Net Income (Loss) Net income (loss) was $169,808, or $0.04 per fully diluted share, for the
three months ended August 31, 2019 compared to net income (loss) of $(211,819), or $(0.05) per fully diluted share, for the three months ended August 31, 2018.
LIQUIDITY AND CAPITAL RESOURCES
The Companys
working capital increased $312,013 to $7,581,930 as of August 31, 2019 as compared to $7,269,917 as of May 31, 2019.
Cash, cash equivalents and
restricted cash increased $180,307 to $1,647,742 as of August 31, 2019 from $1,467,435 as of May 31, 2019. Cash generated by operating activities totaled $91,561 for the three months ended August 31, 2019 as compared to cash used in
operating activities of $402,466 for the three months ended August 31, 2018. Net income of $169,808, along with decreases in accrued liabilities and customer deposits, primarily impacted the total cash generated from operating activities for
the three months ended August 31, 2019.
At August 31, 2019, the Company had accounts receivable of $2,004,159 as compared to $1,996,240 at
May 31, 2019, an increase of $7,919. Inventories increased $65 to $5,019,109 as of August 31, 2019 as compared to $5,019,044 at May 31, 2019. At August 31, 2019, total current liabilities decreased $119,282 to $1,244,485, as
compared to $1,363,777 at May 31, 2019. The decrease in current liabilities is primarily due to decreases in accrued payroll liabilities and other accrued liabilities.
We believe that our existing cash and cash equivalents combined with the cash we anticipate generating from operating activities will be sufficient to meet
our cash requirements for the foreseeable future. We do not have any significant commitments nor are we aware of any significant events or conditions that are likely to have a material impact on our liquidity or capital resources.
Risk Factors
Please refer to the risk factors disclosed
in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended May 31, 2019 for a listing of factors that could cause actual results or events to differ materially from those
contained in any forward-looking statements made by or on behalf of the Company.
Item 3. Quantitative and Qualitative
Disclosures about Market Risk
There have been no material changes from the information previously reported under Item 7A of our Annual Report on
Form 10-K for the fiscal year ended May 31, 2019.
Item 4. Controls
and Procedures
Evaluation of Disclosure Controls and Procedures
As of August 31, 2019, the Company carried out an evaluation, under the supervision and with the participation of the Companys management, including
the Companys Chief Executive Officer and the Companys Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the Exchange Act). Based on the evaluation, the Companys Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of
the period covered by this Report, the Companys disclosure controls and procedures are effective to ensure that information required to be disclosed in the Companys Exchange Act reports is (1) recorded, processed, summarized and
reported in a timely manner, and (2) accumulated and communicated to the Companys management, including the Companys Chief Executive Officer and the Companys Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures including the possibility of human error and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives, and management necessarily is required to use its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
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