Quarterly report pursuant to Section 13 or 15(d)

WARRANT LIABILITY

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WARRANT LIABILITY
6 Months Ended
Feb. 29, 2020
WARRANT LIABILITY  
WARRANT LIABILITY

NOTE 9 - WARRANT LIABILITY

In June 2018, the Company issued warrants to purchase 3,750 shares of its common stock to investors in a registered direct offering. The warrants have a term of five years from the date of issuance. Pursuant to ASC Topic 815, the initial fair value of the warrants of $15,350 was recorded as a warrant liability on the issuance date. The estimated fair values of the warrants were computed at issuance using a Black-Scholes option pricing model.

The estimated fair value of the outstanding warrant liabilities was $849 and $5,444 as of February 29, 2020 and August 31, 2019, respectively.

Increases or decreases in fair value of the warrant liability are included as a component of “Other expense” in the accompanying condensed consolidated statements of operations for the respective period. The changes to the liability for warrants resulted in a decrease of $1,390 and $4,595 in warrant liability and a corresponding gain for the three and six months ended February 29, 2020, respectively. The changes to the liability for warrants resulted in a decrease of $1,271 and $1,055 in warrant liability and a corresponding gain for the three and six months ended February 28, 2019, respectively.

The estimated fair value of the warrants was computed as of February 29, 2020 using the Black Scholes model with the following assumptions: stock price of $1.07, volatility of 83.1%, risk-free rate of 0.86%, annual dividend yield of 0% and expected life of 3.3 years.