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Note 3 - Restatement of Previously Issued Financial Statements and Adoption of New Accounting Standards
 12 Months Ended
Sep. 29, 2018
Notes to Financial Statements  
Accounting Changes and Error Corrections [Text Block]
(
3
)   Restatement of Previously Issued Financial Statements and Adoption of New Accounting Standards
 
The Company has restated its consolidated financial statements as of and for the fiscal year ended
September 30, 2017.
 
The restatement reflects adjustments to correct an error in the Company’s revenue recognition for a service contract. The correction reflects an adjustment that was identified during the Company’s annual audit and during the course of a subsequent review by management. The error was the result of a misinterpretation of ASC Topic
605,
Revenue Recognition
. After review, management determined that
the Company had misapplied the proportional performance accounting principle for its
2017
fiscal year,
requiring a
change in the revenue recognition for a services contract.
Specifically, management concluded the Company should have taken into
consideration, at inception, the ramp up period and the significant backloading of costs and resources needed for the contract. The output method chosen in fiscal year
2017
did
not
accurately reflect the appropriate value of progress to the customer. It has been determined subsequently
that revenue should be measured based on an input method that utilizes the costs to be incurred by the Company to perform under the contract rather than the output method originally used.
The Company believes the costs incurred each month compared to the total costs to be incurred better represents the level of effort being expended as the Company performs over time.
 
The effects of the restatements on the Company’s financial statements and related footnotes for the fiscal year ended
September 30, 2017
are described below.
 
Correction of error in the application of the Company’s revenue recognition policy
 
      As reported       Adjustment       As adjusted  
Balance Sheet                        
Deferred revenue   $
-
     $
484,121
     $
484,121
  
Accumulated deficit    
(822,636
 )    
(484,121
 )    
(1,306,757
 )
                         
Statement of Operations                        
Net revenue   $
4,209,127
     $
(484,121
 )   $
3,725,006
  
Gross profit    
2,291,237
      
(484,121
 )    
1,807,116
  
Operating loss    
(1,437,505
 )    
(484,121
 )    
(1,921,626
 )
Net loss    
(1,429,006
 )    
(484,121
 )    
(1,913,127
 )
Net loss per common share                        
Basic    
(0.78
 )    
(0.26
 )    
(1.04
 )
Diluted    
(0.78
 )    
(0.26
 )    
(1.04
 )
                         
Statement of cash flows                        
Net loss   $
(1,429,006
 )   $
(484,121
 )   $
(1,913,127
 )
Changes in current assets and current liabilities –                        
Deferred revenue    
-
      
484,121
      
484,121
  
                         
Statements of Changes in Stockholders' Equity                        
Accumulated deficit                        
Net loss   $
(1,429,006
 )   $
(484,121
 )   $
(1,913,127
 )
Ending balance    
(822,636
 )    
(484,121
 )    
(1,306,757
 )
Total stockholders’ equity    
3,500,354
      
(484,121
 )    
3,016,233
  
                         
Footnote 10 Income Taxes                        
Reconciliation of statutory federal income tax rate:                        
Tax expense (benefit) at U.S. statutory rate   $
(485,862
 )   $
(164,601
 )   $
(650,463
 )
State income tax provision, net of federal benefit    
(81,630
 )    
(23,370
 )    
(105,000
 )
Valuation allowance    
613,050
      
187,970
      
801,020
  
                         
Deferred income taxes:                        
Deferred revenue    
-
      
187,970
      
187,970
  
Valuation allowance   $
(4,723,406
 )   $
(187,970
 )   $
(4,911,376
 )
 
Adoption of new accounting standard - ASU
2016
-
18
Statement of Cash Flows (Topic
230
)
: Restricted Cash
.
Restri
cted cash is appropriately reflected in the accompanying financial statements, as the Company was required to apply the new accounting standard retrospectively to all periods presented.
 
The adoption of ASU
2016
-
18
Statement of Cash Flows (Topic
230
): Restricted Cash
 
 
 
 
As reported
 
 
 
Adjustment
 
 
 
As adjusted
 
Statement of Cash Flows
 
 
 
 
 
 
 
 
 
 
 
 
Decrease in restricted cash
 
$
14,662
 
 
$
(14,662
)
 
$
-
 
Cash provided by investing activities
 
 
436,904
 
 
 
(14,662
)
 
 
422,242
 
Net decrease in cash, cash equivalents and restricted cash
 
 
(1,305,363
)
 
 
(14,662
)
 
 
(1,320,025
)
Cash, cash equivalents and restricted cash as of the beginning of the year
 
 
2,589,036
 
 
 
27,592
 
 
 
2,616,628
 
Cash, cash equivalents and restricted cash as of the end of the year
 
 
1,283,673
 
 
 
12,930
 
 
 
1,296,603
 
 
Change in Presentation
 
The presentation of net revenue on the accompanying consolidated statement of operations for the year ended
September 30, 2017
has been changed to separately reflect the engineering services and equipment sales components in conformity with the presentation for the year ended
September 29, 2018.