Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
May 31, 2016 | Aug. 31, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | Chineseinvestors.com, Inc. | |
Entity Central Index Key | 1,459,482 | |
Document Type | 10-K | |
Document Period End Date | May 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Public Float | $ 1,971,273 | |
Entity Common Stock, Shares Outstanding | 7,661,805 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2,016 |
Balance Sheets
Balance Sheets - USD ($) | May 31, 2016 | May 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 197,231 | $ 498,189 |
Accounts receivable, net | 1,899 | 101,918 |
Investments, available for sale, in affiliate | 2,425,709 | 1,148,000 |
Investments, available for sale | 111,016 | 301,491 |
Prepaid taxes | 0 | 33,165 |
Other current assets | 55,780 | 91,634 |
Total current assets | 2,791,635 | 2,174,397 |
Property and equipment, net | 11,768 | 9,783 |
Website development, net | 78,147 | 79,644 |
Total non-current assets | 89,915 | 89,427 |
Total assets | 2,881,550 | 2,263,824 |
Current liabilities | ||
Accounts payable | 76,244 | 22,811 |
Accounts payable - due in stock | 0 | 114,800 |
Deferred revenue | 321,416 | 206,565 |
Unearned revenue paid in stock | 90,278 | 173,611 |
Accrued liabilities | 39,153 | 65,844 |
Accrued dividend & interest | 23,954 | 34,947 |
Long-term secured debt | 660,000 | 0 |
Embedded incentive interest | 39,600 | 0 |
Total current liabilities | 1,250,645 | 618,578 |
Non-current liabilities | ||
Long-term deferred revenue | 37,642 | 48,767 |
Total Non-current Liabilities | 37,642 | 48,767 |
Total liabilities | 1,288,287 | 667,345 |
Commitments and Contingencies | ||
Shareholders' equity | ||
Common stock $0.001 par value 80,000,000 authorized and 7,661,805 and 7,724,305 were issued and outstanding May 31, 2016 and May 31, 2015, respectively | 7,663 | 7,725 |
Additional paid-in capital | 14,665,583 | 13,971,170 |
Foreign currency gain/(loss) | (638) | 536 |
Unrealized gain on investments available for sale | 2,057,770 | 531,631 |
Accumulated deficit | (15,140,555) | (12,917,373) |
Total Shareholders' equity | 1,593,263 | 1,596,479 |
Total liabilities and shareholders' equity | 2,881,550 | 2,263,824 |
Preferred Class A [Member] | ||
Shareholders' equity | ||
Preferred stock | 905 | 905 |
Preferred Class A [Member] | ||
Shareholders' equity | ||
Preferred stock | $ 2,535 | $ 1,885 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | May 31, 2016 | May 31, 2015 |
Stockholders' equity [note 3] | ||
Common stock par value | $ 0.001 | $ 0.001 |
Common stock authorized | 80,000,000 | 80,000,000 |
Common stock issued | 7,661,805 | 7,724,305 |
Common stock outstanding | 7,661,805 | 7,724,305 |
Preferred Class A [Member] | ||
Stockholders' equity [note 3] | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock authorized | 20,000,000 | 20,000,000 |
Preferred stock issued | 905,000 | 905,000 |
Preferred stock outstanding | 905,000 | 905,000 |
Preferred Class A [Member] | ||
Stockholders' equity [note 3] | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock authorized | 20,000,000 | 20,000,000 |
Preferred stock issued | 2,415,000 | 1,885,000 |
Preferred stock outstanding | 2,415,000 | 1,885,000 |
Statement of Stockholders' Equi
Statement of Stockholders' Equity (Deficiency) - USD ($) | Common Stock | Preferred Stock "A" | Preferred Stock "B" | Additional Paid-In Capital | Foreign Currency Gain (Loss) | Unrealized Gain on Securities | Stockholders' Deficit | Total |
Beginning balance, shares at May. 31, 2014 | 7,199,305 | 1,285,000 | 0 | |||||
Beginning balance, value at May. 31, 2014 | $ 7,200 | $ 1,285 | $ 0 | $ 10,587,500 | $ 1,350 | $ (291,984) | $ (9,079,857) | $ 1,225,494 |
Stock based compensation, shares | 50,000 | |||||||
Stock based compensation, value | $ 50 | 24,950 | 25,000 | |||||
Preferred stock issued for cash, shares issued | 1,885,000 | |||||||
Preferred stock issued for cash, value | $ 1,885 | 1,883,115 | 1,885,000 | |||||
Deemed dividend associated with preferred stock issuance | 1,475,700 | 1,475,700 | ||||||
Conversion of preferred stock to common stock, shares | 475,000 | (380,000) | ||||||
Conversion of preferred stock to common stock, VALUE | $ 475 | $ (380) | (95) | |||||
Unrealized gain on available for sale securities | 823,615 | 823,615 | ||||||
Unrealized foreign currency gain/loss | (814) | |||||||
Unrealized investment gain/loss | (814) | |||||||
Net (loss) for the period | (3,837,516) | (2,326,869) | ||||||
Ending balance, shares at May. 31, 2015 | 7,724,305 | 905,000 | 1,885,000 | |||||
Ending balance, value at May. 31, 2015 | $ 7,725 | $ 905 | $ 1,885 | 13,971,170 | 536 | 531,631 | (12,917,373) | 1,596,479 |
Preferred stock issued for cash, shares issued | 650,000 | |||||||
Preferred stock issued for cash, value | $ 650 | 649,350 | 650,000 | |||||
Deemed dividend associated with preferred stock issuance | 51,250 | 51,250 | ||||||
Stock repurchased and retired, shares | (62,500) | |||||||
Stock repurchased and retired, value | $ 62 | (6,187) | (6,249) | |||||
Unrealized foreign currency gain/loss | (1,174) | (1,174) | ||||||
Unrealized investment gain/loss | 1,526,139 | 1,526,139 | ||||||
Net (loss) for the period | (2,223,182) | (2,026,206) | ||||||
Ending balance, shares at May. 31, 2016 | 7,661,805 | 905,000 | 2,535,000 | |||||
Ending balance, value at May. 31, 2016 | $ 7,663 | $ 905 | $ 2,535 | $ 14,665,583 | $ (638) | $ 2,057,770 | $ (15,140,555) | $ 1,593,263 |
Statements of Operations and Lo
Statements of Operations and Loss - USD ($) | 12 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Operating revenues | ||
Investor relations | $ 306,415 | $ 1,838,550 |
Subscription | 533,965 | 590,097 |
Other | 62,805 | 13,025 |
Total revenue | 903,185 | 2,441,672 |
Cost of services | 964,223 | 1,011,349 |
Gross profit | (61,038) | 1,430,323 |
Operating expenses | ||
General and administrative expense | 2,296,130 | 1,553,936 |
Uncollectible account write-off | 126,915 | 0 |
Advertising expense | 438,673 | 359,538 |
Total operating expenses | 2,861,718 | 1,913,474 |
Net profit/(loss) from operations | (2,922,756) | (483,151) |
Other income/(expense) | ||
Debt forgiveness | 10,490 | 99,702 |
Interest expense | (63,554) | (59,316) |
Net realized gain/(loss) on marketable equity securities | 949,614 | (1,884,104) |
Total other expense | 896,550 | (1,843,718) |
Net (loss) | (2,026,206) | (2,326,869) |
Preferred stock dividend | (145,726) | (34,947) |
Deemed dividend for beneficial conversion of convertible preferred stock | (51,250) | (1,475,700) |
Net (loss) attributable to common shareholders | $ (2,223,182) | $ (3,837,516) |
Earnings per share attributable to common shareholders | ||
Basic loss per share | $ (.26) | $ (0.51) |
Weighted average number of shares outstanding - basic | 7,724,305 | 7,477,661 |
Other comprehensive income/(loss) | ||
Net unrealized gain/(loss) on available for sale securities | $ 1,526,139 | $ 823,615 |
Comprehensive Income/(Loss) | $ (697,043) | $ (3,013,901) |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
May 31, 2016 | May 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVTIES | ||
Net loss | $ (2,026,206) | $ (2,326,869) |
Adjustments to reconcile net loss (income) to net cash (used in) provided by operating activities: | ||
Non-cash revenue held as available for sale securities | (83,333) | (1,485,696) |
Net, realized (loss)/gain on marketable equity securities | 208,213 | 2,819,078 |
Gain on extinguishment of debt | 0 | (99,702) |
Stock based compensation | 0 | 25,000 |
Expenses paid with third party stock | 12,300 | 0 |
Commissions payable due in stock paid in cash | (43,308) | 0 |
Depreciation and amortization | 20,069 | 24,264 |
Changes in operating assets and liabilities | ||
Accounts receivable | 100,019 | (84,496) |
Deposit | 35,854 | (65,230) |
Prepaid taxes | 33,165 | 25,798 |
Notes payable related party | 0 | 17,648 |
Accounts payable | 53,434 | (31,175) |
Commissions payable | 0 | 114,800 |
Accrued interest expense | 28,607 | (11,068) |
Other accrued liabilities | (26,691) | (13,515) |
Deferred revenue | 103,726 | (168,187) |
Unearned revenue paid in cash | 0 | (120,208) |
Net cash used in operating activities | (1,584,151) | (1,379,558) |
Cash flows from investing activities | ||
(Purchase of)/ sale of assets, net | (20,557) | 3,548 |
Net cash provided by investing activities | (20,557) | 3,548 |
Cash flows from financing activities | ||
Cash raised through sale of class B preferred stock | 650,000 | 1,885,000 |
Cash used for repayment of debt | 0 | (440,000) |
Cash raised through issuance of debt | 660,000 | 0 |
Cash used to purchase and retire common stock | (6,250) | 0 |
Net cash provided by financing activities | 1,303,750 | 1,445,000 |
Net increase/(decrease) in cash and cash equivalents | (300,958) | 68,990 |
Cash and cash equivalents, beginning of year | 498,189 | 429,199 |
Cash and cash equivalents, end of year | 197,231 | 498,189 |
Supplemental cash flow disclosures | ||
Cash paid for interest | 0 | 24,369 |
Cash paid for China representative office tax | 62,298 | 60,184 |
Non cash revenue paid in available for sale securities | $ 0 | $ (1,485,696) |
Organization and Nature of Oper
Organization and Nature of Operations | 12 Months Ended |
May 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Operations | Business Description 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 corporation in the State of Indiana as of June 1, 1997. |
1. Liquidity and Capital Resour
1. Liquidity and Capital Resources | 12 Months Ended |
May 31, 2016 | |
Capital [Abstract] | |
Liquidity and Capital Resources | Cash Flows Cash flows used in operations for the years ended May 31, 2016 and 2015 were ($1,584,151) and ($1,379,558), respectively. The increase of cash used in operations was primarily caused by the net loss offset by increase in cash raised through financing activities. Capital Resources Going Concern |
2. Critical Accounting Policies
2. Critical Accounting Policies and Estimates | 12 Months Ended |
May 31, 2016 | |
Accounting Policies [Abstract] | |
Critical Accounting Policies and Estimates | Basis of Presentation Investment in Affiliate Foreign Currency Selling Price and Market Financing Expenses Numerous Intercompany Transactions 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. Revenue recognition The Company recognizes revenue pursuant to revenue recognition principles presented in SAB Topic 13. First, persuasive evidence of an arrangement. Second, deliver has occurred or services have been rendered, thirdly the sellers price to the buyer is fixed or determinable and lastly collectability is reasonably assured. The Company recognizes revenue pursuant to revenue recognition principles presented in SAB Topic 13. First, persuasive evidence of an arrangement. Second, delivery has occurred or services have been rendered, thirdly the sellers price to the buyer is fixed or determinable and lastly collectability is reasonably assured. 1. Fees from banner advertisement, webpage hosting and maintenance, on-line promotion and translation services, advertising and promotion fees for customers in the Companys Chinese Investment Guides, sponsorship fees from investment seminars, road shows, and forums. The sales prices of these services are fixed and determinable at the time the contracts are signed and there are no provisions for refunds contained in the contracts. These revenues are recognized when all significant 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. Subscription terms are generally between 3 and 12 months but can occasionally be as short as 1 month or as long as 24 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 the client companys stock closing price multiplied by the numbers of shares earned within that specific accounting period. 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 of readily determinable fair value presented at Accounting Standards Codification 820-10-15-5 in assessing the amount to recognize in each accounting period. The number of shares earned is a function of the time period for which services are provided over the contract period in relation to the price of the shares at the time of the services being delivered, added to the value of cash received if any, then recognized as revenue in the period the services were delivered. Costs of Services Sold Website Development Costs Cash and Cash Equivalents Accounts Receivable and Concentration of Credit Risk The Company evaluates the need for an allowance for doubtful accounts on a regular basis. As of May 31, 2016 and 2015, the Company determined that an allowance was not needed as all write-offs that have occurred were not of the recurring nature. The operations of the Company are located in the Peoples Republic of China (PRC). Accordingly, the Companys 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 affiliate Investments available for sale 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 948-310-40-1 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. Unrealized holding gains and losses for Available-for-sale securities (including those classified as current assets) shall be excluded from earnings and reported in other comprehensive income until realized." 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". Prepaid taxes Other Current Assets Other current assets were $55,780 and $91,634 for the years ended May 31, 2016 and May 31, 2015, respectively. Property and Equipment 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 . Commissions payable In 2015 the Company agreed to pay one of its executive a commission based upon his work related to Medicine Man Technologies, of 10% of the value of the stock the Company received in the affiliate. The Company received 2,800,000 shares of stock during the transaction and agreed to pay the executive a value equal to 10% of the share price received as of May 31, 2015. The Company determined the value of the investment in affiliate (Medicine Man Technologies, Inc.) and the related accounts payable was $.41 per share according to the independent valuation at May 31, 2015. Based upon this valuation the Company recorded a liability of commissions payable of $114,800 (2,800,000 X 10% = 280,000 X $.41 = 114,800) on its May 31, 2015 balance sheet. This liability was fully liquidated during the year ended May 31, 2016 through the delivery of 174,371 shares of MDCL stock and payment of $43,308 cash. Unearned revenue, revenue paid in stock Accrued interest Accrued Liabilities May 31, May 31, 2016 2015 China Employee Salaries and Commissions Accrual $ 30,331 $ 50,779 Representative Office Tax Accrual 2,879 3,835 Other Accruals 5,943 11,230 $ 39,153 $ 65,844 Short-term Debt We may issue debt that is collateralized by common stock we own in a third party. Additionally, this debt is intended to be settled using the proceeds when that common stock is sold. If the proceeds from the sale of the common stock are more than the estimated value of the common stock when we entered into the debt agreements, the debt holder receives 30% of the deemed increase in value of the common stock (Incentive Feature). We estimate the value of the Incentive Feature using the expected liquidation value of the common stock collateralizing the debt based on recent sales of the common stock. We record the estimated value of the Incentive Feature as an increase to the debt liability and as interest expense. We recorded a liability and interest expense as of May 31, 2016, for the Incentive Feature of $39,600. We estimated the expected liquidation value of the underlying common stock at $1.20 per share, based on recent sales of shares. Use of 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 · 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. Much of the Companys financial instruments are level one and are carried at market 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 by the price of identical instruments traded on an active exchange. It should be noted that 60,000 shares of the stock earned for consulting work, currently being held qualifies as a Level two instrument and has a book value of $67,500. The Company determined that the instrument was Level two because the market for this instrument was less active, as it was currently being distributed through a private placement memorandum, and was not a freely trading public stock. The value of the stock has been monitored on an ongoing basis and verified to be consistent with the carrying value and, therefore, not requiring an adjustment. Level one instruments were based upon stated balance of financial institution or calculated based upon stock trading in the public market. Level two instruments were 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 included 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. The following table summarizes the assets we are carrying and the fair value category in which they are currently classified: May 31, 2016 May 31, 2015 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Cash 197,231 498,189 Investments 2,358,209 67,500 233,991 67,500 1,148,000 Total Financial Instruments 2,555,440 67,500 732,180 67,500 1,148,000 Income Taxes 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. Other Revenue Uncollectable Advertising Costs Earnings (Loss) Per Share Stock Based Compensation 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. Share based expense paid to through direct stock grants is expensed as occurred. Since the Companys stock is publicly traded, the value is determined based on the number of shares issued and the trading value of the stock on the date of the transaction. The company recognized $25,000 in expenses in the year ended May 31, 2015 for stock based compensation to the Company Chief Financial Officer through direct stock grants of 50,000 shares. Stock option activity was as follows (converted post reverse split): Number of Shares Weighted Balance at May 31, 2014 389,039 $ 0.48 Granted Exercised Forfeited or expired Balance at May 31, 2015 389,035 $ 0.48 Granted Exercised Forfeited or expired Balance at May 31, 2016 389,035 $ 0.48 The following table presents information regarding options outstanding and exercisable as of May 31, 2016: Weighted average contractual remaining term options outstanding 0 years Aggregate intrinsic value options outstanding $ 155,614 Options exercisable 389,035 Weighted average exercise price options exercisable $ .48 Aggregate intrinsic value options exercisable $ 7,781 Weighted average contractual remaining term options exercisable 0 years As of May 31, 2016, future compensation costs related to options issued was $0. 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 1.44% Expected life of options 4-5 years Annualized volatility 90.6% Dividend rate 0% New Accounting Pronouncements ASU 2015-01 Income Statement Extraordinary and Unusual Items (ASU 2015-01) In January 2015, the FASB issued ASU 2015-01 eliminating the concept of extraordinary items for presentation on the face of the income statement. Under the new standard, a material event or transaction that is unusual in nature, infrequent or both shall be reported as a separate component of income from continuing operations. Alternatively, it may be disclosed in the notes to financial statements. The new accounting guidance is required for interim and annual periods beginning after December 15, 2015. Early adoption is permitted if applied from the beginning of a fiscal year. As applicable, this standard may change the presentation of amounts in the income statements. We elected to adopt ASU 2015-01 effective January 1, 2016. Adopting this policy as of June 1, 2014 affected the Company recognizing $99,702 as a gain from debt forgiveness in the year ending May 31, 2015 as the Company determined that the amount was no longer legally due to a contractor. The Company recognized the $99,702 as income in the other incomes section of the income statement. |
3. Stockholders' Equity
3. Stockholders' Equity | 12 Months Ended |
May 31, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | As of May 31, 2016 and 2015, 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 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, 2015, the Company converted 380,000 shares of preferred stock for 475,000 of common stock shares at a conversion rate of 1.25 per share of preferred stock. During the year ended May 31, 2015, the Company granted 50,000 shares of common stock for compensation. The stock was valued at $0.50 per share. The compensation and consulting expense was recorded as general and administrative expenses for the year ended May 31, 2015. During the year ended May 31, 2014, the Company converted 728,776 shares of preferred stock for 910,970 shares at a conversion rate of 1.25 shares of common stock per share of preferred stock. During March 2014, the Company granted 300,000 shares of common stock for compensation. Half the shares were valued at $0.90 per share and the remaining 150,000 shares were valued at $0.77 per share. The Company also issued 18,750 shares for services valued at $0.89 per share. The compensation and consulting expense was recorded as general and administrative expenses for the year ended May 31, 2014. Series A Convertible Preferred Stock: During the third quarter, effective February 29, 2012, the Company issued 2,003,776 shares of preferred stock as Series A 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. Upon issuance of preferred stock convertible in shares of common stock at a price lower than the fair market value of common stock on the date of issuance, in accordance with the guidance provided in ASC 505-10-50 and Emerging Issues Task Force (EITF) No. 00-27, we will record the intrinsic value of this beneficial conversion feature which we calculated to be $520,982 ($1.06 common stock price February 29th, 2012 compared to $0.80 effective conversion rate of $0.26 per share. $0.26 times 2,003,776 = $520,982), as a deemed dividend recognizable in the current year. This deemed dividend was calculated based upon a closing price on February 29, 2012 (the date the shares were formally accepted by the Company) of $1.06 per share and an effective sale price (with conversion) per the preferred share agreement of $0.80 per share of common stock . Series B Convertible Preferred Stock In the years ended May 31, 2016 and 2015 the Company issued 650,000 and 1,885,000 shares of preferred stock as Series B convertible preferred stock for total proceeds of $2,535,000. 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 six 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. Upon issuance of preferred stock convertible in shares of common stock at a price lower than the fair market value of common stock on the date of issuance, in accordance with the guidance provided in ASC 505-10-50 and Emerging Issues Task Force (EITF) No. 00-27, we will record the intrinsic value of this beneficial conversion feature which we calculated to be $1,475,700 as a deemed dividend on the Companys income statement in 2015 and $51,250 in the period ending May 31, 2016. This deemed dividend was calculated based upon a trading price ranging from $0.35 to $0.76 per share closing price of trading on the OTCBB exchange where are stock is traded and effective sale price (with conversion) of $0.88 to $1.90 per share of common stock. |
4. Property and Equipment
4. Property and Equipment | 12 Months Ended |
May 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and equipment are recorded at cost, net of accumulated depreciation and are comprised of the following: May 31, 2016 May 31, 2015 Furniture & Fixtures $ 87,413 $ 75,527 Leasehold Improvements 23,417 23,416 $ 110,830 $ 98,943 Less: Accumulated Depreciation (99,062 ) (89,160 ) $ 11,768 $ 9,783 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 3 years Leasehold improvements Term of the lease Depreciation expense for the years ended May 31, 2015 and 2014 was $9,903 and $16,174, respectively. |
5. Intangible Assets
5. Intangible Assets | 12 Months Ended |
May 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible assets are comprised of the following: May 31, 2016 May 31, 2015 Website development 174,046 165,374 Less: Accumulated Depreciation (95,899 ) (85,730 ) $ 78,147 $ 79,644 Amortization is calculated over a straight-line basis using the economic life of the asset. Amortization expense for the twelve months ended May 31, 2014 and 2013 was $10,166 and $8,090 respectively. |
6. Commitments and Concentratio
6. Commitments and Concentrations | 12 Months Ended |
May 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Concentrations | Office Lease Shanghai 2017 fiscal year 20,143 Office Lease Denver, Colorado 2017 fiscal year $ 18,687 2018 fiscal year 19,355 The company had a lease for executive office space in Denver, Colorado that was prepaid for six months in the third quarter of 2015 and expired July 31, 2015. However, the company moved into new office space June 1, 2015 and abandoned that location at May 31, 2015. The company expensed the remaining outstanding prepaid rent of $3,308 at that time. Office Lease New York Office Lease Irwindale, California Concentrations Litigation |
7. Income Taxes
7. Income Taxes | 12 Months Ended |
May 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The Company recorded no income tax provision or benefit for the years ended May 31, 2016 and 2015, because the Company believes it is more likely than not that these will not be utilized in the near future due to net losses. The Company generated no taxable income. The income tax provision (benefit) differs from the amount computed by applying the U.S. Federal income tax rate of 34% plus applicable state rates to the loss before income taxes due to the unrecognized benefit resulting from the Companys valuation allowance, as well as due to nondeductible expenses. For income tax reporting purposes, the Company has approximately $8 As of May 31, 2016 and 2015, the Company had approximately $2.7 million and $1.7 million, respectively, of net deferred tax assets, comprised primarily of the potential future tax benefits from net operating loss carry forwards. Based upon the level of historical taxable income and projections for future taxable income over the period in which the deferred tax assets are deductible, management could not conclude that realization of the deferred tax assets as of May 31, 2016 and 2015, was more likely than not, and therefore, the Company has recorded a valuation allowance to reduce the net deferred tax assets to zero. The valuation allowance increased approximately $1,100,000 during the year ended May 31, 2016 and increased approximately $902,000 during the year ended May 31, 2015, respectively. The amount of deferred tax assets considered realizable could be adjusted in the near term if future taxable income is generated. The Companys effective tax rate differs from the statutory rate due to the following (expressed as a percentage of pre-tax income): Description 2016 2015 Federal Statutory Rate 35% 35% State Statutory Rate 6% 5% Change in Rate / Other 4% 2% Permanent Tax Differences (6% ) (1% ) Calculated Rate 39% 41% Actual Calculated Rate (39% ) (41% ) Difference 0% 0% |
8. Subsequent Events
8. Subsequent Events | 12 Months Ended |
May 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Management has evaluated all events subsequent to year end through the date of this filing, noting that none materially impacted the financial statements or require further disclosure. |
2. Critical Accounting Polici16
2. Critical Accounting Policies and Estimates (Policies) | 12 Months Ended |
May 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation |
Investment in Affiliate | Investment in Affiliate |
Foreign Currency | Foreign Currency Selling Price and Market Financing Expenses Numerous Intercompany Transactions 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. |
Revenue recognition | Revenue recognition The Company recognizes revenue pursuant to revenue recognition principles presented in SAB Topic 13. First, persuasive evidence of an arrangement. Second, deliver has occurred or services have been rendered, thirdly the sellers price to the buyer is fixed or determinable and lastly collectability is reasonably assured. The Company recognizes revenue pursuant to revenue recognition principles presented in SAB Topic 13. First, persuasive evidence of an arrangement. Second, delivery has occurred or services have been rendered, thirdly the sellers price to the buyer is fixed or determinable and lastly collectability is reasonably assured. 1. Fees from banner advertisement, webpage hosting and maintenance, on-line promotion and translation services, advertising and promotion fees for customers in the Companys Chinese Investment Guides, sponsorship fees from investment seminars, road shows, and forums. The sales prices of these services are fixed and determinable at the time the contracts are signed and there are no provisions for refunds contained in the contracts. These revenues are recognized when all significant 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. Subscription terms are generally between 3 and 12 months but can occasionally be as short as 1 month or as long as 24 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 the client companys stock closing price multiplied by the numbers of shares earned within that specific accounting period. 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 of readily determinable fair value presented at Accounting Standards Codification 820-10-15-5 in assessing the amount to recognize in each accounting period. The number of shares earned is a function of the time period for which services are provided over the contract period in relation to the price of the shares at the time of the services being delivered, added to the value of cash received if any, then recognized as revenue in the period the services were delivered. |
Costs of Services Sold | Costs of Services Sold |
Website Development Costs | Website Development Costs |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Accounts Receivable and Concentration of Credit Risk | Accounts Receivable and Concentration of Credit Risk The Company evaluates the need for an allowance for doubtful accounts on a regular basis. As of May 31, 2016 and 2015, the Company determined that an allowance was not needed as all write-offs that have occurred were not of the recurring nature. The operations of the Company are located in the Peoples Republic of China (PRC). Accordingly, the Companys 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 affiliate | Investments, available for sale, in affiliate |
Investments available for sale | Investments available for sale 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 948-310-40-1 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. Unrealized holding gains and losses for Available-for-sale securities (including those classified as current assets) shall be excluded from earnings and reported in other comprehensive income until realized." 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". |
Prepaid taxes | Prepaid taxes |
Other Current Assets | Other Current Assets Other current assets were $55,780 and $91,634 for the years ended May 31, 2016 and May 31, 2015, respectively. |
Property and Equipment | Property and Equipment 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 | Impairment of Long-life Assets . |
Commissions payable | Commissions payable In 2015 the Company agreed to pay one of its executive a commission based upon his work related to Medicine Man Technologies, of 10% of the value of the stock the Company received in the affiliate. The Company received 2,800,000 shares of stock during the transaction and agreed to pay the executive a value equal to 10% of the share price received as of May 31, 2015. The Company determined the value of the investment in affiliate (Medicine Man Technologies, Inc.) and the related accounts payable was $.41 per share according to the independent valuation at May 31, 2015. Based upon this valuation the Company recorded a liability of commissions payable of $114,800 (2,800,000 X 10% = 280,000 X $.41 = 114,800) on its May 31, 2015 balance sheet. This liability was fully liquidated during the year ended May 31, 2016 through the delivery of 174,371 shares of MDCL stock and payment of $43,308 cash. |
Unearned revenue, revenue paid in stock | Unearned revenue, revenue paid in stock |
Accrued Interest | Accrued interest |
Accrued liabilities | Accrued Liabilities May 31, May 31, 2016 2015 China Employee Salaries and Commissions Accrual $ 30,331 $ 50,779 Representative Office Tax Accrual 2,879 3,835 Other Accruals 5,943 11,230 $ 39,153 $ 65,844 |
Short-term debt | Short-term Debt We may issue debt that is collateralized by common stock we own in a third party. Additionally, this debt is intended to be settled using the proceeds when that common stock is sold. If the proceeds from the sale of the common stock are more than the estimated value of the common stock when we entered into the debt agreements, the debt holder receives 30% of the deemed increase in value of the common stock (Incentive Feature). We estimate the value of the Incentive Feature using the expected liquidation value of the common stock collateralizing the debt based on recent sales of the common stock. We record the estimated value of the Incentive Feature as an increase to the debt liability and as interest expense. We recorded a liability and interest expense as of May 31, 2016, for the Incentive Feature of $39,600. We estimated the expected liquidation value of the underlying common stock at $1.20 per share, based on recent sales of shares. |
Use of Estimates | Use of 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 | Fair Value of Financial Instruments · 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. Much of the Companys financial instruments are level one and are carried at market 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 by the price of identical instruments traded on an active exchange. It should be noted that 60,000 shares of the stock earned for consulting work, currently being held qualifies as a Level two instrument and has a book value of $67,500. The Company determined that the instrument was Level two because the market for this instrument was less active, as it was currently being distributed through a private placement memorandum, and was not a freely trading public stock. The value of the stock has been monitored on an ongoing basis and verified to be consistent with the carrying value and, therefore, not requiring an adjustment. Level one instruments were based upon stated balance of financial institution or calculated based upon stock trading in the public market. Level two instruments were 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 included 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. The following table summarizes the assets we are carrying and the fair value category in which they are currently classified: May 31, 2016 May 31, 2015 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Cash 197,231 498,189 Investments 2,358,209 67,500 233,991 67,500 1,148,000 Total Financial Instruments 2,555,440 67,500 732,180 67,500 1,148,000 |
Income Taxes | Income Taxes 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. |
Other revenue | Other Revenue |
Uncollectable | Uncollectable |
Advertising Costs | Advertising Costs |
Earnings (Loss) Per Share | Earnings (Loss) Per Share |
Stock Based Compensation | Stock Based Compensation 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. Share based expense paid to through direct stock grants is expensed as occurred. Since the Companys stock is publicly traded, the value is determined based on the number of shares issued and the trading value of the stock on the date of the transaction. The company recognized $25,000 in expenses in the year ended May 31, 2015 for stock based compensation to the Company Chief Financial Officer through direct stock grants of 50,000 shares. Stock option activity was as follows (converted post reverse split): Number of Shares Weighted Balance at May 31, 2014 389,039 $ 0.48 Granted Exercised Forfeited or expired Balance at May 31, 2015 389,035 $ 0.48 Granted Exercised Forfeited or expired Balance at May 31, 2016 389,035 $ 0.48 The following table presents information regarding options outstanding and exercisable as of May 31, 2016: Weighted average contractual remaining term options outstanding 0 years Aggregate intrinsic value options outstanding $ 155,614 Options exercisable 389,035 Weighted average exercise price options exercisable $ .48 Aggregate intrinsic value options exercisable $ 7,781 Weighted average contractual remaining term options exercisable 0 years As of May 31, 2016, future compensation costs related to options issued was $0. 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 1.44% Expected life of options 4-5 years Annualized volatility 90.6% Dividend rate 0% |
New Accounting Pronouncements | New Accounting Pronouncements ASU 2015-01 Income Statement Extraordinary and Unusual Items (ASU 2015-01) In January 2015, the FASB issued ASU 2015-01 eliminating the concept of extraordinary items for presentation on the face of the income statement. Under the new standard, a material event or transaction that is unusual in nature, infrequent or both shall be reported as a separate component of income from continuing operations. Alternatively, it may be disclosed in the notes to financial statements. The new accounting guidance is required for interim and annual periods beginning after December 15, 2015. Early adoption is permitted if applied from the beginning of a fiscal year. As applicable, this standard may change the presentation of amounts in the income statements. We elected to adopt ASU 2015-01 effective January 1, 2016. Adopting this policy as of June 1, 2014 affected the Company recognizing $99,702 as a gain from debt forgiveness in the year ending May 31, 2015 as the Company determined that the amount was no longer legally due to a contractor. The Company recognized the $99,702 as income in the other incomes section of the income statement. |
2. Critical Accounting Polici17
2. Critical Accounting Policies and Estimates (Tables) | 12 Months Ended |
May 31, 2016 | |
Accounting Policies [Abstract] | |
Accrued liabilities | May 31, May 31, 2016 2015 China Employee Salaries and Commissions Accrual $ 30,331 $ 50,779 Representative Office Tax Accrual 2,879 3,835 Other Accruals 5,943 11,230 $ 39,153 $ 65,844 |
Fair value of financial instruments | May 31, 2016 May 31, 2015 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Cash 197,231 498,189 Investments 2,358,209 67,500 233,991 67,500 1,148,000 Total Financial Instruments 2,555,440 67,500 732,180 67,500 1,148,000 |
Stock option activity | Number of Shares Weighted Balance at May 31, 2014 389,039 $ 0.48 Granted Exercised Forfeited or expired Balance at May 31, 2015 389,035 $ 0.48 Granted Exercised Forfeited or expired Balance at May 31, 2016 389,035 $ 0.48 |
Options outstanding and exercisable | Weighted average contractual remaining term options outstanding 0 years Aggregate intrinsic value options outstanding $ 155,614 Options exercisable 389,035 Weighted average exercise price options exercisable $ .48 Aggregate intrinsic value options exercisable $ 7,781 Weighted average contractual remaining term options exercisable 0 years |
Weighted Average Assumptions | Risk-free interest rate 1.44% Expected life of options 4-5 years Annualized volatility 90.6% Dividend rate 0% |
4. Property and Equipment (Tabl
4. Property and Equipment (Tables) | 12 Months Ended |
May 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | May 31, 2016 May 31, 2015 Furniture & Fixtures $ 87,413 $ 75,527 Leasehold Improvements 23,417 23,416 $ 110,830 $ 98,943 Less: Accumulated Depreciation (99,062 ) (89,160 ) $ 11,768 $ 9,783 |
Schedule of property useful lives | Computer equipment 3 years Furniture & fixtures 3 years Leasehold improvements Term of the lease |
5. Intangible Assets (Tables)
5. Intangible Assets (Tables) | 12 Months Ended |
May 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets | May 31, 2016 May 31, 2015 Website development 174,046 165,374 Less: Accumulated Depreciation (95,899 ) (85,730 ) $ 78,147 $ 79,644 |
6. Commitments and Concentrat20
6. Commitments and Concentrations (Tables) | 12 Months Ended |
May 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Office lease commitment | Office Lease Shanghai 2017 fiscal year 20,143 Office Lease Denver, Colorado 2017 fiscal year $ 18,687 2018 fiscal year 19,355 |
7. Income Taxes (Tables)
7. Income Taxes (Tables) | 12 Months Ended |
May 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Effective tax rate schedule | Description 2016 2015 Federal Statutory Rate 35% 35% State Statutory Rate 6% 5% Change in Rate / Other 4% 2% Permanent Tax Differences (6% ) (1% ) Calculated Rate 39% 41% Actual Calculated Rate (39% ) (41% ) Difference 0% 0% |
1. Liquidity and Capital Reso22
1. Liquidity and Capital Resources (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Capital [Abstract] | ||
Cash raised through sale of class B preferred stock | $ 650,000 | $ 1,885,000 |
Net cash used in operating activities | (1,584,151) | (1,379,558) |
Cash and cash equivalents, end of year | $ 197,231 | $ 498,189 |
2. Critical Accounting Polici23
2. Critical Accounting Policies and Estimates (Details - Other liabilities) - USD ($) | May 31, 2016 | May 31, 2015 |
Accounting Policies [Abstract] | ||
China Employees Salaries and Commissions Accrual | $ 30,331 | $ 50,779 |
Representative Office Tax Accrual | 2,879 | 3,835 |
Other accruals | 5,943 | 11,230 |
Accrued liabilities | $ 39,153 | $ 65,844 |
2. Critical Accounting Polici24
2. Critical Accounting Policies and Estimates (Details - Fair Value) - USD ($) | May 31, 2016 | May 31, 2015 |
Level 1 | ||
Cash | $ 197,231 | $ 498,189 |
Investments | 2,358,209 | 233,991 |
Total Financial Instruments | 2,555,440 | 732,180 |
Level 2 | ||
Cash | 0 | 0 |
Investments | 67,500 | 67,500 |
Total Financial Instruments | 67,500 | 67,500 |
Level 3 | ||
Cash | 0 | 0 |
Investments | 0 | 1,148,000 |
Total Financial Instruments | $ 0 | $ 1,148,000 |
2. Critical Accounting Polici25
2. Critical Accounting Policies and Estimates (Details - Option activity) - Stock Options | 12 Months Ended |
May 31, 2016USD ($)$ / sharesshares | |
Number of Options Outstanding, Beginning | shares | 389,035 |
Number of Options Outstanding, Ending | shares | 389,035 |
Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ .48 |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ .48 |
Weighted Average Remaining Contractual Life (in years) Outstanding | 0 years |
Aggregate Intrinsic Value Outstanding | $ | $ 155,614 |
Options Exercisable | shares | 389,035 |
Weighted Average Exercise Price - Options Exercisable | $ / shares | $ .48 |
Aggregate Intrinsic Value - Options exercisable | $ | $ 7,781 |
Weighted Average Remaining Contractual Term - Exercisable | 0 years |
2. Critical Accounting Polici26
2. Critical Accounting Policies and Estimates (Details - Assumptions) - Stock Options | 12 Months Ended |
May 31, 2016 | |
Risk free interest rate | 1.44% |
Expected life of options | 4-5 years |
Annualized volatility | 90.60% |
Dividend rate | 0.00% |
2. Critical Accounting Polici27
2. Critical Accounting Policies and Estimates (Details Narrative) - USD ($) | 12 Months Ended | ||
May 31, 2016 | May 31, 2015 | May 31, 2014 | |
Cash and cash equivalents | $ 197,231 | $ 498,189 | $ 429,199 |
Accounts receivable | 1,899 | 101,918 | |
Allowance for doubtful accounts | 0 | 0 | |
Write off of prepaid taxes | 33,165 | 0 | |
Other current assets | 55,780 | 91,634 | |
Depreciation and amortization expense | 20,069 | 24,264 | |
Impairment of Long-life assets | 0 | 0 | |
Gain from debt forgiveness | 10,490 | 99,702 | |
Accounts payable - due in stock | 0 | 114,800 | |
Unearned revenue paid in stock | 90,278 | 173,611 | |
Accrued interest | 23,954 | 34,947 | |
Proceeds from short term debt | $ 660,000 | ||
Short term debt, shares used as collateral | 600,000 | ||
Short term debt incentive liability | $ 39,600 | 0 | |
Other revenue | 62,805 | 13,025 | |
Uncollectable account write-off | 126,915 | 0 | |
Advertising costs | 438,673 | 359,538 | |
Values due in stock | |||
Accounts receivable | 0 | 93,750 | |
Values due in cash | |||
Accounts receivable | 8,168 | 17,442 | |
United States | |||
Cash and cash equivalents | 195,669 | 496,828 | |
China | |||
Cash and cash equivalents | 1,562 | 1,361 | |
Affiliate [Member] | |||
Investment in affiliate | $ 2,425,709 | $ 1,148,000 | |
Stock held in affiliate | 1,347,616 |
3. Stockholders Equity (Details
3. Stockholders Equity (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Preferred stock converted into common stock, preferred shares converted | 380,000 | |
Preferred stock converted into common stock, common stock issued | 475,000 | |
Conversion rate | $ 1.25 | |
Proceeds from preferred stock | $ 650,000 | $ 1,885,000 |
Beneficial conversion feature | $ 51,250 | $ 1,475,700 |
Series B Preferred Stock [Member] | ||
Preferred stock issued, shares issued | 650,000 | 1,885,000 |
Shares for Compensation [Member] | ||
Stock granted for compensation, shares | 50,000 |
4. Property and Equipment (Deta
4. Property and Equipment (Details - property and equipment) - USD ($) | May 31, 2016 | May 31, 2015 |
Property Plant and Equipment, Gross | $ 110,830 | $ 98,943 |
Less: accumulated depreciation | (99,062) | (89,160) |
Property Plant and Equipment. Net | 11,768 | 9,783 |
Furniture and Fixtures | ||
Property Plant and Equipment, Gross | 87,413 | 75,527 |
Leasehold Improvements | ||
Property Plant and Equipment, Gross | $ 23,417 | $ 23,416 |
4. Property and Equipment (De30
4. Property and Equipment (Details - useful lives) - USD ($) | 12 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Depreciation expense | $ 9,903 | $ 16,174 |
Computer Equipment | ||
Expected Useful Lives | 3 years | |
Furniture and Fixtures | ||
Expected Useful Lives | 3 years | |
Leasehold Improvements | ||
Expected Useful Lives | Term of the lease |
5. Intangible Assets (Details)
5. Intangible Assets (Details) - USD ($) | 12 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Website development costs | $ 174,046 | $ 165,374 |
Less: accumulated amortization | (95,899) | (85,730) |
Total Intangible Assets | 78,147 | 79,644 |
Amortization expense | $ 10,166 | $ 8,090 |
6. Commitments and Concentrat32
6. Commitments and Concentrations (Details - Office lease) | May 31, 2016USD ($) |
Shanghai | |
Office lease 2017 fiscal year | $ 20,143 |
Denver, CO | |
Office lease 2017 fiscal year | 18,687 |
Office lease 2018 fiscal year | $ 19,355 |
7. Income Taxes (Details)
7. Income Taxes (Details) | 12 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Federal Statutory Rate | 35.00% | 35.00% |
State Statutory Rate | 6.00% | 5.00% |
Change in Rate / Other | 4.00% | 2.00% |
Permanent Tax Differences | (6.00%) | (1.00%) |
Calculated Rate | 39.00% | 41.00% |
Actual Calculated Rate | (39.00%) | (41.00%) |
Difference | 0.00% | 0.00% |
7. Income Taxes (Details Narrat
7. Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 8,000,000 | |
Expiration date of NOL | Dec. 31, 2036 | |
Net deferred tax assets | $ 2,700,000 | $ 1,600,000 |
Increase (decrease) in valuation allowance | $ 1,100,000 | $ 902,000 |