recorded as paid-in capital with an offsetting debit to convertible preferred stock. The discount attributable to the BCF, however, is amortized as a deemed dividend over the period from issuance to the date the convertible preferred stock becomes convertible. In our case, preferred stock-series C-2016 is convertible from the date of issuance. We then amortize the BCF over six months period and recorded $1,244,622 and $3,685,520 as deemed dividend that increased accumulated deficit for the periods ended May 31, 2018 and 2017, respectively.

During the six months period ended November 30, 2018, the shareholders of preferred stock series C-2016 converted 129,958 shares of preferred stock for 389,874 of common stock shares at a conversion rate of 1 share of preferred stock series C-2016 for 3.00 shares of common stock. During the six months period ended November 30, 2017, the shareholders of preferred stock C-2016 converted 2,908,085 shares of preferred stock for 8,724,255 of common stock shares at a conversion rate of 1 Series C-2016 share of preferred stock for 3.00 shares of common stock. 

Series D-2017 Convertible Preferred Stock

For the year ended May 31, 2018, the Company issued 6,793,050 shares of its Series D-2017 Convertible Preferred Stock at a price of $1.00 per share for total proceeds of $6,793,050. The terms of the preferred stock allow the holder to convert each share of preferred stock into 2 shares of common stock at any time from the date of issuance. The holders of shares of preferred stock are entitled to receive a dividend of $0.06 per share per annum for the first two years from the issuance, which has been recorded as an accrued dividend on the liabilities section of the balance sheet. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary.

We calculated the BCF of the preferred shares as $3,933,443. The BCF would be recorded as paid-in capital with an offsetting debit to convertible preferred stock. The discount attributable to the BCF, however, is amortized as a deemed dividend over the period from issuance to the date the convertible preferred stock becomes convertible. In our case, preferred stock-series D-2017 is convertible at any time from the date of issuance. We recorded $3,933,443 as deemed dividend that increases accumulated deficit as of May 31, 2018. During the year ended May 31, 2018, 150,000 shares of Series D-2017 Convertible Preferred Stock were converted into common stocks.

For the six months ended November 30, 2018, the Company issued shares of its Series D-2017 Preferred Stock at a price of $1.00 per share for total proceeds of $3,548,000. The terms of the Series D-2017 preferred stock allow the holder to convert each share of preferred stock into 2 shares of common stock at any time from the date of issuance. The holders of shares of preferred stock are entitled to receive a dividend of $0.06 per share per annum for the first two years from the issuance of the instruments, which has been recorded as an accrued dividend on the liabilities section of the balance sheet. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary.

We calculated the BCF of the preferred shares issued during the six-month ended November 30, 2018 as $967,100. The BCF would be recorded as paid-in capital with an offsetting debit to convertible preferred stock. The discount attributable to the BCF, however, is amortized as a deemed dividend over the period from issuance to the date the convertible preferred stock becomes convertible. In our case, preferred stock-series D-2017 is convertible at any time from the date of issuance. We recorded $967,100 as deemed dividend that increased accumulated deficit as of November 30, 2018.

During the six months period ended November 30, 2018, the shareholders of preferred stock series D-2017 converted 3,434,000 shares of preferred stock for 6,868,000 of common stock shares at a conversion rate of 1 share of preferred stock series D-2017 for 2 shares of common stock.

Common stock

In October 2018, the Company issued 1,109,818 shares of the Company’s common stock at $0.55 per share to accredited investors for total proceeds of $610,450.

Stock compensation and stock payable

On July 26, 2018, the Company entered into a Consulting Agreement with Regal Consulting, LLC (“Regal”). The agreement has a five-month term ending January 2, 2019, pursuant to which Regal will receive 20,000 shares of the Company’s common stock per month for the term of the Agreement for a total of 100,000 shares, in addition to other compensation. $53,600 share-based compensation expense has been recorded associated with the award for the six months ended November 30, 2018.

On August 9, 2018, the Company entered into a Services Agreement with IRTH Communications LLC (“IRTH”). The agreement has a one-year term, pursuant to which ITRH was to receive $100,000 worth of shares of the Company’s common stock in addition to other compensation. On August 22, 2018, the Company adopted a resolution authorizing the issuance of 226,245 shares of the Company’s common stock to IRTH for its professional services to be provided during the term of the agreement. $33,333 share-based compensation expense has been recorded associated with the award for the six months ended November 30, 2018.

On August 9, 2018, the Company entered into a Consulting Agreement with Axis Partners, Inc. (“Axis”). The agreement is for a six-month term, pursuant to which Axis is to receive 150,000 shares of the Company’s common stock for the term of the agreement. On August 22, 2018, the Company adopted a resolution authorizing the issuance of 150,000 shares of the Company’s common stock to Axis for its professional service to be provided during the term of the agreement. $100,500 share-based compensation expense has been recorded associated with the award for the six months ended November 30, 2018.

On August 24, 2018, the Board adopted a resolution ratifying the award to Melissa Armstrong of an additional 50,000 shares of common stock, for a total award of 100,000 shares, effective October 26, 2016. All services to be performed in conjunction with this award have been fully performed and the shares were fully vested as of the effective date of the award. $33,500 share-based compensation expense was recorded associated with the award for the six months ended November 30, 2018.

On September 11, 2018, the Company issued stock certificates total 526,245 shares for the stock compensation granted to service providers in August 2018. There is no stock compensation payable as of November 30, 2018 and May 31, 2018.

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5. Other Current Assets

6 Months Ended

Nov. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Current Assets

5. Other Current Assets:

Other current assets consist of deposits in Chinese Renminbi on building space under an operating lease and are stated at the current exchange rate at period end. Security deposits of office rent in United States, purchase deposits to vendors for the Hemp oil purchase, prepaid expenses in both United States and Shanghai, details as below:

	November 30,		May 31,
	2018		2018
Prepaid expense	$	498,123	$	79,822
Purchase deposit		72,868		145,376
Cryptocurrency on hands		22,774		31,479
Other current assets		92,343		74,951
	$	686,108	$	331,628

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6. Long-term investments

6 Months Ended

Nov. 30, 2018

Equity Method Investments and Joint Ventures [Abstract]

Long-term investments

6. Long-term investments

Long-term investments include: 1) investment at Breakwater MB, LLC accounted as equity investment without readily available fair value since the Company does not have the significant influence, and 2) investment at Sino-U.S. Finance accounted for equity method (see Note 3).

In March 2017, the Company made a $250,000 investment in Breakwater MB, LLC, a cannabis-focused investment and consulting company, formed by Paul Dickman, the CFO and board member of ChineseInvestors.com, Inc., as a means to invest capital in and provide consulting services to private, cannabis-focused companies as they transition into the public market. The invested capital will primarily be used to cover the costs of becoming a publicly traded company, a strategy the Company expects will provide significant investment appreciation and opportunity for liquidity. All opportunities will be evaluated by the investment committee comprised of ChineseInvestors.com, Inc.’s CEO Warren Wang, Medicine Man Technologies CEO Andy Williams, and Paul Dickman. Mr. Dickman is the managing member of Breakwater MB, LLC and Warren Wang serves as an advisor receiving no compensation for his services.

Breakwater MB, LLC completed its planned raise of $1,000,000 for 50% of Breakwater MB, LLC’s equity by December 2017. The Company’s equity position in Breakwater MB, LLC stands at 8.75% and 12.5% as of November 30, 2018 and May 31, 2018, respectively. ChineseInvestors.com, Inc.’s board reviewed and approved the investment with Mr. Dickman abstaining from voting. Mr. Dickman held 30% of the equity of Breakwater MB LLC as of May 31, 2018 after a $5,000 cash investment in equity in addition to the services that Mr. Dickman renders to Breakwater MB, LLC.

Subsequently in August 23, 2018, the Company entered into a Redemption Agreement and Mutual Release with Mr. Dickman to liquidate 40% of the Company’s investment in Breakwater MB, LLC. Mr. Dickman agreed to pay an aggregate purchase price of $100,000 ($75,000 at the closing and $25,000 no later than September 15, 2018) to redeem the portion of equity (the “Redemption Agreement”). The Redemption Agreement provides for a mutual release and waiver with regard to any claims the parties to the Redemption Agreement ever had, owned or held, or now have, own or hold, as against one another resulting from, arising out of or in any manner relating to or based on the Company’s investment in Breakwater MB LLC, the redemption, or otherwise relating to CIIX’s relationship with Breakwater MB LLC. As of November 30, 2018, the Company had received the $75,000 payment but not the $25,000 payment due September 15, 2018. The redemption agreement will be amended to reflect the payment by Breakwater MB, LLC in the amount of $75,000 only.  The Company’s equity position in Breakwater MB, LLC currently stands at 8.75% as of November 30, 2018.

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7. Property and Equipment

6 Months Ended

Nov. 30, 2018

Property, Plant and Equipment [Abstract]

Property and Equipment

7. Property and Equipment:

Property and equipment are recorded at cost, net of accumulated depreciation and are comprised of the following:

	November 30, 2018			May 31, 2018
Furniture & Fixtures	$	175,995		$	154,748
Leasehold Improvements		123,760			35,176
		299,755			189,924
Less: Accumulated Depreciation		(151,765	)		(124,674	)
	$	147,990		$	65,250

Depreciation expense for the six months ending November 30, 2018 and 2017 was $27,090 and $7,795, respectively.

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8. Website development, net

6 Months Ended

Nov. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Website development, net

8. Website development, net:

Website development is comprised of the following:

	November 30, 2018			May 31, 2018
Website development	$	280,714		$	220,598
Less: Accumulated Amortization		(121,863	)		(116,320	)
	$	158,851		$	104,278

Amortization is calculated over a straight-line basis using the economic life of the asset. Amortization expense for the six months ended November 30, 2018 and 2017 was $5,542 and $5,152 respectively.

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9. Short-term notes

6 Months Ended

Nov. 30, 2018

Debt Disclosure [Abstract]

Short-term notes

9. Short-term notes:

On October 2017, the Company issued one-year promissory notes (the “2017 Notes”) totaling of $995,140 to various individuals. The interest rate for the 2017 Notes is 6% annum. Of the $995,140, as noted above, $116,669 was rolled over from the 2016 Notes with renegotiated terms. The 2017 Notes were to be secured by the stocks of the following companies held by the Company:

Company name	Shares Secured for Loan
Nemaura Medical, Inc. (NMRD)	100,000
Recon Technology LTD (RCON)	49,999
Solbright Group Inc. (SBRT)	195,122
Nengfa Weiye Energy (NFEC)	218,779
SGOCO Group LTD (SGOC)	29,412

As of November 30, 2018, the Company transferred NMRD shares held to the Collateral Agent. It was determined that with the exception of 2017 Notes secured by NMRD shares, the remaining 2017 Notes were not properly secured. The Company offered the lenders of the unsecured 2017 Notes the option to either rescind the notes or allow the notes to remain in place as unsecured notes in April 2018. $360,000 out of the total $620,000 unsecured 2017 Notes were rescinded.  The $995,140 in short term 2017 Notes were repaid, including all principal and interest pursuant to the note terms. As of November 30, 2018, the Company paid $945,140 short loan and interest.

Pursuant to the 2017 Notes, the Company/Borrower, at its sole discretion, could at any time during the term of the 2017 Notes, sell the above referenced stocks, or in the case of the 2017 Notes properly secured by shares in NMRD, instruct the Collateral Agent to sell the above reference stocks, at which time the principal and accrued interest under the 2017 Notes would be accelerated and would become due and owing, and in addition, an incentive would be due and owing in an amount equal to 20% of the appreciation, if any, of the pledged collateral/stocks sold. None of the respective stocks/pledged collateral was sold during the term of the 2017 Notes, and as noted above, the 2017 Notes were paid full according to their terms and the 2017 Notes were effectively cancelled; therefore, no incentives are due and owing to any of these Lenders. As of November 30, 2018, the Company paid $945,140 of the total $995,140 short term 2017 Notes, the remaining $50,000 short term 2017 Notes was repaid in December 2018.

On August 2018, the board of directors of the Company approved the Company to offer unsecured one-year term notes (the “2018 Notes-10%”) to individual investors for a maximum $3,000,000 with 10% annual interest rate. As of November 30, 2018, the Company has issued 2018 Notes-10% in the total amount of $3,050,000 from various individual lenders.

On October 2018, the board of directors of the Company approved the Company to offer unsecured one-year term notes (the “2018 Notes-8%”) to individual investors for a maximum $3,000,000 with 8% annual interest rate. As of November 30, 2018, the Company has issued 2018 Notes-8% in the total amount of $61,800 from various individual lenders.

As of November 30, 2018 and May 31, 2018, the short-term notes are compromised as follows:

	November 30, 2018		May 31, 2018
Short-term 2017 notes
Secured short term notes, due on October 2018, 6% annual interest rate	$	50,000	$	635,140
Debt incentive to the secured short-term notes above		–		41,539
Short term notes, due on April and May 2018, 6% annual interest rate		–		360,000
Debt incentive related to the short-term notes above		–		21,405
Total short-term 2017 notes	$	50,000	$	1,058,084
Short-term 2018 notes-annual interest rate 10%	$	3,050,000	$	–
Short-term 2018 notes-annual interest rate 8%	$	61,800		–
Total Short-term notes	$	3,161,800	$	1,058,084

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10. Other Current Liabilities

6 Months Ended

Nov. 30, 2018

Payables and Accruals [Abstract]

Other Current Liabilities

10. Other Current Liabilities:

Other current liabilities compromise as following:

	November 30, 2018		May 31, 2018
Accrued dividends	$	213,877	$	179,218
Accrued interests and others		92,195		32,721
Accrued payroll and taxes		219,873		218,599
Total	$	525,945	$	430,538

Accrued dividends as of November 30, 2018 are comprised of dividends payable to the preferred stock holders, Series D-2017 in the amount of $213,877. Accrued dividends as of May 31, 2018 are comprised of dividends payable to the preferred stock holders, Series C-2016 and Series D-2017, in the amount of $14,981 and $164,237, respectively.

Accrued interest as of November 30, 2018 represents interest payable for the 2018 Notes and 2017 Notes. Accrued interest as of May 31, 2018 represents interest payable for the 2017 Notes.

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11. Commitments and Contingencies

6 Months Ended

Nov. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

11. Commitments and Contingencies:

Operating Leases

The Company currently maintains leased space in Shanghai, China (as described in the Financials) as well as an office presence in San Gabriel, California, New York City, NY, Flushing, NY and Richmond Canada. It also maintains a correspondence address in Arcadia, California on a month to month basis  .

On September 4, 2018, the Company entered into a lease agreement in New York at 40 Wall St., Room 2877, New York, NY 10005 as a support office. The lease term is 24 months and monthly rent at $7,500.

Future minimum lease commitments for office facilities as of November 30, 2018 are as follows:

For the fiscal years ending May 31,
2019 (6 months)	$	269,224
2020		360,966
2021		176,989
2022		–
	$	807,179

Litigation – The Company is involved in legal proceedings from time to time in the ordinary course of its business.

When entering the 2016 Note Agreements, the Company believed that the SINO contract would be executed, and SINO shares would be delivered upon signing the IR service contract. However, the service contract was not executed due to a disagreement among SINO’s management, and as a result, the Company has not obtained the SINO shares as of November 30, 2018. On January 9, 2018, the Company filed a lawsuit in the Los Angeles County Superior Court, Case No. EC067692 for breach of contract and common counts against SINO-GLOBAL SHIPPING AMERICA LTD. Currently the case is pending assignment of an arbitration date.

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12. Related Party Transactions

6 Months Ended

Nov. 30, 2018

Related Party Transactions [Abstract]

Related Party Transactions

As of November 30, 2018, the Company advanced $168,793 to the Company's CEO, Warren Wang, to reimburse Mr. Wang for advances he made on the Company's behalf to cover then Company's daily operating expenses.  These expenses have not yet been reconciled, but reconciliation is in process and should be completed by the end of the Company's next reporting period. 

The Company made a long-term investment of $250,000 to Breakwater MB LLC in March 2017 formed by the Company’s board member and CFO, Paul Dickman. In September 2018, Breakwater MB LLC returned $75,000 of investment to the Company. The Company’s equity position in Breakwater MB, LLC stands at 8.75% as of November 30, 2018. Refer to Note 6 for investment details.

Mrs. Lan Jiang is the spouse of the Company’s CEO, Mr. Warren Wang. During the three months ended November 30, 2018 and 2017, she received salary compensation of $45,000 and $89,000, respectively. During the six months ended November 30, 2018 and 2017, she received salary compensation of $90,000 and $128,000, respectively.

The Company purchased the shares of Medicine Man Technologies, Inc. (“MDCL”) in April 2014 using the equity method of accounting initially and accounted for the ownership as an investment available for sale as of May 31, 2015 as the Company no longer had “significant influence” over MDCL as a result of shares issuance. The Company liquidated 1,306,378 shares of MDCL for $1,996,939 cash during the year ended May 31, 2017. As of November 30, 2018 and May 31, 2018, the Company still held 41,238 shares of MDCL stock representing $63,816 and $76,496, respectively, of value based upon the closing market price of $1.55 and $1.86, respectively.

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13. Subsequent Event

6 Months Ended

Nov. 30, 2018

Subsequent Events [Abstract]

Subsequent Event

13. Subsequent event:

On October, the Company began offering on a best efforts basis (“Offering”), a maximum of $3,000,000 in original issue price (“Maximum Offering”) of its 8% one-year term notes (the “Notes”). As of December 28, 2018, the Company has received net proceeds for the Notes in the total amount of $1,099,800.

There is no other subsequent event after November 30, 2018 through the date of issuance of these unaudited financial statements.

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3. Critical Accounting Policies and Estimates (Policies)

6 Months Ended

Nov. 30, 2018

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation – The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete audited consolidated financial statement  s. The accompanying unaudited financial information should be read in conjunction with the audited consolidated financial statements, including the notes thereto, as of and for the year ended May 31, 2018, included in our 2018 Annual Report on Form 10-K filed with the SEC. The information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. The results of operations for the six months ended November 30, 2018 are not necessarily indicative of the results for the year ending May 31, 2019 or for any future period.

The consolidated financial statements include the accounts of Chineseinvestors.com Inc. and its subsidiaries (collectively the “Company”). The Company’s subsidiaries include 100% of ChineseHempOil.com Inc., XiBiDi Biotechnology Co, Ltd., Hemp Logic, Inc., CIIX Online, Inc., NewCoins168.com Digital Media Technology Ltd. (Shanghai). Bitcoin Trading Academy LLC and CIIX Online Ltd.

Intercompany accounts and transactions have been eliminated upon consolidation.

Use of Estimates

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The financial statements include some amounts that are based on management's best estimates and judgments. The most significant estimates relate to depreciation and useful lives, and contingencies. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements:

Revenue from Contracts with Customers

On June 1, 2018, the Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2014-09, with regard to FASB ASC 606 Revenue from Contracts with Customers, and have revised certain related accounting policies in connection with revenue recognition and deferred costs, as follows:

The Company’s revenue was mainly derived from four sources:

1. Investor-relations service income

Investor-relations service income is earned by the Company in return for delivering current, publicly available information related to our customers.

a. Identify contracts with customers. The Company signs service agreements with customer. The Company always discloses the nature of the contract including that contact price.

b. Identify performance obligations in the contract. Many of our investor-relations service contracts contain multiple performance obligations. For these contracts, the performance obligations include presentation of customers’ information on Chinesefn.com, translation of all materials to be released, and monthly presentation in the newsletter the Company sends to its registered members. We account for individual performance obligations separately if they are distinct. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.

c. Determine the transaction price. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. Judgment is required to determine the standalone selling price for each distinct performance obligation. We typically have more than one standalone selling price for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, we determine the standalone selling price based on our overall pricing objectives, taking into consideration contract term, industry relevance and other factors. Fees are fixed based on rates specified in the service provided agreements, which do not provide for any refunds or adjustments. In determining the transaction price, the effects of the time value of money is not accounted as the normal term of our service provider agreements is one year or less.

d. The service contract amount is valued based upon the fair market value of the client’s stock closing price at the contract date multiplied by the numbers of shares earned when the service is paid by customers’ common stocks other than cash. For the performance obligations, such as the availability of our customer’s information in our website, the revenue is recognized over the term of the services period while the services are being provided.

e. For the performance obligations will be surrendered at a point of time, the revenue is recognized after the service is provided. In addition, the Company is applying the definition of readily determinable fair value presented at Accounting Standards Codification 820-10-15-5 in assessing the amount to recognize in each accounting period.

There is no significant adjustment from the implementation of ASU 2014-09.

2. Subscription income is recognized over the term of the subscription membership. Subscription fees for our registered members are charged on a per-month basis. Our customers do not have rights to the underlying software code of our solutions, and accordingly, we recognize subscription revenue over time on a straight-line basis over the contract term beginning on the date that our service is made available to the customer. Subscription terms are generally between one to three years but can occasionally be as short as one month or as long as 60 months. Long term deferred revenues are recognized from subscriptions over twelve months.

3. The Company recognizes revenue of product sales of hemp-related products and liquor distribution upon transfer of title to the customer. Customer purchase orders and/or contracts are generally used to determine the existence of contract. Shipping documents and terms and the completion of any customer acceptance requirements, when applicable, are used to verify product delivery, or to satisfy the performance obligation. The Company determines and allocates the transaction price based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company has no product returns or sales discounts and allowances because goods delivered and accepted by customers are normally not returnable.

4. Other revenues include various fee income earned through banner advertisement, webpage hosting and maintenance, on-line promotion and translation services, advertising and promotion fees in the Company’s website, sponsorship fees from investment seminars, road shows, forums at the Company’s website, and referral fee from cryptocurrency transactions. The sales prices of these services are fixed and determinable at the time the contracts are signed and there are no provisions for refunds contained in the contracts. These revenues are recognized when all significant performance obligations have been satisfied and collection of the resulting receivable is reasonably assured.

The Company recognizes revenue pursuant to revenue recognition principles presented in SAB Topic 13 prior to May 31, 2018. First, persuasive evidence of an arrangement. Second, deliver has occurred, or services have been rendered, thirdly the seller’s price to the buyer is fixed or determinable and lastly collectability is reasonably assured. We adopted ASU 2014-09, or ASC 606, on June 1, 2018 and it did not have a material impact on our financial position or results of operations. The guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Financial Instruments – Recognition and Measurement

Recognition and measurement of financial assets and financial liabilities- In January 2016, the FASB issued ASU 2016-01 amending various aspects of the recognition, measurement, presentation, and disclosure requirements for financial instruments. The changes mainly relate to the requirement to measure equity investments in unconsolidated subsidiaries, other than those accounted for under the equity method of accounting, at fair value with changes in fair value recognized in earnings. However, this ASU permits entities to elect to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This ASU is effective for the Company as of June 1, 2018.

As a result of the adoption of this ASU, the Company reclassified $486,789 in the net unrealized losses, net of tax, on equity securities previously classified as available-for-sale, from accumulated other comprehensive loss to accumulated deficit. In addition, changes in value due to the revaluation of equity securities are recorded in unrealized gain on equity securities, net in the consolidated statement of comprehensive (loss) and income.

The equity investment without readily determinable fair value held by the Company is the long-term investment at Breakwater MB, LLC. The Company elects to measure the equity investment using measurement alternative and records the investment at cost minus impairment, if any, plus or minus changes resulting from qualifying observable prices changes. In addition, the existing impairment model has been replaced with a new one-step qualitative impairment model. No initial adoption adjustment was recorded for these instruments since the guidance is required to be applied prospectively for securities measured using the measurement alternative. There is no adjustment to the cost of the equity investment in Breakwater MB, LLC for the six months ended November 30, 2018 as no impairment indicator observed by management.

Cash and Cash Equivalents

Cash and Cash Equivalents – The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents. There were no cash equivalents as of November 30, 2018 and May 31, 2018.

Accounts Receivable, Net

Accounts Receivable, Net – The Company extends unsecured credit to its customers in the ordinary course of business. Accounts receivable are reported at their outstanding unpaid principal balances net of allowances for uncollectible accounts. The Company provides for allowances for uncollectible receivables based on management’s estimate of uncollectible amounts considering age, collection history, and any other factors considered appropriate. The Company writes off accounts receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible.

As of November 30, 2018 and May 31, 2018, the Company determined that an allowance was not needed.

Concentration of Credit Risk

Concentration of Credit Risk – The Company maintains cash at banks in the United States and People’s Republic of China (“PRC”). Should any bank holding cash become insolvent, or if the Company is otherwise unable to withdraw funds, the Company would lose the cash deposited with that bank; however, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts. In the PRC, a depositor has up to RMB 500,000 insured by the People’s Bank of China Financial Stability Bureau (“FSD”), whereas the standard insurance amount is $250,000 per depositor in a bank insured by the Federal Deposit Insurance Corporation (“FDIC”) in the United States. As of November 30, 2018 and May 31, 2018, the Company has $1,390,899 and $780,726 cash balances uninsured, respectively.

Major customers and vendors

Major customers and vendors- For the six-month period ended November 30, 2018, two customers accounted for 30% of total service revenue of the Company with no accounts receivable outstanding as of November 30, 2018. Two customers accounted for 52% of the total service revenue of the Company for the six months ended November 30, 2017 without accounts receivable outstanding as of November 30, 2017.

There was no vendor concentration for the Company as of and for the six months period ended November 30, 2018 and November 30, 2017.

The Company has operations in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy.

Marketable equity Securities

Marketable equity securities – Marketable equity securities is comprised of publicly traded stocks received in return for providing investor relations services to the Company’s customers. The service terms range from one month to a year. The Company considers the securities to be liquid and convertible to cash in under a year. The Company has the ability and intent to liquidate any security that the Company holds to fund operations over the next twelve months, if necessary, and as such has classified all of its marketable securities as short-term.

In accordance with the provisions of topic 820-10-15-5, which states that an equity security has a readily determinable fair value if it meets the condition of having a “sales prices or bid-and-asked quotations which are currently available on a securities exchange registered with the U.S. Securities and Exchange Commission (SEC) or in the over-the-counter market, provided that those prices or quotations for the over-the-counter market are publicly reported by the National Association of Securities Dealers Automated Quotation systems or by the OTC Markets Group Ins. Restricted stock meets that definition if the restriction terminates within one year.” These shares were classified as marketable securities in accordance with ASC 320-10-25-1 as the Companies intention is to sell them in the near-term (less than one year). In compliance with ASC 320-10-35-1, equity securities that have readily determinable fair values that are classified as marketable securities shall be measured subsequently at fair value in the statement of financial position. The Company has adopted ASU 2016-01 from June 1, 2018, and as a result, unrealized holding gains and losses for marketable equity securities (including those classified as current assets) shall be reported as unrealized gain(loss) in the consolidated statement of operation and comprehensive income (loss) under loss before income taxes.

As these shares will be earned over the term of the contracts, the Company will defer the recognition of the earnings of the revenue over the period the services are performed. The value recorded will be determined by multiplying the average of the closing price on the last day of the month for the period being reported based on closing market price per share.

Inventories

Inventories – Inventories include Hemp-related finished products and liquor, stated at the lower of cost or net realizable value using the weighted average cost method. Management reviews inventories for obsolescence and cost in excess of net realizable value at least annually and records a reserve against the inventory and additional cost of goods sold when the carrying value exceeds net realizable value. There was no reserve needed for inventory obsolescence and slow-moving as of November 30, 2018 and May 31, 2018.

Equity Method Investment

Equity Method Investment – Under equity method, the Company records its proportionate share of the investee’s profit or loss based on the specified profit and loss percentage. Distributions received from equity method investees are accounted for as returns on investment and classified as cash inflows from operating activities, unless the Company’s cumulative distributions received less distributions received in prior periods that were determined to be returns of investment exceed cumulative equity in earnings recognized by the Company. When such an excess occurs, the current year distribution up to this excess would be considered a return of investment and classified as cash inflows from investing activities.

In September 2017, the Company entered a letter of intent to invest $60,000 (44.45% of ownership) to jointly operate Beijing New Sino-North America Financial Information Co., Ltd and its subsidiaries (“Sino-U.S. Finance”) with three Chinese individuals to operate a mobile application under the name of “Sino-U.S. Finance” which will provide a platform of information and analysis for Chinese-speaking investors in the PRC and US.

The Company started to account the investment under equity method in the year ended May 31, 2018 and the proportional operation losses picked up for the year ended of May 31, 2018 was $93,562, higher than the $60,000 investment amount. According to ASC 323-10-35-19, if the carrying amount of the investment is reduced to zero, and there are no other investments in the investee, the equity method normally is discounted, and investee losses are no longer reported on the income statement. Thus, the Company recorded $60,000 investment loss for Sino-U.S. Finance for the year ended May 31, 2018 and with $0 balance under long-term investment as of November 30, 2018 and May 31, 2018.

Property and Equipment, net

Property and Equipment, net – Property and equipment are stated at cost. Depreciation and amortization of property and equipment is provided using the straight-line method over estimated useful lives ranging from three to five years. Leasehold improvements are amortized over the life of the lease.

Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Gains and losses from retirement or replacement are included in operations.

Depreciation on equipment is provided on a straight-line basis over their expected useful lives at the following annual rates.

Computer equipment	3 years
Furniture & fixtures	3 years
Leasehold improvements	Term of the lease

Website Development, Net

Website Development, Net – The Company accounts for its development costs in accordance with ASC 350-50, “Accounting for Website Development Costs.” The Company’s website comprises multiple features and offerings that are currently developed with ongoing refinements. In connection with the development of its products, the Company has incurred external costs for hardware, software, and consulting services, and internal costs for payroll and related expenses of its technology employees directly involved in the development. All hardware costs are capitalized as fixed assets. Purchased software costs are capitalized in accordance with ASC 350-50-25 related to accounting for the costs of computer software developed or obtained for internal use. All other costs are reviewed to determine whether they should be capitalized or expensed.

Impairment of Long-life Assets

Impairment of Long-life Assets – In accordance with ASC 360, the Company reviews its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There was no impairment for the periods ended November 30, 2018 and May 31, 2018.

Deferred revenue

Deferred Revenue – The Company receives payment for subscription revenues in advance before the subscription service is granted. The Company recognizes the revenue as being earned as the services are delivered. The amount paid for which services have not yet been delivered related to subscription revenues is recorded as a liability in the current or long-term portion of the liabilities section of the balance sheet.

The Company also receives shares of stocks and warrants as means of payments for the investor relationship (“IR”) service provided. The fair market value of the stocks and warrants on the contract date are amortized and recognized as IR revenue over the contract terms. When these services are prepaid by customers, the amount of the prepayment is initially recorded as an asset with an offsetting unearned revenue liability.

As of November 30, 2018 and May 31, 2018, the deferred revenue compromised as following:

	November 30, 2018			May 31, 2018
Deferred subscription	$	560,226		$	587,194
Unearned IR revenue		252,450			315,238
Total		812,676			902,432
Current		(660,185	)		(787,557	)
Noncurrent	$	152,491		$	114,875

Fair Value of Financial Instruments

Fair Value of Financial Instruments – Fair value accounting establishes a framework for measuring fair value and expands disclosure about fair value measurements. Fair value, which is defined as an exit price or the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

· Level one – Quoted market prices in active markets for identical assets or liabilities;

· Level two – Inputs other than level one inputs that are either directly or indirectly observable; and

· Level three – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

The carrying amount of cash and cash equivalents, marketable equity securities, accounts receivable, due from related party, other current assets, accounts payable, and short-term notes approximates fair value because of the short-term nature of these instruments and the fair values close to its carrying value for the non-current deferred revenue.

The following table summarizes the fair value and carrying value of the Company’s financial instruments as of November 30, 2018:

	Fair Value						Carrying
	Level 1		Level 2		Level 3		Value
Assets -
Cash and cash equivalent	$	1,933,886	$	–	$	–	$	1,933,886
Marketable equity securities		3,201,191		–		–		3,201,191
Cryptocurrency		22,774		–		–		22,774
Liability -
Short-term notes	$	–	$	3,161,800	$	–	$	2,848,806

The following table summarizes the fair value and carrying value of the Company’s financial instruments as of May 31, 2018:

	Fair Value						Carrying
	Level 1		Level 2		Level 3		Value
Assets -
Cash and cash equivalent	$	1,390,258	$	–	$	–	$	1,390,258
Marketable equity securities		1,230,754		–		–		1,230,754
Cryptocurrency		31,479		–		–		31,479
Liability -
Short-term notes	$	–	$	998,192	$	–	$	1,058,084

Short-term notes – The fair value of such notes payable had been determined based on 10% and 6% annual interest rates and the proximity to the issuance date as of November 30, 2018 and May 31, 2018, respectively.

The Company uses Level 1 of the fair value hierarchy to measure the fair value of digital currencies and revalues its digital currencies at every reporting period and recognizes gains or losses in the consolidated statements of operations that are attributable to the change in the fair value of the cryptocurrencies.

Other revenue

Other Revenue – Other revenue is comprised of revenue related to Forex service fees, referral commissions and other miscellaneous service revenues generated which is recognized over the period the term of the service term. For the three-month periods ended November 30, 2018 and November 30, 2017. Details as below:

	November 30, 2018		November 30, 2017
Misc. service revenue	$	5,481	$	–
Bitcoin trading class revenue		–		–
Total	$	5,481	$	–

For the six-month periods ended November 30, 2018 and November 30, 2017. Details as below:

	November 30, 2018		November 30, 2017
Misc. service revenue	$	45,619	$	4,754
Bitcoin trading class revenue		32,898		–
Total	$	78,517	$	4,754

Costs of Services/Products Sold

Costs of Services/Products Sold – Costs of services provided are the total direct cost of the Company’s operations in Shanghai and the US. Cost of products sold includes cost of inventory sold during the period, net of discounts and inventory allowances, freight and shipping costs, warranty and rework costs.

Income Taxes

Income Taxes – Income taxes are accounted for under the asset and liability method of ASC 740. Deferred tax assets and liabilities are recognized for net operating loss and other credit carry forwards and the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the tax effect of transactions are expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the year that includes the enactment date.

Deferred tax assets are reduced by a full valuation allowance since it is more likely than not that the amount will not be realized. Deferred tax assets and liabilities are classified as current or noncurrent based on the classification of the underlying asset or liability giving rise to the temporary difference or the expected date of utilization of the carry forwards.

On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) passed that significantly reforms the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The TCJA, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, effective as of January 1, 2018; limitation of the tax deduction for interest expense; limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such tax losses may be carried forward indefinitely); and repeal of the federal corporate Alternative Minimum Tax (“AMT”).

In connection with the analysis of the impact of the TCJA, the Company determined that it does not have any impact on the financial statements.

The Company considers the earnings of the non-U.S. subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs.

Advertising Costs

Advertising Costs – Advertising costs are expensed when incurred.

Earnings (Loss) Per Share

Earnings (Loss) Per Share – Earnings (loss) per share is computed using the weighted average number of common shares outstanding during the period. The Company has adopted ASC 260 “Earnings Per Share”. Fully diluted loss per share are not calculated and presented on the financial statements as the calculation would be antidilutive.

Stock Based Compensation

Stock Based Compensation – The Company accounts for share-based payments pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards using the Black-Scholes option pricing model.

Stock compensation expense for stock options is recognized over the vesting period of the award or expensed immediately under ASC 718 when stock or options are awarded for previous or current service without further recourse.

We periodically issue shares of our common stock to non-employees in non-capital raising transactions for fees and services. We account for stock issued to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees, whereas the value of the stock compensation is based upon the measurement date as determined at either (a) the date at which a performance commitment is reached, or (b) at the date at which the necessary performance to earn the equity instruments is complete.

Preferred Stock Beneficial Convertible Feature

Preferred Stock Beneficial Convertible Feature – Upon issuance of preferred stock convertible in shares of common stock at a price lower than the fair market value of common stock on the date of issuance, in accordance with the guidance provided in ASC 505-10-50, we have recorded the intrinsic value of this beneficial conversion feature (“BCF”).

In according to ASC 470-20-30-6 Intrinsic value shall be calculated at the commitment date as the differences between the conversion price and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible. In according to ASC 470-20-30-8, if the intrinsic value of the beneficial conversion feature is greater than the proceeds allocated to the convertible instrument, the amount of the discount assigned to the beneficial conversion feature shall be limited to the amount of the proceeds allocated to the convertible instrument. Since all the preferred stocks are issued on different date, we calculate the intrinsic value for each individual preferred stock issuance based on stock issuance date. If the intrinsic value exceeds actual proceeds we received, actual proceeds will be BCF, otherwise, the intrinsic value is the BCF.

Foreign Currency

Foreign Currency – The Company has operations in the PRC as a representative office in the PRC, the functional and reporting currency is in U.S. dollars.

The functional currency of the two subsidiaries operated in PRC, CBD Biotech and Newcoins168, is the Chinese Renminbi (“RMB”). The functional currency of the subsidiary operated in Canada, CIIX Online Ltd. is the Canadian Dollar (“CAD”). Assets and liabilities are translated at the exchange rates as of the balance sheet date. Shareholders’ contribution is translated at historical rate. Income and expenditures are translated at the average exchange rate of the period. The RMB is not freely convertible into foreign currency and all foreign currency exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US dollar at the rates used in translation. 

The exchange rates used were as follows:

November 30, 2018
Spot rate	RMB 6.82 to US $1.00
Average rate for the three months ended November 30, 2018	RMB 6.91 to US $1.00
Average rate for the six months ended November 30, 2018	RMB 6.79 to US $1.00
Spot rate	CAD 1.33 to US $1.00
Average rate for the six months ended November 30, 2018	CAD 1.32 to US $1.00
May 31, 2018
Spot rate	RMB 6.40 to US $1.00
Average rate for the three months ended November 30, 2017	RMB 6.62 to US $1.00
Average rate for the six months ended November 30, 2017	RMB 6.67 to US $1.00

New Accounting Pronouncements

New Accounting Pronouncements – Upon issuance of final pronouncements, we review the new accounting literature to determine its relevance, if any, to our business. The Company is in the progress of evaluating the following accounting updates: 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either operating or financing, with such classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact ASU 2016-02 will have on its consolidated financial statements and associated disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, for public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact will have on its consolidated financial statements and associated disclosures.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, Effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company is currently evaluating the impact will have on its consolidated financial statements and associated disclosures.

In August 2018, the FASB issued ASU 2018-13, air Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. Effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this Update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this Update and delay adoption of the additional disclosures until their effective date. The Company is currently evaluating the impact will have on its consolidated financial statements and associated disclosures.

Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the unaudited condensed consolidated financial position, statements of operations and cash flows.

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3. Critical Accounting Policies and Estimates (Tables)

6 Months Ended

Nov. 30, 2018

Accounting Policies [Abstract]

Schedule of property useful lives

Computer equipment	3 years
Furniture & fixtures	3 years
Leasehold improvements	Term of the lease

Deferred revenue

	November 30, 2018			May 31, 2018
Deferred subscription	$	560,226		$	587,194
Unearned IR revenue		252,450			315,238
Total		812,676			902,432
Current		(660,185	)		(787,557	)
Noncurrent	$	152,491		$	114,875

Fair value of financial instruments

The following table summarizes the fair value and carrying value of the Company’s financial instruments as of November 30, 2018:

	Fair Value						Carrying
	Level 1		Level 2		Level 3		Value
Assets -
Cash and cash equivalent	$	1,933,886	$	–	$	–	$	1,933,886
Marketable equity securities		3,201,191		–		–		3,201,191
Cryptocurrency		22,774		–		–		22,774
Liability -
Short-term notes	$	–	$	3,161,800	$	–	$	2,848,806

The following table summarizes the fair value and carrying value of the Company’s financial instruments as of May 31, 2018:

	Fair Value						Carrying
	Level 1		Level 2		Level 3		Value
Assets -
Cash and cash equivalent	$	1,390,258	$	–	$	–	$	1,390,258
Marketable equity securities		1,230,754		–		–		1,230,754
Cryptocurrency		31,479		–		–		31,479
Liability -
Short-term notes	$	–	$	998,192	$	–	$	1,058,084

Other Revenue

For the three-month periods ended November 30, 2018 and November 30, 2017. Details as below:

	November 30, 2018		November 30, 2017
Misc. service revenue	$	5,481	$	–
Bitcoin trading class revenue		–		–
Total	$	5,481	$	–

For the six-month periods ended November 30, 2018 and November 30, 2017. Details as below:

	November 30, 2018		November 30, 2017
Misc. service revenue	$	45,619	$	4,754
Bitcoin trading class revenue		32,898		–
Total	$	78,517	$	4,754

Exchange rate translation

November 30, 2018
Spot rate	RMB 6.82 to US $1.00
Average rate for the three months ended November 30, 2018	RMB 6.91 to US $1.00
Average rate for the six months ended November 30, 2018	RMB 6.79 to US $1.00
Spot rate	CAD 1.33 to US $1.00
Average rate for the six months ended November 30, 2018	CAD 1.32 to US $1.00
May 31, 2018
Spot rate	RMB 6.40 to US $1.00
Average rate for the three months ended November 30, 2017	RMB 6.62 to US $1.00
Average rate for the six months ended November 30, 2017	RMB 6.67 to US $1.00

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5. Other Current Assets (Tables)

6 Months Ended

Nov. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Current Assets

	November 30,		May 31,
	2018		2018
Prepaid expense	$	498,123	$	79,822
Purchase deposit		72,868		145,376
Cryptocurrency on hands		22,774		31,479
Other current assets		92,343		74,951
	$	686,108	$	331,628

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7. Property and Equipment (Tables)

6 Months Ended

Nov. 30, 2018

Property, Plant and Equipment [Abstract]

Property and equipment

	November 30, 2018			May 31, 2018
Furniture & Fixtures	$	175,995		$	154,748
Leasehold Improvements		123,760			35,176
		299,755			189,924
Less: Accumulated Depreciation		(151,765	)		(124,674	)
	$	147,990		$	65,250

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8. Website development (Tables)

6 Months Ended

Nov. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Website development

	November 30, 2018			May 31, 2018
Website development	$	280,714		$	220,598
Less: Accumulated Amortization		(121,863	)		(116,320	)
	$	158,851		$	104,278

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9. Short-term notes (Tables)

6 Months Ended

Nov. 30, 2018

Debt Disclosure [Abstract]

Schedule of notes secured by stock

Company name	Shares Secured for Loan
Nemaura Medical, Inc. (NMRD)	100,000
Recon Technology LTD (RCON)	49,999
Solbright Group Inc. (SBRT)	195,122
Nengfa Weiye Energy (NFEC)	218,779
SGOCO Group LTD (SGOC)	29,412

Schedule of short-term debt

	November 30, 2018		May 31, 2018
Short-term 2017 notes
Secured short term notes, due on October 2018, 6% annual interest rate	$	50,000	$	635,140
Debt incentive to the secured short-term notes above		–		41,539
Short term notes, due on April and May 2018, 6% annual interest rate		–		360,000
Debt incentive related to the short-term notes above		–		21,405
Total short-term 2017 notes	$	50,000	$	1,058,084
Short-term 2018 notes-annual interest rate 10%	$	3,050,000	$	–
Short-term 2018 notes-annual interest rate 8%	$	61,800		–
Total Short-term notes	$	3,161,800	$	1,058,084

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10. Other Current Liabilities (Tables)

6 Months Ended

Nov. 30, 2018

Payables and Accruals [Abstract]

Schedule of other current liabilities

	November 30, 2018		May 31, 2018
Accrued dividends	$	213,877	$	179,218
Accrued interests and others		92,195		32,721
Accrued payroll and taxes		219,873		218,599
Total	$	525,945	$	430,538

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11. Commitments and Concentrations (Tables)

6 Months Ended

Nov. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Future minimum lease commitments

For the fiscal years ending May 31,
2019 (6 months)	$	269,224
2020		360,966
2021		176,989
2022		–
	$	807,179

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2. Liquidity and Capital Resources (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended	18 Months Ended
	Nov. 30, 2018	Nov. 30, 2017	May 31, 2018	Nov. 30, 2018	May 31, 2017
Cash raised through sale of preferred stock	$ 3,548,000	$ 2,750,000
Net cash used in operating activities	(5,532,119)	(3,142,888)
Cash and cash equivalents	1,933,886	$ 1,547,361	$ 1,390,258	$ 1,933,886	$ 1,770,729
Series D-2017 Preferred Stock [Member]
Cash raised through sale of preferred stock	$ 3,548,000		$ 6,793,050	$ 10,341,050

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3. Critical Accounting Policies and Estimates (Details - useful lives)	6 Months Ended
	Nov. 30, 2018
Computer Equipment
Expected Useful Lives	3 years
Furniture and Fixtures
Expected Useful Lives	3 years
Leasehold Improvements
Expected Useful Lives	Term of the lease

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3. Critical Accounting Policies and Estimates (Details - Deferred revenue) - USD ($)	Nov. 30, 2018	May 31, 2018
Accounting Policies [Abstract]
Deferred subscription	$ 560,226	$ 587,194
Unearned IR revenue	252,450	315,238
Total deferred revenue	812,676	902,432
Current	(660,185)	(787,557)
Noncurrent	$ 152,491	$ 114,875

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3. Critical Accounting Policies and Estimates (Details - Fair Value) - USD ($)	Nov. 30, 2018	May 31, 2018
Assets
Cash	$ 1,933,886	$ 1,390,258
Marketable equity securities	3,201,191	1,230,754
Cryptocurrency	22,774	31,479
Liability -
Short-term notes	2,848,806	1,058,084
Level 1
Assets
Cash	1,933,886	1,390,258
Marketable equity securities	3,201,191	1,230,754
Cryptocurrency	22,774	31,479
Liability -
Short-term notes	0	0
Level 2
Assets
Cash	0	0
Marketable equity securities	0	0
Cryptocurrency	0	0
Liability -
Short-term notes	3,161,800	998,192
Level 3
Assets
Cash	0	0
Marketable equity securities	0	0
Cryptocurrency	0	0
Liability -
Short-term notes	$ 0	$ 0

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3. Critical Accounting Policies and Estimates (Details - Other revenue) - USD ($)	3 Months Ended		6 Months Ended
	Nov. 30, 2018	Nov. 30, 2017	Nov. 30, 2018	Nov. 30, 2017
Accounting Policies [Abstract]
Misc. service revenue	$ 5,481	$ 0	$ 45,619	$ 4,754
Bitcoin trading class revenue	0	0	32,898	0
Total other income	$ 5,481	$ 0	$ 78,517	$ 4,754

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3. Critical Accounting Policies and Estimates (Details - Exchange rates)	3 Months Ended		6 Months Ended
	Nov. 30, 2018	Nov. 30, 2017	Nov. 30, 2018	Nov. 30, 2017	May 31, 2018
China, Yuan Renminbi
Translation rate at period end	6.82		6.82		6.40
Translation rate for duration period	6.91	6.62	6.79	6.67
C A D
Translation rate at period end	1.33		1.33
Translation rate for duration period			1.32

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3. Critical Accounting Policies and Estimates (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended
	Nov. 30, 2018	Nov. 30, 2017	May 31, 2018
Reclassification of securities from AOCI to Retained Earnings	$ 486,789
Allowance for doubtful accounts	0		$ 0
Cash balances uninsured	1,390,899		780,726
Inventory reserve	0		0
Long-term investment	175,000		250,000
Impairment of Long-life assets	$ 0	$ 0
Sales Revenue, Net [Member]
Concentration percentage	0.00%	0.00%
Sales Revenue, Net [Member] | Two Customers [Member]
Concentration percentage	30.00%	54.00%
Sino-U.S. Finance [Member]
Loss on investment			(60,000)
Long-term investment	$ 0		$ 0

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4. Stockholders Equity (Details Narrative) - USD ($)	3 Months Ended	6 Months Ended		12 Months Ended		18 Months Ended
	Sep. 11, 2018	Nov. 30, 2018	Nov. 30, 2017	May 31, 2018	May 31, 2017	Nov. 30, 2018
Proceeds from issuance of preferred stock		$ 3,548,000	$ 2,750,000
Proceeds from issuance of common stock		610,450	$ 0
Various Parties [Member]
Stock issued for compensation, shares	526,245
Series D-2017 Preferred Stock [Member]
Proceeds from issuance of preferred stock		3,548,000		$ 6,793,050		$ 10,341,050
Stock issued new, shares				6,793,050
Beneficial conversion feature		967,100		$ 3,933,443
Amortization of BCF, Deemed dividend		$ 967,100		3,933,443
Accredited Investors [Member]
Stock issued new, shares		1,109,818
Proceeds from issuance of common stock		$ 610,450
Series C-2016 Preferred Stock [Member]
Proceeds from issuance of preferred stock					$ 5,000,043
Stock issued new, shares					5,000,043
Beneficial conversion feature					$ 4,930,143
Amortization of BCF, Deemed dividend				$ 1,244,622	$ 3,685,520
Restricted Stock [Member] | Consulting Agreement [Member] | Regal [Member]
Restricted stock award issued, Shares		100,000
Restricted stock award issued, Value		$ 53,600
Restricted Stock [Member] | Consulting Agreement [Member] | Axis [Member]
Restricted stock award issued, Shares		150,000
Restricted stock award issued, Value		$ 100,500
Restricted Stock [Member] | Consulting Agreement [Member] | Melissa Armstrong [Member]
Restricted stock award issued, Shares		100,000
Restricted stock award issued, Value		$ 33,500
Restricted Stock [Member] | Services Agreement [Member] | IRTH [Member]
Restricted stock award issued, Shares		226,245
Restricted stock award issued, Value		$ 333,333
Series 2012 Preferred Stock [Member] | Common Stock
Preferred stock converted into common stock, preferred shares converted		0	150,000
Preferred stock converted into common stock, common stock issued			187,500
Series A-2014 Preferred Stock [Member] | Common Stock
Preferred stock converted into common stock, preferred shares converted		250,000	994,000
Preferred stock converted into common stock, common stock issued		625,000	2,485,000
Series C-2016 Preferred Stock [Member] | Common Stock
Preferred stock converted into common stock, preferred shares converted		129,958	2,908,085
Preferred stock converted into common stock, common stock issued		389,874	8,724,255
Series D-2017 Preferred Stock [Member] | Common Stock
Preferred stock converted into common stock, preferred shares converted		3,434,000		150,000
Preferred stock converted into common stock, common stock issued		6,868,000

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5. Other Current Assets (Details - Other Current Assets) - USD ($)	Nov. 30, 2018	May 31, 2018
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid expense	$ 498,123	$ 79,822
Purchase deposit	72,868	145,376
Cryptocurrency on hand	22,774	31,479
Other current assets	92,343	74,951
Total other current assets	$ 686,108	$ 331,628

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6. Long-term investments (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended
	Nov. 30, 2018	Nov. 30, 2017	May 31, 2017	May 31, 2018
Sale of investment	$ 75,000	$ 0
Breakwater MB LLC [Member[
Payment made for investment			$ 250,000
Investment percentage	8.75%			12.50%
Sale of investment	$ 75,000

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7. Property and Equipment (Details - property and equipment) - USD ($)	Nov. 30, 2018	May 31, 2018	May 31, 2017
Property Plant and Equipment, Gross	$ 299,755	$ 189,924
Less: accumulated depreciation	(151,765)	(124,674)
Property Plant and Equipment. Net	147,990	$ 65,250
Furniture and Fixtures
Property Plant and Equipment, Gross	175,995		$ 154,748
Leasehold Improvements
Property Plant and Equipment, Gross	$ 123,760		$ 35,176

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7. Property and Equipment (Details Narrative) - USD ($)	6 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 27,090	$ 7,795

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8. Website development (Details) - USD ($)	Nov. 30, 2018	May 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
Website development costs	$ 280,714	$ 220,598
Less: accumulated amortization	(121,863)	(116,320)
Total Intangible Assets	$ 158,851	$ 104,278

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8. Website development (Details Narrative) - USD ($)	6 Months Ended
	Nov. 30, 2018	Nov. 30, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 5,542	$ 5,152

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9. Short-term notes (Details - Debt secured by short-term debt)	Nov. 30, 2018 shares
Nemaura Medical [Member]
Debt secured by shares of stock	100,000
Recon Technology [Member]
Debt secured by shares of stock	49,999
Solbright [Member]
Debt secured by shares of stock	195,122
Nengfa Weiye Energy [Member]
Debt secured by shares of stock	218,779
SGOCO Group [Member]
Debt secured by shares of stock	29,412

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9. Short-term notes (Details - Short term notes) - USD ($)	6 Months Ended
	Nov. 30, 2018	May 31, 2018
Short term debt	$ 3,161,800	$ 1,058,084
Secured Short Term Notes [Member]
Short term debt	50,000	$ 1,058,084
2017 Notes [Member]
Debt stated interest rate		6.00%
2017 Notes [Member] | Secured Short Term Notes [Member]
Short term debt	50,000	$ 635,140
Debt incentive	$ 0	41,539
Debt maturity date	Oct. 31, 2018
Debt stated interest rate	6.00%
2017 Notes [Member] | Secured Short Term Notes [Member]
Short term debt	$ 0	360,000
Debt incentive	$ 0	21,405
Debt maturity date	May 31, 2018
Debt stated interest rate	6.00%
2018 Notes 10% [Member]
Short term debt	$ 3,050,000	0
Debt stated interest rate	10.00%
2018 Notes 8% [Member]
Short term debt	$ 61,800	$ 0
Debt stated interest rate	8.00%

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9. Short-term notes (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended
	Nov. 30, 2018	Nov. 30, 2017	May 31, 2018
Proceeds from issuance of short term debt	$ 3,111,800	$ 965,140
2017 Notes [Member]
Debt issuance date			Oct. 15, 2017
Debt face amount			$ 995,140
Debt stated interest rate			6.00%
Short term debt repaid	$ 995,140
2018 Notes 10% [Member]
Debt stated interest rate	10.00%
Proceeds from issuance of short term debt	$ 3,050,000
2018 Notes 8% [Member]
Debt stated interest rate	8.00%
Proceeds from issuance of short term debt	$ 61,800

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10. Other Current Liabilities (Details - Other current liabilities) - USD ($)	Nov. 30, 2018	May 31, 2018
Payables and Accruals [Abstract]
Accrued dividends	$ 213,877	$ 179,218
Accrued interest	92,195	32,721
Accrued payroll and taxes	219,873	218,599
Total	$ 525,945	$ 430,538

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10. Other Current Liabilities (Details Narrative) - USD ($)	Nov. 30, 2018	May 31, 2018
Accrued dividends	$ 213,877	$ 179,218
Series D-2017 Preferred Stock [Member]
Accrued dividends	$ 213,877	164,237
Series C-2016 Preferred Stock [Member]
Accrued dividends		$ 14,981

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11. Commitments and Contingencies (Details - Office lease)	Nov. 30, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2019 (6 months)	$ 269,224
2020	360,996
2021	176,989
2022	0
Total	$ 807,179

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12. Related Party (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Nov. 30, 2018	Nov. 30, 2017	Nov. 30, 2018	Nov. 30, 2017	May 31, 2018
Return of investment			$ 75,000	$ 0
Warren Wang [Member]
Advance to related party	$ 168,793		168,793
Breakwater MB [Member]
Payments to Acquire Investments			250,000
Return of investment			75,000
Lan Jiang [Member]
Salary	$ 45,000	$ 89,000	$ 90,000	$ 128,000
Medicine Man Technologies, Inc. [Member]
Stock held in investment company, shares	41,238		41,238		41,238
Stock held in investment company, value	$ 63,816		$ 63,816		$ 76,496