See accompanying notes to the financial statements

CHINESEINVESTORS.COM, INC AND SUBSIDIARIES

STATEMENT OF COMPREHENSIVE (LOSS) AND INCOME

For the Three and Six Months Ended November 30, 2017 and 2016

(Unaudited)

Expressed in U.S. Dollars

See accompanying notes to the financial statements 

CHINESEINVESTORS.COM, INC AND SUBSIDIARIES

STATEMENT OF CASH FLOWS

For the Six Months Ended November 30, 2017 and 2016

(Unaudited)

Expressed in U.S. Dollars

Supplemental disclosure of non-cash activity

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

During the three and six months ended November 30, 2016, the company received various stock valued (FMV) at $134,000 and $280,000, respectively, for providing one to twelve months of investor relations (“IR”) services.

See accompanying notes to the financial statements

CHINESEINVESTORS.COM, INC. AND SUBSIDIARIES

STATEMENT OF COMPREHENSIVE (LOSS) AND INCOME

For the Three Months Ended August 31, 2018 and 2017

(Unaudited)

Expressed in U.S. Dollars

See accompanying notes to the financial statements

CHINESEINVESTORS.COM, INC. AND SUBSIDIARIES

STATEMENT OF CASH FLOWS

For the Three Months Ended August 31, 2018 and 2017

(Unaudited)

Expressed in U.S. Dollars

Supplemental disclosure of non-cash activity

During the three months ended August 31, 2018, the Company did not receive stocks for investor relations (“IR”) services.

During the three months ended August 31, 2017, the company received various stocks valued (FMV) at $359,375 for investor relations (“IR”) services which will be performed over one year.

See accompanying notes to the financial statements

NOTES TO THE FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization and Nature of Operations:

Business Description

Chineseinvestors.com, Inc., Inc. (the “Company”) was incorporated on June 15, 1999 in the State of California. The Company is a provider of Chinese language web-based real-time financial information. The Company’s operations had been located in California until September 2002 at which time the operations were relocated to Shanghai, in the People’s Republic of China (PRC). The Company relocated part of the operations in California starting fiscal year 2017.

During May 2000, the Company entered into an agreement with MAS Financial Corp. (“MASF”) whereby MASF agreed to transfer control of a public shell corporation to the Company and perform certain consulting services for a fee of $30,000.

During June 2000, the Company completed reorganization with MAS Acquisition LII Corp. (“MASA”) with no operations or significant assets. Pursuant to the terms of the agreement, the Company acquired approximately 96% of the issued and outstanding common shares of MASA in exchange for all of its issued and outstanding common stock. MASA issued 8,200,000 shares of its restricted common stock for all of the issued and outstanding common shares of the Company. This reorganization was accounted for as though it were a recapitalization of the Company and sale by the Company of 319,900 shares of common stock in exchange for the net assets of MASA. In conjunction with the reorganization MASA changed its name to Chineseinvestors.com, Inc.

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

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

Chineseinvestors.com, Inc. was established as an ‘in language’ (Chinese) financial information web portal, offering various levels of June 1, 1997.information relative to the US Equity and Financial Markets, as well as certain other specific financial markets (including China A Shares, FOREX, etc.). Over the years, various informational components have been added and the general content improved as the Company continues to derive a material portion of its income from various subscription services it offers to its customers. We offer subscription services to provide education about investing and news and analysis on the stock market as well as news about particular stocks that we are following. Nevertheless, we do not provide our subscribers with individualized investment advice and never have investment discretion over any subscribers’ or site visitors’ funds. As described below, providing investor relations services for other companies, especially those requiring Mandarin language support, now account for our most significant revenue sources.

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

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

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

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

In 2010, the Company filed a Form 10 registration statement for us to become a public reporting company under the Exchange Act of 1934 in order to facilitate the Company’s ability to raise capital on the public market. In particular, we have retained the firm of B F Borgers CPA PC to be our independent auditor.

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

As of August 31, 2018, the Company employed twenty-four (24) people in its Shanghai Office in a variety of administrative and operational capacities. All are employed full time. The Company also has approximately thirty-six (36) full-time employees and approximately eight (8) independent contractors in the US.

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

In March 2017, the Company established and registered XiBiDi Biotechnology Co., Ltd. (“CBD Biotechnology Co., Ltd”Biotech”) in the Pudong Free-Trade Area in Shanghai, establishedPRC as a wholly owned foreign enterprise. In April, CIIX appointed XiangYang Yun as chief executive officer (CEO) of this wholly owned foreign enterprise. XiBiDi Biotechnology Co. Ltd.’senterprise (“WOFE”). CBD Biotech’s primary focus isengages at online retail and directretail sales of hemp-based health products and other complimentary products in China. Yun’sPRC. The initial focus of CBD Biotech was the launch of the XiBiDi MagicCBDMagic Hemp Series, (“CBD Magic Hemp Series”), a hemp-infused cosmetics line which included three initial products, namely, the CBDBIO TECH Brightening and Refreshing Moisturizer, the CBDBIO TECH Perfecting Shield Primer, and the CBDBIO TECH Peptide Collagen Solution.line.

In November 2017, CBD Biotechnology Co. Ltd., teamed up with Chinese beauty influencer,The Godfather of Beauty, for the launch of its “CBD Magic Hemp Series” skincare line on China’s largest e-commerce retailer Alibaba. The Company’s flagship store, the "CBD Enterprise Store," is on Alibaba’s Taobao Platform.The Godfather of Beauty is an Internet celebrity with years of experience in live, online marketing on the Taobao Platform.

In November 2017, CBD Biotechnology Co. Ltd. also announced the expansion of its consumer division to enter the lucrative liquor (baijiu) market in China. On November 7, 2017, CBD Biotechnology was issuedBiotech obtained Wholesale Alcohol License in November 2017 from the ShangHai Wine Monopoly Bureau effective October 24, 21072017 for a three yearthree-year term, which allows CBD BiotechnologyBiotech to act as a distributor of the baijau.liquor distributor. CBD BiotechnologyBiotech entered into a wholesale agreement with China GuiZhou HanTai Wine, Inc. to distribute its baijui, liquor product -Yantai 1985 and kicked off its sales and marketing plan by partnering with Jinri Toutiao (translation: Today’s Headlines), a popular Chinese mobile application.. The Company announced its plans to spin off CBD Biotechnology Co. Ltd. at the end ofBiotech in February 2018; however, the Company’s Board of Directors has recently approved postponing the spin-off until the Company’s fiscal year end2018, which was later postponed to after May 31, 2018.2018, the actual date has not been determined.

ChineseHempOil.com, Inc.

In April 2017, the Company established ChineseHempOil.com, Inc. dba “Chinese Wellness Center” a Delaware corporation, as a subsidiary of the Company. ChineseHempOil.com,ChineseHempoil.com, Inc. is responsible for the development and operation of the online and retail sales of non-industrial hemp-based health products in the United States. Chinese Wellness Center is the retail store located in the predominantly Chinese community of San Gabriel, California, located next to the Company’s headquarters. In addition, ChineseInvestors.com, Inc. announced the release of its first hemp oil product line, OptHemp, a premium, private label oil, made from full-spectrum, Colorado grown, GMO-Free, non-industrial hemp, manufactured using a CO 2CO2 Extraction process.

In November 2017, ChineseHempOil.com, Inc. launched its OptHemp product line on Amazon.com kicking off a multi-channel campaign geared to both the US and Chinese-American markets during the 9th annual Singles Day Celebration. This launch commenced the e-commerce marketplace initiative that the Company set into motion in early June through a strategic partnership with a top 100 platinum level partner seller on Amazon Marketplace that agreed to include the OptHemp product line in its limited catalog for resale through the Amazon Channel. This partnership brings to the OptHemp product line the full weight and power of a national sales and marketing agency that specializes in providing business solutions including headquarter sales services, analytics, insights and intelligence, retail services, marketing, digital technology and business process outsourcing. The Company announced its plans to spin off ChineseHempOil.com, Inc atInc. in February 2018, which was later postponed until after May 31, 2018; the endactual date has not been determined.

CBD Biotechnology Co. Ltd.

In June 2017, the Company formed CBD Biotechnology Ltd. (“CBD”), a corporation incorporated in the Province of February 2018; however,British Columbia, which is anticipated to focus on the sales of hemp-infused consumer products similar to those marketed by the Company’s Boardother subsidiaries via online and other distribution channels.

Newcoins168.com Inc.

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 Directors has recently approved postponing10 million RMB.

Bitcoin Trading Academy LLC

In or about March 2018, the spin-off untilCompany established Bitcoin Trading Academy, LLC, a California limited liability company, formerly known as Stock Surge Momentum. LLC, a California limited liability company, with Warren (Wei) Wang, the Company’s fiscal year end May 31,CEO, as its sole managing member. Mr. Wang has transferred all of his interest in Bitcoin Trading Academy, LLC to the Company for $1 consideration. Bitcoin Trading Academy LLC began offering in person and on-line courses on cryptocurrency investment and trading in July 2018.

In an effort to expand its media products, as the first quarter of fiscal year 2018 came to a close, the Company announced that it would be working with Wall Street Multimedia (“WSM”), an independent news agency located in the NYSE to produce a daily cryptocurrency video newscast in Chinese, providing timely information and exclusive analysis regarding all aspects of the emerging digital currency world, including specific cryptocurrencies, such as “Bitcoin” and “Ethereum,” industry trends, price movement, blockchain technology, sector-related stocks and ETFs, etc.

1.2. Liquidity and Capital Resources:

Cash Flows – During the sixthree months ended November 30, 2017,August 31, 2018, the Company primarily generated cash and cash equivalents, from issuances of its common and preferred stock to fund its operations. The Company received $2,750,000total proceeds of $8,638,050 of proceeds from the saleissuance of Series “D-2017” preferred stock by November 30, 2017. Except $100,000August 31, 2018 of which $6,793,050 was received infor the year ended May 31, 2017, the remaining2018 and $1,845,000 was received duringfor the sixthree months ended November 30, 2017. August 31, 2018.

Cash flows (used in) provided by (used in) operations for the sixthree months ended November 30,August 31, 2018 and 2017 were ($2,214,567) and 2016 were $(3,142,888) and $(1,695,491)($1,447,378), respectively. The increased cash used in operations werewas due to increased general and administrative expenses used in operation.operations.

Capital Resources – As of November 30, 2017,August 31, 2018, the Company had cash and cash equivalents of $1,547,361$2,998,221 as compared to cash and cash equivalents of $1,770,729$1,390,258 as of May 31, 2017.2018.

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

2.3. Critical Accounting Policies and Estimates:

Basis of Presentation – These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission for annualinterim financial statements.

Principles of Consolidation - The accompanying consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America.information.

The consolidated financial statements include the accounts of Chineseinvestors.com IncInc. and its subsidiaries (collectively the “Company”). The Company’s subsidiaries include 100% of ChineseHempOil.com Inc, XiBiDi Biotechnology Co, Ltd,Ltd.,, Hemp Logic, Inc., CIIX Online, Inc., Newcoins168.com Inc. and CIIX Online.Bitcoin Trading Academy LLC.

Intercompany accounts and transactions have been eliminated upon consolidation.

Foreign CurrencyUse of Estimates – The Company has operationspreparation of financial statements in the People’s Republic of China (“PRC”), however the functional and reporting currency is in U.S. dollars. To come to this conclusion, the Company considered the direction of ASC section 830-10-55.

Selling Price and Market – As a representative office is located in the PRC, the Company is not allowed to sell directly to PRC based customers. Over 90% of its customers areconformity with accounting principles generally accepted in the United States of America requires management to make estimates and 100%assumptions that affect the reported amounts of all sales are paid in U.S. dollars. This indicatesassets and liabilities and disclosures of contingent assets and liabilities at the functional currency is U.S. dollars.date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Financing – The Company’s financing has been generated exclusively in U.S. dollars from the United States. This indicates the functional currency is U.S. dollars.

Expenses –financial statements include some amounts that are based on management's best estimates and judgments. The majority of expense are paid in U.S. dollars. The expenses generated in PRC are paid by a monthly or weekly cash transfer from the U.S. when the expenses are due, resulting in very little foreign currency exposure. This indicates the functional currency is U.S. dollars.

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:

Numerous Intercompany TransactionsRevenue from Contracts with Customers – The Company has multiple transactions each month between the U.S. and Chinese representative office. This indicates the functional currency is U.S. dollars.

Beside

On June 1, 2018, the above, one subsidiary XiBiDi Biotechnology Co Ltd's functional currency is the Chinese Renminbi (RMB). The reporting currency is that of the US Dollar. AssetsCompany adopted Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2014-09, with regard to FASB ASC 606Revenue from Contracts with Customers, and liabilities are translated at the exchange rates as of the balance sheet date. Owners’ contribution is translated at historical rate. Incomehave revised certain related accounting policies in connection with revenue recognition 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.

XiBiDi Biotechnology Co Ltd was not established until March 2017, therefore there is no translation for statement of comprehensive (loss) and income for three-month period end November 30, 2016 and six-month period end November 30, 2016. The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the financial statements weredeferred costs, as follows:

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

Revenue recognition — Revenue was derivedInvestor-relations service income is earned by the Company in return for delivering current, publicly available information related to our customers.

There is no significant adjustment from five different sources:the implementation of ASU 2014-09.

The Company recognizes revenue pursuant to revenue recognition principles presented in SAB Topic 13.13 prior to May 31, 2018. First, persuasive evidence of an arrangement. Second, deliver has occurred, or services have been rendered, thirdly the seller’s price to the buyer is fixed or determinable and lastly collectability is reasonably assured. We adopted ASU 2014-09, or ASC 606, on June 1, 2018 and it did not have a material impact on our financial position or results of operations. The guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Financial Instruments – Recognition and Measurement

1. FeesRecognition 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 banner advertisement, webpage hosting and maintenance, on-line promotion and translation services, advertising and promotion feesobservable price changes in orderly transactions for customersthe 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 Company’s Chinese Investment Guides, sponsorship feesnet unrealized losses, net of tax, on equity securities previously classified as available-for-sale, from investment seminars, road shows, and forums. The sales pricesaccumulated other comprehensive loss to accumulated deficit. In addition, changes in value due to the revaluation of these servicesequity securities are fixed and determinable at the time the contracts are signed and there are no provisions for refunds containedrecorded in unrealized gain on equity securities, net in the contracts. These revenues are recognized when all significant contractual obligations have been satisfiedconsolidated statement of comprehensive (loss) and collection of the resulting receivable is reasonably assured.income.

2. Fees from membership subscriptions: these revenues are recognized over the term of the subscription. Subscription terms are generally between 3 and 12 months but can occasionally be as short as 1 month or as long as 60 months. Long term deferred revenues are recognized from subscriptions over 12 months.

3. Fees related to setting up and providing ongoing administrative and translation support for currency trading accounts are in association with Forex. These fees are recognized when earned.

4. Investor relations income is earned by the Company in return for delivering current, publicly available information related to our client companies. These revenues are prepaid by the client company and as such are initially recorded as an asset with an offsetting unearned revenue liability. This revenue is recognized over the term of the services period while the services are being provided. The value of the revenue earned is recognized every quarter based upon fair market value of the client company’s stock closing price at contract date multiplied by the numbers of shares earned. By recognizing the revenue incrementally, we are following the guidelines of SAB Topic 13, in that we are only recognizing revenue once the value of the revenue received is fixed and determinable. In addition, we are applying the definition ofequity investment without readily determinable fair value presentedheld by the Company is the long-term investment at Accounting Standards Codification 820-10-15-5 in assessing the amount to recognize in each accounting period. The revenue is recognized over the term of the service period.

5.Breakwater MB, LLC. The Company recognizes revenueelects 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 product sales upon transfer of titlethese instruments since the guidance is required to be applied prospectively for securities measured using the customer. Customer purchase orders and/or contracts are generally usedmeasurement alternative. There is no adjustment to determine the existence of an arrangement. Shipping documents and terms and the completion of any customer acceptance requirements, when applicable, are used to verify product delivery. The Company assesses whether a price is fixed or determinable based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company has no product returns or sales discounts and allowances because goods delivered and accepted by customers are normally not returnable.

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

Website Development Costs – 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 codification 350-50-25 related to accountingBreakwater MB, LLC 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.three months ended August 31, 2018 as no impairment indicator observed by management.

Cash and Cash Equivalents – The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents. At certain times,There were no cash in bank may exceed the amount covered by FDIC insurance. At November 30, 2017equivalents as of August 31, 2018 and May 31, 2017 there were deposit balances in a United States bank of $1,413,341 and $1,716,138 respectively. In addition, the Company maintains cash balance in The Bank of China, which is a government owned bank. The full balance of the deposits in China is secured by the Chinese government.2018.

Accounts Receivable, and Concentration of Credit RiskNet – The Company extends unsecured credit to its customers in the ordinary course of business. Accounts receivable related to subscription revenue is recordedare reported at the time the credit card transaction is completed, and is completed when the merchant bank deposits the cash to the Company bank account. Revenues related to advertising and Forex are regularly collected within 30 daystheir outstanding unpaid principal balances net of the time of services being rendered. However, since these are ongoing contracts, there has been no instance of failure to pay.

allowances for uncollectible accounts. The Company evaluatesprovides 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 need for an allowance for doubtful accounts onwhen a regular basis. balance is determined to be uncollectible.

As of November 30, 2017August 31, 2018 and May 31, 2017,2018, the Company determined that an allowance was not needed.

Concentration of Credit Risk– The operationsCompany maintains cash at banks in the United States and PRC. Should any bank holding cash become insolvent, or if the Company is otherwise unable to withdraw funds, the Company would lose the cash 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 August 31, 2018 and May 31, 2018, the Company has $2,329,336 and $780,726 cash balances uninsured, respectively.

For the three-month period ended August 31, 2018, one customer accounted for 11% of total sales for the Company with no accounts receivable outstanding as of August 31, 2018. One customer accounted for 54% of the total sales of the Company are locatedfor the three months ended August 31, 2017 without accounts receivable outstanding as of August 31, 2017.

There was no vendor concentration for the Company as of and for the three months period ended August 31, 2018 and August 31, 2017.

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

Investments, available for sale, in affiliateMarketable equity Securities – The Company invested in an affiliate, Medicine Man Technologies, Inc. (“MDCL”), in April 2014, implemented theMarketable equity method of accounting. The Company received its ownership in return for supporting the company during its formational stage and no cash, as such the stock received had a value of zero and the affiliate generated a loss through May 31, 2014. The Company has no further commitment to fund losses; therefore, management has deemed it proper to discontinue applying the equity method for the investment as defined by Accounting Standards Codification (“ASC”) 323-10-35-20 for the year ended May 31, 2014. In 2015 the affiliate company issued additional stock, diluting the Company’s position and restructured the management of the entity causing the Company to determine that it no longer had “significant influence” over its operations. The Company then started accounting for the stock owned as an available for sale security. As there was a public market for MDCL stock at November 30, 2017 and May 31, 2017, the Company recognized the stock as a Level 1 financial instrument. The Company has liquidated most of its holdings in MDCL stock generating approximately $0 and $1,896,939 cash during the six months period ended November 30, 2017 and 2016, respectively. At November 30, 2017, the Company still held 41,238 shares of MDCL stock representing $69,691 of value based upon the closing market price of $1.69. At May 31, 2017, the Company held 41,238 shares of MDCL stock representing $72,166 of value based upon the closing market price of $1.75.

Investments available for sale Investments available for salesecurities is comprised of publicly traded stockstocks received in return for providing investor relations services to client companies.the Company’s customers. The investor relations servicesservice terms range from one month to a year, from the inception of the contract.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.

The

Prior to June 1, 2018, the Company followed the guidance of ASC 320-10-30 to determine the initial measure of value based on the quoted price of an otherwise identical unrestricted security of the same issuer, adjusted for the effect of the restriction, 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 available for sale securities in accordance with ASC 948-310-40-1320-10-25-1 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 available-for-sale shall be measured subsequently at fair value in the statement of financial position. UnrealizedThe Company has adopted ASU 2016-01 from June 1, 2018, and as a result, unrealized holding gains and losses for Available-for-salemarketable equity securities (including those classified as current assets) shall be excluded from earningsreported as unrealized gain(loss) in the consolidated statement of comprehensive (Loss) and reported in other comprehensiveIncome under loss before income until realized.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.

Upon receipt, these shares were recorded as an asset on the Companies financials as "Investments, available for sale". The Company will also record a corresponding contra-asset account titled "Unearned Revenue paid in stock".

Inventories – Inventory is valuedInventories include Hemp-related finished products and liquor, stated at the lower of cost or net realizable value. Cost is determinedvalue using the weighted average cost method. Management reviews inventories for obsolescence and cost in excess of net realizable value at least annually and records a reserve against the inventory and additional cost of goods sold when the carrying value exceeds net realizable value. There iswas no write-offreserve needed for inventory obsolescence and slow-moving as of November 30, 2017August 31, 2018 and May 31, 2017.2018.

Other Current AssetsEquity Method Investment– Other current assets consistUnder equity method, the Company records its proportionate share of depositsthe 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 Chinese Renminbi on building space underprior periods that were determined to be returns of investment exceed cumulative equity in earnings recognized by the Company. When such an operating lease and are stated atexcess occurs, the current exchange rate at year end. Security depositsdistribution up to this excess would be considered a return of office rentinvestment and classified as cash inflows from investing activities.

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

The Company started to vendorsaccount the investment under equity method in the year ended May 31, 2018  and the proportional operation losses picked up for the Hemp oil purchase, prepaid expensesyear 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 both United Statesthe investee, the equity method normally is discounted, and Shanghai, detailsinvestee 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 below:

Investment-affiliate – The Company made investment of $250,000 to Breakwater MB LLC in March 2017, a cannabis-focused investmentAugust 31, 2018 and consulting company, formed by the Company’s board member and CFO, Paul Dickman, as a means to invest capital in and provide consulting services to private, cannabis-focused companies as they transition into the public market. The Company’s equity position in Breakwater MB, LLC will be approximately 12.5%. The Company adopt cost method for this investment.May 31, 2018.

Property and Equipment, net – Property and equipment are stated at cost. Depreciation and amortization of property and equipment is provided using the straight-line method over estimated useful lives ranging from three to five years. Leasehold improvements are amortized over the life of the lease. Depreciation and amortization expense was $12,947 and $6,855 for the six months ended November 30, 2017 and 2016, respectively.

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

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

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 codification 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 Topic 360, the Company reviews its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There was no impairment for the periods ended November 30, 2017 and 2016.

Accrued dividend & interest– The accrued dividend balance represents dividend payable related to the Series A-2014 preferred stock Series C-2016 preferred stock and Series D-2017 preferred stock. Accrued dividend was $155,539 and $150,831 for the period ended November 30, 2017August 31, 2018 and May 31, 2017 respectively. The accrued interest balance represents interest payable for short term debt outstanding. Accrued interest was $2,950 and $16,857 for the period ended November 30, 2017 and May 31, 2017 respectively.2018.

Accrued Liabilities – Accrued liabilities are comprised of the following:

Unearned revenue, revenue paid in stock– For the six months ended November 30, 2017 and during fiscal year ended May 31, 2017, the Company received shares of stock and warrants, as payment for investor relations work that the Company will be providing through July 2018. As the Company earns the fee for this work, this balance will be reduced to reflect the portion still to be earned.

Deferred revenueRevenue – 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 deliver.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.

Short-term debt, secured by stock

In September 2016,The Company also receives shares of stocks and warrants as means of payments for the Company obtained short-term debt of $410,000 from various individuals. Based on the original lending agreements, the loan was to have been secured by sharesinvestor relationship (“IR”) service provided. The fair market value of the stocks inand warrants on the following companies. contract date are amortized and recognized as IR revenue over the contract terms. When these services are prepaid by customers, the amount of the prepayment is initially recorded as an asset with an offsetting unearned revenue liability.

When entering the loan agreement, the Company believed that the contract would be executed and SINO shares would be delivered upon signing the contract. However, such IR service agreement was not executed due to a disagreement among SINO’s management, as a result, the Company did not obtain the SINO shares as of November 30, 2017. For NFEC, the Company obtained 100,000 shares at the time of entering the contract, and the remaining shares were fully received by the end of year 2016. For RCON, the Company obtained 50,000 shares at the time entering the contract, but the agreement called for collateral of 60,000 RCON shares, the collateral is now short by 10,000 shares of RCON common stock. The loan agreements are still valid after renegotiating the terms with the private lenders. These notes are due on September 2017. The lenders received a 20% of the deemed increase in value of these secured shares (“Incentive Feature”) at the maturity of the short-term note.

It has been determined that these notes were not properly collateralized as the ownership of the collateral did not transfer from the Company to the collateral agent. All notes that were not properly collateralized have been repaid or renegotiated into new notes, which themselves have not been collateralized. The Company paid back principal and interest to borrowers for a total of $343,051. The reminder of the principal and interest represented by the notes were rolled over to new notes with an outstanding principle balance totaling $116,669.

In November 2017, the Company obtained short-term debt of $965,140 from various individuals. Of the $965,140, $116,669 was rolled over from previous debt. The loans were to be secured by shares of the stocks in the following companies:

The new notes have not been secured by the pledge of those securities.

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.

Fair Value of Financial Instruments – The Company has adopted the provisions of ASC Topic 820, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

MuchAs of August 31, 2018 and May 31, 2018, the deferred revenue compromised as following:

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:

The carrying amount of cash and cash equivalents, investments available for sale, accounts receivable, due from related party, inventories, other current assets, accounts payable, deferred revenue (current and noncurrent), short-term notes and other current liabilities approximates fair value because of the Company’s financialshort-term nature of these instruments are level one and are carried at marketthe fair values close to its carrying value requiring no adjustment to book value. The financial instruments classified as level one were deemed to qualify as that classification because their value was determined byfor the price of identical instruments traded on an active exchange.

Level one instruments are based upon stated balance of financial institution or calculated based upon stock trading in the public market. Level two instruments are calculated based upon the sale of stock through a private placement at arms-length where our shares were an insignificant amount of the total volume of stock sold in the issuer. Level three financial instruments were valued by a professional independent appraiser hired by the Company to determine the valuation. The level three valuation calculation includes discounted cash flow models and market based models as appropriately utilized by a professional valuation firm. The inputs they used included the entities past financial performance, projected budgets, prior private stock sale history and comparable company valuations.non-current deferred revenue.

The following table summarizes the fair value and carrying value of the Company’s assets we are carrying and liabilities as of August 31, 2018:

The following table summarizes the fair value category in which they are currently classified:and carrying value of the Company’s assets and liabilities as of May 31, 2018:

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

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

Other Revenue – Other revenue is comprised of revenue related to Forex service fees, referral commissions and other miscellaneous service revenues generated which is recognized over the period the term of the service term for the periods ended August 31, 2018 and August 31, 2017. Details as below:

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 goods 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.

OtherOn December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) passed that significantly reforms the Internal Revenue – Other revenue is comprised Code of revenue related1986, as amended (the “Internal Revenue Code”). The TCJA, among other things, contains significant changes to Forex service fees, rent generated through office space sublease revenue and other miscellaneous service revenues generated which is recognized over the period the termcorporate taxation, including reduction of the leasecorporate tax rate from a top marginal rate of 35% to a flat rate of 21%, effective as of January 1, 2018; limitation of the tax deduction for interest expense; limitation of the period ended November 30,deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such tax losses may be carried forward indefinitely); and 2016.repeal of the federal corporate Alternative Minimum Tax (“AMT”).

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

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

Advertising Costs – Advertising costs are expensed when incurred.

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

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

Stock compensation expense for stock options is recognized over the vesting period of the award or expensed immediately under ASC 718 and EITF 96-18 when stock or options are awarded for previous or current service without further recourse. The Company issued stock options to contractors and external companies that had been providing services to the Company upon their termination of services. Under ASC 718 and EITF 96-18 these options were recognized as expense in the period issued because they were given as a form of payment for services already rendered with no recourse.

On July 14, 2017,

We periodically issue shares of our common stock to non-employees in non-capital raising transactions for fees and services. We account for stock issued to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees, whereas the Company awarded and issuedvalue of the stock compensation is based upon the measurement date as determined at either (a) the date at which a restricted stock award to a service provider 30,000 shares in total, and the fair market valueperformance commitment is reached, or (b) at the grant date was $0.80 per share. All these shares were fully vested at grant date, stock compensation expense totaling $24,120 were recorded.which the necessary performance to earn the equity instruments is complete.

On August 7, 2017, the Company awarded and issued a restricted stock award to a service provider 50,000 shares in total, and the fair market value at the grant date was $0.87 per share. All these shares were fully vested at grant date, stock compensation expense totaling $43,500 were recorded.

On October 31, 2017, the Company awarded restricted stock awards to various employees 1,340,000 shares in total, and the fair market value at the grant date was $0.49 per share. All these shares were fully vested at grant date, stock compensation expense totaling $656,600 were recorded.

Preferred Stock Beneficial Convertible Feature –Upon issuance of preferred stock convertible intoin 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, and Emerging Issues Task Force (“EITF”) No. 00-27, we have recorded the intrinsic value of this beneficial conversion feature(“feature (“BCF”).

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

Foreign Currency – The Company has operations in the People’s Republic of China (“PRC”) as a representative office in 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”). Assets and liabilities are translated at the exchange rates as of the balance sheet date. Owners’ 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:

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 May 2017,February 2016, the FASB issued ASU NO. 2017-09 Compensation—Stock Compensation2016-02,Leases (Topic 718): Scope of Modification Accounting, Effective842), to increase transparency and comparability among organizations by recognizing a right-of-use asset and a lease liability on the balance sheet for all entitiesleases with terms longer than 12 months. Leases will be classified as either operating or financing, with such classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for annual periods,fiscal years and interim periods within those annual periods,years beginning after December 15, 2017. Early2018, and early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance.

In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”. The amendments add further guidance on identifying performance obligations and also to improve the operability and understandability of the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606.permitted. The Company is currently in the process of evaluating the impact of the adoptionASU 2016-02 will have on its consolidated financial statements. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvementsstatements and Practical Expedients”. The amendments, among other things: (1) clarify the objective of the collectability criterion for applying paragraph 606-10-25-7; (2) permit an entity to exclude amounts collected from customers for all sales (and other similar) taxes from the transaction price; (3) specify that the measurement date for noncash consideration is contract inception; (4) provide a practical expedient that permits an entity to reflect the aggregate effect of all modifications that occur before the beginning of the earliest period presented when identifying the satisfied and unsatisfied performance obligations, determining the transaction price, and allocating the transaction price to the satisfied and unsatisfied performance obligations; (5) clarify that a completed contract for purposes of transition is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP before the date of initial application, and (6) clarify that an entity that retrospectively applies the guidance in Topic 606 to each prior reporting period is not required to disclose the effect of the accounting changeassociated disclosures.

Except for the period of adoption. The effective date of these amendments is at the same date that Topic 606 is effective. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”. The amendments in ASU 2016-20 affect narrow aspects of the guidance issued in ASU 2014-09 including Loan Guarantee Fees, Contract Costs, Provisions for Losses on Construction-Type and Production-Type Contracts, Disclosure of Remaining Performance Obligations, Disclosure of Prior Period Performance Obligations, Contract Modifications, Contract Asset vs. Receivable, Refund Liabilities, Advertising Costs, Fixed Odds Wagering Contracts in the Casino Industry, and Costs Capitalized for Advisors to Private Funds and Public Funds. The effective date of these amendments are at the same date that Topic 606 is effective. Topic 606 is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.

The Company has considered all new accountingabove-mentioned pronouncements, and has concluded that there are no new pronouncementsrecent issued accounting standards that maywill have a material impact on resultsthe unaudited condensed consolidated financial position, statements of operations financial condition, orand cash flows, based on current information.flows.

3.4. Stockholders’ Equity:

As of November 30, 2017August 31, 2018 and May 31, 2017,2018, the Company was authorized to issue 80,000,000 shares of common stock, $0.001 par value per share. In addition, 20,000,000 shares of $.001$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.

During the year ended May 31, 2016, the Company bought back 62,500 shares of company stock from former COO Brett Roper, but those shares has not been returned as of November 30, 2017. The Company has communicated with Mr. Brett Roper, confirmed shares will be returned soon and recorded with transfer agent.

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

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

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

During the six months period ended November 30, 2017, the company received $2,750,000 proceeds from the sale of preferred stock series D-2017.

During the six months period ended November 30, 2017, the Company granted and issued 1,420,000 shares of restricted common stock for compensation. Of the 1,420,000 shares, 1,340,000 were not distributed and recorded as stock compensation payable on balance sheet. The stock was valued from $0.49 to $0.87 per share based on the market price at the grant date. The compensation and consulting expense was recorded as general and administrative expenses for the period ended November 30, 2017.

Series 2012 Convertible Preferred Stock

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

During the three months period ended August 31, 2018, the shareholders of preferred stock series-2012 converted 0 shares of preferred stock.During the three months period ended August 31, 2017, the shareholders of preferred stock Series 2012 converted 50,000 shares of preferred stock for 62,500 shares of common stock shares at a conversion rate of 1 preferred stock A for 1.25 shares of common stock.

Series A-2014 Convertible Preferred Stock

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

During the three months period ended August 31, 2018, the shareholders of preferred stock series A-2014 converted 200,000 shares of preferred stock for 500,000 of common stock shares at a conversion rate of 1 share of preferred stock series A-2014 for 2.50 shares of common stock.During the three months period ended August 31, 2017 the shareholders of preferred stock Series A 2014 converted 690,000 shares of preferred stock for 1,725,000 of common stock shares at a conversion rate of 1 preferred stock B for 2.50 shares of common stock.

Series C-2016 Convertible Preferred Stock

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

We calculated the BCF of the Series C-2016 stockPreferred 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 weand recorded $1,244,622and $3,685,520 as deemed dividend that reduce accumulated deficit as of May 31, 2017, and we recorded the remaining $1,244,622 as deemed dividend that increasesincreased accumulated deficit for the periods ended May 31, 2018 and 2017, respectively.

During the three months period endingended August 31, 2017.2018, the shareholders of preferred stock series C-2016 converted 90,000 shares of preferred stock for 270,000 of common stock shares at a conversion rate of 1 share of preferred stock series C-2016 for 3.00 shares of common stock.During the three months period ended August 31, 2017, the shareholders of preferred stock C-2016 converted 1,857,085 shares of preferred stock for 5,571,255 of common stock shares at a conversion rate of 1 Series C-2016 share of preferred stock for 3.00 shares of common stock.

Series D-2017 Convertible Preferred Stock

In October 2017,For the year ended May 31, 2018, the Company issued 2,750,0006,793,050 shares of its Series D-2017 Convertible Preferred Stock at a price of $1.00 per share for total proceeds of $6,793,050. The terms of the preferred stock allow the holder to convert each share of preferred stock into 2 shares of common stock at any time from the date of issuance. The holders of shares of preferred stock are entitled to receive a dividend of $0.06 per share per annum for the first two years from the issuance, which has been recorded as an accrued dividend on the liabilities section of the balance sheet. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary.

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

For the three months ended August 31, 2018, the Company issued shares of its Series D-2017 Preferred Stock at a price of $1.00 per share for total proceeds of $2,750,000.$1,845,000. 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 of the instruments, which has been recorded as an accrued dividend on the liabilities section of the balance sheet. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary.

We calculated the BCF of the preferred shares issued during the three-month ended in August 31, 2018 as $1,803,720.$169,400. 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 then amortize the BCF over six months period, we recorded $1,803,720$169,400 as deemed dividend that increasesincreased accumulated deficit as of November 30, 2017.August 31, 2018.

During the three months period ended August 31, 2018, the shareholders of preferred stock series D-2017 converted 1,643,000 shares of preferred stock for 3,286,000 of common stock shares at a conversion rate of 1 share of preferred stock series D-2017 for 2.00 shares of common stock.

Stock compensation and stock payable

On July 26, 2018, the Company entered into a Consulting Agreement with Regal Consulting, LLC (“Regal”). The agreement has a five-month term ending January 2, 2019, pursuant to which Regal will receive 20,000 shares of the Company’s common stock per month for the term of the Agreement for a total of 100,000 shares, in addition to other compensation. $13,400 share-based compensation expense has been recorded associated with the award for the three months ended August 31, 2018.

On or about August 9, 2018, the Company entered into a Services Agreement with IRTH Communications LLC (“IRTH”). The agreement has a one year term, pursuant to which ITRH was to receive $100,000 worth of shares of the Company’s common stock in addition to other compensation. On August 22, 2018, the Company adopted a resolution authorizing the issuance of 226,245 shares of the Company’s common stock to IRTH for its professional services to be provided during the term of the agreement. $8,333 share-based compensation expense has been recorded associated with the award for the three months ended August 31, 2018.

On or about August 9, 2018, the Company entered into a Consulting Agreement with Axis Partners, Inc. (“Axis”). The agreement is for a six month term, pursuant to which Axis is to receive 150,000 shares of the Company’s common stock for the term of the agreement. On August 22, 2018, the Company adopted a resolution authorizing the issuance of 150,000 shares of the Company’s common stock to Axis for its professional service to be provided during the term of the agreement. $33,500 share-based compensation expense has been recorded associated with the award for the three months ended August 31, 2018.

On August 24, 2018, the Board adopted a resolution ratifying the award to Melissa Armstrong of an additional 50,000 shares of common stock, for a total award of 100,000 shares, effective October 26, 2016. All services to be performed in conjunction with this award have been fully performed and the shares were fully vested as of the effective date of the award. $33,500 share-based compensation expense was recorded associated with the award for the three months ended August 31, 2018.

The stock compensation payable as of August 31, 2018 is summarized as below, and there is no stock compensation payable as of May 31, 2018.

On September 11, 2018, the Company issued stock certificates total 526,245 shares for the stock compensation granted to service providers in August 2018.

4.5. Other Current Assets:

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

6. Long-term investments

Long-term investments include: 1) investment at Breakwater MB, LLC accounted for cost method since the Company does not have the significant influence, and 2) investment at Sino-U.S. Finance accounted for equity method (see Note 3).

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

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

Subsequently in August 23, 2018, the Company entered into a Redemption Agreement and Mutual Release with Mr. Dickman to liquidate 40% of the Company’s investment in Breakwater MB, LLC. Mr. Dickman agreed to pay an aggregate purchase price of $100,000 ($75,000 at the closing and $25,000 no later than September 15, 2018) to redeem the portion of equity (the “Redemption Agreement”) The Redemption Agreement provides for a mutual release and waiver with regard to any claims the parties to the Redemption Agreement ever had, owned or held, or now have, own or hold, as against one another resulting from, arising out of or in any manner relating to or based on the Company’s investment in Breakwater MB LLC, the redemption, or otherwise relating to CIIX’s relationship with Breakwater MB LLC. As of August 31, 2018, no payment has been received. The Company’s equity position in Breakwater MB, LLC currently stands at 12.5% as of August 31, 2018.

7. Property and Equipment:

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

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

Depreciation expense for the sixthree months ending November 30,August 31, 2018 and 2017 was $8,947 and 2016 was $7,795 and $1,901,$3,898, respectively.

5. Intangible Assets8. Website development, net:

Intangible assets areWebsite developmentis comprised of the following:

Amortization is calculated over a straight-line basis using the economic life of the asset. Amortization expense for the sixthree months ended November 30,August 31, 2018 and 2017 was $2,759 and 2016 was $5,152 and $4,954$2,567 respectively.

6.9. Short-term notes:

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

As of August 31, 2018, the Company transferred NMRD shares held to the Collateral Agent. It was determined that with the exception of 2017 Notes secured by NMRD shares, the remaining 2017 Notes were not properly secured. The Company offered the lenders of the unsecured 2017 Notes the option to either rescind the notes or allow the notes to remain in place as unsecured notes in April 2018. $360,000 out of the total $620,000 unsecured 2017 Notes were rescinded for which the principle and interest became due immediately, and the remaining $260,000 2017 Notes remain unsecured. The $360,000 in short term 2017 Notes has not been repaid.

For 2017 Notes, the lenders also received an incentive equal to 20% of appreciation of the value of the collateralized shares between the note issuance date and the date the shares are liquidated, if at all. As of August 31, 2018 and May 31, 2018, the debt incentive was $149,262 and $62,944, respectively.

On August 2018, the board of directors of the Company approved the Company to offer unsecured one-year term notes (the “2018 Notes”) to individual investors for a maximum $3,000,000 with 10% annum interest rate. As of August 31, 2018, the Company has issued 2018 Notes in the total amount of $2,255,000 from various individual lenders.

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

10. Other Current Liabilities:

Other current liabilities compromise as following:

Accrued dividends as of August 31, 2018 are comprised of dividends payable to the preferred stock holders, Series D-2017 in the amount of $108,403. Accrued dividends as of May 31, 2018 are comprised of dividends payable to the preferred stock holders, Series C-2016 and Series D-2017, in the amount of $14,981 and $164,237, respectively.

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

11. Commitments and Concentrations:Contingencies:

Office Lease – ShanghaiOperating Leases –

The Company entered into a lease for new officecurrently maintains leased space in Shanghai, China. The lease period started October 1, 2013 and the initial term ended on September 30, 2016. In August 2016, the Company renewed this lease at $5,400 per month to September 30, 2019, resultingChina (as described in the following future commitments:

Office Lease – San Gabriel, California – The Company entered a lease for executiveFinancials) as well as an office spacepresence in San Gabriel, California. The Lease period started April 30, 2015California, New York City, NY and was terminatedFlushing, NY. It also maintains a correspondence address in Arcadia, California on August 1, 2016. a month to month basis.

On June 2016,September 4, 2018, the Company renewed the contract for another 3 years to July 31, 2019, the currententer a lease agreement in New York at 40 Wall St. Room 2877, New York, NY 10005 as support office. The lease term is 24 months and monthly rent is $5,432, resulting in the following future commitments:

The Company entered another lease for retail store in San Gabriel, California. The lease period started February 1, 2017 to July 31, 2019, the current monthly rent is $3,243, resulting in the following future commitments:

Concentrations – During the periods ending November 30, 2017 and 2016, the majority of the Company’s revenue was derived from its operations in PRC from individual subscribers, primarily in the United States and Canada.at $7,500.

Future minimum lease commitments for office facilities as of August 31, 2018 are as follows: 

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

When entering the 2016 Note Agreements, the Company believed that the SINO contract would be executed, and SINO shares would be delivered upon signing the IR service contract. However, the service contract was not executed due to a disagreement among SINO’s management, and as a result, the Company has not obtained the SINO shares as of May 31, 2018. On January 9, 2018, the Company filed a lawsuit on the Los Angeles County Superior Court, Case No. EC067692 for breach of contract and common counts against SINO-GLOBAL SHIPPING AMERICA LTD.  Currently the case is pending assignment to an arbitrator.

12. Related Party Transactions:

As of the date of this filing,August 31, 2018, the Company advanced $81,293 to the CEO, Mr. Warren Wang for daily operation purpose.

The Company made a long-term investment of $250,000 to Breakwater MB LLC in March 2017 formed by the Company’s board member and CFO, Paul Dickman. The Company’s equity position in Breakwater MB, LLC stands at 12.5%. Refer toLong-term investments for investment details.

Mrs. Lan Jiang is not involvedthe spouse of the Company’s CEO, Mr. Warren Wang. During the three months ended August 31, 2018 and 2017, she received salary compensation of $45,000 and $39,000, respectively.

The Company purchased the shares of Medicine Man Technologies, Inc. (“MDCL”) in any legal proceedings.April 2014 using equity method of accounting initially and started to account for the ownership as an investment available for sale as of May 31, 2015 as the Company no longer had “significant influence” over MDCL as a result of shares issuance. The Company liquidated 1,306,378 shares of MDCL for $1,996,939 cash during the year ended May 31, 2017. As of August 31, 2018 and May 31, 2018, the Company still held 41,238 shares of MDCL stock representing $72,578 and $76,496, respectively, of value based upon the closing market price of $1.76 and $1.86, respectively.

7.13. Subsequent event:

The Company is currently in the process of offering upcontinuing to offer (up to 10,000,000 shares at $1 per share total $10,000,000shares) of its Series D-2017 Convertible Preferred Stock. Each share of Series D-2017 Preferred Stockpreferred stock is convertible into 2 shares of the Company’s common stock. The Series D-2017 Convertible Preferred Stock will pay at least two years of dividends at the rate of 6% per year on the original investment of $1 per share of Series D-2017 Convertible Preferred Stock. As of the filing date,September 30, 2018, the Company received $5,358,050$9,983,050 proceeds from sales of Seriesseries D-2017 convertible preferred stock, $2,605,000stock.

On August 7, the Company began offering on a best efforts basis (“Offering”), a maximum of these preferred stock has been recorded with stock-transfer agent as$3,000,000 in original issue price (“Maximum Offering”) of November 30,2017,its 10% one-year term notes (the “Notes”). As of the rest areSeptember 30, 2018 we have received the notes in the processtotal amount of recording with$3,030,000. Of the transfer agent. 

$3,030,000, there are $2,255,000 notes are received by August 31, 2018, $775,000 are received after August 31, 2018.

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

Overview

ChineseInvestors.com, IncInc. 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.

During the first quarter of fiscal year 2017 the companyThe Company continued to develop its investor relations business. These clients represent companies whose shares are traded in various public markets including the OTCBB, NASDAQ, and NYSE exchanges.

In an effort to expand its media products, as the first quarter of fiscal year 2018 came to a close, the Company announced that it would be working with Wall Street Multimedia (“WSM”), an independent news agency located in the NYSE to product a daily cryptocurrency video newscast in Chinese, providing timely information and exclusive analysis regarding all aspects of the emerging digital currency world, including specific cryptocurrencies, such as “Bitcoin” and “Ethereum,” industry trends, price movement, blockchain technology, sector-related stocks and ETFs, etc. As of the date of this filing the Company has begun airing its cryptocurrency video newscasts.

XiBiDi Biotechnology Co., Ltd.

In March 2017, the Company established and registered XiBiDi Biotechnology Co., Ltd. (“CBD Biotechnology Co., Ltd”Biotech”) in the Pudong Free-Trade Area in Shanghai, establishedPRC as a wholly owned foreign enterprise. The Chinese character “XiBiDi” is homophonic to “CBD” in English.In April, CIIX appointed XiangYang Yun as chief executive officer (CEO) of this wholly owned foreign enterprise. XiBiDi Biotechnology Co. Ltd.’senterprise (“WOFE”). CBD Biotech’s primary focus isengages at online retail and directretail sales of hemp-based health products and other complimentary products in China. Yun’sPRC. The initial focus in the Company’s first quarter has beenof CBD Biotech was the launch of the XiBiDi Magic Hemp Series (“CBD Magic Hemp Series”) cosmetics line which included the registration and approval process with the Chinese FDA for the line’s three initial products. As of the date of this filing the Company completed the registration and approval process with the Chinese FDA for the initial three products in the line and made a key hire to influence the market and assist with marketing and branding in China. The CBD Magic Hemp Series line is different from other skin care lines currently available in China because the products are infused with hemp extract, A catalogue provided by the CFDA entitled “Catalogue of Cosmetics Raw Materials in Use (2015)” includes Cannabis Sativa Leaf Extract.Series.

In November 2017, CBD Biotechnology Co. Ltd., teamed up with Chinese beauty influencer,The Godfather of Beauty, for the launch of its “CBD Magic Hemp Series” skincare line on China’s largest e-commerce retailer Alibaba. The Company’s flagship store, the "CBD Enterprise Store," is on Alibaba’s Taobao Platform.The Godfather of Beauty is an Internet celebrity with years of experience in live, online marketing on the Taobao Platform.

In November 2017, CBD Biotechnology Co. Ltd. announced the expansion of its consumer division to enter the lucrative liquor (baijiu) market in China. On November 7, 2017, CBD Biotechnology was issuedBiotech obtained Wholesale Alcohol License in November 2017 from the ShangHai Wine Monopoly Bureau effective October 24, 21072017 for a three-year term, which allows CBD BiotechnologyBiotech to act as a distributor of the baijau.liquor distributor. CBD BiotechnologyBiotech entered into a wholesale agreement with China GuiZhou HanTai Wine, Inc. to distribute its baijui,liquor product - Yantai 1985, and kicked off its sales and marketing plan by partnering with Jinri Toutiao (translation: Today’s Headlines), a popular Chinese mobile application.1985. The Company announced its plans to spin off CBD Biotechnology at the end ofBiotech in February 2018; however, the Company’s Board of Directors has recently approved postponing the spin-off until the Company’s fiscal year end2018, which was later postponed to after May 31, 2018.2018, the actual date has not been determined.

ChineseHempOil.com, Inc.

In April 2017, the Company established ChineseHempOil.com, Inc. dba “Chinese Wellness Center” a Delaware corporation, as a subsidiary of the Company. ChineseHempOil.com,ChineseHempoil.com, Inc. responsible for the development and operation of the online and retail sales of non-industrial hemp-based health products in the United States. Chinese Wellness Center is the retail store located in the predominantly Chinese community of San Gabriel, California, located next to the Company’s headquarters. The Company’sIn addition, ChineseInvestors.com, Inc. announced the release of its first hemp oil product line, OptHemp, is a premium, private label oil, made from full-spectrum, Colorado grown, GMO-Free, non-industrial hemp, manufactured using a CO2 Extraction process.

In November 2017, ChineseHempOil.com, Inc. launched its OptHemp product line on Amazon.com kicking off a multi-channel campaign geared to both the US and Chinese-American markets during the 9th annual Singles Day Celebration. This launch commenced the e-commerce marketplace initiative that the Company set into motion in early June through a strategic partnership with a top 100 platinum level partner seller on Amazon Marketplace that agreed to include the OptHemp product line in its limited catalog for resale through the Amazon Channel. This partnership brings to the OptHemp product line, the full weight and power of a national sales and marketing agency that specializes in providing business solutions including headquarter sales services, analytics, insights and intelligence, retail services, marketing, digital technology and business process outsourcing. The Company announced its plans to spin off ChineseHempOil.com, Inc. at the end ofin February 2018; however, the Company’s Board of Directors has recently approved postpoming the spin-off2018, which was later postponed until the Company’s fiscal year end,after May 31, 2018.2018; the actual date has not been determined.

CBD Biotechnology Co. Ltd.

In June 2017, the Company formed CBD Biotechnology Ltd. (“CBD”), a corporation incorporated in the Province of British Columbia, which is anticipated to focus on the sales of hemp infused skin care products infused with hemp extract, via online and other distribution channels. The consumer product line may expand to other types of products as the Company sees fit in the future.

Newcoins168.com Inc.

In April 2018, the Company established a wholly owned foreign enterprise, NewCoins168.com Digital Media Technology Ltd (Shanghai), registered in China Free Trade Zone with registered capital of 10 million RMB.

Bitcoin Trading Academy LLC

In or about March 2018, the Company established Bitcoin Trading Academy, LLC, a California limited liability company, formerly known as Stock Surge Momentum. LLC, a California limited liability company, with Warren (Wei) Wang, the Company’s CEO, as its sole managing member. Mr. Wang has transferred all of his interest in Bitcoin Trading Academy, LLC to the Company for $1 consideration. Bitcoin Trading Academy LLC began offering in person and on-line courses on cryptocurrency investment and trading in July 2018.

Business Environment and Trends

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

For three and six months ended November 30, 2017August 31, 2018 compared to three and six months ended November 30, 2016August 31, 2017

Quarterly Revenues and Expenses

Subscription Revenue: For the three months ended November 30,August 31, 2018 and 2017, and 2016, revenues were $179,333$226,312 and $232,094$136,263, respectively. For the six months ended November 30, 2017 and 2016, subscription revenues were $315,596 and $481,323 respectively, the decrease in revenue was due to lesser renewal from existing subscriber and lesser new subscribers.

Investor Relations-advertisementRelations-Service Revenue: For the three months ended November 30,August 31, 2018 and 2017, and 2016, revenues were $246,667$271,248 and $278,850$258,366 respectively. The slight decreaseincrease of $32,183$12,882 is dueattributable to the Company providedproviding more services to clients for the three months period ended November 30, 2016August 31, 2018 which generated more revenue. For the six months ended November 30, 2017 and 2016, revenues were $505,053 and $369,162 respectively, the increase of $135,871 is due to the Company having hired more professionals in US to service public company clients and increased the service qualities.

Other Revenue: For the three months ended November 30,August 31, 2018 and 2017, and 2016, revenues were $0$73,036 and $4,754$5,031 respectively. ForThe increase of $68,005 is due to the six months ended November 30, 2017bitcoin trading class revenues of $27,398 generated from July 2018 and 2016, other$46,100 in consulting revenues were $0 and $1,783 respectively, for a decrease of $1,783.generated by Newcoins168.com.

Sales-Hemp RelatedSales of Products: For the three months ended November 30,August 31, 2018 and 2017, and 2016, revenues were $39,603$141,764 and $0 respectively. For the six months ended November 30, 2017 and 2016, revenues were $57,568 and $0$17,966 respectively. The increase of $123,798 was due to the Company started to sellsale of the Company’s Hemp-related and Baijiu liquor products.

Cost of Service:Revenue: Cost of services for the three months ended November 30,August 31, 2018 and 2017 were $391,817 and 2016 were $385,588 and $220,525$272,630 respectively, for ana increase of $165,063$119,187 over the same period in 2016. For the six months ended November 30, 2017 and 2016 were $658,219 and $449,396 respectively, for an increase of $208,823 over the same period in 2016. Both increases were due to its operations in the People’s Republic of China was increased.2017. Cost of products for the three months ended November 30,August 31, 2018 and 2017 were $72,745 and 2016 were $15,050 and $0$4,902 respectively. For the six months ended November 30, 2017 and 2016 were $19,951 and $0 respectively. Both increases wereThe increase was due to the Company started to sellCompany’s sale of its Hemp-related and Baijiu liquor products.

Gross profit margin: The Company’s gross profit margin on service revenue decreased to 9%31% ($40,411178,779 on $425,999$570,596 of revenue) in the three months ending November 30, 2017August 31, 2018 from 57%32% ($290,419127,030 on $510,944$399,660 of revenue) in the three months ending November 30, 2016. The Company’s gross profit margin on service revenue decreased to 20% ($162,410 on $820,029 of revenue) in the six months ending November 30, 2017 form 47% ($402,872 on $852,268 of revenue) in the six months ending November 30, 2016. Both decreases due to the Company’s cost of service increase, the Company issued bonus to Shanghai employees. The Company’s gross profit margin on product sales is 62% ($24,552 on $39,602 of revenue) for the three months ending November 30,ended August 31, 2017. The Company’s gross profit margin on product sales is 65%decreased to 49% ($37,61769,019 on $57,568$141,764 of revenue) forin the sixthree months ending November 30,August 31, 2018 from 73% ($13,064 on $17,966 of revenue) in the three months ended August 31, 2017.

General& Administrative Expenses: For the three months ended November 30,August 31, 2018 and 2017, and 2016, expenses were $1,887,872$1,889,241 and $1,207,803,$1,173,482, respectively for an increase of $680,069$715,759 which was related to additionalthe addition staff and stock compensation issued for the past services. For the six months ended November 30, 2017 and 2016, expenses were $3,109,803 and $2,053,478, respectively for an increase of $1,056,325 which was related to additional staff and professional service expenses for the company’s operation.independent contractors.

Advertising Expenses: For the three months ended November 30,August 31, 2018 and 2017, and 2016, expenses were $303,977$317,291 and $180,844$225,243 respectively. The increase is due to the Company’s increased adverting and news coverage in several different cities and in different languages.

Interest Expenses: For the three months ended August 31, 2018 and 2017, expense were $112,833 and $6,841 respectively. The increase is due to the Company increased adverting news coverage in many different cities and different languages. For the six months ended November 30, 2017 and 2016, expenses were $529,219 and $361,567 respectively. These expenses are generally relatedissued two one-year notes to outside advertising costs and various other related expenses.

Net realized gain (loss) on marketable securities: For the three months ended November 30, 2017 and 2016, expenses were $0 and $883,807 respectively. For the six months ended November 30, 2017 and 2016, expenses were $0 and $1,634,685 respectively. There is no liquidation of the Companies holdings in Medicine Man Technologies, Inc. stock.

investors (refer to short-term notes for details).

Liquidity

The Company is currently addressing its liquidity concerns by building upon its revenue generating subscription service products, increasing its advertising basedadvertising-based revenues, increasing its offerings of other consulting services, and sale of Hemp related and liquor products. Since its inception in 1997, the Company has, at times, relied primarily upon proceeds from private placements and sales of shares of its equity securities to fund its operations. In the last two years the Company raised $5,000,043 through the issuance of its Series C-2016 convertible preferred stock. The Company is currently engaged in a private placement of its Series D-2017 convertible preferred stock, thestock. The Company has received $2,750,000$8,638,050 from various investors. We anticipate continuing to rely on sales of our securities as well as increasing our general revenues in order to continue to fund our business operations. In addition,

On January 22, 2014, the Company liquidated most of its holdings in Medicine Man Technologies (MDCL) stock generating approximately $3,300,000 cash. As of November 30, 2017,entered into a Service Provider Agreement with Financial Buzz Media Networks LLC (“Financial Buzz”) beginning on February 6, 2014 and ending on May 5, 2014. In conjunction with the Company still held 41,238Agreement, Financial Buzz was issued 100,000 shares of MDCL stock representing $69,691 of value based upon the closing market price of $1.69.Company’s common stock. All services to be performed in conjunction with this discretionary bonus have been fully performed.

Plan of Continued Operations

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

Item 4. Controls and Procedures

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

Refer to 10K for year ended May 31, 2018 PART II Item 9A Controls and Procedures.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

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

Item 1A. Risk Factors.

Not required for smaller reporting companies.

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

None.

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.

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.