Financial Statement Restatements

12 Months Ended

Feb. 28, 2019

Accounting Changes and Error Corrections [Abstract]

FINANCIAL STATEMENT RESTATEMENTS

NOTE 13 – FINANCIAL STATEMENT RESTATEMENTS

The financial statement restatement and amended amounts included in this amended report are described below along with comparison to financial statement amounts previously reported on Form 10-K, issued on June 13, 2019 for the year ended February 28, 2019:

i. Accounts payable and selling, general & administration expense were understated by $31,395, respectively, with respect to unrecorded expense related to outside consultant and legal expense incurred during fiscal year 2019.

ii. Additional paid-in capital and selling, general & administration expense were overstated by $1,991,740, respectively, due to an incorrect fair value associated with common shares issued during 2019 to BetterSea, a technical consultant to the Company (see Note 8).

iii. Accounts payable was overstated and gain on debt settlement was understated by $100,000, respectively, with respect to amounts incorrectly recorded as an accounts payable due to a vendor.

iv. Restated basic and diluted loss per share for the year ended February 28, 2019 reduced by $0.05 due to the reduced restated net loss for the same period and the restated weighted average number of common shares outstanding for the same period increased by 272,428 shares. The balance sheet at February 28, 2019 was restated for common shares outstanding from 52,082,083 to 53,714,145.

v. Notes payable, general & administration expense, gain on debt settlement and additional paid-in capital are amended to include $80,162 in accrued legal expense and recognition of a net loss of $26,212 related to the issuance of 111,092 common shares in connection with the September 2019 Agreement Regarding Payment of Court Judgment in Installments, On Timeline, And Staying Execution ("Abdou Payment Agreement"), in which the Company was held liable for payment of such expense (see note 14) over a period ending November 15, 2020. In addition to the legal expenses of $80,162, the Company is reclassifying the principle amount of $125,000 from convertible notes payable and $110,000 of accrued interest reported previously as part of accrued expenses to note payable on the balance sheet as of February 28, 2019, including that portion due within twelve months from February 28, 2019 of $70,000 as part of notes payable, current portion.

vi. Additional paid-in capital was understated by and accrued expense was overstated by $67,893 as a result of cash payments received by the Company prior to February 28, 2019 for a definitive number of common shares and recorded as a liability.

Balance Sheet	Previously			Restatement
as of February 28, 2019	Reported			Adjustment				Restated
Assets
Current assets
Cash and cash equivalents	$	358,209		$	-			$	358,209
Other current assets		59,849			-				59,849
Total current assets		418,058			-				418,058
Investment in joint venture		250,000			-				250,000
Total assets	$	668,058		$	-			$	668,058
	$
Liabilities & Shareholders' Deficit
Current liabilities
Accounts payable	$	2,704,269		$	(68,605	)	i, iii	$	2,635,664
Accrued expenses		3,383,369			(177,912	)	v,vi		3,205,456
Customer advances		1,136,542			-				1,136,542
Shares to be issued		-			-				-
Notes payable, current portion		777,537			70,000		v.		847,537
Convertible notes payable and accrued interest-related party, net of discount		3,644,354			-				3,644,354
Convertible notes payable, net of discount		125,000			(125,000	)	v.		-
Notes payable and accrued interest-related party		6,156,375			-				6,156,375
Total current liabilities		17,927,446			(301,517	)			17,625,929
Notes payable-related party		3,000,000			-				3,000,000
Note payable		-			215,181		v.		215,181
Convertible notes payable		1,421,647			-				1,421,647
Total liabilities		22,349,093			(86,336	)			22,262,757
Commitments and contingencies		-			-				-
Shareholders' deficit
Common stock: $0.0001 par value; 150,000,000 shares authorized at February 28, 2019 and 2018; 53,714,145 (restated) and 41,437,035 issued and outstanding at February 28, 2019 and 2018, respectively		5,209			162		iv,v.		5,371
Additional paid-in capital		444,386,887			(1,867,795	)	ii,v,vi		442,519,092
Subscription receivable		-			-				-
Accumulated deficit		(466,073,131	)		1,953,970		i,ii,iii,v		(464,119,161	)
Total shareholders' deficit		(21,681,035	)		86,336				(21,594,699	)
Total liabilities and shareholders' deficit	$	668,058		$	(0	)		$	668,058

Statement of Operations	Previously			Restatement
for the year ended February 28, 2019	Reported			Adjustment				Restated
Net revenue	$	39,274		$	-			$	39,274.00
Cost of goods sold		170,263			-				170,263
Gross profit		(130,989	)		-				(130,989	)
Operating expenses
Engineering, research & development		494,636			-				494,636
Selling, general & administration		5,470,228			(1,880,183	)	i,ii,v		3,590,045
Total operating expenses		5,964,863			(1,880,183	)			4,084,681
Loss from operations		(6,095,853	)		1,880,183				(4,215,670	)
Other income (expense)
Interest expense, net		(1,078,873	)		-				(1,078,873	)
Gain on debt settlement		2,673,511			73,787		iii,v		2,747,298
Other (expense)		44,813			-				44,813
Total income (expense)		1,639,451			73,787				1,713,238
Net income (loss)	$	(4,456,401	)	$	1,953,970			$	(2,502,431	)
Net income (loss) per share	$	(0.10	)	$	0.05		iv	$	(0.05	)
Basic weighted average shares outstanding		45,648,202			272,468		iv		45,920,670
Diluted income (loss) per share	$	(0.10	)	$	0.05		iv	$	(0.05	)
Dilutive weighted average shares outstanding		45,648,202			272,468		iv		45,920,670

Statement of Cash Flows	Previously			Restatement
for the year ended February 28, 2019	Reported			Adjustment				Restated
Net Income (loss)	$	(4,456,401	)	$	1,953,970		ii,iii,I,v	$	(2,502,431	)
Adjustments to reconcile net loss to cash used in operating activities
FMV of warrants issued for services		438,826			(0	)			438,826
Amortization of debt discount		-			-				-
Gain on settlement of debt		(3,270,942	)		(100,000	)	iii		(3,370,942	)
Stock issued for legal settlement		1,992,251			(1,965,527	)	ii,v.		26,724
Stock issued for services		-			-				-
(Increase) decrease in		-			-				-
Other current assets		(17,684	)		(0	)			(17,684	)
Increase (decrease) in		-			-				-
Accts payable and accrued exp		2,215,741			118,771		iii, i		2,334,512
Customer advances		632,910			0				632,910
Cash used in operating activities		(2,465,299	)		7,214				(2,458,085	)
Cash flows from investing activities
Investment in joint venture		-			-				-
Cash flows from financing activities
Issuance of common stock		900,500			67,785		vi.		968,286
Payment on notes payable		(50,000	)		-				(50,000	)
Proceeds from subscription AR		1,225,000			(75,000	)	vi.		1,150,000
Proceeds from convertible note payable		-			-				-
Cash provided by financing activities		2,075,500			(7,215	)			2,068,286
Net incr (decr) in cash and cash equiv		(389,799	)		(1	)			(389,799	)
Beginning cash		748,008			-				748,008
Ending cash	$	358,209		$	(1	)		$	358,209
Supplemental schedule of non-cash financing and investing activities:
Accounts payable converted into shares of common stock		108,430			-				108,430
Notes payable converted into shares of common stock		420,000			30,000				450,000