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RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | 9 Months Ended
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Feb. 28, 2022
Prior Period Adjustment [Abstract] |
Error Correction [Text Block] | NOTE 8: RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS During September 2021, the Company determined that errors were included in the previously issued financial statements as described below. As a result, we restated our financial statements for the periods ended February 28, 2021. The Company discovered the errors listed below. The restatement corrects these errors. Our non-cash stock-based compensation expenses calculation applied forfeiture adjustments to both vested and unvested outstanding options, including those for which the employee had provided the requisite service and vesting had occurred, which resulted in an understatement of stock compensation expense. Additionally, our calculation expensed all issued options at vesting dates versus pro- rata over the period the requisite service was provided. Stock-based compensation expense shown on the statement of operations is a non-cash expense, and impacts accumulated deficit and additional paid-in capital on the balance sheet. However, this does not impact the Company’s cash, revenues or other aspects of ongoing operations. The restatement for the quarter ended February 28, 2021 resulted in no changes in the provision for income taxes. The effect of the restatement on the consolidated statement of operations for the three months ended February 28, 2021 is as follows:
| As Previously Reported |  | Adjustments |  | As Restated
Cost of sales | $ | 3,667,143 |  | $ | 34,926 |  | $ | 3,702,069
Gross Profit |  | (38,505) |  |  | (34,926) |  |  | (73,431)
Operating Expenses: |  |  |  |  |  |  |  |
Selling, general and administrative |  | 1,278,393 |  |  | 249,554 |  |  | 1,527,947
Research and development |  | 563,216 |  |  | 751 |  |  | 563,967
Total operating expense |  | 1,841,609 |  |  | 250,305 |  |  | 2,091,914
Loss from operations |  | (1,880,114) |  |  | (285,231) |  |  | (2,165,345)
Loss before income taxes |  | (1,842,427) |  |  | (285,231) |  |  | (2,127,658)
Net loss | $ | (1,839,310) |  | $ | (285,231) |  | $ | (2,124,541)
Basic net loss per common share | $ | (0.15) |  | $ | (0.03) |  | $ | (0.18)
Diluted net loss per common share | $ | (0.15) |  | $ | (0.03) |  | $ | (0.18)
Comprehensive loss | $ | (1,844,747) |  | $ | (285,231) |  | $ | (2,129,978)
The effect of the restatement on the consolidated statement of operations for the nine months ended February 28, 2021 is as follows:
| As Previously Reported |  | Adjustments |  | As Restated
Cost of sales | $ | 5,639,103 |  | $ | 152,490 |  | $ | 5,791,593
Gross Profit |  | 505,867 |  |  | (152,490) |  |  | 353,377
Operating Expenses: |  |  |  |  |  |  |  |
Selling, general and administrative |  | 3,697,804 |  |  | 540,933 |  |  | 4,238,737
Research and development |  | 1,824,312 |  |  | 67,721 |  |  | 1,892,033
Total operating expense |  | 5,522,116 |  |  | 608,654 |  |  | 6,130,770
Loss from operations |  | (5,016,249) |  |  | (761,144) |  |  | (5,777,393)
Loss before income taxes |  | (4,962,488) |  |  | (761,144) |  |  | (5,723,632)
Net loss | $ | (4,973,889) |  | $ | (761,144) |  | $ | (5,735,033)
Basic net loss per common share | $ | (0.42) |  | $ | (0.07) |  | $ | (0.49)
Diluted net loss per common share | $ | (0.42) |  | $ | (0.07) |  | $ | (0.49)
Comprehensive loss | $ | (4,982,576) |  | $ | (761,144) |  | $ | (5,743,720)
The effect of the restatement on the consolidated statement of cash flows for the period ended February 28, 2021 is as follows:
| As Previously Reported |  | Adjustments |  | As Restated
Cash flows from operating activities: |  |  |  |  |  |  |  |
Net loss | $ | (4,973,889) |  | $ | (761,144) |  | $ | (5,735,033)
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |  |  |  |
Stock option expense |  | 261,176 |  |  | 761,144 |  |  | 1,022,320
Net cash used in operating activities |  | (4,244,064) |  |  | - |  |  | (4,244,064)
Cash and cash equivalents at end of period | $ | 5,272,565 |  | $ | - |  | $ | 5,272,565

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- Definition The entire disclosure for reporting error correction. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 7 -URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22644-107794 + Details
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