Cover
Cover - shares | 9 Months Ended | |
Feb. 28, 2022 | Mar. 31, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Feb. 28, 2022 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --05-31 | |
Entity File Number | 001-38964 | |
Entity Registrant Name | SCHMITT INDUSTRIES, INC. | |
Entity Central Index Key | 0000922612 | |
Entity Tax Identification Number | 93-1151989 | |
Entity Incorporation, State or Country Code | OR | |
Entity Address, Address Line One | 2765 N.W. Nicolai Street | |
Entity Address, City or Town | Portland | |
Entity Address, State or Province | OR | |
Entity Address, Postal Zip Code | 97210 | |
City Area Code | (503) | |
Local Phone Number | 227-7908 | |
Title of 12(b) Security | Common Stock - no par value | |
Trading Symbol | SMIT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 3,822,683 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Feb. 28, 2022 | May 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 1,999,241 | $ 4,032,690 |
Accounts receivable, net | 936,809 | 1,154,645 |
Inventories, net | 2,191,844 | 1,553,310 |
Prepaid expenses | 30,867 | 198,345 |
Income taxes receivable | 17,730 | 18,057 |
Total current assets | 5,176,491 | 6,957,047 |
Leasehold assets | 11,423,035 | 10,448,486 |
Property and equipment, net | 2,248,500 | 2,824,017 |
Property and equipment held for sale, net | 433,410 | 174,847 |
Leasehold, utilities and ERP deposits | 829,001 | 431,808 |
Other assets | ||
Intangible assets, net | 242,088 | 337,725 |
TOTAL ASSETS | 20,352,525 | 21,173,930 |
Current liabilities | ||
Accounts payable | 555,974 | 583,750 |
Accrued commissions | 59,208 | 60,614 |
Accrued payroll liabilities | 505,248 | 527,608 |
Accrued liabilities | 329,492 | 465,146 |
Customer deposits and prepayments | 112,791 | 93,364 |
Other accrued liabilities | 424,799 | 694,590 |
Current portion of long-term lease liabilities | 1,417,386 | 1,042,331 |
Current portion of long-term debt | 472,431 | 541,691 |
Total current liabilities | 3,877,329 | 4,009,094 |
Long-term debt, net current portion | 1,527,569 | 3,253,389 |
Long-term leasehold liabilities, net current portion | 10,833,399 | 10,141,864 |
Total liabilities | 16,238,297 | 17,404,347 |
Stockholders' equity | ||
Common stock, no par value, 20,000,000 shares authorized, 4,236,821 and 3,818,770 shares issued and outstanding at February 28, 2022, respectively; and 4,204,553 and 3,786,502 shares issued and outstanding at May 31, 2021, respectively | 12,318,375 | 12,223,359 |
Accumulated deficit | (8,204,147) | (8,453,776) |
Total stockholders' equity | 4,114,228 | 3,769,583 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 20,352,525 | $ 21,173,930 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Feb. 28, 2022 | May 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0 | $ 0 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 4,236,821 | 4,204,553 |
Common stock, shares outstanding | 3,818,770 | 3,786,502 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2022 | Feb. 28, 2021 | Feb. 28, 2022 | Feb. 28, 2021 | |
Income Statement [Abstract] | ||||
Net sales | $ 1,848,913 | $ 1,668,444 | $ 8,570,053 | $ 5,205,641 |
Cost of revenue | 912,076 | 837,254 | 3,618,925 | 2,804,694 |
Gross profit | 936,837 | 831,190 | 4,951,128 | 2,400,947 |
Operating expenses | ||||
Selling, general and administrative | 3,312,388 | 3,313,918 | 11,604,964 | 8,492,150 |
Transaction costs | 0 | 0 | 0 | 125,167 |
Research and development | 10,771 | 21,732 | 25,616 | 57,062 |
Total operating expenses | 3,323,159 | 3,335,650 | 11,630,580 | 8,674,379 |
Operating loss | (2,386,322) | (2,504,460) | (6,679,452) | (6,273,432) |
Bargain purchase gain | 0 | (2,277) | 0 | 1,187,235 |
Gain on sale of property and equipment | 4,598,095 | |||
Forgiveness of PPP loan | 1,471,292 | 0 | 2,059,826 | 0 |
Interest expense | (8,232) | (5,400) | (37,811) | (12,854) |
Other income, net | 38,286 | 90,703 | 323,589 | 58,777 |
Income (loss) before income taxes | (884,976) | (2,421,434) | 264,247 | (5,040,274) |
Income tax provision (benefit) | 8,268 | (1,637) | 14,618 | (404,667) |
Net income (loss) | $ (893,244) | $ (2,419,797) | $ 249,629 | $ (4,635,607) |
Net income (loss) per common share | ||||
Basic | $ (0.24) | $ (0.64) | $ 0.07 | $ (1.23) |
Weighted-average number of common shares, basic | 3,788,315 | 3,764,536 | 3,790,022 | 3,759,369 |
Diluted | $ (0.24) | $ (0.64) | $ 0.07 | $ (1.23) |
Weighted-average number of common shares, diluted | 3,788,315 | 3,764,536 | 3,813,675 | 3,759,369 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Feb. 28, 2022 | Feb. 28, 2021 | |
Cash flows relating to operating activities | ||
Net income (loss) | $ 249,629 | $ (4,635,607) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Bargain purchase gain | 0 | (1,187,235) |
Forgiveness of Paycheck Protection Program loan | (2,059,826) | 0 |
Depreciation and amortization | 401,448 | 307,732 |
Gain on sale of property and equipment | (4,598,095) | |
Stock-based compensation | 95,016 | 163,493 |
Deferred income taxes | 0 | (406,304) |
Non-cash lease costs | 92,042 | 596,188 |
Increase (decrease) in: | ||
Accounts receivable, net | 217,836 | (381,945) |
Inventories, net | (638,534) | (313,012) |
Prepaid expenses | 167,478 | (39,253) |
Deposits on capital improvements to factory | 0 | (417,794) |
Rent, utility deposits and ERP deposits | (397,193) | (173,294) |
Accounts payable | (27,776) | 476,589 |
Accrued liabilities and customer deposits | (409,187) | 352,537 |
Net cash used in operating activities | (6,907,162) | (5,657,905) |
Cash flows relating to investing activities | ||
Acquisition of Ample Hills | 0 | (1,713,404) |
Purchases of property and equipment | (188,687) | (510,321) |
Proceeds from the sale of property and equipment | 4,797,924 | 35,500 |
Net cash provided by (used in) investing activities | 4,609,237 | (2,188,225) |
Cash flows relating to financing activities | ||
Proceeds from Paycheck Protection Program, net of repayment | 264,476 | 1,795,080 |
Payments on short-term borrowing | 0 | (48,625) |
Repurchase of common stock | 0 | (300,492) |
Net cash provided by financing activities | 264,476 | 1,445,963 |
Decrease in cash and cash equivalents | (2,033,449) | (6,400,167) |
Cash and cash equivalents, beginning of period | 4,032,690 | 10,566,531 |
Cash and cash equivalents, end of period | 1,999,241 | 4,166,364 |
Supplemental disclosure of cash flow information | ||
Cash paid for income taxes, net of refunds | 19,200 | 80,600 |
Cash paid for interest | $ 63 | $ 616 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at May. 31, 2020 | $ 12,257,306 | $ (364,104) | $ 11,893,202 |
Shares outstanding at May. 31, 2020 | 3,784,554 | ||
Shares issued to directors and officers upon vesting of RSUs | $ 0 | 0 | 0 |
Shares issued to directors and officers upon vesting of RSUs, shares | 77,281 | ||
Stock-based compensation | $ 163,493 | 0 | 163,493 |
Net loss | 0 | (4,635,607) | (4,635,607) |
Share repurchases | $ (234,517) | (234,517) | |
Share repurchases, shares | (72,101) | ||
Repurchase of restricted stock units | $ (65,975) | 0 | $ (65,975) |
Repurchase of restricted stock units, shares | (14,400) | ||
Ending balance, value at Feb. 28, 2021 | $ 12,120,307 | (4,999,711) | $ 7,120,596 |
Shares outstanding at Feb. 28, 2021 | 3,775,334 | ||
Beginning balance, value at May. 31, 2021 | $ 12,223,359 | (8,453,776) | 3,769,583 |
Shares outstanding at May. 31, 2021 | 3,786,502 | ||
Shares issued to directors and officers upon vesting of RSUs | $ 0 | 0 | 0 |
Shares issued to directors and officers upon vesting of RSUs, shares | 32,268 | ||
Stock-based compensation | $ 95,016 | 0 | 95,016 |
Net loss | 0 | 249,629 | 249,629 |
Ending balance, value at Feb. 28, 2022 | $ 12,318,375 | $ (8,204,147) | $ 4,114,228 |
Shares outstanding at Feb. 28, 2022 | 3,818,770 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Feb. 28, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation In the opinion of management of Schmitt Industries, Inc. (the "Company", "Schmitt", "we" or "our"), the accompanying unaudited interim condensed consolidated financial statements, (collectively hereinafter the “consolidated financial statements”), have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly its financial position as of February 28, 2022 and its results of operations and its cash flows for the periods presented. The consolidated balance sheet at May 31, 2021 has been derived from the Annual Report on Form 10-K for the fiscal year ended May 31, 2021. The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2021. Operating results for the interim periods presented are not necessarily indicative of the results that may be experienced for the fiscal year ending May 31, 2022. Significant Accounting Policies The Company’s significant accounting policies are described in “Note 2: Summary of Significant Accounting Policies” of our most recent Form 10-K for the fiscal year ended May 31, 2021. Principles of Consolidation These consolidated financial statements include those of the Company and its wholly owned subsidiaries: Schmitt Measurement Systems, Inc. and Ample Hills Acquisition LLC. All significant intercompany accounts and transactions have been eliminated in the preparation of the consolidated financial statements. Reclassifications Certain amounts in the prior period consolidated statements of operations have been reclassified to conform to the presentation of the current period. These reclassifications had no effect on previously recorded net income (loss). Use of Estimates The preparation of the consolidated financial statements in conformity with Generally Accepted Accounting Principles in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. New Accounting Standards The Company assesses the adoption impacts of recently issued accounting standards by the Financial Accounting Standards Board (“FASB”) on the Company's financial statements as well as material updates to previous assessments, if any, from the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2021. There were no new material accounting standards issued in the nine months ended February 28, 2022 that impacted the Company. Recently Adopted Accounting Standards There were no new material accounting standards adopted in the nine months ended February 28, 2022. Liquidity Our primary source of liquidity is our cash flows from operating activities resulting from net income and management of working capital. As of February 28, 2022, our available funds consisted of $ 1,999,241 Investor On August 7, 2021, the Company received The Commitment Letter to Schmitt Industries (“Commitment”) from our CEO. The Commitment states that Sententia Capital Management LLC (“SCM”) or its affiliated entities will provide additional capital as required to Schmitt up to $ 1,300,000 On November 10, 2021, the Company closed on the sale of its building located at 2451 NW 28th Avenue, Portland, OR 97210 for $ 5,100,000 4,753,724 4,598,095 Business Combinations The Company accounts for business combinations in accordance with Accounting Standard Codification (“ASC”) 805 - Business Combinations Acquisition of Ample Hills Assets Held for Sale Assets held for sale are stated at the lower of cost less depreciation or expected net realizable value. Depreciation is computed using the straight-line method over estimated useful lives of 25 The Company owned a two story 35,050 5,100,000 4,753,724 4,598,095 Leases The Company owns two industrial office buildings totaling 11,667 Leases As of February 28, 2022 and May 31, 2021, assets held for sale consisted of the following: Summary of Significant Accounting Policies - Schedule of Assets Held for Sale February 28, 2022 May 31, 2021 Land $ 159,000 $ 140,000 Buildings and improvements 1,616,250 246,135 Total property and equipment held for sale 1,775,250 386,135 Less accumulated depreciation (1,341,840 ) (211,288 ) Total property and equipment held for sale, net $ 433,410 $ 174,847 Concentration of Credit Risk Financial instruments that potentially expose the Company to concentration of credit risk are trade accounts receivable. Credit terms generally require an invoice to be paid within 30 to 60 days or include a discount of up to 1.5% if the invoice is paid within ten days, with the net amount payable in 30 days. Terms are set for each account depending on the customer's credit standing with the Company. Financial Instruments The carrying value of all other financial instruments potentially subject to valuation risk (principally consisting of cash and cash equivalents, accounts receivable, accounts payable, the current portion of the PPP loans, customer deposits and prepayments) approximates fair value because of their short-term maturities. |
AMPLE HILLS BUSINESS ACQUISITIO
AMPLE HILLS BUSINESS ACQUISITION | 9 Months Ended |
Feb. 28, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
AMPLE HILLS BUSINESS ACQUISITION | NOTE 2 - AMPLE HILLS BUSINESS ACQUISITION On July 9, 2020, Ample Hills Acquisition LLC ("Buyer"), a New York limited liability company and wholly owned subsidiary of the Company, entered into an Asset Purchase Agreement (the "Agreement"), dated as of June 29, 2020, with Ample Hills Holdings, Inc., a Delaware corporation, Ample Hills Creamery, Inc., a New York corporation, and their subsidiaries (collectively, "Ample Hills"). The transactions contemplated by the Agreement (the "Transactions") closed on July 9, 2020, the day after a sale order approving the Transactions was entered by the Bankruptcy Court (defined below). The Ample Hills entities were debtors-in-possession under title 11 of the United States Code, 11 U.S.C. § 101 et seq. pursuant to voluntary petitions for relief filed under chapter 11 of the Bankruptcy Code on March 15, 2020 in the United States Bankruptcy Court for the Eastern District of New York (the "Bankruptcy Court"). The Transactions were conducted through a Bankruptcy Court-supervised process, subject to Bankruptcy Court-approved bidding procedures, approval of the Transactions by the Bankruptcy Court, and the satisfaction of certain closing conditions. The Agreement assigned to Buyer, or one or more of its affiliates, the Acquired Assets (as defined in the Agreement) and Buyer, or one or more of its affiliates, assumed the Assumed Liabilities (as defined in the Agreement) for a purchase price of $ 1,000,000 700,000 125,167 The Company's strategy includes utilizing its capital for value opportunities. Accordingly, the primary purpose of the Ample Hills acquisition was to capitalize on this strategy by purchasing a business with a good brand name, which in light of the purchase price paid in bankruptcy, could have a significant upside. The Transactions were funded by the Company with cash on hand and has been accounted for in accordance with ASC 805. Our estimates of fair value are based upon assumptions believed to be reasonable, yet are inherently uncertain and, as a result, may differ from actual performance. During the measurement period, not to exceed one year from the date of acquisition, the Company recorded adjustments to the estimated fair values of the assets acquired and liabilities assumed with a corresponding adjustment to goodwill or bargain purchase gain, as appropriate, in the period in which such revised estimates are identified. The purchase price allocation has been finalized as of May 31, 2021, within the measurement period, and no further adjustments will be made. In accordance with ASC 805 , The following table summarizes the Company's fair value of the assets acquired, and liabilities assumed, as of July 9, 2020, for the Company's acquisition of Ample Hills. Ample Hills Business Acquisition - Schedule of Purchase Price Allocation Purchase Price Cash paid to sellers $ 1,000,000 Cash paid for cure costs 713,404 Total Purchase Price $ 1,713,404 Purchase Price Allocation Assets Acquired Right-of-use operating lease assets 10,645,098 Website 25,545 Tradename and trademarks 903,422 Proprietary recipes 146,739 Security deposits 225,180 Machinery and equipment 564,553 Leasehold improvements 815,798 Inventory 632,100 Total assets acquired $ 13,958,335 Liabilities Assumed Right-of-use operating lease liabilities 10,645,098 Deferred tax liability 405,688 Customer deposits 20,204 Gift card liabilities 35,133 Total liabilities assumed $ 11,106,123 Net assets acquired 2,852,212 Gain on bargain purchase $ 1,138,808 As a result of additional information obtained during the measurement period about the facts and circumstances that existed as of the acquisition date, the Company recorded measurement period adjustments which resulted in a reduction in the bargain purchase gain, which reduced it to $ 1,138,808 Ample Hills was a privately held company that was acquired out of bankruptcy. Management has performed a thorough evaluation of the pre-bankruptcy books and found the records to not be auditable. Therefore, management engaged a third- party consultant to assist in evaluating alternative means by which to provide historic financial data in future periods. For further information see Note 11 – Segment Information Intangible Assets, net |
STOCK OPTIONS AND STOCK-BASED C
STOCK OPTIONS AND STOCK-BASED COMPENSATION | 9 Months Ended |
Feb. 28, 2022 | |
Share-based Payment Arrangement [Abstract] | |
STOCK OPTIONS AND STOCK-BASED COMPENSATION | NOTE 3 - STOCK OPTIONS AND STOCK-BASED COMPENSATION Stock-based compensation includes expense charges for all stock-based awards to employees and directors granted under the Company's stock option plan. Stock-based compensation recognized during the period is based on the portion of the grant date fair value of the stock-based award that will vest during the period, adjusted for forfeitures as they occur. Compensation cost for all stock-based awards is recognized using the straight-line method. Stock Options As of February 28, 2022, the Company had outstanding stock options to purchase 22,500 1.70 Outstanding Options Exercisable Options Number of Shares Weighted- Average Exercise Price Weighted-Average Remaining Contractual Life (years) Number of Shares Weighted- Average Exercise Price 22,500 $ 1.70 5.1 22,500 $ 1.70 No stock options were granted, exercised, canceled or expired under the Company's stock-based compensation plans during the nine months ended February 28, 2022. Restricted Stock Units Service-based and market-based restricted stock units (“RSUs”) are granted to key employees, members of the Company's Board of Directors and others. Service-based RSUs generally fully vest on the first anniversary date of the award. Market-based RSUs are contingent on continued service and vest based on the 15-day average closing price of the Company's common stock equal or exceeding certain targets established by the Compensation Committee of the Board of Directors. No market-based RSUs were granted in the nine months ended February 28, 2022. During the nine months ended February 28, 2022, 12,332 RSU activity under the Company's stock-based compensation plans during the nine months ended February 28, 2022 is summarized as follows: Stock Options and Stock-Based Compensation - Schedule of Restricted Stock Unit Activity Number of Units Weighted-Average Price at Grant Date Aggregate Intrinsic Value Non-vested RSUs - May 31, 2021 34,237 $ 4.71 $ 161,400 RSUs granted 12,332 $ 4.41 54,358 RSUs forfeited (2,058 ) $ 4.86 (10,000 ) RSUs vested (28,376 ) $ 4.26 (120,913 ) Non-vested RSUs – February 28, 2022 16,135 $ 5.26 $ 84,845 During the three and nine months ended February 28, 2022, total restricted stock-compensation expense recognized was $ 25,647 95,016 30,424 |
WEIGHTED-AVERAGE SHARES AND REC
WEIGHTED-AVERAGE SHARES AND RECONCILIATION | 9 Months Ended |
Feb. 28, 2022 | |
Net income (loss) per common share | |
WEIGHTED-AVERAGE SHARES AND RECONCILIATION | NOTE 4 – WEIGHTED-AVERAGE SHARES AND RECONCILIATION Basic net (loss) income per share is computed using the weighted-average number of shares of common stock outstanding. Diluted net (loss) income per share is computed using the weighted-average number of shares of common stock outstanding, adjusted for dilutive incremental shares attributed to outstanding options to purchase common stock and RSUs vested but not issued. Common stock equivalents for stock options are computed using the treasury stock method. In periods in which a net loss is incurred, no common stock equivalents are included since they are antidilutive and as such all stock options outstanding are excluded from the computation of diluted net loss in those periods. For the three and nine months ended February 28, 2022, potentially dilutive securities consisted of options to purchase 22,500 1.70 Basic weighted-average shares for the three and nine months ended February 28, 2022 and February 28, 2021 were as follows: Weighted-Average Shares and Reconciliation - Schedule of Weighted-Average Number of Shares Three Months Ended Nine Months Ended 2022 2021 2022 2021 Weighted-average shares (basic) 3,788,315 3,764,536 3,790,022 3,759,369 Effect of dilutive stock options — — 23,653 — Weighted-average shares (diluted) 3,788,315 3,764,536 3,813,675 3,759,369 |
LEASES
LEASES | 9 Months Ended |
Feb. 28, 2022 | |
Leases [Abstract] | |
LEASES | NOTE 5 – LEASES Leases – as a Lessor On November 22, 2019, the Company entered into a triple-net lease agreement with Tosei America, Inc. (“Tosei”), whereby Tosei leased the Company's building located at 2451 NW 28th Avenue, Portland, OR 97210 for a base monthly fee of $ 23,282 120 On October 1, 2020, the Company entered into a lease agreement (“Humboldt Lease”) whereby Humboldt Street Collective, LLC (“Humboldt”) will lease the Company's building located at 2765 NW Nicolai Street, Portland, OR 97210 for a monthly fee of $ 3,185 62 Years Ending May 31, 2022 $ 9,841 2023 40,151 2024 41,356 2025 42,597 2026 14,338 Total undiscounted cash flow $ 148,283 On December 1, 2020, the Company entered into the Second Humboldt Lease, whereby Humboldt leased a portion of the Company’s building located at 2451 NW 28th Avenue, Portland, OR 97210 for a monthly fee of $ 4,596 59 Leases – as a Lessee In connection with the acquisition of Ample Hills, the Company assumed multiple real estate leases for retail store locations as well as a manufacturing facility, all of which are classified as operating leases. On November 12, 2021, the Company signed an additional retail lease agreement in conjunction with its new retail store located in New York. The store is scheduled to open during the summer of 2022. Payments on this lease will commence on April 22, 2022. To determine whether a contract is or contains a lease, the Company determines at contract inception whether it contains the right to control the use of an identified asset for a period of time in exchange for consideration to the counterparty in the transaction. If the Company determines that the contract provides the right to obtain substantially all of the economic benefit from the use of the leased asset, as well as the right for the Company to direct the asset's use, the Company recognizes a right-of-use asset and liability upon contract inception. The initial carrying value of the operating lease liability is determined by calculating the present value of future lease payments under the contract. The Company considers the future lease payments under the original terms of the contract, and also includes explicitly enumerated renewal periods where management is reasonably certain that such renewal options will be exercised. The Company’s operating leases contain varying terms and expire at various dates through 2032. For the three months ended February 28, 2022 and February 28, 2021, lease expenses under fixed term leases amounted to $ 478,890 400,609 1,347,522 1,099,993 Certain of the Company’s operating leases contain variable lease payments related to certain performance targets by the Company at the underlying store locations. These variable lease costs are recognized as incurred in accordance with ASC 842 - Leases The Company's future minimum lease payments required under operating leases that have commenced as of February 28, 2022 were as follows: Leases - Schedule of Future Minimum Lease Payments for Operating Leases Years Ending May 31, 2022 $ 446,148 2023 1,886,203 2024 1,793,510 2025 1,748,643 2026 1,529,082 Thereafter 7,221,582 Total lease payments 14,625,168 Less: imputed interest (2,374,383) Present value of lease payments 12,250,785 less: current lease obligations (1,417,386) Long-term lease obligations $ 10,833,399 In order to calculate the operating lease asset and liability for a lease, ASC 842 - Leases The Company’s weighted-average remaining lease term and discount rates under operating leases that have commenced as of February 28, 2022 were as follows: Leases - Schedule of Lease Terms and Discount Rates as of February 28, 2022 Weighted-average remaining lease term (years) 8.94 Weighted-average discount rate 3.87 % |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 9 Months Ended |
Feb. 28, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | NOTE 6 – PROPERTY AND EQUIPMENT, NET The Company’s property and equipment, net consisted of the following: Property and Equipment, Net - Schedule of Property, Plant and Equipment, Net February 28, 2022 May 31, 2021 Land Land $ — $ 159,000 Buildings and improvements Buildings and Improvements 1,442,667 2,989,140 Furniture, fixtures and equipment Furniture, Fixtures and Equipment 1,871,580 1,788,784 Total property and equipment 3,314,247 4,936,924 Less: accumulated depreciation (1,065,747 ) (2,112,907 ) Total property and equipment, net $ 2,248,500 $ 2,824,017 Depreciation expense for the three months ended February 28, 2022 and 2021 was $ 74,972 93,068 305,811 217,834 |
CUSTOMER CONCENTRATION
CUSTOMER CONCENTRATION | 9 Months Ended |
Feb. 28, 2022 | |
Risks and Uncertainties [Abstract] | |
CUSTOMER CONCENTRATION | NOTE 7 - CUSTOMER CONCENTRATION Accounts Receivable Revenues The Company had one customer who accounted for 18 11 21 11 18 The Company had two customers who accounted for 23 12 21 |
ACCOUNTS RECEIVABLE, NET
ACCOUNTS RECEIVABLE, NET | 9 Months Ended |
Feb. 28, 2022 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE, NET | NOTE 8 – ACCOUNTS RECEIVABLE, NET The Company’s accounts receivable, net consisted of the following: Accounts Receivable, Net - Schedule of Accounts Receivable, Net February 28, 2022 May 31, 2021 Accounts receivable $ 1,034,729 $ 1,252,968 Less: allowance for doubtful accounts (97,920 ) (98,323 )) Accounts receivable, net $ 936,809 $ 1,154,645 |
INVENTORIES, NET
INVENTORIES, NET | 9 Months Ended |
Feb. 28, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | NOTE 9 – INVENTORIES, NET The Company’s inventories, net consisted of the following: Inventories, Net - Schedule of Inventories, Current February 28, 2022 May 31, 2021 Raw materials $ 1,217,338 $ 901,464 Work-in-process 45,561 35,160 Finished goods 1,029,724 731,826 Total inventories 2,292,623 1,668,450 Less: inventory reserves (100,779 ) (115,140 ) Inventories, net $ 2,191,844 $ 1,553,310 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Feb. 28, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 10 - INCOME TAXES The Company accounts for income taxes using the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management continues to review the level of the valuation allowance on a quarterly basis. There can be no assurance that the Company's future operations will produce sufficient earnings to allow for the deferred tax asset to be fully utilized. The Company currently maintains a full valuation allowance against net deferred tax assets. Each year the Company files income tax returns in the various national, state and local income taxing jurisdictions in which it operates. These tax returns are subject to examination and possible challenge by the taxing authorities. Positions challenged by the taxing authorities may be settled or appealed by the Company. As a result, there is an uncertainty in income taxes recognized in the Company's consolidated financial statements in accordance with ASC Topic 740. The Company applies this guidance by defining criteria that an individual income tax position must meet for any part of the benefit of that position to be recognized in an enterprise's financial statements and provides guidance on measurement, de-recognition, classification, accounting for interest and penalties, accounting in interim periods, disclosure, and transition. As of February 28, 2022 and of May 31, 2021, the Company had no other long-term liabilities related to income tax contingencies. Interest and penalties associated with uncertain tax positions are recognized as components of the "Provision for income taxes." The Company had no liability for payment of interest and penalties as of February 28, 2022 and May 31, 2021. Several tax years are subject to examination by major tax jurisdictions. In the United States, federal tax years ended May 31, 2018 and after are subject to examination. Effective Tax Rate The effective tax rate was 0.9 5.5 0.1 8.0 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Feb. 28, 2022 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | NOTE 11 - SEGMENT INFORMATION As described in Note 2 - Ample Hills Business Acquisition two The foregoing information presents the balances and activities of the Measurement Segment for the three and nine months ended February 28, 2022 and February 28, 2021. For the Ice Cream Segment, the balances and activities for the three and nine months ended February 28, 2022 are included, however, due to the acquisition occurring on July 9, 2020, only a portion of balances and activities are presented for the three and nine months ended February 28, 2021. The following table present the activity for the three months ended February 28, 2022 and 2021: Segment Information - Schedule of Segment Reporting Information by Segment Three Months Ended February 28, 2022 2021 Ice Cream Measurement Ice Cream Measurement Revenue, net $ 972,920 $ 875,993 $ 621,730 $ 1,046,714 Gross margin $ 389,710 $ 547,127 $ 263,355 $ 567,834 Gross margin % 40.1 % 62.5 % 42.4 % 54.2 % Operating loss $ (1,837,593 ) $ (548,729 ) $ (2,200,003 ) $ (304,458 ) Depreciation expense $ 70,761 $ 4,211 $ 82,480 $ 10,588 Amortization expense $ 5,734 $ 26,145 $ 6,017 $ 21,562 Capital expenditures $ 10,200 $ — $ 249,012 $ 2,938 The following table present the activity for the nine months ended February 28, 2022 and 2021: Nine Months Ended February 28, 2022 2021 Ice Cream Measurement Ice Cream Measurement Revenue, net $ 5,908,291 $ 2,661,762 $ 2,282,139 $ 2,923,502 Gross margin $ 3,527,555 $ 1,423,573 $ 944,493 $ 1,456,454 Gross margin % 59.7 % 53.5 % 41.4 % 49.8 % Operating loss $ (4,975,684 ) $ (1,703,768 ) $ (4,901,933 ) $ (1,371,500 ) Depreciation expense $ 285,400 $ 20,411 $ 176,966 $ 40,868 Amortization expense $ 17,200 $ 78,437 $ 16,045 $ 73,853 Capital expenditures $ 188,687 $ — $ 481,063 $ 29,258 Segment Assets February 28, 2022 May 31,2021 Segment assets to total assets Ice Cream Segment $ 7,911,579 $ 10,713,832 Measurement Segment 2,521,490 2,565,701 Corporate assets 9,919,456 7,894,397 Total assets $ 20,352,525 $ 21,173,930 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Feb. 28, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 12 - INTANGIBLE ASSETS Indefinite-Lived Intangible Assets In connection with the acquisition of Ample Hills on July 9, 2020, the Company acquired tradenames and trademarks related to the Ample Hills business. The Company estimated the fair value of these assets utilizing the relief-from-royalty method. These assets were determined to be indefinite-lived and are not amortized, but instead are reviewed for impairment at least annually or whenever events or changes in circumstances indicate that such carrying values may not be recoverable as required by ASC 350, Intangibles — Goodwill and Other During the fourth quarter of the fiscal year ended May 31, 2021, the Company made an evaluation based on factors such as changes in the Ice Cream Segment’s growth rate and recent trends in the Ice Cream Segment’s forecasted financial information and concluded that a triggering event for an interim impairment analysis had occurred. As part of qualitative assessment, it was determined that the carrying value of the Ample Hills tradenames exceeded the estimated fair value. The tradename was valued using the relief-from-royalty method – a variation of the income approach – which was used for the initial valuation of the tradename in connection with the Company’s acquisition of Ample Hills. Due to a reduction in estimated total enterprise value as a result of the change in financial projections, there is no incremental fair value to allocate to the tradenames. Therefore, during the fiscal year ended May 31, 2021, the Company recognized an impairment loss in the amount of $ 903,422 Finite-lived Intangible Assets Amortizable intangible assets include purchased technology and patents for the Company’s Measurement Segment and proprietary recipes and the Company’s website for its Ice Cream Segment. These assets are amortized over their estimated useful lives ranging from three to fifteen years. In total, the weighted-average remaining amortization period of the Company’s intangible assets was 4.71 As of February 28, 2022 and May 31, 2021, for the Measurement Segment, the gross carrying value of amortizable intangible assets was $ 1,663,538 1,554,372 1,475,935 26,145 21,562 78,437 73,853 1.0 As of February 28, 2022 and May 31, 2021, for the Ice Cream Segment, the gross carrying value of amortizable intangible assets was $ 172,184 39,262 22,062 5,734 17,200 7.76 The following tables present the major components of finite-intangible assets which are subject to amortization as of February 28, 2022 and May 31, 2021: Intangible Assets - Schedule of Finite-Lived Intangible Assets As of February 28, 2022 Useful Life (Years) Gross Carrying Value Accumulated Amortization Net Carrying Value Finite-lived intangible assets subject to amortization: Measurement Segment Patented technology 15 $ 1,663,538 $ (1,554,372 ) $ 109,166 Measurement Segment finite-lived assets 1,663,538 (1,554,372 ) 109,166 Ice Cream Segment Proprietary recipes 10 146,739 (24,900 ) 121,839 Company website 3 25,445 (14,362 ) 11,083 Ice Cream Segment finite-lived intangible assets 172,184 (39,262 ) 132,922 Total finite-lived intangible assets $ 1,835,722 $ (1,593,634 ) $ 242,088 As of May 31, 2021 Useful Life (Years) Gross Carrying Value Accumulated Amortization Net Carrying Value Finite-lived intangible assets subject to amortization: Measurement Segment Patented technology 15 $ 1,663,538 $ (1,475,935 ) $ 187,603 Measurement Segment finite-lived assets 1,663,538 (1,475,935 ) 187,603 Ice Cream Segment Proprietary recipes 10 146,739 (13,934 ) 132,805 Company website 3 25,445 (8,128 ) 17,317 Ice Cream Segment finite-lived intangible assets 172,184 (22,062 ) 150,122 Total finite-lived intangible assets $ 1,835,722 $ (1,497,997 ) $ 337,725 Estimated amortization expense remaining for each of the following years is as follows: Intangible Assets - Schedule of Finite-Lived Intangible Assets Future Amortization Expense Year Ending May 31, 2022 $ 36,462 2023 101,370 2024 15,313 2025 14,621 2026 14,621 Thereafter 59,701 Total expected amortization expense $ 242,088 Finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Recoverability is determined by comparing the forecasted future net undiscounted cash flows from the operations to which the assets relate, based on management's best estimates using the appropriate assumptions and projections at the time, to the carrying amount of the assets. If the carrying value is determined to be in excess of such undiscounted cash flows, the asset is considered impaired and a loss is recognized equal to the amount by which the carrying amount exceeds the estimated fair value of the assets, which is determined by discounting future projected cash flows. |
LONG-TERM DEBT
LONG-TERM DEBT | 9 Months Ended |
Feb. 28, 2022 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | NOTE 13 – LONG-TERM DEBT Paycheck Protection Program Loan On March 21, 2020, the Coronavirus Aid Relief and Economic Security Ace (“CARES ACT”) was enacted. The CARES ACT established the PPP, which funds eligible businesses through federally guaranteed loans. Under the PPP, companies are eligible for forgiveness of principal and accrued interest if the proceeds are used for eligible costs, which include, but are not limited to, payroll, benefits, mortgage, lease and utility expenses. The Company received three PPP loans during the fiscal year ended May 31, 2021, two of which were forgiven during the nine months ended February 28,2022. The remaining PPP loan is as follows: Loan Amount Issuance Date Maturity Period Interest Rate Second Draw PPP Loan (Ample Hills) 2,000,000 April 6, 2021 5 1.0 Total PPP Loan Balance $ 2,000,000 The first two loans (both of which were forgiven during the nine months ended February 28, 2022 and therefore excluded from the table) were granted on July 30, 2020 (collectively the “First Draw PPP Loans”) under two notes payable. Both notes were issued July 30, 2020 and funds were disbursed on August 3, 2020. The third loan was granted and issued on April 6, 2021 (the “Second Draw PPP Loan”) to Ample Hills under a note payable which matures five years from the date of issuance and bears interest annually of 1.0%. Interest is accrued monthly, commencing on the date of issuance. Principal and interest is paid monthly through the maturity date, commencing on April 6, 2021 for the Second Draw PPP Loan, unless forgiven as described below. The note may be prepaid at any time prior to maturity with no prepayment penalties. As noted above, Loan proceeds may be used only for eligible expense. Ample Hills has used and intends to use the remaining funds for eligible purposes, including the re-hiring of its workforce. Ample Hills is currently seeking forgiveness of the balance of the Second Draw PPP Loan. Forgiveness of the Second Draw PPP Loan is available for principal that is used for the limited purposes that qualify for forgiveness under the requirements of the Small Business Administration (“SBA”), in addition to accrued interest. To obtain forgiveness, the Company must request it, provide documentation in accordance with SBA requirements and certify that the amounts requested to be forgiven qualify under those requirements. There is no guarantee that the remaining Second Draw Loan will be forgiven by the SBA and therefore, the Company has recorded a $ 2,000,000 472,431 On August 2, 2021, the Company requested forgiveness of the First Draw PPP Loan and provided documentation in accordance with SBA requirements and certified the amounts requested to be forgiven qualified under the requirements. On August 28, 2021, the Company received correspondence from Bank of America, which included a Notice of Paycheck Protection Program Forgiveness Payment from SBA for a portion of the First Draw PPP Loan in the amount of $ 588,534 264,476 Schmitt Industries On December 15, 2021 and December 22, 2021, respectively, for the remaining portion of the First Draw PPP Loan and the Second Draw PPP Loan, the Company provided documentation in accordance with SBA requirements and certified the amounts requested to be forgiven qualified under the requirements. During the three months ended February 28, 2022, the Company received notification that the remaining First Draw PPP Loan had been forgiven by the SBA and subsequently recognized a $ 1,471,022 As of February 28, 2022 and May 31, 2021, the Company has the following current and long-term liabilities recorded for the PPP loans: Long-Term Debt - Schedule of Debt February 28, 2022 May 31, 2021 Current portion $ 472,431 $ 541,691 Long-term portion 1,527,569 3,253,389 Total PPP loan balance $ 2,000,000 $ 3,795,080 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Feb. 28, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 14 – COMMITMENTS AND CONTINGENCIES In a transaction related to the acquisition of Schmitt Measurement Systems, Inc., formerly TMA Technologies, Inc. ("TMA"), the Company established a royalty pool and vested in each shareholder and debt holder of the acquired company an interest in the royalty pool equal to the amount invested or loaned including interest payable through March 1995. The royalty pool is funded at 5% of net revenues (defined as gross sales less returns, allowances and sales commissions) of the Company's surface measurement products and future derivative products developed by Schmitt Industries, Inc., which utilize these technologies. As part of the royalty pool agreement, each former shareholder and debt holder released TMA from any claims with regards to the acquisition except their rights to future royalties. Royalty expense for the nine months ended February 28, 2022 and February 28, 2021 amounted to $ 19,429 18,992 During the Company’s fiscal year ended May 31, 2020 (“Fiscal 2020”), the Company determined that it was more likely than not that the Company had a pre-existing tax liability related to prior periods. The Company has analyzed the liability and estimated it to be $ 265,349 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Feb. 28, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 15 - SUBSEQUENT EVENTS On March 4, 2022, March 15, 2022, and April 13, 2022, the Company signed three new retail lease agreements in conjunction with its plans to expand its Ample Hills store footprint. On April 13, 2022, the Company formalized drawdown terms on its existing $1,300,000 Commitment Letter with its CEO, which states that SCM or its affiliates will provide the Company with additional capital of up to $1,300,000 for the Company’s operations, as needed, through February 28, 2023. Drawdown terms include: 1.0% origination fee, 18-month term after drawdown, 8.0% payment-in-kind interest rate. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Feb. 28, 2022 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation These consolidated financial statements include those of the Company and its wholly owned subsidiaries: Schmitt Measurement Systems, Inc. and Ample Hills Acquisition LLC. All significant intercompany accounts and transactions have been eliminated in the preparation of the consolidated financial statements. |
Reclassifications | Reclassifications Certain amounts in the prior period consolidated statements of operations have been reclassified to conform to the presentation of the current period. These reclassifications had no effect on previously recorded net income (loss). |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with Generally Accepted Accounting Principles in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
New Accounting Standards | New Accounting Standards The Company assesses the adoption impacts of recently issued accounting standards by the Financial Accounting Standards Board (“FASB”) on the Company's financial statements as well as material updates to previous assessments, if any, from the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2021. There were no new material accounting standards issued in the nine months ended February 28, 2022 that impacted the Company. Recently Adopted Accounting Standards There were no new material accounting standards adopted in the nine months ended February 28, 2022. |
Liquidity | Liquidity Our primary source of liquidity is our cash flows from operating activities resulting from net income and management of working capital. As of February 28, 2022, our available funds consisted of $ 1,999,241 Investor On August 7, 2021, the Company received The Commitment Letter to Schmitt Industries (“Commitment”) from our CEO. The Commitment states that Sententia Capital Management LLC (“SCM”) or its affiliated entities will provide additional capital as required to Schmitt up to $ 1,300,000 On November 10, 2021, the Company closed on the sale of its building located at 2451 NW 28th Avenue, Portland, OR 97210 for $ 5,100,000 4,753,724 4,598,095 |
Business Combinations | Business Combinations The Company accounts for business combinations in accordance with Accounting Standard Codification (“ASC”) 805 - Business Combinations Acquisition of Ample Hills |
Assets Held for Sale | Assets Held for Sale Assets held for sale are stated at the lower of cost less depreciation or expected net realizable value. Depreciation is computed using the straight-line method over estimated useful lives of 25 The Company owned a two story 35,050 5,100,000 4,753,724 4,598,095 Leases The Company owns two industrial office buildings totaling 11,667 Leases As of February 28, 2022 and May 31, 2021, assets held for sale consisted of the following: Summary of Significant Accounting Policies - Schedule of Assets Held for Sale February 28, 2022 May 31, 2021 Land $ 159,000 $ 140,000 Buildings and improvements 1,616,250 246,135 Total property and equipment held for sale 1,775,250 386,135 Less accumulated depreciation (1,341,840 ) (211,288 ) Total property and equipment held for sale, net $ 433,410 $ 174,847 |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially expose the Company to concentration of credit risk are trade accounts receivable. Credit terms generally require an invoice to be paid within 30 to 60 days or include a discount of up to 1.5% if the invoice is paid within ten days, with the net amount payable in 30 days. Terms are set for each account depending on the customer's credit standing with the Company. |
Financial Instruments | Financial Instruments The carrying value of all other financial instruments potentially subject to valuation risk (principally consisting of cash and cash equivalents, accounts receivable, accounts payable, the current portion of the PPP loans, customer deposits and prepayments) approximates fair value because of their short-term maturities. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Feb. 28, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies - Schedule of Assets Held for Sale | As of February 28, 2022 and May 31, 2021, assets held for sale consisted of the following: Summary of Significant Accounting Policies - Schedule of Assets Held for Sale February 28, 2022 May 31, 2021 Land $ 159,000 $ 140,000 Buildings and improvements 1,616,250 246,135 Total property and equipment held for sale 1,775,250 386,135 Less accumulated depreciation (1,341,840 ) (211,288 ) Total property and equipment held for sale, net $ 433,410 $ 174,847 |
AMPLE HILLS BUSINESS ACQUISIT_2
AMPLE HILLS BUSINESS ACQUISITION (Tables) | 9 Months Ended |
Feb. 28, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Ample Hills Business Acquisition - Schedule of Purchase Price Allocation | The following table summarizes the Company's fair value of the assets acquired, and liabilities assumed, as of July 9, 2020, for the Company's acquisition of Ample Hills. Ample Hills Business Acquisition - Schedule of Purchase Price Allocation Purchase Price Cash paid to sellers $ 1,000,000 Cash paid for cure costs 713,404 Total Purchase Price $ 1,713,404 Purchase Price Allocation Assets Acquired Right-of-use operating lease assets 10,645,098 Website 25,545 Tradename and trademarks 903,422 Proprietary recipes 146,739 Security deposits 225,180 Machinery and equipment 564,553 Leasehold improvements 815,798 Inventory 632,100 Total assets acquired $ 13,958,335 Liabilities Assumed Right-of-use operating lease liabilities 10,645,098 Deferred tax liability 405,688 Customer deposits 20,204 Gift card liabilities 35,133 Total liabilities assumed $ 11,106,123 Net assets acquired 2,852,212 Gain on bargain purchase $ 1,138,808 |
STOCK OPTIONS AND STOCK-BASED_2
STOCK OPTIONS AND STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Feb. 28, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options and Stock-Based Compensation - Schedule of Stock Option Activity | Outstanding Options Exercisable Options Number of Shares Weighted- Average Exercise Price Weighted-Average Remaining Contractual Life (years) Number of Shares Weighted- Average Exercise Price 22,500 $ 1.70 5.1 22,500 $ 1.70 |
Stock Options and Stock-Based Compensation - Schedule of Restricted Stock Unit Activity | RSU activity under the Company's stock-based compensation plans during the nine months ended February 28, 2022 is summarized as follows: Stock Options and Stock-Based Compensation - Schedule of Restricted Stock Unit Activity Number of Units Weighted-Average Price at Grant Date Aggregate Intrinsic Value Non-vested RSUs - May 31, 2021 34,237 $ 4.71 $ 161,400 RSUs granted 12,332 $ 4.41 54,358 RSUs forfeited (2,058 ) $ 4.86 (10,000 ) RSUs vested (28,376 ) $ 4.26 (120,913 ) Non-vested RSUs – February 28, 2022 16,135 $ 5.26 $ 84,845 |
WEIGHTED-AVERAGE SHARES AND R_2
WEIGHTED-AVERAGE SHARES AND RECONCILIATION (Tables) | 9 Months Ended |
Feb. 28, 2022 | |
Net income (loss) per common share | |
Weighted-Average Shares and Reconciliation - Schedule of Weighted-Average Number of Shares | Basic weighted-average shares for the three and nine months ended February 28, 2022 and February 28, 2021 were as follows: Weighted-Average Shares and Reconciliation - Schedule of Weighted-Average Number of Shares Three Months Ended Nine Months Ended 2022 2021 2022 2021 Weighted-average shares (basic) 3,788,315 3,764,536 3,790,022 3,759,369 Effect of dilutive stock options — — 23,653 — Weighted-average shares (diluted) 3,788,315 3,764,536 3,813,675 3,759,369 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Feb. 28, 2022 | |
Leases [Abstract] | |
Leases - Schedule of Future Minimum Lease Payments Receivable | Years Ending May 31, 2022 $ 9,841 2023 40,151 2024 41,356 2025 42,597 2026 14,338 Total undiscounted cash flow $ 148,283 |
Leases - Schedule of Future Minimum Lease Payments for Operating Leases | The Company's future minimum lease payments required under operating leases that have commenced as of February 28, 2022 were as follows: Leases - Schedule of Future Minimum Lease Payments for Operating Leases Years Ending May 31, 2022 $ 446,148 2023 1,886,203 2024 1,793,510 2025 1,748,643 2026 1,529,082 Thereafter 7,221,582 Total lease payments 14,625,168 Less: imputed interest (2,374,383) Present value of lease payments 12,250,785 less: current lease obligations (1,417,386) Long-term lease obligations $ 10,833,399 |
Leases - Schedule of Lease Terms and Discount Rates | The Company’s weighted-average remaining lease term and discount rates under operating leases that have commenced as of February 28, 2022 were as follows: Leases - Schedule of Lease Terms and Discount Rates as of February 28, 2022 Weighted-average remaining lease term (years) 8.94 Weighted-average discount rate 3.87 % |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 9 Months Ended |
Feb. 28, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net - Schedule of Property, Plant and Equipment, Net | The Company’s property and equipment, net consisted of the following: Property and Equipment, Net - Schedule of Property, Plant and Equipment, Net February 28, 2022 May 31, 2021 Land Land $ — $ 159,000 Buildings and improvements Buildings and Improvements 1,442,667 2,989,140 Furniture, fixtures and equipment Furniture, Fixtures and Equipment 1,871,580 1,788,784 Total property and equipment 3,314,247 4,936,924 Less: accumulated depreciation (1,065,747 ) (2,112,907 ) Total property and equipment, net $ 2,248,500 $ 2,824,017 |
ACCOUNTS RECEIVABLE, NET (Table
ACCOUNTS RECEIVABLE, NET (Tables) | 9 Months Ended |
Feb. 28, 2022 | |
Receivables [Abstract] | |
Accounts Receivable, Net - Schedule of Accounts Receivable, Net | The Company’s accounts receivable, net consisted of the following: Accounts Receivable, Net - Schedule of Accounts Receivable, Net February 28, 2022 May 31, 2021 Accounts receivable $ 1,034,729 $ 1,252,968 Less: allowance for doubtful accounts (97,920 ) (98,323 )) Accounts receivable, net $ 936,809 $ 1,154,645 |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 9 Months Ended |
Feb. 28, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories, Net - Schedule of Inventories, Current | The Company’s inventories, net consisted of the following: Inventories, Net - Schedule of Inventories, Current February 28, 2022 May 31, 2021 Raw materials $ 1,217,338 $ 901,464 Work-in-process 45,561 35,160 Finished goods 1,029,724 731,826 Total inventories 2,292,623 1,668,450 Less: inventory reserves (100,779 ) (115,140 ) Inventories, net $ 2,191,844 $ 1,553,310 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Feb. 28, 2022 | |
Segment Reporting [Abstract] | |
Segment Information - Schedule of Segment Reporting Information by Segment | The following table present the activity for the three months ended February 28, 2022 and 2021: Segment Information - Schedule of Segment Reporting Information by Segment Three Months Ended February 28, 2022 2021 Ice Cream Measurement Ice Cream Measurement Revenue, net $ 972,920 $ 875,993 $ 621,730 $ 1,046,714 Gross margin $ 389,710 $ 547,127 $ 263,355 $ 567,834 Gross margin % 40.1 % 62.5 % 42.4 % 54.2 % Operating loss $ (1,837,593 ) $ (548,729 ) $ (2,200,003 ) $ (304,458 ) Depreciation expense $ 70,761 $ 4,211 $ 82,480 $ 10,588 Amortization expense $ 5,734 $ 26,145 $ 6,017 $ 21,562 Capital expenditures $ 10,200 $ — $ 249,012 $ 2,938 The following table present the activity for the nine months ended February 28, 2022 and 2021: Nine Months Ended February 28, 2022 2021 Ice Cream Measurement Ice Cream Measurement Revenue, net $ 5,908,291 $ 2,661,762 $ 2,282,139 $ 2,923,502 Gross margin $ 3,527,555 $ 1,423,573 $ 944,493 $ 1,456,454 Gross margin % 59.7 % 53.5 % 41.4 % 49.8 % Operating loss $ (4,975,684 ) $ (1,703,768 ) $ (4,901,933 ) $ (1,371,500 ) Depreciation expense $ 285,400 $ 20,411 $ 176,966 $ 40,868 Amortization expense $ 17,200 $ 78,437 $ 16,045 $ 73,853 Capital expenditures $ 188,687 $ — $ 481,063 $ 29,258 |
Segment Information - Schedule of Segment Reporting by Segment Assets | February 28, 2022 May 31,2021 Segment assets to total assets Ice Cream Segment $ 7,911,579 $ 10,713,832 Measurement Segment 2,521,490 2,565,701 Corporate assets 9,919,456 7,894,397 Total assets $ 20,352,525 $ 21,173,930 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Feb. 28, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets - Schedule of Finite-Lived Intangible Assets | The following tables present the major components of finite-intangible assets which are subject to amortization as of February 28, 2022 and May 31, 2021: Intangible Assets - Schedule of Finite-Lived Intangible Assets As of February 28, 2022 Useful Life (Years) Gross Carrying Value Accumulated Amortization Net Carrying Value Finite-lived intangible assets subject to amortization: Measurement Segment Patented technology 15 $ 1,663,538 $ (1,554,372 ) $ 109,166 Measurement Segment finite-lived assets 1,663,538 (1,554,372 ) 109,166 Ice Cream Segment Proprietary recipes 10 146,739 (24,900 ) 121,839 Company website 3 25,445 (14,362 ) 11,083 Ice Cream Segment finite-lived intangible assets 172,184 (39,262 ) 132,922 Total finite-lived intangible assets $ 1,835,722 $ (1,593,634 ) $ 242,088 As of May 31, 2021 Useful Life (Years) Gross Carrying Value Accumulated Amortization Net Carrying Value Finite-lived intangible assets subject to amortization: Measurement Segment Patented technology 15 $ 1,663,538 $ (1,475,935 ) $ 187,603 Measurement Segment finite-lived assets 1,663,538 (1,475,935 ) 187,603 Ice Cream Segment Proprietary recipes 10 146,739 (13,934 ) 132,805 Company website 3 25,445 (8,128 ) 17,317 Ice Cream Segment finite-lived intangible assets 172,184 (22,062 ) 150,122 Total finite-lived intangible assets $ 1,835,722 $ (1,497,997 ) $ 337,725 |
Intangible Assets - Schedule of Finite-Lived Intangible Assets Future Amortization Expense | Estimated amortization expense remaining for each of the following years is as follows: Intangible Assets - Schedule of Finite-Lived Intangible Assets Future Amortization Expense Year Ending May 31, 2022 $ 36,462 2023 101,370 2024 15,313 2025 14,621 2026 14,621 Thereafter 59,701 Total expected amortization expense $ 242,088 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 9 Months Ended |
Feb. 28, 2022 | |
Debt Disclosure [Abstract] | |
Long-Term Debt - Schedule of Long-Term Debt | Loan Amount Issuance Date Maturity Period Interest Rate Second Draw PPP Loan (Ample Hills) 2,000,000 April 6, 2021 5 1.0 Total PPP Loan Balance $ 2,000,000 |
Long-Term Debt - Schedule of Debt | As of February 28, 2022 and May 31, 2021, the Company has the following current and long-term liabilities recorded for the PPP loans: Long-Term Debt - Schedule of Debt February 28, 2022 May 31, 2021 Current portion $ 472,431 $ 541,691 Long-term portion 1,527,569 3,253,389 Total PPP loan balance $ 2,000,000 $ 3,795,080 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Schedule of Assets Held for Sale (Details) - USD ($) | Feb. 28, 2022 | May 31, 2021 |
Long Lived Assets Held-for-sale [Line Items] | ||
Total property and equipment held for sale | $ 3,314,247 | $ 4,936,924 |
Less accumulated depreciation | (1,065,747) | (2,112,907) |
Total property and equipment held for sale, net | 2,248,500 | 2,824,017 |
Assets Held for Sale | ||
Long Lived Assets Held-for-sale [Line Items] | ||
Land | 159,000 | 140,000 |
Buildings and improvements | 1,616,250 | 246,135 |
Total property and equipment held for sale | 1,775,250 | 386,135 |
Less accumulated depreciation | (1,341,840) | (211,288) |
Total property and equipment held for sale, net | $ 433,410 | $ 174,847 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 9 Months Ended | |||
Feb. 28, 2022USD ($)ft² | Feb. 28, 2021USD ($) | Nov. 30, 2021USD ($) | May 31, 2021USD ($) | |
Property, Plant and Equipment [Line Items] | ||||
Cash and cash equivalents | $ 1,999,241 | $ 4,032,690 | ||
Value of building sold | $ 5,100,000 | |||
Proceeds from sale of building, net | 4,753,724 | |||
Gain on sale of property and equipment | $ 4,598,095 | |||
Assets Held for Sale | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful lives | 25 years | |||
Industrial buildings | ft² | 35,050 | |||
Assets Held for Sale | 2765 NW Nicolai Street, Portland, Oregon | ||||
Property, Plant and Equipment [Line Items] | ||||
Industrial buildings | ft² | 11,667 | |||
Investor | ||||
Property, Plant and Equipment [Line Items] | ||||
Commitment for additional capital | $ 1,300,000 |
Ample Hills Business Acquisit_3
Ample Hills Business Acquisition - Schedule of Purchase Price Allocation (Details) - USD ($) | Jul. 09, 2020 | Feb. 28, 2022 | Feb. 28, 2021 | Feb. 28, 2022 | Feb. 28, 2021 | May 31, 2021 |
Purchase Price | ||||||
Cash paid to sellers | $ 1,000,000 | |||||
Cash paid for cure costs | 713,404 | |||||
Total purchase price | 1,713,404 | |||||
Assets Acquired | ||||||
Right-of-use operating lease assets | 10,645,098 | |||||
Website | 25,545 | |||||
Tradename and trademarks | 903,422 | |||||
Proprietary recipes | 146,739 | |||||
Security deposits | 225,180 | |||||
Machinery and equipment | 564,553 | |||||
Leasehold improvements | 815,798 | |||||
Inventory | 632,100 | |||||
Total assets acquired | 13,958,335 | |||||
Liabilities Assumed | ||||||
Right-of-use operating lease liabilities | 10,645,098 | |||||
Deferred tax liability | 405,688 | |||||
Customer deposits | 20,204 | |||||
Gift card liabilities | 35,133 | |||||
Total liabilities assumed | 11,106,123 | |||||
Net assets acquired | 2,852,212 | |||||
Gain on bargain purchase | $ 1,138,808 | $ 0 | $ (2,277) | $ 0 | $ 1,187,235 | $ 1,138,808 |
AMPLE HILLS BUSINESS ACQUISIT_4
AMPLE HILLS BUSINESS ACQUISITION (Details Narrative) - USD ($) | Jul. 09, 2020 | Feb. 28, 2022 | Feb. 28, 2021 | Feb. 28, 2022 | Feb. 28, 2021 | May 31, 2021 |
Business Combination and Asset Acquisition [Abstract] | ||||||
Cash paid to sellers | $ 1,000,000 | |||||
Additional payout to certain landlords | 700,000 | |||||
Transaction costs | 125,167 | |||||
Gain on bargain purchase | $ 1,138,808 | $ 0 | $ (2,277) | $ 0 | $ 1,187,235 | $ 1,138,808 |
Stock Options and Stock-Based_3
Stock Options and Stock-Based Compensation - Schedule of Stock Option Activity (Details) | 9 Months Ended |
Feb. 28, 2022$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Outstanding options, number of shares | shares | 22,500 |
Outstanding options, weighted-average exercise price | $ / shares | $ 1.70 |
Outstanding options, weighted-average remaining contractual life | 5 years 1 month 6 days |
Exercisable options, number of shares | shares | 22,500 |
Exercisable options, weighted-average exercise price | $ / shares | $ 1.70 |
Stock Options and Stock-Based_4
Stock Options and Stock-Based Compensation - Schedule of Restricted Stock Unit Activity (Details) | 9 Months Ended |
Feb. 28, 2022USD ($)$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Non-vested RSUs, number of units, outstanding | shares | 34,237 |
Non-vested RSUs, weighted average price at grant date | $ / shares | $ 4.71 |
Non-vested RSUs, aggregate intrinsic value | $ | $ 161,400 |
RSUs granted, number of units | shares | 12,332 |
RSUs granted, weighted average price at grant date | $ / shares | $ 4.41 |
RSUs granted, aggregate intrinsic value | $ | $ 54,358 |
RSUs forfeited, number of units | shares | (2,058) |
RSUs forfeited, weighted-average price at grant date | $ / shares | $ 4.86 |
RSUs forfeited, aggregate intrinsic value | $ | $ (10,000) |
RSUs vested, number of units | shares | (28,376) |
RSUs vested, weighted average price at grant date | $ / shares | $ 4.26 |
RSUs vested, aggregate intrinsic value | $ | $ (120,913) |
Non-vested RSUs, number of units, outstanding | shares | 16,135 |
Non-vested RSUs, weighted average price at grant date | $ / shares | $ 5.26 |
Non-vested RSUs, aggregate intrinsic value | $ | $ 84,845 |
STOCK OPTIONS AND STOCK-BASED_5
STOCK OPTIONS AND STOCK-BASED COMPENSATION (Details Narrative) | 3 Months Ended | 9 Months Ended |
Feb. 28, 2022USD ($)$ / sharesshares | Feb. 28, 2022USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock options outstanding | 22,500 | 22,500 |
Weighted-average exercise price | $ / shares | $ 1.70 | $ 1.70 |
RSUs granted | 12,332 | |
Restricted stock, compensation expense | $ | $ 25,647 | $ 95,016 |
Compensation expense with a time vesting condition | $ | $ 30,424 | $ 30,424 |
Restricted Stock Units - Service-Based | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs granted | 12,332 |
Weighted-Average Shares and R_3
Weighted-Average Shares and Reconciliation - Schedule of Weighted-Average Number of Shares (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2022 | Feb. 28, 2021 | Feb. 28, 2022 | Feb. 28, 2021 | |
Net income (loss) per common share | ||||
Weighted-average shares (basic) | 3,788,315 | 3,764,536 | 3,790,022 | 3,759,369 |
Effect of dilutive stock options | 23,653 | |||
Weighted-average shares (diluted) | 3,788,315 | 3,764,536 | 3,813,675 | 3,759,369 |
WEIGHTED-AVERAGE SHARES AND R_4
WEIGHTED-AVERAGE SHARES AND RECONCILIATION (Details Narrative) | 3 Months Ended | 9 Months Ended |
Feb. 28, 2022$ / sharesshares | Feb. 28, 2022$ / sharesshares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Exercise price | $ 1.70 | $ 1.70 |
Share-based Payment Arrangement, Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities | shares | 22,500 | 22,500 |
Exercise price | $ 1.70 | $ 1.70 |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Lease Payments Receivable (Details) - Humboldt Lease [Member] | Feb. 28, 2022USD ($) |
Lessee, Lease, Description [Line Items] | |
2022 | $ 9,841 |
2023 | 40,151 |
2024 | 41,356 |
2025 | 42,597 |
2026 | 14,338 |
Total undiscounted cash flow | $ 148,283 |
Leases - Schedule of Future M_2
Leases - Schedule of Future Minimum Lease Payments for Operating Leases (Details) - USD ($) | Feb. 28, 2022 | May 31, 2021 |
less: current lease obligations | $ (1,417,386) | $ (1,042,331) |
Other Liabilities [Member] | ||
2022 | 446,148 | |
2023 | 1,886,203 | |
2024 | 1,793,510 | |
2025 | 1,748,643 | |
2026 | 1,529,082 | |
Thereafter | 7,221,582 | |
Total lease payments | 14,625,168 | |
Less: imputed interest | (2,374,383) | |
Present value of lease payments | 12,250,785 | |
less: current lease obligations | (1,417,386) | |
Long-term lease obligations | $ 10,833,399 |
Leases - Schedule of Lease Term
Leases - Schedule of Lease Terms and Discount Rates (Details) | Feb. 28, 2022 |
Leases [Abstract] | |
Weighted-average remaining lease term | 8 years 11 months 8 days |
Weighted-averfage discount rate | 3.87% |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2022 | Feb. 28, 2021 | Feb. 28, 2022 | Feb. 28, 2021 | |
Lessee, Lease, Description [Line Items] | ||||
Lease expense | $ 478,890 | $ 400,609 | $ 1,347,522 | $ 1,099,993 |
Triple-Net Lease Agreement, Tosei America, Inc. | ||||
Lessee, Lease, Description [Line Items] | ||||
Monthly lease payments | $ 23,282 | |||
Term of contract | 120 months | 120 months | ||
Triple-Net Lease Agreement, Humboldt Lease | ||||
Lessee, Lease, Description [Line Items] | ||||
Monthly lease payments | $ 3,185 | |||
Term of contract | 62 months | 62 months | ||
Triple-Net Lease Agreement, The Second Humboldt Lease | ||||
Lessee, Lease, Description [Line Items] | ||||
Monthly lease payments | $ 4,596 | |||
Term of contract | 59 months | 59 months |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Property, Plant and Equipment, Net (Details) - USD ($) | Feb. 28, 2022 | May 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 3,314,247 | $ 4,936,924 |
Less accumulated depreciation | (1,065,747) | (2,112,907) |
Total property and equipment, net | 2,248,500 | 2,824,017 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 0 | 159,000 |
Buildings and Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 1,442,667 | 2,989,140 |
Furniture, Fixtures and Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 1,871,580 | $ 1,788,784 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2022 | Feb. 28, 2021 | Feb. 28, 2022 | Feb. 28, 2021 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 74,972 | $ 93,068 | $ 305,811 | $ 217,834 |
CUSTOMER CONCENTRATION (Details
CUSTOMER CONCENTRATION (Details Narrative) | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2022 | Feb. 28, 2021 | Feb. 28, 2022 | Feb. 28, 2021 | |
Revenues | Customer Concentration Risk [Member] | ||||
Concentration Risk [Line Items] | ||||
Customer concentration | 18.00% | 11.00% | 18.00% | |
Revenues | Customer #1 | ||||
Concentration Risk [Line Items] | ||||
Customer concentration | 21.00% | |||
Revenues | Customer #2 | ||||
Concentration Risk [Line Items] | ||||
Customer concentration | 11.00% | |||
Accounts Receivable | Customer Concentration Risk [Member] | ||||
Concentration Risk [Line Items] | ||||
Customer concentration | 21.00% | |||
Accounts Receivable | Customer #1 | ||||
Concentration Risk [Line Items] | ||||
Customer concentration | 23.00% | |||
Accounts Receivable | Customer #2 | ||||
Concentration Risk [Line Items] | ||||
Customer concentration | 12.00% |
Accounts Receivable, Net - Sche
Accounts Receivable, Net - Schedule of Accounts Receivable, Net (Details) - USD ($) | Feb. 28, 2022 | May 31, 2021 |
Receivables [Abstract] | ||
Accounts receivable | $ 1,034,729 | $ 1,252,968 |
Less: allowance for doubtful accounts | (97,920) | (98,323) |
Accounts receivable, net | $ 936,809 | $ 1,154,645 |
Inventories, Net - Schedule of
Inventories, Net - Schedule of Inventories, Current (Details) - USD ($) | Feb. 28, 2022 | May 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,217,338 | $ 901,464 |
Work-in-process | 45,561 | 35,160 |
Finished goods | 1,029,724 | 731,826 |
Total inventories | 2,292,623 | 1,668,450 |
Less: inventory reserves | (100,779) | (115,140) |
Inventories, net | $ 2,191,844 | $ 1,553,310 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2022 | Feb. 28, 2021 | Feb. 28, 2022 | Feb. 28, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 0.90% | (0.10%) | 5.50% | (8.00%) |
Effective tax rate | (0.90%) | 0.10% | (5.50%) | 8.00% |
Segment Information - Schedule
Segment Information - Schedule of Segment Reporting Information by Segment (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2022 | Feb. 28, 2021 | Feb. 28, 2022 | Feb. 28, 2021 | |
Segment Reporting Information [Line Items] | ||||
Gross margin | $ 936,837 | $ 831,190 | $ 4,951,128 | $ 2,400,947 |
Operating loss | (2,386,322) | (2,504,460) | (6,679,452) | (6,273,432) |
Ice Cream | ||||
Segment Reporting Information [Line Items] | ||||
Revenue, net | 972,920 | 621,730 | 5,908,291 | 2,282,139 |
Gross margin | $ 389,710 | $ 263,355 | $ 3,527,555 | $ 944,493 |
Gross margin % | 40.10% | 42.40% | 59.70% | 41.40% |
Operating loss | $ (1,837,593) | $ (2,200,003) | $ (4,975,684) | $ (4,901,933) |
Depreciation expense | 70,761 | 82,480 | 285,400 | 176,966 |
Amortization expense | 5,734 | 6,017 | 17,200 | 16,045 |
Capital expenditures | 10,200 | 249,012 | 188,687 | 481,063 |
Measurement | ||||
Segment Reporting Information [Line Items] | ||||
Revenue, net | 875,993 | 1,046,714 | 2,661,762 | 2,923,502 |
Gross margin | $ 547,127 | $ 567,834 | $ 1,423,573 | $ 1,456,454 |
Gross margin % | 62.50% | 54.20% | 53.50% | 49.80% |
Operating loss | $ (548,729) | $ (304,458) | $ (1,703,768) | $ (1,371,500) |
Depreciation expense | 4,211 | 10,588 | 20,411 | 40,868 |
Amortization expense | 26,145 | 21,562 | 78,437 | 73,853 |
Capital expenditures | $ 0 | $ 2,938 | $ 0 | $ 29,258 |
Segment Information - Schedul_2
Segment Information - Schedule of Segment Reporting by Segment Assets (Details) - USD ($) | Feb. 28, 2022 | May 31, 2021 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 20,352,525 | $ 21,173,930 |
Ice Cream | ||
Segment Reporting Information [Line Items] | ||
Total assets | 7,911,579 | 10,713,832 |
Measurement | ||
Segment Reporting Information [Line Items] | ||
Total assets | 2,521,490 | 2,565,701 |
Corporate Assets | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 9,919,456 | $ 7,894,397 |
SEGMENT INFORMATION (Details Na
SEGMENT INFORMATION (Details Narrative) | 9 Months Ended |
Feb. 28, 2022Number | |
Segment Reporting [Abstract] | |
Number of reportable business segments | 2 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Feb. 28, 2022 | May 31, 2021 | |
Indefinite-lived Intangible Assets [Line Items] | ||
Gross carrying value | $ 1,835,722 | $ 1,835,722 |
Accumulated amortization | (1,593,634) | (1,497,997) |
Net carrying value | 242,088 | 337,725 |
Measurement | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Gross carrying value | 1,663,538 | 1,663,538 |
Accumulated amortization | (1,554,372) | (1,475,935) |
Net carrying value | $ 109,166 | $ 187,603 |
Measurement | Patented Technology [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Useful life | 15 years | 15 years |
Gross carrying value | $ 1,663,538 | $ 1,663,538 |
Accumulated amortization | (1,554,372) | (1,475,935) |
Net carrying value | 109,166 | 187,603 |
Ice Cream | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Gross carrying value | 172,184 | 172,184 |
Accumulated amortization | (39,262) | (22,062) |
Net carrying value | $ 132,922 | $ 150,122 |
Ice Cream | Proprietary Recipes | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Useful life | 10 years | 10 years |
Gross carrying value | $ 146,739 | $ 146,739 |
Accumulated amortization | (24,900) | (13,934) |
Net carrying value | $ 121,839 | $ 132,805 |
Ice Cream | Company Website | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Useful life | 3 years | 3 years |
Gross carrying value | $ 25,445 | $ 25,445 |
Accumulated amortization | (14,362) | (8,128) |
Net carrying value | $ 11,083 | $ 17,317 |
Intangible Assets - Schedule _2
Intangible Assets - Schedule of Finite-Lived Intangible Assets Future Amortization Expense (Details) | Feb. 28, 2022USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2022 | $ 36,462 |
2023 | 101,370 |
2024 | 15,313 |
2025 | 14,621 |
2026 | 14,621 |
Thereafter | 59,701 |
Total expected amortization expense | $ 242,088 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Feb. 28, 2022 | Feb. 28, 2021 | Feb. 28, 2022 | Feb. 28, 2021 | May 31, 2021 | |
Indefinite-lived Intangible Assets [Line Items] | |||||
Impairment of intangible assets | $ 903,422 | ||||
Remaining amortization period | 4 years 8 months 15 days | ||||
Accumulated amortization | $ 1,593,634 | 1,497,997 | |||
Measurement | |||||
Indefinite-lived Intangible Assets [Line Items] | |||||
Remaining amortization period | 1 year | ||||
Amortizable intangible assets | $ 1,663,538 | $ 1,663,538 | 1,663,538 | ||
Accumulated amortization | 1,554,372 | 1,475,935 | |||
Amortization expense | 26,145 | $ 21,562 | 78,437 | $ 73,853 | |
Accumulated amortization | $ 1,554,372 | 1,475,935 | |||
Ice Cream | |||||
Indefinite-lived Intangible Assets [Line Items] | |||||
Remaining amortization period | 7 years 9 months 3 days | ||||
Amortizable intangible assets | 172,184 | $ 172,184 | 172,184 | ||
Amortization expense | $ 5,734 | 17,200 | |||
Accumulated amortization | $ 39,262 | $ 22,062 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) - Paycheck Protection Program | 9 Months Ended |
Feb. 28, 2022USD ($) | |
Debt Instrument [Line Items] | |
Loan Amount | $ 2,000,000 |
Second Draw PPP Loan (Ample Hills) | |
Debt Instrument [Line Items] | |
Loan Amount | $ 2,000,000 |
Ample Hills #2 | |
Debt Instrument [Line Items] | |
Issuance date | Apr. 6, 2021 |
Maturity period | 5 years |
Interest rate | 1.00% |
Long-Term Debt - Schedule of De
Long-Term Debt - Schedule of Debt (Details) - USD ($) | Feb. 28, 2022 | May 31, 2021 |
Debt Instrument [Line Items] | ||
Current portion | $ 472,431 | $ 541,691 |
Long-term portion | 1,527,569 | 3,253,389 |
Paycheck Protection Program | ||
Debt Instrument [Line Items] | ||
Current portion | 472,431 | 541,691 |
Long-term portion | 1,527,569 | 3,253,389 |
Total PPP loan balance | $ 2,000,000 | $ 3,795,080 |
LONG-TERM DEBT (Details Narrati
LONG-TERM DEBT (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Aug. 28, 2021 | Feb. 28, 2022 | Feb. 28, 2022 | May 31, 2021 | |
Debt Instrument [Line Items] | ||||
Current portion of long-term debt | $ 472,431 | $ 472,431 | $ 541,691 | |
Paycheck Protection Program | ||||
Debt Instrument [Line Items] | ||||
Loan payable | 2,000,000 | 2,000,000 | ||
Current portion of long-term debt | 472,431 | 472,431 | $ 541,691 | |
Paycheck Protection Program | Schmitt Industries | ||||
Debt Instrument [Line Items] | ||||
Forgiveness of debt | $ 588,534 | |||
Repayment of debt | $ 264,476 | |||
Gain on forgiveness of debt | $ 1,471,022 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 9 Months Ended | |
Feb. 28, 2022 | Feb. 28, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Royalty expense | $ 19,429 | $ 18,992 |
Tax liabilities | $ 265,349 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | Apr. 13, 2022 |
Subsequent Event | SCM | |
Subsequent Event [Line Items] | |
Other Commitments, Description | the Company formalized drawdown terms on its existing $1,300,000 Commitment Letter with its CEO, which states that SCM or its affiliates will provide the Company with additional capital of up to $1,300,000 for the Company’s operations, as needed, through February 28, 2023. Drawdown terms include: 1.0% origination fee, 18-month term after drawdown, 8.0% payment-in-kind interest rate. |