RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

3 Months Ended

Aug. 31, 2021

Prior Period Adjustment [Abstract]

Error Correction [Text Block]

NOTE 8:  RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

Subsequent to the issuance of our financial statements for the quarter ended August 31, 2020, 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 quarter ended August 31, 2020.

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, which resulted in an understatement of stock compensation expense. Additionally, our calculation expensed the option 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 August 31, 2020 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 August 31, 2020 is as follows:

	As Previously Reported		Adjustments		As Restated
Cost of sales	$	960,930	$	64,787	$	1,025,717
Gross Profit		182,876		(64,787)		118,089
Operating Expenses:
Selling, general and administrative		1,164,564		141,380		1,305,944
Research and development		674,693		36,812		711,505
Total operating expense		1,839,257		178,192		2,017,449
Loss from operations		(1,656,381)		(242,979)		(1,899,360)
Loss before income taxes		(1,648,290)		(242,979)		(1,891,269)
Net loss	$	(1,649,415)	$	(242,979)	$	(1,892,394)
Basic net loss per common share	$	(0.14)	$	(0.02)	$	(0.16)
Diluted net loss per common share	$	(0.14)	$	(0.02)	$	(0.16)
Comprehensive loss	$	(1,651,136)	$	(242,979)	$	(1,894,115)

The effect of the restatement on the consolidated balance sheet at May 31, 2021 is as follows:

	As Previously Reported		Adjustments		As Restated
Shareholders' Equity:
Additional paid-in-capital	$	36,685,176	$	2,151,567	$	38,836,743
Accumulated deficit		(28,394,768)		(2,151,567)		(30,546,335)
Other Equity accounts		936,615		-		936,615
Total Shareholders' Equity	$	9,227,023	$	-	$	9,227,023

The effect of the restatement on the consolidated statement of cash flows for the period ended August 31, 2020 is as follows:

	As Previously Reported		Adjustments		As Restated
Cash flows from operating activities:
Net loss	$	(1,649,415)	$	(242,979)	$	(1,892,394)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock option expense		3,808		242,979		246,787
Net cash used in operating activities		(1,597,146)		-		(1,597,146)
Cash and cash equivalents at end of period	$	6,964,314	$	-	$	6,964,314