Chineseinvestors.com 10-Q/A 2011 Q3 Quarterly report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

FORM 10-Q/A

 (Mark one)

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

For the quarterly period ended February 28, 2011

OR

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

For the transition period __________ to __________

Commission File Number: 000-54207

ChineseInvestors.COM

(Exact name of registrant as specified in its charter)

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

411 E. Huntington Drive #107-228, Arcadia, CA 91006

(Address of principal executive offices, including zip code)

Brett Roper, Director of Administrative Services — (303) 345-1262

(Registrant’s telephone number, including area code)

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

17901 Von Karman Avenue, Suite 500, Irvine, CA 92614 Telephone (949) 660-7700

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No x

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	x

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

The Registrant has 37,016,697 shares of common stock outstanding as of April 27 , 2011.
 

ChineseInvestors.COM, Inc.

FORM 10-Q for the Quarter Ended February 28, 2011

INDEX

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20
PART 2 - OTHER INFORMATION
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	21
Item 4.	(Removed and reserved)	21
Item 5.	Other Information	21
Item 6.	Exhibits	21
Signatures		21

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Chineseinvestors.Com, Inc.

BALANCE SHEETS

As of (Expressed in U.S. Dollars)

	(UNAUDITED) February 28, 2011			May 31, 2010
	$			$
ASSETS
Current assets
Cash and cash equivalents [note 1]		136,112			154,802
Accounts receivable, net [note 1]		5,211			8,251
Other current assets [note 1]		22,019			20,061
Total current assets		163,342			183,114
Property and equipment, net [note 4]		4,207			6,503
Website development, net [note 5]		62,662			62,446
Total assets		230,211			252,063
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable		837			3,761
Deferred revenue [note 1]		279,637			279,159
Accrued liabilities [note 1]		41,130			42,979
Total current liabilities		321,604			325,899
Long-term deferred revenue [note 3]		5,199			8,015
Total liabilities		326,803			333,914
Commitments [note 6]
Subsequent events [note 7]
Stockholders’ equity [note 3]
Common stock authorized 80,000,000 common shares with a par value of $0.001 per share issued and outstanding 37,016,697 common shares		37,017			33,592
Additional paid-in capital		6,613,150			6,044,834
Foreign currency gain/loss		1,065			290
Deficit		(6,747,824	)		(6,160,567	)
Total stockholders’ equity		(96,592	)		(81,851	)
Total liabilities and stockholders’ equity		230,211			252,063

See accompanying notes

3

Chineseinvestors.Com, Inc.

STATEMENTS OF OPERATIONS AND (LOSS)

(UNAUDITED)

(Expressed in U.S. Dollars)

		Three months ended February 28,						Nine months ended February 28,
		2011			2010			2011			2010
Operating revenues
Subscription revenue			193,172			199,417			545,257			627,214
FOREX revenue			5,717			17,399			49,822			59,573
Advertising revenue			12,600			—			28,800			25,000
Total revenue			211,489			216,816			623,879			711,787
Cost of services sold			159,270			137,129			426,055			396,618
General and administrative expenses	��		325,009			123,151			723,032			528,714
Advertising expenses			22,200			75,104			62,050			178,071
Net (loss) for the quarter			(294,990	)		(118,568	)		(587,258	)		(391,616	)
Weighted average number of common shares outstanding – basic			34,250,579			40,425,757			34,250,579			42,891,999
Earnings (loss) per share – basic			(0.01	)		(0.00	)		(0.02	)		(0.01	)
Weighted average number of common shares outstanding – diluted			42,030,579			47,293,157			42,030,579			45,419,714
Earnings (loss) per share – diluted			(0.01	)		(0.00	)		(0.01	)		(0.01	)

See accompanying notes

4

Chineseinvestors.Com, Inc.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine months ended February 28, (Expressed in U.S. Dollars)

	2011			2010
OPERATING ACTIVITIES
Net (loss) for the quarter	$	(587,258	)	$	(391,616)
Adjustment to reconcile net (loss) to net cash used in operating activities:
Depreciation and amortization		10,738			19,037
Share based compensation		310,741			52,498
Deposits		(1,181)			784
Accounts receivable		3,040			5,409
Accounts payable		(2,925	)		4,929
Other accrued liabilities		(4,187	)		50,704
Net cash (used in) operating activities		(271,032	)		(258,255	)
INVESTING ACTIVITIES
Purchase of equipment		(8,658	)		(8,798	)
FINANCING ACTIVITIES
Proceeds from private placement		261,000			510,000
Purchase and Retirement of Shares		—			(262,500	)
		261,000			247,500
Increase (decrease) in cash and cash equivalents		(18,690	)		(19,553	)
Cash and cash equivalents, beginning of quarter		154,802			314,882
Cash and cash equivalents, end of quarter		136,112			295,329
Supplemental disclosure of cash flow information
Cash paid for interest, net of interest capitalized		—			—
Cash paid for income taxes		—			—
Cash paid for China representative office tax		27,229			19,479

See accompanying notes

5

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.   Basis of Presentation:

The accompanying unaudited financial statements have been prepared in accordance with the generally accepted accounting principles for interim financial statements and instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for a full year. In connection with the preparation of the financial statements the Company evaluated subsequent events after the balance sheet date of February 28, 2011 through the filing of this report.

These financial statements should be read in conjunction with our financial statements and the notes thereto for the fiscal year ended May 31, 2010 contained in our Form 10-12 G/A.

Liquidity and Capital Resources:

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

Cash Flows – During the quarter ended February 28, 2011, the Company primarily utilized cash and cash equivalents and proceeds from issuances of its common stock to fund its operations.  

Cash flows used in operations for the nine months ended February 28, 2011 was $271,032, which represents an increase in cash used in operations for the comparable nine months ended February 28, 2010 of $258,255.  Increased general and administrative expenses and more expense related to the offering of securities are the primary reasons for this increase.

There is substantial doubt that the Company will 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.

In the past the Company has been successful in raising additional capital for the purpose of expanding its business as well as meeting its operating expense needs.  However, there is no guarantee that the Company will be able to raise the needed working capital to provide liquidity through year end 2011.  Please see Note 7 – Subsequent Events.

Capital Resources – As of February 28, 2011, the Company had cash and cash equivalents of $136,112 as compared to cash and cash equivalents of $154,802 as of May 31, 2010.

Since inception, 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 its business operations. Issuances of additional shares will result in dilution to its existing stockholders.

6

2.   Critical Accounting Policies and Estimates:

Basis of Presentation - These accompanying 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 SEC for annual financial statements.

Foreign Currency – The Company has operations in the Peoples Republic of China, however the functional and reporting currency is in US dollars.  To come to this conclusion the Company considered the direction of Accounting Standards Codification (“ASC”) section 830-10-55.

· Selling Price and Market - As a representative office in China the Company is not allowed to sell to China based customers.  Over 90% of its customers are in the United States and 100% of all sales are paid in US dollars.  This indicates the functional currency is US dollars.

· Financing - The Company's financing has been generated exclusively come from the United States.  This indicates the functional currency is US dollars.

· Expenses – The majority of expenses are paid in US dollars.  The expenses generated in China are paid with a monthly or weekly cash transfer from the US when the expenses are due, resulting in very little foreign currency exposure.  This indicates the functional currency is US dollars.

· Numerous Intercompany Transactions – The Company has multiple transactions each month between the parent and foreign subsidiary.  This indicates the functional currency is US dollars.

Due to the functional and reporting currency both being in US dollars, ASC 830-10-45-17 states that a currency translation is not necessary.

The Company does hold deposits for an office lease that generates a foreign currency gain/(loss) in Chinese Renminbi.  Until these are refunded, the variance is accounted for quarterly and the other asset account is adjusted to the current exchange rate through the foreign currency gain/loss account in the equity section of the balance sheet.

Reclassifications - Certain amounts in the prior quarter’s financial statements have been reclassified to conform to the current quarter presentation and to correct prior quarter errors.

Revenue recognition - Revenue consists of three main sources:

1. Fees from banner advertisement, webpage hosting and maintenance, on-line promotion and translation services, advertising, and promotion fees for customers in the Company’s Chinese Investment Guides, sponsorship fees from investment seminars, road shows, and forums, all of which sales prices are fixed and determinable at the time the contracts are signed and there are no provisions for refunds contained in the contracts. These revenues are recognized when all significant contractual obligations have been satisfied and collection of the resulting receivable is reasonably assured.

2. Fees from membership subscriptions.  These revenues are recognized over the term of the subscription.  The subscription term is generally between 3 and 12 months but can occasionally be as short as 1 month or as long as 24 months.  Long term deferrals are generated from subscriptions over 12 months.

3. Commissions related to setting up currency trading accounts in association with FOREX.

7

Costs of Services Sold – Costs of services sold is recognized as the total direct cost of the Company’s operations in Shanghai.

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 being capitalized.  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 for determination of whether capitalization or expense is appropriate.

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 cash in bank may exceed the amount covered by FDIC insurance.  At February 28, 2011 and May 31, 2010, there were deposit balances in a US bank of $122,246 and $147,906, 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.  At February 28, 2011 and May 31, 2010, there were deposits of $13,866 and $6,896, respectively, in The Bank of China.

Accounts Receivable and Concentration of Credit Risk - The Company extends unsecured credit to its customers in the ordinary course of business.  Accounts receivable related to subscription revenue is recorded at the time the credit card transaction is completed, and is completed when the merchant bank deposits the cash to the Company bank account.  Revenue related to advertising and FOREX are regularly collected within 30 days of the time of services being rendered.  However, since these are ongoing contracts there has been no instance of failure to pay.  As of February 28, 2011 and May 31, 2010, the Company had accounts receivable of $5,211 and $8,251, respectively.

The Company evaluates the need for an allowance for doubtful accounts on a regular basis.  As of February 28, 2011 and May 31, 2010, the Company determined that based on historically having no bad debt an allowance was not needed.

The operations of the Company are located in the People’s Republic of China (“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.

Other Current Assets – Other current assets is comprised of deposits and prepaid expenses in Chinese Renminbi on building space under an operating lease and are stated at the current exchange rate at quarter end.  Other current assets were $22,019 and $20,061 as of February 28, 2011 and May 31, 2010, respectively.

8

Property and Equipment – 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 $10,738 and $19,037 for the nine months ended February 28, 2011 and February 28, 2010, 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.

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 as of February 28, 2011.

Accrued Liabilities and Other Liabilities – Accrued liabilities and other liabilities are comprised of the following:

	February 28,		May 31,
	2011		2010
China Employee Salaries and Commissions Accrual	$	29,354	$	24,186
Representative Office Tax Accrual		7,640		7,568
Other Accruals		4,136		11,225
	$	41,130	$	42,979

Use of Estimates – The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure 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.

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:

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

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

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

9

All Company financial instruments are Level one and are carried at market value.  Therefore no adjustment is required.

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.

Advertising Costs - Advertising costs are expensed when incurred. Advertising costs totaled $62,050 and $178,071 in the nine months ended February 28, 2011 and February 28, 2010, respectively.

Earnings (Loss) Per Share - Earning (loss) per share is computed using the weighted average number of common shares outstanding during the period.  The Company has adopted ASC 260 (formerly SFAS 128), Earnings per Share.

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.  The fair value of the options is amortized over the vesting period.

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

The following table summarizes share-based compensation expense recorded in selling, general and administrative expenses during each period presented (in thousands):

	Nine Months ended
	February 28, 2011		February 28, 2010
Stock Options	$	3,750,000	$	750,000
Total share based compensation expense		310,741		52,498

10

Stock option activity was as follows:

	Number of Shares		Weighted Average Exercise Price ($)
Balance at May 31, 2009
Granted		4,080,000	$	.04
Exercised		-		-
Forfeited or expired		-		-
Balance at May 31, 2010		4,080,000		.04
Granted		3,750,000		.10
Exercised		1,250,000		.00
Forfeited or expired		-		-
Balance at February 28, 2011		6,580,000	$	.06

The following table presents information regarding options outstanding and exercisable as of February 28, 2011:

Weighted average contractual remaining term - options outstanding	3.87 years
Aggregate intrinsic value - options outstanding		-
Options exercisable		1,717,625
Weighted average exercise price – options exercisable	$	.07
Aggregate intrinsic value - options exercisable		-
Weighted average contractual remaining term - options exercisable	3.84 years

As of February 28, 2011, future compensation costs related to options issued was $0 because all options have been expensed in full because there is no future benefit to the company for these options.  During the nine months ended February 28, 2011, 3,750,000 stock options were granted to the CEO; these options, generating an expense of $310,741, were recognized as an expense with $160,741 being recognized in the first quarter of 2011 for 2,500,000 options issued and $150,000 being recognized in the third quarter of 2011 for 1,250,000 options issued.  2,500,000 options were granted by the board to the CEO in the first quarter and the remaining 1,250,000 options were granted by the compensation committee and the board in the third quarter.

For the third quarter options granted these are a result of the board choosing to issue options in lieu of previous options that had expired in fiscal year 2007. During FY 2007 the Company and the CEO, Warren Wang had agreed to let 1,250,000 options that he had been granted to him in FY 2005 to expire.  When they allowed them to expire they agreed to reinstate and then grant the 1,250,000 shares within 30 days of the Company’s Form 10 becoming effective with the SEC which occurred during the third quarter. Because documentation of this previous agreement and the previous options issued and the option extension is inadequate it was the recent decision of the board, audit committee and the compensation committee to formally issue these current options in lieu of the previous options since the previous options have expired under the original agreement and no board minutes or documentation of the prior agreement to extend the options exists. Consequently, for the third quarter the Board and the Compensation Committee have approved the issuance of these options to the CEO with a $1 total exercise price for the CEO. The CEO chose to exercise these options in the third quarter. Compensation expense for these options under Black-Scholes is $150,000 and is booked in the third quarter.

The fair value of each option granted is estimated on the date of the grant using the Black-Scholes option pricing model with weighted average assumptions for grants as follows:

Risk-free interest rate	1.09	%
Expected life of options	4
Annualized volatility	90.6	%
Dividend rate	0	%

11

3.   Stockholders' Equity:

At February 28, 2011 and May 31, 2010, the Company’s $.001 par value common stock authorized stands at 80,000,000 shares.  In addition, 20,000,000 shares of $.001 par value preferred stock were authorized but not issued.

4.   Property and Equipment:

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

	February 28,		May 31,
	2011		2010
Furniture & Fixtures	$	25,250	$	22,415
Leasehold Improvements		9,540		9,540
		34,790		31,955
Less: Accumulated Depreciation		30,583		25,452
	$	4,207	$	6,503

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

Computer Equipment	3 years
Furniture & Fixtures	5 years
Leasehold Improvements	Term of the lease

Depreciation expense for the nine months ended February 28, 2011 and February 28, 2010 was $5,007 and $9,841, respectively.

5.   Intangible Assets:

Intangible assets are comprised of the following:

	February 28,		May 31,
	2011		2010
Website Development Costs	$	111,439	$	105,616
Less: Accumulated Amortization		48,777		43,170
	$	62, 662	$	62,446

Amortization is calculated over a straight-line basis using the economic life of the asset. Amortization expense for the nine months ended February 28, 2011 and February 28, 2010 was $5,731 and $9,196, respectively.

12

6.   Commitments and Concentrations:

The Company leases an apartment pursuant to a month-to-month lease for the use of the CEO and his family in Shanghai, China for a monthly rental of approximately $900.   This lease could be terminated at any time with no additional payments required.

Office Lease – During the first quarter of 2011 fiscal year the Company renewed their office lease for an additional two years ending September 30, 2013 resulting in the following future commitments, based on the exchange rate at February 28, 2011.

2011	$39,448
2012		$59,962
2013		$20,119

Concentrations – During the nine months ended February 28, 2011 and February 28, 2010, all the Company’s revenue was derived from its operations in China.

Litigation – The Company is involved in legal proceedings from time to time in the ordinary course of its business.  As of the date of this filing, the Company is not a party to any lawsuit or proceedings which, individually or in the aggregate, in the opinion of management, is reasonably likely to have a material adverse effect on the financial condition, results of operation or cash flow of the Company.

7.   Subsequent Events:

Private Placement Memorandum – During the third quarter of 2011, the Company commenced a private placement of up to $1,000,000 of its common stock at $.12 per share.  As of April 27 , 2011, the Company had raised $389,000 through the sale of 3,241,667 shares of its common stock in that private placement.

13

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

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the Company’s financial statements and the notes to those statements included elsewhere in this registration statement on Form 10-12G/A. Additional risks of which the Company is not currently aware or which the Company currently deems immaterial could also cause the Company’s actual results to differ.

This report should be read in conjunction with our recently filed Form 10-12G/A with the Securities and Exchange Commission.

Overview

ChineseInvestors.com, Inc. endeavors to be an innovative company, specializing in providing real-time market commentary and analysis in Chinese language character sets (traditional and simplified). Our services are primarily used by Chinese speaking individuals living in North America. We offer several types of subscription-based services and serve several levels of investors and traders (novice to professional). Our market coverage includes the general range of US financial markets, Chinese ‘A’ shares, and the FOREX market.

We currently offer a variety of subscription services including 1) VIP Golden Membership, 2) Education Materials (Video Training), 3) Option Investment & Trading, 4) US Market Megatrend Software, 5) China Market Megatrend Software, 6) FOREX (Foreign Currency Exchange), 7) Dark Horse, 8) Chinese Momentum Stock, 9) Analysis on News and earnings Internet Concept Stocks, and 10) The Five Most-Bullish Stocks as well as various free analysis and research tools.  Current details regarding these services may be found in our Form 10-12G/A as filed with the SEC on March 25, 2011.

Our business model currently requires that all of our product lines generate recurring monthly revenue from each client relative to a ‘client specific’ contract services duration; generally provided on a monthly, quarterly, or annual basis that incorporate discounts for longer duration commitments.

Business Environment and Trends

Global markets have been negatively impacted by a variety of factors, and the financial services industry in particular has been adversely affected by losses in the mortgage and credit markets. Our business is dependent upon the health of the financial markets as well as the financial health of the participants in those markets. The current financial crisis has resulted in lower activity levels and has led to the collapse of some market participants. We are also seeing customers intensify their focus on containing or reducing costs as a result of the challenging market conditions. While we expect these trends will to continue to affect our growth rate and operating results for the short term, we also expect our revenue to reflect these conditions as well as be affected by our advertising investment on a quarter-over-quarter basis for the balance of FY 2011.

14

 Financial Tables and Explanations (ending February 28th)

STATEMENTS OF OPERATIONS AND (LOSS)

(UNAUDITED)

	Expressed in USD						Expressed in USD
	Three months ended February 28,						Nine months ended February 28,
	2011			2010			2011			2010
Operating Revenues
Subscription Revenue		193,172			199,417			545,257			627,214
FOREX Revenue		5,717			17,399			49,822			59,573
Advertising Revenue		12,600			—			28,800			25,000
Total Revenue		211,489			216,816			623,879			711,787
Cost of Services Sold		159,270			137,129			426,055			396,616
General and Administrative Expenses		299,082			123,151			697,105			528,714
Advertising Expenses		22,200			75,104			62,050			178,071
Net (Loss) for the Quarter		(269,063	)		(118,568	)		(561,331	)		(391,616	)

Operating Revenues describes all income from all Company related activities including subscription sales, advertising sales, FOREX support service fees, and education/training sales.

Total Revenues describes all income from all Company related activities including subscription sales, advertising sales, FOREX support service fees, and education/training sales.

Cost of Services Sold refers to all operating expense related to the delivery of content services including the cost of commission and other Shanghai office expenses.

Expenses, General & Administration refers to the expense related to US operational overhead, salaries and related expenses of US Citizens, the costs of note and share repurchases, the costs of options granted, US based web hosting services, etc.

Advertising Expense refers to all costs of advertising.

Net (loss) refers to the value remaining when subtracting the Costs of Services Sold, General & Administration Expenses, and Advertising Expenses from the Total Revenues value.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations

Fiscal Year 2009 (in review)

While the Company posted losses for this annual period, it should be noted that there were additional expenses incurred of $445,000 for the purpose of pursuing a reverse merger opportunity. Additionally, we raised $490,000 during this annual period through a private placement of our stock as well as significantly increasing our advertising efforts to begin to grow our subscription income stream during the last four months of this annual period. We also incurred additional employment costs at our Arcadia, California offices during the last two quarters of this annual period as well as incurred additional legal and accounting expense as related to the private placement and its administration and shares fulfillment. While the monies raised in association with the private placement provided the Company with a better cash reserve, it continued to focus on brand awareness and spent significantly more on advertising than it had in the previous year. Additionally, and in accordance with the use of funds disclosure as noted within the private placement referenced the Company invested additional funds into development of its sales and service infrastructure (Shanghai, China Representative Office).

We substantially increased our advertising investments late in FY 2009 as funds from our private placement came in accordance with our stated plans, increasing this level of expense over the prior year by approximately $80,000.

Fiscal Year 2010 (in review)

Annual Revenues

Subscription Revenue:  There was an increase in subscription revenues from $563,583 in fiscal year (FY) 2009 to $834,081 in FY 2010 representing an approximate 35% increase in subscription revenues.  This increase was primarily generated by an implementation of an increased emphasis on advertising and sales development.  This emphasis was reflected in the increase in advertising expense from $100,612 in FY 2009 to $220,291 in FY 2010.

FOREX Revenue:  The decrease in FOREX revenue from $99,850 (FY 2009) to $72,636 (FY 2010) is within the range of normal year to year variance and does not reflect an unexpected trend.

Advertising Revenue:  The revenue from advertising was fairly consistent with $34,500 in 2009 and $33,100 in 2010.  As the Company’s subscription base and related web traffic continue to grow, our expectation is that advertising revenue will increase as well.

Annual Expenses

Cost of Goods (Services) Sold:  The cost of services sold increased from $255,157 to $426,633 from FY 2009 to FY 2010 as expected with the increase in revenue.  This category of expenses primarily consists of the cost of the Shanghai, China operations.  Since a portion of these expenses are fixed, as the Company’s sales increase, the gross operating margin improves.  As the Company experienced sales growth from approximately $560,000 to $834,000; this 6.8% increase in profit margin is expected and as revenues continue to grow this margin is expected to continue to improve.

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Other Notes Regarding FY 2010 (Significant)

In fiscal year 2010 the Company raised $510,000 through a private placement of our stock. We also bore the additional legal and accounting expense related to the private placement as well as related expense of our audit/accounting work for 2009 and 2010.

During the 2010 fiscal period we issued stock options to several consultants for previous services that generated a onetime general and administrative expense.  We issued 750,000 options to John G. Myers, a past Board of Directors Member in exchange for past services having an impact of $52,498.  We also issued 830,000 options to Edward Li, a past employee in exchange for services rendered having an impact of $53,575.

Also during the 2010 fiscal year the Company elected to initiate an effort to file a Form 10 document with the SEC in order to become a public company.  To this end it hired professional service providers to 1) provide for the creation of PCAOB compliant audited financial statements, 2) provide for financial statement support, and 3) engaged other resources as necessary to produce the Form 10 document. We understand our financial reporting and compliance obligations as we move forward in becoming a public Company.

Advertising:  The Company implemented an aggressive advertising program beginning in 2010 resulting in advertising revenues increasing from $100,612 to $220,291 from FY 2009 to FY 2010.  This increase in advertising had a significant part in growing the Company’s sales by approximately 35% from 2009 to 2010.

While the Company posted losses for this annual period, it should be noted that there were additional expenses as well as expenditures of cash incurred with several significant events as well as additional funds raised in association with the private placement that continued from the previous annual period.

We raised $510,000 during this fiscal period through a Private Placement of our stock as well as significantly increased our advertising efforts to continue to grow the associated subscription and advertising income stream(s). We also bore the additional legal and accounting expense related to the Private Placement as well as related expense of our audit/accounting work for 2009 and 2010.

During this fiscal period we issued 2,500,000 options to LJ Sabean, a past majority shareholder and Board of Directors Member (resigned in March of 2007) as a part of a certain re-purchase of common stock agreement with the Company.

In November of 2009, the Company purchased a note held by Hollingsworth LLC, a past majority shareholder for $112,500. The note was related to a purchase of Hollingsworth LLC’s interests in the Company by Leon J. Sabean, a shareholder in October of 2005.

In January 2010, the Company repurchased 13,451,461 shares from Leon J. Sabean in consideration of a payment to Sabean of $150,000, forgiveness of the note receivable owed by Leon J. Sabean (via the Hollingsworth LLC interests as purchased in October of 2005), and through the issuance of 2,500,000 share purchase options. The Company then retired these shares to Treasury reducing the total number of shares outstanding accordingly.

During this period we substantially reduced our outstanding shares of common stock by 13,451,461 shares in accordance with the re-purchase agreement as described in the preceding paragraph. Please note that this value does not include options as already described in Section 4.

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 Fiscal Year 2011

Year to Date (FY 2011) Performance Comparison to Year End FY 2010

The Company began to reduce its expenditures on advertising during the summer of 2010 and thereby also experienced a drop off in subscription revenues.  The Company continues to monitor it advertising investment so that it can identify where such investments provide the best return in terms of new subscribers.

While subscription income is projected to generate less revenue than the previous year ($834,081) the Company is planning on increasing its investment in advertising during the third and fourth quarters based upon deployment of a portion of the capital it will be raising as associated with the private placement.

Our advertising revenues are projected to increase over the prior year’s performance.

It should also be noted that there were substantial additional expenses in the General & Administrative category related to the granting of stock options and the repurchase of shares as noted in the previous section, Other Notes Regarding FY 2010 (Significant).  These costs totaled more than half of FY 2010’s General & Administrative Expense base noting that these expenses will be drastically reduced in FY 2011 and should cause a substantial drop in our overall operating expenses for the Company.

Nine Month Comparison, FY 2010 to FY 2011

Subscription Revenues: Revenues in the first nine months of FY 2011 declined from $627,257 in FY 2010 to $545,257 in FY 2011 due to a decrease in advertising investment. As cash reserves decrease we have reduced expenses where possible. As the capital raise continues the Company plans to increase our advertising investment as well as sales promotions and are expecting to see subscription revenues increase.

FOREX Revenue:  FOREX revenues decreased in the first nine months of FY 2011 from $59,573 in FY 2010 to $49,822 in FY 2011.  These revenues are generated based upon the trade activity level of current subscribers.  The Company has contracted with an unrelated party to which they provide basic support services.  Revenue levels related to FOREX fluctuate during the course of the year based upon trade volume that accounts the Company set up generate.  In the most recent quarter the Forex market experienced a sharp decline as the government increased restrictions on trading on margin reducing it from 100% to 50%.

Advertising Revenue: Advertising revenues increased from $25,000 in the first nine months of FY 2010 to $28,800 for the related period of 2011.  We expect revenues in this category to grow throughout the balance of FY 2011 as our web site metrics and advertiser results continue to improve (various metrics including click through rates, etc. will provide greater value to our advertisers and allow us to increase our sales in this area).

Overall Revenue: We note that our overall revenue dropped from $711,787 (FY 2010) to $623,879 (FY 2011) due to a general fall off in subscription services and a Forex revenue decline.

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Expenses

Costs of Goods (Services) Sold: As the Company experienced an increase in these related expenses in FY 2010, they expanded their operations in China to support the increased sales volume as well as customer service and content delivery requisites noting that most of these sales will be fulfilled over a three to twelve month time period.  As our subscription sales fell off, $627,214 in the first nine months of 2010 to $545,257 in the same period of 2011, the costs remained somewhat elevated resulting in a substantial decrease to the Company’s gross profit margin from 44% to 32%. As we implement plans to increase sales this margin is expected to increase.

General & Administrative Expenses: The Company had general and administrative expenses of $573,032 in the first nine months of 2011 compared to $528,714 in the similar period in FY 2010.  The increased costs were primarily due to the additional professional cost of becoming a public company as well as $310,741 in stock based compensation expense.

Advertising Expenses:  The Company continued to maintain lower advertising expenditures.  The Company expects to increase advertising upon completion of planned sale of Company stock in fiscal year 2011.

Net Losses:  The Company’s net losses in the first nine months of 2011 were $437,258 as compared to $391,616 loss in a similar period for FY 2010.  This increase in net loss is primarily due to the decrease in subscription revenue and higher general and administrative experienced in that same period.

Liquidity

The Company is currently addressing its liquidity issue(s) by continually building upon its revenue generation subscription service products, increasing its advertising based revenues (as discussed) and by seeking investment capital through a private placement of common stock. Since inception, the Company has at times relied primarily upon proceeds from private placements and sales of shares of its equity securities to fund its operations. We anticipate continuing to rely on such sales of our securities as well as increasing our subscriptions services revenues in order to continue to fund our business operations.  Through the third quarter of 2011 the Company had raised $261,000 through the sale of stock.

It should be noted that the issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will be able to complete all of the additional sales of our equity securities as planned and noted herein or that we will be able arrange for other financing to fund our planned business activities.

While all of these factors as noted herein have the potential to impact the Company’s liquidity in either a positive or negative fashion, it is the Company’s position that should there be a continuing deficit in our operating costs it will likely be the result of the additional cost burden of becoming a publicly reporting company.  To that end the Company feels it will be able to raise the necessary capital to continue operations via the sale of additional stock as already disclosed and noted herein as well as continue to grow our revenues to meet these needs.  Once the Company deploys the additional educational based services (as discussed) and completes the raising of additional funds through the private placement (as discussed) it should be able to attain a break even operating basis and subsequent to a modest time period, achieve a cash flow positive position.

Plan of Continued Operations

As already noted herein as well as within our relative SEC documents (as filed), we have initiated a private placement of our stock to insure the Company has adequate cash to meet its continuing obligations as well as expand its business (as discussed in our Form 10-12G) in China into the education sector.  It is our intent to focus on continuing to build our subscription and advertising revenues through focused advertising as well as seminars and to add to that mix an educational services platform offered in a classroom as well as online setting.

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

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 Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required for smaller reporting companies.

Item 4. Controls and Procedures.

The Company’s Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective as of the Quarter ended and the issuance date of this filing.

We have identified material weaknesses in our internal controls over financial reporting. More specifically, the Company does not maintain a sufficient complement of personnel with an appropriate level of accounting and financial reporting knowledge, experience and training in the application of U.S. GAAP commensurate with our financial reporting requirements and the complexity of our operations and transactions. We also do not maintain an adequate system of processes and internal controls sufficient to support our financial reporting requirements and produce timely and accurate U.S. GAAP financial statements consistent with being a public company.

Although the Company has implemented changes in internal controls over financial reporting described below and performed additional analysis and reviews in connection with the preparation of the financial statements and disclosures in this Form 10-Q, our management concluded that these controls were not operating for a sufficient amount of time to conclude that our internal controls over financial reporting were effective as of February 28, 2011.

In order to further enhance our internal controls, management is currently working with our audit committee to identify and implement corrective actions to improve our disclosure controls and procedures and our internal controls. Specifically, the Company is currently evaluating the controls currently in place and a plan of action to add additional controls and expertise as necessary to correct the problems identified. The company has hired an internal control consultant to implement these corrective actions and is considering hiring a Controller to further segregate duties within the company. We believe these actions will remediate the material weakness described above once implemented. However, the material weakness will not be considered remedied until the applicable remedial controls are implemented and operate for a sufficient period of time and management has concluded that these controls are operating effectively. Our management plans to continue to work with our audit committee to continue to identify and implement corrective actions, where required, to further improve our disclosure controls and procedures and internal controls.

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.

Please refer to our recently filed Form(s) 10-12G/A with the Securities and Exchange Commission for this information.

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

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During the quarter ended February 28, 2011 the Company raised $389,000 through the sale of 3,241,667 shares of commons stock at $.12 per share.  The proceeds from the sales of these stocks were used to fund the Company’s ongoing operating losses and the costs associated with becoming a publicly traded company.

Item 3. Defaults Upon Senior Securities.

There have been no defaults upon senior securities.

Item 5. Other Information.

None.

Item 6. Exhibits.

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

Signatures

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

	ChineseInvestors.com, Inc.
	(Registrant)
Date: April 27, 2011	By:	/s/ Brett Roper
		Brett Roper
		Secretary of the Board of Directors
Date: April 27, 2011	By:	/s/ Wei Wang
		Wei Wang
		Chief Executive Officer

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