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RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
 9 Months Ended
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