----

| Nevada                                              | 99-0364975              |
|-----------------------------------------------------|-------------------------|
| (State or other jurisdiction of incorporation) | (IRS Employer I.D. No.) |

| Large accelerated filer | ☐ |                                          | Accelerated filer         | ☑ |
|-------------------------|---------|-----------------------------------------------|---------------------------|---------|
|                    |    |                                          |                      |    |
| Non-accelerated filer   | ☐ | (Do not check if a smaller reporting company) | Smaller reporting company | ☐ |

----

| PART I – FINANCIAL INFORMATION                                                           |
|------------------------------------------------------------------------------------------------|
|                                                                                           | Page |
|                                                                                           |   |
| Item 1. Financial Statements.                                                                  |  1 |
|                                                                                           |   |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |  34 |
|                                                                                           |   |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk.                            |  41 |
|                                                                                           |   |
| Item 4. Controls and Procedures.                                                               |  42 |
|                                                                                           |   |
| PART II – OTHER INFORMATION                                                              |
|                                                                                           |   |
| Item 1. Legal Proceedings.                                                                     |  43 |
|                                                                                           |   |
| Item 1A. Risk Factors.                                                                         |  43 |
|                                                                                           |   |
| Item 2 Unregistered Sales of Equity Securities and Use of Proceeds.                            |  43 |
|                                                                                           |   |
| Item 3 Defaults Upon Senior Securities.                                                        |  43 |
|                                                                                           |   |
| Item 4. Mine Safety Disclosures.                                                               |  43 |
|                                                                                           |   |
| Item 5. Other Information.                                                                     |  44 |
|                                                                                           |   |
| Item 6. Exhibits.                                                                              |  44 |
|                                                                                           |   |
| Signatures                                                                                     |  45 |

----

|                                         |   | August 31, |       |   | May 31, |   |
|----------------------------------------------|--------|------------|------------|--------|---------|--------|
| ASSETS                                       |   | 2016       |       |   | 2016    |   |
|                                         |   |            |       |   |         |   |
| Current assets:                              |   |            |       |   |         |   |
|   Cash                                  |   | $          | 7,670,907  |   |    | $      | 5,912,106 |   |
|   Accounts receivable              |   |       | 4,166,689  |   |    |   | 4,173,156 |   |
|   Prepaid VAT                      |   |       | 3,581,274  |   |    |   | 3,735,575 |   |
|   Prepaid expenses                 |   |       | 500,347    |   |    |   | 88,477 |   |
|                                         |   |       |       |   |    |   |   |   |
|     Total current assets |   |       | 15,919,217 |   |    |   | 13,909,314 |   |
|                                         |   |       |       |   |    |   |   |   |
| Noncurrent assets:                           |   |       |       |   |    |   |   |   |
| Fixed assets, net                            |   |       | 40,706,868 |   |    |   | 41,603,297 |   |
| Prepaid Lease                                |   |       | 5,797,156  |   |    |   | 5,913,880 |   |
| Accounts receivable-non-current              |   |       | 4,760,339  |   |    |   | 5,907,361 |   |
| Deferred income tax assets                   |   |       | 300,187    |   |    |   | 280,184 |   |
|                                         |   |       |       |   |    |   |   |   |
| Total noncurrent assets                      |   |       | 51,564,550 |   |    |   | 53,704,722 |   |
|                                         |   |       |       |   |    |   |   |   |
| Total Assets                                 |   | $          | 67,483,767 |   |    |   | 67,614,036 |   |

----

|                                                                                                                    |   | August 31, |       |   | May 31, |   |
|-------------------------------------------------------------------------------------------------------------------------|--------|------------|------------|--------|---------|--------|
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                    |   | 2016       |       |   | 2016    |   |
|                                                                                                                    |   |            |       |   |         |   |
| Current liabilities:                                                                                                    |   |            |       |   |         |   |
|                                                                                                                         |   |            |       |   |         |   |
|   Accounts payable                                                                                                 |   | $          | 690,399    |   |    | $      | 1,247,399 |   |
|   Deferred revenues                                                                                                |   |       | 3,058,646  |   |    |   | 2,967,016 |   |
|   Taxes payable                                                                                               |   |       | 750,814    |   |    |   | 810,428 |   |
|   Loan from stockholder                                                                                       |   |       | 8,696,914  |   |    |   | 8,781,471 |   |
|   Accrued liabilities                                                                                         |   |       | 148,116    |   |    |   | 165,097 |   |
|     Total current liabilities                                                                       |   |       | 13,344,889 |   |    |   | 13,971,411 |   |
|                                                                                                                    |   |       |       |   |    |   |   |   |
| Security deposits payable                                                                                               |   |       | 2,754,278  |   |    |   | 2,794,868 |   |
|                                                                                                                    |   |       |       |   |    |   |   |   |
| TOTAL LIABILITIES                                                                                                       |   |       | 16,099,167 |   |    |   | 16,766,279 |   |
|                                                                                                                    |   |       |       |   |    |   |   |   |
| Stockholders' equity:                                                                                                   |   |       |       |   |    |   |   |   |
|   Common stock, $0.001 par value per share, 75,000,000 shares authorized; 63,020,871 shares issued and outstanding |   |       | 63,021     |   |    |   | 63,021 |   |
|   Additional paid-in capital                                                                                  |   |       | 33,518,248 |   |    |   | 33,518,248 |   |
|   Statutory reserve fund                                                                                      |   |       | 1,956,240  |   |    |   | 1,843,520 |   |
|   Retained earnings                                                                                           |   |       | 17,352,579 |   |    |   | 16,234,031 |   |
|   Other comprehensive income                                                                                  |   |       | (2,574,371 | )      |    |   | (1,838,853 | ) |
|                                                                                                                    |   |       |       |   |    |   |   |   |
|   Stockholders' equity before noncontrolling interests                                                        |   |       | 50,315,717 |   |    |   | 49,819,967 |   |
|   Noncontrolling interest                                                                                     |   |       | 1,068,883  |   |    |   | 1,027,790 |   |
|                                                                                                                    |   |       |       |   |    |   |   |   |
|     Total stockholders' equity                                                                      |   |       | 51,384,600 |   |    |   | 50,847,757 |   |
|                                                                                                                    |   |       |       |   |    |   |   |   |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                              |   | $          | 67,483,767 |   |    | $      | 67,614,036 |   |

----

|                                                            |   | Three Months Ended August 31,   |      |
|-----------------------------------------------------------------|--------|------------------------------------------------|-----------|
|                                                            |   | 2016                                           |      |   | 2015 |   |
|                                                            |   |                                                |      |   |  |   |
| Revenue:                                                        |   |                                                |      |   |  |   |
|                                                                 |   |                                                |      |   |  |   |
|     Sales                                        |   | $                                              | 1,536,109 |   |   | $ | 10,865,073 |   |
|     Lease income                            |   |                                           | 592,099   |   |   |   | - |   |
|                                                            |   |                                           |      |   |   |   |   |   |
| Total revenue                                                   |   |                                           | 2,128,208 |   |   |   | 10,865,073 |   |
|                                                            |   |                                           |      |   |   |   |   |   |
| Cost of goods sold:                                             |   |                                           |      |   |   |   |   |   |
|     Cost of sales                           |   |                                           | 139,786   |   |   |   | 8,103,499 |   |
|     Depreciation expense - leased equipment |   |                                           | 286,323   |   |   |   | - |   |
|                                                            |   |                                           |      |   |   |   |   |   |
| Total cost of goods sold                                        |   |                                           | 426,109   |   |   |   | 8,103,499 |   |
|                                                            |   |                                           |      |   |   |   |   |   |
|   Gross profit                                        |   |                                           | 1,702,099 |   |   |   | 2,761,574 |   |
|                                                            |   |                                           |      |   |   |   |   |   |
| Operating expenses:                                             |   |                                           |      |   |   |   |   |   |
|     Selling and marketing                   |   |                                           | 151,438   |   |   |   | 252,257 |   |
|     General and administrative              |   |                                           | 261,854   |   |   |   | 287,207 |   |
|                                                            |   |                                           |      |   |   |   |   |   |
|       Total operating expenses    |   |                                           | 413,292   |   |   |   | 539,464 |   |

----

|                                                                                        |   | Three Months Ended, August 31,   |       |
|---------------------------------------------------------------------------------------------|--------|--------------------------------------------|------------|
|                                                                                        |   | 2016                                       |       |   | 2015 |   |
|                                                                                        |   |                                            |       |   |  |   |
| Income from operations                                                                      |   |                                       | 1,288,807  |   |   |   | 2,222,110 |   |
|     Interest income                                                     |   |                                       | 135,165    |   |   |   | 21,865 |   |
|     Government subsidy                                                  |   |                                       | 225,899    |   |   |   | 241,970 |   |
|                                                                                        |   |                                       |       |   |   |   |   |   |
| Income before provision for income taxes                                                    |   |                                       | 1,649,871  |   |   |   | 2,485,945 |   |
| Provision for income taxes                                                                  |   |                                       | 362,243    |   |   |   | 566,744 |   |
|                                                                                        |   |                                       |       |   |   |   |   |   |
| Net income                                                                                  |   |                                       | 1,287,628  |   |   |   | 1,919,201 |   |
| Noncontrolling interest                                                                     |   |                                       | (56,360    | ) |   |   | (87,987 | ) |
|                                                                                        |   |                                       |       |   |   |   |   |   |
| Net income attributable to common stockholders                                              |   | $                                          | 1,231,268  |   |   | $ | 1,831,214 |   |
|                                                                                        |   |                                       |       |   |   |   |   |   |
| Earnings per common share, basic and diluted                                                |   | $                                          | 0.02       |   |   | $ | 0.03 |   |
|                                                                                        |   |                                       |       |   |   |   |   |   |
| Weighted average shares outstanding, basic and diluted                                      |   |                                       | 63,020,871 |   |   |   | 63,020,871 |   |
|                                                                                        |   |                                       |       |   |   |   |   |   |
| Comprehensive Income:                                                                       |   |                                       |       |   |   |   |   |   |
| Net Income                                                                                  |   | $                                          | 1,287,628  |   |   | $ | 1,919,201 |   |
| Foreign currency translation adjustment                                                     |   |                                       | (750,785   | ) |   |   | (1,154,335 | ) |
|                                                                                        |   |                                       |       |   |   |   |   |   |
| Comprehensive income                                                                        |   |                                       | 536,843    |   |   |   | 764,866 |   |
|      Comprehensive income attributable to noncontrolling interests |   |                                       | (41,093    | ) |   |   | (50,662 | ) |
|                                                                                        |   |                                       |       |   |   |   |   |   |
| Net Comprehensive income attributable to common  stockholders                     |   | $                                          | 495,750    |   |   | $ | 714,204 |   |

----

|                                                      |   | CommonStock |   |   | Additional Paid-in Capital |   |       | Retained Earnings |   |   | Noncontrolling Interests |   |   | StatutoryReserve Fund |      |   | Other Comprehensive Income |   |      | Total  |   |
|-----------------------------------------------------------|--------|-------------|--------|--------|---------------------------------|--------|------------|------------------------|--------|--------|-------------------------------|--------|--------|-----------------------|-----------|--------|---------------------------------|--------|-----------|--------|--------|
|                                                      |   |             |   |   |                                 |   |       |                        |   |   |                               |   |   |                       |      |   |                                 |   |      |        |   |
| Balance, May 31, 2016                                     |   | $           | 63,021 |   |                            | $      | 33,518,248 |                   |   | $      | 16,234,031                    |   |   | $                     | 1,027,790 |   |                            | $      | 1,843,520 |   |   | $ | (1,838,853 | ) |   | $ | 50,847,757 |   |
|                                                      |   |        |   |   |                            |   |       |                   |   |   |                          |   |   |                  |      |   |                            |   |      |   |   |   |   |   |   |   |   |   |
|    Net income                              |   |        | -      |   |                            |   | -          |                   |   |   | 1,231,268                     |   |   |                  | 56,360    |   |                            |   | -         |   |   |   | - |   |   |   | 1,287,628 |   |
|                                                      |   |        |   |   |                            |   |       |                   |   |   |                          |   |   |                  |      |   |                            |   |      |   |   |   |   |   |   |   |   |   |
|    Appropriation to statutory reserve |   |        | -      |   |                            |   | -          |                   |   |   | (112,720                      | )      |   |                  | -         |   |                            |   | 112,720   |   |   |   | - |   |   |   | - |   |
|                                                           |   |        |   |   |                            |   |       |                   |   |   |                          |   |   |                  |      |   |                            |   |      |   |   |   |   |   |   |   |   |   |
|    Foreign currencytranslation adjustment  |   |        | -      |   |                            |   | -          |                   |   |   | -                             |   |   |                  | (15,267   | )      |                            |   | -         |   |   |   | (735,518 | ) |   |   | (750,785 | ) |
|                                                      |   |        |   |   |                            |   |       |                   |   |   |                          |   |   |                  |      |   |                            |   |      |   |   |   |   |   |   |   |   |   |
| Balance, August 31, 2016                                  |   | $           | 63,021 |   |                            | $      | 33,518,248 |                   |   | $      | 17,352,579                    |   |   | $                     | 1,068,883 |   |                            | $      | 1,956,240 |   |   | $ | (2,574,371 | ) |   | $ | 51,384,600 |   |

----

|                                                                                                                                    |   | For The Three Month Ended |      |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|-----------|
|                                                                                                                                    |   | August 31,                |      |
|                                                                                                                                    |   | 2016                      |      |   | 2015 |   |
|                                                                                                                                    |   |                           |      |   |  |   |
| Cash flows from operating activities:                                                                                                   |   | $                         | 1,287,628 |   |   | $ | 1,919,201 |   |
|      Net income                                                                                                |   |                      |      |   |   |   |   |   |
| Adjustments to reconcile net income to net cash provided by operating activities:                                                       |   |                      |      |   |   |   |   |   |
| Depreciation                                                                                                                            |   |                      | 311,417   |   |   |   | 7,373 |   |
| Amortization for the land lease                                                                                                    |        |                           | 31,024    |  |  |  | 33,230 |   |
| Increase in deferred income tax assets                                                                                                  |   |                      | (24,219   | ) |   |   | (30,974 | ) |
| Changes in operating assets and liabilities:                                                                                            |   |                           |      |   |   |   |   |   |
| Decrease (increase) in accounts receivable                                                                                              |   |                      | 968,029   |   |   |   | (10,050,668 | ) |
| Decrease in prepaid VAT                                                                                                                 |   |                      | 100,657   |   |   |   | - |   |
| (Increase) decrease in prepaid expenses                                                                                                 |   |                      | (415,653  | ) |   |   | 43,437 |   |
| (Increase) in advance to supplier                                                                                                       |   |                      | -         |   |   |   | (2,625,840 | ) |
| (Decrease) increase in accounts payable and accrued liabilities                                                                    |   |                      | (473,197  | ) |   |   | 543,921 |   |
| Increase in deferred revenue                                                                                                            |   |                      | 135,544   |   |   |   | 209,399 |   |
| (Decrease) increase in taxes payable                                                                                                    |   |                      | (48,136   | ) |   |   | 231,334 |   |
|                                                                                                                                    |   |                      |      |   |   |   |   |   |
|               Net cash provided by (used in) operating activities |   |                      | 1,873,094 |   |   |   | (9,719,587 | ) |
|                                                                                                                                    |   |                      |      |   |   |   |   |   |
| Cash flows from investing activities:                                                                                                   |   |                      |      |   |   |   |   |   |
|    Purchase of fixed assets                                                                                                   |   |                      | (17,423   | ) |   |   | (9,741,051 | ) |
|                                                                                                                                    |   |                      |      |   |   |   |   |   |
| Cash flows from financing activities:                                                                                                   |   |                      |      |   |   |   |   |   |
|     Proceeds from shareholder                                                                                            |   |                      | -         |   |   |   | 12,259,848 |   |
| Effect of exchange rate changes on cash                                                                                                 |   |                      | (96,870   | ) |   |   | (1,142,809 | ) |
|                                                                                                                                    |   |                      |      |   |   |   |   |   |
| Net increase (decrease) in cash                                                                                                         |   |                      | 1,758,801 |   |   |   | (8,343,599 | ) |
| Cash, beginning                                                                                                                         |   |                      | 5,912,106 |   |   |   | 26,493,540 |   |
|                                                                                                                                    |   |                      |      |   |   |   |   |   |
| Cash, end                                                                                                                               |   | $                         | 7,670,907 |   |   | $ | 18,149,941 |   |

----

|                                                                          | For The Three Month Ended |   |
|-------------------------------------------------------------------------------|---------------------------|--------|
|                                                                          | August 31,                |   |
|                                                                          | 2016                      |   | 2015 |   |
| Supplemental disclosure of cash flow information                              |                           |   |  |   |
| Cash paid during the period for:                                              |                           |   |  |   |
| Interest                                                                      |                      | $      | - |   |   | $ | 627 |   |
| Income taxes                                                                  |                      | $      | 436,072 |   |   | $ | 689,855 |   |
|                                                                          |                      |   |   |   |   |   |   |   |
| Supplemental disclosure of non-cash activities                                |                      |   |   |   |   |   |   |   |
| Property, equipment, construction in process transferred from prepayment |                      | $      | - |   |   | $ | 834,302 |   |
| Property, equipment, construction in process accrued                     |                      | $      | - |   |   | $ | (11,615 | ) |
| Payment of accrued liabilities by shareholder                                 |                      | $      | 39,000 |   |   | $ |   |   |

----

----

----

----

----

|  ASSETS                                                        |   | August 31,2016 |       |   | May 31,2016 |   |
|---------------------------------------------------------------------|--------|----------------|------------|--------|-------------|--------|
|                                                                |   | (Unaudited)    |       |   |             |   |
| Current assets:                                                     |   |                |       |   |             |   |
|  Cash                                                          |   | $              | 6,538,804  |   |        | $      | 5,587,133 |   |
|  Account receivable                                            |   |           | 4,165,891  |   |        |   | 4,172,406 |   |
|  Prepaid VAT                                                   |   |           | 2,153,313  |   |        |   | 2,286,570 |   |
|  Prepaid expenses                                              |   |           | 497,566    |   |        |   | 87,492 |   |
|                                                                |   |           |       |   |        |   |   |   |
|   Total current assets                                    |   |           | 13,355,574 |   |        |   | 12,133,601 |   |
|                                                                |   |           |       |   |        |   |   |   |
| Fixed assets, net                                                   |   |           | 16,542,498 |   |        |   | 17,070,774 |   |
|                                                                |   |           |       |   |        |   |   |   |
| Account receivable-noncurrent                                       |   |           | 4,760,339  |   |        |   | 5,907,361 |   |
|                                                                |   |           |       |   |        |   |   |   |
| TOTAL ASSETS                                                        |   | $              | 34,658,411 |   |        | $      | 35,111,736 |   |
|                                                                |   |           |       |   |        |   |   |   |
| LIABILITIES                                                         |   |           |       |   |        |   |   |   |
|                                                                |   |           |       |   |        |   |   |   |
| Current liabilities:                                                |   |           |       |   |        |   |   |   |
|  Due to China Xuefeng Environmental Engineering, Inc. (1) |   | $              | 6,513,058  |   |        | $      | 6,609,043 |   |
|  Payable to WFOE (2)                                           |   |           | 15,700,755 |   |        |   | 13,958,489 |   |
|  Accounts payable                                              |   |           | 254,471    |   |        |   | 774,665 |   |
|  Deferred revenue                                              |   |           | 2,385,045  |   |        |   | 2,967,016 |   |
|  Taxes payable                                                 |   |           | 565,832    |   |        |   | 635,027 |   |
|  Loan from stockholder                                         |   |           | 272,866    |   |        |   | 276,888 |   |
|  Accrued liabilities                                           |   |           | 41,235     |   |        |   | 42,746 |   |
|                                                                |   |           |       |   |        |   |   |   |
|   Total current liabilities                               |   |           | 25,733,262 |   |        |   | 25,263,874 |   |
|                                                                |   |           |       |   |        |   |   |   |
| Deposit payable-noncurrent                                          |   |           | 2,754,278  |   |        |   | 2,794,868 |   |
|                                                                |   |           |       |   |        |   |   |   |
| TOTAL LIABILITIES                                                   |   | $              | 28,487,540 |   |        | $      | 28,058,742 |   |

----

| (1) | Due to China Xuefeng Environmental Engineering, Inc. is for the proceeds from the sale of common stock which proceeds were received by Jiangsu Xuefeng for 14,000,000 common shares issued by China Xuefeng Environmental Engineering, Inc. on March 19, 2013 at $0.50 each (approximately US$7,000,000). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Payable to WFOE represents outstanding amounts due to Baichuang Information Consulting (Shenzhen) Co. Ltd. under the Exclusive Technical Service and Business Consulting Agreement for consulting services provided to Jiangsu Xuefeng in exchange for 95% of Jiangsu Xuefeng's net income and additional monthly payments of RMB 100,000 (approximately US$15,630).  During the three months ended August 31, 2016 and 2015, Jiangsu Xuefeng did not make any payment to the WOFE. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|           |   | For The Three Months Ended August 31, |      |
|----------------|--------|---------------------------------------|-----------|
|           |   | 2016                                  |      |   | 2015 |   |
|           |   | (Unaudited)                           |      |   | (Unaudited) |   |
| Revenue        |   | $                                     | 2,128,208 |   |   | $ | 10,865,073 |   |
|           |   |                                  |      |   |   |   |   |   |
| Net income (3) |   | $                                     | 1,127,203 |   |   | $ | 1,759,742 |   |

| (3) | Under the Exclusive Technical Service and Business Consulting Agreement, 95% of the net income is to be remitted to the WFOE, which is not reflected above. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                |   | For The Three Months Ended August 31, |      |
|-----------------------------------------------------|--------|---------------------------------------|-----------|
|                                                |   | 2016                                  |      |   | 2015 |   |
|                                                |   | (Unaudited)                           |      |   | (Unaudited) |   |
|                                                |   |                                       |      |   |  |   |
| Net cash provided by (used in) operating activities |   | $                                     | 1,056,516 |   |   | $ | (9,650,785 | ) |
| Net cash (used in) investing activities             |   |                                  | (17,423   | ) |   |   | (178,100 | ) |
| Effect of exchange rate changes on cash             |   |                                  | (87,422   | ) |   |   | (740,497 | ) |
|                                                |   |                                  |      |   |   |   |   |   |
| Net increase (decrease) in cash                     |   | $                                     | 951,671   |   |   | $ | (10,569,382 | ) |

----

|              |   | August 31,  |       |   | May 31, |   |
|-------------------|--------|-------------|------------|--------|---------|--------|
|              |   | 2016        |       |   | 2016    |   |
|              |   | (Unaudited) |       |   |         |   |
|              |   |             |       |   |         |   |
| TOTAL ASSETS      |   | $           | 32,642,934 |   |    | $      | 32,316,617 |   |
|              |   |        |       |   |    |   |   |   |
| TOTAL LIABILITIES |   | $           | 9,368,758  |   |    | $      | 8,854,005 |   |

|                     |   | For The Three Months Ended August 31, |    |
|--------------------------|--------|---------------------------------------|---------|
|                     |   | 2016                                  |    |   | 2015 |   |
|                     |   | (Unaudited)                           |    |   | (Unaudited) |   |
|                     |   |                                       |    |   |  |   |
| TOTAL OPERATING EXPENSES |   | $                                     | 97,035  |   |   | $ | 124,240 |   |
|                     |   |                                  |    |   |   |   |   |   |
| TOTAL OTHER INCOME       |   | $                                     | 226,058 |   |   | $ | 242,315 |   |
|                     |   |                                  |    |   |   |   |   |   |
| NET INCOME               |   | $                                     | 153,242 |   |   | $ | 149,049 |   |

----

|                                                                                                                     |   | August 31,2016 |   |   | May 31,2016 |   |   | August 31,2015 |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|-------------|--------|--------|----------------|--------|
|                                                                                                                     |   |                |   |   |             |   |   |                |   |
| Balance sheet items, except for stockholders' equity, as of year end                                                     |   |           | 0.1497 |   |        |   | 0.1519 |           |   |   | N/A |   |
|                                                                                                                     |   |           |   |   |        |   |   |           |   |   |   |   |
| Amounts included in the statements of income, statements of changes in stockholders' equity and statements of cash flows |   |           | 0.1506 |   |        |   | N/A    |           |   |   | 0.1613 |   |

----

----

| Year Ending |        |   |
|-------------|--------|--------|
| May 31,     | Amount |   |
|        |        |   |
| 2017        |   | $      | 3,102,134 |   |
| 2018        |   |   | 4,329,537 |   |
| 2019        |   |   | 1,492,458 |   |
|        |   |   |   |   |
|        |   | $      | 8,924,129 |   |

----

| Year Ending |   |   |        |       |
|-------------|--------|--------|--------|------------|
| May 31,     |   |   | Amount |       |
|        |   |   |        |       |
| 2017        |   |   | $      | 2,078,266  |   |
| 2018        |   |   |   | 2,771,022  |   |
| 2019        |   |   |   | 2,771,022  |   |
| 2020        |   |   |   | 2,771,022  |   |
| 2021        |   |   |   | 1,756,988  |   |
|        |   |   |   |       |   |
|        |   |   | $      | 12,148,320 |   |

----

----

----

----

| Computers and equipment       | 3 years  |
|-------------------------------|----------|
| Motor vehicles                | 4 years  |
| Furniture and fixtures        | 5 years  |
| Investment in leased property | 15 years |
| Machinery                     | 10 years |
| Building and improvement      | 20 years |

----

----

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----

|                           |   | August 31,  |       |   | May 31, |   |
|--------------------------------|--------|-------------|------------|--------|---------|--------|
|                           |   | 2016        |       |   | 2016    |   |
|                           |   | (Unaudited) |       |   |         |   |
|                           |   |             |       |   |         |   |
| Computers and equipment        |   | $           | 81,193     |   |    | $      | 64,818 |   |
| Vehicles                       |   |        | 86,707     |   |    |   | 87,984 |   |
| Investment in leased property  |   |        | 17,172,179 |   |    |   | 17,425,249 |   |
| Production facilities          |   |        | 8,391,757  |   |    |   | 8,515,428 |   |
| Furniture and fixtures         |   |        | 18,177     |   |    |   | 18,445 |   |
| Building and improvement       |   |        | 15,792,189 |   |    |   | 16,024,922 |   |
|                           |   |        |       |   |    |   |   |   |
|                           |   |        | 41,542,202 |   |    |   | 42,136,846 |   |
| Less: accumulated depreciation |   |        | (835,334   | )      |    |   | (533,549 | ) |
|                           |   |        |       |   |    |   |   |   |
|                           |   | $           | 40,706,868 |   |    | $      | 41,603,297 |   |

----

|     |   | For the Three Months Ended August 31, |    |
|----------|--------|--------------------------------------------|---------|
|     |   | 2016                                       |    |   | 2015 |   |
|     |   | (Unaudited)                                |    |   | (Unaudited) |   |
|     |   |                                            |    |   |  |   |
| Current  |   | $                                          | 386,462 |   |   | $ | 597,718 |   |
| Deferred |   |                                       | (24,219 | ) |   |   | (30,974 | ) |
|     |   |                                       |    |   |   |   |   |   |
| Total    |   | $                                          | 362,243 |   |   | $ | 566,744 |   |

|                      |   | 2016   |   |   | 2015   |   |
|---------------------------|--------|--------|--------|--------|--------|--------|
|                      |   |        |   |   |        |   |
| Statutory rate            |   |   | 25     | %      |   |   | 25 | % |
| Government subsidy        |   |   | 3      | %      |   |   | 2 | % |
|                      |   |   |   |   |   |   |   |   |
| Effective income tax rate |   |   | 22     | %      |   |   | 23 | % |

----

| Year Ending |   |        |    |
|-------------|--------|--------|---------|
| May 31,     |   | Amount |    |
|        |   |        |    |
| 2017        |   | $      | 108,432 |   |
| 2018        |   |   | 36,144  |   |
|        |   |   |    |   |
|        |   | $      | 144,576 |   |

----

----

| Year EndingMay 31, |   | Amount |   |
|--------------------|--------|--------|--------|
|               |   |        |   |
| 2017               |   | $      | 11,054 |   |
| 2018               |   |   | 15,030 |   |
| 2019               |   |   | 5,120  |   |
|               |   |   |   |   |
|               |   | $      | 31,204 |   |

----

| ASSETS                                         | May 31,2016 |   |
|------------------------------------------------|-------------|--------|
|                                           |             |   |
|                                           |             |   |
|   Investment in subsidiaries and VIE |        | $      | 50,355,645 |   |
|                                           |        |   |   |   |
| TOTAL ASSETS                                   |        | $      | 50,355,645 |   |

| LIABILITIES AND STOCKHOLDERS' EQUITY |   |        |    |
|--------------------------------------|--------|--------|---------|
|                                 |   |        |    |
| Current liabilities:                 |   |        |    |
|   Loan from stockholder         |   | $      | 492,678 |   |
|   Accrued liabilities      |   |   | 43,000  |   |
|                                 |   |   |    |   |
| Total current liabilities            |   |   | 535,678 |   |
|                                 |   |   |    |   |
| Stockholders' equity:                |   |   |    |   |

| Common stock, $0.001 par value; 75,000,000 shares authorized; 63,020,871 shares issued and outstanding |   |   | 63,021     |   |
|--------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|
|  Additional paid-in capital                                                                       |   |   | 33,518,248 |   |
|  Statutory reserve fund                                                                           |   |   | 1,843,520  |   |
|  Retained earnings                                                                                |   |   | 16,234,031 |   |
|  Other comprehensive income                                                                       |   |   | (1,838,853 | )      |
|                                                                                                   |   |   |       |   |
| Total stockholders' equity                                                                             |   |   | 49,819,967 |   |
|                                                                                                   |   |   |       |   |
| TOTAL LIABILITIES AND STOCKHOLDERS'  EQUITY                                                  |   | $      | 50,355,645 |   |

----

|                                                                 | For TheYear Ended May 31, |   |
|----------------------------------------------------------------------|---------------------------|--------|
|                                                                 | 2016                      |   |
|                                                                 |                           |   |
| Revenues:                                                            |                           |   |
|  Share of earnings from investment in subsidiaries and VIE |                      | $      | 3,948,073 |   |
|                                                                 |                      |   |   |   |
| Operating expenses:                                                  |                      |   |   |   |
|  General and administrative                                     |                      |   | 123,000 |   |
|                                                                 |                      |   |   |   |
| Net income                                                           |                      | $      | 3,825,073 |   |

|                                                                                       |   | For The Year Ended May 31, |       |
|--------------------------------------------------------------------------------------------|--------|---------------------------------|------------|
|                                                                                       |   | 2016                            |       |
|                                                                                       |   |                                 |       |
| Cash flows from operating activities:                                                      |   |                                 |       |
|  Net income                                                                           |   | $                               | 3,825,073  |   |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities |   |
|  Share of earnings from investment in subsidiaries and VIE                            |   |                            | (3,948,073 | ) |
|      Increase in accrued liabilities                              |   |                            | 123,000    |   |
|                                                                                       |   |                            |       |   |
|     Net cash (used by) operating activities                            |   |                            | -          |   |
|                                                                                       |   |                            |       |   |
| Net increase in cash                                                                       |   |                            | -          |   |
| Cash, beginning of year                                                                    |   |                            | -          |   |
|                                                                                       |   |                            |       |   |
| Cash, end of year                                                                          |   | $                               | -          |   |
|                                                                                       |   |                            |       |   |
| Noncash financing activities:                                                              |   |                            |       |   |
|       Payment of accrued liabilities by shareholder          |   | $                               | 100,438    |   |

----

----

----

----

| l      | A requirement to have only two years of audited financial statements and only two years of related MD&A;                                                                                         |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                 |
| l      | Exemption from the auditor attestation requirement in the assessment of the emerging growth company's internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002; |
|   |                                                                                                                                                                                                 |
| l      | Reduced disclosure about the emerging growth company's executive compensation arrangements; and;                                                                                                     |
|   |                                                                                                                                                                                                 |
| l      | No non-binding advisory votes on executive compensation or golden parachute arrangements.                                                                                                            |

----

|                                                         |   | Quarters Ended August 31, |      |
|--------------------------------------------------------------|--------|---------------------------|-----------|
|                                                         |   | 2016                      |      |   | 2015 |   |   | Percentage |   |
|                                                         |   | (U.S. $)                  |      |   | (U.S. $) |   |   | Change |   |
|                                                         |   |                           |      |   |  |   |   |  |   |
| Revenue                                                      |   | $                         | 2,128,208 |   |   | $ | 10,865,073 |   |   |   | (80 | %) |
| Cost of revenue                                              |   |                      | (426,109  | ) |   |   | (8,103,499 | ) |   |   | (95 | %) |
|       Gross profit             |   |                      | 1,702,099 |   |   |   | 2,761,574 |   |   |   | (38 | %) |
|     Selling expenses                     |   |                      | 151,438   |   |   |   | 252,257 |   |   |   | (40 | %) |
|     General and administrative expenses  |   |                      | 261,854   |   |   |   | 287,207 |   |   |   | (9 | %) |
|       Total operating expenses |   |                      | 413,292   |   |   |   | 539,464 |   |   |   | (23 | %) |
| Operating income                                             |   |                      | 1,288,807 |   |   |   | 2,222,110 |   |   |   | (42 | %) |
|     Interest income                      |   |                      | 361,064   |   |   |   | 263,835 |   |   |   | 37 | % |
| Income before provision for income taxes                     |   |                      | 1,649,871 |   |   |   | 2,485,945 |   |   |   | (34 | %) |
| Provision for income taxes                                   |   |                      | 362,243   |   |   |   | 566,744 |   |   |   | (36 | %) |
| Net income                                                   |   |                      | 1,287,628 |   |   |   | 1,919,201 |   |   |   | (33 | %) |
|     Noncontrolling interests             |   |                      | (56,360   | ) |   |   | (87,987 | ) |   |   | (36 | %) |
| Net income attributable to common  stockholders         |   | $                         | 1,231,268 |   |   | $ | 1,831,214 |   |   |   | (33 | %) |

----

|                                | Quarters Ended August 31, |   |
|-------------------------------------|---------------------------|--------|
|                                | 2016                      |   | 2015 |   | Percentage |   |
|                                | (U.S. $)                  |   | (U.S. $) |   | Change |   |
|                                |                           |   |  |   |  |   |
| Improvements and Upgrading Services |                      | $      | 451,796 |   |   | $ | - |   |  100 | % |
| Patent Leasing                      |   1,084,313 |   |   1,016,190 |   |  7 | % |
| Sales type lease                    |  -                 |   |  9,848,883 |   |  (100 | %) |
| Operating lease                     |                      |   | 592,099 |   |   |   | - |   |   |   | 100 | % |
|  Total                         |                      | $      | 2,128,208 |   |   | $ | 10,865,073 |   |   |   | (80 | %) |

----

----

----

----

----

| ● | The Company does not have a sufficient number of accounting personnel, which would provide segregation of duties within our internal control procedures to support the accurate and timely reporting of our financial results. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                           |
| ● | The Company's current accounting personnel lack experience and knowledge in identifying and resolving complex accounting issues under U.S. Generally Accepted Accounting Principles (GAAP).                                    |

----

| Exhibit No. |   | Description                                                                                                                                     |
|-------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                            |
| 31.1        |   | Certification of Principal Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 302 of 2002*                           |
|        |   |                                                                                                                                            |
| 31.2        |   | Certification of Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 302 of 2002*                           |
|        |   |                                                                                                                                            |
| 32.1        |   | Certification of Principal Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+ |
|        |   |                                                                                                                                            |
| 32.2        |   | Certification of Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+ |
|        |   |                                                                                                                                            |
| 101.INS     |   | XBRL Instance Document**                                                                                                                        |
|        |   |                                                                                                                                            |
| 101.SCH     |   | XBRL Taxonomy Extension Schema Document**                                                                                                       |
|        |   |                                                                                                                                            |
| 101.CAL     |   | XBRL Taxonomy Extension Calculation Linkbase Document**                                                                                         |
|        |   |                                                                                                                                            |
| 101.DEF     |   | XBRL Taxonomy Extension Definition Linkbase Document**                                                                                          |
|        |   |                                                                                                                                            |
| 101.LAB     |   | XBRL Taxonomy Extension Label Linkbase Document**                                                                                               |
|        |   |                                                                                                                                            |
| 101.PRE     |   | XBRL Taxonomy Extension Presentation Linkbase Document**                                                                                        |

| *       |   | Filed herewith                                                                                                                                                             |
|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **      |   | In accordance with Regulation S-T, the XBRL related information on Exhibit No. 101 to this Quarterly Report on Form 10-Q shall be deemed "furnished" herewith not "filed". |
| +  |   | In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed".                                                                          |

----

|                   | China Xuefeng Environmental Engineering Inc. |
|------------------------|----------------------------------------------|
|                   |                                         |   |
| Date: October 17, 2016 | By:                                          | /s/ Li Yuan |
|                   |                                         | Li Yuan |
|                   |                                         | Chief Executive OfficerPrincipal Executive Officer |
|                   |                                         |   |
|                   |                                         |   |
| Date: October 17, 2016 | By:                                          | /s/ Kuanfu Fan |
|                   |                                         | Kuanfu Fan |
|                   |                                         | Chief Financial OfficerPrincipal Financial Officer |

----