Cover
Cover | 3 Months Ended |
Aug. 31, 2021 | |
Entity Addresses [Line Items] | |
Document Type | S-1 |
Amendment Flag | true |
Amendment Description | The registrant is filing this post-effective amendment to update the financial statements and other information contained in the registrant’s registration statement on Form S-1 (Registration No. 333-228906) (the “Registration Statement”), which was declared effective by the Securities and Exchange Commission on September 30, 2020. The Registration Statement related to (i) the issuance by the registrant of up to 806,126 shares of the registrant’s common stock, par value $0.0001 per share (“Common Stock”), which consist of (a) 650,000 shares of Common Stock that may be issued upon the exercise of 650,000 warrants (the “Public Warrants”) originally sold as part of units in the registrant’s initial public offering (the “IPO”) and which entitle the holder to purchase Common Stock at an exercise price of $92.00 per share of Common Stock, (b) 32,688 shares of Common Stock that may be issued upon the exercise of 32,688 warrants (the “Private Placement Warrants”) underlying units originally issued in a private placement that closed simultaneously with the consummation of the IPO (the “Private Placement Units”), which entitle the holder to purchase Common Stock at an exercise price of $92.00 per share of Common Stock, and (c) 123,438 shares of Common Stock, which represent shares of Common Stock that may be issued upon the exercise of 123,438 warrants (the “2019 Warrants”, and together with the Public Warrants and Private Placement Warrants, the “Warrants”) originally sold as part of units in a private placement that commenced on March 27, 2019 (the “2019 Private Placement”) and which entitle the holder to purchase Common Stock at an exercise price of $32.00 per share of Common Stock, and (ii) the resale from time to time of 775,496 shares of Common Stock and 32,688 Private Placement Warrants by the selling securityholders named in the prospectus or their permitted transferees. As of November 16, 2021, an aggregate of 32,706 shares have been resold pursuant to the Registration Statement. No additional securities are being registered pursuant to this post-effective amendment to the Registration Statement. All applicable registration fees were previously paid on December 19, 2018, July 12, 2019 and September 23, 2019. |
Entity Registrant Name | SIMPLICITY ESPORTS AND GAMING COMPANY |
Entity Central Index Key | 0001708410 |
Entity Tax Identification Number | 82-1231127 |
Entity Incorporation, State or Country Code | DE |
Entity Address, Address Line One | 7000 W. Palmetto Park Rd. |
Entity Address, Address Line Two | Suite 505 |
Entity Address, City or Town | Boca Raton |
Entity Address, State or Province | FL |
Entity Address, Postal Zip Code | 33433 |
City Area Code | (855) |
Local Phone Number | 345-9467 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Elected Not To Use the Extended Transition Period | false |
Business Contact [Member] | |
Entity Addresses [Line Items] | |
Entity Address, Address Line One | 625 N. Flagler Drive |
Entity Address, Address Line Two | Suite 600 |
Entity Address, City or Town | West Palm Beach |
Entity Address, State or Province | FL |
Entity Address, Postal Zip Code | 33401 |
City Area Code | (855) |
Local Phone Number | 345-9467 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Aug. 31, 2021 | May 31, 2021 | May 31, 2020 |
Current Assets | |||
Cash and cash equivalents | $ 673,693 | $ 414,257 | $ 160,208 |
Accounts receivable, net | 139,166 | 160,101 | 127,653 |
Inventory | 297,013 | 206,974 | 15,787 |
Other current assets | 41,250 | 52,643 | 5,588 |
Total Current Assets | 1,151,122 | 833,975 | 309,236 |
Non Current Assets | |||
Goodwill | 5,180,141 | 5,180,141 | 5,155,141 |
Intangible assets, net | 1,558,039 | 1,635,227 | 2,141,374 |
Deferred brokerage fees | 77,539 | 79,943 | 149,223 |
Property and equipment, net | 566,970 | 574,308 | 232,733 |
Right of use asset, operating leases, net | 1,562,617 | 1,533,010 | 490,984 |
Security deposits | 40,307 | 40,307 | 14,885 |
Due from franchisees | 3,037 | 23,007 | |
Deferred financing costs | 320,399 | 307,494 | 98,198 |
Total Non Current Assets | 9,309,049 | 9,373,437 | 8,282,538 |
TOTAL ASSETS | 10,460,171 | 10,207,412 | 8,591,774 |
Current Liabilities | |||
Accounts payable | 209,594 | 438,466 | 126,716 |
Accrued expenses | 1,147,434 | 1,166,433 | 1,381,342 |
Current portion of convertible note payable, net of discount | 1,323,051 | 2,211,097 | 1,127,320 |
Loan payable | 82,235 | 82,235 | 40,500 |
Note payable - related party | 64,728 | ||
Operating lease obligation, current | 311,116 | 307,013 | 151,867 |
Current portion of deferred revenues | 30,034 | 30,034 | 3,795 |
Stock payable | 75,000 | ||
Total Current Liabilities | 3,103,464 | 4,235,278 | 2,971,268 |
Operating lease obligation, net of current portion | 1,245,699 | 1,199,748 | 339,116 |
Deferred revenues, less current portion | 176,127 | 182,342 | 365,718 |
Non current portion of convertible notes payable,net of discount | 235,030 | ||
Total Non Current Liabilities | 1,656,856 | 1,382,090 | |
Total Liabilities | 4,760,320 | 5,617,368 | 3,676,102 |
Commitments and Contingencies - Note 7 | |||
Stockholders’ Equity | |||
Preferred stock - $0.0001 par value, 1,000,000 shares authorized; no shares issued and outstanding | |||
Common stock - $0.0001 par value; 36,000,000 shares authorized; 1,492,595 and 1,427,124 shares issued and outstanding as of August 31, 2021 and May 31, 2021 respectively | 149 | 142 | 100 |
Additional paid-in capital | 21,233,531 | 16,708,762 | 11,132,103 |
Accumulated deficit | (16,502,806) | (12,291,899) | (6,195,044) |
Total Simplicity Esports and Gaming Company Stockholders’ Equity | 5,581,649 | 4,417,005 | 4,937,159 |
Non-Controlling Interest | 118,202 | 173,039 | (21,487) |
Total Stockholders’ Equity | 5,699,851 | 4,590,044 | 4,915,672 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 10,460,171 | 10,207,412 | $ 8,591,774 |
Common stock issuable | $ 850,775 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Aug. 31, 2021 | May 31, 2021 | Aug. 31, 2020 | May 31, 2020 |
Statement of Financial Position [Abstract] | ||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 |
Preferred stock shares issued | 0 | 0 | 0 | |
Preferred stock, shares outstanding | 0 | 0 | 0 | |
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Common stock, shares authorized | 36,000,000 | 36,000,000 | 36,000,000 | |
Common stock, shares issued | 1,492,595 | 1,427,124 | 998,622 | |
Common stock, shares outstanding | 1,492,595 | 1,427,124 | 998,622 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 12 Months Ended | ||
Aug. 31, 2021 | Aug. 31, 2020 | May 31, 2021 | May 31, 2020 | |
Revenues: | ||||
Total Revenues | $ 904,840 | $ 200,601 | $ 1,551,923 | $ 861,410 |
Cost of Goods Sold | 607,122 | 67,645 | 1,014,310 | 591,541 |
Gross Profit | 297,718 | 132,956 | 537,613 | 269,869 |
Operating Expenses: | ||||
Compensation and related benefits | 1,303,126 | 302,568 | 2,804,177 | 1,577,245 |
Professional fees | 449,353 | 73,891 | 771,859 | 499,568 |
General and administrative expenses | 443,695 | 241,769 | 1,399,947 | 925,177 |
Impairment loss | 359,129 | |||
Total Operating Expenses | 2,196,174 | 618,228 | 5,335,112 | 3,001,990 |
Loss from Operations | (1,898,456) | (485,272) | (4,797,499) | (2,732,121) |
Other Income (Expense): | ||||
Debt forgiveness Income | 93,761 | |||
Interest expense | (659,696) | (154,128) | (1,399,598) | (32,472) |
Interest income | 19 | 7 | 29 | 3,034 |
Other income | 52,358 | |||
Gain on bargain acquisition | 21,812 | 2,019 | ||
Foreign exchange gain/(loss) | (19,572) | (19,572) | ||
Total Other Income (Expense) | (2,367,288) | (185,828) | (1,397,329) | 66,342 |
Loss Before Provision for Income Taxes | (4,265,744) | (671,100) | (6,194,828) | (2,665,779) |
Provision for Income Taxes | ||||
Net Loss | (4,265,744) | (671,100) | (6,194,828) | (2,665,779) |
Net loss attributable to noncontrolling interest | 54,837 | 15,886 | 97,973 | 45,541 |
Net loss attributable to common shareholders | $ (4,210,907) | $ (655,214) | $ (6,096,855) | $ (2,620,238) |
Basic and Diluted Net Loss per share | $ (2.89) | $ (0.61) | $ (4.91) | $ (2.71) |
Basic and diluted Weighted Average Number of Common Shares Outstanding | 1,459,485 | 1,074,408 | 1,242,981 | 965,371 |
Loss on extinguishment of debt | $ (1,759,969) | $ (12,135) | ||
Franchise Royalties And License Fees [Member] | ||||
Revenues: | ||||
Total Revenues | $ 305,925 | $ 523,007 | ||
Esports Revenue [Member] | ||||
Revenues: | ||||
Total Revenues | 168,981 | 36,380 | 1,053,226 | 174,042 |
Company Owned Stores Sales [Member] | ||||
Revenues: | ||||
Total Revenues | 673,501 | 76,938 | $ 192,772 | $ 164,361 |
Franchise Revenues [Member] | ||||
Revenues: | ||||
Total Revenues | $ 62,358 | $ 87,283 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Noncontrolling Interest [Member] | Retained Earnings [Member] | Total |
Balance - May 31, 2021 at May. 31, 2019 | $ 88 | $ 9,442,027 | $ (3,574,806) | $ 5,867,309 | |
Balance, shares at May. 31, 2019 | 875,497 | ||||
Shares issued for PLAYlive Nation acquisition | $ 9 | 1,439,991 | 1,440,000 | ||
Shares issued for PLAYlive Nation acquisition, shares | 93,750 | ||||
Shares issued for vesting of employment agreement awards | $ 1 | 153,000 | 153,001 | ||
Shares issued for vesting of employment agreement awards, shares | 13,125 | ||||
Shares issued for cash | $ 2 | 87,698 | $ 87,700 | ||
Shares issued for cash, shares | 15,625 | 123,000 | |||
Shares issued to directors, officers and employees as compensation | 5,900 | $ 5,900 | |||
Shares issued to directors, officers and employees as compensation, shares | 625 | ||||
Shares issued in connection with note payable | 3,487 | 3,487 | |||
Non-controlling interest of original investment in subsidiaries | 24,054 | 24,054 | |||
Net loss attributable to noncontrolling interest | (45,541) | (45,541) | |||
Net Loss | (2,620,238) | (2,620,238) | |||
Balance - August 31, 2021 at May. 31, 2020 | $ 100 | 11,132,103 | (21,487) | (6,195,044) | 4,915,672 |
Balance, shares at May. 31, 2020 | 998,622 | ||||
Shares issued for contracted services | 68,778 | 68,778 | |||
Shares issued for contracted services, Shares | 6,597 | ||||
Shares issued in connection with issuance and amendments of notes payable | $ 2 | 202,215 | 202,217 | ||
Shares issued in connection with issuance and amendments of notes payable, Shares | 23,030 | ||||
Shares issued for cash | 25,000 | 25,000 | |||
Shares issued for cash, shares | 2,976 | ||||
Shares issued to directors, officers and employees as compensation | $ 12 | 819,297 | 819,309 | ||
Shares issued to directors, officers and employees as compensation, shares | 116,174 | ||||
Shares issued in connection with franchise acquisition | $ 2 | 164,998 | 165,000 | ||
Shares issued in connection with franchise acquisition, shares | 18,750 | ||||
Non-controlling interest of original investment in subsidiaries | 240,000 | 240,000 | |||
Net loss attributable to noncontrolling interest | (15,886) | (15,886) | |||
Net Loss | (655,214) | (655,214) | |||
Balance - August 31, 2021 at Aug. 31, 2020 | $ 116 | 12,412,391 | 202,627 | (6,850,258) | 5,764,876 |
Balance, shares at Aug. 31, 2020 | 1,166,149 | ||||
Balance - May 31, 2021 at May. 31, 2020 | $ 100 | 11,132,103 | (21,487) | (6,195,044) | 4,915,672 |
Balance, shares at May. 31, 2020 | 998,622 | ||||
Shares issued for contracted services | $ 5 | 624,870 | 624,875 | ||
Shares issued for contracted services, Shares | 53,817 | ||||
Shares issued in connection with issuance and amendments of notes payable | $ 4 | 1,313,554 | 1,313,558 | ||
Shares issued in connection with issuance and amendments of notes payable, Shares | 42,040 | ||||
Shares issued for cash | $ 4 | 574,996 | 575,000 | ||
Shares issued for cash, shares | 48,396 | ||||
Shares issued to directors, officers and employees as compensation | $ 22 | 2,359,379 | 2,359,401 | ||
Shares issued to directors, officers and employees as compensation, shares | 219,535 | ||||
Shares issued in connection with franchise acquisition | $ 7 | 703,860 | 703,867 | ||
Shares issued in connection with franchise acquisition, shares | 64,714 | ||||
Non-controlling interest of original investment in subsidiaries | 292,500 | 292,500 | |||
Net loss attributable to noncontrolling interest | (97,974) | (97,973) | |||
Net Loss | (6,096,855) | (6,096,855) | |||
Balance - August 31, 2021 at May. 31, 2021 | $ 142 | 16,708,762 | 173,039 | (12,291,899) | 4,590,044 |
Balance, shares at May. 31, 2021 | 1,427,124 | ||||
Shares issued for contracted services | $ 2 | 224,875 | 224,877 | ||
Shares issued for contracted services, Shares | 21,346 | ||||
Shares issued in connection with issuance and amendments of notes payable | $ 4 | 4,136,895 | 4,136,899 | ||
Shares issued in connection with issuance and amendments of notes payable, Shares | 38,125 | ||||
Sale of warrants | 100,000 | 100,000 | |||
Shares issued in connection with franchise acquisition | $ 1 | 62,999 | 63,000 | ||
Shares issued in connection with franchise acquisition, shares | 6,000 | ||||
Net loss attributable to noncontrolling interest | (54,837) | (54,837) | |||
Net Loss | (4,210,907) | (4,210,907) | |||
Balance - August 31, 2021 at Aug. 31, 2021 | $ 149 | 21,233,531 | 118,202 | (16,502,806) | 5,699,851 |
Balance, shares at Aug. 31, 2021 | 1,492,595 | ||||
Common stock issuable | $ 850,775 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 12 Months Ended | ||
Aug. 31, 2021 | Aug. 31, 2020 | May 31, 2021 | May 31, 2020 | |
Cash flows from operating activities: | ||||
Net loss | $ (4,265,744) | $ (671,100) | $ (6,194,828) | $ (2,665,779) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Non-cash interest expense | 620,178 | 1,117,667 | ||
Deferred guaranteed interest | (116,000) | |||
Depreciation expense | 81,737 | 27,135 | 229,513 | 57,473 |
Amortization expense | 77,188 | 66,614 | 295,709 | 211,067 |
Provision for uncollectible accounts | 14,137 | 52,549 | ||
Debt forgiveness loss | ||||
Lease liability net of leased asset | 20,447 | |||
Deferred financing costs | (12,905) | (30,416) | ||
Gain on acquisition | (2,357) | |||
Issuance of shares for interest payment | 81,508 | |||
Issuance of shares for inventory purchases | 11,919 | |||
Impairment loss | 359,129 | |||
Deferred lease expense | (26,248) | (776) | ||
Debt forgiveness income | (93,761) | |||
Issuance of shares for services | 224,877 | 150,095 | 2,984,271 | 161,776 |
Changes in operating assets and liabilities: | ||||
Accounts receivable | 20,935 | 5,478 | (32,448) | (127,653) |
Inventory | (90,039) | 11,127 | (63,474) | (15,787) |
Prepaid expenses | 11,393 | (17,087) | (16,500) | (5,588) |
Security deposits | (25,422) | (2,568) | ||
Deferred brokerage fees | 2,404 | 4,525 | 69,280 | (18,592) |
Deferred revenues | (6,215) | (7,414) | (157,137) | 123,882 |
Accounts payable | (228,872) | (10,538) | 337,022 | 123,142 |
Accrued expenses | (18,999) | 185,620 | (245,464) | 729,902 |
Due from franchisee | 19,970 | (23,007) | ||
Net cash used in operating activities | (943,694) | (233,412) | (1,391,938) | (1,523,262) |
Cash flows from investing activities: | ||||
Cash (used in)/acquired from acquisition | (150,000) | 26,180 | ||
Purchase of property and equipment | (20,961) | (1,949) | (163,472) | |
Net cash provided by (used in) investing activities | (20,961) | (151,949) | (137,292) | |
Cash flows from financing activities: | ||||
Proceeds from sale of warrants | 100,000 | |||
Repayment of note payable | (590,909) | (201,300) | (2,137,753) | |
Proceeds from note payable | 1,715,000 | 748,150 | 3,417,430 | 192,048 |
Proceeds from sale of Private Units | 25,000 | 500,000 | 87,700 | |
Deferred financing costs | (209,296) | (98,198) | ||
Non-controlling interest of original investment in subsidiaries | 202,500 | 24,054 | ||
Private placement funds received | 41,735 | 75,000 | ||
Net cash provided by financing activities | 1,224,091 | 571,850 | 1,814,616 | 280,604 |
Net change in cash | 259,436 | 338,438 | 254,049 | (1,379,950) |
Cash - beginning of period | 414,257 | 160,208 | 160,208 | 1,540,158 |
Cash - end of period | 673,693 | 498,646 | 414,257 | 160,208 |
Supplemental Disclosures of Cash Flow Information: | ||||
Cash paid for interest | 109,091 | 48,800 | ||
Cash paid for income taxes | ||||
Supplemental Non-Cash Investing and Financing Information | ||||
Common stock issued for consideration in an acquisition of fixed assets | 63,000 | 165,000 | 871,852 | 1,440,000 |
Common stock issued in connection with notes payable | 238,918 | |||
Beneficial conversion feature with warrants issued for debt discount | 1,505,387 | |||
Conversion of debt to common shares | 100,000 | |||
Increase in prepaid expenses and accrued expenses | 30,555 | |||
Warrants issued for debt discount | (1,521,754) | |||
Acquisition of PLAYlive: | ||||
Goodwill | 2,226,166 | |||
Property and equipment | 9,503 | |||
Deferred brokerage fees | 805,975 | |||
Accounts payable | (3,574) | |||
Deferred revenue | $ (1,624,250) | |||
Loss on extinguishment of debt | 1,759,969 | |||
Stock-based compensation | $ 850,775 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESS Simplicity Esports and Gaming Company F/K/A Smaaash Entertainment Inc. (the “Company,” “we,” or “our”), was organized as a blank check company organized under the laws of the State of Delaware on April 17, 2017. The Company was formed under the name I-AM Capital Acquisition Company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (“Business Combination”). On November 20, 2018, the Company changed its name from I-AM Capital Acquisition Company to Smaaash Entertainment Inc. On January 2, 2019, the Company changed its name from Smaaash Entertainment Inc. to Simplicity Esports and Gaming Company. Through our wholly owned subsidiary, Simplicity Esports, LLC, acquired on January 2, 2019, the Company has begun to implement a unique approach to ensure the ultimate fan friendly esports experience. Our intention is to have gamers involved at the grassroots level and feel a sense of unity as we compete with top class talent. Our management and players are known within the esports community and we plan to use their skills to create a seamless content creation plan helping gamers feel closer to our brand than any other in the industry. Simplicity is an established brand in the Esports industry with an engaged fan base competing in popular games across different genres, including PUBG, Gears of War, Smite, Guns of Boom, and multiple EA Sports titles. Additionally, the Simplicity stream team encompasses a unique group of casters, influencers, and personalities, all of whom connect to Simplicity’s dedicated fan base. Simplicity also has begun to open and operate esports gaming centers that will provide the public an opportunity to experience and enjoy gaming and Esports in a social setting, regardless of skill or experience. Through our wholly owned subsidiary, PLAYlive Nation, Inc. (“PLAYlive”), acquired on July 29, 2019, the Company has a network of franchised Gaming Centers. As August 31, 2021 the company had 17 12 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) | NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESS Simplicity Esports and Gaming Company F/K/A Smaaash Entertainment Inc. (the “Company,” “we,” or “our”), was an organized as a blank check company organized under the laws of the State of Delaware on April 17, 2017. The Company was formed under the name I-AM Capital Acquisition Company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (“Business Combination”). On November 20, 2018, the Company changed its name from I-AM Capital Acquisition Company to Smaaash Entertainment Inc. On January 2, 2019, the Company changed its name from Smaaash Entertainment Inc. to Simplicity Esports and Gaming Company. Through our wholly subsidiary, Simplicity Esports, LLC, acquired on January 2, 2019 (see Note 6). The Company has begun to implement a unique approach to ensure the ultimate fan friendly esports experience. Our intention is to have gamers involved at the grassroots level and feel a sense of unity as we compete with top class talent. Our management and players are known within the esports community and we plan to use their skills to create a seamless content creation plan helping gamers feel closer to our brand than any other in the industry. Simplicity is an established brand in the Esports industry with an engaged fan base competing in popular games across different genres, including PUBG, Gears of War, Smite, Guns of Boom, and multiple EA Sports titles. Additionally, the Simplicity stream team encompasses a unique group of casters, influencers, and personalities all of whom connect to Simplicity’s dedicated fan base. Simplicity also has begun to open and operate esports gaming centers that will provide the public an opportunity to experience and enjoy gaming and Esports in a social setting, regardless of skill or experience. Through our wholly owned subsidiary, PLAYlive Nation, Inc. (“PLAYlive”), acquired on July 29, 2019 (see Note 6), the Company has a network of franchised Gaming Centers. As May 31, 2020, approximately 43 locations were open and operating, in various states including Arizona, California, Idaho, Florida, Maryland, Michigan, Mississippi, Montana, Oregon, South Carolina, Texas, Utah and Washington. PLAYlive offers a video gaming lounge concept to qualified franchisees. PLAYlive currently offers single-unit location franchises as well as agreements to develop multiple locations. This PLAYlive model is being interlaced with the esports gaming centers mentioned above to create the ultimate gaming center. The Company’s sponsor was I-AM Capital Partners LLC (the “Sponsor”). The Company selected May 31 as its fiscal year end. Initial Business Combination The Company’s management had broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering. As August 31, 2021 the company had 17 12 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 On August 21, 2018, the Company deposited into the Trust Account an aggregate of $ 303,610 0.058 On November 20, 2018, the parties consummated the initial Business Combination. Upon consummation of the Business Combination, the Company issued 208,000 10.21 2,125,000 At the special meeting of stockholders held on November 9, 2018, holders of 4,448,260 “ 10.2187363 45,455,596 2,000,000 520,000 208,000 5,119,390 5,461,500 On the Closing Date, the Company entered into a master franchise agreement (“Master Franchise Agreement”) and a master license and distribution agreement (“Master Distribution Agreement”) with Smaaash. As of May 31, 2020, the Master Franchise Agreement and Master Distribution Agreement continue to be in effect. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Accounting Policies [Abstract] | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the condensed consolidated financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, as filed with the SEC on August 30, 2021. The interim results for the three months ended August 31, 2021 are not necessarily indicative of the results to be expected for the year ending May 31, 2022 or for any future interim periods. Correction of Previously Issued Financial Statements The accompanying condensed consolidated statement 27,134 The Company assessed the materiality of the misstatement quantitatively and qualitatively and has concluded that the correction of the classification error is immaterial to the consolidated financials taken as a whole. As a result of the correction, Cost of Goods Sold increased from $ 40,511 67,645 160,090 132,956 Emerging Growth Company Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) Basis of Consolidation The condensed consolidated financial statements include the operations of the Company and its wholly owned subsidiaries, Simplicity Esports, LLC, PLAYlive Nation, Inc., and PLAYlive Nation Holdings, LLC, its 76 79 51 All significant intercompany accounts and transactions have been eliminated in consolidation. Cash and cash equivalents The Company considers short-term interest-bearing investments with initial maturities of three months or less to be cash equivalents. The Company has no Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and accounts receivable. Cash and cash equivalents in a financial institution, which at times, may exceed the Federal depository insurance coverage of $ 250,000 Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed consolidated balance sheet. Foreign Currencies Revenue and expenses are translated at average rates of exchange prevailing during the period. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition As of January 1, 2018, the Company adopted Revenue from Contracts with Customers (Topic 606) (“ASC 606”). The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The Company adopted the standard using the modified retrospective method and the adoption did not have a material impact on the Company’s consolidated financial statements. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied. Product sales occur once control is transferred upon delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods and services. Our revenue is derived from the three sources listed below. The following describes principal activities, separated by major product or service, from which the Company generates its revenues: Company-owned Store Sales The Company-owned stores principally generate revenue from retail esports gaming centers. Revenues from Company-owned stores are recognized when the products are delivered, or the service is provided. Franchise Revenues Franchise revenues consist of royalties, fees and initial license fee income. Franchise royalties are based on six percent of franchise store sales after a minimum level of sales occur and are recognized as sales occur. Any royalty reductions, including waivers or those offered as part of a new store development incentive or as incentive for other behaviors, are recognized at the same time as the related royalty, as they are not separately distinguishable from the full royalty rate. Franchise royalties are billed on a monthly basis. The Company recognizes initial franchise license fee revenue when the Company has performed substantially all the services required in the franchise agreement. Fees received that do not meet these criteria are recorded as deferred revenues until earned. The pre-opening services provided to franchisees do not contain separate and distinct performance obligations from the franchise right; thus, the fees collected will be amortized on a straight-line basis beginning at the store opening date through the term of the franchise agreement, which is typically 10 The Company offers various incentive programs for franchisees including royalty incentives, new store opening incentives (i.e. development incentives) and other support initiatives. Royalties and franchise fees sales are reduced to reflect any royalty incentives earned or granted under these programs that are in the form of discounts. Commissary sales are comprised of gaming equipment and supplies sold to franchised stores and are recognized as revenue upon shipment or delivery of the related products to the franchisees. Payments are generally due within 30 days. Fees for information services, including software maintenance fees, marketing fees and website maintenance, graphic and promotion fees are recognized as revenue as such services are provided. Esports Revenue Esports is a form of competition using video games. Most commonly, esports takes the form of organized, single player and multiplayer video game tournaments or leagues, particularly between professional players, individually or as teams. Revenues from Esports revenues are recognized when the competition is completed, and prize money is awarded. Revenues earned from team sponsorships, prize winnings, league sponsorships, and from the Company’s share of league revenues are included in esports revenue. Deferred Revenues Deferred revenues are classified as current or long-term based on when management estimates the revenues will be recognized. The Company receives payments from franchisees in advance of all performance obligations having been met, including but not limited to franchise locations being opened. As certain conditions agreed to in these franchise agreements are performed, revenues are recognized. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) Deferred costs include commissions paid to brokers related to the sale of specific new franchises which have not met revenue recognition criteria as of August 31, 2021. These costs are recognized in the same period as the initial franchise fee revenue is recognized Accounts Receivable The Company estimates the allowance for doubtful accounts based on an analysis of specific customers (i.e. franchisees), taking into consideration the age of past due accounts and an assessment of the customer’s ability to pay. Accounts receivable are written off against the allowance when management determines it is probable the receivable is worthless. Customer account balances with invoices dated over 90 days old are considered delinquent and considered in the allowance assessment. The Company performs credit evaluations of its customers and, generally, requires no collateral. Management has assessed accounts receivable and an allowance for doubtful accounts of approximately $ 42,479 Property and Equipment Property and equipment and leasehold improvements are recorded at its historical cost. The cost of property and equipment is depreciated over the estimated useful lives, when placed in service (ranging from 3 5 Intangible Assets and Impairment Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Assets not subject to amortization are tested for impairment at least annually. These costs are included in intangible assets on our condensed consolidated balance sheet and amortized on a straight-line basis when placed into service over their estimated useful lives of the costs, which is 2 10 The Company periodically reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less that the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. Goodwill Goodwill is the excess of our purchase cost over the fair value of the net assets of acquired businesses. We do not amortize goodwill, but we assess our goodwill for impairment at least annually. We have assessed goodwill and qualitative considerations indicated no impairment. Franchise Locations Through PLAYlive, the Company’s wholly owned subsidiary, the Company has entered into franchise agreements with third parties. As of August 31, 2021, 12 franchise locations were considered to be operational in various states including Arizona, California, Florida, Idaho, Maryland, Ohio, South Carolina, Texas and Washington. Stock-based Compensation The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation Equity-Based Payments to Non-Employees Non employee stock-based payments The Company records stock based payments made to non-employees in accordance with ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) Leases In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02-Leases (Topic 842), which significantly amends the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company elected to adopt this update early as of January l, 2019 using the modified retrospective transition method and prior periods have not been restated. Upon implementation, the Company recognized an initial operating lease right-of-use asset of $ 110,003 107,678 Basic Income (Loss) Per Share The Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” Net income (loss) - per share is calculated by dividing the Company’s net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings or loss per common share is calculated by dividing the Company’s net income or loss available to common stockholders by the diluted weighted average number of common shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. For this calculation potentially dilutive securities consist primarily of warrants, outstanding options and shares into which the company’s convertible notes payable are convertible. When the Company records a loss from operations, all potentially dilutive shares are anti-dilutive and are consequently excluded from the calculation of diluted net loss per common share. Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740, “ Income Taxes ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the consolidated financial statements recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) Recently Issued and Recently Adopted Accounting Pronouncements Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Company’s future financial statements. The Company periodically reviews new accounting standards that are issued. Although some of these accounting standards may be applicable to the Company, the Company has not identified any other new standards that it believes merit further discussion, and the Company expects that none would have a significant impact on its financial statements. Going Concern, Liquidity and Management’s Plan The Company’s unaudited condensed consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the unaudited condensed consolidated financial statements, the Company has an accumulated deficit of $ 16,502,806 , a working capital deficit of $ 1,952,342 as of August 31, 2021, and a net loss attributable to common shareholders of $ 4,210,907 for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the of the date that the unaudited financial statements are issued. The Company has commenced operations and has begun to generate revenue; however, the Company’s cash position may not be sufficient to support the Company’s daily operations. Management intends to raise additional funds by way of private and/or public offerings. While the Company believes in the viability of its strategy and its ability to generate sufficient revenue and to raise additional funds, there can be no assurances to that effect. Should the Company fail to raise additional capital, it may be compelled to reduce the scope of its planned future business activities. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, to generate sufficient revenue and to raise additional funds by way of public and/or private offerings. The unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to several other countries and infections have been reported globally. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future. As a result, all of our corporate and franchised Simplicity Gaming Centers were closed effective April 1, 2020. We commenced reopening Simplicity Gaming Centers as of May 1, 2020 and have since reopened 16 company owned stores and 12 franchise locations. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but is anticipated to have a material adverse impact on our business, financial condition and results of operations. The measures taken to date impacted the Company’s business for the fiscal year ended May 31, 2021 as well as the fiscal quarter ended August 31, 2021 and will potentially continue to impact the Company’s business. Management expects that all of its business segments, across all of its geographies, will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time. | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company views its operations as one reporting entity and accordingly does not report on segments. Emerging Growth Company Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. Basis of Consolidation The consolidated financial statements include the operations of the Company and its wholly owned subsidiaries, Simplicity Esports, LLC, PLAYlive Nation, Inc., and PLAYlive Nation Holdings, LLC, its 76% 79% 51% All significant intercompany accounts and transactions have been eliminated in consolidation. Cash and cash equivalents The Company considers short-term interest-bearing investments with initial maturities of three months or less to be cash equivalents. The Company has no SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the Federal depository insurance coverage of $ 250,000 Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the consolidated balance sheet. Use of Estimates The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition As of January 1, 2018, the Company adopted Revenue from Contracts with Customers (Topic 606) (“ASC 606”). The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The Company adopted the standard using the modified retrospective method and the adoption did not have a material impact on its financial statements. The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied. Product sales occur once control is transferred upon delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods and services. The following describes principal activities, separated by major product or service, from which the Company generates its revenues. Company-owned Stores Sales The Company-owned stores principally generate revenue from retail esports gaming centers. Revenues from Company-owned stores are recognized when the products are delivered, or the service is provided. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 Franchise Royalties and Fees Franchise royalties which are based on six percent of franchise store sales after a minimum level of sales occur and are recognized as sales occur. Any royalty reductions, including waivers or those offered as part of a new store development incentive or as incentive for other behaviors are recognized at the same time as the related royalty as they are not separately distinguishable from the full royalty rate. Franchise royalties are billed on a monthly basis. The Company recognizes initial franchise license fee revenue, when the Company has performed substantially all the services required in the franchise agreement. Fees received that do not meet these criteria are recorded as deferred revenues until earned. The pre-opening services provided to franchisees do not contain separate and distinct performance obligations from the franchise right; thus, the fees collected will be amortized on a straight-line basis beginning at the store opening date through the term of the franchise agreement, which is typically 10 years. Franchise license renewal fees, which generally occur every 10 years, are billed before the renewal date. Fees received for future license renewal periods are amortized over the life of the renewal period. The Company offers various incentive programs for franchisees including royalty incentives, new store opening incentives (i.e. development incentives) and other support initiatives. Royalties and franchise fees sales are reduced to reflect any royalty incentives earned or granted under these programs that are in the form of discounts. Commissary sales are comprised of food and supplies sold to franchised stores and are recognized as revenue upon shipment or delivery of the related products to the franchisees. Payments are generally due within 30 days. Fees for information services, including software maintenance fees, marketing fees and website maintenance, graphic and promotion fees are recognized as revenue as such services are provided. Esports Revenue Esports revenue is a form of competition using video games. Most commonly, esports takes the form of organized, single player and multiplayer video game competitions, particularly between professional players, individually or as teams. Revenues from Esports revenue are recognized when the competition is completed, and prize money is awarded. Revenues earned from league sponsorships from the Company’s share of league revenues including domestic esports teams competing in games such as Overwatch, Apex Legends, PUBG and more are included here. Revenue from international esports teams including Flamengo esports are included here. League revenues are earned through sponsorship fees on a per tournament, or per season basis. As of March 22, 2020, the Company commenced online esports tournaments promoted directly to its existing customer base. Revenue from these tournaments, comprised of registration fees on a per player basis, is included here. Deferred Revenues Deferred revenues are classified as current or long-term based on when management estimates the revenues will be recognized. The Company receives payments from franchisees in advance of all performance obligations having been met, including but not limited to franchise locations being opened. As certain conditions agreed to in these franchise agreements are performed, revenues are recognized. Deferred costs include commissions paid to brokers related to the sale of specific new franchises which have not met revenue recognition criteria as of May 31, 2021 and 2020. These costs are recognized in the same period as the initial franchise fee revenue is recognized. Accounts Receivable The Company estimates the allowance for doubtful accounts based on an analysis of specific customers (i.e. franchisees), taking into consideration the age of past due accounts and an assessment of the customer’s ability to pay. Accounts receivable are written off against the allowance when management determines it is probable the receivable is worthless. Customer account balances with invoices dated over 90 days old are considered delinquent and considered in the allowance assessment. The Company performs credit evaluations of its customers and, generally, requires no collateral. Management has assessed accounts receivable as of May 31, 2021 and 2020, and an allowance for doubtful accounts of approximately $ 38,000 52,400 Property and equipment Property and equipment and leasehold improvements are recorded at its historical cost. The cost of property and equipment is depreciated over the estimated useful lives, when placed in service, (ranging from 3 5 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 Intangible Assets and impairment Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Assets not subject to amortization are tested for impairment at least annually. These costs were included in intangible assets on our balance sheet and amortized on a straight-line basis when placed into service over the estimated useful lives of the costs, which is 3 5 The Company periodically reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less that the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. For the year ended May 31, 2021, we performed a third-party evaluation of the intangible assets which indicated no impairment was required. Goodwill Goodwill is the excess of our purchase cost over the fair value of the net assets of acquired businesses. We do not amortize goodwill, but we assess our goodwill for impairment at least annually. Our assessment date was May 31, 2020, and we performed a third-party evaluation of the goodwill value at May 31, 2021 which quantitative and qualitative considerations indicated no impairment. Franchise Locations Through PLAYlive, the Company’s wholly owned subsidiary, the Company has entered into franchise agreements with third parties. As May 31, 2021, approximately 12 locations were open and operating, in various states including Arizona, California, Florida, Idaho, Maryland, Michigan, Mississippi, Montana, Oregon, South Carolina, Texas, Utah and Washington. Stock-based compensation The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation Equity-Based Payments to Non-Employees Non employee stock-based payments The Company records stock based payments made to non-employees in accordance with ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 Leases In February of 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02-Leases (Topic 842), which significantly amends the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company adopted this update as of January l, 2019 using the modified retrospective transition method and prior periods have not been restated. Upon implementation, the Company recognized initial operating lease right-of-use assets of $ 110,003 107,678 Deferred Financing Costs The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (SAB) Topic 5A — “Expenses of Offering”. Offering costs of $ 307,494 98,198 Basic Income (Loss) per share The Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period. Diluted earnings or loss per common share is calculated by dividing net income or loss available to common stockholders by the diluted weighted-average number of common shares outstanding, which includes the effect of potentially dilutive securities. Potentially dilutive securities for this calculation consist primarily of warrants, outstanding options, and shares into which the convertible notes are convertible. When the Company records a loss from operations, all potentially dilutive shares are anti-dilutive and are consequently excluded from the calculation of diluted net loss per common share. Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740, “ Income Taxes ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Recent Accounting Pronouncements Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Company’s future financial statements. The following are a summary of recent accounting developments. The Company periodically reviews new accounting standards that are issued. Although some of these accounting standards may be applicable to the Company, the Company has not identified any other new standards that it believes merit further discussion, and the Company expects that none would have a significant impact on its financial statements. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), followed by other related ASUs that provided targeted improvements and additional practical expedient options (collectively “ASC 842”). ASC 842 requires lessees to recognize right-of-use (“ROU”) assets and lease payment liabilities on the balance sheet for leases representing the Company’s right to use the underlying assets over the lease term. Each lease that is recognized on the balance sheet is classified as either finance or operating, with such classification affecting the pattern and classification of expense recognition in the Statements of Operations Statements of Cash Flows The Company adopted ASC 842 on January 1, 2019 using the modified retrospective method. The Company elected as part of its adoption to also use the optional transition methodology whereby previously reported periods continue to be reported in accordance with historical accounting guidance for leases that were in effect for those prior periods. Policy elections and practical expedients that the Company has implemented as part of adopting ASC 842 include (a) excluding from the balance sheet leases with terms that are less than or equal to one year, (b) for all existing asset classes that contain both lease and non-lease components, combining these components together and accounting for them as a single lease component, (c) the package of practical expedients, which among other things, allows the Company to avoid reassessing contracts that commenced prior to adoption that were properly evaluated under legacy GAAP, and (d) excluding land easements, which were not accounted for under the previous leasing guidance, that existed or expired before adoption of ASC 842. The scope of ASC 842 does not apply to leases used in the exploration for minerals or use thereof, including oil, natural gas and natural gas liquids. The Company’s adoption of ASC 842 resulted in an increase in other assets, accounts payable and accrued liabilities, and other liabilities line items on the accompanying Consolidated Balance Sheets Going Concern, Liquidity and Management’s Plan The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the consolidated financial statements, the Company has an accumulated deficit as of May 31, 2021 and 2020 of $ 12,291,899 6,195,044 6,096,855 2,620,238 1,408,609 1,523,262 working capital deficit of approximately $ 1,952,342 a net loss of approximately $1,818,314 million The Company’s cash position may not be sufficient to support the Company’s daily operations. Management plans to raise additional funds by way of a private or ongoing public offering. While the Company believes in the viability of its strategy and its ability to generate sufficient revenue and to raise additional funds, there can be no assurances to that effect. Should the Company fail to raise additional capital, it may be compelled to reduce the scope of its planned future business activities. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, to generate sufficient revenue and to raise additional funds by way of public and/or private offerings. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to several other countries and infections have been reported globally. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future. As a result, all of our corporate and franchised Simplicity Gaming Centers had been closed effective April 1, 2020. Although our franchise agreements with franchisees of Simplicity Gaming Centers require a minimum monthly royalty payment to us from the franchisees regardless of whether the franchised Simplicity Gaming Centers are operating, there is a potential risk that franchisees of Simplicity Gaming Centers will default in their obligations to pay their minimum monthly royalty payment to us The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but is anticipated to have a material adverse impact on our business, financial condition and results of operations. The measures taken to date impacted the Company’s business for the fiscal year and potentially beyond. Management expects that all of its business segments, across all of its geographies, will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time. |
INITIAL PUBLIC OFFERING AND PRI
INITIAL PUBLIC OFFERING AND PRIVATE PLACEMENT | 12 Months Ended |
May 31, 2021 | |
Initial Public Offering And Private Placement | |
INITIAL PUBLIC OFFERING AND PRIVATE PLACEMENT | NOTE 3 — INITIAL PUBLIC OFFERING AND PRIVATE PLACEMENT Initial Public Offering On August 22, 2017, the Company sold 625,000 80.00 50.0 3.7 3.2 1 50,000 1.82 Each Unit consisted of one share of the Company’s common stock, one right to receive one-tenth of one share of the Company’s common stock upon consummation of the Company’s initial Business Combination (“Right”), and one redeemable warrant (“Warrant”) Each Warrant entitles the holder to purchase one share 92.00 five years The Company may redeem the Warrants, in whole and not in part, at a price of $ 0.01 21.00 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 Each holder of a Right received one-tenth (1/10) of one share of common stock upon consummation of the Business Combination. No fractional shares were issued upon exchange of the Rights. The Company granted the underwriters a 45-day option to purchase up to 93,750 25,000 2,000,000 110,000 70,000 The Company issued Maxim Group LLC (“Maxim”), as compensation for the Initial Public Offering, an aggregate of 6,500 250 Settlement Agreement On November 20, 2018, the Company entered into a settlement and release agreement (“Settlement Agreement”) with Maxim. Pursuant to the Settlement Agreement, the Company made a cash payment of $ 20,000 6,500 Unit Purchase Option At the time of the closing of the Initial Public Offering, the Company sold to Maxim, for an aggregate of $ 100 31,250 32,500 743,600 2.86 35 1.73 five years The Company granted the holders of the UPO, demand and “piggy back” registration rights for periods of five and seven years Private Placement Concurrently with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 31,812 80.00 2,545,000 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 On September 13, 2017, the Sponsor purchased 875 70,000 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
PROPERTY, PLANT AND EQUIPMENT | NOTE 3 — PROPERTY, PLANT AND EQUIPMENT The following is a summary of property, plant, and equipment—at cost, less accumulated depreciation: SCHEDULE OF PROPERTY AND EQUIPMENT August 31, 2021 May 31, 2021 Leasehold improvements $ 110,849 $ 110,849 Property and equipment 830,141 755,741 Total cost 940,990 866,590 Less accumulated depreciation (374,020 ) (292,282 ) Net property plant and equipment $ 566,970 $ 574,308 Depreciation expense for the three months ended August 31, 2021 and 2020 was $ 81,737 and $ 27,135 , respectively. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) | NOTE 4 - PROPERTY, PLANT AND EQUIPMENT The following is a summary of property, plant, and equipment—at cost, less accumulated depreciation: SCHEDULE OF PROPERTY AND EQUIPMENT May 31, May 31, 2021 2020 Leasehold improvements 110,849 52,189 Property and equipment 755,741 243,314 Total cost 866,590 295,503 Less accumulated depreciation (292,282 ) (62,771 ) Net, property plant and equipment $ 574,308 $ 232,733 Depreciation expense for the years ended May 31, 2021, and 2020 was $ 229,511 57,473 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
INTANGIBLE ASSETS | NOTE 4 — INTANGIBLE ASSETS The following table sets forth the intangible assets, including accumulated amortization as of August 31, 2021: SCHEDULE OF INTANGIBLE ASSETS Useful Life Cost Amortization Value August 31, 2021 Remaining Accumulated Net Carrying Useful Life Cost Amortization Value Non-Competes 4 $ 1,023,118 $ 548,642 $ 474,476 Trademarks Indefinite 866,000 - 866,000 Customer database 2 35,000 20,417 14,583 Restrictive covenant 2 115,000 67,083 47,917 Customer contracts 10 546,000 391,270 154,730 Internet domain 2 3,000 2,667 333 $ 2,588,118 $ 944,537 $ 1,558,039 The following tables set forth the intangible assets, including accumulated amortization as of May 31, 2021: Useful Life Cost Amortization Value May 31, 2021 Remaining Accumulated Net Carrying Useful Life Cost Amortization Value Non-Competes 4.50 $ 1,023,118 $ 498,799 $ 524,319 Trademarks Indefinite 866,000 - 866,000 Customer Contracts 10 546,000 301,675 244,325 Internet domain 2.50 3,000 2,417 583 $ 2,438,118 $ 802,891 $ 1,635,227 The following table sets forth the future amortization of the Company’s intangible assets as of August 31, 2021 for the fiscal years ending May 31: SCHEDULE OF FUTURE AMORTIZATION OF INTANGIBLE ASSETS 2022 2023 2024 2025 2026 Thereafter Total Non-Competes $ 153,468 $ 204,624 $ 116,384 $ - $ - $ - $ 474,476 Customer contracts 12,158 16,211 16,211 16,211 16,211 77,728 154,730 Restrictive covenant 43,125 4,792 - - - 47,917 Customer database 13,125 1,458 - - - 14,583 Internet domain 333 - - - - - 333 Total $ 222,209 $ 227,085 $ 132,595 $ 16,211 $ 16,211 $ 77,728 $ 692,039 Amortization expense for the three months ended August 31, 2021 and 2020 was $ 77,188 and $ 66,614 , respectively. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) | NOTE 5 - INTANGIBLE ASSETS The following tables set forth the intangible assets, including accumulated amortization at May 31, 2021 and 2020: SCHEDULE OF INTANGIBLE ASSETS May 31, 2021 Remaining Accumulated Net Carrying Useful Life Cost Amortization Value Non-Competes 4.50 $ 1,023,118 $ 498,799 $ 524,319 Trademarks Indefinite 866,000 - 866,000 Customer Contracts 10 546,000 301,675 244,325 Internet domain 2.50 3,000 2,417 583 $ 2,438,118 $ 802,891 $ 1,635,227 May 31, 2020 Remaining Accumulated Net Carrying Useful Life Cost Amortization Value Non-Competes 4.50 $ 1,023,118 $ 289,884 $ 733,234 Trademarks Indefinite 866,000 - 866,000 Customer Contracts 10 546,000 5,443 540,557 Internet domain 2.50 3,000 1,417 1,583 $ 2,438,118 $ 296,744 $ 2,141,374 The following table sets forth the future amortization of the Company’s intangible assets at May 31, 2021: SCHEDULE OF FUTURE AMORTIZATION OF INTANGIBLE ASSETS 2022 2023 2024 2025 2026 Thereafter Total Non-Competes $ 204,624 $ 204,624 $ 119,363 $ - $ - $ - $ 528,611 Customer contracts 89,647 20,897 14,647 14,647 14,647 89,840 244,325 Internet domain 583 - - - - - 583 Total $ 260,224 $ 259,807 $ 259,224 $ 173,962 $ 54,600 $ 267,557 $ 1,275,374 Amortization expense for the years ended May 31, 2021, and 2020 was $ 295,709 211,067 Goodwill The Company’s goodwill carrying amounts relate to the acquisitions of Simplicity Esports LLC and PLAYlive Nation Inc. The composition of the goodwill balance, is as follows: SCHEDULE OF GOODWILL Fiscal Year Fiscal Year Simplicity Esports LLC $ 4,456,250 $ 4,456,250 PLAYlive Nation Inc. 698,891 698,891 Ft. Bliss 25,000 25,000 Total Goodwill $ 5,180,141 $ 5,180,141 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 |
ACQUISITIONS
ACQUISITIONS | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | ||
ACQUISITIONS | NOTE 5 — ACQUISITIONS Simplicity Salinas, LLC On July 26, 2021 the Company through its wholly owned subsidiary, Simplicity Salinas, LLC acquired all of the inventory and property, plant and equipment assets of an existing franchise in exchange for 6,000 shares of common stock at $ 10.85 per share. | NOTE 6 - ACQUISITIONS The Simplicity Esports, LLC Acquisition On January 4, 2019, the Company consummated the transactions contemplated by the share exchange agreement, dated December 21, 2018 (as amended by Amendment No. 1 to Share Exchange Agreement, dated December 28, 2018 and by Amendment No. 2 to Share Exchange Agreement, dated December 30, 2018, the “Share Exchange Agreement”) by and among the Company, Smaaash Entertainment, Inc. (“Smaaash”), each of the equity holders of Simplicity (“Simplicity Owners”) and Jed Kaplan, in the capacity as the representative of the Simplicity Owners (the “Representative”). Pursuant to the Share Exchange Agreement the Simplicity Owners transferred all the issued and outstanding equity interests of Simplicity to the Company in exchange for newly issued shares of common stock of the Company (the “Acquisition”). The Simplicity Owners received an aggregate of 37,500 87,500 250,000 The acquisition of Simplicity, in an all-stock deal, creates a pure play esports team and entertainment platform opportunity, which we believe will increase shareholder value and boost our growth strategy as we endeavor the build out of our brick and mortar esports centers. The acquisition was accounted for by the Company using the acquisition method under business combination accounting. Under this method, the purchase price paid by the acquirer is allocated to the assets acquired and liabilities assumed as of the acquisition date based on the fair value. Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions. All fair value measurements of acquired assets and liabilities assumed are non-recurring in nature and classified as level 3 on the fair value hierarchy. The aggregate purchase price consisted of the following: SCHEDULE OF AGGREGATE PURCHASE PRICE Restricted stock consideration 6,090,000 Total $ 6,090,000 As noted in the table above, the Company issued 375,000 6,090,000 The following table summarizes the estimated fair value of The Simplicity Esports, LLC assets acquired, and liabilities assumed at the date of acquisition: SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED Cash 76,000 Internet Domain 3,000 Trade names and trademarks 588,000 Non-Competes 1,023,118 Accounts payable and accrued liabilities (56,000 ) Goodwill 4,455,882 Total $ 6,090,000 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 PLAYlive Nation Acquisition On July 29, 2019, the Company entered into a definitive agreement to acquire PLAYlive for total consideration of 93,750 The acquisition was accounted for by the Company using the acquisition method under business combination accounting. Under this method, the purchase price paid by the acquirer is allocated to the assets acquired and liabilities assumed as of the acquisition date based on the fair value. Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions. All fair value measurements of acquired assets and liabilities assumed are non-recurring in nature and classified as level 3 on the fair value hierarchy. The aggregate purchase price consisted of the following: SCHEDULE OF AGGREGATE PURCHASE PRICE Restricted stock consideration 1,440,000 Total $ 1,440,000 As noted in the table above, the Company issued 93,750 1,440,000 The following table summarizes the estimated fair value of the PLAYlive assets acquired and liabilities assumed at the date of acquisition: SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED Cash 26,000 Property, plant and equipment 10,000 Net deferred revenue (115,000 ) Customer relationships - Accounts payable and accrued liabilities (4,000 ) Goodwill 699,000 Trademarks 278,000 Customer contracts 546,000 Total $ 1,440,000 Revenue and net loss included in the year ended May 31, 2021 and 2020, consolidated financial statements attributable to PLAYlive is approximately $ 306,000 301,000 523,000 124,000 Company owned store acquisitions During the year, the Company acquired thirteen gaming centers from prior franchisees in various locations throughout the United States. On a consolidated basis, the Company paid for these acquisitions by issuing 64,714 On July 26, 2021 the Company through its wholly owned subsidiary, Simplicity Salinas, LLC acquired all of the inventory and property, plant and equipment assets of an existing franchise in exchange for 6,000 shares of common stock at $ 10.85 per share. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Related Party Transactions [Abstract] | ||
RELATED PARTY TRANSACTIONS | NOTE 6 — RELATED PARTY TRANSACTIONS Contract Services On August 27, 2021 the Company entered into a contract with Laila Cavalcanti Loss, a board member, to provide legal services to its subsidiary Simplicity One Brasil, LTDA. The contract calls for monthly payments of $ 2,500 and 250 25,000 375 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) The Company maintains a portion of its cash balance at a financial services company that is owned by an officer of the Company. | NOTE 7 — RELATED PARTY TRANSACTIONS Private Units In addition, the Sponsor purchased an aggregate of 31,812 80.00 2,545,000 The Sponsor committed to purchase from the Company up to an additional 3,281 On September 13, 2017, 7,000 80.00 Kaplan Promissory Note On May 12, 2020 (the “Issue Date”), the Company issued a promissory note (the “Kaplan Note”) in the principal sum of $ 90,000 5% 64,728 10% Equity Sales On May 7, 2020, we authorized the sale of 2,867 shares of our restricted Common Stock at $ 8.72 per share to William H. Herrmann, Jr. a member of our board of directors for $ 25,000 (Note 10). The Company maintains its cash balance at a financial services company that is owned by an officer of the Company. On August 27, 2021 the Company entered into a contract with Laila Cavalcanti Loss, a board member, to provide legal services to its subsidiary Simplicity One Brasil, LTDA. The contract calls for monthly payments of $ 2,500 250 25,000 375 |
DEBT
DEBT | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Debt Disclosure [Abstract] | ||
DEBT | NOTE 8 - DEBT The table below presents outstanding debt instruments as of August 31, and May 31, 2021 SCHEDULE OF OUTSTANDING DEBT INSTRUMENT AUGUST 31, 2021 MAY 31, 2021 Convertible Promissory Notes $ 3,952,424 $ 3,157,970 Related Debt Discount (2,394,343 ) (947,873 ) Total $ 1,558,081 $ 2,211,097 Current portion of Convertible Promissory Notes, net $ 1,323,051 $ 2,211,097 Non current portion of Convertible Promissory Notes, net 235,030 - Amendments to the Series A-2 Exchange Convertible Note On or about December 20, 2018, the Company issued that certain Series A-2 exchange convertible note in the original principal amount of $ 1,000,000 (the “Series A-2 Note”) to Maxim. 1.93 automatically adjusted to the lower of (i) the conversion price then in effect, and (ii) the greater of the arithmetic average of the VWAP of the Company’s common stock in the five trading days prior to the notice of conversion and $0.50 On June 4, 2020, $ 100,000 in principal was converted into 85,905 shares of common stock in accordance with the terms of the Maxim Note. On June 18, 2020, the Company and Maxim entered into that certain first amendment to the Series A-2 Note (the “First Amendment”), pursuant to which such parties agreed to the following: (i) Maxim’s resale of the Company’s common stock (the “Common Stock”) underlying the Series A-2 Note shall be limited to 10 % of the daily volume of the Common Stock on each respective trading day, (ii) the maturity date of the Series A-2 Note was extended to December 31, 2020, (iii) the principal amount of the Series A-2 Note was increased by $ 100,000 and (iv) the conversion price was reduced from $ 15.44 to $ 9.20 . On December 31, 2020, the Company and Maxim entered into a second amendment to the Series A-2 Note to extend the maturity date of Series A-2 Note to February 15, 2021. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) On April 14, 2021, the Company and Maxim entered into the third amendment to the Series A-2 Note with Maxim pursuant to which the Company and Maxim agreed to the following: (i) The maturity date of the Series A-2 Note is extended to October 15, 2021. (ii) The principal balance of the Series A-2 Note is increased by $ 50,000 as of April 14, 2021. (iii) The Series A-2 Note was not repaid in its entirety (in cash and/or shares of the Company’s common stock pursuant to conversion(s) of the Series A-2 Note) on or before April 30, 2021, and accordingly, the principal balance of the Series A-2 Note increased by an additional $ 50,000 . (iv) The Series A-2 Note was not repaid in its entirety (in cash and/or shares of the Company’s common stock pursuant to conversion(s) of the Series A-2 Note) on or before May 15, 2021, and accordingly, the principal balance of the Series A-2 Note increased by an additional $ 50,000 . (v) If the Series A-2 Note is not repaid in its entirety (in cash and/or shares of the Company’s common stock pursuant to conversion(s) of the Series A-2 Note) on or before July 15, 2021, the principal balance of the Series A-2 Note will increase by an additional $ 100,000 . (vi) If the Series A-2 Note is not repaid in its entirety (in cash and/or shares of the Company’s common stock pursuant to conversion(s) of the Series A-2 Note) on or before September 15, 2021, the principal balance of the Series A-2 Note will increase by an additional $ 100,000 , representing a total cumulative increase in the principal balance of $ 350,000 if the Series A-2 Note is not repaid in its entirety on or before September 15, 2021. (vii) The Company will, within five business days after the Company’s receipt of the Second Tranche Purchase Price of $999,996, pay $500,000 to Maxim, which will reduce the principal owed under the Series A-2 Note by $500,000. While any portion of the Series A-2 Note is outstanding, if the Company receives cash proceeds from public offerings or private placements of the Company’s common stock to investors (except with respect to proceeds from officers and directors of the Company), the Company will, within five business days of the Company’s receipt of such proceeds, inform Maxim or such receipt, following which Maxim will have the right in its sole discretion to require the Company to immediately apply up to 25% of such proceeds received by the Company to repay the outstanding amounts owed under the Series A-2 Note. The parties understand that (a) each dollar applied toward repayment pursuant to this clause (viii) will reduce the balance owed under the Series A-2 Note by one dollar, and (b) this clause (viii) will not apply to the Tiger Trout transaction. On August 19, 2021, the Company and Maxim entered into the fourth amendment (the “Fourth Amendment”) to the Series A-2 Maxim Note, as amended, pursuant to which the Company and Maxim agreed that all obligations under the Series A-2 Maxim Note, as amended, shall be extinguished, and the Series A-2 Maxim Note, as amended, shall be deemed repaid in its entirety, upon the satisfaction of the following obligations: (i) the Company’s payment of $ 500,000 20,000 365,000 As a result of the Fourth Amendment, the Company issued to Maxim a common stock purchase warrant (the “Warrant”) for the purchase of 365,000 13.00 500,000 1,759,969 20,000 February 19, 2021 12% Promissory Note and Securities Purchase Agreement On February 19, 2021, the Company entered into a securities purchase agreement (the “SPA”) dated as of February 19, 2021, with an accredited investor (the “Holder”), pursuant to which the Company issued a 12 % promissory note (the “Note”) with a maturity date of February 19, 2022 (the “Maturity Date”), in the principal sum of $ 1,650,000 . In addition, the Company issued 10,000 shares of its common stock to the Holder as a commitment fee pursuant to the SPA. Pursuant to the terms of the Note, the Company agreed to pay to $ 1,650,000 (the “Principal Sum”) to the Holder and to pay interest on the principal balance at the rate of 12% per annum (provided that the first twelve months of interest shall be guaranteed). The Note carries an original issue discount (“OID”) of $ 165,000 . Accordingly, on the Closing Date (as defined in the SPA), the Holder paid the purchase price of $ 1,485,000 in exchange for the Note. The Company intends to use the proceeds for its operational expenses, the repayment of those certain self-amortization promissory notes previously issued to the Holder on June 18, 2020 and November 23, 2020, and the repayment of certain other existing debt obligations. The Holder may convert the Note into the Company’s common stock (subject to the beneficial ownership limitations of 4.99 % in the Note) at any time at a conversion price equal to $ 11.50 per share. The Company may prepay the Note at any time prior to the date that an Event of Default (as defined in the Note) (each an “Event of Default”) occurs at an amount equal to 100% of the Principal Sum then outstanding plus accrued and unpaid interest (no prepayment premium). The Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the Note or SPA. The Company is required to make an interim payment to the Holder in the amount of $ 363,000 , on or before August 19, 2021, towards the repayment of the balance of the Note. 100,000 100,000 163,000 During the quarter ended August 31, 2021 the Company paid interim payments to the Holder in the amount of $ 225,000 90,909 109,091 25,000 287,330 in interest expense for the amortization of debt discount. 903,588 Upon the Holder’s provision of notice to the Company of the occurrence of any Event of Default, which has not been cured within five (5) calendar days (provided, however, that this five (5) calendar day cure period shall not apply to any event of default under Sections 3.1, 3.2, and 3.19 of the Note), the Note shall become immediately due and payable and the Company shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Principal Sum then outstanding plus accrued interest multiplied by 125 % (the “Default Amount”). Upon the occurrence of an Event of Default, additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 15% per annum or the highest rate permitted by law. March 2021 FirstFire Global 12% Promissory Note and Securities Purchase Agreement On March 10, 2021, the Company, entered into a securities purchase agreement (the “March 10 FirstFire SPA”) dated as of March 10, 2021, with FirstFire Global Opportunities Fund, LLC, a Delaware limited liability company (the “FirstFire”), pursuant to which the Company issued a 12 March 10, 2022 560,000 130,606 56,000 8,394 365,000 3,394 560,000 12 56,000 504,000 4.99 11.50 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) The Company may prepay the March 10 FirstFire Note at any time prior to the date that an Event of Default (as defined in the Note) (each an “Event of Default”) occurs at an amount equal to 100% of the Principal Sum then outstanding plus accrued and unpaid interest (no prepayment premium). The March 10 FirstFire Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the March 10 FirstFire Note or March 10 FirstFire SPA. The Company is required to make an interim payment to FirstFire in the amount of $ 123,200 , on or before September 10, 2021, towards the repayment of the balance of the March 10 FirstFire Note. 40,000 On October 1, 2021, the Company issued a common stock purchase warrant for the purchase of an additional 40,000 Upon FirstFire’s provision of notice to the Company of the occurrence of any Event of Default, which has not been cured within five (5) calendar days (provided, however, that this five (5) calendar day cure period shall not apply to any event of default under Sections 3.1, 3.2, and 3.19 of the March 10 FirstFire Note), the March 10 FirstFire Note shall become immediately due and payable and the Company shall pay to FirstFire, in full satisfaction of its obligations hereunder, an amount equal to the Principal Sum then outstanding plus accrued interest multiplied by 125 % (the “Default Amount”). Upon the occurrence of an Event of Default, additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 15% per annum or the highest rate permitted by law. During the quarter ended August 31, 2021, the Company recognized $ 65,533 419,468 June 2021 FirstFire Global 12% Promissory Note and Securities Purchase Agreement On June 11, 2021, the Company entered into a securities purchase agreement (the “June 11 FirstFire SPA”) dated as of June 10, 2021, with FirstFire Global Opportunities Fund, LLC (“FirstFire”), pursuant to which the Company issued a 12% June 10, 2023 1,266,666 11,875 1,266,666 126,666 1,140,000 4.99% 11.50 The Company may prepay the June 11 FirstFire Note at any time prior to maturity in accordance with the terms of the June 11 FirstFire Note. The June 11 FirstFire Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the June 11 FirstFire Note or the June 11 FirstFire SPA. Upon the occurrence of any Event of Default (as defined in the June 11 FirstFire Note), which has not been cured within three calendar days, the June 11 FirstFire Note shall become immediately due and payable and the Company shall pay to FirstFire, in full satisfaction of its obligations hereunder, an amount equal to the FirstFire Principal Sum then outstanding plus accrued interest multiplied by 125% Pursuant to the terms of the June 11 FirstFire SPA, the Company also issued to FirstFire a three 593,750 10.73 The Company also agreed to prepare and file with the Securities and Exchange Commission a registration statement covering the resale of all shares issued or issuable pursuant to the June 11 FirstFire SPA, including shares issued upon conversion of the June 11 FirstFire Note or exercise of the June 11 FirstFire Warrant. The Company agreed to use its commercially reasonable efforts to have the registration statement filed with the SEC within 90 days following June 10, 2021 and to have the registration statement declared effective by the SEC within 120 days following June 10, 2021. The Company recorded the June 11 FirstFire Note in the amount of $ 1,266,667 1,266,667 76,000 1,053,999 140,548 140,548 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) GS Capital Securities Purchase Agreement & Note On June 16, 2021, the Company entered into a securities purchase agreement (the “GS SPA”) dated as of June 10, 2021, with GS Capital Partners, LLC (“GS Capital”), pursuant to which the Company issued a 12% June 10, 2023 333,333 3,125 300,000 33,333 300,000 4.99% 11.50 The Company may prepay the GS Note at any time prior to maturity in accordance with the terms of the GS Note. The GS Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the GS Note or the GS SPA. Upon the occurrence of any Event of Default (as defined in the GS Note), which has not been cured within three calendar days, the GS Note shall become immediately due and payable and the Company shall pay to GS, in full satisfaction of its obligations hereunder, an amount equal to the principal amount then outstanding plus accrued interest multiplied by 125% Pursuant to the terms of the GS SPA, the Company also issued to GS a three 156,250 10.73 The Company also agreed to prepare and file with the SEC a registration statement covering the resale of all shares issued or issuable pursuant to the GS SPA, including shares issued upon conversion of the GS Note or exercise of the GS Warrant. The Company agreed to use its commercially reasonable efforts to have the registration statement filed with the SEC within 90 days following June 10, 2021 and to have the registration statement declared effective by the SEC within 120 days following June 10, 2021. The Company recorded the GS Note in the amount of $ 333,333 333,333 20,000 280,000 34,703 34,703 Jefferson Street Capital Stock Purchase Agreement & Note On August 23, 2021, the Company entered into a securities purchase agreement (the “Jefferson SPA”) dated as of August 23, 2021, with Jefferson Street Capital, LLC (“Jefferson”), pursuant to which the Company issued a 12% August 23, 2023 333,333 3,125 300,000 33,333 300,000 4.99% 11.50 The Company may prepay the Jefferson Note at any time prior to maturity in accordance with the terms of the Jefferson Note. The Jefferson Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the Jefferson Note or the Jefferson SPA. Upon the occurrence of any Event of Default (as defined in the Jefferson Note), which has not been cured within three calendar days, the Jefferson Note shall become immediately due and payable and the Company shall pay to Jefferson, in full satisfaction of its obligations hereunder, an amount equal to the principal amount then outstanding plus accrued interest multiplied by 125% Pursuant to the terms of the Jefferson SPA, the Company also issued to Jefferson a three 156,250 10.73 The Company also agreed to prepare and file with the SEC a registration statement covering the resale of all shares issued or issuable pursuant to the Jefferson SPA, including shares issued upon conversion of the Jefferson Note or exercise of the Jefferson Warrant. The Company agreed to use its commercially reasonable efforts to have the registration statement filed with the SEC within 90 days following August 23, 2021 and to have the registration statement declared effective by the SEC within 120 days following August 23, 2021. The Company recorded the Jefferson Note in the amount of $ 333,333 274,239 20,000 205,905 685 59,779 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) | NOTE 8 – DEBT The table below presents outstanding debt instruments as of May 31: SCHEDULE OF OUTSTANDING DEBT INSTRUMENT 2021 2020 Convertible Promissory Notes 3,157,970 152,500 Less: Related Discount (946,873 ) (25,180 ) Related Party Note - 64,728 Convertible Note Payable - 1,000,000 Total $ 2,211,097 $ 1,192,048 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 10% Fixed Convertible Promissory Note On April 29, 2020 (the “Effective Date”), the Company issued a 10% October 29, 2020 152,000 152,500 2,500 150,000 In addition to the “guaranteed” interest, and upon the occurrence of an Event of Default (as hereinafter defined), additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 20% per annum or the highest rate permitted by law. The Company may prepay the Harbor Gates Note according to the following schedule: SCHEDULE OF PREPAYMENT OF DEBT NOTE Days Since Payment Amount Under 30 115 31-60 120 61-90 125 91-180 135 135% Pursuant to the terms of the Harbor Gates Note, the Company agreed to issue Harbor Gates shares of Company common stock in two tranches as follows: (i) 1,250 (ii) In the event the average of the three volume weighted average prices for the Company’s common stock during the three consecutive trading days immediately preceding the date which is the 180 th SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 If an Event of Default (as defined in the Promissory Note) occurs, the outstanding Principal Amount of the Harbor Gates Note owing in respect thereof through the date of acceleration, shall become, at Harbor Gates’ election, immediately due and payable in cash at the “Mandatory Default Amount”. The Mandatory Default Amount means 35% If the Harbor Gates Note is not retired on or before the Maturity Date, then at any time and from time to time after the Maturity Date, and subject to the terms hereof and restrictions and limitations contained in the Harbor Gates Note, Harbor Gates has the right, at Harbor Gates’ sole option, to convert in whole or in part the outstanding and unpaid Principal Amount under the Harbor Gates Note into shares of the Company’s common stock at the Variable Conversion Price. The “Variable Conversion Price” will be equal to the lower of: (a) $1.00, or (b) 70% of the lowest volume weighted average price of the Company’s common stock during the 15 consecutive trading days prior to the date on Harbor Gates elects to convert all or part of the Harbor Gates Note. This note along with guaranteed interest of $ 15,000 Kaplan Promissory Note On May 12, 2020 (the “Issue Date”), the Company issued a promissory note (the “Kaplan Note”) in the principal sum of $ 90,000 5% Pursuant to the terms of the Kaplan Note, the Company agreed to pay to Mr. Kaplan the lesser of (i) the principal sum of $ 90,000 Subject to the terms of the Kaplan Note, Mr. Kaplan agreed to make one direct Advance to and for the benefit of the Company on the Issue Date in the amount of $ 45,000 Prior to the Maturity Date or an Event of Default (as hereinafter defined), the Principal Amount outstanding under the Kaplan Note will bear interest at a rate of 3% 10% The Company may prepay the Kaplan Note, in whole or in part, without a prepayment penalty, at any time provided that an Event of Default has not then occurred. During the year ended May 31, 2021, the Kaplan Note was retired in exchange for a 10% SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 Self-Amortization Promissory Note On June 18, 2020 (the “Issue Date”), the Company entered into a securities purchase agreement (the “SPA”) with an accredited investor (the “Holder”), pursuant to which the Company issued a 12% self-amortization promissory note (the “Amortization Note”) with a maturity date of June 18, 2021 (the “Maturity Date”), in the principal sum of $ 550,000 . Pursuant to the terms of the Amortization Note, the Company agreed to pay to $ 550,000 (the “Principal Sum”) to the Holder and to pay interest on the Principal Sum at the rate of 12% per annum. The Amortization Note carries an original issue discount (“OID”) of $ 55,000 . Accordingly, on the Closing Date (as defined in the SPA), the Holder paid the purchase price of $495,000 in exchange for the Amortization Note. In addition, pursuant to the terms of the SPA, the Company agreed to issue 6,875 shares of the Company’s common stock to the Holder as additional consideration. The Company may prepay the Amortization Note at any time prior to the date that an Event of Default (as defined in the Amortization Note) (each an “Event of Default”) occurs at an amount equal to 100% of the Principal Sum then outstanding plus accrued and unpaid interest with no prepayment premium. The Amortization Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the Amortization Note or SPA. The Company is required to make amortization payments to the Holder according to the following schedule: SCHEDULE OF AMORTIZATION PAYMENTS Payment Date Payment Amount 10/16/2020 $ 66,125 11/16/2020 $ 66,125 12/16/2020 $ 66,125 01/18/2021 $ 66,125 02/18/2021 $ 66,125 03/18/2021 $ 66,125 04/16/2021 $ 66,125 05/18/2021 $ 66,125 06/18/2021 $ 65,921 Total: $ 594,921 In connection with the November 23, 2020 SPA discussed below, we repaid principal and interest of $ 198,375 Upon the Holder’s provision of notice to the Company of the occurrence of any Event of Default, which has not been cured within five calendar days as provided in the Amortization Note, the Amortization Note shall become immediately due and payable and the Company shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Principal Sum then outstanding plus accrued interest multiplied by 125% (the “Default Amount”). Upon the occurrence of an Event of Default, additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 15% per annum or the highest rate permitted by law. The Company shall have the right to pay the Default Amount in cash at any time, provided, however that the Holder may convert the Amortization Note into the Company’s common stock (subject to the beneficial ownership limitations of 4.99% contained in the Amortization Note) at any time after the date that is five calendar days after the Amortization Note becomes immediately due and payable as a result of an Event of Default until the Company has repaid the Amortization Note in cash. If the aforementioned event occurs, the conversion price will be equal to the closing bid price of the Company’s common stock on the trading day immediately preceding the date of the respective conversion. While any portion of this Note is outstanding, if the Company receives cash proceeds of more than $ 2,000,000 50% August 7, 2020 Self-Amortization Promissory Note On August 7, 2020 (the “Issue Date”), the Company entered into a securities purchase agreement (the “SPA”) with FirstFire Global Opportunities Fund, LLC, an accredited investor (the “Holder”), pursuant to which the Company issued a 12% August 7, 2021 333,333 333,333 12% 33,333 300,000 4,167 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 The Company may prepay the Self-Amortization Note at any time prior to the date that an Event of Default (as defined in the Amortization Note) (each an “Event of Default”) occurs at an amount equal to 100% of the Principal Sum then outstanding plus accrued and unpaid interest with no prepayment premium. The Self-Amortization Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the Self-Amortization Note or SPA. The Company is required to make amortization payments to the Holder according to the following schedule: SCHEDULE OF AMORTIZATION PAYMENTS Payment Date Payment Amount 12/07/2020 $ 40,075.75 01/07/2021 $ 40,075.75 02/08/2021 $ 40,075.75 03/08/2021 $ 40,075.75 04/07/2021 $ 40,075.75 05/07/2021 $ 40,075.75 06/07/2021 $ 40,075.75 07/07/2021 $ 40,075.75 08/07/2021 $ 39,952.34 Total: $ 360,558.34 On March 10, 2021, we repaid the outstanding principal and interest on the Self-Amortization Note. Upon the Holder’s provision of notice to the Company of the occurrence of any Event of Default, which has not been cured within five calendar days as provided in the Amortization Note, the Amortization Note shall become immediately due and payable and the Company shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Principal Sum then outstanding plus accrued interest multiplied by 125% (the “Default Amount”). Upon the occurrence of an Event of Default, additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 15% per annum or the highest rate permitted by law. The Company shall have the right to pay the Default Amount in cash at any time, provided, however that the Holder may convert the Amortization Note into the Company’s common stock (subject to the beneficial ownership limitations of 4.99% contained in the Amortization Note) at any time after the date that is five calendar days after the Amortization Note becomes immediately due and payable as a result of an Event of Default until the Company has repaid the Amortization Note in cash. If the aforementioned event occurs, the conversion price will be equal to the closing bid price of the Company’s common stock on the trading day immediately preceding the date of the respective conversion. While any portion of this Note is outstanding, if the Company receives cash proceeds of more than $ 2,000,000 November 23, 2020 Self-Amortization Promissory Note On November 25, 2020, the Company entered into a securities purchase agreement (the “November 2020 SPA”), dated as of November 23, 2020 (the “Effective Date”), with an accredited investor (the “Holder”) pursuant to which the Company issued a 12% November 23, 2021 750,000 750,000 441,375 75,000 35,250 198,375 90,000 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 In connection with the November 23, 2020 SPA, the Company is required to issue warrants equal to 375,000 157,438 The Company may prepay the Amortization Note at any time prior to the date that an Event of Default (as defined in the Amortization Note) (each an “Event of Default”) occurs at an amount equal to 100% of the Principal Sum then outstanding plus accrued and unpaid interest (no prepayment premium). The Amortization Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the November Amortization Note or the November 2020 SPA. The Company is required to make amortization payments to the Holder according to the following schedule: SCHEDULE OF AMORTIZATION PAYMENTS Payment Date Payment Amount 2/23/2021 $ 84,000 3/23/2021 $ 84,000 4/23/2021 $ 84,000 5/21/2021 $ 84,000 6/23/2021 $ 84,000 7/23/2021 $ 84,000 8/23/2021 $ 84,000 9/23/2021 $ 84,000 10/22/2021 $ 84,000 11/23/2021 $ 84,000 Total: $ 840,000 On February 19, 2021, we repaid the outstanding principal and interest on the November Amortization Note. Upon the Holder’s provision of notice to the Company of the occurrence of any Event of Default, which has not been cured within five (5) calendar days (provided, however, that this cure period shall not apply to certain events of default as set forth in the November Amortization Note), the November Amortization Note shall become immediately due and payable and the Company shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Principal Sum then outstanding plus accrued interest multiplied by 125% (the “Default Amount”). Upon the occurrence of an Event of Default (as hereinafter defined), additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 15% per annum or the highest rate permitted by law. The Company shall have the right to pay the Default Amount in cash at any time, provided, however that the Holder may convert the November Amortization Note into the Company’s common stock (subject to the beneficial ownership limitations of 4.99% contained in the Amortization Note) at any time after the date that is five (5) calendar days after the November Amortization Note becomes immediately due and payable as a result of an Event of Default until the Company has repaid the Amortization Note in cash. If the aforementioned event occurs, the conversion price will be equal to the closing bid price of the Company’s common stock on the trading day immediately preceding the date of the respective conversion. The Holder shall have the right, at any time following an Uncured Default Date (as defined in this Note), to convert all or any portion of the then outstanding and unpaid principal amount and interest (including any default interest) into shares of the Company’s common stock at the Conversion Price. Following the Uncured Default Date, the Conversion Price shall equal the lesser of (i) 105% multiplied by the closing bid price of the Company’s common stock or (ii) the closing bid price of the Company’s common stock immediately preceding the date of the respective conversion (the “Conversion Price”). SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 Amendments to the Series A-2 Exchange Convertible Note On or about December 20, 2018, the Company issued that certain Series A-2 exchange convertible note in the original principal amount of $ 1,000,000 On June 18, 2020, the Company and Maxim entered into that certain first amendment to the Series A-2 Note (the “First Amendment”), pursuant to which such parties agreed to the following: (i) Maxim’s resale of the Company’s common stock (the “Common Stock”) underlying the Series A-2 Note shall be limited to 10% of the daily volume of the Common Stock on each respective trading day, (ii) the maturity date of the Series A-2 Note was extended to December 31, 2020, (iii) the principal amount of the Series A-2 Note was increased by $100,000 and (iv) the conversion price was reduced from $15.44 ($1.93 pre-reverse split) to $9.20 ($1.15 pre-reverse split). On December 31, 2020, the Company and Maxim entered into a second amendment to the Series A-2 Note to extend the maturity date of Series A-2 Note to February 15, 2021 . On April 14, 2021, the Company and Maxim entered into the third amendment to the Series A-2 Note with Maxim pursuant to which the Company and Maxim agreed to the following: (i) The maturity date of the Series A-2 Note is extended to October 15, 2021. (ii) The principal balance of the Series A-2 Note is increased by $50,000 as of April 14, 2021. (iii) The Series A-2 Note was not repaid in its entirety (in cash and/or shares of the Company’s common stock pursuant to conversion(s) of the Series A-2 Note) on or before April 30, 2021, and accordingly, the principal balance of the Series A-2 Note increased by an additional $50,000. (iv) The Series A-2 Note was not repaid in its entirety (in cash and/or shares of the Company’s common stock pursuant to conversion(s) of the Series A-2 Note) on or before May 15, 2021, and accordingly, the principal balance of the Series A-2 Note increased by an additional $50,000. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 (v) If the Series A-2 Note is not repaid in its entirety (in cash and/or shares of the Company’s common stock pursuant to conversion(s) of the Series A-2 Note) on or before July 15, 2021, the principal balance of the Series A-2 Note will increase by an additional $100,000. (vi) If the Series A-2 Note is not repaid in its entirety (in cash and/or shares of the Company’s common stock pursuant to conversion(s) of the Series A-2 Note) on or before September 15, 2021, the principal balance of the Series A-2 Note will increase by an additional $100,000, representing a total cumulative increase in the principal balance of $350,000 if the Series A-2 Note is not repaid in its entirety on or before September 15, 2021. (vii) The Company will, within five business days after the Company’s receipt of the Second Tranche Purchase Price of $999,996, pay $500,000 to Maxim, which will reduce the principal owed under the Series A-2 Note by $500,000. While any portion of the Series A-2 Note is outstanding, if the Company receives cash proceeds from public offerings or private placements of the Company’s common stock to investors (except with respect to proceeds from officers and directors of the Company), the Company will, within five business days of the Company’s receipt of such proceeds, inform Maxim or such receipt, following which Maxim will have the right in its sole discretion to require the Company to immediately apply up to 25% of such proceeds received by the Company to repay the outstanding amounts owed under the Series A-2 Note. The parties understand that (a) each dollar applied toward repayment pursuant to this clause (viii) will reduce the balance owed under the Series A-2 Note by one dollar, and (b) this clause (viii) will not apply to the Tiger Trout transaction. On August 19, 2021, the Company and Maxim entered into the fourth amendment (the “Fourth Amendment”) to the Series A-2 Maxim Note, as amended, pursuant to which the Company and Maxim agreed that all obligations under the Series A-2 Maxim Note, as amended, shall be extinguished, and the Series A-2 Maxim Note, as amended, shall be deemed repaid in its entirety, upon the satisfaction of the following obligations: (i) the Company’s payment of $ 500,000 20,000 365,000 On August 19, 2021, the Company issued to Maxim a common stock purchase warrant (the “Warrant”) for the purchase of 365,000 13.00 The Company has paid the Maxim note, in its entirety by August 24, 2021 February 19, 2021 12% Promissory Note and Securities Purchase Agreement On February 19, 2021, the Company entered into a securities purchase agreement (the “SPA”) dated as of February 19, 2021, with an accredited investor (the “Holder”), pursuant to which the Company issued a 12% February 19, 2022 1,650,000 10,000 1,650,000 165,000 1,485,000 11.50 The Company may prepay the Note at any time prior to the date that an Event of Default (as defined in the Note) (each an “Event of Default”) occurs at an amount equal to 100% of the Principal Sum then outstanding plus accrued and unpaid interest (no prepayment premium). The Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the Note or SPA. The Company is required to make an interim payment to the Holder in the amount of $ 363,000 Upon the Holder’s provision of notice to the Company of the occurrence of any Event of Default, which has not been cured within five (5) calendar days (provided, however, that this five (5) calendar day cure period shall not apply to any event of default under Sections 3.1, 3.2, and 3.19 of the Note), the Note shall become immediately due and payable and the Company shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Principal Sum then outstanding plus accrued interest multiplied by 125% (the “Default Amount”). Upon the occurrence of an Event of Default, additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 15% per annum or the highest rate permitted by law. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 Note Payable On November 20, 2018, the Company paid its underwriter $ 20,000 1,800,000 8% 12% 15% 12% 18% 125% The principal and interest of the Note was payable upon demand by Maxim or from time to time, in accordance the following schedule: (i) one third of the principal, accrued and unpaid interest and any late charges on May 20, 2019; (ii) one third of the principal, accrued and unpaid interest and any late charges on August 20, 2019; and (iii) one third of the principal, accrued and unpaid interest and any late charges on November 20, 2019. The Note was secured by a first priority security interest in all personal property and assets of the Company excluding the assets held in escrow with respect to (i) that certain stock purchase agreement with Polar, pursuant to which Polar agreed to sell up to 490,000 220,000 The amount payable under the Note could also have been paid in shares of common stock of the Company or securities convertible or exercisable into shares of common stock of the Company (the “Alternate Equity Payment”) if and only if the Company and Maxim mutually agree on both the purchase price and, if applicable, the conversion and/or exercise price of each security of the Company issued in such Alternative Equity Payment. Otherwise, the payment should be made in cash only. So long as any amount under the Note remained outstanding, all cash proceeds received by the Company from any sales of its securities was to be used to repay this Note. 363,000 , on or before August 19, 2021, towards the repayment of the balance of the Note. 100,000 100,000 163,000 During the quarter ended August 31, 2021 the Company paid interim payments to the Holder in the amount of $ 225,000 90,909 109,091 25,000 903,588 On or about December 20, 2018, the Company issued that certain Series A-2 exchange convertible note in the original principal amount of $ 1,000,000 (the “Series A-2 Note”) to Maxim. 1.93 automatically adjusted to the lower of (i) the conversion price then in effect, and (ii) the greater of the arithmetic average of the VWAP of the Company’s common stock in the five trading days prior to the notice of conversion and $0.50 On June 4, 2020, $ 100,000 in principal was converted into 85,905 shares of common stock in accordance with the terms of the Maxim Note. Pursuant to the terms of the June 11 FirstFire SPA, the Company also issued to FirstFire a three 593,750 10.73 The Company recorded the Jefferson Note in the amount of $ 333,333 274,239 20,000 205,905 685 59,779 If the Series A-2 Note is not repaid in its entirety (in cash and/or shares of the Company’s common stock pursuant to conversion(s) of the Series A-2 Note) on or before September 15, 2021, the principal balance of the Series A-2 Note will increase by an additional $ 100,000 , representing a total cumulative increase in the principal balance of $ 350,000 if the Series A-2 Note is not repaid in its entirety on or before September 15, 2021 The Company will, within five business days after the Company’s receipt of the Second Tranche Purchase Price of $999,996, pay $500,000 to Maxim, which will reduce the principal owed under the Series A-2 Note by $500,000. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
COMMITMENTS AND CONTINGENCIES | NOTE 7 — COMMITMENTS AND CONTINGENCIES Unit Purchase Option The Company sold to the underwriters (and/or their designees), for $ 100 , an option to purchase up to a total of 250,000 Units (which increased to 260,000 Units upon the partial exercise of the underwriters’ over-allotment option), exercisable at $ 11.50 per Unit pre-reverse split (or an aggregate exercise price of $ 2,990,000 ) upon the closing of the Initial Public Offering. The UPO may be exercised for cash or on a cashless basis, at the holder’s option, at any time during the period commencing on the later of the first anniversary of the effective date of the registration statement relating to the Initial Public Offering and the closing of the Company’s initial Business Combination and terminating on the fifth anniversary of such effectiveness date. The Units issuable upon exercise of this UPO are identical to those offered in the Initial Public Offering, except that the exercise price of the warrants underlying the Units sold to the underwriters is $ 13.00 per share on a pre-reverse split basis. Operating Lease Right of Use Obligation The Company adopted Topic 842 on January 1, 2019. The Company elected to adopt this standard using the optional modified retrospective transition method and recognized a cumulative-effect adjustment to the consolidated balance sheet on the date of adoption. Comparative periods have not been restated. With the adoption of Topic 842, the Company’s condensed consolidated balance sheet now contains the following line items: Operating lease right-of-use assets, Current portion of operating lease liabilities and Operating lease liabilities, net of current portion. As of August 31, 2021, operating lease right-of-use assets and liabilities arising from operating leases was $ 1,562,617 and $ 1,556,815 , respectively. During the quarter ended August 31, 2021 and 2020, the Company recorded operating lease expense of $ 140,516 and $ 20,623 . The following is a schedule showing the future minimum lease payments under operating leases by fiscal years and the present value of the minimum payments as of August 31, 2021. SCHEDULE SHOWING THE FUTURE MINIMUM LEASE PAYMENTS 2022 $ 370,370 2023 $ 468,377 2024 $ 470,511 2025 $ 423,795 2026 and thereafter $ 171,602 Total Operating Lease Obligations $ 1,904,655 Less: Amount representing interest $ (347,840 ) Present Value of minimum lease payments $ 1,556,815 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) Employment Agreements, Board Compensation and Bonuses On July 29, 2020, the Company entered into a new employment agreement (the “Kaplan 2020 Agreement”) with Mr. Kaplan and 75,000 cash bonus and authorized the issuance of 250,000 shares of the Company’s common stock both related to his performance during the fiscal year ended May 31, 2020. As of August 31, 2021 the Company still owed Mr. Kaplan $ 35,000 of the 2020 bonus award. Effective March 29, 2021, the Company promoted Mr. Kaplan to be the Chairmen of the Board of Directors, and he ceased to be the Company’s Chief Executive Officer and Interim Chief Financial Officer. Upon this change, Mr. Kaplan’s new monthly salary became $ 4,000 per month and the Kaplan 2020 Agreement was terminated. On July 29, 2020, the Company entered into a new employment agreement (the “Franklin 2020 Agreement”) with Mr. Franklin and the Board of Directors approved for Mr. Franklin a $ 75,000 cash bonus and authorized the issuance of 250,000 fully vested shares of the Company’s common stock both related to his performance during the fiscal year ended May 31, 2020. As of August 31, 2021, the Company still owed Mr. Franklin $ 35,000 of the 2020 bonus award. On March 25, 2021, the Board of Directors appointed Mr. Franklin as the Company’s Chief Executive Officer, effective March 29, 2021. Mr. Franklin continues to be a member of our board of directors. In connection with Mr. Franklin’s appointment, on March 25, 2021, the Company entered into an employment agreement, dated as of March 29, 2021 by and between the Company and Mr. Franklin (the “2021 Franklin Employment Agreement”). Pursuant to the terms of the 2021 Franklin Employment Agreement, in exchange for Mr. Franklin’s services, the Company agreed to pay Mr. Franklin an annual base salary of $ 250,000 . Mr. Franklin is also eligible to receive a quarterly bonus of up to $ 15,000 in the form of a cash bonus and/or equity grant of shares of the Company’s common stock. Mr. Franklin’s eligibility for any bonus and the amount thereof will be determined solely at the discretion of the Board of Directors. On May 11, 2021, the Board appointed Nancy Hennessey to serve as the Company’s Chief Financial Officer, effective May 17, 2021. In connection with Ms. Hennessey’s appointment as the Company’s Chief Financial officer, the Company entered into an employment agreement, dated as of May 17, 2021 by and between the Company and Ms. Hennessey (the “Hennessey Employment Agreement”). Pursuant to the terms of the Hennessey Employment Agreement, in exchange for Ms. Hennessey’s services, the Company agreed to pay Ms. Hennessey an annual base salary of $ 140,000 . In addition, Ms. Hennessey is entitled to receive compensation in the form of an equity grant of $ 5,000 in the Company’s common stock for each quarter during the term of the Hennessey Employment Agreement, which runs for a period ending one year after May 17, 2021 and automatically renews for successive one year terms unless either party gives 60 days’ advance written notice of its intention not to renew the Hennessey Employment Agreement. Ms. Hennessey is also eligible to receive a quarterly bonus of up to $ 12,500 in the form of a cash bonus and/or equity grant of shares of the Company’s common stock. Pursuant to the terms of the Hennessey Employment Agreement, Ms. Hennessey will also receive (i) 5,000 shares of common stock upon filing of the 2021 Annual Report on Form 10-K, if completed before July 31, 2021, and (ii) 5,000 shares of common stock upon completion of an uplisting to a national exchange, such as The Nasdaq Stock Market or the NYSE American. Ms. Hennessey’s eligibility for any bonus and the amount thereof will be determined solely at the discretion of the Board of Directors On August 31, 2021, the Company has accrued $ 5,000 On August 20, 2021, the Board of Directors approved 82,500 833,250 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) | NOTE 9 — COMMITMENTS AND CONTINGENCIES Unit Purchase Option The Company sold to the underwriters (and/or their designees), for $ 100 , an option to purchase up to a total of 250,000 Units (which increased to 260,000 Units upon the partial exercise of the underwriters’ over-allotment option), exercisable at $ 11.50 per Unit (or an aggregate exercise price of $ 2,990,000 ) upon the closing of the Initial Public Offering. The UPO may be exercised for cash or on a cashless basis, at the holder’s option, at any time during the period commencing on the later of the first anniversary of the effective date of the registration statement relating to the Initial Public Offering and the closing of the Company’s initial Business Combination and terminating on the fifth anniversary of such effectiveness date. The Units issuable upon exercise of this UPO are identical to those offered in the Initial Public Offering, except that the exercise price of the warrants underlying the Units sold to the underwriters is $ 13.00 per share. Operating Lease Right of Use Obligation The Company adopted Topic 842 on January 1, 2019. The Company elected to adopt this standard using the optional modified retrospective transition method and recognized a cumulative-effect adjustment to the consolidated balance sheet on the date of adoption. Comparative periods have not been restated. With the adoption of Topic 842, the Company’s consolidated balance sheet now contains the following line items: Operating lease right-of-use assets, Current portion of operating lease liabilities and Operating lease liabilities, net of current portion. As all the existing leases subject to the new lease standard were previously classified as operating leases by the Company, they were similarly classified as operating leases under the new standard. The Company has determined that the identified operating leases did not contain non-lease components and require no further allocation of the total lease cost. Additionally, the agreements in place did not contain information to determine the rate implicit in the leases, so we used our incremental borrowing rate as the discount rate. Our weighted average discount rate is 10.4% 41 As of May 31, 2021, operating lease right-of-use assets and liabilities arising from operating leases was $ 1,527,286 1,527,967 As of May 31, 2020, operating lease right-of-use assets and liabilities arising from operating leases was $ 490,984 490,983 353,000 147,000 The following is a schedule showing the future minimum lease payments under operating leases by years and the present value of the minimum payments as of May 31, 2021. SCHEDULE SHOWING THE FUTURE MINIMUM LEASE PAYMENTS 2022 $ 471,063 2023 $ 450,377 2024 $ 452,511 2025 $ 405,795 2026 $ 153,601 Total Operating Lease Obligations $ 1,945,347 Less: Amount representing interest $ (418,061 ) Present Value of minimum lease payments $ 1,527,286 Employment Agreements, Board Compensation and Bonuses On July 29, 2020, the Company entered into a new employment agreement (the “Kaplan 2020 Agreement”) with Mr. Kaplan. Such employment agreement replaced the Kaplan 2018 Agreement. As a result, the Kaplan 2018 Agreement was terminated and is of no further force or effect. Pursuant to the terms of the Kaplan 2020 Agreement, the Company agreed to pay Mr. Kaplan a monthly base salary of $ 5,000 15,000 50,000 The term of the Kaplan 2020 Agreement is for an initial one-year term SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 On July 29, 2020, the Board of Directors approved for Mr. Kaplan a $ 75,000 250,000 75,000 216,625 On July 29, 2020, the Company entered into a new employment agreement (the “Franklin 2020 Agreement”) with Mr. Franklin. Such employment agreement replaced the Franklin 2018 Agreement. As a result, the Franklin 2018 Agreement was terminated and is of no further force or effect. Pursuant to the terms of the Franklin 2020 Agreement, the Company agreed to pay Mr. Franklin a monthly base salary of $ 12,500 ; provided, however, that the parties agreed that such base salary will be deferred and will accumulate until the Company has sufficient cash available to make such payments, to be reasonably determined by the Board of Directors and Mr. Franklin, at which time all accrued and unpaid base salary will be paid. In addition, Mr. Franklin will receive an equity grant of 6,250 shares of common stock per month, which shares will be fully vested upon grant. Mr. Franklin will also be eligible to receive a quarterly bonus in the form of cash or equity shares and will be entitled to participate in the Company’s employee benefit plans. In addition, if, during the term of the Franklin 2020 Agreement, the Company’s shares are approved for listing on a U.S. national securities exchange, the Company will pay Mr. Franklin a $ 50,000 cash bonus, to be paid upon such listing begin effective. On July 29, 2020, the Board of Directors approved for Mr. Franklin a $ 75,000 250,000 75,000 216,625 On July 29, 2020, the Board of Directors approved the issuance of 192,000 166,675 During the year ended May 31, 2021, the Board of Directors approved the issuance of 17,125 Litigation On August 5, 2020, a lawsuit styled Duncan Wood v. PLAYlive Nation, Inc. and Simplicity eSports and Gaming Company (Case No. 20-1043) was filed in the U.S. District Court for the District of Delaware. The complaint alleges unlawful failure to make timely and reasonable payment of wages, breach of contract, breach of the duty of good faith and fair dealing and unjust enrichment. The plaintiff seeks monetary damages for compensation alleged to be owed, treble damages, interest on all wage compensation, reasonable attorneys’ fees and other relief as the Court deems just and proper. Defendants’ responsive pleading is not yet due and has not been filed. The litigation is in its initial stages and the Company is unable to reasonably predict its potential outcome. The Company, however, believes that the lawsuit is without merit and intends to vigorously defend the claims. On SOME DATE the lawsuit was withdrawn without prejudice. A s of August 31, 2021 the Company still owed Mr. Kaplan $ 35,000 of the 2020 bonus award. The Company sold to the underwriters (and/or their designees), for $ 100 , an option to purchase up to a total of 250,000 Units (which increased to 260,000 Units upon the partial exercise of the underwriters’ over-allotment option), exercisable at $ 11.50 per Unit pre-reverse split On May 11, 2021, the Board appointed Nancy Hennessey to serve as the Company’s Chief Financial Officer, effective May 17, 2021. In connection with Ms. Hennessey’s appointment as the Company’s Chief Financial officer, the Company entered into an employment agreement, dated as of May 17, 2021 by and between the Company and Ms. Hennessey (the “Hennessey Employment Agreement”). Pursuant to the terms of the Hennessey Employment Agreement, in exchange for Ms. Hennessey’s services, the Company agreed to pay Ms. Hennessey an annual base salary of $ 140,000 . In addition, Ms. Hennessey is entitled to receive compensation in the form of an equity grant of $ 5,000 in the Company’s common stock for each quarter during the term of the Hennessey Employment Agreement, which runs for a period ending one year after May 17, 2021 and automatically renews for successive one year terms unless either party gives 60 days’ advance written notice of its intention not to renew the Hennessey Employment Agreement. Ms. Hennessey is also eligible to receive a quarterly bonus of up to $ 12,500 in the form of a cash bonus and/or equity grant of shares of the Company’s common stock. Pursuant to the terms of the Hennessey Employment Agreement, Ms. Hennessey will also receive (i) 5,000 shares of common stock upon filing of the 2021 Annual Report on Form 10-K, if completed before July 31, 2021, and (ii) 5,000 shares of common stock upon completion of an uplisting to a national exchange, such as The Nasdaq Stock Market or the NYSE American. Ms. Hennessey’s eligibility for any bonus and the amount thereof will be determined solely at the discretion of the Board of Directors At August 31, 2021, the Company has accrued $ 5,000 On August 20, 2021, the Board of Directors issued 82,500 833,250 |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Equity [Abstract] | ||
STOCKHOLDERS’ EQUITY | NOTE 9 - STOCKHOLDERS’ EQUITY Preferred Stock The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $ 0.0001 per share. As of August 31, 2021 there were no shares of preferred stock issued or outstanding. Common Stock On August 17, 2020, the Company amended its certificate of incorporation to increase the total number of authorized shares of the Company’s common stock from 20,000,000 to 36,000,000 . Holders of the shares of the Company’s common stock are entitled to one vote for each share. At August 31, 2021 and May 31, 2021, there were 1,492,595 and 1,427,124 shares of common stock issued and outstanding respectively. Stock - Based Compensation During the quarter ended August 31, 2021, the company approved stock-based compensation to its officers or directors and share based compensation for the three months ended August 31, 2021 and August 31, 2020 was approximately $ 838,250 and $ 150,095 , respectively. Warrants The Company issued warrants 100,000 100,000 20.00 100,000 A summary of the status of the Company’s outstanding stock warrants as of August 31, 2021 is as follows: SCHEDULE OF OUTSTANDING STOCK WARRANTS Number of Average Outstanding – May 31, 2020 803,001 $ 83.01 Granted during the year ended May 31, 2021 17,063 $ 20.66 Outstanding – May 31, 2021 820,064 $ 10.38 Warrants granted during the quarter ended August 31, 2021 1,257,312 $ 11.26 Sale of warrants during the quarter 100,000 $ 20.00 Warrants exercisable – August 31, 2021 2,177,376 $ 38.08 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) | NOTE 10 — STOCKHOLDERS’ EQUITY Preferred Stock The Company is authorized to issue 1,000,000 0.0001 no Common Stock The Company is authorized to issue 36,000,000 0.0001 one vote for each share. 1,427,124 988,622 2020 Transactions During the year ended May 31, 2020, the Company issued 123,000 94,000 14,000 15,000 2021 Transactions During the year ended May 31, 2021, the Company issued 429,000 shares of its common stock. Shares were issued for compensation for employees, officers and directors in the amount of 240,000 shares, 84,000 shares in connection with notes payable, 65,000 shares for the acquisition of company owned stores from prior franchisees, 37,000 shares as satisfaction to vendors for services rendered and 3,000 shares were issued for cash. Common Shares Issued subsequent May 31, 2021 From June 1, 2021 through August 27, 2021 the Company has issued 42,000 21,000 15,000 6,000 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 Private Placement Beginning in February of 2019 and closing in May of 2019, the Company sold units in connection with a private offering by the Company to raise working capital of up to $ 2,000,000 1,000,000 2.00 (i) one share of common stock, par value $0.0001 per share of the Company (the “Common Stock”) and (ii) a warrant to purchase one share of Common Stock, exercisable at a price of $4.00 per share, exercisable at any time within five years of issuance (each, a “Warrant”) as provided for in the Company’s Term Sheet for Unit Offering dated February 6, 2019 (the “Term Sheet”). The Company sold 962,500 1,925,000 Stock Based Compensation For the year ended May 31, 2020 the Company authorized the issuance of 95,000 For the year ended May 31, 2021, the Company authorized the issuance of 240,000 For the years ended May 31, 2021 and 2020, i n connection with these issuances the Company recorded share-based compensation expense of $ 1,690,000 828,000 Warrants During the year ended May 31, 2021, we issued 3,116 shares of common stock to an accredited investor upon the exercise of previously issued warrants. The warrants were exercised on a cashless or “net” basis. Accordingly, we did not receive any proceeds from such exercises. The cashless exercise of such warrants resulted in the cancellation of previously issued warrants. During the year ended May 31, 2020, there was no warrant activity. A summary of the status of the Company’s outstanding stock warrants for the years ended May 31, 2021 and 2020 is as follows: SCHEDULE OF OUTSTANDING STOCK WARRANTS Number of Average Outstanding – May 31, 2019 803,001 $ 83.01 Granted - - Outstanding – May 31, 2020 803,001 83.01 Granted – May 31, 2020 17,063 20.66 Outstanding – May 31, 2021 820,064 $ 81.71 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
May 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 11 - INCOME TAXES For the year ended May 31, 2021 and 2020, the income tax provisions for current taxes were $ 0 Deferred income taxes reflect the net tax effects of permanent and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The temporary differences that result in deferred tax assets and liabilities are the results of carry forward tax losses, amortization and impairment expense. The components of the net deferred tax assets for the year ended May 31, 2021 and 2020 are as follows: SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS Year ended Year ended Net Operating Loss $ 1,926,000 $ 770,000 Impairment of cost method investment 129,000 - Accrued Expenses 98,000 Allowance for Doubtful Accounts 10,000 Gross deferred tax asset 2,163,000 770,000 Less: Valuation allowance (1,972,000 ) (825,000 ) Net deferred tax asset $ 191,000 $ 55,000 Deferred tax liabilities: Amortization of intangible assets (98,000 ) (55,000 ) Depreciation (93,000 ) Net deferred assets/liabilities - - In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a valuation allowance, in an amount equal to gross deferred tax assets less deferred tax liabilities. For the years ended May 31, 2021 and 2020, the change in the valuation allowance was $ 1,257,000 444,000 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 The table below summarizes the reconciliation of our income tax provision computed at the federal statutory rate of 21% SCHEDULE OF RECONCILIATION OF THE STATUTORY FEDERAL INCOME TAX RATE 2021 2020 Expected provision (benefit) at statutory rate (21.0 )% (21.0 )% State taxes, net of federal tax benefit (4.4 )% (4.4 )% Permanent differences-stock based compensation 9.0 15.0 Increase in valuation allowance 16.4 % 10.4 % Total provision (benefit) for income taxes 0.0 % 0.0 % At May 31, 2021 and May 31, 2020, the Company had Federal net operating loss carry forwards of approximately $ 7,600,000 3,800,000 The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions and is subject to examination by the various taxing authorities. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Subsequent Events [Abstract] | ||
SUBSEQUENT EVENTS | NOTE 10 — SUBSEQUENT EVENTS On September 1, 2021, the Company issued an aggregate of 82,500 On August 31, 2021 pursuant to the terms of that certain Securities Purchase Agreement between the Company and Lucas Ventures, LLC, the Company issued a convertible promissory note in the principal amount of $ 200,000 with an effective date of September 2, 2021 . In addition, the Company issued 3,749 shares of its common stock to the investor as a commitment fee pursuant to the Securities Purchase Agreement. Furthermore, the Company issued a common stock purchase warrant for the purchase of 187,400 shares of the Company’s common stock. On August 31, 2021 pursuant to the terms of that certain Securities Purchase Agreement between the Company and LGH Investments, LLC, the Company issued a convertible promissory note in the principal amount of $ 200,000 effective September 2, 2021. On September 17, 2021, the Company issued a common stock purchase warrant for the purchase of 40,000 On September 28, 2021, the Company entered into a securities purchase agreement (the “Ionic SPA”) dated as of September 28, 2021, with Ionic Ventures, LLC (“Ionic”), pursuant to which the Company issued a 12% promissory note (the “Ionic Note”) with a maturity date of September 28, 2023 (the “Ionic Maturity Date”), in the principal sum of $ 1,555,555.56 . In addition, the Company issued 14,584 shares of its common stock to Ionic as a commitment fee pursuant to the Ionic SPA. Pursuant to the terms of the Ionic Note, the Company agreed to pay to $ 1,400,000 .00 (the “Ionic Principal Sum”) to Ionic and to pay interest on the principal balance at the rate of 12% per annum (provided that the first six months of interest shall be guaranteed and the remaining 18 months of interest shall be deemed earned in full if any amount is outstanding under the Ionic Note after 180 days from September 28, 2021). The Ionic Note carries an original issue discount (“OID”) of $ 155,555.56 . Accordingly, Ionic paid the purchase price of $ 1,400,000 .00 in exchange for the Ionic Note. The Company intends to use the proceeds for working capital. Ionic may convert the Ionic Note into the Company’s common stock (subject to the beneficial ownership limitations of 4.99% in the Ionic Note; provided however, that the limitation on conversion may be waived (up to 9.99%) by Ionic upon, at the election of Ionic, not less than 61 days’ prior notice to the Company) at any time at a conversion price equal to $ 11.50 per share, as the same may be adjusted as provided in the Ionic Note. The Company may prepay the Ionic Note at any time prior to maturity in accordance with the terms of the Ionic Note. The Ionic Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the Ionic Note or the Ionic SPA. Upon the occurrence of any Event of Default (as defined in the Ionic Note), which has not been cured within three calendar days, the Ionic Note shall become immediately due and payable and the Company shall pay to Ionic, in full satisfaction of its obligations hereunder, an amount equal to the principal amount then outstanding plus accrued interest multiplied by 125% . Pursuant to the terms of the Ionic SPA, the Company also issued to Ionic a three -year warrant to purchase 729,167 shares of the Company’s common stock at an exercise price equal to (i) 110% of the per share offering price of the offering made in connection with any uplisting of the Company’s common stock; or (ii) prior to the determination of the per share offering price of the offering made in connection with any uplisting of the common stock and following such time if the uplisting contemplated in clause (i) is not completed by November 1, 2021, $ 10.73 . The Company also agreed to prepare and file with the SEC a registration statement covering the resale of all shares issued or issuable pursuant to the Ionic SPA, including shares issued upon conversion of the Ionic Note or exercise of the Ionic Warrant. The Company agreed to use its commercially reasonable efforts to have the registration statement filed with the SEC within 90 days following September 28, 2021 and to have the registration statement declared effective by the SEC within 120 days following September 28, 2021. On September 28, 2021 the Company received notice that the original Paycheck Protection Plan (“PPP”) loan was forgiven in the amount of $ 40,500 On September 30, 2021, the Company paid $ 500,000 On October 1, 2021, the Company issued a common stock purchase warrant for the purchase of an additional 40,000 shares of the Company’s common stock to FirstFire as consideration for FirstFire entering into a second amendment to the March 10 FirstFire Note in order to remove the capital raising ceiling in such note. On October 7, 2021, the Company’s wholly owned subsidiary Simplicity Tracy, LLC entered into an Asset Purchase agreement company with a former franchisee to acquire the assets of the former franchisee in exchange for 4,500 The above issuances/sales were made pursuant to an exemption from registration as set forth in Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act. | NOTE 12 — SUBSEQUENT EVENTS Acquisitions Simplicity Salinas, LLC: On July 22, 2021, the Company’s wholly-owned subsidiary, Simplicity Salinas, LLC (“Simplicity Salinas”) entered into an Asset Purchase Agreement (“Simplicity Salinas APA”) with an existing franchisee (“”), to acquire the franchisee’s assets in exchange for 6,000 65,100 10.85 Debt Instruments Issued June 11 FirstFire Global 12% Promissory Note and Securities Purchase Agreement On June 11, 2021, the Company entered into a securities purchase agreement (the “FirstFire SPA”) dated as of June 10, 2021, with FirstFire Global Opportunities Fund, LLC (“FirstFire”), pursuant to which the Company issued a 12% June 10, 2023 1,266,666 11,875 the Company agreed to pay to $ 1,266,666 126,666 1,140,000 FirstFire Note. The Company intends to use the proceeds for working capital and to pay off an existing promissory note issued by the Company in favor of Maxim. FirstFire may convert the FirstFire Note into the Company’s common stock (subject to the beneficial ownership limitations of 4.99% in the FirstFire Note; provided however, that the limitation on conversion may be waived (up to 9.99%) by FirstFire upon, at the election of FirstFire, not less than 61 days’ prior notice to the Company) at any time at a conversion price equal to $ 11.50 The Company may prepay the FirstFire Note at any time prior to maturity in accordance with the terms of the FirstFire Note. The FirstFire Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the FirstFire Note or the FirstFire SPA. Upon the occurrence of any Event of Default (as defined in the FirstFire Note), which has not been cured within three calendar days, the FirstFire Note shall become immediately due and payable and the Company shall pay to FirstFire, in full satisfaction of its obligations hereunder, an amount equal to the FirstFire Principal Sum then outstanding plus accrued interest multiplied by 125% Pursuant to the terms of the FirstFire SPA, the Company also issued to FirstFire a three-year warrant (the “FirstFire Warrant”) to purchase 593,750 November 1, 2021 10.73 The Company also agreed to prepare and file with the Securities and Exchange Commission a registration statement covering the resale of all shares issued or issuable pursuant to the FirstFire SPA, including shares issued upon conversion of the FirstFire Note or exercise of the FirstFire Warrant. The Company agreed to use its commercially reasonable efforts to have the registration statement filed with the SEC within 90 days following June 10, 2021 and to have the registration statement declared effective by the SEC within 120 days following June 10, 2021. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 GS Capital Securities Purchase Agreement & Note On June 16, 2021, the Company entered into a securities purchase agreement (the “GS SPA”) dated as of June 10, 2021, with GS Capital Partners, LLC (“GS Capital”), pursuant to which the Company issued a 12% June 10, 2023 333,333 3,125 the Company agreed to pay to $ 300,000 33,333 300,000 GS may convert the GS Note into the Company’s common stock (subject to the beneficial ownership limitations of 4.99% in the GS Note; provided however, that the limitation on conversion may be waived (up to 9.99%) by GS upon, at the election of GS, not less than 61 days’ prior notice to the Company) at any time at a conversion price equal to $ 11.50 The Company may prepay the GS Note at any time prior to maturity in accordance with the terms of the GS Note. The GS Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the GS Note or the GS SPA. Upon the occurrence of any Event of Default (as defined in the GS Note), which has not been cured within three calendar days, the GS Note shall become immediately due and payable and the Company shall pay to GS, in full satisfaction of its obligations hereunder, an amount equal to the principal amount then outstanding plus accrued interest multiplied by 125% Pursuant to the terms of the GS SPA, the Company also issued to GS a three-year warrant to purchase 156,250 November 1, 2021 10.73 The Company also agreed to prepare and file with the SEC a registration statement covering the resale of all shares issued or issuable pursuant to the GS SPA, including shares issued upon conversion of the GS Note or exercise of the GS Warrant. The Company agreed to use its commercially reasonable efforts to have the registration statement filed with the SEC within 90 days following June 10, 2021, and to have the registration statement declared effective by the SEC within 120 days following June 10, 2021. Pursuant to the terms of the Series A-2 Maxim Note Amendments, on July 15, 2021 the Company was required to either pay the Maxim Series A-2 Note in its entirety or the Company would increase the Maxim Note to include an additional $ 100,000 Fourth Amendment to Series A-2 Maxim Note On August 19, 2021, the Company and Maxim entered into the fourth amendment (the “Fourth Amendment”) to the Series A-2 Maxim Note, as amended, pursuant to which the Company and Maxim agreed that all obligations under the Series A-2 Maxim Note, as amended, shall be extinguished, and the Series A-2 Maxim Note, as amended, shall be deemed repaid in its entirety, upon the satisfaction of the following obligations: (i) the Company’s payment of $ 500,000 20,000 365,000 On August 19, 2021, the Company issued to Maxim a common stock purchase warrant (the “Warrant”) for the purchase of 365,000 13.00 The Company is expected to pay the Maxim note, in its entirety by the end of August, 2021. Jefferson Street Capital Stock Purchase Agreement & 12% Convertible Promissory Jefferson Note On August 23, 2021, the Company entered into that certain securities purchase agreement (the “Jefferson SPA”), dated as of August 23, 2021, by and between the Company and Jefferson Street Capital LLC (“Jefferson”). Pursuant to the terms of the Jefferson SPA, (i) the Company agreed to issue and sell to Jefferson the Jefferson Note (as hereinafter defined); (ii) the Company agreed to issue to Jefferson the Warrant (as hereinafter defined); and (iii) the Company agreed to issue to Jefferson 3,125 300,000 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 Pursuant to the terms of the Jefferson SPA, on August 23, 2021, the Company issued a 12% August 23, 2023 333,333 333,333 300,000 333,333 Any Principal Amount or interest on the Jefferson Note that is not paid when due will bear interest at the rate of the lesser of (i) 20%, or (b) the maximum rate allowed by law. Jefferson may, at any time while the shares issuable upon conversion of the Jefferson Note are subject to an effective registration statement, or if no registration statement covering such shares is effective, at any time after 180 days from August 23, 2021, so long as there are amounts outstanding under the Jefferson Note, convert all or any portion of the then outstanding and unpaid Principal Amount and interest into shares of the Company’s common stock at a conversion price of $11.50 per share; provided, however, that upon failure to make any payment under the Jefferson Note, the conversion price will be $10.00 per share, as the same may be adjusted as provided in the Jefferson Note. The Jefferson Note has a 4.99% equity blocker; provided, however, that the 4.99% equity blocker may be waived (up to 9.99%) by Jefferson, at Jefferson’s election, on not less than 61 days’ prior notice to the Company. On August 23, 2021, Jefferson paid the purchase price of $ 300,000 The Company may prepay the Jefferson Note at any time in accordance with the terms of the Jefferson Note. While any portion of the outstanding Principal Amount and interest are due and owing, if the Company receives cash proceeds from any source or series of related or unrelated sources, including but not limited to, the issuance of equity or debt, the conversion of outstanding warrants of the Company, the issuance of securities pursuant to an equity line of credit of the Company or the sale of assets, the Company must inform Jefferson of such receipt, following which Jefferson may, in its sole discretion, require the Company to immediately apply up to 50% of the proceeds therefrom to repay all or any portion of the outstanding Principal Amount and interest then due under the Jefferson Note; provided, however, that the first $3,000,000 of equity financing received by the Company will be excepted from this requirement. The Jefferson SPA and the Jefferson Note contain customary events of default relating to, among other things, payment defaults, breach of representations and warranties, and breach of provisions of the Jefferson Note or Jefferson SPA. Jefferson Street Capital Registration Rights Agreement On August 23, 2021, the Company also entered into a registration rights agreement (the “Jefferson Registration Rights Agreement”) with Jefferson pursuant to which the Company is obligated to file a registration statement to register the resale of the shares issuable pursuant to the Jefferson SPA. Pursuant to the Jefferson Registration Rights Agreement, the Company must (i) file the registration statement within 90 calendar days from August 23, 2021, and (ii) use reasonable best efforts to cause the registration statement to be declared effective under the Securities within 120 calendar days after August 23, 2021 . The Company also agreed that it would not file any other registration statement, including those on Form S-8 or Form S-4, for other securities, for a period of 12 months from August 23, 2021, unless it has the prior written approval from Jefferson. The Jefferson Registration Rights Agreement contains customary indemnification provisions. Jefferson Street Capital Common Stock Purchase Warrant Also on August 23, 2021, pursuant to the terms of the Jefferson SPA, the Company issued to Jefferson a common stock purchase warrant (the “Jefferson Warrant”) for the purchase of 156,250 November 1, 2021 10.73 On August 31, 2021 pursuant to the terms of that certain Securities Purchase Agreement between the Company and Lucas Ventures, LLC, the Company issued a convertible promissory note in the principal amount of $ 200,000 with an effective date of September 2, 2021 . In addition, the Company issued 3,749 shares of its common stock to the investor as a commitment fee pursuant to the Securities Purchase Agreement. Furthermore, the Company issued a common stock purchase warrant for the purchase of 187,400 shares of the Company’s common stock. 500,000 On October 7, 2021, the Company’s wholly owned subsidiary Simplicity Tracy, LLC entered into an Asset Purchase agreement company with a former franchisee to acquire the assets of the former franchisee in exchange for 4,500 In addition, the Company issued 14,584 shares of its common stock to Ionic as a commitment fee pursuant to the Ionic SPA. The Company intends to use the proceeds for working capital. Ionic may convert the Ionic Note into the Company’s common stock (subject to the beneficial ownership limitations of 4.99% in the Ionic Note; three -year warrant to purchase 729,167 shares of the Company’s common stock at an exercise price equal to (i) 110% of the per share offering price of the offering made in connection with any uplisting of the Company’s common stock; or (ii) prior to the determination of the per share offering price of the offering made in connection with any uplisting of the common stock and following such time if the uplisting contemplated in clause (i) is not completed by November 1, 2021, $ 10.73 . Upon the occurrence of any Event of Default (as defined in the Ionic Note), which has not been cured within three calendar days, the Ionic Note shall become immediately due and payable and the Company shall pay to Ionic, in full satisfaction of its obligations hereunder, an amount equal to the principal amount then outstanding plus accrued interest multiplied by 125% . On September 28, 2021 the Company received notice that the original Paycheck Protection Plan (“PPP”) loan was forgiven in the amount of $ 40,500 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Accounting Policies [Abstract] | ||
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the condensed consolidated financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, as filed with the SEC on August 30, 2021. The interim results for the three months ended August 31, 2021 are not necessarily indicative of the results to be expected for the year ending May 31, 2022 or for any future interim periods. | Basis of Presentation The accompanying consolidated financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company views its operations as one reporting entity and accordingly does not report on segments. |
Emerging Growth Company | Emerging Growth Company Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) | Emerging Growth Company Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. |
Basis of Consolidation | Basis of Consolidation The condensed consolidated financial statements include the operations of the Company and its wholly owned subsidiaries, Simplicity Esports, LLC, PLAYlive Nation, Inc., and PLAYlive Nation Holdings, LLC, its 76 79 51 All significant intercompany accounts and transactions have been eliminated in consolidation. | Basis of Consolidation The consolidated financial statements include the operations of the Company and its wholly owned subsidiaries, Simplicity Esports, LLC, PLAYlive Nation, Inc., and PLAYlive Nation Holdings, LLC, its 76% 79% 51% All significant intercompany accounts and transactions have been eliminated in consolidation. |
Cash and cash equivalents | Cash and cash equivalents The Company considers short-term interest-bearing investments with initial maturities of three months or less to be cash equivalents. The Company has no | Cash and cash equivalents The Company considers short-term interest-bearing investments with initial maturities of three months or less to be cash equivalents. The Company has no SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and accounts receivable. Cash and cash equivalents in a financial institution, which at times, may exceed the Federal depository insurance coverage of $ 250,000 | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the Federal depository insurance coverage of $ 250,000 |
Financial Instruments | Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed consolidated balance sheet. | Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the consolidated balance sheet. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | Use of Estimates The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Revenue Recognition | Revenue Recognition As of January 1, 2018, the Company adopted Revenue from Contracts with Customers (Topic 606) (“ASC 606”). The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The Company adopted the standard using the modified retrospective method and the adoption did not have a material impact on the Company’s consolidated financial statements. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied. Product sales occur once control is transferred upon delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods and services. Our revenue is derived from the three sources listed below. The following describes principal activities, separated by major product or service, from which the Company generates its revenues: | Revenue Recognition As of January 1, 2018, the Company adopted Revenue from Contracts with Customers (Topic 606) (“ASC 606”). The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The Company adopted the standard using the modified retrospective method and the adoption did not have a material impact on its financial statements. The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied. Product sales occur once control is transferred upon delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods and services. The following describes principal activities, separated by major product or service, from which the Company generates its revenues. |
Company-owned Store Sales | Company-owned Store Sales The Company-owned stores principally generate revenue from retail esports gaming centers. Revenues from Company-owned stores are recognized when the products are delivered, or the service is provided. | Company-owned Stores Sales The Company-owned stores principally generate revenue from retail esports gaming centers. Revenues from Company-owned stores are recognized when the products are delivered, or the service is provided. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 |
Franchise Royalties and Fees | Franchise Royalties and Fees Franchise royalties which are based on six percent of franchise store sales after a minimum level of sales occur and are recognized as sales occur. Any royalty reductions, including waivers or those offered as part of a new store development incentive or as incentive for other behaviors are recognized at the same time as the related royalty as they are not separately distinguishable from the full royalty rate. Franchise royalties are billed on a monthly basis. The Company recognizes initial franchise license fee revenue, when the Company has performed substantially all the services required in the franchise agreement. Fees received that do not meet these criteria are recorded as deferred revenues until earned. The pre-opening services provided to franchisees do not contain separate and distinct performance obligations from the franchise right; thus, the fees collected will be amortized on a straight-line basis beginning at the store opening date through the term of the franchise agreement, which is typically 10 years. Franchise license renewal fees, which generally occur every 10 years, are billed before the renewal date. Fees received for future license renewal periods are amortized over the life of the renewal period. The Company offers various incentive programs for franchisees including royalty incentives, new store opening incentives (i.e. development incentives) and other support initiatives. Royalties and franchise fees sales are reduced to reflect any royalty incentives earned or granted under these programs that are in the form of discounts. Commissary sales are comprised of food and supplies sold to franchised stores and are recognized as revenue upon shipment or delivery of the related products to the franchisees. Payments are generally due within 30 days. Fees for information services, including software maintenance fees, marketing fees and website maintenance, graphic and promotion fees are recognized as revenue as such services are provided. | |
Esports Revenue | Esports Revenue Esports is a form of competition using video games. Most commonly, esports takes the form of organized, single player and multiplayer video game tournaments or leagues, particularly between professional players, individually or as teams. Revenues from Esports revenues are recognized when the competition is completed, and prize money is awarded. Revenues earned from team sponsorships, prize winnings, league sponsorships, and from the Company’s share of league revenues are included in esports revenue. | Esports Revenue Esports revenue is a form of competition using video games. Most commonly, esports takes the form of organized, single player and multiplayer video game competitions, particularly between professional players, individually or as teams. Revenues from Esports revenue are recognized when the competition is completed, and prize money is awarded. Revenues earned from league sponsorships from the Company’s share of league revenues including domestic esports teams competing in games such as Overwatch, Apex Legends, PUBG and more are included here. Revenue from international esports teams including Flamengo esports are included here. League revenues are earned through sponsorship fees on a per tournament, or per season basis. As of March 22, 2020, the Company commenced online esports tournaments promoted directly to its existing customer base. Revenue from these tournaments, comprised of registration fees on a per player basis, is included here. |
Deferred Revenues | Deferred Revenues Deferred revenues are classified as current or long-term based on when management estimates the revenues will be recognized. The Company receives payments from franchisees in advance of all performance obligations having been met, including but not limited to franchise locations being opened. As certain conditions agreed to in these franchise agreements are performed, revenues are recognized. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) Deferred costs include commissions paid to brokers related to the sale of specific new franchises which have not met revenue recognition criteria as of August 31, 2021. These costs are recognized in the same period as the initial franchise fee revenue is recognized | Deferred Revenues Deferred revenues are classified as current or long-term based on when management estimates the revenues will be recognized. The Company receives payments from franchisees in advance of all performance obligations having been met, including but not limited to franchise locations being opened. As certain conditions agreed to in these franchise agreements are performed, revenues are recognized. Deferred costs include commissions paid to brokers related to the sale of specific new franchises which have not met revenue recognition criteria as of May 31, 2021 and 2020. These costs are recognized in the same period as the initial franchise fee revenue is recognized. |
Accounts Receivable | Accounts Receivable The Company estimates the allowance for doubtful accounts based on an analysis of specific customers (i.e. franchisees), taking into consideration the age of past due accounts and an assessment of the customer’s ability to pay. Accounts receivable are written off against the allowance when management determines it is probable the receivable is worthless. Customer account balances with invoices dated over 90 days old are considered delinquent and considered in the allowance assessment. The Company performs credit evaluations of its customers and, generally, requires no collateral. Management has assessed accounts receivable and an allowance for doubtful accounts of approximately $ 42,479 | Accounts Receivable The Company estimates the allowance for doubtful accounts based on an analysis of specific customers (i.e. franchisees), taking into consideration the age of past due accounts and an assessment of the customer’s ability to pay. Accounts receivable are written off against the allowance when management determines it is probable the receivable is worthless. Customer account balances with invoices dated over 90 days old are considered delinquent and considered in the allowance assessment. The Company performs credit evaluations of its customers and, generally, requires no collateral. Management has assessed accounts receivable as of May 31, 2021 and 2020, and an allowance for doubtful accounts of approximately $ 38,000 52,400 |
Property and Equipment | Property and Equipment Property and equipment and leasehold improvements are recorded at its historical cost. The cost of property and equipment is depreciated over the estimated useful lives, when placed in service (ranging from 3 5 | Property and equipment Property and equipment and leasehold improvements are recorded at its historical cost. The cost of property and equipment is depreciated over the estimated useful lives, when placed in service, (ranging from 3 5 SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 |
Intangible Assets and Impairment | Intangible Assets and Impairment Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Assets not subject to amortization are tested for impairment at least annually. These costs are included in intangible assets on our condensed consolidated balance sheet and amortized on a straight-line basis when placed into service over their estimated useful lives of the costs, which is 2 10 The Company periodically reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less that the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. | Intangible Assets and impairment Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Assets not subject to amortization are tested for impairment at least annually. These costs were included in intangible assets on our balance sheet and amortized on a straight-line basis when placed into service over the estimated useful lives of the costs, which is 3 5 The Company periodically reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less that the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. For the year ended May 31, 2021, we performed a third-party evaluation of the intangible assets which indicated no impairment was required. |
Goodwill | Goodwill Goodwill is the excess of our purchase cost over the fair value of the net assets of acquired businesses. We do not amortize goodwill, but we assess our goodwill for impairment at least annually. We have assessed goodwill and qualitative considerations indicated no impairment. | Goodwill Goodwill is the excess of our purchase cost over the fair value of the net assets of acquired businesses. We do not amortize goodwill, but we assess our goodwill for impairment at least annually. Our assessment date was May 31, 2020, and we performed a third-party evaluation of the goodwill value at May 31, 2021 which quantitative and qualitative considerations indicated no impairment. |
Franchise Locations | Franchise Locations Through PLAYlive, the Company’s wholly owned subsidiary, the Company has entered into franchise agreements with third parties. As of August 31, 2021, 12 franchise locations were considered to be operational in various states including Arizona, California, Florida, Idaho, Maryland, Ohio, South Carolina, Texas and Washington. | Franchise Locations Through PLAYlive, the Company’s wholly owned subsidiary, the Company has entered into franchise agreements with third parties. As May 31, 2021, approximately 12 locations were open and operating, in various states including Arizona, California, Florida, Idaho, Maryland, Michigan, Mississippi, Montana, Oregon, South Carolina, Texas, Utah and Washington. |
Stock-based Compensation | Stock-based Compensation The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation Equity-Based Payments to Non-Employees | Stock-based compensation The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation Equity-Based Payments to Non-Employees Non employee stock-based payments The Company records stock based payments made to non-employees in accordance with ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 |
Leases | Leases In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02-Leases (Topic 842), which significantly amends the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company elected to adopt this update early as of January l, 2019 using the modified retrospective transition method and prior periods have not been restated. Upon implementation, the Company recognized an initial operating lease right-of-use asset of $ 110,003 107,678 | Leases In February of 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02-Leases (Topic 842), which significantly amends the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company adopted this update as of January l, 2019 using the modified retrospective transition method and prior periods have not been restated. Upon implementation, the Company recognized initial operating lease right-of-use assets of $ 110,003 107,678 |
Deferred Financing Costs | Deferred Financing Costs The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (SAB) Topic 5A — “Expenses of Offering”. Offering costs of $ 307,494 98,198 | |
Basic Income (Loss) Per Share | Basic Income (Loss) Per Share The Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” Net income (loss) - per share is calculated by dividing the Company’s net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings or loss per common share is calculated by dividing the Company’s net income or loss available to common stockholders by the diluted weighted average number of common shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. For this calculation potentially dilutive securities consist primarily of warrants, outstanding options and shares into which the company’s convertible notes payable are convertible. When the Company records a loss from operations, all potentially dilutive shares are anti-dilutive and are consequently excluded from the calculation of diluted net loss per common share. | Basic Income (Loss) per share The Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period. Diluted earnings or loss per common share is calculated by dividing net income or loss available to common stockholders by the diluted weighted-average number of common shares outstanding, which includes the effect of potentially dilutive securities. Potentially dilutive securities for this calculation consist primarily of warrants, outstanding options, and shares into which the convertible notes are convertible. When the Company records a loss from operations, all potentially dilutive shares are anti-dilutive and are consequently excluded from the calculation of diluted net loss per common share. |
Income Taxes | Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740, “ Income Taxes ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the consolidated financial statements recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) | Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740, “ Income Taxes ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. |
Recently Issued and Recently Adopted Accounting Pronouncements | Recently Issued and Recently Adopted Accounting Pronouncements Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Company’s future financial statements. The Company periodically reviews new accounting standards that are issued. Although some of these accounting standards may be applicable to the Company, the Company has not identified any other new standards that it believes merit further discussion, and the Company expects that none would have a significant impact on its financial statements. | Recent Accounting Pronouncements Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Company’s future financial statements. The following are a summary of recent accounting developments. The Company periodically reviews new accounting standards that are issued. Although some of these accounting standards may be applicable to the Company, the Company has not identified any other new standards that it believes merit further discussion, and the Company expects that none would have a significant impact on its financial statements. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), followed by other related ASUs that provided targeted improvements and additional practical expedient options (collectively “ASC 842”). ASC 842 requires lessees to recognize right-of-use (“ROU”) assets and lease payment liabilities on the balance sheet for leases representing the Company’s right to use the underlying assets over the lease term. Each lease that is recognized on the balance sheet is classified as either finance or operating, with such classification affecting the pattern and classification of expense recognition in the Statements of Operations Statements of Cash Flows The Company adopted ASC 842 on January 1, 2019 using the modified retrospective method. The Company elected as part of its adoption to also use the optional transition methodology whereby previously reported periods continue to be reported in accordance with historical accounting guidance for leases that were in effect for those prior periods. Policy elections and practical expedients that the Company has implemented as part of adopting ASC 842 include (a) excluding from the balance sheet leases with terms that are less than or equal to one year, (b) for all existing asset classes that contain both lease and non-lease components, combining these components together and accounting for them as a single lease component, (c) the package of practical expedients, which among other things, allows the Company to avoid reassessing contracts that commenced prior to adoption that were properly evaluated under legacy GAAP, and (d) excluding land easements, which were not accounted for under the previous leasing guidance, that existed or expired before adoption of ASC 842. The scope of ASC 842 does not apply to leases used in the exploration for minerals or use thereof, including oil, natural gas and natural gas liquids. The Company’s adoption of ASC 842 resulted in an increase in other assets, accounts payable and accrued liabilities, and other liabilities line items on the accompanying Consolidated Balance Sheets |
Going Concern, Liquidity and Management’s Plan | Going Concern, Liquidity and Management’s Plan The Company’s unaudited condensed consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the unaudited condensed consolidated financial statements, the Company has an accumulated deficit of $ 16,502,806 , a working capital deficit of $ 1,952,342 as of August 31, 2021, and a net loss attributable to common shareholders of $ 4,210,907 for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the of the date that the unaudited financial statements are issued. The Company has commenced operations and has begun to generate revenue; however, the Company’s cash position may not be sufficient to support the Company’s daily operations. Management intends to raise additional funds by way of private and/or public offerings. While the Company believes in the viability of its strategy and its ability to generate sufficient revenue and to raise additional funds, there can be no assurances to that effect. Should the Company fail to raise additional capital, it may be compelled to reduce the scope of its planned future business activities. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, to generate sufficient revenue and to raise additional funds by way of public and/or private offerings. The unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to several other countries and infections have been reported globally. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future. As a result, all of our corporate and franchised Simplicity Gaming Centers were closed effective April 1, 2020. We commenced reopening Simplicity Gaming Centers as of May 1, 2020 and have since reopened 16 company owned stores and 12 franchise locations. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but is anticipated to have a material adverse impact on our business, financial condition and results of operations. The measures taken to date impacted the Company’s business for the fiscal year ended May 31, 2021 as well as the fiscal quarter ended August 31, 2021 and will potentially continue to impact the Company’s business. Management expects that all of its business segments, across all of its geographies, will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time. | Going Concern, Liquidity and Management’s Plan The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the consolidated financial statements, the Company has an accumulated deficit as of May 31, 2021 and 2020 of $ 12,291,899 6,195,044 6,096,855 2,620,238 1,408,609 1,523,262 working capital deficit of approximately $ 1,952,342 a net loss of approximately $1,818,314 million The Company’s cash position may not be sufficient to support the Company’s daily operations. Management plans to raise additional funds by way of a private or ongoing public offering. While the Company believes in the viability of its strategy and its ability to generate sufficient revenue and to raise additional funds, there can be no assurances to that effect. Should the Company fail to raise additional capital, it may be compelled to reduce the scope of its planned future business activities. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, to generate sufficient revenue and to raise additional funds by way of public and/or private offerings. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to several other countries and infections have been reported globally. SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 2021 Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future. As a result, all of our corporate and franchised Simplicity Gaming Centers had been closed effective April 1, 2020. Although our franchise agreements with franchisees of Simplicity Gaming Centers require a minimum monthly royalty payment to us from the franchisees regardless of whether the franchised Simplicity Gaming Centers are operating, there is a potential risk that franchisees of Simplicity Gaming Centers will default in their obligations to pay their minimum monthly royalty payment to us The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but is anticipated to have a material adverse impact on our business, financial condition and results of operations. The measures taken to date impacted the Company’s business for the fiscal year and potentially beyond. Management expects that all of its business segments, across all of its geographies, will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time. |
Correction of Previously Issued Financial Statements | Correction of Previously Issued Financial Statements The accompanying condensed consolidated statement 27,134 The Company assessed the materiality of the misstatement quantitatively and qualitatively and has concluded that the correction of the classification error is immaterial to the consolidated financials taken as a whole. As a result of the correction, Cost of Goods Sold increased from $ 40,511 67,645 160,090 132,956 | |
Foreign Currencies | Foreign Currencies Revenue and expenses are translated at average rates of exchange prevailing during the period. | |
Franchise Revenues | Franchise Revenues Franchise revenues consist of royalties, fees and initial license fee income. Franchise royalties are based on six percent of franchise store sales after a minimum level of sales occur and are recognized as sales occur. Any royalty reductions, including waivers or those offered as part of a new store development incentive or as incentive for other behaviors, are recognized at the same time as the related royalty, as they are not separately distinguishable from the full royalty rate. Franchise royalties are billed on a monthly basis. The Company recognizes initial franchise license fee revenue when the Company has performed substantially all the services required in the franchise agreement. Fees received that do not meet these criteria are recorded as deferred revenues until earned. The pre-opening services provided to franchisees do not contain separate and distinct performance obligations from the franchise right; thus, the fees collected will be amortized on a straight-line basis beginning at the store opening date through the term of the franchise agreement, which is typically 10 The Company offers various incentive programs for franchisees including royalty incentives, new store opening incentives (i.e. development incentives) and other support initiatives. Royalties and franchise fees sales are reduced to reflect any royalty incentives earned or granted under these programs that are in the form of discounts. Commissary sales are comprised of gaming equipment and supplies sold to franchised stores and are recognized as revenue upon shipment or delivery of the related products to the franchisees. Payments are generally due within 30 days. Fees for information services, including software maintenance fees, marketing fees and website maintenance, graphic and promotion fees are recognized as revenue as such services are provided. | |
Non employee stock-based payments | Non employee stock-based payments The Company records stock based payments made to non-employees in accordance with ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, SIMPLICITY ESPORTS AND GAMING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2021 (UNAUDITED) |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
SCHEDULE OF PROPERTY AND EQUIPMENT | The following is a summary of property, plant, and equipment—at cost, less accumulated depreciation: SCHEDULE OF PROPERTY AND EQUIPMENT August 31, 2021 May 31, 2021 Leasehold improvements $ 110,849 $ 110,849 Property and equipment 830,141 755,741 Total cost 940,990 866,590 Less accumulated depreciation (374,020 ) (292,282 ) Net property plant and equipment $ 566,970 $ 574,308 | The following is a summary of property, plant, and equipment—at cost, less accumulated depreciation: SCHEDULE OF PROPERTY AND EQUIPMENT May 31, May 31, 2021 2020 Leasehold improvements 110,849 52,189 Property and equipment 755,741 243,314 Total cost 866,590 295,503 Less accumulated depreciation (292,282 ) (62,771 ) Net, property plant and equipment $ 574,308 $ 232,733 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
SCHEDULE OF INTANGIBLE ASSETS | The following table sets forth the intangible assets, including accumulated amortization as of August 31, 2021: SCHEDULE OF INTANGIBLE ASSETS Useful Life Cost Amortization Value August 31, 2021 Remaining Accumulated Net Carrying Useful Life Cost Amortization Value Non-Competes 4 $ 1,023,118 $ 548,642 $ 474,476 Trademarks Indefinite 866,000 - 866,000 Customer database 2 35,000 20,417 14,583 Restrictive covenant 2 115,000 67,083 47,917 Customer contracts 10 546,000 391,270 154,730 Internet domain 2 3,000 2,667 333 $ 2,588,118 $ 944,537 $ 1,558,039 The following tables set forth the intangible assets, including accumulated amortization as of May 31, 2021: Useful Life Cost Amortization Value May 31, 2021 Remaining Accumulated Net Carrying Useful Life Cost Amortization Value Non-Competes 4.50 $ 1,023,118 $ 498,799 $ 524,319 Trademarks Indefinite 866,000 - 866,000 Customer Contracts 10 546,000 301,675 244,325 Internet domain 2.50 3,000 2,417 583 $ 2,438,118 $ 802,891 $ 1,635,227 | The following tables set forth the intangible assets, including accumulated amortization at May 31, 2021 and 2020: SCHEDULE OF INTANGIBLE ASSETS May 31, 2021 Remaining Accumulated Net Carrying Useful Life Cost Amortization Value Non-Competes 4.50 $ 1,023,118 $ 498,799 $ 524,319 Trademarks Indefinite 866,000 - 866,000 Customer Contracts 10 546,000 301,675 244,325 Internet domain 2.50 3,000 2,417 583 $ 2,438,118 $ 802,891 $ 1,635,227 May 31, 2020 Remaining Accumulated Net Carrying Useful Life Cost Amortization Value Non-Competes 4.50 $ 1,023,118 $ 289,884 $ 733,234 Trademarks Indefinite 866,000 - 866,000 Customer Contracts 10 546,000 5,443 540,557 Internet domain 2.50 3,000 1,417 1,583 $ 2,438,118 $ 296,744 $ 2,141,374 |
SCHEDULE OF FUTURE AMORTIZATION OF INTANGIBLE ASSETS | The following table sets forth the future amortization of the Company’s intangible assets as of August 31, 2021 for the fiscal years ending May 31: SCHEDULE OF FUTURE AMORTIZATION OF INTANGIBLE ASSETS 2022 2023 2024 2025 2026 Thereafter Total Non-Competes $ 153,468 $ 204,624 $ 116,384 $ - $ - $ - $ 474,476 Customer contracts 12,158 16,211 16,211 16,211 16,211 77,728 154,730 Restrictive covenant 43,125 4,792 - - - 47,917 Customer database 13,125 1,458 - - - 14,583 Internet domain 333 - - - - - 333 Total $ 222,209 $ 227,085 $ 132,595 $ 16,211 $ 16,211 $ 77,728 $ 692,039 | The following table sets forth the future amortization of the Company’s intangible assets at May 31, 2021: SCHEDULE OF FUTURE AMORTIZATION OF INTANGIBLE ASSETS 2022 2023 2024 2025 2026 Thereafter Total Non-Competes $ 204,624 $ 204,624 $ 119,363 $ - $ - $ - $ 528,611 Customer contracts 89,647 20,897 14,647 14,647 14,647 89,840 244,325 Internet domain 583 - - - - - 583 Total $ 260,224 $ 259,807 $ 259,224 $ 173,962 $ 54,600 $ 267,557 $ 1,275,374 |
SCHEDULE OF GOODWILL | The Company’s goodwill carrying amounts relate to the acquisitions of Simplicity Esports LLC and PLAYlive Nation Inc. The composition of the goodwill balance, is as follows: SCHEDULE OF GOODWILL Fiscal Year Fiscal Year Simplicity Esports LLC $ 4,456,250 $ 4,456,250 PLAYlive Nation Inc. 698,891 698,891 Ft. Bliss 25,000 25,000 Total Goodwill $ 5,180,141 $ 5,180,141 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
May 31, 2021 | |
The Simplicity Esports L L C [Member] | |
Business Acquisition [Line Items] | |
SCHEDULE OF AGGREGATE PURCHASE PRICE | The aggregate purchase price consisted of the following: SCHEDULE OF AGGREGATE PURCHASE PRICE Restricted stock consideration 6,090,000 Total $ 6,090,000 |
SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED | The following table summarizes the estimated fair value of The Simplicity Esports, LLC assets acquired, and liabilities assumed at the date of acquisition: SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED Cash 76,000 Internet Domain 3,000 Trade names and trademarks 588,000 Non-Competes 1,023,118 Accounts payable and accrued liabilities (56,000 ) Goodwill 4,455,882 Total $ 6,090,000 |
P L A Y Live Nation Inc [Member] | |
Business Acquisition [Line Items] | |
SCHEDULE OF AGGREGATE PURCHASE PRICE | The aggregate purchase price consisted of the following: SCHEDULE OF AGGREGATE PURCHASE PRICE Restricted stock consideration 1,440,000 Total $ 1,440,000 |
SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED | The following table summarizes the estimated fair value of the PLAYlive assets acquired and liabilities assumed at the date of acquisition: SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED Cash 26,000 Property, plant and equipment 10,000 Net deferred revenue (115,000 ) Customer relationships - Accounts payable and accrued liabilities (4,000 ) Goodwill 699,000 Trademarks 278,000 Customer contracts 546,000 Total $ 1,440,000 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Short-term Debt [Line Items] | ||
SCHEDULE OF OUTSTANDING DEBT INSTRUMENT | The table below presents outstanding debt instruments as of August 31, and May 31, 2021 SCHEDULE OF OUTSTANDING DEBT INSTRUMENT AUGUST 31, 2021 MAY 31, 2021 Convertible Promissory Notes $ 3,952,424 $ 3,157,970 Related Debt Discount (2,394,343 ) (947,873 ) Total $ 1,558,081 $ 2,211,097 Current portion of Convertible Promissory Notes, net $ 1,323,051 $ 2,211,097 Non current portion of Convertible Promissory Notes, net 235,030 - | The table below presents outstanding debt instruments as of May 31: SCHEDULE OF OUTSTANDING DEBT INSTRUMENT 2021 2020 Convertible Promissory Notes 3,157,970 152,500 Less: Related Discount (946,873 ) (25,180 ) Related Party Note - 64,728 Convertible Note Payable - 1,000,000 Total $ 2,211,097 $ 1,192,048 |
SCHEDULE OF PREPAYMENT OF DEBT NOTE | The Company may prepay the Harbor Gates Note according to the following schedule: SCHEDULE OF PREPAYMENT OF DEBT NOTE Days Since Payment Amount Under 30 115 31-60 120 61-90 125 91-180 135 | |
Self Amortization Promissory Note [Member] | ||
Short-term Debt [Line Items] | ||
SCHEDULE OF AMORTIZATION PAYMENTS | The Company is required to make amortization payments to the Holder according to the following schedule: SCHEDULE OF AMORTIZATION PAYMENTS Payment Date Payment Amount 10/16/2020 $ 66,125 11/16/2020 $ 66,125 12/16/2020 $ 66,125 01/18/2021 $ 66,125 02/18/2021 $ 66,125 03/18/2021 $ 66,125 04/16/2021 $ 66,125 05/18/2021 $ 66,125 06/18/2021 $ 65,921 Total: $ 594,921 | |
August 7, 2020 Self Amortization Promissory Note [Member] | ||
Short-term Debt [Line Items] | ||
SCHEDULE OF AMORTIZATION PAYMENTS | The Company is required to make amortization payments to the Holder according to the following schedule: SCHEDULE OF AMORTIZATION PAYMENTS Payment Date Payment Amount 12/07/2020 $ 40,075.75 01/07/2021 $ 40,075.75 02/08/2021 $ 40,075.75 03/08/2021 $ 40,075.75 04/07/2021 $ 40,075.75 05/07/2021 $ 40,075.75 06/07/2021 $ 40,075.75 07/07/2021 $ 40,075.75 08/07/2021 $ 39,952.34 Total: $ 360,558.34 | |
November 23, 2020 Self-Amortization Promissory Note [Member] | ||
Short-term Debt [Line Items] | ||
SCHEDULE OF AMORTIZATION PAYMENTS | The Company is required to make amortization payments to the Holder according to the following schedule: SCHEDULE OF AMORTIZATION PAYMENTS Payment Date Payment Amount 2/23/2021 $ 84,000 3/23/2021 $ 84,000 4/23/2021 $ 84,000 5/21/2021 $ 84,000 6/23/2021 $ 84,000 7/23/2021 $ 84,000 8/23/2021 $ 84,000 9/23/2021 $ 84,000 10/22/2021 $ 84,000 11/23/2021 $ 84,000 Total: $ 840,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
SCHEDULE SHOWING THE FUTURE MINIMUM LEASE PAYMENTS | The following is a schedule showing the future minimum lease payments under operating leases by fiscal years and the present value of the minimum payments as of August 31, 2021. SCHEDULE SHOWING THE FUTURE MINIMUM LEASE PAYMENTS 2022 $ 370,370 2023 $ 468,377 2024 $ 470,511 2025 $ 423,795 2026 and thereafter $ 171,602 Total Operating Lease Obligations $ 1,904,655 Less: Amount representing interest $ (347,840 ) Present Value of minimum lease payments $ 1,556,815 | The following is a schedule showing the future minimum lease payments under operating leases by years and the present value of the minimum payments as of May 31, 2021. SCHEDULE SHOWING THE FUTURE MINIMUM LEASE PAYMENTS 2022 $ 471,063 2023 $ 450,377 2024 $ 452,511 2025 $ 405,795 2026 $ 153,601 Total Operating Lease Obligations $ 1,945,347 Less: Amount representing interest $ (418,061 ) Present Value of minimum lease payments $ 1,527,286 |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2021 | May 31, 2021 | |
Equity [Abstract] | ||
SCHEDULE OF OUTSTANDING STOCK WARRANTS | A summary of the status of the Company’s outstanding stock warrants as of August 31, 2021 is as follows: SCHEDULE OF OUTSTANDING STOCK WARRANTS Number of Average Outstanding – May 31, 2020 803,001 $ 83.01 Granted during the year ended May 31, 2021 17,063 $ 20.66 Outstanding – May 31, 2021 820,064 $ 10.38 Warrants granted during the quarter ended August 31, 2021 1,257,312 $ 11.26 Sale of warrants during the quarter 100,000 $ 20.00 Warrants exercisable – August 31, 2021 2,177,376 $ 38.08 | A summary of the status of the Company’s outstanding stock warrants for the years ended May 31, 2021 and 2020 is as follows: SCHEDULE OF OUTSTANDING STOCK WARRANTS Number of Average Outstanding – May 31, 2019 803,001 $ 83.01 Granted - - Outstanding – May 31, 2020 803,001 83.01 Granted – May 31, 2020 17,063 20.66 Outstanding – May 31, 2021 820,064 $ 81.71 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
May 31, 2021 | |
Income Tax Disclosure [Abstract] | |
SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS | The components of the net deferred tax assets for the year ended May 31, 2021 and 2020 are as follows: SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS Year ended Year ended Net Operating Loss $ 1,926,000 $ 770,000 Impairment of cost method investment 129,000 - Accrued Expenses 98,000 Allowance for Doubtful Accounts 10,000 Gross deferred tax asset 2,163,000 770,000 Less: Valuation allowance (1,972,000 ) (825,000 ) Net deferred tax asset $ 191,000 $ 55,000 Deferred tax liabilities: Amortization of intangible assets (98,000 ) (55,000 ) Depreciation (93,000 ) Net deferred assets/liabilities - - |
SCHEDULE OF RECONCILIATION OF THE STATUTORY FEDERAL INCOME TAX RATE | The table below summarizes the reconciliation of our income tax provision computed at the federal statutory rate of 21% SCHEDULE OF RECONCILIATION OF THE STATUTORY FEDERAL INCOME TAX RATE 2021 2020 Expected provision (benefit) at statutory rate (21.0 )% (21.0 )% State taxes, net of federal tax benefit (4.4 )% (4.4 )% Permanent differences-stock based compensation 9.0 15.0 Increase in valuation allowance 16.4 % 10.4 % Total provision (benefit) for income taxes 0.0 % 0.0 % |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) | Aug. 20, 2021shares | Nov. 20, 2018$ / sharesshares | Nov. 20, 2018USD ($)$ / shares | Nov. 09, 2018USD ($)$ / sharesshares | May 31, 2020shares | Aug. 31, 2021storesfranchise | Aug. 21, 2018USD ($)$ / shares | Aug. 22, 2017$ / shares |
Companies owned | stores | 17 | |||||||
Franchise locations | franchise | 12 | |||||||
Deposit in trust account | $ | $ 303,610 | |||||||
Price per unit under trust account | $ / shares | $ 0.058 | |||||||
Number of shares issued | 82,500 | 123,000 | ||||||
Number of shares issued upon conversion of convertible securities | 520,000 | |||||||
Smaaash Entertainment Private Limited [Member] | ||||||||
Number of shares issued | 2,000,000 | |||||||
IPO [Member] | ||||||||
Sale of stock, price per unit | $ / shares | $ 80 | |||||||
Number of common stock shares and warrants outstanding | 5,119,390 | |||||||
Number of common stock shares eligible for outstanding warrants | 5,461,500 | |||||||
IPO [Member] | I A M Capital Partners L L C [Member] | ||||||||
Number of shares redeemed | 4,448,260 | |||||||
Sale of stock, price per unit | $ / shares | $ 10.2187363 | |||||||
Number of shares redeemed, value | $ | $ 45,455,596 | |||||||
Chardan [Member] | Restricted Stock [Member] | ||||||||
Number of shares issued restricted shares | 208,000 | |||||||
Share price | $ / shares | $ 10.21 | $ 10.21 | ||||||
Chardan [Member] | Restricted Stock [Member] | General and Administrative Expense [Member] | ||||||||
Number of shares issued restricted shares, value | $ | $ 2,125,000 | |||||||
Chardan Capital Markets [Member] | ||||||||
Number of shares issued upon conversion of convertible securities | 208,000 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Aug. 31, 2021 | Aug. 30, 2021 | Aug. 31, 2020 | May 31, 2021 | May 31, 2020 | Jan. 01, 2019 | |
Property, Plant and Equipment [Line Items] | ||||||
Cash equivalents | $ 0 | $ 0 | ||||
Federal depository insurance coverage | 250,000 | 250,000 | ||||
Allowance for doubtful accounts | 42,479 | 38,000 | $ 52,400 | |||
Operating lease right-of-use asset | 1,562,617 | 1,533,010 | 490,984 | |||
Operating lease liability | 311,116 | 307,013 | 151,867 | |||
Offering costs | 307,494 | 98,198 | ||||
Accumulated deficit | 16,502,806 | 12,291,899 | 6,195,044 | |||
Net loss attributable to common shareholders | 6,096,855 | 2,620,238 | ||||
Net cash used in operating activities | 943,694 | $ 233,412 | $ 1,391,938 | 1,523,262 | ||
Working capital deficit | $ 1,952,342 | |||||
Companies owned and franchise reopened | As a result, all of our corporate and franchised Simplicity Gaming Centers were closed effective April 1, 2020. We commenced reopening Simplicity Gaming Centers as of May 1, 2020 and have since reopened 16 company owned stores and 12 franchise locations. | As a result, all of our corporate and franchised Simplicity Gaming Centers had been closed effective April 1, 2020. Although our franchise agreements with franchisees of Simplicity Gaming Centers require a minimum monthly royalty payment to us from the franchisees regardless of whether the franchised Simplicity Gaming Centers are operating, there is a potential risk that franchisees of Simplicity Gaming Centers will default in their obligations to pay their minimum monthly royalty payment to us | ||||
Depreciation expense | $ 81,737 | 27,135 | $ 229,513 | 57,473 | ||
Cost of goods sold | 607,122 | 67,645 | 1,014,310 | 591,541 | ||
Gross profit | 297,718 | 132,956 | 537,613 | 269,869 | ||
Net Income (Loss) Attributable to Parent | $ 4,210,907 | $ 4,210,907 | 655,214 | $ 6,096,855 | $ 2,620,238 | |
Franchise [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Finite lived intangible asset, useful life | 10 years | |||||
Revision of Prior Period, Adjustment [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Depreciation expense | 27,134 | |||||
Cost of goods sold | 40,511 | |||||
Gross profit | $ 160,090 | |||||
Accounting Standards Update 2016-02 [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Operating lease right-of-use asset | $ 110,003 | |||||
Operating lease liability | $ 107,678 | |||||
Minimum [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property, plant and equipment, useful life | 3 years | 3 years | ||||
Finite lived intangible asset, useful life | 2 years | 3 years | ||||
Maximum [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property, plant and equipment, useful life | 5 years | 5 years | ||||
Finite lived intangible asset, useful life | 10 years | 5 years | ||||
Simplicity One Brasil Ltd [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Equity method investment, ownership percentage | 76.00% | 76.00% | ||||
Simplicity Happy Valley, LLC and Simplicity Redmond, LLC [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Equity method investment, ownership percentage | 79.00% | 79.00% | ||||
Simplicity El Paso [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Equity method investment, ownership percentage | 51.00% | |||||
Simplicity ElPaso LLC [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Equity method investment, ownership percentage | 51.00% |
INITIAL PUBLIC OFFERING AND P_2
INITIAL PUBLIC OFFERING AND PRIVATE PLACEMENT (Details Narrative) | Nov. 20, 2018USD ($)shares | Sep. 13, 2017USD ($)shares | Aug. 22, 2017USD ($)$ / sharesshares | Aug. 31, 2021USD ($)shares | Aug. 31, 2020USD ($) | May 31, 2021USD ($)$ / sharesshares | May 31, 2020USD ($) |
Offering costs | $ 307,494 | $ 98,198 | |||||
Amount of estimated fair value | $ 743,600 | ||||||
Fair value, per unit | $ / shares | $ 2.86 | ||||||
Proceeds from sale of private units | $ 25,000 | $ 500,000 | $ 87,700 | ||||
Measurement Input, Price Volatility [Member] | |||||||
Fair value measurement input | 0.35 | ||||||
Measurement Input, Risk Free Interest Rate [Member] | |||||||
Fair value measurement input | 0.0173 | ||||||
Measurement Input, Expected Term [Member] | |||||||
Represent equity maturity term | 5 years | ||||||
Maxim Group LLC [Member] | Settlement Agreement [Member] | |||||||
Cash payment | $ 20,000 | ||||||
IPO [Member] | |||||||
Number of shares purchased | shares | 625,000 | 250,000 | 250,000 | ||||
Sale of stock, price per unit | $ / shares | $ 80 | ||||||
Proceeds from sale of units, net of underwriting discounts paid | $ 50,000,000 | ||||||
Offering costs | 3,700,000 | ||||||
Underwriter fees | $ 3,200,000 | $ 1,000,000 | |||||
Issuance of shares to underwriter, shares | shares | 50,000 | ||||||
Deferred underwriting fees | $ 1,820,000 | ||||||
Securities included in one unit, description | Each Unit consisted of one share of the Company’s common stock, one right to receive one-tenth of one share of the Company’s common stock upon consummation of the Company’s initial Business Combination (“Right”), and one redeemable warrant (“Warrant”) | ||||||
Description of warrants rights | Each Warrant entitles the holder to purchase | ||||||
Exercise price of warrants per share | $ / shares | $ 0.01 | $ 92 | |||||
Warrants and Rights Outstanding, Term | 5 years | ||||||
Sale price per share | $ / shares | $ 21 | ||||||
Exchange of rights, description | Each holder of a Right received one-tenth (1/10) of one share of common stock upon consummation of the Business Combination. No fractional shares were issued upon exchange of the Rights. | ||||||
Sale of stock, consideration received | $ 100 | $ 100 | |||||
Number of units issued under purchase option | shares | 31,250 | ||||||
Demand registration rights term | five and seven years | ||||||
IPO [Member] | Maxim Group LLC [Member] | |||||||
Number of shares purchased | shares | 6,500 | ||||||
IPO [Member] | Maxim Group LLC [Member] | Pre Reverse Split [Member] | |||||||
Number of shares purchased | shares | 6,500 | ||||||
IPO [Member] | Underwriters [Member] | |||||||
Number of shares purchased | shares | 25,000 | ||||||
Underwriter fees | $ 110,000 | ||||||
Deferred underwriting fees | 70,000 | ||||||
Number of shares agreed to be purchased under commitment | shares | 93,750 | ||||||
Proceeds from sale of equity | $ 2,000,000 | ||||||
Over-Allotment Option [Member] | Maxim Group LLC [Member] | |||||||
Number of shares purchased | shares | 250 | ||||||
Over-Allotment Option [Member] | Underwriters [Member] | |||||||
Number of shares purchased | shares | 260,000 | 260,000 | |||||
Sale of stock, consideration received | $ 2,990,000 | $ 2,990,000 | |||||
Number of units issued under purchase option | shares | 32,500 | ||||||
Private Placement [Member] | |||||||
Number of shares purchased | shares | 875 | 31,812 | |||||
Sale of stock, price per unit | $ / shares | $ 80 | ||||||
Proceeds from sale of equity | $ 70,000 | ||||||
Proceeds from sale of private units | $ 2,545,000 |
SCHEDULE OF PROPERTY AND EQUIPM
SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($) | Aug. 31, 2021 | May 31, 2021 | May 31, 2020 |
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 940,990 | $ 866,590 | $ 295,503 |
Less accumulated depreciation | (374,020) | (292,282) | (62,771) |
Net property plant and equipment | 566,970 | 574,308 | 232,733 |
Leasehold Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | 110,849 | 110,849 | 52,189 |
Property, Plant and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 830,141 | $ 755,741 | $ 243,314 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Aug. 31, 2021 | Aug. 31, 2020 | May 31, 2021 | May 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 229,511 | $ 57,473 | ||
Depreciation | $ 81,737 | $ 27,135 | $ 229,513 | $ 57,473 |
SCHEDULE OF INTANGIBLE ASSETS (
SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Aug. 31, 2021 | May 31, 2021 | May 31, 2020 | Aug. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Finite lived intangible assets, Cost | $ 2,438,118 | $ 2,438,118 | $ 2,588,118 | |
Accumulated Amortization | 802,891 | (296,744) | 944,537 | |
Intangible assets, Net Carrying Value | $ 1,558,039 | 1,635,227 | 2,141,374 | 1,558,039 |
Accumulated Amortization | $ (802,891) | $ 296,744 | $ (944,537) | |
Noncompete Agreements [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets, useful life | 4 years | 4 years 6 months | 4 years 6 months | |
Finite lived intangible assets, Cost | $ 1,023,118 | $ 1,023,118 | $ 1,023,118 | |
Accumulated Amortization | 548,642 | 498,799 | (289,884) | |
Intangible assets, Net Carrying Value | 474,476 | 524,319 | 733,234 | |
Accumulated Amortization | (548,642) | (498,799) | 289,884 | |
Trademarks [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite lived intangible assets, Cost | 866,000 | 866,000 | 866,000 | |
Accumulated Amortization | ||||
Intangible assets, Net Carrying Value | $ 866,000 | $ 866,000 | $ 866,000 | |
Intangible assets, useful life, description | Indefinite | Indefinite | Indefinite | |
Accumulated Amortization | ||||
Customer Contracts [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets, useful life | 10 years | 10 years | 10 years | |
Finite lived intangible assets, Cost | $ 546,000 | $ 546,000 | $ 546,000 | |
Accumulated Amortization | 391,270 | 301,675 | (5,443) | |
Intangible assets, Net Carrying Value | 154,730 | 244,325 | 540,557 | |
Accumulated Amortization | $ (391,270) | $ (301,675) | $ 5,443 | |
Internet Domain Names [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets, useful life | 2 years | 2 years 6 months | 2 years 6 months | |
Finite lived intangible assets, Cost | $ 3,000 | $ 3,000 | $ 3,000 | |
Accumulated Amortization | 2,667 | 2,417 | (1,417) | |
Intangible assets, Net Carrying Value | 333 | 583 | 1,583 | |
Accumulated Amortization | $ (2,667) | $ (2,417) | $ 1,417 | |
Customer Database [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets, useful life | 2 years | |||
Finite lived intangible assets, Cost | $ 35,000 | |||
Accumulated Amortization | 20,417 | |||
Intangible assets, Net Carrying Value | 14,583 | |||
Accumulated Amortization | $ (20,417) | |||
Restrictive Covenant [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets, useful life | 2 years | |||
Finite lived intangible assets, Cost | $ 115,000 | |||
Accumulated Amortization | 67,083 | |||
Intangible assets, Net Carrying Value | 47,917 | |||
Accumulated Amortization | $ (67,083) |
SCHEDULE OF FUTURE AMORTIZATION
SCHEDULE OF FUTURE AMORTIZATION OF INTANGIBLE ASSETS (Details) - USD ($) | Aug. 31, 2021 | May 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
2023 | $ 227,085 | $ 260,224 |
2024 | 132,595 | 259,807 |
2025 | 16,211 | 259,224 |
2026 | 16,211 | 173,962 |
2026 | 54,600 | |
Thereafter | 267,557 | |
Total | 692,039 | 1,275,374 |
2022 | 222,209 | |
Thereafter | 77,728 | |
Total | 692,039 | 1,275,374 |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
2023 | 204,624 | 204,624 |
2024 | 116,384 | 204,624 |
2025 | 119,363 | |
2026 | ||
2026 | ||
Thereafter | ||
Total | 474,476 | 528,611 |
2022 | 153,468 | |
Thereafter | ||
Total | 474,476 | 528,611 |
Customer Contracts [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
2023 | 16,211 | 89,647 |
2024 | 16,211 | 20,897 |
2025 | 16,211 | 14,647 |
2026 | 16,211 | 14,647 |
2026 | 14,647 | |
Thereafter | 89,840 | |
Total | 154,730 | 244,325 |
2022 | 12,158 | |
Thereafter | 77,728 | |
Total | 154,730 | 244,325 |
Internet Domain Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
2023 | 583 | |
2024 | ||
2025 | ||
2026 | ||
2026 | ||
Thereafter | ||
Total | 333 | 583 |
2022 | 333 | |
Thereafter | ||
Total | 333 | $ 583 |
Restrictive Covenant [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
2023 | 4,792 | |
2025 | ||
2026 | ||
Total | 47,917 | |
2022 | 43,125 | |
Thereafter | ||
Total | 47,917 | |
Customer Database [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
2023 | 1,458 | |
2025 | ||
2026 | ||
Total | 14,583 | |
2022 | 13,125 | |
Thereafter | ||
Total | $ 14,583 |
SCHEDULE OF GOODWILL (Details)
SCHEDULE OF GOODWILL (Details) - USD ($) | Aug. 31, 2021 | May 31, 2021 | May 31, 2020 |
Restructuring Cost and Reserve [Line Items] | |||
Goodwill | $ 5,180,141 | $ 5,180,141 | $ 5,155,141 |
The Simplicity Esports L L C [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Goodwill | 4,456,250 | 4,456,250 | |
P L A Y Live Nation Inc [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Goodwill | 698,891 | 698,891 | |
Ft Bliss [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Goodwill | $ 25,000 | $ 25,000 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Aug. 31, 2021 | Aug. 31, 2020 | May 31, 2021 | May 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 77,188 | $ 66,614 | $ 295,709 | $ 211,067 |
SCHEDULE OF AGGREGATE PURCHASE
SCHEDULE OF AGGREGATE PURCHASE PRICE (Details) | 12 Months Ended |
May 31, 2021USD ($) | |
The Simplicity Esports L L C [Member] | |
Business Acquisition [Line Items] | |
Total | $ 6,090,000 |
The Simplicity Esports L L C [Member] | Restricted Stock [Member] | |
Business Acquisition [Line Items] | |
Total | 6,090,000 |
P L A Y Live Nation Inc [Member] | |
Business Acquisition [Line Items] | |
Total | 1,440,000 |
P L A Y Live Nation Inc [Member] | Restricted Stock [Member] | |
Business Acquisition [Line Items] | |
Total | $ 1,440,000 |
SCHEDULE OF FAIR VALUE OF ASSET
SCHEDULE OF FAIR VALUE OF ASSETS ACQUIRED (Details) | May 31, 2021USD ($) |
The Simplicity Esports L L C [Member] | |
Business Acquisition [Line Items] | |
Cash | $ 76,000 |
Accounts payable and accrued liabilities | (56,000) |
Goodwill | 4,455,882 |
Total | 6,090,000 |
The Simplicity Esports L L C [Member] | Internet Domain Names [Member] | |
Business Acquisition [Line Items] | |
Finite lived intangible assets | 3,000 |
The Simplicity Esports L L C [Member] | Trademarks and Trade Names [Member] | |
Business Acquisition [Line Items] | |
Finite lived intangible assets | 588,000 |
The Simplicity Esports L L C [Member] | Noncompete Agreements [Member] | |
Business Acquisition [Line Items] | |
Finite lived intangible assets | 1,023,118 |
P L A Y Live Nation Inc [Member] | |
Business Acquisition [Line Items] | |
Cash | 26,000 |
Accounts payable and accrued liabilities | (4,000) |
Goodwill | 699,000 |
Total | 1,440,000 |
Property, plant and equipment | 10,000 |
Net deferred revenue | (115,000) |
Customer relationships | |
P L A Y Live Nation Inc [Member] | Trademarks [Member] | |
Business Acquisition [Line Items] | |
Finite lived intangible assets | 278,000 |
P L A Y Live Nation Inc [Member] | Customer Contracts [Member] | |
Business Acquisition [Line Items] | |
Finite lived intangible assets | $ 546,000 |
ACQUISITIONS (Details Narrative
ACQUISITIONS (Details Narrative) - USD ($) | Jul. 26, 2021 | Jul. 29, 2019 | Jan. 07, 2019 | Jan. 04, 2019 | Mar. 31, 2019 | May 31, 2021 | May 31, 2020 |
The Simplicity Esports L L C [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Number of share issued | 87,500 | 37,500 | 250,000 | ||||
Purchase price | $ 6,090,000 | ||||||
The Simplicity Esports L L C [Member] | Restricted Stock [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Number of share issued | 375,000 | ||||||
Purchase price | $ 6,090,000 | ||||||
P L A Y Live Nation Inc [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Number of share issued | 93,750 | ||||||
Purchase price | 1,440,000 | ||||||
Revenue | 306,000 | $ 523,000 | |||||
Net income (loss) | $ 301,000 | $ 124,000 | |||||
Stock Issued During Period, Shares, Acquisitions | 94,000 | ||||||
P L A Y Live Nation Inc [Member] | Restricted Stock [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Number of share issued | 93,750 | ||||||
Purchase price | $ 1,440,000 | ||||||
Thirteen Gaming Centers [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Number of share issued | 64,714 | ||||||
Existing Franchisee [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Stock Issued During Period, Shares, Acquisitions | 6,000 | ||||||
Shares Issued, Price Per Share | $ 10.85 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Aug. 27, 2021 | May 07, 2020 | Sep. 13, 2017 | Aug. 31, 2021 | Aug. 31, 2020 | May 31, 2021 | May 31, 2020 | May 12, 2020 |
Related Party Transaction [Line Items] | ||||||||
Proceeds from sale of private units | $ 25,000 | $ 500,000 | $ 87,700 | |||||
William H Herrmann [Member] | Restricted Stock [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Sale of stock, price per share | $ 8.72 | |||||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 2,867 | |||||||
Stock Issued During Period, Value, Restricted Stock Award, Gross | $ 25,000 | |||||||
Laila Cavalcanti Loss [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
[custom:StockIssuedDuringPeriodValuesStockAwardGross] | $ 2,500 | |||||||
[custom:StockIssuedDuringPeriodSharesStockAwardGross] | 250 | |||||||
[custom:AccruedAmountForStockPayment] | $ 25,000 | |||||||
[custom:AccruedSharesForStockPayment] | 375 | |||||||
Kaplan Promissory Note [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Debt instrument, face amount | $ 45,000 | |||||||
Kaplan Promissory Note [Member] | Jed Kaplan [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Debt instrument, face amount | $ 64,728 | $ 90,000 | ||||||
Equity method investment, ownership percentage | 10.00% | 5.00% | ||||||
I A M Capital Partners L L C [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of shares agreed to be purchased under commitment | 3,281 | |||||||
Private Placement [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of shares purchased | 875 | 31,812 | ||||||
Sale of stock, price per share | $ 80 | |||||||
Proceeds from sale of private units | $ 2,545,000 | |||||||
Private Placement [Member] | I A M Capital Partners L L C [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of shares purchased | 7,000 | |||||||
Sale of stock, price per share | $ 80 |
SCHEDULE OF OUTSTANDING DEBT IN
SCHEDULE OF OUTSTANDING DEBT INSTRUMENT (Details) - USD ($) | Aug. 31, 2021 | May 31, 2021 | May 31, 2020 |
Short-term Debt [Line Items] | |||
Related Debt Discount | $ (2,394,343) | $ (947,873) | $ (25,180) |
Related Party Note | 64,728 | ||
Convertible Note Payable | 1,000,000 | ||
Total | 1,558,081 | 2,211,097 | 1,192,048 |
Total | 1,558,081 | 2,211,097 | 1,192,048 |
Current portion of Convertible Promissory Notes, net | 1,323,051 | 2,211,097 | |
Non current portion of Convertible Promissory Notes, net | 235,030 | ||
Convertible Promissory Note [Member] | |||
Short-term Debt [Line Items] | |||
Long term debt gross | $ 3,952,424 | $ 3,157,970 | $ 152,500 |
SCHEDULE OF PREPAYMENT OF DEBT
SCHEDULE OF PREPAYMENT OF DEBT NOTE (Details) | 12 Months Ended |
May 31, 2021 | |
Under Thirty [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Payment Amount | 115% of Principal Amount (as hereinafter defined) so paid |
Debt interest rate | 115.00% |
Thirty One To Sixty [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Payment Amount | 120% of Principal Amount so paid |
Debt interest rate | 120.00% |
Sixty One To Ninety [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Payment Amount | 125% of Principal Amount so paid |
Debt interest rate | 125.00% |
Ninety One To One Eighteen [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Payment Amount | 135% of Principal Amount so paid |
Debt interest rate | 135.00% |
SCHEDULE OF AMORTIZATION PAYMEN
SCHEDULE OF AMORTIZATION PAYMENTS (Details) - USD ($) | Aug. 31, 2021 | May 31, 2021 | Nov. 25, 2020 | Aug. 07, 2020 | Jun. 18, 2020 | May 31, 2020 |
Short-term Debt [Line Items] | ||||||
Total | $ 1,558,081 | $ 2,211,097 | $ 1,192,048 | |||
Self-Amortization Promissory Notes [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | $ 594,921 | |||||
Self-Amortization Promissory Notes [Member] | 10/16/2020 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 66,125 | |||||
Self-Amortization Promissory Notes [Member] | 11/16/2020 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 66,125 | |||||
Self-Amortization Promissory Notes [Member] | 12/16/2020 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 66,125 | |||||
Self-Amortization Promissory Notes [Member] | 01/18/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 66,125 | |||||
Self-Amortization Promissory Notes [Member] | 02/18/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 66,125 | |||||
Self-Amortization Promissory Notes [Member] | 03/18/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 66,125 | |||||
Self-Amortization Promissory Notes [Member] | 04/16/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 66,125 | |||||
Self-Amortization Promissory Notes [Member] | 05/18/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 66,125 | |||||
Self-Amortization Promissory Notes [Member] | 06/18/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | $ 65,921 | |||||
August 7, 2020 Self Amortization Promissory Note [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | $ 360,558 | |||||
August 7, 2020 Self Amortization Promissory Note [Member] | 12/07/2020 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 40,076 | |||||
August 7, 2020 Self Amortization Promissory Note [Member] | 01/07/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 40,076 | |||||
August 7, 2020 Self Amortization Promissory Note [Member] | 02/08/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 40,076 | |||||
August 7, 2020 Self Amortization Promissory Note [Member] | 03/08/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 40,076 | |||||
August 7, 2020 Self Amortization Promissory Note [Member] | 04/07/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 40,076 | |||||
August 7, 2020 Self Amortization Promissory Note [Member] | 05/07/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 40,076 | |||||
August 7, 2020 Self Amortization Promissory Note [Member] | 06/07/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 40,076 | |||||
August 7, 2020 Self Amortization Promissory Note [Member] | 07/07/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 40,076 | |||||
August 7, 2020 Self Amortization Promissory Note [Member] | 08/07/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | $ 39,952 | |||||
November 23, 2020 Self-Amortization Promissory Note [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | $ 840,000 | |||||
November 23, 2020 Self-Amortization Promissory Note [Member] | 2/23/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 84,000 | |||||
November 23, 2020 Self-Amortization Promissory Note [Member] | 3/23/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 84,000 | |||||
November 23, 2020 Self-Amortization Promissory Note [Member] | 4/23/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 84,000 | |||||
November 23, 2020 Self-Amortization Promissory Note [Member] | 5/21/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 84,000 | |||||
November 23, 2020 Self-Amortization Promissory Note [Member] | 6/23/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 84,000 | |||||
November 23, 2020 Self-Amortization Promissory Note [Member] | 7/23/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 84,000 | |||||
November 23, 2020 Self-Amortization Promissory Note [Member] | 8/23/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 84,000 | |||||
November 23, 2020 Self-Amortization Promissory Note [Member] | 9/23/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 84,000 | |||||
November 23, 2020 Self-Amortization Promissory Note [Member] | 10/22/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | 84,000 | |||||
November 23, 2020 Self-Amortization Promissory Note [Member] | 11/23/2021 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Total | $ 84,000 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) | Sep. 01, 2021 | Aug. 30, 2021 | Aug. 25, 2021 | Aug. 23, 2021 | Aug. 20, 2021 | Aug. 19, 2021 | Jun. 16, 2021 | Jun. 11, 2021 | Jun. 11, 2021 | Apr. 14, 2021 | Apr. 14, 2021 | Mar. 10, 2021 | Mar. 10, 2021 | Feb. 19, 2021 | Nov. 25, 2020 | Aug. 07, 2020 | Jun. 18, 2020 | Jun. 18, 2020 | Jun. 07, 2020 | Jun. 04, 2020 | Apr. 29, 2020 | Dec. 20, 2018 | Nov. 20, 2018 | Sep. 30, 2021 | Aug. 19, 2021 | Aug. 31, 2021 | Aug. 27, 2021 | Aug. 31, 2020 | May 31, 2021 | May 31, 2020 | Oct. 01, 2021 | Sep. 17, 2021 | Sep. 15, 2021 | Jul. 15, 2021 | May 15, 2021 | Apr. 30, 2021 | Feb. 28, 2021 | Jul. 02, 2020 | May 12, 2020 |
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 2,394,343 | $ 947,873 | $ 25,180 | ||||||||||||||||||||||||||||||||||||
Number of common stock issued | 82,500 | 123,000 | |||||||||||||||||||||||||||||||||||||
Stock Issued During Period, Value, Conversion of Convertible Securities | $ 100,000 | ||||||||||||||||||||||||||||||||||||||
Additional Paid in Capital | 21,233,531 | 16,708,762 | $ 11,132,103 | ||||||||||||||||||||||||||||||||||||
Interest Expense | 659,696 | $ 154,128 | $ 1,399,598 | $ 32,472 | |||||||||||||||||||||||||||||||||||
Subsequent Event [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Number of common stock issued | 42,000 | ||||||||||||||||||||||||||||||||||||||
Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Number of common stock issued | 2,976 | 48,396 | 15,625 | ||||||||||||||||||||||||||||||||||||
Holder [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | 90,909 | ||||||||||||||||||||||||||||||||||||||
Repayment of debt | 225,000 | ||||||||||||||||||||||||||||||||||||||
Original issue discount | 903,588 | ||||||||||||||||||||||||||||||||||||||
Interest expense | 287,330 | ||||||||||||||||||||||||||||||||||||||
Guaranteed Interest Contracts | 109,091 | ||||||||||||||||||||||||||||||||||||||
[custom:AmendmentFee-0] | 25,000 | ||||||||||||||||||||||||||||||||||||||
FirstFire Global Oppurtunities Fund, LLC [Member] | Warrant [Member] | Subsequent Event [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Warrants issued | 40,000 | 40,000 | |||||||||||||||||||||||||||||||||||||
FirstFire Global Oppurtunities Fund, LLC [Member] | June FirstFire SPA [Member] | June FirstFire Warrant [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Warrants issued | 593,750 | 593,750 | |||||||||||||||||||||||||||||||||||||
Warrant exercise price | $ 10.73 | $ 10.73 | |||||||||||||||||||||||||||||||||||||
Warrants and Rights Outstanding, Term | 3 years | 3 years | |||||||||||||||||||||||||||||||||||||
FirstFire Global Oppurtunities Fund, LLC [Member] | FirstFire SPA [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 56,000 | $ 56,000 | |||||||||||||||||||||||||||||||||||||
Proceeds from issuance of debt | $ 504,000 | ||||||||||||||||||||||||||||||||||||||
Debt conversion price | $ 11.50 | $ 11.50 | |||||||||||||||||||||||||||||||||||||
FirstFire Global Oppurtunities Fund, LLC [Member] | FirstFire SPA [Member] | Subsequent Event [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt instrument, default interest rate | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||
Debt maturity date | Jun. 10, 2023 | ||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 1,266,666 | $ 1,266,666 | |||||||||||||||||||||||||||||||||||||
Original issue discount | 126,666 | $ 126,666 | |||||||||||||||||||||||||||||||||||||
Proceeds from issuance of debt | $ 1,140,000 | ||||||||||||||||||||||||||||||||||||||
Description of payment terms | the Company agreed to pay to $1,266,666 (the “FirstFire Principal Sum”) to FirstFire and to pay interest on the principal balance at the rate of 12% per annum (provided that the first six months of interest shall be guaranteed and the remaining 18 months of interest shall be deemed earned in full if any amount is outstanding under the FirstFire Note after 180 days from June 10, 2021). | ||||||||||||||||||||||||||||||||||||||
Warrants issued | 593,750 | 593,750 | |||||||||||||||||||||||||||||||||||||
Warrant exercise price | $ 10.73 | $ 10.73 | |||||||||||||||||||||||||||||||||||||
Debt conversion price | $ 11.50 | $ 11.50 | |||||||||||||||||||||||||||||||||||||
FirstFire Global Oppurtunities Fund, LLC [Member] | Accredited Investor [Member] | Securities Purchase Agreement [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt instrument, default interest rate | 12.00% | ||||||||||||||||||||||||||||||||||||||
Debt maturity date | Aug. 7, 2021 | ||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 333,333 | ||||||||||||||||||||||||||||||||||||||
Repayment of debt | 333,333 | ||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 33,333 | ||||||||||||||||||||||||||||||||||||||
Number of common stock issued | 4,167 | ||||||||||||||||||||||||||||||||||||||
Debt description | Upon the Holder’s provision of notice to the Company of the occurrence of any Event of Default, which has not been cured within five calendar days as provided in the Amortization Note, the Amortization Note shall become immediately due and payable and the Company shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Principal Sum then outstanding plus accrued interest multiplied by 125% (the “Default Amount”). Upon the occurrence of an Event of Default, additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 15% per annum or the highest rate permitted by law. The Company shall have the right to pay the Default Amount in cash at any time, provided, however that the Holder may convert the Amortization Note into the Company’s common stock (subject to the beneficial ownership limitations of 4.99% contained in the Amortization Note) at any time after the date that is five calendar days after the Amortization Note becomes immediately due and payable as a result of an Event of Default until the Company has repaid the Amortization Note in cash. If the aforementioned event occurs, the conversion price will be equal to the closing bid price of the Company’s common stock on the trading day immediately preceding the date of the respective conversion. | ||||||||||||||||||||||||||||||||||||||
FirstFire Global Oppurtunities Fund, LLC [Member] | Accredited Investor [Member] | Securities Purchase Agreement [Member] | Paid the Purchase Price In Exchange Of Amortization of Notes [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Repayment of debt | $ 300,000 | ||||||||||||||||||||||||||||||||||||||
Maxim Group LLC [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Repayment of debt | $ 500,000 | ||||||||||||||||||||||||||||||||||||||
Number of common stock issued | 20,000 | ||||||||||||||||||||||||||||||||||||||
Gain (Loss) on Extinguishment of Debt | $ 1,759,969 | ||||||||||||||||||||||||||||||||||||||
Maxim [Member] | Subsequent Event [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Restricted shares issued to purchase common stock | 82,500 | ||||||||||||||||||||||||||||||||||||||
Maxim [Member] | Fourth Amendment [Member] | Subsequent Event [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Repayment of debt | $ 500,000 | ||||||||||||||||||||||||||||||||||||||
Description of payment terms | the Company and Maxim agreed that all obligations under the Series A-2 Maxim Note, as amended, shall be extinguished, and the Series A-2 Maxim Note, as amended, shall be deemed repaid in its entirety, upon the satisfaction of the following obligations: (i) the Company’s payment of $500,000 to Maxim within three business days of August 19, 2021, (ii) the Company’s issuance of 20,000 restricted shares of the Company’s common stock to Maxim within seven business days of August 19, 2021, and (iii) the Company’s issuance of a common stock purchase warrant to Maxim on August 19, 2021 for the purchase of 365,000 shares of the Company’s common stock. | ||||||||||||||||||||||||||||||||||||||
Restricted shares issued to purchase common stock | 20,000 | ||||||||||||||||||||||||||||||||||||||
Warrants issued | 365,000 | 365,000 | |||||||||||||||||||||||||||||||||||||
Warrant exercise price | $ 13 | $ 13 | |||||||||||||||||||||||||||||||||||||
Polar Asset Management Partners Inc [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Number of shares agreed to sell | 490,000 | ||||||||||||||||||||||||||||||||||||||
K 2 Principal Fund L P [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Number of shares agreed to sell | 220,000 | ||||||||||||||||||||||||||||||||||||||
GS Capital Partners, LLC [Member] | GS SPA [Member] | GS Warrant [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Warrants issued | 156,250 | ||||||||||||||||||||||||||||||||||||||
Warrant exercise price | $ 10.73 | ||||||||||||||||||||||||||||||||||||||
Warrants and Rights Outstanding, Term | 3 years | ||||||||||||||||||||||||||||||||||||||
Jefferson Street Capital, LLC [Member] | Jefferson SPA [Member] | Jefferson Warrant [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Warrants issued | 156,250 | ||||||||||||||||||||||||||||||||||||||
Warrant exercise price | $ 10.73 | ||||||||||||||||||||||||||||||||||||||
Warrants and Rights Outstanding, Term | 3 years | ||||||||||||||||||||||||||||||||||||||
10% Fixed Convertible Promissory Note [Member] | Harbor Gates Capital, LLC [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt instrument, default interest rate | 10.00% | ||||||||||||||||||||||||||||||||||||||
Debt maturity date | Oct. 29, 2020 | ||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 152,000 | ||||||||||||||||||||||||||||||||||||||
Repayment of debt | 152,500 | ||||||||||||||||||||||||||||||||||||||
Original issue discount | 2,500 | ||||||||||||||||||||||||||||||||||||||
Debt exchange | $ 150,000 | ||||||||||||||||||||||||||||||||||||||
Remaining unpaid principal amount percentage | 135.00% | ||||||||||||||||||||||||||||||||||||||
Interest repaid | $ 15,000 | ||||||||||||||||||||||||||||||||||||||
10% Fixed Convertible Promissory Note [Member] | Harbor Gates Capital, LLC [Member] | Mandatory Default Amount [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt instrument, default interest rate | 35.00% | ||||||||||||||||||||||||||||||||||||||
10% Fixed Convertible Promissory Note [Member] | Harbor Gates Capital, LLC [Member] | Two Tranches [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Number of common stock issued | 1,250 | ||||||||||||||||||||||||||||||||||||||
Debt description | In the event the average of the three volume weighted average prices for the Company’s common stock during the three consecutive trading days immediately preceding the date which is the 180th day following the Effective Date is less than $1.00 per share, then Harbor Gates will be entitled, and the Company will issue to Harbor Gates additional shares of common stock as set forth in the Harbor Gates Note. | ||||||||||||||||||||||||||||||||||||||
Harbor Gates Note [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Variable conversion price of common stock description | The “Variable Conversion Price” will be equal to the lower of: (a) $1.00, or (b) 70% of the lowest volume weighted average price of the Company’s common stock during the 15 consecutive trading days prior to the date on Harbor Gates elects to convert all or part of the Harbor Gates Note. | ||||||||||||||||||||||||||||||||||||||
Kaplan Promissory Note [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 45,000 | ||||||||||||||||||||||||||||||||||||||
Kaplan Promissory Note [Member] | Jed Kaplan [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt instrument, default interest rate | 3.00% | ||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 64,728 | $ 90,000 | |||||||||||||||||||||||||||||||||||||
Equity method investment, ownership percentage | 10.00% | 5.00% | |||||||||||||||||||||||||||||||||||||
Debt instrument, effective interest percentage | 10.00% | ||||||||||||||||||||||||||||||||||||||
June 18, 2020 Convertible Note [Member]. | Accredited Investor [Member] | Securities Purchase Agreement [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 550,000 | 550,000 | |||||||||||||||||||||||||||||||||||||
Repayment of debt | 550,000 | ||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 55,000 | $ 55,000 | |||||||||||||||||||||||||||||||||||||
Number of common stock issued | 6,875 | ||||||||||||||||||||||||||||||||||||||
Debt description | Accordingly, on the Closing Date (as defined in the SPA), the Holder paid the purchase price of $495,000 in exchange for the Amortization Note. | ||||||||||||||||||||||||||||||||||||||
Proceeds from equity | $ 2,000,000 | ||||||||||||||||||||||||||||||||||||||
November 23, 2020 Convertible Note [Member] | Accredited Investor [Member] | Securities Purchase Agreement [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt instrument, default interest rate | 12.00% | ||||||||||||||||||||||||||||||||||||||
Debt maturity date | Nov. 23, 2021 | ||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 750,000 | ||||||||||||||||||||||||||||||||||||||
Repayment of debt | 750,000 | ||||||||||||||||||||||||||||||||||||||
Original issue discount | 75,000 | ||||||||||||||||||||||||||||||||||||||
Partial repayment of principal and interest | 198,375 | ||||||||||||||||||||||||||||||||||||||
Proceeds from issuance of debt | 441,375 | ||||||||||||||||||||||||||||||||||||||
Origination fees | 35,250 | ||||||||||||||||||||||||||||||||||||||
Interest expense | $ 90,000 | ||||||||||||||||||||||||||||||||||||||
November 23, 2020 Convertible Note [Member] | Accredited Investor [Member] | Securities Purchase Agreement [Member] | Warrant [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 157,438 | ||||||||||||||||||||||||||||||||||||||
Number of common stock issued | 375,000 | ||||||||||||||||||||||||||||||||||||||
Debt description | Upon the Holder’s provision of notice to the Company of the occurrence of any Event of Default, which has not been cured within five (5) calendar days (provided, however, that this cure period shall not apply to certain events of default as set forth in the November Amortization Note), the November Amortization Note shall become immediately due and payable and the Company shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Principal Sum then outstanding plus accrued interest multiplied by 125% (the “Default Amount”). Upon the occurrence of an Event of Default (as hereinafter defined), additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 15% per annum or the highest rate permitted by law. The Company shall have the right to pay the Default Amount in cash at any time, provided, however that the Holder may convert the November Amortization Note into the Company’s common stock (subject to the beneficial ownership limitations of 4.99% contained in the Amortization Note) at any time after the date that is five (5) calendar days after the November Amortization Note becomes immediately due and payable as a result of an Event of Default until the Company has repaid the Amortization Note in cash. If the aforementioned event occurs, the conversion price will be equal to the closing bid price of the Company’s common stock on the trading day immediately preceding the date of the respective conversion. | ||||||||||||||||||||||||||||||||||||||
Febraury 2021 Convertible Note [Member] | Accredited Investor [Member] | Securities Purchase Agreement [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt instrument, default interest rate | 12.00% | ||||||||||||||||||||||||||||||||||||||
Debt maturity date | Feb. 19, 2022 | ||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 1,650,000 | ||||||||||||||||||||||||||||||||||||||
Repayment of debt | 1,650,000 | ||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 165,000 | ||||||||||||||||||||||||||||||||||||||
Number of common stock issued | 10,000 | ||||||||||||||||||||||||||||||||||||||
Debt description | The Company is required to make an interim payment to the Holder in the amount of $363,000, on or before August 19, 2021, towards the repayment of the balance of the Note. Currently the Company and the Holder have agreed to extend the terms of this payment. The extension provides that the Company paid $100,000 to the Holder by the interim payment date and has agreed to pay an additional $100,000 upon the completion of a new debt deal that is anticipated to close by September 1, 2021 and the Company has agreed to pay $163,000 to the Holder | ||||||||||||||||||||||||||||||||||||||
Equity method investment, ownership percentage | 4.99% | ||||||||||||||||||||||||||||||||||||||
Partial repayment of principal and interest | $ 363,000 | ||||||||||||||||||||||||||||||||||||||
Proceeds from issuance of debt | $ 1,485,000 | ||||||||||||||||||||||||||||||||||||||
Debt conversion price | $ 11.50 | ||||||||||||||||||||||||||||||||||||||
Febraury 2021 Convertible Note [Member] | Accredited Investor [Member] | Securities Purchase Agreement [Member] | Subsequent Event [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Partial repayment of principal and interest | $ 100,000 | ||||||||||||||||||||||||||||||||||||||
Additional Repayment of Long Term Debt Principal and Interest | 100,000 | ||||||||||||||||||||||||||||||||||||||
Febraury 2021 Convertible Note [Member] | Holders [Member] | Securities Purchase Agreement [Member] | Minimum [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt instrument, default interest rate | 50.00% | ||||||||||||||||||||||||||||||||||||||
Febraury 2021 Convertible Note [Member] | Holder [Member] | Securities Purchase Agreement [Member] | Subsequent Event [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Partial repayment of principal and interest | $ 163,000 | ||||||||||||||||||||||||||||||||||||||
Febraury 2021 Convertible Note [Member] | FirstFire Global Oppurtunities Fund, LLC [Member] | FirstFire SPA [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 560,000 | $ 560,000 | |||||||||||||||||||||||||||||||||||||
Febraury 2021 Convertible Note [Member] | 03/02/2021 [Member] | FirstFire SPA [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Number of common stock issued | 3,394 | ||||||||||||||||||||||||||||||||||||||
Series A-2 Exchange Convertible Note [Member] | Maxim Group LLC [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Repayment of debt | $ 500,000 | ||||||||||||||||||||||||||||||||||||||
Warrants issued | 365,000 | 365,000 | |||||||||||||||||||||||||||||||||||||
Warrant exercise price | $ 13 | $ 13 | |||||||||||||||||||||||||||||||||||||
Debt Instrument, Convertible, Terms of Conversion Feature | upon the satisfaction of the following obligations: (i) the Company’s payment of $ | ||||||||||||||||||||||||||||||||||||||
Series A-2 Exchange Convertible Note [Member] | Maxim Group LLC [Member] | Securities Exchange Agreement [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Number of common stock issued | 85,905 | ||||||||||||||||||||||||||||||||||||||
Stock Issued During Period, Value, Conversion of Convertible Securities | $ 100,000 | $ 1,000,000 | |||||||||||||||||||||||||||||||||||||
Debt conversion price | $ 1.93 | ||||||||||||||||||||||||||||||||||||||
Debt Instrument, Convertible, Terms of Conversion Feature | automatically adjusted to the lower of (i) the conversion price then in effect, and (ii) the greater of the arithmetic average of the VWAP of the Company’s common stock in the five trading days prior to the notice of conversion and $0.50 | ||||||||||||||||||||||||||||||||||||||
Series A-2 Exchange Convertible Note [Member] | Maxim Group LLC [Member] | Restricted Stock [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Number of common stock issued | 20,000 | ||||||||||||||||||||||||||||||||||||||
Series A-2 Exchange Convertible Note [Member] | Maxim Note [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt description | parties agreed to the following: (i) Maxim’s resale of the Company’s common stock (the “Common Stock”) underlying the Series A-2 Note shall be limited to | ||||||||||||||||||||||||||||||||||||||
Maxim Note [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt instrument, default interest rate | 10.00% | 10.00% | |||||||||||||||||||||||||||||||||||||
Debt description | parties agreed to the following: (i) Maxim’s resale of the Company’s common stock (the “Common Stock”) underlying the Series A-2 Note shall be limited to 10% of the daily volume of the Common Stock on each respective trading day, (ii) the maturity date of the Series A-2 Note was extended to December 31, 2020, (iii) the principal amount of the Series A-2 Note was increased by $100,000 and (iv) the conversion price was reduced from $15.44 ($1.93 pre-reverse split) to $9.20 ($1.15 pre-reverse split). | ||||||||||||||||||||||||||||||||||||||
Series A Two Note One [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt description | The maturity date of the Series A-2 Note is extended to October 15, 2021. | ||||||||||||||||||||||||||||||||||||||
Series A Two Note Two [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt description | The principal balance of the Series A-2 Note is increased by $50,000 as of April 14, 2021. | ||||||||||||||||||||||||||||||||||||||
Series A Two Note Three [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt description | The Series A-2 Note was not repaid in its entirety (in cash and/or shares of the Company’s common stock pursuant to conversion(s) of the Series A-2 Note) on or before April 30, 2021, and accordingly, the principal balance of the Series A-2 Note increased by an additional $50,000. | ||||||||||||||||||||||||||||||||||||||
Series A Two Note Four [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt description | The Series A-2 Note was not repaid in its entirety (in cash and/or shares of the Company’s common stock pursuant to conversion(s) of the Series A-2 Note) on or before May 15, 2021, and accordingly, the principal balance of the Series A-2 Note increased by an additional $50,000. | ||||||||||||||||||||||||||||||||||||||
Series A Two Note Five [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt description | If the Series A-2 Note is not repaid in its entirety (in cash and/or shares of the Company’s common stock pursuant to conversion(s) of the Series A-2 Note) on or before July 15, 2021, the principal balance of the Series A-2 Note will increase by an additional $100,000. | ||||||||||||||||||||||||||||||||||||||
Series A Two Note Six [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt description | If the Series A-2 Note is not repaid in its entirety (in cash and/or shares of the Company’s common stock pursuant to conversion(s) of the Series A-2 Note) on or before September 15, 2021, the principal balance of the Series A-2 Note will increase by an additional $100,000, representing a total cumulative increase in the principal balance of $350,000 if the Series A-2 Note is not repaid in its entirety on or before September 15, 2021. | ||||||||||||||||||||||||||||||||||||||
Series A Two Note Seven [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt description | The Company will, within five business days after the Company’s receipt of the Second Tranche Purchase Price of $999,996, pay $500,000 to Maxim, which will reduce the principal owed under the Series A-2 Note by $500,000. | ||||||||||||||||||||||||||||||||||||||
Secured Demand Promissory Note [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 1,800,000 | ||||||||||||||||||||||||||||||||||||||
Underwriter fees | $ 20,000 | ||||||||||||||||||||||||||||||||||||||
Accrued interest rate of debt instrument | 125.00% | 125.00% | |||||||||||||||||||||||||||||||||||||
Description of debt instrument priority terms | The Note was secured by a first priority security interest in all personal property and assets of the Company excluding the assets held in escrow with respect to (i) that certain stock purchase agreement with Polar, pursuant to which Polar agreed to sell up to 490,000 shares of the Company’s common stock to the Company thirty days after the consummation of the Business Combination and (ii) that certain stock purchase agreement with K2, pursuant to which K2 agreed to sell up to 220,000 shares of the Company’s common stock to the Company thirty days after the consummation of the Business Combination. | ||||||||||||||||||||||||||||||||||||||
Secured Demand Promissory Note [Member] | May 20, 2019 [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Accrued interest rate of debt instrument | 8.00% | ||||||||||||||||||||||||||||||||||||||
Secured Demand Promissory Note [Member] | May 21, 2019, through August 20, 2019 [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Accrued interest rate of debt instrument | 12.00% | ||||||||||||||||||||||||||||||||||||||
Secured Demand Promissory Note [Member] | August 21, 2019, through November 20, 2019 [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Accrued interest rate of debt instrument | 15.00% | ||||||||||||||||||||||||||||||||||||||
Secured Demand Promissory Note [Member] | August 21, 2019 [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Accrued interest rate of debt instrument | 12.00% | ||||||||||||||||||||||||||||||||||||||
Secured Demand Promissory Note [Member] | After August 21, 2019 [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Accrued interest rate of debt instrument | 18.00% | ||||||||||||||||||||||||||||||||||||||
Secured Demand Promissory Note [Member] | FirstFire Global Oppurtunities Fund, LLC [Member] | FirstFire SPA [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Accrued interest rate of debt instrument | 125.00% | ||||||||||||||||||||||||||||||||||||||
Jefferson Note [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 333,333 | ||||||||||||||||||||||||||||||||||||||
Original issue discount | 274,239 | ||||||||||||||||||||||||||||||||||||||
Interest repaid | 20,000 | ||||||||||||||||||||||||||||||||||||||
Additional Paid in Capital | $ 205,905 | ||||||||||||||||||||||||||||||||||||||
Interest Expense | 685 | ||||||||||||||||||||||||||||||||||||||
Debt instruments unamortized discount | 59,779 | ||||||||||||||||||||||||||||||||||||||
Series A-2 Note [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 50,000 | $ 50,000 | |||||||||||||||||||||||||||||||||||||
Cumulative increase principal amounts | $ 350,000 | ||||||||||||||||||||||||||||||||||||||
Tranches Description | The Company will, within five business days after the Company’s receipt of the Second Tranche Purchase Price of $999,996, pay $500,000 to Maxim, which will reduce the principal owed under the Series A-2 Note by $500,000. | ||||||||||||||||||||||||||||||||||||||
Series A-2 Note [Member] | Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 100,000 | $ 50,000 | $ 50,000 | ||||||||||||||||||||||||||||||||||||
Series A-2 Note [Member] | Common Stock [Member] | Subsequent Event [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 100,000 | ||||||||||||||||||||||||||||||||||||||
Series A-1 Exchange Convertible Note [Member] | Maxim Group LLC [Member] | Securities Exchange Agreement [Member] | Minimum [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt conversion price | $ 9.20 | $ 9.20 | |||||||||||||||||||||||||||||||||||||
Series A-1 Exchange Convertible Note [Member] | Maxim Group LLC [Member] | Securities Exchange Agreement [Member] | Maximum [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt conversion price | $ 15.44 | $ 15.44 | |||||||||||||||||||||||||||||||||||||
03/02/2021 [Member] | FirstFire Global Oppurtunities Fund, LLC [Member] | FirstFire SPA [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt instrument, default interest rate | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||
Debt maturity date | Mar. 10, 2022 | ||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 560,000 | $ 560,000 | |||||||||||||||||||||||||||||||||||||
Repayment of debt | $ 365,000 | ||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 56,000 | $ 56,000 | |||||||||||||||||||||||||||||||||||||
Equity method investment, ownership percentage | 499.00% | 499.00% | |||||||||||||||||||||||||||||||||||||
Partial repayment of principal and interest | $ 123,200 | ||||||||||||||||||||||||||||||||||||||
Proceeds from issuance of debt | 130,606 | ||||||||||||||||||||||||||||||||||||||
Origination fees | $ 8,394 | ||||||||||||||||||||||||||||||||||||||
FirstFire Note[Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 1,266,667 | $ 1,266,667 | |||||||||||||||||||||||||||||||||||||
Original issue discount | 1,266,667 | 1,266,667 | 419,468 | ||||||||||||||||||||||||||||||||||||
Interest repaid | 76,000 | 76,000 | |||||||||||||||||||||||||||||||||||||
Additional Paid in Capital | $ 1,053,999 | $ 1,053,999 | |||||||||||||||||||||||||||||||||||||
Interest Expense | 140,548 | ||||||||||||||||||||||||||||||||||||||
Debt instruments unamortized discount | 140,548 | ||||||||||||||||||||||||||||||||||||||
Recognized debt discount | 65,533 | ||||||||||||||||||||||||||||||||||||||
June FirstFire Promissory Note [Member] | FirstFire Global Oppurtunities Fund, LLC [Member] | June FirstFire SPA [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt instrument, default interest rate | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||
Debt maturity date | Jun. 10, 2023 | ||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 1,266,666 | $ 1,266,666 | |||||||||||||||||||||||||||||||||||||
Repayment of debt | 1,266,666 | ||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 126,666 | $ 126,666 | |||||||||||||||||||||||||||||||||||||
Number of common stock issued | 11,875 | ||||||||||||||||||||||||||||||||||||||
Equity method investment, ownership percentage | 4.99% | 4.99% | |||||||||||||||||||||||||||||||||||||
Proceeds from issuance of debt | $ 1,140,000 | ||||||||||||||||||||||||||||||||||||||
Debt conversion price | $ 11.50 | $ 11.50 | |||||||||||||||||||||||||||||||||||||
Accrued interest rate of debt instrument | 125.00% | ||||||||||||||||||||||||||||||||||||||
GS Promissory Note [Member] | GS Capital Partners, LLC [Member] | GS SPA [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt instrument, default interest rate | 12.00% | ||||||||||||||||||||||||||||||||||||||
Debt maturity date | Jun. 10, 2023 | ||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 333,333 | ||||||||||||||||||||||||||||||||||||||
Repayment of debt | 300,000 | ||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 33,333 | ||||||||||||||||||||||||||||||||||||||
Number of common stock issued | 3,125 | ||||||||||||||||||||||||||||||||||||||
Equity method investment, ownership percentage | 4.99% | ||||||||||||||||||||||||||||||||||||||
Proceeds from issuance of debt | $ 300,000 | ||||||||||||||||||||||||||||||||||||||
Debt conversion price | $ 11.50 | ||||||||||||||||||||||||||||||||||||||
Accrued interest rate of debt instrument | 125.00% | ||||||||||||||||||||||||||||||||||||||
GS Note [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 333,333 | ||||||||||||||||||||||||||||||||||||||
Original issue discount | 333,333 | ||||||||||||||||||||||||||||||||||||||
Interest repaid | 20,000 | ||||||||||||||||||||||||||||||||||||||
Additional Paid in Capital | $ 280,000 | ||||||||||||||||||||||||||||||||||||||
Interest Expense | 34,703 | ||||||||||||||||||||||||||||||||||||||
Debt instruments unamortized discount | $ 34,703 | ||||||||||||||||||||||||||||||||||||||
Jefferson Promissory Note [Member] | Jefferson Street Capital, LLC [Member] | Jefferson SPA [Member] | |||||||||||||||||||||||||||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||||||||||||||||||||||||||
Debt instrument, default interest rate | 12.00% | ||||||||||||||||||||||||||||||||||||||
Debt maturity date | Aug. 23, 2023 | ||||||||||||||||||||||||||||||||||||||
Principal amount of debt instrument | $ 333,333 | ||||||||||||||||||||||||||||||||||||||
Repayment of debt | 300,000 | ||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 33,333 | ||||||||||||||||||||||||||||||||||||||
Number of common stock issued | 3,125 | ||||||||||||||||||||||||||||||||||||||
Equity method investment, ownership percentage | 4.99% | ||||||||||||||||||||||||||||||||||||||
Proceeds from issuance of debt | $ 300,000 | ||||||||||||||||||||||||||||||||||||||
Debt conversion price | $ 11.50 | ||||||||||||||||||||||||||||||||||||||
Accrued interest rate of debt instrument | 125.00% |
SCHEDULE SHOWING THE FUTURE MIN
SCHEDULE SHOWING THE FUTURE MINIMUM LEASE PAYMENTS (Details) - USD ($) | Aug. 31, 2021 | May 31, 2021 | May 31, 2020 |
Loss Contingencies [Line Items] | |||
2023 | $ 471,063 | ||
2024 | 450,377 | ||
2025 | 452,511 | ||
2026 and thereafter | 405,795 | ||
2026 | 153,601 | ||
Total Operating Lease Obligations | 1,945,347 | ||
Less: Amount representing interest | (418,061) | ||
Present Value of minimum lease payments | $ 1,556,815 | $ 1,527,286 | $ 490,983 |
Operating Lease Liabilities [Member] | |||
Loss Contingencies [Line Items] | |||
2023 | 468,377 | ||
2024 | 470,511 | ||
2025 | 423,795 | ||
2026 and thereafter | 171,602 | ||
Total Operating Lease Obligations | 1,904,655 | ||
Less: Amount representing interest | (347,840) | ||
Present Value of minimum lease payments | 1,556,815 | ||
2022 | $ 370,370 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | Aug. 20, 2021 | May 17, 2021 | Mar. 29, 2021 | Jul. 29, 2020 | Mar. 29, 2020 | Sep. 13, 2017 | Aug. 22, 2017 | Aug. 31, 2021 | Aug. 31, 2020 | May 31, 2021 | May 31, 2020 |
Subsidiary, Sale of Stock [Line Items] | |||||||||||
Weighted average discount rate | 10.40% | ||||||||||
Weighted average remaining lease term | 41 months | ||||||||||
Operating lease right-of-use assets | $ 1,562,617 | $ 1,533,010 | $ 490,984 | ||||||||
Operating lease liabilities | 1,556,815 | 1,527,286 | 490,983 | ||||||||
Operating lease expense | 140,516 | $ 20,623 | 147,000 | 353,000 | |||||||
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture | $ 819,309 | 2,359,401 | $ 5,900 | ||||||||
Shares issued for cash, shares | 82,500 | 123,000 | |||||||||
Accrued Liabilities | $ 833,250 | ||||||||||
Operating Lease [Member] | |||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||
Operating lease right-of-use assets | 1,527,286 | ||||||||||
Operating lease liabilities | $ 1,527,967 | ||||||||||
Underwriter [Member] | |||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||
Sale of Stock, Price Per Share | $ 13 | $ 13 | |||||||||
Jed Kaplan [Member] | |||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||
Monthly base salary | $ 4,000 | ||||||||||
Cash bonus | $ 75,000 | $ 216,625 | |||||||||
Accrued interest | $ 75,000 | ||||||||||
Jed Kaplan [Member] | Kaplan 2020 Agreement [Member] | |||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||
Monthly base salary | $ 5,000 | ||||||||||
Number of shares of common stock fully vested upon grant | 15,000 | ||||||||||
Cash bonus | $ 50,000 | ||||||||||
[custom:InitialTerm] | one-year term | ||||||||||
Board of Directors [Member] | |||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||
Number of common stock shares issued | 250,000 | ||||||||||
Number of common stock shares issuance directors | 17,125 | ||||||||||
Mr. Franklin [Member] | |||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||
Number of shares of common stock fully vested upon grant | 250,000 | ||||||||||
Cash bonus | $ 75,000 | $ 216,625 | |||||||||
Accrued interest | 75,000 | ||||||||||
Due to Related Parties, Current | $ 35,000 | ||||||||||
Mr. Franklin [Member] | Franklin 2020 Agreement [Member] | |||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||
Monthly base salary | $ 12,500 | ||||||||||
Number of shares of common stock fully vested upon grant | 6,250 | ||||||||||
Cash bonus | $ 50,000 | ||||||||||
Employee and Directors [Member] | |||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||
Accrued interest | 166,675 | ||||||||||
Number of shares issued for services | 192,000 | ||||||||||
MrKaplan [Member] | |||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||
Due to Related Parties, Current | 35,000 | ||||||||||
Chief Financial Officer [Member] | Hennessey Employment Agreement [Member] | |||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||
Salary and Wage, Officer, Excluding Cost of Good and Service Sold | $ 140,000 | ||||||||||
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture | 5,000 | ||||||||||
[custom:MaximumQuarterlyBonusAmount] | $ 12,500 | ||||||||||
[custom:EmploymentAgreementDescription] | Ms. Hennessey will also receive (i) 5,000 shares of common stock upon filing of the 2021 Annual Report on Form 10-K, if completed before July 31, 2021, and (ii) 5,000 shares of common stock upon completion of an uplisting to a national exchange, such as The Nasdaq Stock Market or the NYSE American. | ||||||||||
Ms Hennessey [Member] | |||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||
[custom:AccruedEquityGrant-0] | 5,000 | ||||||||||
Chief Executive Officer [Member] | Franklin Employment Agreement [Member] | |||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||
Salary and Wage, Officer, Excluding Cost of Good and Service Sold | $ 250,000 | ||||||||||
[custom:MaximumQuarterlyBonusAmount] | $ 15,000 | ||||||||||
IPO [Member] | |||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||
Sale of Stock, Consideration Received on Transaction | $ 100 | $ 100 | |||||||||
Sale of Stock, Number of Shares Issued in Transaction | 625,000 | 250,000 | 250,000 | ||||||||
[custom:OptionsExercisablePerUnit-0] | $ 11.50 | ||||||||||
Sale of Stock, Price Per Share | $ 80 | ||||||||||
[custom:OptionsExercisableSharePrice-0] | $ 11.50 | ||||||||||
IPO [Member] | Underwriters [Member] | |||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||
Sale of Stock, Number of Shares Issued in Transaction | 25,000 | ||||||||||
Over-Allotment Option [Member] | Underwriters [Member] | |||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||
Sale of Stock, Consideration Received on Transaction | $ 2,990,000 | $ 2,990,000 | |||||||||
Sale of Stock, Number of Shares Issued in Transaction | 260,000 | 260,000 |
SCHEDULE OF OUTSTANDING STOCK W
SCHEDULE OF OUTSTANDING STOCK WARRANTS (Details) - $ / shares | 3 Months Ended | 12 Months Ended | |
Aug. 31, 2021 | May 31, 2021 | May 31, 2020 | |
Warrant [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Number of Warrants, Outstanding, Beginning balance | 820,064 | 803,001 | 803,001 |
Average exercise price stock warrants, Outstanding, Beginning balance | $ 81.71 | $ 83.01 | $ 83.01 |
Number of Warrants, Granted | 17,063 | ||
Average exercise price stock warrants, Granted | $ 20.66 | ||
Number of Warrants, Outstanding, Ending balance | 820,064 | 803,001 | |
Average exercise price stock warrants, Outstanding, Ending balance | $ 81.71 | $ 83.01 | |
Warrants [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Number of Warrants, Outstanding, Beginning balance | 820,064 | 803,001 | |
Average exercise price stock warrants, Outstanding, Beginning balance | $ 10.38 | $ 83.01 | |
Number of Warrants, Granted | 1,257,312 | 17,063 | |
Average exercise price stock warrants, Granted | $ 11.26 | $ 20.66 | |
Number of Warrants, Outstanding, Ending balance | 2,177,376 | 820,064 | 803,001 |
Average exercise price stock warrants, Outstanding, Ending balance | $ 38.08 | $ 10.38 | $ 83.01 |
Number of Warrants, Sale of warrants | 100,000 | ||
Average exercise price stock warrants, Sale of warrants | $ 20 |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) | Aug. 20, 2021 | Nov. 09, 2018 | Sep. 13, 2017 | Aug. 31, 2021 | Aug. 27, 2021 | Aug. 31, 2020 | May 31, 2019 | May 31, 2021 | May 31, 2020 | Aug. 17, 2020 | Feb. 28, 2019 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Preferred stock, authorized | 1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 | |||||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Preferred stock, issued | 0 | 0 | 0 | ||||||||
Preferred stock, outstanding | 0 | 0 | 0 | ||||||||
Common stock, authorized | 36,000,000 | 36,000,000 | 36,000,000 | ||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||
Common stock holders rights | one vote for each share. | ||||||||||
Common stock, issued | 1,492,595 | 1,427,124 | 998,622 | ||||||||
Common stock, outstanding | 1,492,595 | 1,427,124 | 998,622 | ||||||||
Number of shares issued | 82,500 | 123,000 | |||||||||
Shares, Issued | 3,000 | ||||||||||
Number of shares issued upon conversion of convertible securities | 520,000 | ||||||||||
Stock-based compensation | $ 838,250 | $ 150,095 | $ 1,690,000 | $ 828,000 | |||||||
Employment Agreements [Member] | Vested Ratably Through May Thirty One Two Thousand Twenty [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Number of shares issued | 240,000 | 95,000 | |||||||||
Accredited Investors [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Number of shares issued | 3,116 | ||||||||||
Maximum [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Common stock, authorized | 36,000,000 | ||||||||||
Minimum [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Common stock, authorized | 20,000,000 | ||||||||||
Private Placement [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Number of shares purchased | 875 | 31,812 | |||||||||
Private Placement [Member] | Accredited Investors [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Number of sale of stock, value | $ 1,925,000 | ||||||||||
Number of shares purchased | 962,500 | ||||||||||
Common stock exchanged for warrants description | (i) one share of common stock, par value $0.0001 per share of the Company (the “Common Stock”) and (ii) a warrant to purchase one share of Common Stock, exercisable at a price of $4.00 per share, exercisable at any time within five years of issuance (each, a “Warrant”) as provided for in the Company’s Term Sheet for Unit Offering dated February 6, 2019 (the “Term Sheet”). | ||||||||||
Private Placement [Member] | Maximum [Member] | Accredited Investors [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Number of sale of stock, value | $ 2,000,000 | ||||||||||
Number of shares purchased | 1,000,000 | ||||||||||
Share price | $ 2 | ||||||||||
Subsequent Event [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Number of shares issued | 42,000 | ||||||||||
Number of shares issued for services | 21,000 | ||||||||||
Number of shares issued upon conversion of convertible securities | 15,000 | ||||||||||
Franchise [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Number of shares issued for acquisition | 65,000 | ||||||||||
Franchise [Member] | Subsequent Event [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Number of shares issued for acquisition | 6,000 | ||||||||||
Common Stock [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Number of shares issued | 2,976 | 48,396 | 15,625 | ||||||||
Number of common stock shares issued as compensation | 116,174 | 219,535 | 625 | ||||||||
Shares, Issued | 429,000 | ||||||||||
Number of shares issued for services | 21,346 | 6,597 | 53,817 | ||||||||
Employees [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Number of common stock shares issued as compensation | 14,000 | ||||||||||
Officers And Directors [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Number of common stock shares issued as compensation | 240,000 | 15,000 | |||||||||
Vendor [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Number of shares issued for services | 37,000 | ||||||||||
Private Investor [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Sale of warrants | 100,000 | ||||||||||
Warrants to purchase shares of common stock | 100,000 | ||||||||||
Warrants exercise price | $ 20 | ||||||||||
Proceeds from warrants | $ 100,000 | ||||||||||
P L A Y Live Nation Inc [Member] | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Number of shares issued for acquisition | 94,000 |
SCHEDULE OF COMPONENTS OF DEFER
SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS (Details) - USD ($) | May 31, 2021 | May 31, 2020 |
Income Tax Disclosure [Abstract] | ||
Net Operating Loss | $ 1,926,000 | $ 770,000 |
Impairment of cost method investment | 129,000 | |
Accrued Expenses | 98,000 | |
Allowance for Doubtful Accounts | 10,000 | |
Gross deferred tax asset | 2,163,000 | 770,000 |
Less: Valuation allowance | (1,972,000) | (825,000) |
Net deferred tax asset | 191,000 | 55,000 |
Amortization of intangible assets | (98,000) | (55,000) |
Depreciation | (93,000) | |
Net deferred assets/liabilities |
SCHEDULE OF RECONCILIATION OF T
SCHEDULE OF RECONCILIATION OF THE STATUTORY FEDERAL INCOME TAX RATE (Details) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Expected provision (benefit) at statutory rate | (21.00%) | (21.00%) |
State taxes, net of federal tax benefit | (4.40%) | (4.40%) |
Permanent differences-stock based compensation | 9.00% | 15.00% |
Increase in valuation allowance | 16.40% | 10.40% |
Total provision (benefit) for income taxes | 0.00% | 0.00% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Aug. 31, 2021 | Aug. 31, 2020 | May 31, 2021 | May 31, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Income tax provisions | ||||
Change in valuation allowance | 1,257,000 | 444,000 | ||
Federal net operating loss carry forwards | $ 7,600,000 | $ 3,800,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Oct. 07, 2021 | Sep. 28, 2021 | Sep. 01, 2021 | Aug. 20, 2021 | Jul. 26, 2021 | Jun. 11, 2021 | Mar. 10, 2021 | Sep. 30, 2021 | Sep. 28, 2021 | Aug. 23, 2021 | Aug. 19, 2021 | Jul. 22, 2021 | Jun. 16, 2021 | Aug. 31, 2021 | Aug. 27, 2021 | May 31, 2021 | May 31, 2020 | Oct. 01, 2021 | Sep. 17, 2021 |
Subsequent Event [Line Items] | |||||||||||||||||||
Original issue discount | $ 2,394,343 | $ 947,873 | $ 25,180 | ||||||||||||||||
Shares issued for cash, shares | 82,500 | 123,000 | |||||||||||||||||
[custom:DebtForgivenessIncome] | $ 93,761 | ||||||||||||||||||
Holder [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Principal amount of debt instrument | 90,909 | ||||||||||||||||||
Original issue discount | 903,588 | ||||||||||||||||||
Repayment of debt | 225,000 | ||||||||||||||||||
Existing Franchisee [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Shares issued price per share | $ 10.85 | ||||||||||||||||||
Stock Issued During Period, Shares, Acquisitions | 6,000 | ||||||||||||||||||
Asset Purchase Agreement [Member] | Ventures LLC [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Principal amount of debt instrument | $ 200,000 | ||||||||||||||||||
Warrants issued | 187,400 | ||||||||||||||||||
Stock Issued During Period, Shares, Acquisitions | 3,749 | ||||||||||||||||||
Asset Purchase Agreement [Member] | LGH Investments LLC [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Principal amount of debt instrument | $ 200,000 | ||||||||||||||||||
FirstFire SPA [Member] | FirstFire Global Oppurtunities Fund, LLC [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Original issue discount | $ 56,000 | ||||||||||||||||||
Proceeds from issuance of debt | $ 504,000 | ||||||||||||||||||
Debt conversion price | $ 11.50 | ||||||||||||||||||
Subsequent Event [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Shares issued for cash, shares | 42,000 | ||||||||||||||||||
Subsequent Event [Member] | Paycheck Protection Plan [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
[custom:DebtForgivenessIncome] | $ 40,500 | ||||||||||||||||||
Subsequent Event [Member] | Holder [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Repayments of Related Party Debt | $ 500,000 | ||||||||||||||||||
Subsequent Event [Member] | FirstFire Global Oppurtunities Fund, LLC [Member] | Warrant [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Warrants issued | 40,000 | 40,000 | |||||||||||||||||
Subsequent Event [Member] | Maxim [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Restricted shares issued to purchase common stock | 82,500 | ||||||||||||||||||
Subsequent Event [Member] | Asset Purchase Agreement [Member] | Existing Franchisee [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Shares issued to acquire assets, shares | 6,000 | ||||||||||||||||||
Shares issued to acquire assets, value | $ 65,100 | ||||||||||||||||||
Shares issued price per share | $ 10.85 | ||||||||||||||||||
Subsequent Event [Member] | Asset Purchase Agreement [Member] | Simplicity Tracy LLC [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 4,500 | ||||||||||||||||||
Subsequent Event [Member] | FirstFire SPA [Member] | FirstFire Global Oppurtunities Fund, LLC [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Debt instrument, default interest rate | 12.00% | ||||||||||||||||||
Debt maturity date | Jun. 10, 2023 | ||||||||||||||||||
Principal amount of debt instrument | $ 1,266,666 | ||||||||||||||||||
Shares issued for commitment fee, shares | 11,875 | ||||||||||||||||||
Debt payment terms | the Company agreed to pay to $1,266,666 (the “FirstFire Principal Sum”) to FirstFire and to pay interest on the principal balance at the rate of 12% per annum (provided that the first six months of interest shall be guaranteed and the remaining 18 months of interest shall be deemed earned in full if any amount is outstanding under the FirstFire Note after 180 days from June 10, 2021). | ||||||||||||||||||
Debt principal payment | $ 1,266,666 | ||||||||||||||||||
Original issue discount | 126,666 | ||||||||||||||||||
Proceeds from issuance of debt | $ 1,140,000 | ||||||||||||||||||
Debt conversion, description | FirstFire Note. The Company intends to use the proceeds for working capital and to pay off an existing promissory note issued by the Company in favor of Maxim. FirstFire may convert the FirstFire Note into the Company’s common stock (subject to the beneficial ownership limitations of 4.99% in the FirstFire Note; provided however, that the limitation on conversion may be waived (up to 9.99%) by FirstFire upon, at the election of FirstFire, not less than 61 days’ prior notice to the Company) at any time at a conversion price equal to $11.50 per share, as the same may be adjusted as provided in the FirstFire Note. | ||||||||||||||||||
Debt conversion price | $ 11.50 | ||||||||||||||||||
Outstanding payment, percentage | 125.00% | ||||||||||||||||||
Warrants issued | 593,750 | ||||||||||||||||||
Warrant expiration date | Nov. 1, 2021 | ||||||||||||||||||
Warrant exercise price | $ 10.73 | ||||||||||||||||||
Subsequent Event [Member] | GS SPA [Member] | GS Capital [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Debt instrument, default interest rate | 12.00% | ||||||||||||||||||
Debt maturity date | Jun. 10, 2023 | ||||||||||||||||||
Principal amount of debt instrument | $ 333,333 | ||||||||||||||||||
Shares issued for commitment fee, shares | 3,125 | ||||||||||||||||||
Debt payment terms | the Company agreed to pay to $300,000.00 (the “GS Principal Sum”) to GS and to pay interest on the principal balance at the rate of 12% per annum (provided that the first six months of interest shall be guaranteed and the remaining 18 months of interest shall be deemed earned in full if any amount is outstanding under the GS Note after 180 days from June 10, 2021). | ||||||||||||||||||
Debt principal payment | $ 300,000 | ||||||||||||||||||
Original issue discount | 33,333 | ||||||||||||||||||
Proceeds from issuance of debt | $ 300,000 | ||||||||||||||||||
Debt conversion, description | GS may convert the GS Note into the Company’s common stock (subject to the beneficial ownership limitations of 4.99% in the GS Note; provided however, that the limitation on conversion may be waived (up to 9.99%) by GS upon, at the election of GS, not less than 61 days’ prior notice to the Company) at any time at a conversion price equal to $11.50 per share, as the same may be adjusted as provided in the GS Note. | ||||||||||||||||||
Debt conversion price | $ 11.50 | ||||||||||||||||||
Outstanding payment, percentage | 125.00% | ||||||||||||||||||
Warrants issued | 156,250 | ||||||||||||||||||
Warrant expiration date | Nov. 1, 2021 | ||||||||||||||||||
Warrant exercise price | $ 10.73 | ||||||||||||||||||
Increase in debt | $ 100,000 | ||||||||||||||||||
Subsequent Event [Member] | Fourth Amendment [Member] | Maxim [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Debt payment terms | the Company and Maxim agreed that all obligations under the Series A-2 Maxim Note, as amended, shall be extinguished, and the Series A-2 Maxim Note, as amended, shall be deemed repaid in its entirety, upon the satisfaction of the following obligations: (i) the Company’s payment of $500,000 to Maxim within three business days of August 19, 2021, (ii) the Company’s issuance of 20,000 restricted shares of the Company’s common stock to Maxim within seven business days of August 19, 2021, and (iii) the Company’s issuance of a common stock purchase warrant to Maxim on August 19, 2021 for the purchase of 365,000 shares of the Company’s common stock. | ||||||||||||||||||
Warrants issued | 365,000 | ||||||||||||||||||
Warrant exercise price | $ 13 | ||||||||||||||||||
Debt payment terms | the Company and Maxim agreed that all obligations under the Series A-2 Maxim Note, as amended, shall be extinguished, and the Series A-2 Maxim Note, as amended, shall be deemed repaid in its entirety, upon the satisfaction of the following obligations: (i) the Company’s payment of $500,000 to Maxim within three business days of August 19, 2021, (ii) the Company’s issuance of 20,000 restricted shares of the Company’s common stock to Maxim within seven business days of August 19, 2021, and (iii) the Company’s issuance of a common stock purchase warrant to Maxim on August 19, 2021 for the purchase of 365,000 shares of the Company’s common stock. | ||||||||||||||||||
Repayment of debt | $ 500,000 | ||||||||||||||||||
Restricted shares issued to purchase common stock | 20,000 | ||||||||||||||||||
Subsequent Event [Member] | Fourth Amendment [Member] | Maxim [Member] | Common Stock [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Shares reserved for future issuance | 365,000 | ||||||||||||||||||
Subsequent Event [Member] | Jefferson SPA [Member] | Jefferson [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Debt instrument, default interest rate | 12.00% | ||||||||||||||||||
Debt maturity date | Aug. 23, 2023 | ||||||||||||||||||
Principal amount of debt instrument | $ 333,333 | ||||||||||||||||||
Shares issued for commitment fee, shares | 3,125 | ||||||||||||||||||
Debt principal payment | $ 333,333 | ||||||||||||||||||
Original issue discount | 333,333 | ||||||||||||||||||
Proceeds from issuance of debt | $ 300,000 | ||||||||||||||||||
Debt conversion, description | that upon failure to make any payment under the Jefferson Note, the conversion price will be $10.00 per share, as the same may be adjusted as provided in the Jefferson Note. The Jefferson Note has a 4.99% equity blocker; provided, however, that the 4.99% equity blocker may be waived (up to 9.99%) by Jefferson, at Jefferson’s election, on not less than 61 days’ prior notice to the Company. | ||||||||||||||||||
Warrants issued | 156,250 | ||||||||||||||||||
Warrant expiration date | Nov. 1, 2021 | ||||||||||||||||||
Warrant exercise price | $ 10.73 | ||||||||||||||||||
Repayment of debt | $ 300,000 | ||||||||||||||||||
Proceeds from equity financing | $ 300,000 | ||||||||||||||||||
Subsequent Event [Member] | Ionic SPA [Member] | Ionic Ventures, LLC [Member] | Ionic Warrant [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Warrants issued | 729,167 | 729,167 | |||||||||||||||||
Warrant exercise price | $ 10.73 | $ 10.73 | |||||||||||||||||
Warrants and Rights Outstanding, Term | 3 years | 3 years | |||||||||||||||||
Subsequent Event [Member] | Ionic SPA [Member] | Ionic Ventures, LLC [Member] | Ionic Promissory Note [Member] | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Debt instrument, default interest rate | 12.00% | 12.00% | |||||||||||||||||
Debt maturity date | Sep. 28, 2023 | ||||||||||||||||||
Principal amount of debt instrument | $ 1,555,555.56 | $ 1,555,555.56 | |||||||||||||||||
Original issue discount | 155,555.56 | $ 155,555.56 | |||||||||||||||||
Proceeds from issuance of debt | $ 1,400,000 | ||||||||||||||||||
Debt conversion price | $ 11.50 | $ 11.50 | |||||||||||||||||
Repayment of debt | $ 1,400,000 | ||||||||||||||||||
Shares issued for cash, shares | 14,584 | ||||||||||||||||||
Equity Method Investment, Ownership Percentage | 4.99% | 4.99% | |||||||||||||||||
Debt Instrument, Interest Rate During Period | 125.00% |