Chineseinvestors.com, Inc. - FORM 10-Q

Attached files

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EX-32.1 - CERTIFICATION - Chineseinvestors.com, Inc.	chinese_ex3201.htm
EX-31.2 - CERTIFICATION - Chineseinvestors.com, Inc.	chinese_ex3102.htm
EX-31.1 - CERTIFICATION - Chineseinvestors.com, Inc.	chinese_ex3101.htm

Table of Contents

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 February 29, 2020

☐	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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

Securities registered pursuant to Section 12(g) of the Act: Common Stock

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 February 29, 2020, there were outstanding 55,019,497 shares of the issuer’s common stock, par value $0.001 per share, 445,000 shares of the issuer’s Series 2012 convertible preferred stock, par value $0.001 per share, 356,000 shares of the issuer’s Series A-2014 convertible preferred stock, par value $0.001 per share, 193,000 shares of the issuer’s Series C-2016 convertible preferred stock, par value $0.001 per share, and 5,222,050 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 February 29, 2020

INDEX

		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements		2

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		32

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		37

Item 4.	Controls and Procedures		37

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings		38

Item 1A.	Risk Factors		38

Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds		38

Item 3.	Defaults Upon Senior Securities		38

Item 4.	Mine Safety Disclosures		38

Item 5.	Other Information		38

Item 6.	Exhibits		38

Signatures			39

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

CHINESEINVESTORS.COM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

Expressed in U.S. Dollars

	February 29, 2020			May 31, 2019
Assets
Current assets
Cash and cash equivalents	$	537,902		$	1,311,984
Accounts receivable, net		229,006			635,874
Marketable equity securities		412,742			1,133,256
Inventories		165,914			189,397
Due from related party		35,950			606
Other current assets		318,280			471,120
Total current assets		1,699,794			3,742,237

Non-current assets
Long-term investments		153,910			323,603
Property and equipment, net		54,168			98,250
Website development, net		147,356			148,361
Operating lease right of use assets		492,125			–
Other assets		108,383			111,357
Total non-current assets		955,942			681,571

Total assets	$	2,655,736		$	4,423,808
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	357,286		$	487,090
Short-term notes		8,618,856			5,873,709
Deferred revenue, current		663,700			518,570
Current portion of operating lease liabilities		256,500			–
Other current liabilities		1,238,784			638,248
Total current liabilities		11,135,126			7,517,617

Non-current liabilities
Operating lease liabilities-long term		250,147			–
Long-term deferred revenue		188,808			122,329
Total Non-current Liabilities		438,955			122,329

Total liabilities		11,574,081			7,639,946

Commitments and Contingencies (Note 12)
Shareholders’ equity
Preferred stock, series 2012, $0.001 par value 300,000,000 and 20,000,000 authorized, 445,000 and 445,000 were issued and outstanding at February 29, 2020 and May 31, 2019, respectively		445			445
Preferred stock, series A-2014, $0.001 par value 300,000,000 and 20,000,000 authorized, 356,000 and 356,000 were issued and outstanding at February 29, 2020 and May 31, 2019, respectively		356			356
Preferred stock, series C-2016, $0.001 par value 300,000,000 and 20,000,000 authorized, 193,000 and 193,000 were issued and outstanding at February 29, 2020 and May 31, 2019, respectively		193			193
Preferred stock, series D-2017, $0.001 par value 300,000,000 and 20,000,000 authorized, 5,222,050 and 6,037,050 were issued and outstanding at February 29, 2020 and May 31, 2019, respectively		5,222			6,037
Common stock $0.001 par value 700,000,000 and 80,000,000 authorized, 55,019,497 and 45,486,499 were issued and outstanding February 29, 2020 and May 31, 2019, respectively		55,021			45,488
Additional paid-in capital		46,030,067			44,118,980
Accumulated deficit		(55,840,149	)		(47,348,927	)
Accumulated other comprehensive income (loss)		(25,960	)		(38,710	)
Total CIIX Shareholders' equity		(9,774,805	)		(3,216,138	)
Non-controlling interest		856,460			–
Total equity		(8,918,345	)		(3,216,138	)
Total liabilities and shareholders’ equity	$	2,655,736		$	4,423,808

See accompanying notes to the financial statements

CHINESEINVESTORS.COM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

Three Months ended February 28, 2019

Common Stock

Preferred Stock, series 2012

Preferred Stock, series A

Preferred Stock, series C

Amount

Balance at November 30, 2018

39,039,499

39,040

445,000

445

356,000

356

493,000

493

Preferred stocks conversion, series A

–

Preferred stocks conversion, series B

–

Preferred stocks conversion, series C

390,000

390

–

(130,000

)

(130

)

Stock Issuance of Preferred Stock D

–

Preferred stocks conversion, series D

430,000

430

–

Preferred Stock D Return

–

Common stock issuance

–

Stock Compensation

1,147,000

1,147

–

Preferred Stock D Dividend

–

Deemed dividend associated with preferred stock issuance, series D

–

Net(loss) for the period

–

Foreign currency

–

Balance at February 28, 2019

41,006,499

41,007

445,000

445

356,000

356

363,000

363

	Three Months Ended February 28, 2019
	Preferred Stock, series D						Additional Paid in			Stockholders'			Accumulated Other Comprehensive
	Shares			Amount			Capital			Deficit			Income (loss)			Total
Balance at November 30, 2018		6,757,050		$	6,757		$	42,071,868		$	(40,245,175	)	$	(2,853	)	$	1,870,931

Preferred stocks conversion, series A		–			–			–			–			–			–
Preferred stocks conversion, series B		–			–			–			–			–			–
Preferred stocks conversion, series C		–			–			(260	)		–			–			–
Stock Issuance of Preferred Stock D		60,000			60			59,940			–			–			60,000
Preferred stocks conversion, series D		(215,000	)		(215	)		(215	)		–			–			–
Preferred Stock D Return		(30,000	)		(30	)		(29,970	)		–			–			(30,000	)
Common stock issuance		–			–			–			–			–			–
Stock Compensation		–			–			618,293						–			619,440
Preferred Stock D Dividend		–			–			–			(98,420	)		–			(98,420	)
Deemed dividend associated with preferred stock issuance, series D		–			–			25,600			(25,600	)		–			–
Net(loss) for the period		–			–			–			(3,360,603	)		–			(3,360,603	)
Foreign currency		–			–			–			–			(6,211	)		(6,211	)

Balance at February 28, 2019		6,572,050		$	6,572		$	42,745,256		$	(43,729,798	)	$	(9,064	)	$	(944,863	)

See accompanying notes to the financial statements

CHINESEINVESTORS.COM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (continued)

	Three Months ended February 29, 2020
	Common Stock				Preferred Stock, series 2012				Preferred Stock, series A				Preferred Stock, series C
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount
Balance at November 30, 2019		54,151,497	$	54,153		445,000	$	445		356,000	$	356		193,000	$	193

Common stock Issuance		668,000		668		–		–		–		–		–		–
Compensation expense-restricted stock of a subsidiary		–		–		–		–		–		–		–		–
Preferred stocks conversion, series D		200,000		200		–		–		–		–		–		–
Preferred Stock dividends, series D		–		–		–		–		–		–		–		–
Preferred Stock issuance, series D		-		-		-		-		-		-		-		-
Contribution from non-controlling interest		-		-		-		-		-		-		-		-
Deemed Dividend associated with preferred stock issuance, series D		-		-		-		-		-		-		-		-
Net (loss) for the period		–		–		–		–		–		–		–		–
Foreign currency		–		–		–		–		–		–		–		–

Balance at February 29, 2020		55,019,497	$	55,021		445,000	$	445		356,000	$	356		193,000	$	193

	Preferred Stock, series D						Additional Paid in			Stockholders'			Accumulated Other Comprehensive Income						Non-controlling
	Shares			Amount			Capital			Deficit			(loss)			Subtotal			Interest			Total
Balance at November 30, 2019		5,182,050		$	5,182		$	45,725,375		$	(53,016,324	)	$	(48,705	)	$	(7,279,325	)	$	–		$	(7,279,325	)

Common stock Issuance		–			–			99,532			–			–			100,200			–			100,200
Compensation expense-restricted stock of a subsidiary		–			–			–			–			–			–			100,081			100,081
Preferred stocks conversion, series D		(100,000	)		(100	)		(100	)		–			–			–			–			–
Preferred Stock dividends, series D		–			–			–			(66,984	)		–			(66,984	)		–			(66,984	)
Preferred Stock issuance, series D		140,000			140			139,860			–			–			140,000			–			140,000
Contribution from non-controlling interest		–			–			–			–			–			–			813,000			813,000
Deemed Dividend associated with preferred stock issuance, series D		–			–			65,400			(65,400	)		–			–			–			–
Net (loss) for the period		–			–			–			(2,691,441	)		–			(2,691,441	)		(55,304	)		(2,746,745	)
Foreign currency		–			–			–			–			22,745			22,745			(1,317	)		21,428

Balance at February 29, 2020		5,222,050		$	5,222		$	46,030,067		$	(55,840,149	)	$	(25,960	)	$	(9,774,805	)	$	856,460		$	(8,918,345	)

See accompanying notes to the financial statements

CHINESEINVESTORS.COM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (continued)

Nine Months ended February 28, 2019

Common Stock

Preferred Stock, series 2012

Preferred Stock, series A

Preferred Stock, series C

Amount

Balance at May 31, 2018

29,520,560

29,522

445,000

445

606,000

606

622,958

623

Preferred stocks conversion, series A

–

Preferred stocks conversion, series B

625,000

625

–

(250,000

)

(250

)

–

Preferred stocks conversion, series C

779,874

780

–

(259,958

)

(260

)

Stock Issuance of Preferred Stock D

–

Preferred stocks conversion, series D

7,298,000

7,298

–

Preferred Stock D Return

–

Common Stock Issuance

1,109,820

1,110

–

Stock compensation

1,673,245

1,672

–

Preferred Stock dividends, series D

–

Deemed dividend associated with preferred stock issuance, series D

–

Net (loss) for the period

–

Unrealized investment gain/loss

–

Foreign currency.

–

Balance at February 28, 2019

41,006,499

41,007

445,000

445

356,000

356

363,000

363

	Nine Months Ended February 28, 2019
	Preferred Stock, series D						Additional Paid in			Stockholders'			Accumulated Other Comprehensive Income
	Shares			Amount			Capital			Deficit			(loss)			Total
Balance at May 31, 2018		6,643,050		$	6,643		$	36,651,070		$	(35,268,062	)	$	(495,186	)	$	925,661

Preferred stocks conversion, series A		–			–			–			–			–			–
Preferred stocks conversion, series B		–			–			(375	)		–			–			–
Preferred stocks conversion, series C		–			–			(520	)					–			–
Stock Issuance of Preferred Stock D		3,608,000			3,608			3,604,392			–			–			3,608,000
Preferred stocks conversion, series D		(3,649,000	)		(3,649	)		(3,649	)		–			–			–
Preferred Stock D Return		(30,000	)		(30	)		(29,970	)		–			–			(30,000	)
Common Stock Issuance		–			–			609,340			–			–			610,450
Stock compensation		–			–			922,268			–			–			923,940
Preferred Stock dividends, series D		–			–			–			(312,454	)		–			(312,454	)
Deemed dividend associated with preferred stock issuance, series D		–			–			992,700			(992,700	)		–			–
Net (loss) for the period		–			–			–			(6,669,795	)		–			(6,669,795	)
Unrealized investment gain/loss		–			–			–			(486,787	)		486,787			–
Foreign currency		–			–			–			–			(9,064	)		(9,064	)

Balance at February 28, 2019		6,572,050		$	6,572		$	42,745,256		$	(43,729,798	)	$	(9,064	)	$	(944,863	)

See accompanying notes to the financial statements

CHINESEINVESTORS.COM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (continued)

Nine Months ended February 29, 2020

Common Stock

Preferred Stock, series 2012

Preferred Stock, series A

Preferred Stock, series C

Amount

Balance at May 31, 2019

45,486,497

45,488

445,000

445

356,000

356

193,000

193

Common stock Issuance

5,213,000

5,213

–

Stock compensation

2,410,000

2,410

–

Compensation expense-restricted stock of a subsidiary

–

Preferred stocks conversion, series D

1,910,000

1,910

–

Preferred Stock dividends, series D

–

Preferred Stock issuances, series D

–

Other receivable arising from transactions involving CIIX’s capital stock (Note 4)

–

Effect of restructuring entities under common control

Deemed Dividend associated with preferred stock issuance, series D

Net (loss) for the period

–

Foreign currency

–

Balance at February 29, 2020

55,019,499

55,021

445,000

445

356,000

356

193,000

193

	Preferred Stock, series D						Additional Paid in			Stockholders'			Accumulated Other Comprehensive Income						Non-Controlling
	Shares			Amount			Capital			Deficit			(loss)			Subtotal			Interest			Total
Balance at May 31, 2019		6,037,050		$	6,037		$	44,118,980		$	(47,348,927	)	$	(38,710	)	$	(3,216,138	)	$	–		$	(3,216,138	)

Common stock Issuance		–			–			776,737			–			–			781,950			–			781,950
Stock compensation		–			–			1,046,370			–			–			1,048,780			–			1,048,780
Compensation expense-restricted stock of a subsidiary		–			–			–			–			–			–			100,081			100,081
Preferred stocks conversion, series D		(955,000	)		(955	)		(955	)		–			–			–			–			–
Preferred Stock dividends, series D		–			–			–			(220,991	)		–			(220,991	)		–			(220,991	)
Preferred Stock issuances, series D		140,000			140			139,860			–			–			140,000			–			140,000
Other receivable arising from transactions involving CIIX’s capital stock (Note 4)		–			–			(116,325	)		–			–			(116,325	)		–			(116,325	)
Contribution from non-controlling interest		–			–			–			–			–			–			813,000			813,000
Deemed Dividend associated with preferred stock issuance, series D		–			–			65,400			(65,400	)		–			–			–			–
Net (loss) for the period		–			–			–			(8,204,831	)		–			(8,204,831	)		(55,304	)		(8,260,135	)
Foreign currency		–			–			–			–			12,750			12,750			(1,317	)		11,433

Balance at February 29, 2020		5,222,050		$	5,222		$	46,030,067		$	(55,840,149	)	$	(25,960	)	$	(9,774,805	)	$	856,460		$	(8,918,345	)

See accompanying notes to the financial statements

CHINESEINVESTORS.COM, INC. AND SUBSIDIARIES

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

For the Three and Nine Months Ended February 29, 2020 and February 28, 2019

Expressed in U.S. Dollars

	Three Months Ended						Nine Months Ended
	*February 29, 2020*			February 28, 2019			*February 29, 2020*			February 28, 2019
Operating revenues
Investor relations services	$	103,332		$	147,664		$	1,383,482		$	546,251
Subscriptions		253,475			229,220			621,390			680,119
Sales CBD/hemp products		86,956			1,061,318			1,241,919			1,493,939
Other		2			6,620			3,863			97,447
Total revenue		443,765			1,444,822			3,250,654			2,817,756

Cost of revenue
Services		297,739			253,135			1,012,287			1,106,084
Products		39,355			759,369			917,627			958,198
		337,094			1,012,504			1,929,914			2,064,282

Gross profit (loss)		106,671			432,318			1,320,740			753,474

Operating Expenses
General and administrative expenses		1,757,366			3,273,479			6,535,822			7,850,987
Advertising expenses		160,811			298,297			720,544			977,431
Bad debt expenses		413,000			–			593,238			–
Total operating expenses		2,331,177			3,571,776			7,849,604			8,828,418

Loss from operations		(2,224,506	)		(3,139,458	)		(6,528,864	)		(8,074,944	)

Other income/(expense)
Other income		(151,776	)		(209	)		(142,685	)		5,693
Interest income (expense)		(228,975	)		(146,283	)		(599,352	)		(195,194	)
Net realized (loss) gain on investments		3,035			1,881,159			(41,719	)		1,612,559
Loss from security investments		(8,231	)		–			(87,935	)		–
Unrealized (loss) gain on equity securities		(138,407	)		(1,957,422	)		(849,133	)		18,814
Unrealized (loss) gain on cryptocurrencies		2,115			1,610			(10,447	)		(36,724	)
Total other income (expense)		(522,239	)		(221,145	)		(1,731,271	)		1,405,148

Loss before income taxes		(2,746,745	)		(3,360,603	)		(8,260,135	)		(6,669,796	)
Income tax expenses		–			–			–			–
Net loss before dividends		(2,746,745	)		(3,360,603	)		(8,260,135	)		(6,669,796	)

Deemed dividend for the beneficial conversion of convertible preferred stock		(65,400	)		(25,600	)		(65,400	)		(992,700	)
Preferred stock dividends		(66,984	)		(98,420	)		(220,991	)		(312,454	)
Net loss attributable to common shareholders		(2,879,129	)		(3,484,623	)		(8,546,526	)		(7,974,950	)

Less: net income (loss) attributable to non-controlling interest		(55,304	)		–			(55,304	)		–
Net income (loss) attributable to the CIIX common shareholders	$	(2,823,825	)	$	(3,484,623	)	$	(8,491,222	)	$	(7,974,950	)

Net loss attributable to common shareholders		(2,879,129	)		(3,484,623	)		(8,546,526	)		(7,974,950	)
Other comprehensive income (loss), net of nil tax
Foreign currency translation loss		32,295			(6,211	)		12,750			(665	)
Comprehensive loss		(2,846,834	)		(3,490,834	)		(8,533,776	)		(7,975,615	)
Less: comprehensive income (loss) attributable to non-controlling interest		(1,317	)		–			(1,317	)		–
Comprehensive loss attributable to CIIX common shareholders	$	(2,845,517	)	$	(3,490,834	)	$	(8,532,459	)	$	(7,975,615	)

Loss per share-basic and diluted	$	(0.05	)	$	(0.08	)	$	(0.17	)	$	(0.22	)
Weighted average number of shares outstanding - basic & diluted		55,515,233			43,332,692			50,839,982			35,623,585

See accompanying notes to the financial statements

CHINESEINVESTORS.COM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended February 29, 2020 and February 28, 2019

Expressed in U.S. Dollars

	2020			2019
Cash flows from operating activities
Net loss	$	(8,260,135	)	$	(6,669,796	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
Non-cash revenue received as available for sale securities		(947,995	)		(395,023	)
Investment loss (gain) on marketable securities		41,719			(1,612,559	)
Equity in loss from equity method investments		87,935			–
Unrealized loss (gain) on equity securities		849,133			(18,814	)
Unrealized loss (gain) on cryptocurrencies		10,447			36,724
Bad debt expenses		593,238			–
Loss on issuance of preferred stock to investors		140,000			–
Stock compensation expenses		1,165,527			882,273
Depreciation and amortization		54,145			46,407
Changes in operating assets and liabilities
Accounts receivable		276,226			(9,270	)
Inventory		21,594			(23,937	)
Other current assets		(321,197	)		(655,224	)
Accounts payable		(128,631	)		(109,053	)
Accrued interest		393,151			135,485
Deferred revenue		283,391			(104,118	)
Customer deposit		7,060			97,421
Other accrued liabilities		496,514			740
Net cash (used in) operating activities		(5,237,878	)		(8,398,744	)

Cash flows from investing activities
Purchase of equipment		(9,881	)		(139,241	)
Proceeds from investment return		8,750			–
Proceeds from sale of investment-affiliate		–			75,000
Proceeds from sale of marketable securities		191,645			2,313,734
Loan to related party		(68,709	)		–
Net cash provided by (used in) investing activities		121,805			2,249,493

Cash flows from financing activities
Proceeds of issuance of common stock		781,950			610,450
Contribution from non-controlling interest		813,000			–
Proceeds of issuance of preferred stock, series D-2017		–			3,578,000
Payments made for preferred stock dividends		(2,992	)		(393,502	)
Proceeds of issuance of new debts		3,150,002			4,259,800
Repayment of debts		(404,855	)		(995,140	)
Net cash provided by financing activities		4,337,105			7,059,608

Effects of currency translation on cash and cash equivalents		4,886			(12,650	)

Net increase (decrease) in cash and cash equivalents		(774,082	)		897,707
Cash and cash equivalents - beginning of period		1,311,984			1,390,258
Cash and cash equivalents - end of period	$	537,902		$	2,287,965

Supplemental cash flow disclosures
Cash paid for interest	$	80,942		$	59,708
Cash paid for income taxes	$	–		$	–

Supplemental disclosure of non-cash activity

During the three and nine months ended February 29, 2020, the Company received various stocks valued (FMV) at $0 and $189,300 for providing one to twelve months of investor relations (“IR”) services.

During the three and nine months ended February 28, 2019, the company received one stock valued (FMV) at $116,250 and $379,050 for investor relations (“IR”) services which will be performed within one year.

See accompanying notes to the financial statements

CHINESEINVESTORS.COM, INC. AND SUBSIDIARIES

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, the Company’s former sole officer and director, was replaced by Chineseinvestors.com, Inc.’s officers and directors. After giving effect to the acquisition, Chineseinvestors.com, Inc. became a wholly owned subsidiary and the name was changed to Chineseinvestors.com, Inc.

Chineseinvestors.com, Inc. was established as an ‘in language’ (Chinese) financial information web portal, offering news and 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 of the web portal has improved as the Company continues to derive a material portion of its income from the various subscription services it offers to its customers, which provide investment education, news and analysis on the US Equity and Financial Markets as well as news about particular stocks that we are following. Nevertheless, the Company does not provide subscribers with individualized investment advice and never has investment discretion over any subscribers’ or site visitors’ funds. In addition, the Company provides investor relations services for other companies, especially those requiring Mandarin language support, which now accounts for one of the Company’s most significant revenue sources. These services typically include translating client releases into English from Mandarin or vice versa, featuring client advertisements on the www.chinesefn.com website, and assisting clients to achieve goals which may be to increase stock price, to increase awareness about clients and their stock, or to helping clients 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 are the underlying common thread, generally in the form of advertisements on the chinesefn.com website. In exchange for services provided, the Company generally receives fees consisting of cash, client securities, or a combination of cash and equity.

Chineseinvestors.com, Inc. has been in continuous operation since July 1999 using the web domains (uniform resource locators) www.chineseinvestors.com and www.chinesefn.com. The Company has representative offices in leased office space in Shanghai, China, where most support services are fulfilled, San Gabriel, California, and Flushing, NY.

In March 2017, the Company established and registered XiBiDi Biotechnology Co. Ltd./CBD Biotechnology Co. Ltd. (“CBD Biotech”) in Pudong Free-Trade Area in Shanghai, PRC as a wholly owned foreign enterprise (“WOFE”). CBD Biotech’s primary focus is online and retail sales of industrial hemp-infused cosmetics and liquor in PRC.

In April 2017, the Company established ChineseHempOil.com, Inc., dba “Chinese Wellness Center,” (referred to as CHO) a Delaware corporation, as a subsidiary of the Company in San Gabriel, California. CHO is responsible for the development and operation of the online and retail sales of industrial hemp products in the United States.

The Company also incorporated two subsidiaries - Hemp Logic, Inc. (“Hemp Logic”) and CIIX Online, Inc., both Delaware corporations in April 2017. The two wholly owned subsidiaries never operated since their inception. However, on or about November 11, 2019, Hemp Logic, CBD Biotech and ChineseInvestors.com, Inc. entered into a Share Exchange Agreement (“SEA”) pursuant to which the Company sold/transferred to Hemp Logic its one hundred percent (100%) equity interest in CBD Biotech in exchange for newly issued Class A Common Stock, par value $0.0001 and Class B Common Stock, par value $0.0001. CBD Biotech become a wholly-owned subsidiary of Hemp Logic and the Company become a majority owner of Hemp Logic. Hemp Logic issued the Company an aggregate of four million eight hundred forty- one thousand seven hundred thirty-nine (4,841,739) newly-issued Class A Common Stock, par value $0.0001 per share and Class B Common Stock, par value $0.0001 per share of Hemp Logic in the aggregate (the “Hemp Logic Shares”), After the SEA, one hundred percent (“100%”) of the equity interests of CBD Biotech are owned by Hemp Logic and approximately 83.9% of Hemp Logic is owned by the Company. The closing of the exchange took place on December 31, 2019. All operations will be conducted through Hemp Logic and CBD Biotech will continue to operate two business lines, cosmetics and liquor. As of February 29, 2020, the Company owns 77% of Hemp Logic.

In June 2017, the Company formed CBD Biotechnology Ltd. (“CBD Canada”), a corporation incorporated in the Province of British Columbia, which was slated to focus on the sales of industrial hemp-products, via online and other distribution channels. CBD Canada has not generated any revenue as of February 29, 2020.

In or about March 2018, the Company established Bitcoin Trading Academy, LLC, a California limited liability company, formerly known as Stock Surge Momentum. LLC, a California limited liability company (“BTA LLC”), with Warren (Wei) Wang, the Company’s CEO, as its sole managing member. Mr. Wang has transferred all of his interest in BTA, LLC to the Company for $1 consideration. BTA LLC began offering in person and on-line courses on cryptocurrency investment and trading education in July 2018. BTA LLC has since ceased to offer its cryptocurrency news and courses due to decreased consumer demand, presumably related to the 2018 Cryptocurrency Crash. Although the cryptocurrency market is slowly rebounding, currently, the Company does not have short-term plans to resume these programs.

In April 2018, the Company established NewCoins168.com Digital Media Technology Ltd. (Shanghai) as a WOFE registered in China Free Trade Zone, with registered capital of 10 million RMB. There are no revenues as of February 29, 2020.

In August 2018, the Company formed CIIX Online Ltd. (“CIIX Online”), a corporation incorporated in the Province of British Columbia, which was anticipated to focus on the sales of the Company’s subscription service to consumers. There are no revenues as of February 29, 2020.

Donald Capital, LLC, is a Delaware limited liability company established on May 7, 2018. In exchange for capital contributions totaling $160,000 from ChineseInvestors.com, Inc., the Company received a 24.99% interest in Donald Capital LLC. The remaining 75.1% is held equally by Hamilton Strategy Group, Inc. and McDonald Global Enterprises LLC. Alex Hamilton is the CFO of Hemp Logic, Inc. and is the President of Donald Capital LLC. Mr. Hamilton is also the owner of Hamilton Global Strategy. Donald Capital LLC is a registered broker dealer approved by FINRA effective May 14, 2019. On or about February 5, 2020, by unanimous written consent of the Company’s Board of Directors, the Company approved a resolution to sell its 24.9% interest in Donald Capital LLC to a qualified buyer on terms to be agreed upon. To date, no buyer has been procured.

2. Liquidity and Capital Resources:

Cash Flows – During the nine months ended February 29, 2020, the Company primarily generated cash from issuances of its debts to fund its operations. The Company received total proceeds of $3,150,002 of proceeds from the issuance of unsecured promissory notes which accrue interest at the rate of 10% per annum for the nine months ended February 29, 2020.

Cash flows used in operations for the nine months ended February 29, 2020 and 2019 were $5,237,878 and $8,398,744, respectively. The decreased cash used in operations was due to a reduction in general and administrative expenses used in operations.

Capital Resources – As of February 29, 2020, the Company had cash and cash equivalents of $537,902 as compared to cash and cash equivalents of $1,311,984 as of May 31, 2019.

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 statements. 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, 2019, included in our 2019 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 three and nine months ended February 29, 2020 are not necessarily indicative of the results for the year ending May 31, 2020 or for any future period.

These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The consolidated financial statements include the operations of Chineseinvestors.com Inc. and its subsidiaries. The Company’s wholly owned subsidiaries include ChineseHempOil.com Inc, CBD Biotechnology Co. Ltd., CIIX Online, NewCoins168.com Digital Media Technology Ltd., Bitcoin Trading Academy LLC, CIIX Online Ltd and Blue Ocean Capital Holding LLC. The Company’s subsidiaries include 77% of CBD Biotech, Inc., Hemp Logic, of which 23% of Hemp Logic’s consolidated operating results were shown in non-controlling interest on the consolidated balance sheets. Intercompany accounts and transactions have been eliminated upon consolidation.

Certain reclassifications have been made to the consolidated financial statements for prior years to the current year’s presentation. Such reclassifications have no effect on net income as previously reported.

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:

Lease

The Company adopted Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), as of June 1, 2019, using a modified retrospective transition method and as a result, the consolidated balance sheet prior to June 1, 2019 was not restated, continues to be reported under ASC Topic 840, Leases, or ASC 840. For all leases at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease.

The lease liability is based on the present value of the remaining minimum lease payments, determined under ASC 842, discounted using our incremental borrowing rate at the effective date of June 1, 2019, using the original lease term as the tenor. As permitted under the transition guidance, we elected several practical expedients that permit us to not reassess (1) whether a contract is or contains a lease, (2) the classification of existing leases, and (3) whether previously capitalized costs continue to qualify as initial indirect costs. The application of the practical expedients did not have a significant impact on the measurement of the operating lease liability. Adoption of the new standard resulted in the recording of operating right of use assets and the related lease liabilities of approximately $891,371 and $925,816, respectively, as of June 1, 2019. The difference between the additional lease assets and lease liabilities was $34,445. The standard did not materially impact our consolidated operating results and had no impact on cash flows. Please see Note 11.

Stock Compensation

The Company adopted 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.

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:

Investor-relations service income

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

Identify contracts with clients. The Company enters into service agreements with clients. The Company always discloses the nature of the contract including the contact price.

Identify performance obligations in the contract. Many of our investor-relations service contracts contain multiple performance obligations, including presentation of clients’ information on Chinesefn.com, translation of client 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.

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 are one year or less.

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

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.

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.

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 minimal product returns or sales discounts and allowances because goods delivered and accepted by customers are normally not returnable.

Other revenues include various fee-based income earned through banner advertisements, webpage hosting and maintenance, on-line promotion and translation services, advertising and promotion fees on the Company’s website, sponsorship fees from investment seminars, road shows, forums on the Company’s website, and referral fees from cryptocurrency referrals. 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 these contracts. These revenues are recognized when all significant performance obligations have been satisfied and collection of the resulting receivable is reasonably assured.

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

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 in Donald Capital 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 Donald Capital, LLC for the three and nine months ended February 29, 2020 as no impairment indicator was 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 February 29, 2020 and May 31, 2019.

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.

The Company recorded $413,000 and $0 bad debt expense for the three months ended February 29, 2020 and 2019, respectively, and $593,238 and $0 bad debt expense for the nine months ended February 29, 2020 and 2019, respectively.

Marketable equity securities – Marketable equity securities is comprised of publicly traded stocks received in return for providing investor relations services to the Company’s clients. 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 industrial hemp 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 write down the cost to its net realizable value 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 February 29, 2020 and May 31, 2019.

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” slated to 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 February 29, 2020 and May 31, 2019.

Property and Equipment, net – Property and equipment are stated at cost net of accumulated depreciation and amortization, and accumulated impairment, if any. 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.

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 February 29, 2020 and May 31, 2019.

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 IR services provided. The fair market value of the stocks and warrants on the contract date are amortized and recognized as IR revenue over term of the contracts. When these services are prepaid by clients, the amount of the prepayment is initially recorded as an asset with an offsetting unearned revenue liability.

As of February 29, 2020 and May 31, 2019, the deferred revenue compromised as following:

	February 29, 2020			May 31, 2019
Deferred subscriptions	$	800,936		$	503,644
Unearned IR revenues		51,572			137,255
Total		852,508			640,899
Current		(663,700	)		(518,570	)
Noncurrent	$	188,808		$	122,329

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 February 29, 2020:

	Fair Value						Carrying
	Level 1		Level 2		Level 3		Value
Assets -
Cash and cash equivalent	$	537,902	$	–	$	–	$	537,902
Marketable equity securities		412,742		–		–		412,742
Cryptocurrency		12,356		–		–		12,356
Liability -
Short-term notes	$	–	$	8,074,596	$	–	$	8,618,856

The following table summarizes the fair value and carrying value of the Company’s financial instruments as of May 31, 2019:

	Fair Value						Carrying
	Level 1		Level 2		Level 3		Value
Assets -
Cash and cash equivalent	$	1,311,984	$	–	$	–	$	1,311,984
Marketable equity securities		1,133,256		–		–		1,133,256
Cryptocurrency		67,420		–		–		67,420
Liability -
Short-term notes	$	–	$	5,387,609	$	–	$	5,873,709

Short-term notes – The fair value of such notes payable had been determined based on 10% and 8% annual interest rates and the proximity to the issuance date as of February 29, 2020 and May 31, 2019, 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.

Non-Controlling Interest – The Company accounted for its non-controlling interest of 23% in Hemp Logic and CBD Biotech as a separate component of equity. In addition, net loss, and components of other comprehensive income are attributed to both the Company and non-controlling interest.

Segment Policy – The Company’s reportable segments, service and products. Service segment includes income from financial news subscriptions and investor relations services. Product segment includes income from hemp related product sales. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision maker. The Company evaluates performance based primarily on income (loss) from operations.

Other Revenue – Other revenue is comprised of revenue related to Forex service fees, miner revenue and other miscellaneous service revenues generated which are recognized over the term the services are to be provided. For the three-month periods ended February 29, 2020 and 2019 details as below:

	February 29, 2020		February 28, 2019
Misc. service revenues	$	2	$	6,620
Bitcoin trading class revenues		–		–
Total	$	2	$	6,620

For the nine-month periods ended February 29, 2020 and February 28, 2019. Details as below:

	February 29, 2020		February 28, 2019
Misc. service revenues	$	3,863	$	64,549
Bitcoin trading class revenues		–		32,898
Total	$	3,863	$	97,447

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”). 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. Subsequent to the end of the third fiscal quarter, on March 27, 2020, H.R. 478, the CARES Act, was signed into law. The CARES Act contains a number of federal corporate tax relief provisions that may be of benefit to the Company. The actual effect to the Company will not be known until after the end of the Company’s fiscal year on May 31, 2020.

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 ASU 2018-07, Equity-Based Payments to Non-Employees, Nonemployee share-based payment awards nonemployee share-based payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied.

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”).

According to ASC 470-20-30-6 intrinsic value shall be calculated at the commitment date as the difference 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. 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 have been issued on different dates, 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:

February 29, 2020
Spot rate		RMB 6.99 to US $1.00
Average rate for the three months ended February 29, 2020		RMB 6.98 to US $1.00
Average rate for the nine months ended February 29, 2020		RMB 6.70 to US $1.00
Spot rate		CAD 1.34 to US $1.00
Average rate for the three months ended February 29, 2020		CAD 1.32 to US $1.00
Average rate for the nine months ended February 29, 2020		CAD 1.32 to US $1.00

May 31, 2019
Spot rate		RMB 6.69 to US $1.00
Average rate for the three months ended February 28, 2019		RMB 6.85 to US $1.00
Average rate for the nine months ended February 28, 2019		RMB 6.81 to US $1.00
Spot rate		CAD 1.32 to US $1.00
Average rate for the three months ended February 28, 2019		CAD 1.32 to US $1.00
Average rate for the nine months ended February 28, 2019		CAD 1.32 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 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, 2022, including interim periods within those fiscal years. Subsequently, the FASB announced certain codification improvements including ASU 2018-19, ASU-2019-04 and ASU 2019-05. 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 balance sheets, statements of stockholders’ equity(deficit), statements of operations and comprehensive income(loss) and statements of cash flows.

4. Stockholders’ Equity:

As of February 29, 2020, the Company was authorized to issue 700,000,000 shares of common stock, $0.001 par value per share. In addition, 300,000,000 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. The Company has paid off all the dividends for the Series 2012 Convertible Preferred Stock and the holders of this preferred stock no longer entitled to dividends.

During the nine months period ended February 29, 2020 and 2019, the shareholders of preferred stock series-2012 did not convert any shares of preferred stock. There are 445,000 shares of Series -2012 Convertible Preferred Stock outstanding as of February 29, 2020.

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. The Company has paid off all the dividends for the Series A- 2014 Convertible Preferred Stock and the holders of this preferred stock are no longer entitled to dividends.

During the nine months period ended February 29, 2020, the shareholders of preferred stock series A-2014 converted 0 shares of preferred stock. During the nine months period ended February 28, 2019, 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. There are 356,000 shares of Series A-2014 Convertible Preferred Stock outstanding as of February 29, 2020.

Series C-2016 Convertible Preferred Stock

In December 2016, the Company issued 5,000,043 shares of its Series C-2016 Convertible Preferred Stock at a price of $1.00 per share for total proceeds of $5,000,043. The terms of the 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, and the Company maintained the right to suspend the dividend at its discretion if it is deemed necessary. The Company paid total $232,449 dividends to Series C-2016 Convertible Preferred Stock and the holders of this preferred stock no longer entitle to dividends.

We calculated the BCF of the Series C-2016 Convertible 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 after six months from the date of issuance. We then amortize the BCF over six months period, we recorded $3,685,520 as deemed dividend as of May 31, 2018, and we recorded the remaining $1,244,622 as deemed dividend that increases accumulated deficit for the period ended August 31, 2017.

During the nine months period ended February 29, 2020, the shareholders of preferred stock series C-2016 converted 0 shares of preferred stock. During the nine months period ended February 28, 2019, the shareholders of preferred stock series C-2016 converted 259,958 shares of preferred stock for 779,874 of common stock shares at a conversion rate of 1 share of preferred stock series C-2016 for 3.00 shares of common stock. There are 193,000 shares of Series C-2016 Convertible Preferred Stock outstanding as of February 29, 2020.

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. For the year ended May 31, 2019, the Company issued 3,578,000 shares of its Series D-2017 Convertible Preferred Stock at a price of $1.00 per share for total proceeds of $3,578,000. 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 $992,700 and $3,933,443 for the year ended May 31, 2019 and 2018, respectively. 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 $992,700 and $3,933,443 as deemed dividend as of May 31, 2019 and 2018, respectively.

Duplicate certificates totaling 140,000 shares of Series D-2017 preferred stock were issued to three (3) individual investors. Despite efforts to secure the return of these duplicate certificates, the Company has been unable to do so; therefore, the Company recorded $140,000 as loss and we calculated the BCF of the preferred shares are $65,400 as of February 29, 2020. The Company’s transfer agent has been instructed not remove the restrictions or to convert the duplicate certificates in the event they are redeemed in the future.

During the nine months period ended February 29, 2020, the shareholders of preferred stock series D-2017 converted 955,000 shares of preferred stock for 1,910,000 of common stock shares at a conversion rate of 1 share of preferred stock series D-2017 for 2 shares of common stock. During the nine months period ended February 28, 2019, the shareholders of preferred stock series D-2017 converted 3,649,000 shares of preferred stock for 7,298,000 of common stock shares at a conversion rate of 1 share of preferred stock series D-2017 for 2 shares of common stock. There are 5,222,050 shares of Series D-2017 Convertible Preferred Stock outstanding as of February 29, 2020.

Common Stock

In November 2019, the Company issued Company’s common stock at $0.15 per share to accredited investors for total proceeds of $781,950, and total 5,213,000 shares were issued as of February 29, 2020.

Stock compensation

On June 4, 2019, the Company awarded various employees and contractors stock compensation total 2,222,000 shares of common stock. 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. $999,900 share-based compensation expense was recorded associated with the award for the nine months ended February 29, 2020.

On September 26, 2019, the Company awarded 2 contractors stock compensation total 188,000 shares of common stock. 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. $48,880 share-based compensation expense was recorded associated with the award for the nine months ended February 29, 2020.

On December 23, 2019, the Company’s subsidiary Hemp Logic Inc issued stock compensation total 1,446,250 shares of common stock. Hemp Logic’s fair market value was not available at grant date, we used the Company’s stock value to calculate the stock compensation totaled at $300,098 at grant date. The service is to be performed in one year starting November 1, 2019. $100,081 share-based compensation expense was recorded associated with the award for the nine months ended February 29, 2020.

Treasury Stock

On September 25, 2019, the Company entered into an Assignment and Assumption Agreement with Mr. Paul Dickman, the Company agreed to assign its remaining 8.75% interest in MB Breakwater, LLC to Mr. Dickman and Mr. Paul Dickman sold 423,000 shares of the Company’s common stock to the Company that were issued to Mr. Paul Dickman as part of the Company’s incentive compensation arrangement with Mr. Paul Dickman. The share certificates were received by the Company but Mr. Dickman had not delivered the stock powers required to effect the transfer as of February 29, 2020. The stock powers were received on April 9, 2020.

Non-controlling interest

The share exchange agreement, which Hemp Logic, CBD Biotech and ChineseInvestors.com entered into on November 11, 2019, states that one hundred percent (“100%”) of the equity interests of CBD Biotech are owned by Hemp Logic and approximately 83.9% of Hemp Logic is owned by the Company. After Hemp Logic issued stock compensation to its officers and board of directors, the Company’s ownership in Hemp Logic changed to 77%; therefore, the Company accounted for its non-controlling interest of 23% in Hemp Logic and CBD Biotech as a separate component of equity. In addition, net loss, and components of other comprehensive income are attributed to both the Company and non-controlling interest. Please see note 14 for details.

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 CBD product purchase, prepaid expenses in both United States and Shanghai, details as below:

	February 29, 2020		May 31, 2019
Prepaid expenses	$	66,433	$	314,707
Purchase deposits		160,849		49,773
Cryptocurrencies on hand		12,356		67,420
Other current assets		78,642		39,220
Total other current assets	$	318,280	$	471,120

6. Long-term investments

Long-term investments include: 1) investment at Breakwater MB, LLC and Grow flow Inc accounted as equity investment without readily available fair value since the Company does not have the significant influence, the Company sold investment in Breakwater MB, LLC on September 25, 2019 and 2) investment at Sino-U.S. Finance and Donald Capital LLC are accounted for equity method since the Company has the ability to exercise significant influence over the investee, under which 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.

Since the Company’s investments include privately held companies where quoted market prices are not available and as a result, the cost method, combined with other intrinsic information, is used to assess the fair value of the investment. If the carrying value is above the fair value of an investment at the end of any reporting period, the investment is reviewed to determine if the impairment is other than temporary. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis in the investment is established.

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 Company’s former CFO and a former 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 was to be primarily used to cover the costs of becoming a publicly traded company, a strategy the Company expected would provide significant investment appreciation and opportunity for liquidity. All opportunities were to 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 served 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 stood at 8.75% with carrying value of $140,000 and 12.5% with carrying value of $250,000 as of May 31, 2019 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.

On 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 5% of the equity (the “Redemption Agreement”). The Redemption Agreement provided 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 February 29, 2020, the Company had received the $75,000 payment but not the $25,000 payment due September 15, 2018; therefore only 3.75% of the equity was redeemed, leaving 8.75%.

For the year ended May 31, 2019, Breakwater transferred 400,000 shares of its stock holding in Grow Flow Inc to the Company as a dividend distribution. Those shares were valued at $35,000 based on 20% of the Company’s invested equity holding of $175,000 in Breakwater MB, LLC.

On or about September 25, 2019, the Company entered into an Assignment and Assumption Agreement with Mr. Dickman, the Company agreed to assign its remaining 8.75% interest in MB Breakwater, LLC to Mr. Dickman and Mr. Dickman sold 423,000 shares of the Company’s common stock to the Company that were issued to Mr. Dickman as part of the Company’s incentive compensation arrangement with Mr. Dickman. The share certificates were received by the Company but Mr. Dickman had not delivered the stock powers required to effect the transfer as of February 29, 2020. The Company recognized loss in amount of $23,675. The Company received the stock powers required on April 9, 2020.

In April 2019, the Company made a $160,000 investment for 24.9% of Donald Capital LLC a Delaware Corporation’s equity. The remaining 75.1% is held equally by Hamilton Strategy Group, Inc. and McDonald Global Enterprises LLC. Alex Hamilton is the CFO of Hemp Logic, Inc and the President of Donald Capital LLC. Mr. Hamilton is also the owner of Hamilton Global Strategy. Donald Capital is a boutique investment bank, approved by FINRA and the SEC on May 14, 2019. As of February 29, 2020, the Company’s equity position in Donald Capital LLC currently stands at 24.9%. The Company recorded $8,231 and $20,943 investment loss for Donald Capital LLC for the three and nine months ended February 29, 2020 and with $118,910 balance under long-term investment as of February 29, 2020.

Long term investments are comprised of the following:

	February 29, 2020		May 31, 2019
Breakwater Finance MB, LLC	$	–	$	140,000
Donald Capital LLC		118,910		148,603
Grow Flow Inc.		35,000		35,000
	$	153,910	$	323,603

7. Property and Equipment:

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

	February 29, 2020			May 31, 2019
Furniture & Fixtures	$	179,620		$	179,337
Leasehold Improvements		95,944			96,718
		275,564			276,055
Less: Accumulated Depreciation		(221,396	)		(177,805	)
	$	54,168		$	98,250

Depreciation expense for the nine months ended February 29, 2020 and 2019 was $44,815 and $38,445, respectively.

8. Website development, net:

Website development is comprised of the following:

	February 29, 2020			May 31, 2019
Website development	$	285,859		$	276,861
Less: Accumulated Amortization		(138,503	)		(128,500	)
	$	147,356		$	148,361

Amortization is calculated over a straight-line basis using the economic life of the asset. Amortization expense for the nine months ended February 29, 2020 and 2019 was $9,330 and $8,348, respectively.

9. Short-term notes:

In August 2018, the board of directors of the Company approved the offer of unsecured one-year term notes to individual accredited investor lenders for a maximum $3,000,000 with 10% annual interest rate (the “2018 Notes-10%”). The Company issued 2018 Notes-10% in the total amount of $3,030,000 from various individual accredited investor lenders. As of February 29, 2020, some accredited investor lenders of the 2018 Notes-10% rolled over a portion or all of the principal and interest due and owing on the 2018 Notes – 10% totaling $1,387,026 into the Company’s 2019 offering of unsecured notes at -with a 10% annual interest rate (the “2019 Notes – 10%”) and the Company paid off $200,000 to accredited investor lenders. As of February 29, 2020, $1,300,000 of the 2018 Notes-10% were in default.

In October 2018, the board of directors of the Company approved the Company to offer unsecured one-year term notes to individual accredited investor lenders for a maximum $3,000,000 with an 8% annual interest rate (the “2018 Notes – 8%.”). The 2018 Notes – 8% included an incentive based on the NF Energy Savings Corporation (“NFEC”) share value of $10.38 per share (the “Base Value”). At the time the 2018 Notes – 8% were executed, the Company held 220,000 shares of NF Energy Savings Corporation (“NFEC”) (the “Securities”). As provided for in the 2018 Notes – 8%, the Company/Borrower agreed that if Borrower, at its sole discretion, sold any of the Securities during the term of the 2018 Notes – 8%, all of the Lenders in the Class would be entitled to receive in the aggregate, twenty percent (20%) of the excess of the sales proceeds of such Securities over the Base Value (the “Incentive Payment”). The Lender’s share of the Incentive Payment would be determined by the fraction of the total loan to all loans in the class, not to exceed $3,000,000. As of February 29, 2020, the Company had issued 2018 Notes-8% in the total amount of $1,154,800 to various individual lenders and as of February 29, 2020, the Company paid incentives totaling $51,314 incentive to the accredited investor lenders for the 2018 Notes – 8%. As of February 29, 2020, some accredited investor lenders of 2018 Notes-8% converted all or some portion of the principal and interest due and owing under the 2018 Notes – 10% totaling $110,000 to common stock at $0.15/share. As of February 29, 2020, $1,039,800 of the 2018 Notes-8% were in default.

On February 2019, the board of directors of the Company approved the offering of unsecured one-year term notes to individual lenders for a maximum $5,000,000 with 10% annual interest rate (the “2019 Notes-10%”). As of February 29, 2020, the Company has issued 2019 Notes-10% in the total amount of $5,645,490 to various individual accredited investor lenders. Of the $5,645,490, $1,567,025 was rolled over from the 2018-Notes 10% in August 2019. As of February 29, 2020, $75,000 of the 2019 Notes-10% were in default and $25,000 converted to 166,667 shares of Common stock at $0.15/share.

On November 13, 2019 the Company entered into a Term Loan and Security Agreement with Celtic Bank Corporation ("Celtic") in the original principal amount of $100,000 (the “Celtic Loan”). Bluevine Capital Inc. (“Bluevine”) is the servicer for the Celtic Loan. The Celtic Loan matures on May 12, 2020. The terms of the Celtic Loan provide for weekly payments which are current as of February 29, 2020. To secure the Celtic Loan obligations the Company granted to Celtic and to Bluevine, as the collateral agent for Celtic, a continuing first priority security interest in that certain collateral identified therein.

On November 27, 2019, the Company entered into a Revenue Purchase Agreement with Pearl Beta Funding, LLC (“PBF”) (the “Revenue Purchase Agreement”). Pursuant to the Revenue Purchase Agreement, PBF purchased $139,650 worth, approximately 6%, of the Company’s future accounts, contract rights and other entitlements arising from or relating to the payment of monies from the Company’s customers’ and/or other third party payers (the “Receipts” defined as all payments made by cash, check, electronic transfer or other form of monetary payment in the ordinary course of the Company’s business), for the payments due to Company as a result of the Company’s sale of goods and/or services (the “Transactions”) until the purchased amount has been delivered to PBF. With regard to the Revenue Purchase Agreement, the Company is selling a portion of a future revenue stream to PBF at a discount. Pursuant to the Security Agreement and Guaranty of Performance (“SAGP”) granted to PBF a security interest in and lien upon certain collateral identified therein. The remittance provided for in the Revenue Purchase Agreement in the amount of $1,552 as a good faith estimate of purchased percentage multiplied by the daily average revenues of the Company during the previous calendar month divided by the number of business days in the calendar month. Pursuant to the Revenue Purchase Agreement PBF will debit the remittance each business day from the Company’s designated account, until such time as PBF receives payment in full of the purchased amount of $139,650.

On December 24, 2019, the Company entered into an unsecured promissory note in the original principal amount of $150,000 from one individual lender (the “December 24, 2019 Note”). The December 24, 2019 Note has a one year term and provides for payment of twenty-four (24) bi-monthly installments of principal and interest beginning on January 15, 2020, followed by a principal and interest payment due on January 30, 2020, and continuing on the 15th and the 30th day of each consecutive month, until paid in full in the amounts set forth in the corresponding amortization schedule. The December 24, 2019 Note provides for interest at the rate of 18.65% interest and default interest of 21.10%. Any unpaid principal and all accrued but unpaid interest is due and payable on the maturity date.

On December 21, 2019, the Company entered into an unsecured promissory note in the original principal amount of $210,000 from one individual lender (the “December 21, 2019 Note”). The December 21, 2019 Note has a one year terms and provides for payment of twenty-four (24) bi-monthly installments of principal and interest beginning on January 15, 2020, followed by a principal and interest payment due on January 30, 2020, and continuing on the 15th and the 30th day of each consecutive month, until paid in full in the amounts set forth in the corresponding amortization schedule. The December 21, 2019 Note provides for interest at the rate of 18.65% interest and default interest of 21.10%. Any unpaid principal and all accrued but unpaid interest is due and payable on the maturity date.

On January 14, 2020, the Company entered into an unsecured promissory note in the original principal amount of $70,000 from one individual lender (the “January 14, 2020 Note”). The January 14, 2020 Note has a 6 months terms and provides for payment of twelve (12) bi-monthly installments of principal and interest beginning on February 15, 2020, followed by a principal and interest payment due on February 29, 2020, and continuing on the 15th and the 30th day of each consecutive month, until paid in full in the amounts set forth in the corresponding amortization schedule. The January 14, 2020 Note provides for interest at the rate of 18.65% interest and default interest of 21.10%. Any unpaid principal and all accrued but unpaid interest is due and payable on the maturity date.

On January 9, 2020, the Company entered into a Securities Purchase Agreement (the “Power Up January 2020 Agreement”), in connection with the issuance of a convertible note to the Company in favor of Power Up Lending Group Ltd., in the aggregate principal amount of $88,000, for a one-year term with an annual interest rate of 8% per annum. (the “January 2020-8% Note”), convertible into shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in the January 2020-8% Note and the Power Up January 2020 Agreement, along with an irrevocable letter agreement with Globex Transfer, LLC, the Company’s transfer agent, with respect to the reserve of shares of Common Stock of the Company to be issued upon any conversion of the January 2020-8% Note.

On February 11, 2020, the Company entered into a Securities Purchase Agreement (the “Power Up February 22, 2020 Agreement”), in connection with the issuance of a convertible note to the Company in favor of Power Up Lending Group Ltd., in the aggregate principal amount of $53,000, for a one-year term with an annual interest rate of 8% per annum. (the “February 11, 2020-8% Note”), convertible into shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in the February 11, 2020-8% Note and the Power Up February 22, 2020 Agreement, along with an irrevocable letter agreement with Globex Transfer, LLC, the Company’s transfer agent, with respect to the reserve of shares of Common Stock of the Company to be issued upon any conversion of the February 11, 2020-8% Note.

On February 24, 2020, the Company entered into a Securities Purchase Agreement (the “Crown Bridge February 2020 Agreement”), in connection with the issuance of a convertible note to the Company in favor of Crown Bridge Partners, LLC in the aggregate principal amount of $75,000, for a one-year term with an annual interest rate of 8% per annum. (the “Crown Bridge February 2020-8% Note”), convertible into shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in the Crown Bridge February 2020-8% Note and the Crown Bridge February 2020 Agreement, along with an irrevocable letter agreement with Globex Transfer, LLC, the Company’s transfer agent, with respect to the reserve of shares of Common Stock of the Company to be issued upon any conversion of the Crown Bridge February 2020-8% Note.

As of February 29, 2020 and May 31, 2019, the short-term notes are compromised as follows:

	February 29, 2020		May 31, 2019

Short-term 2018 notes-annual interest rate 10% due August to October 2019	$	1,300,000	$	3,030,000
Short-term 2018 notes-annual interest rate 8% due November 2019 to January 2020		1,039,800		1,154,800
Short-term 2019 notes-annual interest rate 10% due February 2020 to November 2020		5,645,490		1,688,909
Celtic Bank Corporation		49,993		–
Pearl Beta Funding LLC		3,812		–
Debt-2020 note-annual interest rate 18.65%-Semimonthly payments		363,761		–
Debt-2020-8%		216,000		–
Total Short-term notes	$	8,618,856	$	5,873,709

10. Other Current Liabilities:

Other current liabilities compromise as following:

	February 29, 2020		May 31, 2019
Accrued dividends	$	413,552	$	195,554
Accrued interests and others		548,940		143,377
Accrued payroll and taxes		276,292		299,317
Total	$	1,238,784	$	638,248

Accrued dividends as of February 29, 2020 and May 31, 2019 are comprised of dividends payable to the preferred stockholders, Series D-2017 in the amount of $402,217 and $195,554, respectively. On or about December 17, 2019, the Company’s Board of Directors approved a resolution that provides for an equity dividend payable in the Company’s Rule 144 restricted common stock, equal to two (2) times the amount of the stated dividend amount of 6% for the Series D-2017 preferred shareholders, calculated using a base price of $0.15 USD per share of common stock and declared payable on the outstanding preferred stock of the Company to the Series D -2017 preferred shareholders of record between December 1, 2018 and May 31, 2019 in satisfaction of the dividends which accrued but were unpaid for the fiscal year ended May 31, 2019. It is likely that the Company’s Board will likewise recommend and approve an equity payment for dividends to Series D-2017 shareholders payable as of February 29, 2020. As of the date of this filing the stock certificates for the dividends payable for the period ended May 31, 2019 have not been issued, but are in process.

Accrued interest as of February 29, 2020 represents interest payable for the 2018 Notes - 10%, 2018 Notes – 8%, 2019 Notes 10% and 2020 Notes-8%. Accrued interest as of May 31, 2019 represents interest payable for the 2018 Notes -10%, the 2018 Notes -8%, and 2019 Notes -10%.

11. Segments and Geographic Areas

The Company operates business in two operating segments: Financial News and Investor Relation Services and Industrial Hemp Product Sales. Segment disclosures are on a performance basis consistent with internal management reporting.

Information about segments during the periods presented were as follows:

	Three Months Ended						Nine Months Ended
	February 29,			February 28,			February 29,			February 28,
	2020			2019			2020			2019
Geographic Markets
China	$	40,997		$	1,030,397		$	1,068,047		$	1,464,734
USA		402,768			414,425			2,182,607			1,353,022
Total	$	443,765		$	1,444,822		$	3,250,654		$	2,817,756

Revenue Segments
Service	$	356,809		$	383,504		$	2,008,735		$	1,323,817
Products		86,956			1,061,318			1,241,919			1,493,939
Total	$	443,765		$	1,444,822		$	3,250,654		$	2,817,756

Cost of Revenue Segments
Service	$	297,739		$	253,135		$	1,012,287		$	1,106,084
Products		39,355			759,369			917,627			958,198
Total	$	377,094		$	1,012,504		$	1,929,914		$	2,064,282

Operating expenses
Service	$	1,881,028		$	2,791,341		$	6,589,893		$	7,279,150
Products		450,149			780,435			1,259,711			1,549,268
Total	$	2,331,177		$	3,571,776		$	7,849,604		$	8,828,418

Loss from operations
Service		(1,821,958	)	$	(2,660,972	)		(5,593,445	)	$	(7,061,417	)
Products		(402,548	)		(478,486	)		(935,419	)		(1,013,527	)
Total	$	(2,224,506	)	$	(3,139,458	)	$	(6,528,864	)	$	(8,074,944	)

12. Risk and Uncertainties:

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 February 29, 2020 and May 31, 2019, the Company had $0 and $608,908 cash balances uninsured, respectively.

Major customers and vendors- For the nine months ended February 29, 2020, two customers each accounted for 23% and 13% of the total revenue of the Company, without accounts receivable outstanding as of February 29, 2020. For the nine months ended February 28, 2019, two customers each accounted for 14% and 12% of total service revenue of the Company with no accounts receivable outstanding as of February 28, 2019.

One vendor accounted 35% of the total purchases by the Company for the nine months ended February 29, 2020. There was no vendor concentration for the Company as of and for the nine months ended February 28, 2019.

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.

Coronavirus disease 2019- On January 30, 2020, the spread of novel coronavirus (“COVID-19”) was declared a Public Health Emergency of International Concern by the World Health Organization ("WHO"). Subsequently, on March 11, 2020, WHO characterized the COVID-19 outbreak as a pandemic.

We will continue to monitor the impact of COVID-19, but at the date of this report it is too early to determine the full impact this virus may have on the global financial markets and the overall economy. Should this emerging macro-economic risk continue for an extended period, there could be an adverse material financial impact to our businesses and investments, including a material reduction in our results of operations.

13. Commitments and Contingencies:

Operating Leases

The Company currently maintains leased space in Shanghai, China, San Gabriel, California, Flushing, NY and it also maintains a correspondence address in Arcadia, California on a month to month basis.

We lease certain office space from third parties. For leases beginning in June 1, 2019 and later, at the inception of a contract we assess whether the contract is, or contains, a lease. Our assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether we have the right to direct the use of the asset. At inception of a lease, we allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments.

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one year or more. The exercise of lease renewal options is at our sole discretion. Our leases do not include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term. Certain of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. All our leases are operating lease.

As of February 29, 2020, our operating lease right of use assets and operating lease liability are approximately $492,125 and $506,647 respectively. The rent expense for the three and nine months ended February 29, 2020 is $145,837 and $333,537, respectively.

Future minimum lease commitments for office facilities as of February 29, 2020 are as follows:

For the fiscal years ending May 31,
2020 (three months)	$	64,125
2021		227,900
2022		126,900
2023		33,030
	$	451,955

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

On September 1, 2016, the Company entered into a Service Provider Agreement with SINO-GLOBAL SHIPPING AMERICA LTD (“SINO”) to perform investor relations services for SINO in exchange for 60,000 shares of SINO Rule of 144 restricted stock. When entering the 2016 Note Agreements, the Company believed that the SINO shares would be delivered as provided for in the agreement. However, the shares were not delivered purportedly due to a disagreement among SINO’s management, and as a result, the Company has not obtained the SINO shares as of February 29, 2020. 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. The dispute was ultimately arbitrated by the American Arbitration Association in May 2019 and the parties reached a settlement whereby SINO will issue 40,000 shares of its Rule 144 restricted Common Stock to the Company. The Settlement Agreement was executed by the parties and the Company is in receipt of the share certificate, but is awaiting receipt of a new share certificate, less the amount of settlement shares due to the Company’s counsel under the contingency arrangement.

On or about September 19, 2019 a lawsuit entitled J. Jim Ye v. ChineseInvestors.com, Inc. and Warren Wei Wang, was filed in Los Angeles County Superior Court, Glendale Courthouse, as Case No. 19GDCV01195, alleging causes of action for rescission of purchase of securities due to fraud, violation of Cal. Buss. & Prof. Code Section 17200, et seq., and fraudulent concealment. It is the Company’s position that the Plaintiff’s claims have no merit. The Company has retained counsel to defend the action. This action is pending.

14. Non-Controlling Interest:

On November 11, 2019, Hemp Logic, CBD Biotech and ChineseInvestors.com, Inc. entered into a Share Exchange Agreement (“SEA”) pursuant to which the Company sold/transferred to Hemp Logic its one hundred percent (100%) equity interest in CBD Biotech in exchange for newly issued Class A Common Stock, par value $0.0001 and Class B Common Stock, par value $0.0001. CBD Biotech became a wholly-owned subsidiary of Hemp Logic and the Company became a majority owner of Hemp Logic. Hemp Logic issued the Company an aggregate of four million eight hundred forty-one thousand seven hundred thirty-nine (4,841,739) newly-issued 2,521,739 shares of Class A Common Stock and 2,320,000 shares of Class B Common Stock of Hemp Logic in the aggregate (the “Hemp Logic Shares”). After the SEA, one hundred percent (“100%”) of the equity interests of CBD Biotech are owned by Hemp Logic and approximately 83.9% of Hemp Logic is owned by the Company. The closing of the exchange took place on December 31, 2019. As of February 29, 2020, the Company own 77% of Hemp Logic Inc.

Hemp Logic, Inc. is conducting private offering of up to 1,666,666 Series A Convertible Preferred Shares, par value USD $0.0001 (the “Series A Preferred Shares”), at a purchase price of USD $3.00 per Preferred Share (the "Purchase Price"). As of February 29, 2020, Hemp Logic received $813,000 from various investors for 217,000 shares of Hemp Logic’s series A preferred shares. Hemp Logic also issued stock compensation to its officers and board of directors total 1,446,250 shares of its common stock. The stock compensation issuance in Hemp Logic changed the Company’s ownership in Hemp Logic Inc. to 77%. $813,000 were recorded as contribution from non-controlling interest on the Company’s consolidated statement of shareholders’ equity.

15. Related Party Transactions:

As of February 29, 2020, the Company advanced $27,971 to the CEO, Mr. Warren Wang and $7,979 to Donald Capital LLC for daily operation.

Mrs. Lan Jiang is the spouse of the Company’s CEO, Mr. Warren Wang. During the three months ended February 29, 2020 and 2019, she received salary compensation of $45,000 and $45,000, 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. The Company received an additional 31,250 shares of MDCL stock for IR services which were provided for a period of six months starting January 15, 2019. The Company liquidated 34,457 shares of MDCL for $99,207 cash and record $43,595 gain during the nine months ended February 29, 2020. The Company’s records indicated that an additional 38,031 shares were held; however, the issuer’s transfer agent is not in agreement; therefore, the Company also wrote off the remaining 38,031 shares as unrecoverable. There is no MDCL stock left as of February 29, 2020.

16. Subsequent Event:

On March 11, 2020 Qi Zhang and Yan Fang An, by and through their Counsel, filed a Complaint for Breach of Contract in the U.S. District Court, Central District of California, Case No. 2:20-cv-02356 related to the breach of two unsecured promissory notes. The Company has retained counsel and is pursuing its defenses.

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 incurred $2,746,581 in additional debt obligations from individual lenders and $403,421 from institutional lenders for total new debt of $3,150,002 in the nine months ended February 29, 2020. The Company continues to develop its subscription business and its investor relations business. These investor relations clients represent companies whose shares are traded in various public markets including the OTCBB, NASDAQ, and NYSE exchanges.

XiBiDi Biotechnology Co., Ltd.

In March 2017, the Company established and registered XiBiDi Biotechnology Co. Ltd./CBD Biotechnology Co. Ltd. (“CBD Biotech”) in Pudong Free-Trade Area in Shanghai, Peoples Republic of China, founded as a wholly owned foreign enterprise (“WOFE”) of ChineseInvestors.com Inc. CBD Biotech’s primary focus is online and retail sales of industrial hemp-infused skincare products and liquor in the PRC. CBD Biotech’s first product launch was CBD Magic Hemp Series, an industrial hemp-infused skincare line.

Thereafter in November 2017, CBD Biotech obtained Wholesale Alcohol License from the Shanghai Wine Monopoly Bureau, effective October 24, 2017 for a three-year term, which allows CBD Biotech to act as a liquor distributor. CBD Biotech entered into a wholesale agreement with China GuiZhou HanTai Wine, Inc. to distribute its liquor product - Yantai 1985. The Company announced plans to spin off CBD Biotech in February 2018, which was later postponed. Thereafter, in December 2018, the Company announced that it had retained an underwriter for the planned Initial Public Offering (“IPO”) of CBD Biotech concurrently with a listing on a national securities exchange.

On or about February 27, 2019, CBD Biotech, Inc., an exempted company with limited liability incorporated in the Cayman Islands, was formed (“CBD Biotech Cayman”). CBD Biotech Cayman is solely owned by Wei Wang, ChineseInvestors.com, Inc.’s Chief Executive Officer, and Alex Hamilton, Chairman and Chief Financial Officer of CBD Biotech. The Company was prepared to enter into a Share Exchange Agreement with CBD Biotech and the shareholders of CBD Biotech Cayman (the “Share Exchange Agreement”). However, on or about November 11, 2019, Hemp Logic, CBD Biotech and ChineseInvestors.com, Inc. entered into a Share Exchange Agreement (“SEA”) pursuant to which the Company sold/transferred to Hemp Logic its one hundred percent (100%) equity interest in CBD Biotech in exchange for newly issued Class A Common Stock, par value $0.0001 and Class B Common Stock, par value $0.0001. CBD Biotech become a wholly-owned subsidiary of Hemp Logic and the Company become a majority owner of Hemp Logic. Hemp Logic issued the Company an aggregate of four million eight hundred fort- one thousand seven hundred thirty-nine (4,841,739) newly-issued 2,521,739 shares of Class A Common Stock and 2,320,000 shares of Class B Common Stock of Hemp Logic in the aggregate (the “Hemp Logic Shares”), After the SEA, one hundred percent (“100%”) of the equity interests of CBD Biotech are owned by Hemp Logic and approximately 83.9% of Hemp Logic is owned by the Company. The closing of the exchange took place on December 31, 2019. All operations will be conducted through Hemp Logic and CBD Biotech will continue to operate two business lines, cosmetics and liquor. As of February 29, 2020, the Company own 77% of Hemp Logic Inc.

As of February 29, 2020, CBD Biotech employed fifteen (15) full-time employees in its Shanghai Office in a variety of administrative and operational capacities. Its CFO, Alex Hamilton, is based in the Company’s New York office.

ChineseHempOil.com, Inc.

In April 2017, the Company established ChineseHempOil.com, Inc. dba “Chinese Wellness Center,” a Delaware corporation (“CHO”), as a wholly owned subsidiary of the Company. CHO is responsible for online and retail sales of industrial hemp products in the United States. Chinese Wellness Center is the Company’s retail store located in the predominantly Chinese community of San Gabriel, California, next to the Company’s headquarters. In or about February 2018, the Company announced its plans to spin off CHO, which was later postponed. In December 2018, the Company announced that it had retained an underwriter for the planned Initial Public Offering (“IPO”) of CBD Biotech, concurrently with a listing on a national securities exchange. CHO will no longer be part of this planned spin-off.

As of February 29, 2020, ChineseHempOil.com, Inc. employed two (2) full-time employees in the United States.

CBD Biotechnology Co. Ltd.

In June 2017, the Company formed CBD Biotechnology Ltd. (“CBD Canada”), a corporation incorporated in the Province of British Columbia, which is anticipated to focus on the sales of industrial hemp- products, via online and other distribution channels. CBD Canada has not generated any income as of February 29, 2020.

Newcoins168.com LTD

On or about January 25, 2018, a certificate of incorporation was filed with the Registrar in St. Vincent and the Grenadines establishing Newcoins168.com, LTD (“Newcoins Grenadine”). Pursuant to the Certificate of Incumbency, issued on May 28, 2018, the Registered Office for Newcoins Grenadine is Suite 305, Griffith Corporate Centre, Beachmont, P.O. Box 15 1 O, Kingstown. Saint Vincent and the Grenadines. All of Newcoins Grenadine’s registered shares, 1000 shares, were issued to ChineseInvestors.com, Inc.’s CEO, Wei Wang. Wei Wang holds these shares as agent for ChneseInvestors.com, Inc. Newcoins Grenadine’s total authorized capital is $1,000,000.

Newcoins Grenadine was established to develop a full-service retail Forex and CFD platform that connects with one of the market’s leading trading platforms to provide customers with Forex/CFD market trading service, as well as offering education, market information, and insights for customers related to the Forex/CFD market. The platform had 992 subscribers in the Philippines, Malaysia, Indonesia, Russia, Hong Kong, Brunei and India and no registered users in the US. Newcoins Grenadine’s registered users never funded their accounts.

On or about February 27, 2019 Newcoins Grenadine entered into a Technology Solution Agreement with Match-Trade Technologies (“MTT”), pursuant to which MTT agreed to provide Newcoins Grenadine with a trading infrastructure (integrated electronic systems and software) designed to offer a platform to Newcoins Grenadine’s clients for the trading of financial products, i.e., Forex and/or CFDs and/or other financial instruments offered to Newcoins Grenadine’s clients. In or about March 2019, Newcoins Grenadine entered into an agreement with Forexstreet S.L. (“FS”) pursuant to which FS agreed to provide daily news feeds and updates. Newcoins Grenadine platform has not generated any revenues to date. Given the platform’s target audience is outside of the US and China, it has been challenging to convert leads generated as a result of advertising and marketing efforts into account deposits that will lead to trading due to the significant language barrier. The Company has determined that the expense that would be required to hire and trains native speakers to assist the platform’s potential account holders/traders would outweigh the potential gain and has decided to focus its efforts on the Company’s core, traditional business lines. In an effort to reduce fixed costs associated with the platform, the Company cancelled these service agreements and discontinued the platform in August 2019.

Newcoins168.com Digital Media Technology Ltd.

In April 2018, the Company established a wholly owned foreign enterprise, NewCoins168.com Digital Media Technology Ltd (Shanghai), registered in China Free Trade Zone with registered capital of 10 million RMB. As of February 29, 2020, NewCoins168 employed one (1) full-time employees in its Shanghai Office in a variety of administrative and operational capacities.

CIIX Online LTD

In August 2018, the Company formed CIIX Online Ltd. (“CIIX Online”), a corporation incorporated in the Province of British Columbia, which is anticipated to focus on the sales of the Company’s subscription service to consumers.

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

Donald Capital, LLC

Donald Capital, LLC, is a Delaware limited liability company established on May 7, 2018. In exchange for capital contributions totaling $160,000 from ChineseInvestors.com, Inc., the Company received a 24.9% interest in Donald Capital LLC. The remaining 75.1% is held equally by Hamilton Strategy Group, Inc. and McDonald Global Enterprises LLC. Alex Hamilton is the CFO of Hemp Logic, Inc. and is the President of Donald Capital LLC. Mr. Hamilton is also the owner of Hamilton Strategy Group. Donald Capital LLC is a registered broker dealer approved by FINRA effective May 14, 2019. Donald Capital LLC will serve clients around the globe in the private, micro, small and middle capitalization arenas through pre-capital raise and strategic advisory, capital raise and other services that will be offered through network partners. On or about February 5, 2020, by unanimous written consent of the Company’s Board of Directors, the Company approved a resolution to sell its 24.9% interest in Donald Capital LLC to a qualified buyer on terms to be agreed upon. To date, no buyer has been procured.

Business Environment and Trends

The global marketplace has gradually recovered. We understand that our business is dependent upon the health of the financial markets as well as the financial health of the participants in those markets. With the recovery of the financial market, more market participants willing to subscribe our financial market analysis programs and public companies eager to spend more on increasing media exposure and developing investor relations.

For three and nine months ended February 29, 2020 compared to three and nine months ended February 28, 2019.

Quarterly Revenues and Expenses

Subscription Revenues: For the three months ended February 29, 2020 and February 28, 2019, revenues were $253,475 and $229,220, respectively. For the nine months ended February 29, 2020 and February 28, 2019, revenues were $621,390 and $680,119, respectively. The decline in revenues was due to a decrease in the Company’s subscribers to such services.

Investor Relations-Service Revenues: For the three months ended February 29, 2020 and February 28, 2019, revenues were $103,332 and $147,664 respectively. For the nine months ended February 29, 2020 and February 28, 2019, revenues were $1,383,482 and $546,251 respectively. The increases were attributable to an increase in investor relations clients.

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

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

Cost of Revenue: Cost of services for the three months ended February 29, 2020 and 2019 were $297,739 and $253,135 respectively, for an increase of $44,604 over the same period in 2019. Cost of services for the nine months ended February 29, 2020 and 2019 were $1,012,287 and $1,106,084 respectively, for a decrease of $93,797 over the same period in 2019. Cost of products for the three months ended February 29, 2020 and 2019 were $39,355 and $759,369 respectively, for a decrease of $720,014. Cost of products for the nine months ended February 29, 2020 and 2019 were $917,627 and $958,198 respectively, for a decrease of $40,571. This decrease was due to the Company’s sale of its industrial hemp and baijiu liquor products.

Gross profit (loss) and gross margin: The Company’s gross margin on service revenue decreased to 17% (gross profit $59,069 on $356,808 of revenue) in the three months ended February 29, 2020 from 34% (gross profit $130,369 on $383,504 of revenue) in the three months ended February 28, 2019. The gross margin decrease for service revenue is due to decreased investor relations clients and revenues generated for these services. The Company’s gross margin on service revenue increased to 50% (gross profit $996,448 on $2,008,735 of revenue) in the nine months ended February 29, 2020 from 16.4% (gross profit $217,733 on $1,323,817 of revenue) in the nine months ended February 28, 2019. The Company’s gross margin on product sales increased to 55% ($47,601 on $86,956 of revenue) in the three months ended February 29, 2020 from 28% ($301,949 on $1,061,318 of revenue) in the three months ended February 28, 2019. The increase in gross margin for product sales was due to reduced product retail pricing on industrial hemp products and reduced sales expenses. The Company’s gross margin on product sales decreased to 26% ($324,292 on $1,241,919 of revenue) in the nine months ended February 29, 2020 from 36% ($535,741 on $1,493,939 of revenue) in the nine months ended February 28, 2019.

General & Administrative Expenses: For the three months ended February 29, 2020 and February 28, 2019, expenses were $1,757,366 and $3,273,479, respectively for a decrease of $1,516,113 which was related to downsizing of staff and independent contractors. For the nine months ended February 29, 2020 and February 28, 2019, expenses were $6,535,822 and $7,850,987, respectively for a decrease of $1,315,165 which was related to company implemented budgetary control on certain expenditures such as office utilities, other general office expenses, and company travel and entertainment in an effort to reduce the total amount of General and Administrative Expenses.

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

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

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

Liquidity

The Company is currently addressing its liquidity concerns by building upon its revenue generating subscription service products, increasing its advertising-based revenues, increasing its offerings of other consulting services, and sale of industrial hemp products. Since its inception in 1997, the Company has, at times, relied primarily upon proceeds from private placements and sales of shares of its equity securities to fund its operations. In the last two years the Company raised $5,000,043 through the issuance of its Series C-2016 convertible preferred stock and $10,371,050 through the issuance of its Series D-2017 convertible preferred stock. We anticipate continuing to rely on sales of our securities as well as increasing our general revenues in order to continue to fund our business operations.

Plan of Continued Operations

Management’s Plan for the fiscal year 2020

Business Development

Management recognizes that one of the Company’s most significant assets is its unique network of Chinese investors in the United States and worldwide; thus, one of Management’s immediate short-term goals is to focus on achieving brand-marketing goals for both its core subscription and investor relations business and its industrial hemp/CBD business. Management believes that this demographic is likely to continue to grow, especially at the upper end of the income scale, partly because Chinese are believed to be highly adaptive to the economy, are believed to have the ability to see the bigger picture when it comes to monetary investments in the stock market, and are believed to have the ability to recognize and appreciate new trends in capital markets. Moreover, Management also believes Chinese are an affluent demographic and they accumulate disposable savings over and above other demographics. Having access to this market that is open to the new ideas and opportunities gives the Company a competitive edge over other companies that market to other demographics. Management believes that its unique network not been maximized to capture its full monetary value to the Company.

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

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

In addition, management is exploring joint venture opportunities with partners that are looking to reach our unique network of consumers. With regard to its industrial hemp/CBD business in China, the Company has two New Hemp-Infused, Skin-Friendly, Antimicrobial Sanitizer Products in development.

The Company will also continue to recruit and will seek to retain a talented and knowledgeable workforce and more specifically, will work to strengthen its existing sales force through enhanced training, allocation of resources and providing cross-selling opportunities. As such, the Company does not contemplate any further layoffs of its sales force other than in the normal course.

Budgetary Control

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

The management has also implemented budgetary control on certain expenditures such as office utilities, other general office expenses, and company travel and entertainment in an effort to reduce the total amount of General and Administrative Expenses to approximately $300,000 USD each month from the current expenses of approximately $400,000, excluding current debt due and owing.

Financing

The Company anticipates continuing to rely on sales of its securities to fund a portion of its business operations in fiscal year 2020, plans to meet all of its obligations, and will conform to all of the requirements to remaining a fully reporting a public company, while increasing its market presence as well as services offering spectrum.

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, 2019, PART II Item 9A Controls and Procedures.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

On or about September 19, 2019 a lawsuit entitled J. Jim Ye v. ChineseInvestors.com, Inc. and Warren Wei Wang, was filed in Los Angeles County Superior Court, Glendale Courthouse, as Case No. 19GDCV01195, alleging causes of action for rescission of purchase of securities due to fraud, violation of Cal. Buss. & Prof. Code Section 17200, et seq., and fraudulent concealment. It is the Company’s position that the Plaintiff’s claims have no merit and the Company has retained counsel to defend the action. The action is pending.

On March 11, 2020 Qi Zhang and Yan Fang An, by and through their Counsel, filed a Complaint for Breach of Contract the U.S. District Court, Central District of California, Case No. 2:20-cv-02356 related to the breach of two unsecured promissory notes. The Company has retained counsel to defend the action. The action is pending.

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

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: April 14, 2020	By: /s/ King Fai Leung
	King Fai Leung
	Chief Financial Officer

Date: April 14, 2020	By: /s/ Wei Wang
	Wei Wang
	Chief Executive Officer

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