Annual report pursuant to Section 13 and 15(d)

Consolidated Statements of Cash Flows

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Consolidated Statements of Cash Flows - USD ($)
12 Months Ended
Aug. 31, 2019
Aug. 31, 2018
OPERATING ACTIVITIES    
Net loss $ (18,727,000) $ (16,823,000)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 839,000 274,000
Inducement loss on Note Conversions 3,829,000
Excess of derivative liabilities over Notes at issuance 2,588,000
Amortization of note discount and financing costs $ 5,607,000 $ 951,000
Stock issued for services 263,000 163,000
Stock based compensation $ 369,000 $ 200,000
Loss (Gain) associated with note defaults, net (811,000) 3,500,000
Interest paid in common shares 509,000
Change in fair value derivative and warrant liability (2,569,000)
Changes in operating assets and liabilities    
Accounts receivable (161,000) 318,000
Unbilled accounts receivable (3,286,000) (6,193,000)
Prepaid expenses 43,000 (210,000)
Other current assets 15,000 (243,000)
Deposits - workers' compensation (4,364,000) (1,538,000)
Deposits and other assets (3,000) 6,000
Accounts payable 1,815,000 86,000
Payroll related liabilities 6,935,000 7,088,000
Accrued workers' compensation costs 5,129,000 1,206,000
Other current liabilities (106,000) 1,677,000
Net cash used in operating activities (2,086,000) (9,538,000)
INVESTING ACTIVITIES    
Purchase of fixed assets (1,167,000) (3,019,000)
Issuance of related party note receivable (325,000)  
Net cash used in investing activities (1,492,000) (3,019,000)
FINANCING ACTIVITIES    
Proceeds from issuance of convertible notes 3,750,000 9,000,000
Issuance costs related to convertible notes (485,000) (765,000)
Repayment of convertible notes (436,000)
Proceeds from exercise of warrants 660,000 75,000
Net cash provided by financing activities 3,489,000 8,310,000
Net decrease in cash and cash equivalents (89,000) (4,247,000)
Cash - beginning of year   $ 5,897,000
Cash - end of year $ 1,561,000  
SUPPLEMENTAL INFORMATION:    
Cash paid during the year for:
Interest $ 226,000 $ 133,000
Income taxes
Non-cash investing and financing activities:    
Conversion of debt and accrued interest into common stock 8,904,000
Additional principal to settle registration rights penalties 889,000
Discharge of related party note receivable for common shares 325,000
Allocated fair value of beneficial conversion feature 1,479,000
Allocated fair value of warrants included with convertible notes 2,271,000
Debt discount due to the intrinsic value of beneficial conversion feature 924,000
Debt discount due to warrants included with convertible notes $ 859,000