Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
May 31, 2018 | Aug. 27, 2018 | Nov. 30, 2017 | |
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, 2018 | ||
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 | $ 12,224,113 | ||
Entity Common Stock, Shares Outstanding | 32,730,560 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | May 31, 2018 | May 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 1,390,258 | $ 1,770,729 |
Accounts receivable, net | 9,815 | 8,627 |
Investments, available for sale | 1,230,754 | 729,075 |
Inventory | 130,679 | 7,690 |
Due from related party | 87,379 | 0 |
Other current assets | 331,628 | 271,401 |
Total current assets | 3,180,513 | 2,787,522 |
Non-current assets | ||
Long-term investments | 250,000 | 250,000 |
Property and equipment, net | 65,250 | 53,032 |
Website development, net | 104,278 | 81,687 |
Other assets | 76,271 | 0 |
Total non-current assets | 495,799 | 384,719 |
Total assets | 3,676,312 | 3,172,241 |
Current liabilities | ||
Accounts payable | 359,597 | 303,463 |
Short-term notes | 1,058,084 | 433,520 |
Deferred revenue, current | 787,557 | 502,241 |
Investor deposits | 0 | 210,100 |
Other current liabilities | 430,538 | 235,470 |
Total current liabilities | 2,635,776 | 1,684,794 |
Non-current liabilities | ||
Deferred revenue, noncurrent | 114,875 | 96,144 |
Total Non-current Liabilities | 114,875 | 96,144 |
Total liabilities | 2,750,651 | 1,780,938 |
Commitments and Contingencies (Note 8) | 0 | 0 |
Stockholders' equity | ||
Common stock $0.001 par value 80,000,000 authorized and 29,520,560 and 11,446,805 issued and outstanding May 31, 2018 and 2017, respectively | 29,522 | 11,448 |
Additional paid-in capital | 36,651,070 | 23,928,741 |
Accumulated deficit | (35,268,062) | (22,349,379) |
Accumulated other comprehensive loss | (495,186) | (206,892) |
Total stockholders' equity | 925,661 | 1,391,303 |
Total liabilities and stockholders' equity | 3,676,312 | 3,172,241 |
Series 2012 Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock | 445 | 615 |
Series A-2014 Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock | 606 | 1,770 |
Series C-2016 Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock | 623 | 5,000 |
Series D-2017 Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock | $ 6,643 | $ 0 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | May 31, 2018 | May 31, 2017 |
Stockholders' equity [note 3] | ||
Common stock par value | $ 0.001 | $ 0.001 |
Common stock authorized | 80,000,000 | 80,000,000 |
Common stock issued | 29,520,560 | 11,446,805 |
Common stock outstanding | 29,520,560 | 11,446,805 |
Series 2012 Preferred Stock [Member] | ||
Stockholders' equity [note 3] | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock authorized | 20,000,000 | 20,000,000 |
Preferred stock issued | 445,000 | 615,000 |
Preferred stock outstanding | 445,000 | 615,000 |
Series A-2014 Preferred Stock [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 | 606,000 | 1,770,000 |
Preferred stock outstanding | 606,000 | 1,770,000 |
Series C-2016 Preferred Stock [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 | 622,958 | 5,000,043 |
Preferred stock outstanding | 622,958 | 5,000,043 |
Series D-2017 Preferred Stock [Member] | ||
Stockholders' equity [note 3] | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock authorized | 20,000,000 | 20,000,000 |
Preferred stock issued | 6,643,050 | 0 |
Preferred stock outstanding | 6,643,050 | 0 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders Equity (Deficit) - USD ($) | Common Stock | Preferred Stock A | Preferred Stock B | Preferred Stock C | Preferred Stock D | Additional Paid-In Capital | Stockholder's Deficit | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning balance, shares at May. 31, 2016 | 7,661,805 | 905,000 | 2,605,000 | ||||||
Beginning balance, value at May. 31, 2016 | $ 7,663 | $ 905 | $ 2,605 | $ 14,735,888 | $ (15,098,304) | $ 2,113,532 | $ 1,762,289 | ||
Stock based compensation, shares | 1,335,000 | ||||||||
Stock based compensation, value | $ 1,335 | 513,615 | 514,950 | ||||||
Preferred stock issued new, shares | 5,000,043 | ||||||||
Preferred stock issued new, value | $ 5,000 | 4,995,043 | 5,000,043 | ||||||
Deemed dividend associated with preferred stock issuance | 3,685,520 | (3,685,520) | |||||||
Unamortized beneficial conversion feature | 1,244,622 | 1,244,622 | |||||||
Preferred stock discount | (1,244,622) | (1,244,622) | |||||||
Stock converted, shares issued | 2,450,000 | ||||||||
Stock converted, value issued | $ 2,450 | ||||||||
Stock converted, shares converted | (290,000) | (835,000) | |||||||
Stock converted, value converted | $ (290) | $ (835) | (1,325) | ||||||
Preferred stock dividend | (228,794) | (228,794) | |||||||
Unrealized foreign currency gain/loss | 638 | 638 | |||||||
Unrealized investment gain/loss | (2,321,062) | (2,321,062) | |||||||
Net loss | (3,336,761) | (3,336,761) | |||||||
Ending balance, shares at May. 31, 2017 | 11,446,805 | 615,000 | 1,770,000 | 5,000,043 | 0 | ||||
Ending balance, value at May. 31, 2017 | $ 11,448 | $ 615 | $ 1,770 | $ 5,000 | $ 0 | 23,928,741 | (22,349,379) | (206,892) | 1,391,303 |
Stock based compensation, shares | 1,520,000 | ||||||||
Stock based compensation, value | $ 1,520 | 768,700 | 770,220 | ||||||
Preferred stock issued new, shares | 6,793,050 | ||||||||
Preferred stock issued new, value | $ 6,793 | 6,786,257 | 6,793,050 | ||||||
Deemed dividend associated with preferred stock issuance | 5,178,065 | (5,178,065) | |||||||
Stock converted, shares issued | 6,553,755 | ||||||||
Stock converted, value issued | $ 16,554 | ||||||||
Stock converted, shares converted | (170,000) | (1,164,000) | (4,377,085) | (150,000) | |||||
Stock converted, value converted | $ (170) | $ (1,164) | $ (4,337) | $ (150) | (10,693) | ||||
Preferred stock dividend | (335,014) | (335,014) | |||||||
Unrealized foreign currency gain/loss | (8,399) | (8,399) | |||||||
Unrealized investment gain/loss | (279,895) | (279,895) | |||||||
Net loss | (7,405,604) | (7,405,604) | |||||||
Ending balance, shares at May. 31, 2018 | 29,520,560 | 445,000 | 606,000 | 622,958 | 6,643,050 | ||||
Ending balance, value at May. 31, 2018 | $ 29,522 | $ 445 | $ 606 | $ 623 | $ 6,643 | $ 36,651,070 | $ (35,268,062) | $ (495,186) | $ 925,661 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) | 12 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Total revenues | $ 2,353,331 | $ 1,667,977 |
Total cost of revenues | 1,400,058 | 1,211,354 |
Gross profit | 953,273 | 456,623 |
Operating expenses | ||
General and administrative expenses | 6,998,171 | 4,735,029 |
Advertising expense | 1,169,968 | 636,128 |
Total operating expenses | 8,168,139 | 5,371,157 |
Income (loss) from operations | (7,214,866) | (4,914,534) |
Other income/(expense) | ||
Other income (expense) | (5,013) | 0 |
Interest expense | (103,809) | (92,062) |
Net realized (loss) gain on investment | (7,148) | 1,669,835 |
Equity in loss from equity method investments | (60,000) | 0 |
Unrealized (loss) gain on cryptocurrency | (14,768) | 0 |
Total other income / (expense) | (190,738) | 1,577,773 |
Loss before income taxes | (7,405,604) | (3,336,761) |
Income tax expense | 0 | 0 |
Net loss | (7,405,604) | (3,336,761) |
Deemed dividend for beneficial conversion of convertible preferred stock | (5,178,065) | (3,685,520) |
Preferred stock dividends | (335,014) | (228,794) |
Net loss attributable to common shareholders | (12,918,683) | (7,251,075) |
Other comprehensive income (loss) | ||
Net unrealized loss for available for sale securities | (279,895) | (2,321,062) |
Foreign currency translation loss | (8,399) | 0 |
Comprehensive loss attributable to common shareholders | $ (13,206,977) | $ (9,572,137) |
Loss per share attributable to common shareholders: | ||
Basic and diluted loss per share | $ (0.58) | $ (0.86) |
Weighted average number of shares outstanding - basic and diluted | 22,427,427 | 8,433,127 |
Services [Member] | ||
Total revenues | $ 968,282 | $ 808,362 |
Total cost of revenues | 1,237,866 | 1,211,021 |
Subscription [Member] | ||
Total revenues | 779,964 | 838,897 |
Products [Member] | ||
Total revenues | 378,984 | 1,265 |
Total cost of revenues | 162,192 | 333 |
Other Revenues [Member] | ||
Total revenues | $ 226,101 | $ 19,453 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
May 31, 2018 | May 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVTIES | ||
Net loss | $ (7,405,604) | $ (3,336,761) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Non-cash revenue received as available for sale securities | (768,282) | (338,333) |
Investment (gain) loss on marketable equity securities | 7,148 | (1,669,835) |
Unrealized loss on cryptocurrencies | 14,768 | 0 |
Loss from equity method investments | 60,000 | 0 |
Stock based compensation | 770,220 | 514,950 |
Depreciation and amortization | 29,622 | 16,410 |
Impairment Loss | 0 | 84,375 |
Changes in operating assets and liabilities | ||
Accounts receivable | (1,188) | (6,728) |
Inventories | (122,987) | (7,690) |
Other current assets | (275,793) | (215,621) |
Accounts payable | 56,134 | 196,621 |
Deferred revenue | 290,754 | 7,382 |
Other accrued liabilities | 206,104 | (44,488) |
Investor deposit | (210,100) | 210,100 |
Net cash used in operating activities | (7,349,204) | (4,589,618) |
Cash flows from investing activities | ||
Long-term investment affiliate | 0 | (250,000) |
Long-term equity investments | (30,000) | 0 |
Purchase of property and equipment | (64,431) | (61,215) |
Proceeds from the sale of marketable equity securities | 0 | 2,017,726 |
Purchase of marketable equity securuties | 0 | (294,148) |
Net cash (used in) provided by investing activities | (94,431) | 1,412,363 |
Cash flows from financing activities | ||
Proceeds of issuance of preferred stock, series C | 0 | 5,000,043 |
Proceeds of issuance of preferred stock, series D | 6,793,050 | 0 |
Payments made for preferred stock dividends | (306,627) | 0 |
Proceeds of issuance of debts | 995,140 | 410,000 |
Repayments of debts | (410,000) | (660,000) |
Net cash provided by financing activities | 7,071,563 | 4,750,043 |
Effects of exchange rates on cash and cash equivalents | (8,399) | 710 |
Net increase/(decrease) in cash and cash equivalents | (380,471) | 1,573,498 |
Cash and cash equivalents - beginning of year | 1,770,729 | 197,231 |
Cash and cash equivalents, end of year | 1,390,258 | 1,770,729 |
Supplemental cash flow disclosures | ||
Cash paid for income taxes | 800 | 800 |
Cash paid for interest | 47,217 | 75,639 |
Supplemental disclosure of non-cash activity: | ||
Stock received for investor relations services | 909,375 | 480,000 |
Prepayment reclassified as long term investment | $ 0 | $ 30,000 |
1. Organization and Nature of O
1. Organization and Nature of Operations | 12 Months Ended |
May 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Operations | 1. Organization and Nature of Operations Chineseinvestors.com, Inc. In May 2000, the Company entered into an agreement with MAS Financial Corp. (the “MASF”) through which MASF transferred the control of a public shell corporation to the Company and performed certain consulting services for a fee of $30,000. In June 2000, the Company completed reorganization with MAS Acquisition LII Corp. (“MASA”) with no operations and 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 was now incorporated as a C corporation in the State of Indiana as of June 1, 1997. In March 2017, the Company established and registered XiBiDi Biotechnology Co. Ltd. (“CBD Biotech”) in Pudong Free-Trade Area in Shanghai, PRC as a wholly owned foreign enterprise (“WOFE”). CBD Biotech’s primary engages at online and retail sales of hemp-based health products and other complimentary products in PRC. The initial focus of CBD Biotech was the launch of XiBiDi Magic Hemp Series (“CBD Magic”), a cosmetics line which included three products. In November 2017, CBD Biotech teamed up with Chinese beauty influencer, The Godfather of Beauty The Godfather of Beauty CBD Biotech obtained Wholesale Alcohol License in November 2017 from ShangHai Wine Monopoly Bureau effective October 24, 2017 for a three-year term, which allows CBD Biotech to act as a liquor distributor. CBD Biotech entered into a wholesale agreement with China GuiZhou HanTai Wine, Inc. to distribute its liquor product - Yantai 1985 In April 2017, the Company established ChineseHempOil.com, Inc. dba “Chinese Wellness Center” a Delaware corporation, as a subsidiary of the Company in San Gabriel, California. ChineseHempOil.com, Inc. is responsible for the development and operation of the online and retail sales of hemp-based health products in the United States. ChineseInvestors.com, Inc. announced the release of its first hemp oil product line, OptHemp, a premium, private label oil, made from full-spectrum, Colorado grown, GMO-Free, hemp, manufactured using a CO 2 Extraction process, which was then launched on Amazon.com in November 2017. This launch commenced the e-commerce marketplace initiative that the Company partnered with a top 100 platinum-level-partner-sellers on Amazon Marketplace. The Company announced its plans to spin off ChineseHempOil.com, Inc. in February 2018; which was later postponed until after May 31, 2018, the end of the Company’s 2018 fiscal year. The Company also incorporated two subsidiaries - Hemp Logic, Inc. and CIIX Online, Inc., Delaware companies in April 2017. The two wholly owned subsidiaries have not operated since the inceptions. In or about March 2018, the Company established Bitcoin Trading Academy, LLC, a California limited liability company, formerly known as Stock Surge Momentum. LLC, a California limited liability company, with Warren (Wei) Wang, the Company’s CEO, as its sole managing member. Mr. Wang has transferred all of his interest in Bitcoin Trading Academy, LLC to the Company for $1 consideration. Bitcoin Trading Academy LLC began offering in person and on-line courses on cryptocurrency investment and trading in July 2018. The Company established a new WOFE– Newcoins168 Media Technology Co., Ltd (“Newcoins168”) at Pudong Free-Trade Area in Shanghai, PRC in April 2018, who engages in cryptocurrency transactions. The register capital of Newcoin168 is RMB 10 million. Newcoins168 has no operation for the year ended May 31, 2018. In an effort to expand its media products, as the first quarter of fiscal year 2018 came to a close, the Company announced that it would be working with Wall Street Multimedia (“WSM”), an independent news agency located in the NYSE to produce a daily cryptocurrency video newscast in Chinese, providing timely information and exclusive analysis regarding all aspects of the emerging digital currency world, including specific cryptocurrencies, such as “Bitcoin” and “Ethereum,” industry trends, price movement, blockchain technology, sector-related stocks and ETFs, etc. Liquidity and Capital Resources: Cash Flows Cash flows used in operations for the years ended May 31, 2018 and 2017 were $7,349,204 and $4,589,618, respectively. The increase of cash used in operations was primarily caused by the increased net loss due to the Hemp-related business lines and liquor sales launched during the year. Capital Resources Since inception in 1997, the Company has primarily relied upon proceeds from private placements of its equity securities and issuance of debts pledged with the marketable securities the Company holds to fund its operations. The Company anticipates continuing to rely on the two means in order to continue to fund business operations. Issuances of additional shares will result in dilution to its existing stockholders. There is no assurance that the Company will be able to complete any additional sales of its equity securities or that it will be able arrange for other financing to fund our planned business activities. Going Concern |
2. Critical Accounting Policies
2. Critical Accounting Policies and Estimates | 12 Months Ended |
May 31, 2018 | |
Accounting Policies [Abstract] | |
Critical Accounting Policies and Estimates | 2. Critical Accounting Policies and Estimates: Principles of Consolidation These accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The consolidated financial statements include the operations of Chineseinvestors.com Inc. and its subsidiaries. The Company’s wholly owned subsidiaries include ChineseHempOil.com Inc, CBD Biotech, Hemp Logic, CIIX Online and Newcoins168. Intercompany accounts and transactions have been eliminated upon consolidation. Certain reclassifications have been made to the consolidated financial statements for prior years to the current year’s presentation. Such reclassifications have no effect on net income as previously reported. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, 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 may differ from those estimates and assumptions. On an ongoing basis, management evaluates its estimates based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Foreign Currency The Company’s financial statements are presented in U.S. dollars ($), which is the reporting and functional currency for the Company. To come to the conclusion, the Company considered the direction of ASC section 830-10-55. Selling Price and Market Financing Expenses Numerous Intercompany Transactions The functional currency of the two subsidiaries operated in PRC: CBD Biotech and Newcoins168, is the Chinese Renminbi (“RMB”). Assets and liabilities are translated at the exchange rates as of the balance sheet date. Owners’ contribution is translated at historical rate. Income and expenditures are translated at the average exchange rate of the period. The RMB is not freely convertible into foreign currency and all foreign currency exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US dollar at the rates used in translation. The exchange rates used were as follows: May 31, 2018 Spot rate RMB 6.40 to US $1.00 Average rate for the year end May 31, 2018 RMB 6.36 to US $1.00 May 31, 2017 Balance sheet RMB 6.80 to US $1.00 Cash and cash equivalents The Company considers all cash on hands and the highly liquid instruments with an original maturity of three months or less to be cash equivalents. There is no cash equivalents for the years ended May 31, 2018 and 2017. Accounts Receivable, net The Company extends unsecured credit to its customers in the ordinary course of business. Accounts receivable are reported at their outstanding unpaid principal balances net of allowances for uncollectible accounts. The Company provides for allowances for uncollectible receivables based on management’s estimate of uncollectible amounts considering age, collection history, and any other factors considered appropriate. The Company writes off accounts receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible. As of May 31, 2018 and 2017, the Company determined that an allowance was not needed. Concentration of Credit Risk The Company maintains cash at banks in the United States and PRC. Should any bank holding cash become insolvent, or if the Company is otherwise unable to withdraw funds, the Company would lose the cash with that bank; however, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts. In the PRC, a depositor has up to RMB 500,000 insured by the People’s Bank of China Financial Stability Bureau (“FSD”), whereas the standard insurance amount is $250,000 per depositor in a bank insured by the Federal Deposit Insurance Corporation (“FDIC”) in the United States. As of May 31, 2018, and 2017 the Company has $780,726 and $1,379,933 cash balances uninsured, respectively. Major customers and vendors For the year ended May 31, 2018, one customer accounted for 22% of total sales for the Company with no accounts receivable outstanding as of May 31, 2018, respectively. One customer accounted for 10% of the total sales of the Company for the year ended May 31, 2017 without accounts receivable outstanding as of May 31, 2017. There was no vendor concentration for the Company for the years ended May 31, 2018 and 2017. The Company has operations in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. Investments Available for Sale Investments available for sale is comprised of publicly traded stocks received in return for providing investor relations services to the Company’s customers. The service terms range from one month to a year. The Company considers the securities to be liquid and convertible to cash in under a year. The Company has the ability and intent to liquidate any security that the Company holds to fund operations over the next twelve months, if necessary, and as such has classified all of its marketable securities as short-term. 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 320-10-25-1 as the Companies intention is to sell them in the near-term (less than one year). In compliance with ASC 320-10-35-1, equity securities that have readily determinable fair values that are classified as 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. The Company purchased the shares of Medicine Man Technologies, Inc. (“MDCL”) in April 2014 using equity method of accounting initially and started to account the ownership as investment available for sale as of May 31, 2015 as the Company no longer had “significant influence” over MDCL as a result of shares issuance. The Company liquidated 1,306,378 shares of MDCL for $1,996,939 cash during the years ended May 31, 2017. At May 31, 2018 and 2017, the Company still held 41,238 shares of MDCL stock representing $76,496 and $72,166, respectively of value based upon the closing market price of $1.86 and $1.75, respectively. Inventories Inventories include Hemp-related finished products and liquor, stated at the lower of cost or net realizable value using the weighted average cost method. Management reviews inventories for obsolescence and cost in excess of net realizable value at least annually and records a reserve against the inventory and additional cost of goods sold when the carrying value exceeds net realizable value. There was no reserve needed for inventory obsolescence and slow-moving as of May 31, 2018 and 2017. Other Current Assets Other current assets consist of deposits in Chinese Renminbi on building space under an operating lease and are stated at the spot rate at year end. Security deposits of office rent in United States, purchase deposits to vendors for the hemp and liquor product purchases, prepaid expenses in both United States and Shanghai, details as below: May 31, 2018 May 31, 2017 Prepaid expenses $ 79,822 $ 89,457 Purchase deposit 145,376 66,125 Cryptocurrency on hands 31,479 – Other receivables and others 74,951 115,819 Total $ 331,628 $ 271,401 The Company purchased various types of cryptocurrency during the year ended of May 31, 2018, including Ethereum, Bitcoin, Litecoin, and etc. and included them under other current assets as of May 31, 2018. The cryptocurrency was recorded at fair market value and recognizes the change of the fair market value as unrealized gain or loss in the statement of operations. As of May 31, 2018 and 2017 the fair value of our cryptocurrencies was $31,479 and $0, respectively. During the year ended May 31, 2018 and 2017 the Company recorded ($14,768) and $0 as unrealized gain (loss) on cryptocurrency, respectively . A $30,000 prepayment to Sino-U.S. Finance recorded under other current assets as of May 31, 2017 was reclassified to long term investment in year ended May 31, 2018 . Property and Equipment, net Property and equipment are stated at cost. Depreciation and amortization of property and equipment is calculated 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 on equipment is provided on a straight-line basis over their expected useful lives at the following annual rates. Computer equipment 3 years Furniture & fixtures 5 years Leasehold improvements Term of the lease Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Gains and losses from retirement or replacement are included in operations. Property and equipment are recorded at cost, net of accumulated depreciation is comprised of the following: May 31, 2018 May 31, 2017 Furniture & Fixtures $ 154,748 $ 126,486 Leasehold Improvements 35,176 32,061 189,924 158,547 Less: Accumulated Depreciation (124,674 ) (105,515 ) $ 65,250 $ 53,032 Depreciation expense for the years ending May 31, 2018 and 2017 was $19,159 and $6,452, respectively. Website Development The website the Company hosts – Chineseinvestors.com 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 purchased, and internal costs for payroll and related expenses of its technology employees directly involved in the development. The Company capitalized the internal development costs in accordance with ASC 350-50, “Accounting for Website Development Costs”, whereas all external costs are capitalized in accordance with ASC 350-50-25 related to accounting for the costs of computer software developed or obtained for internal use. Costs incurred for significant upgrades and enhancements to our websites are also capitalized. The estimated useful life for the website development is three years and amortized using straight-line method over the period. All other costs are reviewed to determine whether they should be capitalized or expensed. Amortization of website development is calculated over a straight-line basis using the economic life estimated. The balances of website development, net was as follows: May 31, 2018 May 31, 2017 Website development $ 220,598 $ 187,544 Less: Accumulated Amortization (116,320 ) (105,857 ) $ 104,278 $ 81,687 Amortization expense for the years ended May 31, 2018 and 2017 was $10,463 and $9,958, respectively. Long-term investment s Long-term investments include: 1) investment at Breakwater MB, LLC accounted for cost method since the Company does not have the significant influence, and 2) investment at Sino-U.S. Finance accounted for equity method since the Company has the ability to exercise significant influence over the investee, under which the Company records its proportionate share of the investee’s profit or loss based on the specified profit and loss percentage. Distributions received from equity method investees are accounted for as returns on investment and classified as cash inflows from operating activities, unless the Company’s cumulative distributions received less distributions received in prior periods that were determined to be returns of investment exceed cumulative equity in earnings recognized by the Company. When such an excess occurs, the current year distribution up to this excess would be considered a return of investment and classified as cash inflows from investing activities. Since the Company’s investments include privately-held companies where quoted market prices are not available and as a result, the cost method, combined with other intrinsic information, is used to assess the fair value of the investment. If the carrying value is above the fair value of an investment at the end of any reporting period, the investment is reviewed to determine if the impairment is other than temporary. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis in the investment is established. For the years ended May 31, 2018 and 2017, there was no impairment losses related to the investments. Impairment of Long-life Assets In accordance with ASC Topic 360, the Company reviews its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There was no impairment for the years ended May 31, 2018 and 2017 . Deferred revenue The Company receives payment for subscription revenues in advance before the subscription service is granted. The company recognizes the revenue as being earned as the services are delivered. The amount paid for which services have not yet been delivered related to subscription revenues is recorded as a liability in the current or long-term portion of the liabilities section of the balance sheet. The Company also receives shares of stocks and warrants as means of payments for the investor relationship (“IR”) service provided. The fair market value of the stocks and warrants on the contract date are amortized and recognized as IR revenue over the contract terms. As of May 31, 2018, and 2017, the deferred revenue compromised as following: May 31, 2018 May 31, 2017 Deferred subscription $ 587,194 $ 366,440 Unearned IR revenue 315,238 231,945 Total 902,432 598,385 Current (787,557 ) (502,241 ) Noncurrent $ 114,875 $ 96,144 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 seller’s price to the buyer is fixed or determinable and lastly collectability is reasonably assured. The Company’s revenue was mainly derived from four sources: 1. Investor-relations service income is earned by the Company in return for delivering current, publicly available information related to our client companies. These revenues are prepaid by clients and as such are initially recorded as an asset with an offsetting unearned revenue liability. The value of the revenue earned is recognized based upon the fair market value of the client’s stock closing price at the contract date multiplied by the numbers of shares earned. Then this revenue is recognized over the term of the services period while the services are being provided. By recognizing the revenue incrementally, the Company are following the guidelines of FASB ASC 605 and SAB Topic 13, in that the Company are only recognizing revenue once the value of the revenue received is fixed and determinable. In addition, the Company is applying the definition of readily determinable fair value presented at Accounting Standards Codification 820-10-15-5 in assessing the amount to recognize in each accounting period. The revenue is recognized over the term of the services period, added to the value of cash received if any, then recognized as revenue in the period the services were delivered. 2. Subscription income is recognized over the term of the subscription membership. Subscription terms are generally between 3 and 12 months but can occasionally be as short as 1 month or as long as 60 months. Long term deferred revenues are recognized from subscriptions over 12 months. 3. The Company recognizes revenue of product sales of hemp-related products and liquor distribution upon transfer of title to the customer. Customer purchase orders and/or contracts are generally used to determine the existence of an arrangement. Shipping documents and terms and the completion of any customer acceptance requirements, when applicable, are used to verify product delivery. The Company assesses whether a price is fixed or determinable based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company has no product returns or sales discounts and allowances because goods delivered and accepted by customers are normally not returnable. 4. Other revenues include various fee income earned through banner advertisement, webpage hosting and maintenance, on-line promotion and translation services, advertising and promotion fees in the Company’s website, sponsorship fees from investment seminars, road shows, and forums at the Company’s website, and referral fee from cryptocurrency transactions. The sales prices of these services are fixed and determinable at the time the contracts are signed and there are no provisions for refunds contained in the contracts. These revenues are recognized when all significant contractual obligations have been satisfied and collection of the resulting receivable is reasonably assured. The Company is finalizing the implementation of ASC 606 revenue recognition and expecting no significant financial impact on company’s financial statements. Costs of revenues Costs of services are the total direct cost of the representative office in Shanghai, PRC. Cost of products sold includes cost of inventory sold during the year, net of discounts and inventory allowances, freight and shipping costs, warranty and rework costs. 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. Level one instruments are based upon stated balance of financial institution or calculated based upon stock trading in the public market. Level two instruments are calculated based upon the sale of stock through a private placement at arms-length where our shares were an insignificant amount of the total volume of stock sold in the issuer. Level three financial instruments were valued by a professional independent appraiser hired by the Company to determine the valuation. The level three valuation calculation includes discounted cash flow models and market-based models as appropriately utilized by a professional valuation firm. The inputs they used included the entities past financial performance, projected budgets, prior private stock sale history and comparable company valuations. The carrying amount of cash and cash equivalents, investments available for sale, accounts receivable, due from related party, inventories, other current assets, accounts payable, deferred revenue (current and noncurrent), short-term notes and other current liabilities approximates fair value because of the short term nature of these instruments and the fair values close to its carrying value for the non-current deferred revenue. The following table summarizes the fair value and carrying value of the Company’s assets and liabilities as of May 31, 2018: Fair Value Carrying Level 1 Level 2 Level 3 Value Assets - Cash $ 1,390,258 $ – $ – $ 1,390,258 Short-term investments, available for sale $ 1,230,754 $ – $ – $ 1,230,754 Cryptocurrency $ 31,479 $ – $ – $ 31,479 Liability - Short-term notes $ – $ 998,192 $ – $ 1,058,084 The following table summarizes the fair value and carrying value of the Company’s assets and liabilities as of May 31, 2017: Fair Value Carrying Level 1 Level 2 Level 3 Value Assets - Cash $ 1,770,729 $ – $ – $ 1,770,729 Short-term investments, available for sale $ 729,075 $ – $ – $ 729,075 Liability - Short-term notes $ – $ 408,981 $ – $ 433,520 Short-term notes - The fair value of such notes payable had been determined based on 6% annual interest rate and the proximity to the issuance date. The Company uses Level 1 of the fair value hierarchy to measure the fair value of digital currencies and revalues its digital currencies at every reporting period and recognizes gains or losses in the consolidated statements of operations that are attributable to the change in the fair value of the digital currency. Income Taxes Income taxes are accounted for under the asset and liability method of ASC 740. Deferred tax assets and liabilities are recognized for net operating loss and other credit carry forwards and the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the tax effect of transactions are expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the year that includes the enactment date. Deferred tax assets are reduced by a full valuation allowance since it is more likely than not that the amount will not be realized. Deferred tax assets and liabilities are classified as current or noncurrent based on the classification of the underlying asset or liability giving rise to the temporary difference or the expected date of utilization of the carry forwards. On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) passed that significantly reforms the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The TCJA, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, effective as of January 1, 2018; limitation of the tax deduction for interest expense; limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such tax losses may be carried forward indefinitely); and repeal of the federal Alternative Minimum Tax (“AMT”). In connection with the analysis of the impact of the TCJA, the Company determine it does not have any impact on the financial statements. The Company considers the earnings of the non-U.S. subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs. Advertising Costs Advertising costs are expensed when incurred. For the years ended May 31, 2018 and 2017, the Company incurred $1,169,968 and $636,128, respectively. Earnings (Loss) Per Share Earnings (loss) per share is computed using the weighted average number of common shares outstanding during the period. The Company has adopted ASC 260 “Earnings Per Share”. Fully diluted loss per share are not calculated and presented on the financial statements as the calculation would be antidilutive for the years ended May 31, 2018 and 2017. Stock Based Compensation The Company accounts for share-based payments pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards using the Black-Scholes option pricing model. Stock compensation expense for stock options is recognized over the vesting period of the award or expensed immediately under ASC 718 and ASC 505-50 when stock or options are awarded for previous or current service without further recourse. The Company issued stock options to employees, contractors and external companies that had been providing services to the Company upon their termination of services. Under ASC 718, ASC 505-50 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. Preferred Stock Beneficial Convertible Feature Upon issuance of preferred stock convertible in shares of common stock at a price lower than the fair market value of common stock on the date of issuance, in accordance with the guidance provided in ASC 505-10-50, we have recorded the intrinsic value of this beneficial conversion feature (“BCF”). In accordance with ASC 470-20-30-6 Intrinsic value shall be calculated at the commitment date as the differences between the conversion price and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible. In according to ASC 470-20-30-8, if the intrinsic value of the beneficial conversion feature is greater than the proceeds allocated to the convertible instrument, the amount of the discount assigned to the beneficial conversion feature shall be limited to the amount of the proceeds allocated to the convertible instrument. Since all the preferred stocks are issued on different date, we calculate the intrinsic value for each individual preferred stock issuance based on stock issuance date. If the intrinsic value exceeds actual proceeds we received, actual proceeds will be BCF, otherwise, the intrinsic value is the BCF. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, and early adoption is prohibited. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management believes the impact of the adoption of ASU 2014-09 will not have any material impact on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities. Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the unaudited condensed consolidated financial position, statements of operations and cash flows. |
3. Long-term investments
3. Long-term investments | 12 Months Ended |
May 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Long-term investments | 3. Long-term investments In March 2017, the Company made a $250,000 investment in Breakwater MB, LLC, a cannabis-focused investment and consulting company, formed by Paul Dickman, the CFO and board member of ChineseInvestors.com, Inc., as a mean to invest capital in and provide consulting services to private, cannabis-focused companies as they transition into the public market. The invested capital will primarily be used to cover the costs of becoming a publicly traded company, a strategy the Company expects will provide significant investment appreciation and opportunity for liquidity. All opportunities will be evaluated by the investment committee comprised of ChineseInvestors.com, Inc.’s CEO Warren Wang, Medicine Man Technologies CEO Andy Williams, and Paul Dickman. Mr. Dickman is the managing member of Breakwater MB, LLC and Warren Wang serves as an advisor receiving no compensation for his services. Breakwater MB, LLC completed its planned raise of $1,000,000 by December 2017 and the Company’s equity position in Breakwater MB, LLC currently stands at 12.5% as of May 31, 2018. ChineseInvestors.com, Inc.’s board reviewed and approved the investment with Mr. Dickman abstaining from voting. Mr. Dickman held 30% of the equity of Breakwater MB as of May 31, 2018 after $5,000 cash investment in Breakwater MB equity in addition to the services that Mr. Dickman renders. Subsequently on or about August 23, 2018, the Company reached a redemption agreement and mutual release with Mr. Dickman to liquidate 40% of the Company’s investment at Breakwater MB, LLC. Mr. Dickman agreed to pay an aggregate purchase price of $100,000 ($75,000 at the closing and $25,000 no later than September 15, 2018) to redeem the portion of equity. The Redemption Agreement provides for a mutual release and waiver with regard to any claims the parties to the Redemption Agreement ever had, owned or held, or now have, own or hold, as against one another resulting from, arising out of or in any manner relating to or based on the Company’s investment in Breakwater, the redemption, or otherwise relating to CIIX’s relationship with Breakwater. As of August 24, 2018, no payment has been received. In September 2017, the Company entered a letter of intent for investment cooperation to invest $60,000 (44.45% of ownership) to jointly operate Sino-U.S. Finance. The investee will operate a mobile application under the name of “Sino-U.S. Finance” which will provide the platform of information and analysis for Chinese investors in the PRC and US. The Company started to account the investment under equity method in Q4 2018 and the proportional operation losses picked up for the year ended of May 31, 2018 was $93,562, higher than the $60,000 investment amount. According to ASC 323-10-35-19, if the carrying amount of the investment is reduced to zero, and there are no other investments in the investee, the equity method normally is discounted, and investee losses are no longer reported on the income statement. Thus, the Company recorded $60,000 investment loss for Sino-U.S. Finance for the year ended May 31, 2018 and with $0 balance under long-term investment as of May 31, 2018. |
4. Short-term notes
4. Short-term notes | 12 Months Ended |
May 31, 2018 | |
Debt Disclosure [Abstract] | |
Short-term notes | 4. Short-term notes In September 2016, the Company issued one-year promissory notes in the total amount of $410,000 with 6% annum interest rate from various individuals (the “2016 Notes”). Based on the original lending agreements (the “2016 Note Agreements”), the Notes were to be secured by the stocks of the following companies held by the Company. Company name Shares Secured Sino-Global Shipping America LTD (SINO) 80,000 Recon Technology LTD (RCON) 60,000 Nengfa Weiye Energy (NFEC) 185,000 SGOCO Group LTD (SGOC) 28,333 When entering the 2016 Note Agreements, the Company believed that the SINO contract would be executed, and SINO shares would be delivered upon signing the IR service contract. However, such it was not executed due to a disagreement among SINO’s management, as a result, the Company has not obtained the SINO shares as of May 31, 2018. On January 9, 2018, the Company filed a lawsuit on the Los Angeles County Superior Court, Case No. EC067692 for breach of contract and common counts against SINO-GLOBAL SHIPPING AMERICA LTD. The Company obtained 100,000 NFEC shares when entering the 2016 Note Agreements and the remaining 85,000 shares were received by the end of year 2016. The Company obtained 50,000 RCON shares upon entering the IR service contract, which was 10,000 shares short of the pledged collateral for the 2016 Notes. Later, it was determined that the 2016 Notes were not properly collateralized as the ownership of the collateral had not been transferred from the Company to the collateral agent. For the year ended May 31, 2018, the Company paid off $306,627 principal of the 2016 Notes and $36,424 interest back to creditors; The remaining $116,669 principal of the 2016 Notes and interest payable were rolled over upon the lenders’ requests into new notes in 2017. On October 2017, the Company issued additional one-year promissory notes (the “2017 Notes”) totaling of $995,140 to various individuals. The interest rate for the 2017 Notes is 6% annum. Of the $995,140, as noted above, $116,669 was rolled over from the 2016 Notes with renegotiated terms. The 2017 Notes were to be secured by the stocks of the following companies held by the Company: Company name Shares Secured for 2017 Notes Nemaura Medical, Inc (NMRD) 100,000 Recon Technology LTD (RCON) 49,999 Solbright Group Inc. (SBRT) 195,122 Nengfa Weiye Energy (NFEC) 218,779 SGOCO Group LTD (SGOC) 29,412 As of May 31, 2018, the Company transferred NMRD shares held to the Collateral Agent. It was determined that with the exception of 2017 Notes secured by NMRD shares, the remaining 2017 Notes were not properly secured. The Company offered the lenders of the unsecured 2017 Notes the option to either rescind the notes or allow the notes to remain in place as unsecured notes in April 2018. $360,000 out of the total $620,000 unsecured 2017 Notes were rescinded for which the principle and interest became due immediately, and the remaining $260,000 2017 Notes remain unsecured. The $360,000 in short term 2017 Notes has not been repaid. As of May 31, 2018, the short-term 2017 Notes are compromised as follows: Secured short term notes, due on October 2018, 6% annum interest rate $ 635,140 Debt incentive to the secured short term notes above 41,539 Short term notes, due on April and May 2018, 6% annum interest rate 360,000 Debt incentive related to the short term notes above 21,405 Total $ 1,058,084 For the 2016 Notes and 2017 Notes, the lenders also received an incentive equal to 20% of appreciation of the value of the collateralized shares between the note issuance date and the date the shares are liquidated, if at all. As of May 31, 2018 and 2017, the debt incentive was $62,944 and $23,520, respectively. |
5. Other Current Liabilities
5. Other Current Liabilities | 12 Months Ended |
May 31, 2018 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | 5. Other Current Liabilities Other current liabilities compromise as following: May 31, 2018 May 31, 2017 Accrued dividends $ 179,218 $ 150,831 Accrued interests and others 32,721 25,820 Accrued payroll and taxes 218,599 58,820 Total $ 430,538 $ 235,470 Accrued dividends as of May 31, 2018 are comprised of dividends payable to the preferred stock holders, Series C-2016 and Series D-2017, in the amount of $14,981 and $164,237, respectively. Accrued dividends as of May 31, 2017 are comprised of $39,308 and $111,523 in dividends payable to the preferred stocks holders, Series A-2014 and Series C-2016, respectively. Accrued interest as of May 31, 2018 and 2017 represents interest payable for the 2017 Notes and 2016 Notes, respectively. |
6. Stockholders' Equity
6. Stockholders' Equity | 12 Months Ended |
May 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | 6. Stockholders’ Equity: As of May 31, 2018 and 2017, the Company was authorized to issue 80,000,000 shares of common stock, $0.001 par value per share. In addition, 20,000,000 shares of $0.001 par value preferred stock were authorized. All common stock shares have full dividend rights. However, it is not anticipated that the Company will be declaring distributions in the foreseeable future. Series 2012 Convertible Preferred Stock During the third quarter of fiscal year 2013, effective February 29, 2012, the Company issued 2,003,776 shares of preferred stock as Series 2012 Convertible Preferred Stock for total proceeds of $2,003,776. The terms of the preferred stock allow the holder to convert each share of preferred stock into 1.25 shares of common stock at any time after nine months from the date of issuance. The holders of shares of preferred stock were entitled to receive a dividend of $0.06 per share per annum for the first two years from the issuance of the instruments. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary. During the year ended May 31, 2018, the shareholders of preferred stock series 2012 converted 170,000 shares of preferred stock for 212,500 of common stock shares at a conversion rate of 1 share of preferred stock series 2012 for 1.25 shares of common stock. Series A-2014 Convertible Preferred Stock In the years ended May 31, 2016 and 2015 the Company issued 720,000 and 1,885,000 shares of preferred stock as Series A-2014 Convertible Preferred Stock for total proceeds of $2,605,000. The terms of the preferred stock allow the holder to convert each share of preferred stock into 2.5 shares of common stock at any time after nine months from the date of issuance. The holders of shares of preferred stock shall have the right to one vote for each share of common stock into which such preferred stock could convert. The holders of shares of preferred stock are entitled to receive a dividend of $0.06 per share per annum for the first two years from the issuance of the instruments, which has been recorded as an accrued dividend on the liabilities section of the balance sheet. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary. During the year ended May 31, 2018 the shareholders of preferred stock series A-2014 converted 1,164,000 shares of preferred stock for 2,910,000 of common stock shares at a conversion rate of 1 share of preferred stock series A-2014 for 2.50 shares of common stock. Series C-2016 Convertible Preferred Stock In December 2016, the Company issued 5,000,043 shares of its Series C-2016 Convertible Preferred Stock at a price of $1.00 per share for total proceeds of $5,000,043. The terms of the preferred stock allow the holder to convert each share of preferred stock into 3 shares of common stock at any time after nine months from the date of issuance. The holders of shares of preferred stock are entitled to receive a dividend of $0.06 per share per annum for the first year from the issuance of the instruments, which has been recorded as an accrued dividend on the liabilities section of the balance sheet. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary. We calculated the BCF of the Series C-2016 Convertible Preferred Stock as $4,930,143. The BCF would be recorded as paid-in capital with an offsetting debit to convertible preferred stock. The discount attributable to the BCF, however, is amortized as a deemed dividend over the period from issuance to the date the convertible preferred stock becomes convertible. In our case, preferred stock-series C-2016 is convertible after six months from the date of issuance. We then amortize the BCF over six months period, we recorded $3,685,520 as deemed dividend that reduce accumulated deficit as of May 31, 2017, and we recorded the remaining $1,244,622 as deemed dividend that increases accumulated deficit for the period ended August 31, 2018. During the year ended May 31, 2018, the shareholders of preferred stock series C-2016 converted 4,377,085 shares of preferred stock for 13,131,255 of common stock shares at a conversion rate of 1 share of preferred stock series C-2016 for 3.00 shares of common stock. Series D-2017 Convertible Preferred Stock For the year ended May 31, 2018, the Company issued 6,793,050 shares of its Series D-2017 Convertible Preferred Stock at a price of $1.00 per share for total proceeds of $6,793,050. The terms of the preferred stock allow the holder to convert each share of preferred stock into 2 shares of common stock at any time from the date of issuance. The holders of shares of preferred stock are entitled to receive a dividend of $0.06 per share per annum for the first two years from the issuance, which has been recorded as an accrued dividend on the liabilities section of the balance sheet. The Company maintained the right to suspend the dividend at its discretion if it is deemed necessary. We calculated the BCF of the preferred shares as $3,933,443. The BCF would be recorded as paid-in capital with an offsetting debit to convertible preferred stock. The discount attributable to the BCF, however, is amortized as a deemed dividend over the period from issuance to the date the convertible preferred stock becomes convertible. In our case, preferred stock-series D-2017 is convertible at any time from the date of issuance. We recorded $3,933,443 as deemed dividend that increases accumulated deficit as of May 31, 2018. During the year ended May 31, 2018, the shareholders of preferred stock series D-2017 converted 150,000 shares of preferred stock for 300,000 of common stock shares at a conversion rate of 1 share of preferred stock series D -2017 for 2.00 shares of common stock. Restricted Common Stock During the year ended May 31, 2017, the Company granted 1,335,000 shares of restricted common stock compensation to employee and contractors. The stock was valued from $0.44 to $0.47 per share and fully vested on the grant date as the service had been provided. The compensation and consulting expense were recorded as general and administrative expenses totaling $426,950 for the year ended May 31, 2017. On October 22, 2016, the Company granted Melissa Armstrong 50,000 as a discretionary signing bonus for legal services performed. Melissa Armstrong is not an affiliate of the Company within the meaning of SEC Rules 144 and 501 in that she is not a member of our board of directors, an officer or a person in control of the Company. The Certificate, number 1401, was dated March 3, 2017, however it represents shares granted effective October 22, 2016. All services to be performed in conjunction with this discretionary bonus have been fully performed and the shares were fully earned as of the date of the award. On July 14, 2017, the Company awarded and issued a restricted stock award to a service provider 30,000 shares in total, and the fair market value at the grant date was $0.80 per share. All these shares were fully vested at grant date since the service had been provided, stock compensation expense totaling $24,120 were recorded. On August 7, 2017, the Company awarded and issued a restricted stock award to a service provider 50,000 shares in total, and the fair market value at the grant date was $0.87 per share. All these shares were fully vested at grant date, stock compensation expense totaling $43,500 were recorded. On October 31, 2017, the Company awarded restricted stock awards to various employees 1,340,000 shares in total, and the fair market value at the grant date was $0.49 per share. All these shares were fully vested at grant date, stock compensation expense totaling $656,600 were recorded. On March 27, 2018, the Company awarded restricted stock awards to various contractors and board of directors 100,000 shares in total, and the fair market value at the grant date was $0.46 per share. All these shares were fully vested at grant date since the service had been provided, stock compensation expense totaling $46,000 were recorded. During the year ended May 31, 2018, the Company granted 1,520,000 shares of restricted common stock for compensation. The stock was valued from $0.49 to $0.87 per share based on the market price at the grant date and fully vested immediately since the service had been provided. The compensation and consulting expense was recorded as general and administrative expenses totaling $770,220 for the year ended May 31, 2018. |
7. Related Party
7. Related Party | 12 Months Ended |
May 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party | 7. Related Party Transactions: Mrs. Lan Jiang is the spouse of the Company’s CEO, Mr. Warren Wang. During the years ended May 31, 2018 and 2017, she received 380,000 and 200,000 restricted shares of the Company’s stock compensation with the fair market value $186,200 and $74,000 as of grant date. Those 200,000 shares of the Company’s stock were issued and delivery on February 28, 2017. As of May 31, 2018, the Company advanced $87,379 to the CEO, Mr. Warren Wang for daily operation purpose. The Company made a long-term investment of $250,000 to Breakwater MB LLC in March 2017 formed by the Company’s board member and CFO, Paul Dickman. The Company’s equity position in Breakwater MB, LLC will be approximately 12.5%. Refer to Note 3 for investment details. The Company paid $72,500 and $132,355 to Breakwater Corporate Finance in years ended May 31, 2018 and 2017, a consulting firm owned by the Company’s board member and CFO, Paul Dickman. |
8. Commitments and Concentratio
8. Commitments and Concentrations | 12 Months Ended |
May 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Concentrations | 8. Commitments and Contingencies: Operating Leases The Company entered into lease agreements for its operations in San Gabriel (California), New York City (New York) and Shanghai (China) since 2013 with lease terms ranging from two to four years. Future minimum lease commitments for office facilities as of May 31, 2018 are as follows: For the years ended May 31, 2019 $ 366,174 2020 169,648 2021 101,000 2022 – $ 636,822 For the years ended May 31, 2018 and 2017, the total rent expense for office facilities was $227,422 and $225,334, respectively. Litigation When entering the 2016 Note Agreements, the Company believed that the SINO contract would be executed, and SINO shares would be delivered upon signing the IR service contract. However, the service contract was not executed due to a disagreement among SINO’s management, and as a result, the Company has not obtained the SINO shares as of May 31, 2018. On January 9, 2018, the Company filed a lawsuit on the Los Angeles County Superior Court, Case No. EC067692 for breach of contract and common counts against SINO-GLOBAL SHIPPING AMERICA LTD. Currently the case is pending assignment to an arbitrator. |
9. Income Taxes
9. Income Taxes | 12 Months Ended |
May 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes: The Company recorded no income tax provision or benefit for the years ended May 31, 2018 and 2017, 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 Company’s valuation allowance, as well as due to nondeductible expenses. For income tax reporting purposes, the Company has approximately $16 million and $10 million of net operating loss (the “NOL”) carry forwards as of May 31, 2018 and 2017. Tax Reform Act of 1986 contains provisions that may limit the net operating loss carry forwards and tax credits available to be used in any given year if certain events occur, including significant changes in ownership interests. Realization of net operating loss and tax credit carry forwards is dependent on generating sufficient taxable income prior to their expiration dates. The comprehensive tax legislation (the “Tax Act”) issued on December 22, 2017 disallows the carryback of NOLs but allow for the indefinite carryforward of those NOLs and a new limitation on NOL utilization is added for the NOL incurred in years ending after December 31, 2017. As of May 31, 2018 and 2017, the Company had approximately $5.6 million and $3.4 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, 2018 and 2017, was more likely than not, and therefore, the Company has recorded a valuation allowance to reduce the net deferred tax assets to zero. The amount of deferred tax assets considered realizable could be adjusted in the near term if future taxable income is generated. The Company’s effective tax rate differs from the statutory rate due to the following (expressed as a percentage of pre-tax income): May 31, 2018 May 31, 2017 Federal Statutory Rate 21% 35% State Statutory Rate 6% 6% Change in Rate / Other 3% 4% Permanent Tax Differences (3% ) (6% ) Calculated Rate 27% 39% Actual Calculated Rate (27% ) (39% ) Difference 0% 0% On December 22, 2017, the U.S. government enacted comprehensive tax legislation (the “Tax Act”), which lowers the U.S. federal corporate income tax rate from 35% to 21%, implementing a territorial tax system, imposing one-time tax on foreign unremitted earnings and setting limitations on deductibility of certain costs (e.g., interest expense), among other things. Due to the complexities involved in accounting for the recently enacted Tax Act, the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin 118 (“SAB 118”) requires that the company include in its financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. For the year ended May 31, 2018, the Company accrued a $0 tax expense for the Tax Act’s one-time transition tax on the foreign subsidiaries due to the accumulated deficit. No net operating losses is carried forward Realization of net operating loss and tax credit carry forwards are most likely than not for the foreign subsidiaries. For the year ended May 31, 2018, the Company did not accrue in its provisional tax benefit any amount related to the net change in deferred tax liabilities stemming from the Tax Act’s reduction of the U.S. federal tax rate from 35% to 21% as the Company provides full allowances for its net deferred tax assets as of May 31, 2018. |
10. Earnings (loss) per share
10. Earnings (loss) per share | 12 Months Ended |
May 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings (loss) per share | 10. Earnings (loss) per share The following table presents the calculation of the Company’s basic and diluted loss per share for the years ended: May 31, 2018 May 31, 2017 Net loss attributable to common shareholders of the Company $ (12,918,683 ) $ (7,251,075 ) Weighted average shares used to compute net loss per share available to common shareholders, basic and diluted 22,427,427 8,433,127 Basic and diluted net loss per share $ (0.58 ) $ (0.86 ) For the years ended May 31, 2018 and 2017, outstanding preferred stocks of 8,317,008 shares and 7,385,043 shares, respectively, were excluded from the computation of diluted net loss per share as the impact of including those option shares would be anti-dilutive. |
11. Subsequent Events
11. Subsequent Events | 12 Months Ended |
May 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 11. Subsequent events: The Company is continuing to offer (up to 10,000,000 shares) of its Series D-2017 Convertible Preferred Stock. Each share of Series D-2017 preferred stock is convertible into 2 shares of the Company’s common stock. The Series D-2017 Convertible Preferred Stock will pay at least two years of dividends at the rate of 6% per year on the original investment of $1 per share of Series D-2017 Convertible Preferred Stock. As of the date of this report, the Company received $8,195,050 proceeds from sales of series D-2017 convertible preferred stock, $1,405,000 of those proceeds were received after May 31, 2018. On August 7, the Company began offering on a best efforts basis (“Offering”), a maximum of $3,000,000 in original issue price (“Maximum Offering”) of its 10% one-year term notes (the “Notes”). As of the date of this report, we have issued the notes in the total amount approximately to $1,580,000. On August 23, 2018, the Company reached a redemption agreement and mutual release with Mr. Dickman to liquidate 40% of the Company’s investment at Breakwater MB, LLC. Mr. Dickman agreed to pay an aggregate purchase price of $100,000 ($75,000 at the closing and $25,000 no later than September 15, 2018) to redeem the portion of equity The Redemption Agreement provides for a mutual release and waiver with regard to any claims the parties to the Redemption Agreement ever had, owned or held, or now have, own or hold, as against one another resulting from, arising out of or in any manner relating to or based on the Company’s investment in Breakwater, the redemption, or otherwise relating to CIIX’s relationship with Breakwater. As of August 24, no payment has been received. On August 24, 2018, the Board has adopted a resolution awarding Melissa Armstrong an additional 50,000 shares of common stock, for a total award of 100,000 shares. All services to be performed in conjunction with this discretionary bonus have been fully performed and the shares were fully earned as of the date of the award. |
2. Critical Accounting Polici18
2. Critical Accounting Policies and Estimates (Policies) | 12 Months Ended |
May 31, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation These accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The consolidated financial statements include the operations of Chineseinvestors.com Inc. and its subsidiaries. The Company’s wholly owned subsidiaries include ChineseHempOil.com Inc, CBD Biotech, Hemp Logic, CIIX Online and Newcoins168. Intercompany accounts and transactions have been eliminated upon consolidation. Certain reclassifications have been made to the consolidated financial statements for prior years to the current year’s presentation. Such reclassifications have no effect on net income as previously reported. |
Use of Estimates | Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, 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 may differ from those estimates and assumptions. On an ongoing basis, management evaluates its estimates based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. |
Foreign Currency | Foreign Currency The Company’s financial statements are presented in U.S. dollars ($), which is the reporting and functional currency for the Company. To come to the conclusion, the Company considered the direction of ASC section 830-10-55. Selling Price and Market Financing Expenses Numerous Intercompany Transactions The functional currency of the two subsidiaries operated in PRC: CBD Biotech and Newcoins168, is the Chinese Renminbi (“RMB”). Assets and liabilities are translated at the exchange rates as of the balance sheet date. Owners’ contribution is translated at historical rate. Income and expenditures are translated at the average exchange rate of the period. The RMB is not freely convertible into foreign currency and all foreign currency exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US dollar at the rates used in translation. The exchange rates used were as follows: May 31, 2018 Spot rate RMB 6.40 to US $1.00 Average rate for the year end May 31, 2018 RMB 6.36 to US $1.00 May 31, 2017 Balance sheet RMB 6.80 to US $1.00 |
Cash and Cash Equivalents | Cash and cash equivalents The Company considers all cash on hands and the highly liquid instruments with an original maturity of three months or less to be cash equivalents. There is no cash equivalents for the years ended May 31, 2018 and 2017. |
Accounts Receivable, net | Accounts Receivable, net The Company extends unsecured credit to its customers in the ordinary course of business. Accounts receivable are reported at their outstanding unpaid principal balances net of allowances for uncollectible accounts. The Company provides for allowances for uncollectible receivables based on management’s estimate of uncollectible amounts considering age, collection history, and any other factors considered appropriate. The Company writes off accounts receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible. As of May 31, 2018 and 2017, the Company determined that an allowance was not needed. |
Concentration of Credit Risk | Concentration of Credit Risk The Company maintains cash at banks in the United States and PRC. Should any bank holding cash become insolvent, or if the Company is otherwise unable to withdraw funds, the Company would lose the cash with that bank; however, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts. In the PRC, a depositor has up to RMB 500,000 insured by the People’s Bank of China Financial Stability Bureau (“FSD”), whereas the standard insurance amount is $250,000 per depositor in a bank insured by the Federal Deposit Insurance Corporation (“FDIC”) in the United States. As of May 31, 2018, and 2017 the Company has $780,726 and $1,379,933 cash balances uninsured, respectively. Major customers and vendors For the year ended May 31, 2018, one customer accounted for 22% of total sales for the Company with no accounts receivable outstanding as of May 31, 2018, respectively. One customer accounted for 10% of the total sales of the Company for the year ended May 31, 2017 without accounts receivable outstanding as of May 31, 2017. There was no vendor concentration for the Company for the years ended May 31, 2018 and 2017. The Company has operations in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. |
Investments available for sale | Investments Available for Sale Investments available for sale is comprised of publicly traded stocks received in return for providing investor relations services to the Company’s customers. The service terms range from one month to a year. The Company considers the securities to be liquid and convertible to cash in under a year. The Company has the ability and intent to liquidate any security that the Company holds to fund operations over the next twelve months, if necessary, and as such has classified all of its marketable securities as short-term. 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 320-10-25-1 as the Companies intention is to sell them in the near-term (less than one year). In compliance with ASC 320-10-35-1, equity securities that have readily determinable fair values that are classified as 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. The Company purchased the shares of Medicine Man Technologies, Inc. (“MDCL”) in April 2014 using equity method of accounting initially and started to account the ownership as investment available for sale as of May 31, 2015 as the Company no longer had “significant influence” over MDCL as a result of shares issuance. The Company liquidated 1,306,378 shares of MDCL for $1,996,939 cash during the years ended May 31, 2017. At May 31, 2018 and 2017, the Company still held 41,238 shares of MDCL stock representing $76,496 and $72,166, respectively of value based upon the closing market price of $1.86 and $1.75, respectively. |
Inventories | Inventories Inventories include Hemp-related finished products and liquor, stated at the lower of cost or net realizable value using the weighted average cost method. Management reviews inventories for obsolescence and cost in excess of net realizable value at least annually and records a reserve against the inventory and additional cost of goods sold when the carrying value exceeds net realizable value. There was no reserve needed for inventory obsolescence and slow-moving as of May 31, 2018 and 2017. |
Other Current Assets | Other Current Assets Other current assets consist of deposits in Chinese Renminbi on building space under an operating lease and are stated at the spot rate at year end. Security deposits of office rent in United States, purchase deposits to vendors for the hemp and liquor product purchases, prepaid expenses in both United States and Shanghai, details as below: May 31, 2018 May 31, 2017 Prepaid expenses $ 79,822 $ 89,457 Purchase deposit 145,376 66,125 Cryptocurrency on hands 31,479 – Other receivables and others 74,951 115,819 Total $ 331,628 $ 271,401 The Company purchased various types of cryptocurrency during the year ended of May 31, 2018, including Ethereum, Bitcoin, Litecoin, and etc. and included them under other current assets as of May 31, 2018. The cryptocurrency was recorded at fair market value and recognizes the change of the fair market value as unrealized gain or loss in the statement of operations. As of May 31, 2018 and 2017 the fair value of our cryptocurrencies was $31,479 and $0, respectively. During the year ended May 31, 2018 and 2017 the Company recorded ($14,768) and $0 as unrealized gain (loss) on cryptocurrency, respectively . A $30,000 prepayment to Sino-U.S. Finance recorded under other current assets as of May 31, 2017 was reclassified to long term investment in year ended May 31, 2018 . |
Property and Equipment, net | Property and Equipment, net Property and equipment are stated at cost. Depreciation and amortization of property and equipment is calculated 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 on equipment is provided on a straight-line basis over their expected useful lives at the following annual rates. Computer equipment 3 years Furniture & fixtures 5 years Leasehold improvements Term of the lease Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Gains and losses from retirement or replacement are included in operations. Property and equipment are recorded at cost, net of accumulated depreciation is comprised of the following: May 31, 2018 May 31, 2017 Furniture & Fixtures $ 154,748 $ 126,486 Leasehold Improvements 35,176 32,061 189,924 158,547 Less: Accumulated Depreciation (124,674 ) (105,515 ) $ 65,250 $ 53,032 Depreciation expense for the years ending May 31, 2018 and 2017 was $19,159 and $6,452, respectively. |
Website Development | Website Development The website the Company hosts – Chineseinvestors.com 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 purchased, and internal costs for payroll and related expenses of its technology employees directly involved in the development. The Company capitalized the internal development costs in accordance with ASC 350-50, “Accounting for Website Development Costs”, whereas all external costs are capitalized in accordance with ASC 350-50-25 related to accounting for the costs of computer software developed or obtained for internal use. Costs incurred for significant upgrades and enhancements to our websites are also capitalized. The estimated useful life for the website development is three years and amortized using straight-line method over the period. All other costs are reviewed to determine whether they should be capitalized or expensed. Amortization of website development is calculated over a straight-line basis using the economic life estimated. The balances of website development, net was as follows: May 31, 2018 May 31, 2017 Website development $ 220,598 $ 187,544 Less: Accumulated Amortization (116,320 ) (105,857 ) $ 104,278 $ 81,687 Amortization expense for the years ended May 31, 2018 and 2017 was $10,463 and $9,958, respectively. |
Long-term investments | Long-term investment s Long-term investments include: 1) investment at Breakwater MB, LLC accounted for cost method since the Company does not have the significant influence, and 2) investment at Sino-U.S. Finance accounted for equity method since the Company has the ability to exercise significant influence over the investee, under which the Company records its proportionate share of the investee’s profit or loss based on the specified profit and loss percentage. Distributions received from equity method investees are accounted for as returns on investment and classified as cash inflows from operating activities, unless the Company’s cumulative distributions received less distributions received in prior periods that were determined to be returns of investment exceed cumulative equity in earnings recognized by the Company. When such an excess occurs, the current year distribution up to this excess would be considered a return of investment and classified as cash inflows from investing activities. Since the Company’s investments include privately-held companies where quoted market prices are not available and as a result, the cost method, combined with other intrinsic information, is used to assess the fair value of the investment. If the carrying value is above the fair value of an investment at the end of any reporting period, the investment is reviewed to determine if the impairment is other than temporary. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis in the investment is established. For the years ended May 31, 2018 and 2017, there was no impairment losses related to the investments. |
Impairment of Long-life Assets | Impairment of Long-life Assets In accordance with ASC Topic 360, the Company reviews its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There was no impairment for the years ended May 31, 2018 and 2017 . |
Deferred revenue | Deferred revenue The Company receives payment for subscription revenues in advance before the subscription service is granted. The company recognizes the revenue as being earned as the services are delivered. The amount paid for which services have not yet been delivered related to subscription revenues is recorded as a liability in the current or long-term portion of the liabilities section of the balance sheet. The Company also receives shares of stocks and warrants as means of payments for the investor relationship (“IR”) service provided. The fair market value of the stocks and warrants on the contract date are amortized and recognized as IR revenue over the contract terms. As of May 31, 2018, and 2017, the deferred revenue compromised as following: May 31, 2018 May 31, 2017 Deferred subscription $ 587,194 $ 366,440 Unearned IR revenue 315,238 231,945 Total 902,432 598,385 Current (787,557 ) (502,241 ) Noncurrent $ 114,875 $ 96,144 |
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 seller’s price to the buyer is fixed or determinable and lastly collectability is reasonably assured. The Company’s revenue was mainly derived from four sources: 1. Investor-relations service income is earned by the Company in return for delivering current, publicly available information related to our client companies. These revenues are prepaid by clients and as such are initially recorded as an asset with an offsetting unearned revenue liability. The value of the revenue earned is recognized based upon the fair market value of the client’s stock closing price at the contract date multiplied by the numbers of shares earned. Then this revenue is recognized over the term of the services period while the services are being provided. By recognizing the revenue incrementally, the Company are following the guidelines of FASB ASC 605 and SAB Topic 13, in that the Company are only recognizing revenue once the value of the revenue received is fixed and determinable. In addition, the Company is applying the definition of readily determinable fair value presented at Accounting Standards Codification 820-10-15-5 in assessing the amount to recognize in each accounting period. The revenue is recognized over the term of the services period, added to the value of cash received if any, then recognized as revenue in the period the services were delivered. 2. Subscription income is recognized over the term of the subscription membership. Subscription terms are generally between 3 and 12 months but can occasionally be as short as 1 month or as long as 60 months. Long term deferred revenues are recognized from subscriptions over 12 months. 3. The Company recognizes revenue of product sales of hemp-related products and liquor distribution upon transfer of title to the customer. Customer purchase orders and/or contracts are generally used to determine the existence of an arrangement. Shipping documents and terms and the completion of any customer acceptance requirements, when applicable, are used to verify product delivery. The Company assesses whether a price is fixed or determinable based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company has no product returns or sales discounts and allowances because goods delivered and accepted by customers are normally not returnable. 4. Other revenues include various fee income earned through banner advertisement, webpage hosting and maintenance, on-line promotion and translation services, advertising and promotion fees in the Company’s website, sponsorship fees from investment seminars, road shows, and forums at the Company’s website, and referral fee from cryptocurrency transactions. The sales prices of these services are fixed and determinable at the time the contracts are signed and there are no provisions for refunds contained in the contracts. These revenues are recognized when all significant contractual obligations have been satisfied and collection of the resulting receivable is reasonably assured. The Company is finalizing the implementation of ASC 606 revenue recognition and expecting no significant financial impact on company’s financial statements. |
Costs of revenues | Costs of revenues Costs of services are the total direct cost of the representative office in Shanghai, PRC. Cost of products sold includes cost of inventory sold during the year, net of discounts and inventory allowances, freight and shipping costs, warranty and rework costs. |
Fair Value of Financial Instruments | 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. Level one instruments are based upon stated balance of financial institution or calculated based upon stock trading in the public market. Level two instruments are calculated based upon the sale of stock through a private placement at arms-length where our shares were an insignificant amount of the total volume of stock sold in the issuer. Level three financial instruments were valued by a professional independent appraiser hired by the Company to determine the valuation. The level three valuation calculation includes discounted cash flow models and market-based models as appropriately utilized by a professional valuation firm. The inputs they used included the entities past financial performance, projected budgets, prior private stock sale history and comparable company valuations. The carrying amount of cash and cash equivalents, investments available for sale, accounts receivable, due from related party, inventories, other current assets, accounts payable, deferred revenue (current and noncurrent), short-term notes and other current liabilities approximates fair value because of the short term nature of these instruments and the fair values close to its carrying value for the non-current deferred revenue. The following table summarizes the fair value and carrying value of the Company’s assets and liabilities as of May 31, 2018: Fair Value Carrying Level 1 Level 2 Level 3 Value Assets - Cash $ 1,390,258 $ – $ – $ 1,390,258 Short-term investments, available for sale $ 1,230,754 $ – $ – $ 1,230,754 Cryptocurrency $ 31,479 $ – $ – $ 31,479 Liability - Short-term notes $ – $ 998,192 $ – $ 1,058,084 The following table summarizes the fair value and carrying value of the Company’s assets and liabilities as of May 31, 2017: Fair Value Carrying Level 1 Level 2 Level 3 Value Assets - Cash $ 1,770,729 $ – $ – $ 1,770,729 Short-term investments, available for sale $ 729,075 $ – $ – $ 729,075 Liability - Short-term notes $ – $ 408,981 $ – $ 433,520 Short-term notes - The fair value of such notes payable had been determined based on 6% annual interest rate and the proximity to the issuance date. The Company uses Level 1 of the fair value hierarchy to measure the fair value of digital currencies and revalues its digital currencies at every reporting period and recognizes gains or losses in the consolidated statements of operations that are attributable to the change in the fair value of the digital currency. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method of ASC 740. Deferred tax assets and liabilities are recognized for net operating loss and other credit carry forwards and the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the tax effect of transactions are expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the year that includes the enactment date. Deferred tax assets are reduced by a full valuation allowance since it is more likely than not that the amount will not be realized. Deferred tax assets and liabilities are classified as current or noncurrent based on the classification of the underlying asset or liability giving rise to the temporary difference or the expected date of utilization of the carry forwards. On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) passed that significantly reforms the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The TCJA, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, effective as of January 1, 2018; limitation of the tax deduction for interest expense; limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such tax losses may be carried forward indefinitely); and repeal of the federal Alternative Minimum Tax (“AMT”). In connection with the analysis of the impact of the TCJA, the Company determine it does not have any impact on the financial statements. The Company considers the earnings of the non-U.S. subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs. |
Advertising Costs | Advertising Costs Advertising costs are expensed when incurred. For the years ended May 31, 2018 and 2017, the Company incurred $1,169,968 and $636,128, respectively. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Earnings (loss) per share is computed using the weighted average number of common shares outstanding during the period. The Company has adopted ASC 260 “Earnings Per Share”. Fully diluted loss per share are not calculated and presented on the financial statements as the calculation would be antidilutive for the years ended May 31, 2018 and 2017. |
Stock Based Compensation | Stock Based Compensation The Company accounts for share-based payments pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards using the Black-Scholes option pricing model. Stock compensation expense for stock options is recognized over the vesting period of the award or expensed immediately under ASC 718 and ASC 505-50 when stock or options are awarded for previous or current service without further recourse. The Company issued stock options to employees, contractors and external companies that had been providing services to the Company upon their termination of services. Under ASC 718, ASC 505-50 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. |
Preferred Stock Beneficial Convertible Feature | Preferred Stock Beneficial Convertible Feature Upon issuance of preferred stock convertible in shares of common stock at a price lower than the fair market value of common stock on the date of issuance, in accordance with the guidance provided in ASC 505-10-50, we have recorded the intrinsic value of this beneficial conversion feature (“BCF”). In accordance with ASC 470-20-30-6 Intrinsic value shall be calculated at the commitment date as the differences between the conversion price and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible. In according to ASC 470-20-30-8, if the intrinsic value of the beneficial conversion feature is greater than the proceeds allocated to the convertible instrument, the amount of the discount assigned to the beneficial conversion feature shall be limited to the amount of the proceeds allocated to the convertible instrument. Since all the preferred stocks are issued on different date, we calculate the intrinsic value for each individual preferred stock issuance based on stock issuance date. If the intrinsic value exceeds actual proceeds we received, actual proceeds will be BCF, otherwise, the intrinsic value is the BCF. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, and early adoption is prohibited. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management believes the impact of the adoption of ASU 2014-09 will not have any material impact on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities. Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the unaudited condensed consolidated financial position, statements of operations and cash flows. |
2. Critical Accounting Polici19
2. Critical Accounting Policies and Estimates (Tables) | 12 Months Ended |
May 31, 2018 | |
Accounting Policies [Abstract] | |
Exchange rate translation | May 31, 2018 Spot rate RMB 6.40 to US $1.00 Average rate for the year end May 31, 2018 RMB 6.36 to US $1.00 May 31, 2017 Balance sheet RMB 6.80 to US $1.00 |
Other Current Assets | May 31, 2018 May 31, 2017 Prepaid expenses $ 79,822 $ 89,457 Purchase deposit 145,376 66,125 Cryptocurrency on hand 31,479 – Other receivables and others 74,951 115,819 Total $ 331,628 $ 271,401 |
Schedule of property useful lives | Computer equipment 3 years Furniture & fixtures 5 years Leasehold improvements Term of the lease |
Property and equipment | May 31, 2018 May 31, 2017 Furniture & Fixtures $ 154,748 $ 126,486 Leasehold Improvements 35,176 32,061 189,924 158,547 Less: Accumulated Depreciation (124,674 ) (105,515 ) $ 65,250 $ 53,032 |
Intangible assets | May 31, 2018 May 31, 2017 Website development $ 220,598 $ 187,544 Less: Accumulated Amortization (116,320 ) (105,857 ) $ 104,278 $ 81,687 |
Deferred revenue | May 31, 2018 May 31, 2017 Deferred subscription $ 587,194 $ 366,440 Unearned IR revenue 315,238 231,945 Total 902,432 598,385 Current (787,557 ) (502,241 ) Noncurrent $ 114,875 $ 96,144 |
Fair value of financial instruments | The following table summarizes the fair value and carrying value of the Company’s assets and liabilities as of May 31, 2018: Fair Value Carrying Level 1 Level 2 Level 3 Value Assets - Cash $ 1,390,258 $ – $ – $ 1,390,258 Short-term investments, available for sale $ 1,230,754 $ – $ – $ 1,230,754 Cryptocurrency $ 31,479 $ – $ – $ 31,479 Liability - Short-term notes $ – $ 998,192 $ – $ 1,058,084 The following table summarizes the fair value and carrying value of the Company’s assets and liabilities as of May 31, 2017: Fair Value Carrying Level 1 Level 2 Level 3 Value Assets - Cash $ 1,770,729 $ – $ – $ 1,770,729 Short-term investments, available for sale $ 729,075 $ – $ – $ 729,075 Liability - Short-term notes $ – $ 408,981 $ – $ 433,520 |
4. Short-term notes (Tables)
4. Short-term notes (Tables) | 12 Months Ended |
May 31, 2018 | |
Debt Disclosure [Abstract] | |
Short-term debt | Secured short term notes, due on October 2018, 6% annum interest rate $ 635,140 Debt incentive to the secured short term notes above 41,539 Short term notes, due on April and May 2018, 6% annum interest rate 360,000 Debt incentive related to the short term notes above 21,405 Total $ 1,058,084 |
5. Other Current Liabilities (T
5. Other Current Liabilities (Tables) | 12 Months Ended |
May 31, 2018 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | May 31, 2018 May 31, 2017 Accrued dividends $ 179,218 $ 150,831 Accrued interests and others 32,721 25,820 Accrued payroll and taxes 218,599 58,820 Total $ 430,538 $ 235,470 |
8. Commitments and Concentrat22
8. Commitments and Concentrations (Tables) | 12 Months Ended |
May 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating Leases | For the years ended May 31, 2019 $ 366,174 2020 169,648 2021 101,000 2022 – $ 636,822 |
9. Income Taxes (Tables)
9. Income Taxes (Tables) | 12 Months Ended |
May 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Effective tax rate schedule | May 31, 2018 May 31, 2017 Federal Statutory Rate 21% 35% State Statutory Rate 6% 6% Change in Rate / Other 3% 4% Permanent Tax Differences (3% ) (6% ) Calculated Rate 27% 39% Actual Calculated Rate (27% ) (39% ) Difference 0% 0% |
10. Earnings (loss) per share (
10. Earnings (loss) per share (Tables) | 12 Months Ended |
May 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share, Basic and Diluted | May 31, 2018 May 31, 2017 Net loss attributable to common shareholders of the Company $ (12,918,683 ) $ (7,251,075 ) Weighted average shares used to compute net loss per share available to common shareholders, basic and diluted 22,427,427 8,433,127 Basic and diluted net loss per share $ (0.58 ) $ (0.86 ) |
1. Organization and Nature of25
1. Organization and Nature of Operations (Details Narrative) - USD ($) | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Net cash used in operating activities | $ (7,349,204) | $ (4,589,618) | |
Cash and cash equivalents | 1,390,258 | 1,770,729 | $ 197,231 |
Series D-2017 Preferred Stock [Member] | |||
Cash raised through sale of preferred stock | $ 6,793,050 | $ 100,000 |
2. Critical Accounting Polici26
2. Critical Accounting Policies and Estimates (Details - Exchange rates) - China, Yuan Renminbi | 12 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Translation rate | 6.40 | 6.80 |
Translation rate for duration period | 6.36 |
2. Critical Accounting Polici27
2. Critical Accounting Policies and Estimates (Details - Other Current Assets) - USD ($) | May 31, 2018 | May 31, 2017 |
Accounting Policies [Abstract] | ||
Prepaid expense | $ 79,822 | $ 89,457 |
Purchase deposit | 145,376 | 66,125 |
Cryptocurrency on hand | 31,479 | 0 |
Other receivables and others | 74,951 | 115,819 |
Total other current assets | $ 331,628 | $ 271,401 |
2. Critical Accounting Polici28
2. Critical Accounting Policies and Estimates (Details - useful lives of Property and Equipment) | 12 Months Ended |
May 31, 2018 | |
Computer Equipment | |
Expected Useful Lives | 3 years |
Furniture and Fixtures | |
Expected Useful Lives | 5 years |
Leasehold Improvements | |
Expected Useful Lives | Term of the lease |
2. Critical Accounting Polici29
2. Critical Accounting Policies and Estimates (Details - property and equipment) - USD ($) | May 31, 2018 | May 31, 2017 |
Property Plant and Equipment, Gross | $ 189,924 | $ 158,547 |
Less: accumulated depreciation | (124,674) | (105,515) |
Property Plant and Equipment. Net | 65,250 | 53,032 |
Furniture and Fixtures | ||
Property Plant and Equipment, Gross | 154,748 | 126,486 |
Leasehold Improvements | ||
Property Plant and Equipment, Gross | $ 35,176 | $ 32,061 |
2. Critical Accounting Polici30
2. Critical Accounting Policies and Estimates (Details - Website Development) - USD ($) | May 31, 2018 | May 31, 2017 |
Accounting Policies [Abstract] | ||
Website development costs | $ 220,598 | $ 187,544 |
Less: accumulated amortization | (116,320) | (105,857) |
Total Intangible Assets | $ 104,278 | $ 81,687 |
2. Critical Accounting Polici31
2. Critical Accounting Policies and Estimates (Details - Deferred revenue) - USD ($) | May 31, 2018 | May 31, 2017 |
Accounting Policies [Abstract] | ||
Deferred subscription | $ 587,194 | $ 366,440 |
Unearned IR revenue | 315,238 | 231,945 |
Total deferred revenue | 902,432 | 598,385 |
Current | (787,557) | (502,241) |
Noncurrent | $ 114,875 | $ 96,144 |
2. Critical Accounting Polici32
2. Critical Accounting Policies and Estimates (Details - Fair Value) - USD ($) | May 31, 2018 | May 31, 2017 |
Assets | ||
Cash | $ 1,390,258 | $ 1,770,729 |
Short-term investments, available for sale | 1,230,754 | 729,075 |
Cryptocurrency | 31,479 | 0 |
Liability - | ||
Short-term notes | 1,058,084 | 433,520 |
Level 1 | ||
Assets | ||
Cash | 1,390,258 | 1,770,729 |
Short-term investments, available for sale | 1,230,754 | 729,075 |
Cryptocurrency | 31,479 | |
Liability - | ||
Short-term notes | 0 | 0 |
Level 2 | ||
Assets | ||
Cash | 0 | 0 |
Short-term investments, available for sale | 0 | 0 |
Cryptocurrency | 0 | |
Liability - | ||
Short-term notes | 998,192 | 408,981 |
Level 3 | ||
Assets | ||
Cash | 0 | 0 |
Short-term investments, available for sale | 0 | 0 |
Cryptocurrency | 0 | |
Liability - | ||
Short-term notes | $ 0 | $ 0 |
2. Critical Accounting Polici33
2. Critical Accounting Policies and Estimates (Details Narrative) | 12 Months Ended | ||
May 31, 2018USD ($)$ / sharesshares | May 31, 2017USD ($)$ / sharesshares | May 31, 2018CNY (¥)shares | |
Cash equivalents | $ 0 | $ 0 | |
Allowance for doubtful accounts | 0 | 0 | |
Cash balances uninsured | 780,726 | 1,379,933 | |
Cryptocurrency | 31,479 | 0 | |
Unrealized (loss) gain on cryptocurrency | (14,768) | 0 | |
Long term investment | 30,000 | ||
Depreciation expense | 19,159 | 6,452 | |
Amortization expense | 10,463 | 9,958 | |
Impairment losses related to the investments | 0 | 0 | |
Impairment of Long-life assets | 0 | 84,375 | |
Advertising Costs | $ 1,169,968 | $ 636,128 | |
Medicine Man Technologies, Inc. [Member] | |||
Number shares liquidated | shares | 1,306,378 | ||
Proceeds from sale of stock in affiliate | $ 1,996,939 | ||
Stock held in affiliate | shares | 41,238 | 41,238 | 41,238 |
Stock held in affiliate, value | $ 76,496 | $ 72,166 | |
Stock price | $ / shares | $ 1.86 | $ 1.75 | |
Sales Revenue, Net [Member] | One customer [Member] | |||
Concentration percentage | 22.00% | 10.00% | |
China | |||
Cash, FDIC Insured Amount | ¥ | ¥ 500,000 | ||
United States | |||
Cash, FDIC Insured Amount | $ 250,000 |
3. Long-term investments (Detai
3. Long-term investments (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Long-term investments | $ 250,000 | $ 250,000 |
Equity in loss from equity method investments | (60,000) | 0 |
Payment for investment | 0 | 250,000 |
Breakwater MB, LLC [Member] | ||
Long-term investments | $ 250,000 | |
Payment for investment | $ 250,000 | |
Investment ownership | 12.50% | |
Sino-U.S. Finance [Member] | ||
Long-term investments | $ 0 | |
Equity in loss from equity method investments | $ 60,000 |
4. Short-term notes (Details -
4. Short-term notes (Details - Stock collateral) - shares | Oct. 31, 2017 | Sep. 30, 2016 |
Sino-Global Shipping America [Member] | ||
Debt secured by shares of stock | 80,000 | |
Recon Technology [Member] | ||
Debt secured by shares of stock | 49,999 | 60,000 |
Nengfa Weiye Energy [Member] | ||
Debt secured by shares of stock | 218,779 | 185,000 |
SGOCO Group [Member] | ||
Debt secured by shares of stock | 29,412 | 28,333 |
Nemaura Medical [Member] | ||
Debt secured by shares of stock | 100,000 | |
Solbright [Member] | ||
Debt secured by shares of stock | 195,122 |
4. Short-term notes (Details 36
4. Short-term notes (Details - Short term notes) - USD ($) | 12 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Short term debt | $ 1,058,084 | $ 433,520 |
Debt incentive | $ 23,520 | |
2017 Notes [Member] | Secured Short Term Notes [Member] | ||
Short term debt | 635,140 | |
Debt incentive | $ 41,539 | |
Debt maturity date | Oct. 31, 2018 | |
Debt stated interest rate | 6.00% | |
2017 Notes [Member] | Other Short Term Note [Member] | ||
Short term debt | $ 360,000 | |
Debt incentive | $ 21,405 | |
Debt maturity date | May 31, 2018 | |
Debt stated interest rate | 6.00% |
4. Short-term notes (Details Na
4. Short-term notes (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Short term debt balance | $ 1,058,084 | $ 433,520 |
Debt incentive | $ 23,520 | |
2016 Note Agreements [Member] | ||
Debt issuance date | Sep. 1, 2016 | |
Debt face amount | $ 410,000 | |
Debt stated interest rate | 6.00% | |
Repayment of short term debt | $ 306,627 | |
Interest expense | 36,424 | |
Debt incentive | $ 62,944 | |
2017 Notes [Member] | ||
Debt issuance date | Oct. 1, 2017 | |
Debt face amount | $ 995,140 |
5. Other Current Liabilities (D
5. Other Current Liabilities (Details) - USD ($) | May 31, 2018 | May 31, 2017 |
Other Liabilities Disclosure [Abstract] | ||
Accrued dividends | $ 179,218 | $ 150,831 |
Accrued interests and others | 32,721 | 25,820 |
Accrued payroll and taxes | 218,599 | 58,820 |
Total other current liabilities | $ 430,538 | $ 235,470 |
5. Other Current Liabilities 39
5. Other Current Liabilities (Details Narrative) - USD ($) | May 31, 2018 | May 31, 2017 |
Accrued dividends | $ 179,218 | $ 150,831 |
Series C-2016 Preferred Stock [Member] | ||
Accrued dividends | 14,981 | 111,523 |
Series D-2017 Preferred Stock [Member] | ||
Accrued dividends | $ 164,237 | |
Series A-2014 Preferred Stock [Member] | ||
Accrued dividends | $ 39,308 |
6. Stockholders Equity (Details
6. Stockholders Equity (Details Narrative) - USD ($) | Aug. 07, 2017 | Jul. 14, 2017 | Mar. 27, 2018 | Oct. 31, 2017 | Oct. 22, 2016 | May 31, 2018 | May 31, 2017 |
Beneficial conversion feature | $ (5,178,065) | $ (3,685,520) | |||||
Beneficial conversion feature- adjustment to additional paid-in capital | 1,244,622 | ||||||
Compensation and consulting expense | 770,220 | 514,950 | |||||
Melissa Armstrong [Member] | |||||||
Shares granted as signing bonus for legal services | 50,000 | ||||||
Series C-2016 Preferred Stock [Member] | |||||||
Proceeds from issuance of preferred stock | $ 5,000,043 | ||||||
Stock issued new, shares | 5,000,043 | ||||||
Beneficial conversion feature | $ 4,930,143 | ||||||
Beneficial conversion feature- adjustment to additional paid-in capital | 3,685,520 | ||||||
Deemed dividend | 1,244,622 | ||||||
Series D-2017 Preferred Stock [Member] | |||||||
Proceeds from issuance of preferred stock | $ 6,793,050 | $ 100,000 | |||||
Stock issued new, shares | 6,793,050 | ||||||
Beneficial conversion feature | $ 3,933,443 | ||||||
Deemed dividend | $ 3,933,443 | ||||||
Restricted Stock [Member] | |||||||
Stock granted for compensation, shares | 1,520,000 | 1,335,000 | |||||
Compensation and consulting expense | $ 770,220 | $ 426,950 | |||||
Restricted Stock [Member] | Service provider [Member] | |||||||
Restricted stock award issued, Shares | 50,000 | 30,000 | |||||
Restricted stock award issued, Value | $ 43,500 | $ 24,120 | |||||
Restricted Stock [Member] | Various Employees [Member] | |||||||
Restricted stock award issued, Shares | 1,340,000 | ||||||
Restricted stock award issued, Value | $ 656,600 | ||||||
Restricted Stock [Member] | Various Contractors [Member] | |||||||
Restricted stock award issued, Shares | 100,000 | ||||||
Restricted stock award issued, Value | $ 46,000 | ||||||
Series 2012 Preferred Stock [Member] | Common Stock | |||||||
Preferred stock converted into common stock, preferred shares converted | 170,000 | ||||||
Preferred stock converted into common stock, common stock issued | 212,500 | ||||||
Series A-2014 Preferred Stock [Member] | Common Stock | |||||||
Preferred stock converted into common stock, preferred shares converted | 1,164,000 | ||||||
Preferred stock converted into common stock, common stock issued | 2,910,000 | ||||||
Series C-2016 Preferred Stock [Member] | Common Stock | |||||||
Preferred stock converted into common stock, preferred shares converted | 4,377,085 | ||||||
Preferred stock converted into common stock, common stock issued | 13,131,255 | ||||||
Series D-2017 Preferred Stock [Member] | Common Stock | |||||||
Preferred stock converted into common stock, preferred shares converted | 150,000 | ||||||
Preferred stock converted into common stock, common stock issued | 300,000 |
7. Related Party (Details Narra
7. Related Party (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Stock issued for compensation, value | $ 770,220 | $ 514,950 |
Lan Jiang [Member] | ||
Stock issued for compensation, shares | 380,000 | 200,000 |
Stock issued for compensation, value | $ 186,200 | $ 74,000 |
Warren Wang [Member] | ||
Advance to related party | 87,379 | |
Breakwater MB [Member] | ||
Payments to Acquire Investments | 250,000 | |
Breakwater Corporate Finance [Member] | ||
Payment to related party | $ 72,500 | $ 132,355 |
8. Commitments and Concentrat42
8. Commitments and Concentrations (Details) | May 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,019 | $ 366,174 |
2,020 | 169,648 |
2,021 | 101,000 |
2,022 | 0 |
Total | $ 636,822 |
8. Commitments and Concentrat43
8. Commitments and Concentrations (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 227,422 | $ 225,334 |
9. Income Taxes (Details)
9. Income Taxes (Details) | 12 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Federal Statutory Rate | 21.00% | 35.00% |
State Statutory Rate | 6.00% | 6.00% |
Change in Rate / Other | 3.00% | 4.00% |
Permanent Tax Differences | (3.00%) | (6.00%) |
Calculated Rate | 27.00% | 39.00% |
Actual Calculated Rate | (27.00%) | (39.00%) |
Difference | 0.00% | 0.00% |
9. Income Taxes (Details Narrat
9. Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 16,000,000 | $ 10,000,000 |
Net deferred tax assets | 5,600,000 | $ 3,400,000 |
Accrued tax expense | $ 0 | |
U.S. federal tax rate | 21.00% | 35.00% |
10. Earnings (loss) per share46
10. Earnings (loss) per share (Details) - USD ($) | 12 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Earnings Per Share [Abstract] | ||
Net loss attributable to common shareholders of the Company | $ (12,918,683) | $ (7,251,075) |
Weighted average shares used to compute net loss per share available to common shareholders, basic and diluted | 22,427,427 | 8,433,127 |
Basic and diluted net loss per share | $ (0.58) | $ (0.86) |
10. Earnings (loss) per share47
10. Earnings (loss) per share (Details Narrative) - shares | 12 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Earnings Per Share [Abstract] | ||
Preferred stock excluded from Computation of Earnings Per Share | 8,317,008 | 7,385,043 |