10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2016

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ____________

Commission file number 333-184796

GREENWOOD HALL, INC.

(Exact name of registrant as specified in its charter)

Nevada	99-0376273
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.

12424 Wilshire Blvd,. Suite 1030, Los Angeles, CA 90025

(Address of principal executive offices) (Zip Code)

310-905-8300

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨		Accelerated filer ¨
Non-accelerated filer ¨	(Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

APPLICABLE ONLY TO CORPORATE ISSUERS

As of February 3, 2017, there were 58,741,683 shares of the issuer’s $.001 par value common stock issued and outstanding. No market value has been computed based upon the fact that no active trading market had been established as of the last business day of the registrant’s most recently completed second fiscal quarter. 

EXPLANATORY NOTE

We are filing this Amendment No. 1 on Form 10-Q/A to amend and restate in their entirety the following items of our Quarterly Report on Form 10-Q for the quarter ended November 30, 2016 as originally filed with the Securities and Exchange Commission on January 27, 2017 (the “Original Form 10-Q”): (i) Item 1 of Part I, the Condensed Consolidated Balance Sheet as of November 30, 2016 (unaudited) and the notes related thereto; and (ii) Item 2 of Part I, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” No other sections were affected, but for the convenience of the reader, this report on Form 10-Q/A restates in its entirety, as amended, our Original Form 10-Q. This report on Form 10-Q/A is presented as of the filing date of the Original Form 10-Q and does not reflect events occurring after that date, or modify or update disclosures in any way other than as required to reflect the restatement described below.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION	3
Item 1. Financial Statements.	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	22
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	28
Item 4. Controls and Procedures.	28
PART II - OTHER INFORMATION	29
Item 1. Legal Proceedings	29
Item 1A. Risk Factors	29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3. Defaults Upon Senior Securities	29
Item 4. Mine Safety Disclosures.	29
Item 5. Other Information.	29
Item 6. Exhibits.	29
SIGNATURES	30

 2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Our unaudited financial statements are stated in United States Dollars and are prepared in accordance with United States generally accepted accounting principles.

It is the opinion of management that the unaudited interim financial statements for the quarter ended November 30, 2016 include all adjustments, consisting of normal recurring adjustments, necessary in order to ensure that the unaudited interim financial statements are not misleading.

 3

GREENWOOD HALL, INC.

INDEX TO FINANCIAL STATEMENTS

Balance Sheets	5
Statements of Operations	6
Statements of Cash Flows	7
Notes to Financial Statements	8

 4

GREENWOOD HALL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

NOVEMBER 30, 2016 (UNAUDITED) AND AUGUST 31, 2016

	(Unaudited)
	November 30,			August 31,
	2016			2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	325,869		$	-
Accounts receivable, net		1,266,287			800,836
Prepaid expenses and other current assets		113,083			96,343
Current assets to be disposed of		36,860			36,860
TOTAL CURRENT ASSETS		1,742,099			934,039
PROPERTY AND EQUIPMENT, net		65,197			80,315
OTHER ASSETS
Deposits and other assets		79,783			79,783
TOTAL OTHER ASSETS		79,783			79,783
TOTAL ASSETS	$	1,887,078		$	1,094,137
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable	$	1,878,674		$	2,062,464
Accrued expenses		622,106			687,624
Accrued payroll and related expenses		774,078			745,405
Bank Overdraft		-			801,784
Deferred revenue		495,882			194,861
Accrued interest		196,883			755,083
Due to stockholders / officer		247,267			302,880
Notes payable, net of discount of $178,037 and $183,732, respectively		1,473,876			5,329,149
Line of Credit		-			2,000,000
Derivative liability		1,181,175			846,583
Current liabilities to be disposed of		335,857			335,857
TOTAL CURRENT LIABILITIES		7,205,798			14,061,690
Notes payable, non-current, net of discounts of 1,553,028		3,583,281			-
TOTAL LIABILITIES		10,789,079			14,061,690
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value; 937,500,000 shares authorized, 58,741,683 and 53,717,501 shares issued and outstanding, respectively		58,742			53,718
Additional paid-in capital		14,903,287			14,835,385
Subscription Receivable		(190,000	)		(190,000	)
Accumulated deficit		(23,674,029	)		(27,666,656	)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		(8,902,001	)		(12,967,553	)
Noncontrolling interest		-			-
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		(8,902,001	)		(12,967,553	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	1,887,078		$	1,094,137

 5

GREENWOOD HALL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2016 AND 2015

(UNAUDITED)

	Three Months Ended
	November 30, 2016			November 30, 2015
REVENUES	$	2,541,007		$	1,290,001
OPERATING EXPENSES
Direct cost of services		1,740,165			875,299
Personnel		704,181			691,468
Selling, general and administrative		443,638			1,026,477
Equity-based expense		35,494			88,184
TOTAL OPERATING EXPENSES		2,923,478			2,681,428
INCOME (LOSS) FROM OPERATIONS		(382,471	)		(1,391,427	)
OTHER INCOME (EXPENSE)
Interest expense		(406,839	)		(2,052,792	)
Change in value of derivatives		478,762			202,249
Transaction related income (expense), net		4,303,175
Miscellaneous income (expense), net		-			(16,788	)
TOTAL OTHER INCOME (EXPENSE)		4,375,098			(1,867,331	)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE PROVISION FOR (BENEFIT FROM) INCOME TAXES		3,992,627			(3,258,758	)
Provision for income taxes		-			-
INCOME (LOSS) FROM CONTINUING OPERATIONS		3,992,627			(3,258,758	)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax		-			-
NET INCOME (LOSS)		3,992,627			(3,258,758	)
Net income (loss) attributable to non-controlling interests		-			-
Net income (loss)	$	3,992,627		$	(3,258,758	)
Earnings per share - basic and diluted
Income (loss) from continuing operations	$	0.07		$	(0.07	)
Income (loss) from discontinued operations		-			-
Net income (loss)	$	0.07		$	(0.07	)
Weighted average common shares - basic		57,373,891			47,656,478
Weighted average common shares - diluted		57,835,060			47,656,478

 6

GREENWOOD HALL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2016 AND 2015

(UNAUDITED)

	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	3,992,627		$	(3,258,758	)
Net (income) loss from discontinued operations		-			-
Net income (loss) from continuing operations		3,992,627			(3,258,758	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities of continuing operations:
Non-cash interest on convertible promissory notes		248,927			335,559
Gain on settlement of notes payable		(4,303,175	)		-
Warrants issued for services		-			-
Stock-based compensation		-			20,084
Shares issued for services		-			68,100
Shares issued for settlement		35,492			1,500,000
Depreciation and amortization		15,850			16,179
Change in value of derivatives		(478,762	)		(202,249	)
Changes in operating assets and liabilities:
Accounts receivable		(465,451	)		342,410
Prepaid expenses and other current assets		(16,740	)		37,969
Deposits and other assets		678			251
Accounts payable		(242,390	)		169,157
Accrued expenses		(65,518	)		154,353
Accrued payroll and related		28,673			82,020
Deferred revenue		301,021			56,426
Accrued interest		91,324			94,908
Advances from officers, net		-			2,375
Net cash provided by (used in) operating activities of continuing operations		(857,443	)		(581,216	)
Net cash provided by (used in) operating activities of discontinued operations		-			-
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(857,443	)		(581,216	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(1,411	)		-
Net cash used in investing activities of continuing operations		(1,411	)		-
Net cash used in investing activities of discontinued operations		-			-
NET CASH USED IN INVESTING ACTIVITIES		(1,411	)		-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable		3,554,850			100,000
Payments on notes payable		(2,043,301	)		(10,181	)
Proceeds from the sale of stock		-			310,000
Repayment of bank overdraft		(271,213	)		-
Repayment due to stockholder officer		(55,613	)		-
Net cash provided by (used in) financing activities of continuing operations		1,184,723			399,819
Net cash provided by (used in) financing activities of discontinued operations		-			-
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		1,184,723			399,819
NET INCREASE (DECREASE) IN CASH FROM CONTINUING OPERATIONS		325,869			(181,397	)
NET INCREASE (DECREASE) IN CASH FROM DISCONTINUED OPERATIONS		-			-
NET INCREASE (DECREASE) IN CASH		325,869			(181,397	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		-			211,725
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	325,869		$	30,328
Supplemental disclosures:
Interest paid in cash	$	17,257		$	297,009
Income taxes paid in cash	$	-		$	-
Supplemental disclosure of non-cash investing and financing activities:
Conversion of convertible note and accrued interest into common stock	$	35,492		$	80,000

 7

GREENWOOD HALL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Greenwood Hall, Inc., a Nevada corporation (hereinafter referred to as the “Company”, “Greenwood Hall”, “we”, “us” or “our”) is an emerging education management solutions provider that delivers end-to-end services that support the entire student lifecycle including offerings that increase student enrollment, improve student experience, optimize student success and outcomes, and help schools maximize operating efficiencies. Since 2006, we have developed and customized turnkey solutions that combine strategy, personnel, proven processes and robust technology to help schools effectively and efficiently improve student outcomes, expand into new markets such as online learning, increase revenues, and deliver enhanced student experiences. Our Company currently has 158 employees and has served more than 62 education clients and over 75 degree programs.

Basis of Presentation

On July 23, 2014, Greenwood Hall (formerly Divio Holdings, Corp. (“Divio”)) and its wholly owned subsidiary (“Merger Sub”) consummated the transactions contemplated under a Merger Agreement, dated July 22, 2014, by and among Divio, Merger Sub, and PCS Link, Inc. (“PCS Link”). Pursuant to the Merger Agreement, Merger Sub merged with and into PCS Link with PCS Link remaining as the surviving corporation (the “Merger”). Upon the consummation of the Merger, the separate existence of Merger Sub ceased, and PCS Link became a wholly owned subsidiary of Divio. As a result of the Merger, the holders of all of the issued and outstanding shares of PCS Link common stock exchanged all of such shares (other than “dissenting shares” as defined in California Corporations Code Section 1300) for a combined total of 25,250,000 shares of common stock of Divio, representing approximately 71% of the total outstanding shares on the effective date of the Merger. Immediately following the Merger, Divio Holdings, Corp. changed its name to Greenwood Hall, Inc.

The Merger was accounted for as a “reverse merger,” with PCS Link as the accounting acquirer and the Company as the legal acquirer. Although, the Company acquired PCS Link from a legal perspective, the transaction is viewed as a recapitalization of PCS Link accompanied by an issuance of stock by PCS Link for the net assets of Greenwood Hall from an accounting perspective. This is because Greenwood Hall did not have operations immediately prior to the Merger, and PCS Link became the operating company as a result thereof. The board of directors of Greenwood Hall immediately after the Merger consisted of five directors, four of whom were nominated by PCS Link. Additionally, PCS Link’s stockholders owned 71% of the outstanding shares of Greenwood Hall immediately after completion of the transaction.

This Quarterly Report on Form 10-Q for the quarter ended November 30, 2016 should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended August 31, 2016, filed with the Securities and Exchange Commission (“SEC”) on December 6, 2016. As contemplated by the SEC under Article 8 of Regulation S-X, the accompanying consolidated financial statements and footnotes have been condensed and therefore do not contain all disclosures required by generally accepted accounting principles. The interim financial data are unaudited; however, in the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. Results for interim periods are not necessarily indicative of those to be expected for the full year.

Reclassifications

Certain amounts from prior years have been reclassified to conform to current year presentation.

Principles of Consolidation

The consolidated financial statements include the accounts of Greenwood Hall, PCS Link, a wholly owned subsidiary of Greenwood Hall (“PCS Link”), and University Financial Aid Solutions, LLC (“UFAS”), collectively referred to herein as the “Company”, “we”, “us”, “our”, or “Greenwood Hall”. All significant intercompany accounts and transactions have been eliminated in consolidation. Through our affiliate UFAS we provided complete financial aid solutions. During 2013, UFAS ceased operations and is presently winding down its affairs. As a result, UFAS is presented in the accompanying consolidated financial statements as discontinued operations.

 8

Going Concern

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which contemplates the continuation of the Company as a going concern. The Company has an accumulated deficit and a working capital deficit as of November 30, 2016 and has continued to incur a loss from operations during the first three months of fiscal year 2017. Although such accumulated deficit has decreased by 14.9% from $(27,666,656) as of August 31, 2016, these conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The Company has historically funded its activities through cash generated from operations, debt financing, the issuance of equity for cash, and advances from stockholders. During the three months ended November 30, 2016, the Company generated $1,184,723 from financing activities.

Management intends to become profitable by continuing to grow its operations and customer base. If the Company is not successful in becoming profitable, it may have to further delay or reduce expenses, or curtail operations. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that could result should the Company not continue as a going concern.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures. Management uses its historical records and knowledge of its business in making these estimates. Accordingly, actual results may differ from these estimates.

Cash and Cash Equivalents

For the purpose of the statement of cash flows, the Company considers cash equivalents to include short-term, highly liquid investments with an original maturity of three months or less.

Research and Development

Costs relating to designing and developing new products are expensed in the period incurred.

Revenue Recognition

The Company’s contracts are typically structured into two categories, (i) fixed-fee service contracts that span a period of time, often in excess of one year, and (ii) service contracts at agreed-upon rates based on the volume of service provided or a flat monthly subscription fee. Some of the Company’s service contracts are subject to guaranteed minimum amounts of service volume.

The Company recognizes revenue when all of the following have occurred: persuasive evidence of an agreement with the customer exists, services have been rendered, the selling price is fixed or determinable, and collectability of the selling price is reasonably assured. For fixed-fee service contracts, the Company recognizes revenue on a straight-line basis over the period of contract performance. Costs incurred under these service contracts are expensed as incurred.

Deferred Revenue

Deferred revenue primarily consists of prepayments received from customers for which the Company’s revenue recognition criteria have not been met. The deferred revenue will be recognized as revenue once the criteria for revenue recognition have been met.

Accounts Receivable

The Company extends credit to its customers. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of the Company’s customers to make required payments. Management specifically analyzes the age of customer balances, historical bad debt experience, customer credit-worthiness, and changes in customer payment terms when making estimates of the collectability of the Company’s trade accounts receivable balances. If the Company determines that the financial condition of any of its customers has deteriorated, whether due to customer specific or general economic issues, an increase in the allowance may be made. After all attempts to collect a receivable have failed, the receivable is written off. Based on the information available, management believes the Company’s accounts receivable, net of the allowance for doubtful accounts, are collectable.

 9

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are being provided using the straight-line method over the estimated useful lives of the assets. The estimated useful lives used are as follows:

Classification	Life
Equipment	5-7 Years
Computer equipment	7 Years

Expenses for repairs and maintenance are charged to expense as incurred, while renewals and betterments are capitalized.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740-10, “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities.

Earnings (Loss) per Share

Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Warrants to purchase common stock are excluded from the computation of diluted shares during the three months ended November 30, 2016 and 2015, respectively, when their effect is anti-dilutive.

Variable Interest Entities

Generally, an entity is defined as a variable interest entity (“VIE”) under current accounting rules if it has (a) equity that is insufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, or (b) equity investors that cannot make significant decisions about the entity’s operations, or that do not absorb the expected losses or receive the expected returns of the entity. When determining whether an entity that is a business qualifies as a VIE, we also consider whether (i) we participated significantly in the design of the entity, (ii) we provided more than half of the total financial support to the entity, and (iii) substantially all of the activities of the VIE either involve us or are conducted on our behalf. A VIE is consolidated by its primary beneficiary, which is the party that absorbs or receives a majority of the entity’s expected losses or expected residual returns.

University Financial Aid Services, LLC was 60% owned by John Hall and Zan Greenwood, who at the time held a combined 92.5% of our common stock and served as directors of PCS Link. John Hall is the CEO of the Company and Zan Greenwood served as the Company’s Chief Operating Officer through June 2013. The equity owners of UFAS have no equity at risk, Greenwood Hall has funded UFAS’ operations since it was formed in 2010, and we have the ability to exercise control over UFAS through our two stockholders / directors.

Based on our assessment, we have determined that UFAS is a VIE and that we are the primary beneficiary, as defined in current accounting rules. Accordingly, we are required to consolidate the revenues and expenses of UFAS. To date, the Company has not allocated any income or loss of UFAS to noncontrolling interests as the noncontrolling interests never had any equity at risk. As previously discussed, UFAS ceased operations during 2013 and is presently winding down its affairs. The Company does not anticipate having any future involvement with UFAS after it is dissolved.

 10

Marketing and Advertising

Marketing and advertising costs are expensed as incurred. Marketing and advertising amounted to $7,209 and $12,833 for the three months ended November 30, 2016, and the three months ended November 30, 2015, respectively, and are included in selling, general and administrative expenses.

Stock-Based Compensation

Compensation costs related to stock options and other equity awards are determined in accordance with FASB ASC 718-10, “Compensation-Stock Compensation.” Under this method, compensation cost is calculated based on the grant-date fair value estimated in accordance FASB ASC 718-10, amortized on a straight-line basis over the awards’ vesting period. Stock-based compensation was $35,494 and $20,084 for the three months ended November 30, 2016, and November 30, 2015, respectively. This expense is included in the condensed consolidated statements of operations as Equity-Based Compensation.

Derivative Liabilities

We account for warrants and conversion features as either equity or liabilities based upon the characteristics and provisions of each instrument. Warrants and conversion features classified as equity are recorded as additional paid-in capital on our Consolidated Balance Sheet and no further adjustments to their valuation are made. Some of our warrants and conversion features were determined to be ineligible for equity classification because of provisions that may result in an adjustment to their exercise price. Instruments classified as derivative liabilities and other derivative financial instruments that require separate accounting as assets or liabilities are recorded on our Consolidated Balance Sheet at their fair value on the date of issuance and are revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense. We estimate the fair value of these liabilities using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate.

During the three months ended November 30, 2016 and November 30, 2015, the Company recognized a change in value of the derivative liability of $478,762 and $202,249, respectively.

Fair Value of Financial Instruments

The Company groups financial assets and financial liabilities measured at fair value into three levels of hierarchy in accordance with ASC 820-10, “Fair Value Measurements and Disclosure.” Assets and liabilities recorded at fair value in the accompanying balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

Level Input:	Input Definition:
Level I	Observable quoted prices in active markets for identical assets and liabilities.
Level II	Observable quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level III	Model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models, and similar techniques.

For certain of our financial instruments, including working capital instruments, the carrying amounts are approximate fair value due to their short-term nature. Our notes payable approximate fair value based on prevailing interest rates.

The following table summarizes fair value measurements at November 30, 2016 and August 31, 2016 for assets and liabilities measured at fair value on a recurring basis.

November 30, 2016

	Level 1		Level 2		Level 3		Total
Derivative Liabilities	$	—	$	—	$	1,181,175	$	1,181,175

 11

August 31, 2016

	Level 1		Level 2		Level 3		Total
Derivative Liabilities	$	—	$	—	$	846,583	$	846,583

The assumptions used in valuing derivative instruments issued during the three months ended November 30, 2016 were as follows:

Risk free interest rate	0.51% - 1.22%
Expected life	.01 Years-5.00 years
Dividend yield	None
Volatility	68% - 137%

The following is a reconciliation of the derivative liability related to these instruments for the three months ended November 30, 2016:

Value at August 31, 2016	$	846,583
Issuance of instruments		1,161,043
Change in value		(478,762	)
Net settlements		(347,690	)
Value as of November 30, 2016	$	1,181,175

The derivative liabilities are estimated using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate. Changes in the assumptions used could have a material impact on the resulting fair value. The primary input affecting the value of our derivatives liabilities is the Company’s stock price, term and volatility. Other inputs have a comparatively insignificant effect.

Effect of Recently Issued Accounting Standards 

There were no recently issued accounting standards during the period ended November 30, 2016 that impacted our consolidated financial statements or ongoing financial reporting.

 12

2. PROPERTY AND EQUIPMENT

Depreciation and amortization of the Company’s property and equipment amounted to $15,850 and $16,179 for the three months ended November 30, 2016 and the three months ended November 30, 2015, respectively, and is included in the accompanying consolidated statements of operations in selling, general and administrative expenses.

At November 30, 2016 and August 31, 2016, property and equipment consists of the following:

	November 2016			August 2016
Computer equipment	$	553,255			553,255
Software and Equipment		42,398			42,398
Furniture & Fixtures		9,177			9,177
		604,830			604,830
Accumulated depreciation		(539,633	)		(524,515	)
Net property and equipment	$	65,197			80,315

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3. NOTES PAYABLE

On October 14, 2016, the Company executed a new credit agreement (“Moriah Agreement”) with Moriah Educational Management LLC (“Moriah”). The Moriah Agreement provided for a revolving loan (“Revolving Loan”) for up to $3,500,000. The Revolving Loan may be drawn in tranches of not less than $500,000. On October 14, 2016 (“Advance Date”) the Company borrowed the full $3,500,000 (“Principal”). Interest on the Revolving Loan shall be computed on the basis of the actual number of days elapsed and a year of 360 days and shall accrue on the outstanding principal balance of advances at an annual rate equal to the greater of (i) the sum of (A) the “Prime Rate” as reported in the “Money Rates” column of The Wall Street Journal, adjusted as and when such Prime Rate changes, plus (B) Seven and Three Quarters Percent (7.75%), or (ii) Ten Percent (10.0%), but in no event in excess of Fourteen Percent (14%) per annum unless an event of default has occurred and is continuing. The prime rate was 3.5% on the Advance date. The Principal is due and payable, with all accrued and unpaid interest on October 13, 2018 with monthly payments of $29,167 starting on April 1, 2017. The Moriah Agreement contains a prepayment penalty. If the Company pays the entire unpaid Principal before April 30, 2017, a penalty of three percent (3%) of the then-outstanding Principal under the Revolving Loan.

As part of the Moriah Agreement, the Company issued two warrants to Moriah for the purchase of the Company’s common stock:

The Moriah Warrant is for the purchase, for a period of seven years, of up to 3,500,000 shares of the Company common stock at a purchase price of $0.12 per share, which is adjustable downward (“Ratchet-down”) if the Company issues share of its common stock, or securities convertible into or exercisable for the Company’s common stock at a price below $0.12. The Company has determined the Ratchet-down provision causes the Moriah Warrant to be a derivative, accordance with ASC 815 Derivatives and Hedging (ASC 815”). ASC 815 requires the Moriah Warrant to be recorded as a liability on the date of issuance and revalued every reporting period, with the increase or decrease in fair value recorded as a loss or gain in the Company’s statement of operations. As of the October 14, 2016, the fair value of the Moriah Warrant was approximately $23,000, which was recorded as a discount to the Revolving Loan and amortized as an expense over the life of the Revolving Loan. As of November 30, 2016, the fair value of the Moriah Warrant was approximately $43,000.

Moriah Put is for the purchase, for a period of five years, of up to 8,125,000 shares of the Company common stock at a purchase price of $0.14 per share, which is adjustable downward (“Ratchet-down”) if the Company issues share of its common stock, or securities convertible into or exercisable for the Company’s common stock at a price below $0.14. Also, the Moriah Put grants the holder of the option to sell all or any portion of the Moriah Put or the Moriah Put Shares (“Put Option”) for which the Moriah Put has been exercised to the Company for a total purchase price of up to One Million One Hundred Thirty Seven Thousand Five Hundred Dollars ($1,137,500), pro-rated for any portion thereof, representing a purchase price of Fourteen Cents ($0.14) per Moriah Put Share, subject to adjustment. The Put Option may be exercised at any time and, if for a portion thereof, from time to time, during the fifteen-day period (the “Put Period”) commencing on the earliest of (1) the date when Moriah receives written notice from the Company of the Company’s intention to prepay the Revolving Loan, which notice shall be delivered by the Company to Moriah so as to be received by Moriah no later than fifteen days prior to the proposed date of prepayment; (2) the date of Moriah’s acceleration of the Obligations following an event of default, or (3) September 29, 2018

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The Company has determined the Ratchet-down and Put Option provisions causes the Moriah Put to be a derivative, accordance with ASC 815 Derivatives and Hedging (ASC 815”). ASC 815 requires the Moriah Put to be recorded as a liability on the date of issuance and revalued every reporting period, with the increase or decrease in fair value recorded as a loss or gain in the Company’s statement of operations. As of the October 14, 2016, the fair value of the Moriah Put was approximately $1,137,500, which was recorded as a discount to the Revolving Loan and amortized as an expense over the life of the Revolving Loan. As of November 30, 2016, the fair value of the Moriah Put was approximately $1,137,500.

Also, the Moriah Put provides the Company call the Moriah Put (“Call Option”) so long as any portion of this Warrant is outstanding, if the Company’s Common Stock has both (a) an average closing price greater than $0.50 per share, and (b) an average daily trading volume in excess of 300,000 shares, in each case for the immediately preceding ninety (90) consecutive trading days and continuing through the call notice period or such earlier date as the Moriah Put is exercised or transferred, the Company shall have the irrevocable right, but not the obligation, to demand automatic exercise, in whole or in part, by the Holder. The Company has determined the Call Option to be a derivative asset in a accordance with ASC 815 Derivatives and Hedging (ASC 815”). ASC 815 requires the Call Option to be recorded as an asset on the date of issuance and revalued every reporting period, with the increase or decrease in fair value recorded as a loss or gain in the Company’s statement of operations. As of the October 14, 2016 and November 30, 2016, the Company has determined the Call Option fair value to be approximately$0.

Under the Moriah Agreement the Company has the following reporting and financial covenants:

Annual Financial Statements. Annual financial statements of Company, certified by the Chief Financial Officer of each and audited by an outside accounting firm acceptable to Lender, as soon as available, but in any event within ninety (90) days after the end of Borrower’s Fiscal Year during the Term. Such financial statements shall fairly present the financial position of Company as of the dates thereof and the results of its operations, cash flows and stockholders’ equity for each of the periods then ended in all material aspects; and be prepared in accordance with GAAP.

Quarterly Financial Statements. Quarterly financial statements of the Company, as soon as available but in any event no later than forty-five (45) days after the close of each calendar quarter, consisting of the unaudited balance sheet and the related statement of income of the Company, prepared in accordance with GAAP, subject to year-end audit adjustments, together with such other information with respect to the business of Company as Moriah may request.

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Monthly Financial Statements. Not later than eighteen (18) days after the end of the first three (3) calendar months ending after the date hereof, and thereafter not later than fifteen (15) days after the end of each subsequent calendar month, the unaudited balance sheets and the related statements of income of Company, certified by the Chief Financial Officer of Borrower, subject to year end audit adjustments, with an aging schedule for all accounts receivable and accounts payable and calculation of LTM EBITDA as of the date of such financial statements, together with such other information with respect to the business of Company as Moriah may request.

Bi-Monthly Accounts Receivable and Accounts Payable Aging Reports. Twice a month, not later than the 15th day and the last day of each calendar month, respectively, an aging schedule for all accounts receivable and accounts payable, in form and substance satisfactory to Moriah.

Borrower shall timely file all reports required to be filed with the SEC pursuant to Section 13 or 15(d) of the 1934 Act. The Company was late in the filing of the Company’s Form 10Q for the quarter ended November 30, 2016, and such untimely filing was cured to the satisfaction of the lender.

Adjusted Gross Revenues. Borrower will maintain (i) minimum monthly gross revenues of not less than eighty percent (80%) of the projected monthly plan provided by Borrower to Lender prior to the date hereof and annexed to our Annual Report on Form 10-k as Exhibit 9.18, as measured monthly as of the last day of each month during the Term, and (ii) minimum quarterly gross revenues of not less than eighty-five percent (85%) of the projected quarterly plan provided by Borrower to Lender prior to, as measured quarterly as of the last day of each fiscal quarter during the Term .

EBITDA. Borrower will maintain minimum quarterly EBITDA of not less than eighty-five percent (85%) of the projected quarterly plan provided by Borrower to Lender, as measured quarterly as of the last day of each fiscal quarter during the Term.

From the Principal advances, the Company was required to make certain payments to the Company’s existing note holders, specifically $1,200,000 to Opus Bank (“Opus”), $177,578 to California United Bank (“CUB”), $150,000 to Colgan Finacial Group, Inc. (“Colgan”), $305,000 to First Fire Capital (“First Fire”), $187,257 to Redwood Fund (“Redwood). Also, the Company prepaid approximately $131,000 of interest under the Revolving Loan.

As consideration for Moriah to enter in to the Moriah Agreement, the Company was required to settle the Opus and CUB loans, settle or extend the maturity dates on all other existing notes to date after the repayment of Moriah Principal and the for the other notes holders to execute an agreement to subordinate their security position to Moriah.

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On October 7, 2014, CUB, agreed to tender its secured promissory note in the amount of $1,250,000 dated October 21, 2010 with a remaining balance of $876,251 and all accrued and unpaid interest of approximately $75,000 for a one-time payment of $177,578. Also, the Company was required to issue a new warrant to purchase 523,587 shares of the Company’s common stock at an exercise price of $0.10 per share.

On October 13, 2016 Opus agreed to tender its secured promissory note and letter of credit agreement for total principal of $3,515,152 and all accrued and unpaid interest of approximately $218,000 for a one-time payment of $1,205,778. Also, the Company was required to issue a new warrant for to purchase 2,000,000 shares of the Company’s common stock at an exercise price of $0.10 per share.

On October 16, 2016 Colgan agreed to amend the secured promissory note dated December 23, 2013. Colgan agreed to accept a payment of $150,000, forgive $150,000 of accrued and unpaid interest and subordinate its secured position to Moriah. Also, the maturity date was extended to the earlier of (a) the date that the Company’s obligation to Mariah is paid or (b) December 31, 2017. The note shall accrue interest at a rate of 12% per annum.

On October 6, 2016 Colgan agreed to amend the secured promissory note dated December 18, 2014. Colgan agreed that the maturity date was extend to the earlier of (a) the date that the Company’s obligation to Mariah is paid or (b) December 31, 2017, with an interest rate of 12% per annum.

On October 13, 2016, First Fire agreed to tender its secured promissory note in the amount of $392,500 dated December 21, 2015 and all accrued and unpaid interest of approximately $18,000 for a one-time payment of $305,000. In addition, $24,500 of the outstanding balance of the note was converted into 3,122,222 shares of common stock.

On September 30, 2016, Redwood agreed to accept a new promissory note, maturing on September 30, 2017 and an interest rate of 12% per annum, in the amount of $1,418,496 in exchange for a payment of $300,000 and the cancelation of the promissory notes dated March 31, 2015, August 14, 2015, November 6, 2015, December 14, 2015, and February 4, 2016 and all accrued and unpaid interest under these notes. Also, Redwood agreed to to tender its promissory notes dated November 6, 2015 and January 18, 2016 for total principal of $170,000 and all accrued and unpaid of approximately $17,000 for a one-time payment of $187,257.

On October 3, 2016, Lincoln Park Capital Fund, LLC agreed to accept new promissory notes maturing on September 30, 2019 and an interest rate of 12% per annum, in the amount of $685,000 in exchange for the cancellation of the promissory notes dated April 24, 2015 in the amount of $295,000 and August 21, 2015 in the amount of $295,000 and all accrued and unpaid interest under these notes of approximately $75,000. In addition, Lincoln Park was issued a new promissory note maturing September 30, 2019 of $250,000 reflecting $200,000 in net proceeds to the Company.

The following is a schedule, by year, of the aggregate maturities of the notes payable as of November 30, 2016:

Periods ending November 30,
2017	$	1,651,830.00
2018	$	4,204,487.00
2019	$	935,000.00
2020	$	0
2021	$	0
Thereafter	$	0

4. STOCKHOLDERS’ EQUITY

The Company is authorized to issue one class of stock, which represents 937,500,000 shares of Common Stock, par value $0.001.

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Stock Issued for Services

During the three months ended November 30, 2016, the Company did not issue any shares of its common stock in exchange for services.

Stock Option Plan

In July 2014, the Board of Directors adopted, and the stockholders approved, the 2014 Stock Option Plan under which a total of 5,000,000 shares of Common Stock are reserved for issuance. The 2014 Stock Option Plan will terminate in September 2024.

Stock Options

As of November 30, 2016, the members of the Board of Directors hold options to purchase an aggregate of 1,750,000 shares of Common Stock at exercise prices ranging from $0.01 to $0.75, which were granted prior to August 31, 2016.

Transactions in Q1 2017	Quantity		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life
Outstanding, August 31, 2016		4,985,000	$	0.23		8.78
Granted		0	$	-		-
Exercised		0		-		-
Cancelled/Forfeited		0		-		-
Outstanding, November 30, 2016		4,985,000	$	0.23		8.78
Exercisable, November 30, 2016		2,660,000	$	0.36		8.35

The fair value of these options was estimated at the date of grant using the Black Scholes option pricing model with the following assumptions: no dividends, expected volatility of 100%, risk free interest rate between 1.21% and 1.65%, and expected life of 5.5 years.

The weighted average remaining contractual life of options outstanding issued under the Plan was 9.03 years at November 30, 2016. The exercise prices for the options outstanding at November 30, 2016 ranged from $0.01 to $0.75, and the information relating to these options is as follows:

OPTIONS OUTSTANDING						OPTIONS EXERCISABLE
Quantity		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life		Quantity		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life
	700,000	$	0.01		7.65		700,000		0.01		7.65
	600,000	$	0.50		8.28		600,000		0.50		8.28
	450,000	$	0.75		8.34		450,000		0.75		8.34
	910,000	$	0.35		8.94		910,000		0.35		8.94
	1,825,000	$	0.08		9.24		-		-		-
	500,000	$	0.11		9.34		-		-		-
	4,985,000	$	0.23		8.78		2,660,000	$	0.36		8.35

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Warrants Outstanding

The following is a summary of warrants outstanding at November 30, 2016:

Exercise Price		Number of Warrants		Expiration Date
$	1.000		1,264,023	Dec-24
$	0.010		100,000	Jul-16
$	1.000		-	Apr-20
$	0.010		150,000	Feb-18
$	0.500		1,176,473	Aug-20
$	1.000		-	Aug-20
$	1.000		1,200,000	Aug-21
$	1.000		-	Aug-21
$	1.000		20,000	Aug-21
$	1.000		10,000	Aug-21
$	0.010		-	Dec-19
$	1.100		-	Mar-21
$	0.100		800,000	Jun-18
$	0.125		800,000	Jun-18
$	0.032		3,184,126	Jun-18
$	0.040		3,184,126	Jun-18
$	0.050		100,000	Jun-21
$	0.100		1,428,571	Oct-26
$	0.100		523,587	Dec-20
$	0.100		2,000,000	Oct-20
$	0.100		5,000,000	Oct-21
$	0.120		3,500,000	Oct-21
$	0.140		8,125,000	Oct-21

Warrants were issued pursuant to certain consulting agreements and amendments to financing terms. Warrants are booked to additional paid in capital and to interest expense based on stock price at date of grant, exercise price, warrant life, risk free rate and annual volatility. During the three months ended November 30, 2016, the Company granted warrants to purchase up to 20,577,158 shares of Common Stock, valued from $0.10 to $0.14 per share.

5. CONCENTRATIONS

Concentration of Credit Risk

The Company maintains its cash and cash equivalents at a financial institution which may, at times, exceed federally insured limits. Historically, the Company has not experienced any losses in such accounts.

Major Customers

For the three months ended November 30, 2016, three (3) customers represented 53% of net revenues and for the three months ended November 30, 2015, four (4) customers represented a total of 53% of revenues. A decision by this customer to cease business relations with the Company may have a material adverse effect on the Company’s financial condition and results of operations.

6. INCOME TAXES

The difference between income tax expense attributable to continuing operations and the amount of income tax expense that would result from applying domestic federal statutory rates to pre-tax income (loss) is mainly related to an increase in the valuation allowance, partially offset by state income taxes. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized. Deferred income tax assets are mainly related to net operating loss carryforwards. Management has chosen to take a 100% valuation allowance against the deferred income tax asset until such time as management believes that its projections of future profits make the realization of the deferred income tax assets more likely than not. Significant judgment is required in the evaluation of deferred income tax benefits and differences in future results from management’s estimates could result in material differences.

A majority of the Company’s deferred tax asset is comprised of net operating loss carryforwards, offset by a 100% valuation allowance at November 30, 2016 and November 30, 2015.

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As of November 30, 2016, the Company is in process of determining the amount of Federal and State net operating loss carry forwards (“NOL”) available to offset future taxable income. The Company’s NOLs will begin expiring in 2032. These NOLs may be used to offset future taxable income, to the extent the Company generates any taxable income, and thereby reduce or eliminate future federal income taxes otherwise payable. Section 382 of the Internal Revenue Code imposes limitations on a corporation’s ability to utilize NOLs if it experiences an ownership change as defined in Section 382. In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50% over a three-year period. In the event that an ownership change has occurred, or were to occur, utilization of the Company’s NOLs would be subject to an annual limitation under Section 382. Any unused annual limitation may be carried over to later years. The Company could experience an ownership change under Section 382 as a result of events in the past in combination with events in the future. If so, the use of the Company’s NOLs, or a portion thereof, against future taxable income may be subject to an annual limitation under Section 382, which may result in expiration of a portion of the NOLs before utilization.

Due to the existence of the valuation allowance, future changes in the Company’s unrecognized tax benefits will not impact its effective tax rate. Any carryforwards that expire prior to utilization as a result of such limitations will be removed, if applicable, from deferred tax assets with a corresponding reduction of the valuation allowance.

7. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases its operating facilities under non-cancelable operating leases that expire through 2024. Total rent expense for the three months ended November 30, 2016, the three months ended November 30, 2015, amounted to $134,725 and $184,111, respectively. The Company is responsible for certain operating expenses in connection with these leases. The following is a schedule, by year, of future minimum lease payments required under non-cancelable operating leases as of August 31, 2016:

Years Ending August 31,
2017	516,484
2018	555,762
2019	571,259
2020	467,211
2021	464,560
Thereafter	794,235

Employment Agreements

At November 30, 2016, the Company maintained an employment agreement with an officer, the terms of which may require the payment of severance benefits upon termination.

Legal Matters 

The Company is involved from time to time in various legal proceedings in the normal conduct of its business.

On August 26, 2016, Zantine Greenwood (“Greenwood”), a former officer and founder of the Company, commenced a proceeding in Arbitration alleging that the Company had breached its obligations under a consulting agreement entered into by and between Greenwood and the Company on or about July 24, 2014 (the “Consulting Agreement”).  The Company did not appear at the Arbitration.  On September 23, 2016, the Arbitrator issued an award to Greenwood against the Company in the sum of $236,250.79.  On October 26, 2016, Greenwood filed a petition to confirm the award in the Los Angeles Superior Court, Case No. BS165962. The Company opposed the petition and requested that the court vacate the award because the arbitration provision in the Consulting Agreement was void under applicable law and therefore the Arbitrator had no subject matter jurisdiction over the dispute.   In a January 9, 2017 Settlement Agreement and Mutual Release, the Company agreed to pay Greenwood $115,000 plus 5.5% simple interest in monthly installments of $10,000 until payment in full in exchange for a release of any and all claims against the Company arising from or relating to the dispute.  Conditions to the settlement are that the Court vacate the award and retain jurisdiction until all payments have been made.  The Company expects that the Court will agree with the conditions.

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On March 11, 2016, StoryCorp Consulting, Inc. and David R. Wells filed suit against the Company and the John R. Hall, in his individual capacity, in the Superior Court of the State of California for the County of Los Angeles (Central District) for breach of contract and promissory fraud/false promise, among other things, seeking an amount of not less than $ 100,000. The Company believes that it has a strong defense and is vigorously defending against this lawsuit, but the potential range of loss related to this matter cannot be determined, as the pleadings are still not resolved, but are expected to be resolved in 2017, at the earliest. No trial date has been set. If we fail in defending any such claims or settling those claims, in addition to paying monetary damages or a settlement payment, the outcome of this matter could have a materially adverse effect on our business, financial condition and results of operations.

8. DISCONTINUED OPERATIONS

During 2013, we ceased operations in our affiliated company, UFAS. The operations of UFAS are now presented as discontinued operations in the accompanying consolidated financial statements. UFAS was inactive during the three month periods ended November 30, 2016 and 2015.

9. SUBSEQUENT EVENTS

On November 22, 2016, Frederic Boyer tendered to the Company a written resignation (the “Resignation”) as director on the Board, effective immediately, in which Mr. Boyer expressed disagreement with certain management practices as it related to the Board of Directors. A copy of the Resignation is filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on November 29, 2016.

On November 28, 2016, the Board of Directors appointed Michael Poutre II, Cary Sucoff and Jerry Rubinstein to the Board of Directors, effective as of December 7, 2016.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements. These statements are based on the Company’s (as hereinafter defined) current beliefs, expectations and assumptions about future events, conditions and results and on information currently available to them. All statements, other than statements of historical fact, included herein regarding the Company’s strategy, future operations, financial position, future revenues, projected costs, plans, prospects and objectives are forward-looking statements. Words such as “expect”, “may”, “anticipate”, “intend”, “would”, “plan”, “believe”, “estimate”, “should” and similar words and expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements.

Forward-looking statements in the report include express or implied statements concerning the Company’s future revenues, expenditures, capital or other funding requirements, the adequacy of the Company’s current cash and working capital to fund present and planned operations and financing needs, expansion of and demand for product offerings, and the growth of the Company’s business and operations through acquisitions or otherwise, as well as future economic and other conditions both generally and in the Company’s specific geographic and product markets. These statements are based on currently available operating, financial and competitive information and are subject to various risks, uncertainties and assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements due to a number of factors including, but not limited to, those set forth below in the section entitled “Risk Factors” included in the Company’s annual report on Form 10-K for the year ended August 31, 2016, filed with the U.S. Securities and Exchange Commission on December 6, 2016. Given those risks, uncertainties and other factors, many of which are beyond the Company’s control, you should not place undue reliance on these forward-looking statements.

As used in this Form 10-Q, the terms “we”, “us”, “our”, the “Company”, mean Greenwood Hall, Inc. (formerly Divio Holdings, Corp.), unless otherwise indicated. The forward-looking statements relate only to events as of the date on which the statements are made. Neither the Company nor PCS Link (as hereinafter defined) undertakes any obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, even if experience or future changes make it clear that any projected results or events expressed or implied therein will not be realized. You are advised, however, to consult any further disclosures the Company makes in future public filings, statements and press releases.

All dollar amounts refer to US dollars unless otherwise indicated.

Company Overview

Greenwood Hall, Inc., a Nevada corporation (hereinafter referred to as the “Company”, “Greenwood Hall”, “we”, “us” or “our”), is an education technology company. Our corporate mission is to enable colleges and universities to remain relevant by helping them expand access to personalized educational opportunities that are flexible and affordable, and to prepare students for career opportunities. We assist schools in maximizing the student experience and driving successful student outcomes while leveraging technology to help reinvent their operating and financial models.

We provide cloud-based education management services that address the entire student lifecycle. Our solutions combine strategy, people, proven processes and robust technology to provide end-to-end services that begin with recruitment and student enrollment and can end with post-graduation job placement, career networking and alumni relations. Our solutions are utilized by schools that need to enhance the student experience and are looking to expand into new markets such as online learning, international and/or competency-based learning. All of our solutions are designed to help public and not-for-profit higher education institutions generate sustainable improvements in operating and financial results, while improving student success and satisfaction.

Our Services

Our core services include:

· solutions that support the entire student lifecycle including lead generation/marketing, new student recruitment, enrollment counseling, financial aid advising, new student recruitment, retention counseling, career advising, student concierge, and help desk services;

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· consulting services, including market assessments and analysis of internal operational efficiency, retention counseling/coaching and the reengagement of students who have dropped out of a particular institution;

· student support solutions, including help desk, career advising, student concierge and financial aid advising services; and

· various data and technology enabled solutions that enable school clients to better manage/analyze data, deliver instruction to students (online, hybrid, and classroom), and make certain institutional decisions.

In addition to services provided to educational institutions, we provide donor lifecycle management services to various major non-profit organizations. The lifecycle management services for non-profit organizations are mainly related to legacy operations of our Company prior to entering the education marketplace in 2006.

We believe that our end-to-end solutions that span the entire student lifecycle provide us with an advantage over competing providers that often address isolated segments of the student lifecycle spectrum, such as student acquisition and student retention. We generally focus on small to medium-sized private and not-for-profit institutions and medium-sized to large public institutions.

Our Business Model

Substantially all of our revenue is derived from fee-for-service arrangements with our customers – either as a result of transactions processed/handled by the Company and/or monthly recurring subscription fees. Until recently, the majority of our revenue was transactional in nature. Moving forward, we anticipate the majority of our non-project based revenue will be subscription-based, in which customers generate a minimum set amount of revenue on a monthly and/or annual basis.

We continue to grow our new business pipeline and we believe the expansion of our sales resources position us well for substantial revenue growth in our core higher education business.

Recent Developments

On September 2, 2016, the Company entered into a Services Agreement with Fourth Quadrant, Inc., pursuant to which the Company will provide education management services to Marian University in Indianapolis, Indiana.

On October 28, 2016, Seminole State College in Sanford Florida extended its services agreement with the Company through April 30, 2017.

On November 1, 2016, we entered into an amendment to our services agreement with the University of Alabama to extend the agreement through December 31, 2017.

On November 4, 2016, we entered into an amendment to our services and subscription agreement with Troy University in Troy, Alabama to extend the agreement through December 31, 2017.

On November 22, 2016, Frederic Boyer tendered to the Company a written resignation (the “Resignation”) as director on the Board, effective immediately, in which Mr. Boyer expressed disagreement with certain management practices as it related to the Board of Directors. A copy of the Resignation is filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on November 29, 2016.

On November 28, 2016, the Board of Directors appointed Michael Poutre II, Cary Sucoff and Jerry Rubinstein to the Board of Directors, effective as of December 7, 2016.

On November 28, 2016, the Company announced it had entered into an agreement with Borough of Manhattan Community College to provide various advisory services.

On January 10, 2017, the Company entered into an agreement with Lamar University, a unit of the Texas State University system, to provide enrollment management services.

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Recent Financing Transactions

On October 14, 2016, the Company entered into a Loan and Security Agreement (“Loan Agreement”) with PCS Link, Inc., a California corporation and the Company’s wholly-owned subsidiary (“PCS”), and Moriah Education Management, LLC, a Delaware limited liability company (“Moriah”), pursuant to which Moriah granted a loan to PCS in exchange for a promissory note in the principal amount of $3,500,000 (“Moriah Loan”). The Company also entered into a Stock Pledge Agreement (the “Stock Pledge Agreement”) with Moriah, pursuant to which the Company pledged 1,007,920 shares of common stock of PCS held by the Company, representing 100% of the issued and outstanding shares of common stock of PCS, and (ii) John R. Hall, the Chief Executive Officer of the Company and the Chief Executive Officer of PCS, executed a personal guaranty (the “Personal Guaranty”), to secure PCS’ obligations under the Loan Agreement. In connection with the Loan Agreement, on October 14, 2016, the Company and Moriah entered into a Securities Issuance Agreement pursuant to which the Company issued a five-year warrant to purchase 8,125,000 shares of the Company’s common stock at a price of $0.14 per share and a seven-year warrant to purchase 3,500,000 shares of the Company’s common stock at a price of $0.12 per share. The warrants were issued in reliance on Section 4(a)(2) of the Securities Act of 1933. On October 14, 2016, in consideration for the Personal Guaranty, the Company issued to John Hall, its Chief Executive Officer, a five-year warrant to purchase up to 5,000,000 shares of common stock of the Company at a price of $0.10 per share. The warrants were issued in reliance on Section 4(a)(2) of the Securities Act of 1933.

In connection with the Moriah Loan, the Company restructured its existing debt held by Redwood Fund LP, Lincoln Park Capital Fund, LLC, Colgan Financial Group, Inc., Opus Bank and California United Bank, as further described in the notes to the financial statements contained herein.

Non-GAAP Measures: Adjusted EBITDA

In this report, we supplement our reporting of certain financial measures determined in accordance with GAAP by utilizing certain non-GAAP financial measures. Adjusted EBITDA represents our earnings before interest expense, other income (expense), income taxes, depreciation and amortization, transactional-related expenses, stock-based compensation, and changes in the fair value of our derivative financial instruments. Adjusted EBITDA is a key measure used by Management and the Board of Directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short and long-term operational plans. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our Management and Board of Directors.

Adjusted EBITDA described below are in addition to, and not meant to be considered superior to, or a substitute for, our financial statements prepared in accordance with GAAP. In addition, Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate Adjusted EBITDA in the same manner as we do.

Our use of Adjusted EBITDA has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations include the following:

· Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

· Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

· Adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation;

· Adjusted EBITDA does not reflect interest or tax payments that may represent a reduction in cash available to us; and

· Other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Due to these and other limitations, investors should consider adjusted EBITDA alongside other U.S. GAAP-based financial performance measures, including various cash flow metrics, net income (loss) and our other U.S. GAAP results. The following table presents a reconciliation of Adjusted EBITDA (loss) to net loss for each of the periods indicated:

 24

	Three Months Ended
	November 30, 2016			November 30, 2015
NET INCOME (LOSS)	$	3,992,627		$	(3,258,758	)
Adjustments:
Equity Expense		35,494			88,184
Interest Expense		406,839			2,052,792
Other Income/Expense		(4,303,175	)		-
Transaction Related Expenses		125,189			-
Change in Value of Derivatives		(478,762	)		202,249
Miscellaneous Income (expense), net		-			(16,788	)
Total Adjustments		(4,214,414	)		2,326,437
ADJUSTED EBITDA (LOSS)	$	(221,787	)	$	(932,321	)

Results of Operations

EdTech Versus Legacy/Non-Recurring Revenue

We have two revenue streams – EdTech and Legacy. The EdTech side of our business includes all of our technology-enabled solutions offerings to higher education. It is the growth side of our business and the area that Management believes will generate the highest stockholder value. As such, the Company is focused on the growth of our EdTech offerings. Our Legacy business represents the Company’s non-education lifecycle management services for non-profit organizations as well as certain non-strategic higher education offerings. In order to best maximize stockholder value, Management opted in 2014 to end its efforts to grow the Company’s Legacy business. The Company’s revenues for the first three months of FY-2017 reflect an increasing proportion of EdTech revenue from the first three months of FY-2016.

	Three Months Ended
	November 30, 2016		November 30, 2015
Legacy	$	148,245	$	252,422
EdTech	$	2,392,762	$	1,037,579
Total Revenue	$	2,541,007	$	1,290,001

 25

The following table summarizes our consolidated statements of operations for the three months ended November 30, 2016 and November 30, 2015.

	Three Months Ended
	November 30, 2016			November 30, 2015
REVENUE	$	2,541,007		$	1,290,001
Direct cost of services		1,740,165			875,299
Personnel		704,181			691,468
Selling, general and administrative		443,638			1,026,477
Equity-based expense		35,494			88,184
TOTAL OPERATING EXPENSES		2,923,478			2,681,428
INCOME (LOSS) FROM OPERATIONS		(382,471	)		(1,391,427	)
OTHER INCOME (EXPENSE)
Interest expense		(406,839	)		(2,052,792	)
Change in value of derivatives		(478,762	)		202,249
Transaction related income (expense), net		4,303,175			-
Miscellaneous income (expense), net		-			(16,788	)
TOTAL OTHER INCOME (EXPENSE)		4,375,098			(1,867,331	)
NET INCOME (LOSS)		3,992,627			(3,258,758	)

Revenue, Net

Overall Revenue increased by $1,251,006, or 97.0%, during the three months ended November 30, 2016, primarily due to new contracts with higher education customers secured during the second half of the Company’s fiscal year ended August 31, 2016 as well as during the three months ended November 31, 2016. Recurring revenues from the Company’s strategic EdTech offerings increased by $1,355,183 or 130.6% during three months ended November 30, 2016, compared to the same period in 2015, primarily due to new contracts with higher education customers secured during the second half of the Company’s fiscal year ended August 31, 2016 as well as during the three months ended November 30, 2016.

Direct Cost of Services

Direct cost of service increased by $864,866, or 99.0%, during the three months ended November 30, 2016, primarily due to increased demand for and sales of the Company’s services.

Personnel

Personnel costs increased by $12,713, or 1.8%, during the three months ended November 30, 2016, primarily due to increased demand for and sales of the Company’s services.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased by $582,840, or 56.8%, during the three months ended November 30, 2016, primarily due to reductions in overhead expenses.

Equity-based Expense

Equity-based expense decreased by $52,690, or 59.8%, during the three months ended November 30, 2016.

Other Income (Expense)

Other income increased by $6,242,429, or 334.3%, during the three months ended November 30, 2016, due primarily to transaction related income equal to $4,303,175.

Income (Loss) From Continuing Operations

We experienced a net income of $3,992,627 from continuing operations for the three months ended November 30, 2016. This compares with a net loss from continuing operations of $(3,258,758), during the three months ended November 30, 2015, an increase of $7,251,385, or 222.5%.

Period-to-Period Fluctuations

Our revenue, cash position and accounts receivable may fluctuate significantly from quarter to quarter due to variations driven by the academic schedules of our clients’ programs. These programs generally start classes for new and returning students on an average of four times per year. Class start dates are not necessarily evenly spaced throughout the year, do not necessarily correspond to the traditional academic calendar and may vary from year to year. As a result, the number of classes our client programs have in session, and therefore the number of students enrolled, will vary from month to month and quarter to quarter, leading to variability in our revenue.

 26

Liquidity and Capital Resources

Working Capital

	November 30, 2016			August 31, 2016
Total Current Assets	$	1,742,099			934,039
Total Current Liabilities		7,205,798			14,061,690
Working Capital Deficit		(5,463,699	)		(13,127,651	)

The working capital deficit decreased by $7,663,952, or 58.4%, from August 31, 2016 to November 30, 2016, due primarily to amendments to the respective maturity dates of certain notes payable and line of credit, such that such notes and line of credit were subsequently deemed non-current liabilities.

Cash Flows

	Three months ended			Three months ended
	November 30, 2016			November 30, 2015
Net Cash provided by (used in) Operating Activities	$	(857,443	)		(581,216	)
Net Cash provided by (used in) Investing Activities		(1,411	)		-
Net Cash provided by (used in) Financing Activities		1,184,723			399,819

The decrease by $276,227, or 47.5% in net cash provided by operating activities in the three months ended November 30, 2016 as compared to the three months ended November 30, 2015 was due to the restructuring transactions completed in October 2016. The increase by $784,904, or 196.3%, in cash provided by financing activities in the three months ended November 30, 2016 as compared to the three months ended November 30, 2015 was due to financing transactions completed by the Company in October 2016. The decrease by $1,411, in cash provided by investing activities in the three months ended November 30, 2016 as compared to the three months ended November 30, 2015 was due to the acquisition of software and equipment.

Going Concern

Our financial statements have been prepared on a going concern basis. We must raise additional capital to fund our operations in order to continue as a going concern. The Company has an accumulated deficit and a working capital deficit as of November 30, 2016 and continues to incur a loss from continuing operations during the first quarter of FY-2017. Presently, the Company does not have sufficient cash resources to meet its plans in the twelve months following November 30, 2016. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is in the process of evaluating various financing alternatives in order to finance our growth and general and administrative expenses as well as materially reducing the Company’s debt load. These alternatives include raising funds through public or private equity markets and either through institutional or retail investors. Although there is no assurance that the Company will be successful with our fund raising initiatives, Management believes that the Company will be able to secure the necessary financing as a result of ongoing financing discussions with third party investors and existing stockholders. There can be no assurance that potential financing will be obtained on term acceptable to management and future financing may substantially dilute the ownership of existing stockholders

Management intends to restore profitability by continuing to grow our operations and customer base while maintaining the overhead savings we achieved during our recent restructuring. Management’s recent restructuring of the Company’s debt contributed to reducing the Company’s debt load. Management believes that the actions presently being taken to further implement its business plan, generate additional revenues and restructure certain liabilities provide the opportunity for the Company to continue as a going concern. If the Company is not successful in becoming profitable, it may have to further delay or reduce expenses, or curtail operations. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that could result should the Company not continue as a going concern.

Lack of Working Capital

As a result of the Company’s ongoing evaluation of its capital structure, it has, at times, suffered from costly cash flow challenges as well as associated costs, missed opportunities and inability to fully scale its operations. The lack of working capital has caused the Company to rely heavily on operating revenue as well as other sources of capital, such as debt. The Company believes proper capital investment and less reliance on incurring new debt to finance the Company’s growth will enable the Company to improve its financial performance in the future.

 27

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Contractual Obligations

Except as described below, there were no other significant changes to our outstanding contractual obligations as of November 30, 2016 from amounts previously disclosed in our 2016 Annual Report.

Debt

A detailed description of the Company’s debt is provided in Note 3 under Item 1 hereunder and is incorporated herein by reference.

Critical Accounting Policies

Our critical accounting policies require management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and the accompanying notes. These estimates are based on historical experience, the advice of external experts or on other assumptions management believes to be reasonable. Where actual amounts differ from estimates, revisions are included in the results for the period in which actual amounts become known. Historically, differences between estimates and actual amounts have not had a significant impact on our consolidated financial statements.

Critical accounting policies and estimates used to prepare the financial statements are discussed with our Board of Directors as they are implemented and on an annual basis.

We have no material changes to our Critical Accounting Policies and Estimates disclosure as filed in our 2016 Annual Report.

Recent Accounting Pronouncements

See Note 1 to the consolidated financial statements for a discussion of recent accounting guidance.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosure.

We carried out an evaluation under the supervision and with the participation of management, including our principal executive officer and principal financial and accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of November 30, 2016, the end of the period covered by this Quarterly Report. Based upon the evaluation of our disclosure controls and procedures as of November 30, 2016, our Chief Executive Officer (principal executive officer and principal financial and accounting officer) concluded that, as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level due to the late filing of this Quarterly Report.

 28

Changes in Internal Control over Financial Reporting

No changes in the Company's internal control over financial reporting have come to management's attention during the Company's last fiscal quarter that have materially affected, or are likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Except as disclosed in our Annual Report on Form 10-K for the year ended August 31, 2016 and Note 7 under Item 1 hereunder, incorporated herein by reference, we are not subject to any material pending legal proceedings. From time to time, we may be involved in routine legal proceedings, as well as demands, claims and threatened litigation, which arise in the normal course of business.

ITEM 1A. RISK FACTORS

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item. A description of “Risk Factors” applicable to the Company, its business and investment in its securities is disclosed in our Annual Report on Form 10-K for the year ended August 31, 2016.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

Exhibit	Description of Exhibit
31	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

 29

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized.        

	GREENWOOD HALL, INC.
Date: February 6, 2017	By:	/s/ John Hall
		John Hall
		Chief Executive Officer
		Principal Executive Officer and Principal Financial and Accounting Officer

 30

EX-31

EXHIBIT 31

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT

I, John Hall, certify that:

1. I have reviewed this Amendment No. 1 to the Quarterly Report on Form 10-Q for the period ended November 30, 2016 of Greenwood Hall, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the period presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of small business issuer’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal controls over financial reporting.

Date: February 6, 2017

/s/ John Hall

John Hall

Chief Executive Officer

(Principal Executive Officer and Principal Financial and Accounting Officer)

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with Amendment No. 1 to the Quarterly Report of Greenwood Hall, Inc. (the “Company”) on Form 10-Q for the period ended November 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dianwen Ju, Chief Executive Officer and Director of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

IN WITNESS WHEREOF, the undersigned has executed this certification as of February 6, 2017.

/s/ John Hall

John Hall

Chief Executive Officer

(Principal Executive Officer and Principal Financial and Accounting Officer)

A signed original of this written statement, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement, has been provided to Greenwood Hall, Inc., and will be retained by Greenwood Hall, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares

3 Months Ended

Nov. 30, 2016

Feb. 03, 2017

Document And Entity Information

Entity Registrant Name

GREENWOOD HALL, INC.

Entity Central Index Key

0001557644

Document Type

10-Q/A

Trading Symbol

ELRN

Document Period End Date

Nov. 30, 2016

Amendment Flag

true

Amendment Description

EXPLANATORY NOTE

We are filing this Amendment No. 1 on Form 10-Q/A to amend and restate in their entirety the following items of our Quarterly Report on Form 10-Q for the quarter ended November 30, 2016 as originally filed with the Securities and Exchange Commission on January 27, 2017 (the “Original Form 10-Q”): (i) Item 1 of Part I, the Condensed Consolidated Balance Sheet as of November 30, 2016 (unaudited) and the notes related thereto; and (ii) Item 2 of Part I, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” No other sections were affected, but for the convenience of the reader, this report on Form 10-Q/A restates in its entirety, as amended, our Original Form 10-Q. This report on Form 10-Q/A is presented as of the filing date of the Original Form 10-Q and does not reflect events occurring after that date, or modify or update disclosures in any way other than as required to reflect the restatement described below.

Current Fiscal Year End Date

--08-31

Entity a Well-known Seasoned Issuer

No

Entity a Voluntary Filer

No

Entity's Reporting Status Current

Yes

Entity Filer Category

Smaller Reporting Company

Entity Common Stock, Shares Outstanding

58,741,683

Document Fiscal Period Focus

Q1

Document Fiscal Year Focus

2017

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($)	Nov. 30, 2016	Aug. 31, 2016
CURRENT ASSETS
Cash and cash equivalents	$ 325,869
Accounts receivable, net	1,266,287	800,836
Prepaid expenses and other current assets	113,083	96,343
Current assets to be disposed of	36,860	36,860
TOTAL CURRENT ASSETS	1,742,099	934,039
PROPERTY AND EQUIPMENT, net	65,197	80,315
OTHER ASSETS
Deposits and other assets	79,783	79,783
TOTAL OTHER ASSETS	79,783	79,783
TOTAL ASSETS	1,887,078	1,094,137
CURRENT LIABILITIES
Accounts payable	1,878,674	2,062,464
Accrued expenses	622,106	687,624
Accrued payroll and related expenses	774,078	745,405
Bank Overdraft		801,784
Deferred revenue	495,882	194,861
Accrued interest	196,883	755,083
Due to stockholders / officer	247,267	302,880
Notes payable, net of discount of $178,037 and $183,732, respectively	1,473,876	5,329,149
Line of Credit		2,000,000
Derivative liability	1,181,175	846,583
Current liabilities to be disposed of	335,857	335,857
TOTAL CURRENT LIABILITIES	7,205,798	14,061,690
Notes payable, non-current, net of discounts of 1,553,028	3,583,281
TOTAL LIABILITIES	10,789,079	14,061,690
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value; 937,500,000 shares authorized, 58,741,683 and 53,717,501 shares issued and outstanding, respectively	58,742	53,718
Additional paid-in capital	14,903,287	14,835,385
Subscription Receivable	(190,000)	(190,000)
Accumulated deficit	(23,674,029)	(27,666,656)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)	(8,902,001)	(12,967,553)
Noncontrolling interest
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)	(8,902,001)	(12,967,553)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$ 1,887,078	$ 1,094,137

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (UNAUDITED) - USD ($)	Nov. 30, 2016	Aug. 31, 2016
Statement of Financial Position [Abstract]
Notes payable, current, discount	$ 178,037	$ 183,732
Notes payable, noncurrent, discounts	$ 1,553,028
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized	937,500,000	937,500,000
Common stock, issued	58,741,683	53,717,501
Common stock, outstanding	58,741,683	53,717,501

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)	3 Months Ended
	Nov. 30, 2016	Nov. 30, 2015
Income Statement [Abstract]
REVENUES	$ 2,541,007	$ 1,290,001
OPERATING EXPENSES
Direct cost of services	1,740,165	875,299
Personnel	704,181	691,468
Selling, general and administrative	443,638	1,026,477
Equity-based expense	35,494	88,184
TOTAL OPERATING EXPENSES	2,923,478	2,681,428
INCOME (LOSS) FROM OPERATIONS	(382,471)	(1,391,427)
OTHER INCOME (EXPENSE)
Interest expense	(406,839)	(2,052,792)
Change in value of derivatives	478,762	202,249
Transaction related income (expense), net	4,303,175
Miscellaneous income (expense), net		(16,788)
TOTAL OTHER INCOME (EXPENSE)	4,375,098	(1,867,331)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE PROVISION FOR (BENEFIT FROM) INCOME TAXES	3,992,627	(3,258,758)
Provision for income taxes
INCOME (LOSS) FROM CONTINUING OPERATIONS	3,992,627	(3,258,758)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax
NET INCOME (LOSS)	3,992,627	(3,258,758)
Net income (loss) attributable to non-controlling interests
Net income (loss)	$ 3,992,627	$ (3,258,758)
Earnings per share - basic and diluted
Income (loss) from continuing operations (in dollars per share)	$ 0.07	$ (0.07)
Income (loss) from discontinued operations (in dollars per share)
Net income (loss) (in dollars per share)	$ 0.07	$ (0.07)
Weighted average common shares - basic (in shares)	57,373,891	47,656,478
Weighted average common shares - diluted (in shares)	57,835,060	47,656,478

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	3 Months Ended
	Nov. 30, 2016	Nov. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 3,992,627	$ (3,258,758)
Net (income) loss from discontinued operations
Net income (loss) from continuing operations	3,992,627	(3,258,758)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities of continuing operations:
Non-cash interest on convertible promissory notes	248,927	335,559
Gain on settlement of notes payable	(4,303,175)
Warrants issued for services
Stock-based compensation		20,084
Shares issued for services		68,100
Shares issued for settlement	35,492	1,500,000
Depreciation and amortization	15,850	16,179
Change in value of derivatives	(478,762)	(202,249)
Changes in operating assets and liabilities:
Accounts receivable	(465,451)	342,410
Prepaid expenses and other current assets	(16,740)	37,969
Deposits and other assets	678	251
Accounts payable	(242,390)	169,157
Accrued expenses	(65,518)	154,353
Accrued payroll and related	28,673	82,020
Deferred revenue	301,021	56,426
Accrued interest	91,324	94,908
Advances from officers, net		2,375
Net cash provided by (used in) operating activities of continuing operations	(857,443)	(581,216)
Net cash provided by (used in) operating activities of discontinued operations
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(857,443)	(581,216)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(1,411)
Net cash used in investing activities of continuing operations	(1,411)
Net cash used in investing activities of discontinued operations
NET CASH USED IN INVESTING ACTIVITIES	(1,411)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable	3,554,850	100,000
Payments on notes payable	(2,043,301)	(10,181)
Proceeds from the sale of stock		310,000
Repayment of bank overdraft	(271,213)
Repayment due to stockholder officer	(55,613)
Net cash provided by (used in) financing activities of continuing operations	1,184,723	399,819
Net cash provided by (used in) financing activities of discontinued operations
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	1,184,723	399,819
NET INCREASE (DECREASE) IN CASH FROM CONTINUING OPERATIONS	325,869	(181,397)
NET INCREASE (DECREASE) IN CASH FROM DISCONTINUED OPERATIONS
NET INCREASE (DECREASE) IN CASH	325,869	(181,397)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		211,725
CASH AND CASH EQUIVALENTS, END OF PERIOD	325,869	30,328
Supplemental disclosures:
Interest paid in cash	17,257	297,009
Income taxes paid in cash
Supplemental disclosure of non-cash investing and financing activities:
Conversion of convertible note and accrued interest into common stock	$ 35,492	$ 80,000

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Nov. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Greenwood Hall, Inc., a Nevada corporation (hereinafter referred to as the “Company”, “Greenwood Hall”, “we”, “us” or “our”) is an emerging education management solutions provider that delivers end-to-end services that support the entire student lifecycle including offerings that increase student enrollment, improve student experience, optimize student success and outcomes, and help schools maximize operating efficiencies. Since 2006, we have developed and customized turnkey solutions that combine strategy, personnel, proven processes and robust technology to help schools effectively and efficiently improve student outcomes, expand into new markets such as online learning, increase revenues, and deliver enhanced student experiences. Our Company currently has 158 employees and has served more than 62 education clients and over 75 degree programs.

Basis of Presentation

On July 23, 2014, Greenwood Hall (formerly Divio Holdings, Corp. (“Divio”)) and its wholly owned subsidiary (“Merger Sub”) consummated the transactions contemplated under a Merger Agreement, dated July 22, 2014, by and among Divio, Merger Sub, and PCS Link, Inc. (“PCS Link”). Pursuant to the Merger Agreement, Merger Sub merged with and into PCS Link with PCS Link remaining as the surviving corporation (the “Merger”). Upon the consummation of the Merger, the separate existence of Merger Sub ceased, and PCS Link became a wholly owned subsidiary of Divio. As a result of the Merger, the holders of all of the issued and outstanding shares of PCS Link common stock exchanged all of such shares (other than “dissenting shares” as defined in California Corporations Code Section 1300) for a combined total of 25,250,000 shares of common stock of Divio, representing approximately 71% of the total outstanding shares on the effective date of the Merger. Immediately following the Merger, Divio Holdings, Corp. changed its name to Greenwood Hall, Inc.

The Merger was accounted for as a “reverse merger,” with PCS Link as the accounting acquirer and the Company as the legal acquirer. Although, the Company acquired PCS Link from a legal perspective, the transaction is viewed as a recapitalization of PCS Link accompanied by an issuance of stock by PCS Link for the net assets of Greenwood Hall from an accounting perspective. This is because Greenwood Hall did not have operations immediately prior to the Merger, and PCS Link became the operating company as a result thereof. The board of directors of Greenwood Hall immediately after the Merger consisted of five directors, four of whom were nominated by PCS Link. Additionally, PCS Link’s stockholders owned 71% of the outstanding shares of Greenwood Hall immediately after completion of the transaction.

This Quarterly Report on Form 10-Q for the quarter ended November 30, 2016 should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended August 31, 2016, filed with the Securities and Exchange Commission (“SEC”) on December 6, 2016. As contemplated by the SEC under Article 8 of Regulation S-X, the accompanying consolidated financial statements and footnotes have been condensed and therefore do not contain all disclosures required by generally accepted accounting principles. The interim financial data are unaudited; however, in the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. Results for interim periods are not necessarily indicative of those to be expected for the full year.

Reclassifications

Certain amounts from prior years have been reclassified to conform to current year presentation.

Principles of Consolidation

The consolidated financial statements include the accounts of Greenwood Hall, PCS Link, a wholly owned subsidiary of Greenwood Hall (“PCS Link”), and University Financial Aid Solutions, LLC (“UFAS”), collectively referred to herein as the “Company”, “we”, “us”, “our”, or “Greenwood Hall”. All significant intercompany accounts and transactions have been eliminated in consolidation. Through our affiliate UFAS we provided complete financial aid solutions. During 2013, UFAS ceased operations and is presently winding down its affairs. As a result, UFAS is presented in the accompanying consolidated financial statements as discontinued operations.

Going Concern

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which contemplates the continuation of the Company as a going concern. The Company has an accumulated deficit and a working capital deficit as of November 30, 2016 and has continued to incur a loss from operations during the first three months of fiscal year 2017. Although such accumulated deficit has decreased by 14.9% from $(27,666,656) as of August 31, 2016, these conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The Company has historically funded its activities through cash generated from operations, debt financing, the issuance of equity for cash, and advances from stockholders. During the three months ended November 30, 2016, the Company generated $1,184,723 from financing activities.

Management intends to become profitable by continuing to grow its operations and customer base. If the Company is not successful in becoming profitable, it may have to further delay or reduce expenses, or curtail operations. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that could result should the Company not continue as a going concern.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures. Management uses its historical records and knowledge of its business in making these estimates. Accordingly, actual results may differ from these estimates.

Cash and Cash Equivalents

For the purpose of the statement of cash flows, the Company considers cash equivalents to include short-term, highly liquid investments with an original maturity of three months or less.

Research and Development

Costs relating to designing and developing new products are expensed in the period incurred.

Revenue Recognition

The Company’s contracts are typically structured into two categories, (i) fixed-fee service contracts that span a period of time, often in excess of one year, and (ii) service contracts at agreed-upon rates based on the volume of service provided or a flat monthly subscription fee. Some of the Company’s service contracts are subject to guaranteed minimum amounts of service volume.

The Company recognizes revenue when all of the following have occurred: persuasive evidence of an agreement with the customer exists, services have been rendered, the selling price is fixed or determinable, and collectability of the selling price is reasonably assured. For fixed-fee service contracts, the Company recognizes revenue on a straight-line basis over the period of contract performance. Costs incurred under these service contracts are expensed as incurred.

Deferred Revenue

Deferred revenue primarily consists of prepayments received from customers for which the Company’s revenue recognition criteria have not been met. The deferred revenue will be recognized as revenue once the criteria for revenue recognition have been met.

Accounts Receivable

The Company extends credit to its customers. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of the Company’s customers to make required payments. Management specifically analyzes the age of customer balances, historical bad debt experience, customer credit-worthiness, and changes in customer payment terms when making estimates of the collectability of the Company’s trade accounts receivable balances. If the Company determines that the financial condition of any of its customers has deteriorated, whether due to customer specific or general economic issues, an increase in the allowance may be made. After all attempts to collect a receivable have failed, the receivable is written off. Based on the information available, management believes the Company’s accounts receivable, net of the allowance for doubtful accounts, are collectable.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are being provided using the straight-line method over the estimated useful lives of the assets. The estimated useful lives used are as follows:

Classification	Life
Equipment	5-7 Years
Computer equipment	7 Years

Expenses for repairs and maintenance are charged to expense as incurred, while renewals and betterments are capitalized.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740-10, “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities.

Earnings (Loss) per Share

Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Warrants to purchase common stock are excluded from the computation of diluted shares during the three months ended November 30, 2016 and 2015, respectively, when their effect is anti-dilutive.

Variable Interest Entities

Generally, an entity is defined as a variable interest entity (“VIE”) under current accounting rules if it has (a) equity that is insufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, or (b) equity investors that cannot make significant decisions about the entity’s operations, or that do not absorb the expected losses or receive the expected returns of the entity. When determining whether an entity that is a business qualifies as a VIE, we also consider whether (i) we participated significantly in the design of the entity, (ii) we provided more than half of the total financial support to the entity, and (iii) substantially all of the activities of the VIE either involve us or are conducted on our behalf. A VIE is consolidated by its primary beneficiary, which is the party that absorbs or receives a majority of the entity’s expected losses or expected residual returns.

University Financial Aid Services, LLC was 60% owned by John Hall and Zan Greenwood, who at the time held a combined 92.5% of our common stock and served as directors of PCS Link. John Hall is the CEO of the Company and Zan Greenwood served as the Company’s Chief Operating Officer through June 2013. The equity owners of UFAS have no equity at risk, Greenwood Hall has funded UFAS’ operations since it was formed in 2010, and we have the ability to exercise control over UFAS through our two stockholders / directors.

Based on our assessment, we have determined that UFAS is a VIE and that we are the primary beneficiary, as defined in current accounting rules. Accordingly, we are required to consolidate the revenues and expenses of UFAS. To date, the Company has not allocated any income or loss of UFAS to noncontrolling interests as the noncontrolling interests never had any equity at risk. As previously discussed, UFAS ceased operations during 2013 and is presently winding down its affairs. The Company does not anticipate having any future involvement with UFAS after it is dissolved.

Marketing and Advertising

Marketing and advertising costs are expensed as incurred. Marketing and advertising amounted to $7,209 and $12,833 for the three months ended November 30, 2016, and the three months ended November 30, 2015, respectively, and are included in selling, general and administrative expenses.

Stock-Based Compensation

Compensation costs related to stock options and other equity awards are determined in accordance with FASB ASC 718-10, “Compensation-Stock Compensation.” Under this method, compensation cost is calculated based on the grant-date fair value estimated in accordance FASB ASC 718-10, amortized on a straight-line basis over the awards’ vesting period. Stock-based compensation was $35,494 and $20,084 for the three months ended November 30, 2016, and November 30, 2015, respectively. This expense is included in the condensed consolidated statements of operations as Equity-Based Compensation.

Derivative Liabilities

We account for warrants and conversion features as either equity or liabilities based upon the characteristics and provisions of each instrument. Warrants and conversion features classified as equity are recorded as additional paid-in capital on our Consolidated Balance Sheet and no further adjustments to their valuation are made. Some of our warrants and conversion features were determined to be ineligible for equity classification because of provisions that may result in an adjustment to their exercise price. Instruments classified as derivative liabilities and other derivative financial instruments that require separate accounting as assets or liabilities are recorded on our Consolidated Balance Sheet at their fair value on the date of issuance and are revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense. We estimate the fair value of these liabilities using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate.

During the three months ended November 30, 2016 and November 30, 2015, the Company recognized a change in value of the derivative liability of $478,762 and $202,249, respectively.

Fair Value of Financial Instruments

The Company groups financial assets and financial liabilities measured at fair value into three levels of hierarchy in accordance with ASC 820-10, “Fair Value Measurements and Disclosure.” Assets and liabilities recorded at fair value in the accompanying balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

Level Input:	Input Definition:
Level I	Observable quoted prices in active markets for identical assets and liabilities.
Level II	Observable quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level III	Model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models, and similar techniques.

For certain of our financial instruments, including working capital instruments, the carrying amounts are approximate fair value due to their short-term nature. Our notes payable approximate fair value based on prevailing interest rates.

The following table summarizes fair value measurements at November 30, 2016 and August 31, 2016 for assets and liabilities measured at fair value on a recurring basis.

November 30, 2016

	Level 1		Level 2		Level 3		Total
Derivative Liabilities	$	—	$	—	$	1,181,175	$	1,181,175

August 31, 2016

	Level 1		Level 2		Level 3		Total
Derivative Liabilities	$	—	$	—	$	846,583	$	846,583

The assumptions used in valuing derivative instruments issued during the three months ended November 30, 2016 were as follows:

Risk free interest rate	0.51% - 1.22%
Expected life	.01 Years-5.00 years
Dividend yield	None
Volatility	68% - 137%

The following is a reconciliation of the derivative liability related to these instruments for the three months ended November 30, 2016:

Value at August 31, 2016	$	846,583
Issuance of instruments		1,161,043
Change in value		(478,762	)
Net settlements		(347,690	)
Value as of November 30, 2016	$	1,181,175

The derivative liabilities are estimated using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate. Changes in the assumptions used could have a material impact on the resulting fair value. The primary input affecting the value of our derivatives liabilities is the Company’s stock price, term and volatility. Other inputs have a comparatively insignificant effect.

Effect of Recently Issued Accounting Standards 

There were no recently issued accounting standards during the period ended November 30, 2016 that impacted our consolidated financial statements or ongoing financial reporting.

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PROPERTY AND EQUIPMENT

3 Months Ended

Nov. 30, 2016

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

2. PROPERTY AND EQUIPMENT

Depreciation and amortization of the Company’s property and equipment amounted to $15,850 and $16,179 for the three months ended November 30, 2016 and the three months ended November 30, 2015, respectively, and is included in the accompanying consolidated statements of operations in selling, general and administrative expenses.

At November 30, 2016 and August 31, 2016, property and equipment consists of the following:

	November 2016			August 2016
Computer equipment	$	553,255			553,255
Software and Equipment		42,398			42,398
Furniture & Fixtures		9,177			9,177
		604,830			604,830
Accumulated depreciation		(539,633	)		(524,515	)
Net property and equipment	$	65,197			80,315

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NOTES PAYABLE

3 Months Ended

Nov. 30, 2016

Debt Disclosure [Abstract]

NOTES PAYABLE

3. NOTES PAYABLE

On October 14, 2016, the Company executed a new credit agreement (“Moriah Agreement”) with Moriah Educational Management LLC (“Moriah”). The Moriah Agreement provided for a revolving loan (“Revolving Loan”) for up to $3,500,000. The Revolving Loan may be drawn in tranches of not less than $500,000. On October 14, 2016 (“Advance Date”) the Company borrowed the full $3,500,000 (“Principal”). Interest on the Revolving Loan shall be computed on the basis of the actual number of days elapsed and a year of 360 days and shall accrue on the outstanding principal balance of advances at an annual rate equal to the greater of (i) the sum of (A) the “Prime Rate” as reported in the “Money Rates” column of The Wall Street Journal, adjusted as and when such Prime Rate changes, plus (B) Seven and Three Quarters Percent (7.75%), or (ii) Ten Percent (10.0%), but in no event in excess of Fourteen Percent (14%) per annum unless an event of default has occurred and is continuing. The prime rate was 3.5% on the Advance date. The Principal is due and payable, with all accrued and unpaid interest on October 13, 2018 with monthly payments of $29,167 starting on April 1, 2017. The Moriah Agreement contains a prepayment penalty. If the Company pays the entire unpaid Principal before April 30, 2017, a penalty of three percent (3%) of the then-outstanding Principal under the Revolving Loan.

As part of the Moriah Agreement, the Company issued two warrants to Moriah for the purchase of the Company’s common stock:

The Moriah Warrant is for the purchase, for a period of seven years, of up to 3,500,000 shares of the Company common stock at a purchase price of $0.12 per share, which is adjustable downward (“Ratchet-down”) if the Company issues share of its common stock, or securities convertible into or exercisable for the Company’s common stock at a price below $0.12. The Company has determined the Ratchet-down provision causes the Moriah Warrant to be a derivative, accordance with ASC 815 Derivatives and Hedging (ASC 815”). ASC 815 requires the Moriah Warrant to be recorded as a liability on the date of issuance and revalued every reporting period, with the increase or decrease in fair value recorded as a loss or gain in the Company’s statement of operations. As of the October 14, 2016, the fair value of the Moriah Warrant was approximately $23,000, which was recorded as a discount to the Revolving Loan and amortized as an expense over the life of the Revolving Loan. As of November 30, 2016, the fair value of the Moriah Warrant was approximately $43,000.

Moriah Put is for the purchase, for a period of five years, of up to 8,125,000 shares of the Company common stock at a purchase price of $0.14 per share, which is adjustable downward (“Ratchet-down”) if the Company issues share of its common stock, or securities convertible into or exercisable for the Company’s common stock at a price below $0.14. Also, the Moriah Put grants the holder of the option to sell all or any portion of the Moriah Put or the Moriah Put Shares (“Put Option”) for which the Moriah Put has been exercised to the Company for a total purchase price of up to One Million One Hundred Thirty Seven Thousand Five Hundred Dollars ($1,137,500), pro-rated for any portion thereof, representing a purchase price of Fourteen Cents ($0.14) per Moriah Put Share, subject to adjustment. The Put Option may be exercised at any time and, if for a portion thereof, from time to time, during the fifteen-day period (the “Put Period”) commencing on the earliest of (1) the date when Moriah receives written notice from the Company of the Company’s intention to prepay the Revolving Loan, which notice shall be delivered by the Company to Moriah so as to be received by Moriah no later than fifteen days prior to the proposed date of prepayment; (2) the date of Moriah’s acceleration of the Obligations following an event of default, or (3) September 29, 2018 

The Company has determined the Ratchet-down and Put Option provisions causes the Moriah Put to be a derivative, accordance with ASC 815 Derivatives and Hedging (ASC 815”). ASC 815 requires the Moriah Put to be recorded as a liability on the date of issuance and revalued every reporting period, with the increase or decrease in fair value recorded as a loss or gain in the Company’s statement of operations. As of the October 14, 2016, the fair value of the Moriah Put was approximately $1,137,500, which was recorded as a discount to the Revolving Loan and amortized as an expense over the life of the Revolving Loan. As of November 30, 2016, the fair value of the Moriah Put was approximately $1,137,500.

Also, the Moriah Put provides the Company call the Moriah Put (“Call Option”) so long as any portion of this Warrant is outstanding, if the Company’s Common Stock has both (a) an average closing price greater than $0.50 per share, and (b) an average daily trading volume in excess of 300,000 shares, in each case for the immediately preceding ninety (90) consecutive trading days and continuing through the call notice period or such earlier date as the Moriah Put is exercised or transferred, the Company shall have the irrevocable right, but not the obligation, to demand automatic exercise, in whole or in part, by the Holder. The Company has determined the Call Option to be a derivative asset in a accordance with ASC 815 Derivatives and Hedging (ASC 815”). ASC 815 requires the Call Option to be recorded as an asset on the date of issuance and revalued every reporting period, with the increase or decrease in fair value recorded as a loss or gain in the Company’s statement of operations. As of the October 14, 2016 and November 30, 2016, the Company has determined the Call Option fair value to be approximately$0.

Under the Moriah Agreement the Company has the following reporting and financial covenants:

Annual Financial Statements. Annual financial statements of Company, certified by the Chief Financial Officer of each and audited by an outside accounting firm acceptable to Lender, as soon as available, but in any event within ninety (90) days after the end of Borrower’s Fiscal Year during the Term. Such financial statements shall fairly present the financial position of Company as of the dates thereof and the results of its operations, cash flows and stockholders’ equity for each of the periods then ended in all material aspects; and be prepared in accordance with GAAP.

Quarterly Financial Statements. Quarterly financial statements of the Company, as soon as available but in any event no later than forty-five (45) days after the close of each calendar quarter, consisting of the unaudited balance sheet and the related statement of income of the Company, prepared in accordance with GAAP, subject to year-end audit adjustments, together with such other information with respect to the business of Company as Moriah may request. 

Monthly Financial Statements. Not later than eighteen (18) days after the end of the first three (3) calendar months ending after the date hereof, and thereafter not later than fifteen (15) days after the end of each subsequent calendar month, the unaudited balance sheets and the related statements of income of Company, certified by the Chief Financial Officer of Borrower, subject to year end audit adjustments, with an aging schedule for all accounts receivable and accounts payable and calculation of LTM EBITDA as of the date of such financial statements, together with such other information with respect to the business of Company as Moriah may request.

Bi-Monthly Accounts Receivable and Accounts Payable Aging Reports. Twice a month, not later than the 15th day and the last day of each calendar month, respectively, an aging schedule for all accounts receivable and accounts payable, in form and substance satisfactory to Moriah.

Borrower shall timely file all reports required to be filed with the SEC pursuant to Section 13 or 15(d) of the 1934 Act. The Company was late in the filing of the Company’s Form 10Q for the quarter ended November 30, 2016. As of the filing of the Form 10Q, the Company received a waiver from Moriah.

Adjusted Gross Revenues. Borrower will maintain (i) minimum monthly gross revenues of not less than eighty percent (80%) of the projected monthly plan provided by Borrower to Lender prior to the date hereof and annexed to our Annual Report on Form 10-k as Exhibit 9.18, as measured monthly as of the last day of each month during the Term, and (ii) minimum quarterly gross revenues of not less than eighty-five percent (85%) of the projected quarterly plan provided by Borrower to Lender prior to, as measured quarterly as of the last day of each fiscal quarter during the Term .

EBITDA. Borrower will maintain minimum quarterly EBITDA of not less than eighty-five percent (85%) of the projected quarterly plan provided by Borrower to Lender, as measured quarterly as of the last day of each fiscal quarter during the Term.

From the Principal advances, the Company was required to make certain payments to the Company’s existing note holders, specifically $1,200,00 to Opus Bank (“Opus”), $177,578 to California United Bank (“CUB”), $150,000 to Colgan Finacial Group, Inc. (“Colgan”), $305,000 to First Fire Capital (“First Fire”), $187,257 to Redwood Fund (“Redwood). Also, the Company prepaid approximately $131,000 of interest under the Revolving Loan.

As consideration for Moriah to enter in to the Moriah Agreement, the Company was required to settle the Opus and CUB loans, settle or extend the maturity dates on all other existing notes to date after the repayment of Moriah Principal and the for the other notes holders to execute an agreement to subordinate their security position to Moriah. 

On October 7, 2014, CUB, agreed to tender its secured promissory note in the amount of $1,250,000 dated October 21, 2010 with a remaining balance of $876,251 and all accrued and unpaid interest of approximately $75,000 for a one-time payment of $177,578. Also, the Company was required to issue a new warrant to purchase 523,587 shares of the Company’s common stock at an exercise price of $0.10 per share.

On October 13, 2016 Opus agreed to tender its secured promissory note and letter of credit agreement for total principal of $3,515,152 and all accrued and unpaid interest of approximately $218,000 for a one-time payment of $1,205,778. Also, the Company was required to issue a new warrant for to purchase 2,000,000 shares of the Company’s common stock at an exercise price of $0.10 per share.

On October 16, 2016 Colgan agreed to amend the secured promissory note dated December 23, 2013. Colgan agreed to accept a payment of $150,000, forgive $150,000 of accrued and unpaid interest and subordinate its secured position to Moriah. Also, the maturity date was extended to the earlier of (a) the date that the Company’s obligation to Mariah is paid or (b) December 31, 2017. The note shall accrue interest at a rate of 12% per annum.

On October 6, 2016 Colgan agreed to amend the secured promissory note dated December 18, 2014. Colgan agreed that the maturity date was extend to the earlier of (a) the date that the Company’s obligation to Mariah is paid or (b) December 31, 2017, with an interest rate of 12% per annum.

On October 13, 2016, First Fire agreed to tender its secured promissory note in the amount of $392,500 dated December 21, 2015 and all accrued and unpaid interest of approximately $18,000 for a one-time payment of $305,000. In addition, $24,500 of the outstanding balance of the note was converted into 3,122,222 shares of common stock. 

On September 30, 2016, Redwood agreed to accept a new promissory note, maturing on September 30, 2017 and an interest rate of 12% per annum, in the amount of $1,418,496 in exchange for a payment of $300,000 and the cancelation of the promissory notes dated March 31, 2015, August 14, 2015, November 6, 2015, December 14, 2015, and February 4, 2016 and all accrued and unpaid interest under these notes. Also, Redwood agreed to to tender its promissory notes dated November 6, 2015 and January 18, 2016 for total principal of $170,000 and all accrued and unpaid of approximately $17,000 for a one-time payment of $187,257.

On October 3, 2016, Lincoln Park Capital Fund, LLC agreed to accept new promissory notes maturing on September 30, 2019 and an interest rate of 12% per annum, in the amount of $685,000 and $250,000 in exchange for the cancellation of the promissory notes dated April 24, 2015 in the amount of $295,000 and August 21, 2015 in the amount of $295,000 and all accrued and unpaid interest under these notes of approximately $75,000. 

The following is a schedule, by year, of the aggregate maturities of the notes payable as of November 30, 2016:

Periods ending November 30,
2017	$	1,651,830.00
2018	$	4,204,487.00
2019	$	935,000.00
2020	$	0
2021	$	0
Thereafter	$	0

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STOCKHOLDERS' EQUITY

3 Months Ended

Nov. 30, 2016

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

4. STOCKHOLDERS’ EQUITY

The Company is authorized to issue one class of stock, which represents 937,500,000 shares of Common Stock, par value $0.001. 

Stock Issued for Services

During the three months ended November 30, 2016, the Company did not issue any shares of its common stock in exchange for services.

Stock Option Plan

In July 2014, the Board of Directors adopted, and the stockholders approved, the 2014 Stock Option Plan under which a total of 5,000,000 shares of Common Stock are reserved for issuance. The 2014 Stock Option Plan will terminate in September 2024.

Stock Options

As of November 30, 2016, the members of the Board of Directors hold options to purchase an aggregate of 1,750,000 shares of Common Stock at exercise prices ranging from $0.01 to $0.75, which were granted prior to August 31, 2016.

Transactions in Q1 2017	Quantity		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life
Outstanding, August 31, 2016		4,985,000	$	0.23		8.78
Granted		0	$	-		-
Exercised		0		-		-
Cancelled/Forfeited		0		-		-
Outstanding, November 30, 2016		4,985,000	$	0.23		8.78
Exercisable, November 30, 2016		1,750,000	$	0.36		8.35

The fair value of these options was estimated at the date of grant using the Black Scholes option pricing model with the following assumptions: no dividends, expected volatility of 100%, risk free interest rate between 1.21% and 1.65%, and expected life of 5.5 years.

The weighted average remaining contractual life of options outstanding issued under the Plan was 9.03 years at November 30, 2016. The exercise prices for the options outstanding at November 30, 2016 ranged from $0.01 to $0.75, and the information relating to these options is as follows:

OPTIONS OUTSTANDING						OPTIONS EXERCISABLE
Quantity		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life		Quantity		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life
	700,000	$	0.01		7.65		700,000		0.01		7.65
	600,000	$	0.50		8.28		600,000		0.50		8.28
	450,000	$	0.75		8.34		450,000		0.75		8.34
	910,000	$	0.35		8.94		910,000		0.35		8.94
	1,825,000	$	0.08		9.24		-		-		-
	500,000	$	0.11		9.34		-		-		-
	4,985,000	$	0.23		8.78			$	0.36		8.35

Warrants Outstanding

The following is a summary of warrants outstanding at November 30, 2016:

Exercise Price		Number of Warrants		Expiration Date
$	1.000		1,264,023	Dec-24
$	0.010		100,000	Jul-16
$	1.000		-	Apr-20
$	0.010		150,000	Feb-18
$	0.500		1,176,473	Aug-20
$	1.000		-	Aug-20
$	1.000		1,200,000	Aug-21
$	1.000		-	Aug-21
$	1.000		20,000	Aug-21
$	1.000		10,000	Aug-21
$	0.010		-	Dec-19
$	1.100		-	Mar-21
$	0.100		800,000	Jun-18
$	0.125		800,000	Jun-18
$	0.032		3,184,126	Jun-18
$	0.040		3,184,126	Jun-18
$	0.050		100,000	Jun-21
$	0.100		1,428,571	Dec-09
$	0.100		523,587	Dec-20
$	0.100		2,000,000	Oct-20
$	0.100		5,000,000	Oct-21
$	0.120		3,500,000	Oct-21
$	0.140		8,125,000	Oct-21

Warrants were issued pursuant to certain consulting agreements and amendments to financing terms. Warrants are booked to additional paid in capital and to interest expense based on stock price at date of grant, exercise price, warrant life, risk free rate and annual volatility. During the three months ended November 30, 2016, the Company granted warrants to purchase up to 20,577,158 shares of Common Stock, valued from $0.10 to $0.14 per share.

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CONCENTRATIONS

3 Months Ended

Nov. 30, 2016

Risks and Uncertainties [Abstract]

CONCENTRATIONS

5. CONCENTRATIONS

Concentration of Credit Risk

The Company maintains its cash and cash equivalents at a financial institution which may, at times, exceed federally insured limits. Historically, the Company has not experienced any losses in such accounts.

Major Customers

For the three months ended November 30, 2016, three (3) customers represented 53% of net revenues and for the three months ended November 30, 2015, four (4) customers represented a total of 53% of revenues. A decision by this customer to cease business relations with the Company may have a material adverse effect on the Company’s financial condition and results of operations.

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INCOME TAXES

3 Months Ended

Nov. 30, 2016

Income Tax Disclosure [Abstract]

INCOME TAXES

6. INCOME TAXES

The difference between income tax expense attributable to continuing operations and the amount of income tax expense that would result from applying domestic federal statutory rates to pre-tax income (loss) is mainly related to an increase in the valuation allowance, partially offset by state income taxes. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized. Deferred income tax assets are mainly related to net operating loss carryforwards. Management has chosen to take a 100% valuation allowance against the deferred income tax asset until such time as management believes that its projections of future profits make the realization of the deferred income tax assets more likely than not. Significant judgment is required in the evaluation of deferred income tax benefits and differences in future results from management’s estimates could result in material differences.

A majority of the Company’s deferred tax asset is comprised of net operating loss carryforwards, offset by a 100% valuation allowance at November 30, 2016 and November 30, 2015.

As of November 30, 2016, the Company is in process of determining the amount of Federal and State net operating loss carry forwards (“NOL”) available to offset future taxable income. The Company’s NOLs will begin expiring in 2032. These NOLs may be used to offset future taxable income, to the extent the Company generates any taxable income, and thereby reduce or eliminate future federal income taxes otherwise payable. Section 382 of the Internal Revenue Code imposes limitations on a corporation’s ability to utilize NOLs if it experiences an ownership change as defined in Section 382. In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50% over a three-year period. In the event that an ownership change has occurred, or were to occur, utilization of the Company’s NOLs would be subject to an annual limitation under Section 382. Any unused annual limitation may be carried over to later years. The Company could experience an ownership change under Section 382 as a result of events in the past in combination with events in the future. If so, the use of the Company’s NOLs, or a portion thereof, against future taxable income may be subject to an annual limitation under Section 382, which may result in expiration of a portion of the NOLs before utilization.

Due to the existence of the valuation allowance, future changes in the Company’s unrecognized tax benefits will not impact its effective tax rate. Any carryforwards that expire prior to utilization as a result of such limitations will be removed, if applicable, from deferred tax assets with a corresponding reduction of the valuation allowance.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Nov. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

7. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases its operating facilities under non-cancelable operating leases that expire through 2024. Total rent expense for the three months ended November 30, 2016, the three months ended November 30, 2015, amounted to $134,725 and $184,111, respectively. The Company is responsible for certain operating expenses in connection with these leases. The following is a schedule, by year, of future minimum lease payments required under non-cancelable operating leases as of August 31, 2016:

Years Ending August 31,
2017	516,484
2018	555,762
2019	571,259
2020	571,513
2021	467,211
Thereafter	1,258,745

Employment Agreements

At November 30, 2016, the Company maintained an employment agreement with an officer, the terms of which may require the payment of severance benefits upon termination.

Legal Matters 

The Company is involved from time to time in various legal proceedings in the normal conduct of its business.

On August 26, 2016, Zantine Greenwood (“Greenwood”), a former officer and founder of the Company, commenced a proceeding in Arbitration alleging that the Company had breached its obligations under a consulting agreement entered into by and between Greenwood and the Company on or about July 24, 2014 (the “Consulting Agreement”).  The Company did not appear at the Arbitration.  On September 23, 2016, the Arbitrator issued an award to Greenwood against the Company in the sum of $236,250.79.  On October 26, 2016, Greenwood filed a petition to confirm the award in the Los Angeles Superior Court, Case No. BS165962. The Company opposed the petition and requested that the court vacate the award because the arbitration provision in the Consulting Agreement was void under applicable law and therefore the Arbitrator had no subject matter jurisdiction over the dispute.   In a January 9, 2017 Settlement Agreement and Mutual Release, the Company agreed to pay Greenwood $115,000 plus 5.5% simple interest in monthly installments of $10,000 until payment in full in exchange for a release of any and all claims against the Company arising from or relating to the dispute.  Conditions to the settlement are that the Court vacate the award and retain jurisdiction until all payments have been made.  The Company expects that the Court will agree with the conditions. 

On March 11, 2016, StoryCorp Consulting, Inc. and David R. Wells filed suit against the Company and the John R. Hall, in his individual capacity, in the Superior Court of the State of California for the County of Los Angeles (Central District) for breach of contract and promissory fraud/false promise, among other things, seeking an amount of not less than $ 100,000. The Company believes that it has a strong defense and is vigorously defending against this lawsuit, but the potential range of loss related to this matter cannot be determined, as the pleadings are still not resolved, but are expected to be resolved in 2017, at the earliest. No trial date has been set. If we fail in defending any such claims or settling those claims, in addition to paying monetary damages or a settlement payment, the outcome of this matter could have a materially adverse effect on our business, financial condition and results of operations.

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DISCONTINUED OPERATIONS

3 Months Ended

Nov. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

8. DISCONTINUED OPERATIONS

During 2013, we ceased operations in our affiliated company, UFAS. The operations of UFAS are now presented as discontinued operations in the accompanying consolidated financial statements. UFAS was inactive during the three month periods ended November 30, 2016 and 2015.

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SUBSEQUENT EVENTS

3 Months Ended

Nov. 30, 2016

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

9. SUBSEQUENT EVENTS

On November 22, 2016, Frederic Boyer tendered to the Company a written resignation (the “Resignation”) as director on the Board, effective immediately, in which Mr. Boyer expressed disagreement with certain management practices as it related to the Board of Directors. A copy of the Resignation is filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on November 29, 2016.

On November 28, 2016, the Board of Directors appointed Michael Poutre II, Cary Sucoff and Jerry Rubinstein to the Board of Directors, effective as of December 7, 2016.

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Nov. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Greenwood Hall, Inc., a Nevada corporation (hereinafter referred to as the “Company”, “Greenwood Hall”, “we”, “us” or “our”) is an emerging education management solutions provider that delivers end-to-end services that support the entire student lifecycle including offerings that increase student enrollment, improve student experience, optimize student success and outcomes, and help schools maximize operating efficiencies. Since 2006, we have developed and customized turnkey solutions that combine strategy, personnel, proven processes and robust technology to help schools effectively and efficiently improve student outcomes, expand into new markets such as online learning, increase revenues, and deliver enhanced student experiences. Our Company currently has 158 employees and has served more than 62 education clients and over 75 degree programs.

Basis of Presentation

Basis of Presentation

On July 23, 2014, Greenwood Hall (formerly Divio Holdings, Corp. (“Divio”)) and its wholly owned subsidiary (“Merger Sub”) consummated the transactions contemplated under a Merger Agreement, dated July 22, 2014, by and among Divio, Merger Sub, and PCS Link, Inc. (“PCS Link”). Pursuant to the Merger Agreement, Merger Sub merged with and into PCS Link with PCS Link remaining as the surviving corporation (the “Merger”). Upon the consummation of the Merger, the separate existence of Merger Sub ceased, and PCS Link became a wholly owned subsidiary of Divio. As a result of the Merger, the holders of all of the issued and outstanding shares of PCS Link common stock exchanged all of such shares (other than “dissenting shares” as defined in California Corporations Code Section 1300) for a combined total of 25,250,000 shares of common stock of Divio, representing approximately 71% of the total outstanding shares on the effective date of the Merger. Immediately following the Merger, Divio Holdings, Corp. changed its name to Greenwood Hall, Inc.

The Merger was accounted for as a “reverse merger,” with PCS Link as the accounting acquirer and the Company as the legal acquirer. Although, the Company acquired PCS Link from a legal perspective, the transaction is viewed as a recapitalization of PCS Link accompanied by an issuance of stock by PCS Link for the net assets of Greenwood Hall from an accounting perspective. This is because Greenwood Hall did not have operations immediately prior to the Merger, and PCS Link became the operating company as a result thereof. The board of directors of Greenwood Hall immediately after the Merger consisted of five directors, four of whom were nominated by PCS Link. Additionally, PCS Link’s stockholders owned 71% of the outstanding shares of Greenwood Hall immediately after completion of the transaction.

This Quarterly Report on Form 10-Q for the quarter ended November 30, 2016 should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended August 31, 2016, filed with the Securities and Exchange Commission (“SEC”) on December 6, 2016. As contemplated by the SEC under Article 8 of Regulation S-X, the accompanying consolidated financial statements and footnotes have been condensed and therefore do not contain all disclosures required by generally accepted accounting principles. The interim financial data are unaudited; however, in the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. Results for interim periods are not necessarily indicative of those to be expected for the full year.

Reclassifications

Reclassifications

Certain amounts from prior years have been reclassified to conform to current year presentation.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of Greenwood Hall, PCS Link, a wholly owned subsidiary of Greenwood Hall (“PCS Link”), and University Financial Aid Solutions, LLC (“UFAS”), collectively referred to herein as the “Company”, “we”, “us”, “our”, or “Greenwood Hall”. All significant intercompany accounts and transactions have been eliminated in consolidation. Through our affiliate UFAS we provided complete financial aid solutions. During 2013, UFAS ceased operations and is presently winding down its affairs. As a result, UFAS is presented in the accompanying consolidated financial statements as discontinued operations.

Going Concern

Going Concern

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which contemplates the continuation of the Company as a going concern. The Company has an accumulated deficit and a working capital deficit as of November 30, 2016 and has continued to incur a loss from operations during the first three months of fiscal year 2017. Although such accumulated deficit has decreased by 14.9% from $(27,666,656) as of August 31, 2016, these conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The Company has historically funded its activities through cash generated from operations, debt financing, the issuance of equity for cash, and advances from stockholders. During the three months ended November 30, 2016, the Company generated $1,184,723 from financing activities.

Management intends to become profitable by continuing to grow its operations and customer base. If the Company is not successful in becoming profitable, it may have to further delay or reduce expenses, or curtail operations. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that could result should the Company not continue as a going concern.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures. Management uses its historical records and knowledge of its business in making these estimates. Accordingly, actual results may differ from these estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

For the purpose of the statement of cash flows, the Company considers cash equivalents to include short-term, highly liquid investments with an original maturity of three months or less.

Research and Development

Research and Development

Costs relating to designing and developing new products are expensed in the period incurred.

Revenue Recognition

Revenue Recognition

The Company’s contracts are typically structured into two categories, (i) fixed-fee service contracts that span a period of time, often in excess of one year, and (ii) service contracts at agreed-upon rates based on the volume of service provided or a flat monthly subscription fee. Some of the Company’s service contracts are subject to guaranteed minimum amounts of service volume.

The Company recognizes revenue when all of the following have occurred: persuasive evidence of an agreement with the customer exists, services have been rendered, the selling price is fixed or determinable, and collectability of the selling price is reasonably assured. For fixed-fee service contracts, the Company recognizes revenue on a straight-line basis over the period of contract performance. Costs incurred under these service contracts are expensed as incurred.

Deferred Revenue

Deferred Revenue

Deferred revenue primarily consists of prepayments received from customers for which the Company’s revenue recognition criteria have not been met. The deferred revenue will be recognized as revenue once the criteria for revenue recognition have been met.

Accounts Receivable

Accounts Receivable

The Company extends credit to its customers. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of the Company’s customers to make required payments. Management specifically analyzes the age of customer balances, historical bad debt experience, customer credit-worthiness, and changes in customer payment terms when making estimates of the collectability of the Company’s trade accounts receivable balances. If the Company determines that the financial condition of any of its customers has deteriorated, whether due to customer specific or general economic issues, an increase in the allowance may be made. After all attempts to collect a receivable have failed, the receivable is written off. Based on the information available, management believes the Company’s accounts receivable, net of the allowance for doubtful accounts, are collectable.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are being provided using the straight-line method over the estimated useful lives of the assets. The estimated useful lives used are as follows:

Classification	Life
Equipment	5-7 Years
Computer equipment	7 Years

Expenses for repairs and maintenance are charged to expense as incurred, while renewals and betterments are capitalized.

Income Taxes

Income Taxes

The Company accounts for income taxes in accordance with ASC 740-10, “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities.

Earnings (Loss) per Share

Earnings (Loss) per Share

Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Warrants to purchase common stock are excluded from the computation of diluted shares during the three months ended November 30, 2016 and 2015, respectively, when their effect is anti-dilutive.

Variable Interest Entities

Variable Interest Entities

Generally, an entity is defined as a variable interest entity (“VIE”) under current accounting rules if it has (a) equity that is insufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, or (b) equity investors that cannot make significant decisions about the entity’s operations, or that do not absorb the expected losses or receive the expected returns of the entity. When determining whether an entity that is a business qualifies as a VIE, we also consider whether (i) we participated significantly in the design of the entity, (ii) we provided more than half of the total financial support to the entity, and (iii) substantially all of the activities of the VIE either involve us or are conducted on our behalf. A VIE is consolidated by its primary beneficiary, which is the party that absorbs or receives a majority of the entity’s expected losses or expected residual returns.

University Financial Aid Services, LLC was 60% owned by John Hall and Zan Greenwood, who at the time held a combined 92.5% of our common stock and served as directors of PCS Link. John Hall is the CEO of the Company and Zan Greenwood served as the Company’s Chief Operating Officer through June 2013. The equity owners of UFAS have no equity at risk, Greenwood Hall has funded UFAS’ operations since it was formed in 2010, and we have the ability to exercise control over UFAS through our two stockholders / directors.

Based on our assessment, we have determined that UFAS is a VIE and that we are the primary beneficiary, as defined in current accounting rules. Accordingly, we are required to consolidate the revenues and expenses of UFAS. To date, the Company has not allocated any income or loss of UFAS to noncontrolling interests as the noncontrolling interests never had any equity at risk. As previously discussed, UFAS ceased operations during 2013 and is presently winding down its affairs. The Company does not anticipate having any future involvement with UFAS after it is dissolved.

Marketing and Advertising

Marketing and Advertising

Marketing and advertising costs are expensed as incurred. Marketing and advertising amounted to $7,209 and $12,833 for the three months ended November 30, 2016, and the three months ended November 30, 2015, respectively, and are included in selling, general and administrative expenses.

Stock-Based Compensation

Stock-Based Compensation

Compensation costs related to stock options and other equity awards are determined in accordance with FASB ASC 718-10, “Compensation-Stock Compensation.” Under this method, compensation cost is calculated based on the grant-date fair value estimated in accordance FASB ASC 718-10, amortized on a straight-line basis over the awards’ vesting period. Stock-based compensation was $35,494 and $20,084 for the three months ended November 30, 2016, and November 30, 2015, respectively. This expense is included in the condensed consolidated statements of operations as Equity-Based Compensation.

Derivative Liabilities

Derivative Liabilities

We account for warrants and conversion features as either equity or liabilities based upon the characteristics and provisions of each instrument. Warrants and conversion features classified as equity are recorded as additional paid-in capital on our Consolidated Balance Sheet and no further adjustments to their valuation are made. Some of our warrants and conversion features were determined to be ineligible for equity classification because of provisions that may result in an adjustment to their exercise price. Instruments classified as derivative liabilities and other derivative financial instruments that require separate accounting as assets or liabilities are recorded on our Consolidated Balance Sheet at their fair value on the date of issuance and are revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense. We estimate the fair value of these liabilities using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate.

During the three months ended November 30, 2016 and November 30, 2015, the Company recognized a change in value of the derivative liability of $478,762 and $202,249, respectively.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company groups financial assets and financial liabilities measured at fair value into three levels of hierarchy in accordance with ASC 820-10, “Fair Value Measurements and Disclosure.” Assets and liabilities recorded at fair value in the accompanying balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

Level Input:	Input Definition:
Level I	Observable quoted prices in active markets for identical assets and liabilities.
Level II	Observable quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level III	Model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models, and similar techniques.

For certain of our financial instruments, including working capital instruments, the carrying amounts are approximate fair value due to their short-term nature. Our notes payable approximate fair value based on prevailing interest rates.

The following table summarizes fair value measurements at November 30, 2016 and August 31, 2016 for assets and liabilities measured at fair value on a recurring basis.

November 30, 2016

	Level 1		Level 2		Level 3		Total
Derivative Liabilities	$	—	$	—	$	1,181,175	$	1,181,175

August 31, 2016

	Level 1		Level 2		Level 3		Total
Derivative Liabilities	$	—	$	—	$	846,583	$	846,583

The assumptions used in valuing derivative instruments issued during the three months ended November 30, 2016 were as follows:

Risk free interest rate	0.51% - 1.22%
Expected life	.01 Years-5.00 years
Dividend yield	None
Volatility	68% - 137%

The following is a reconciliation of the derivative liability related to these instruments for the three months ended November 30, 2016:

Value at August 31, 2016	$	846,583
Issuance of instruments		1,161,043
Change in value		(478,762	)
Net settlements		(347,690	)
Value as of November 30, 2016	$	1,181,175

The derivative liabilities are estimated using option pricing models that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life and risk-free interest rate. Changes in the assumptions used could have a material impact on the resulting fair value. The primary input affecting the value of our derivatives liabilities is the Company’s stock price, term and volatility. Other inputs have a comparatively insignificant effect.

Effect of Recently Issued Accounting Standards

Effect of Recently Issued Accounting Standards 

There were no recently issued accounting standards during the period ended November 30, 2016 that impacted our consolidated financial statements or ongoing financial reporting.

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Nov. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of estimated useful lives of property and equipment

The estimated useful lives used are as follows:

Classification	Life
Equipment	5-7 Years
Computer equipment	7 Years

Schedule of fair value measurements

The following table summarizes fair value measurements at November 30, 2016 and August 31, 2016 for assets and liabilities measured at fair value on a recurring basis.

November 30, 2016

	Level 1		Level 2		Level 3		Total
Derivative Liabilities	$	—	$	—	$	1,181,175	$	1,181,175

August 31, 2016

	Level 1		Level 2		Level 3		Total
Derivative Liabilities	$	—	$	—	$	846,583	$	846,583

Schedule of derivative instruments

The assumptions used in valuing derivative instruments issued during the three months ended November 30, 2016 were as follows:

Risk free interest rate	0.51% - 1.22%
Expected life	.01 Years-5.00 years
Dividend yield	None
Volatility	68% - 137%

Schedule of reconciliation of the derivative liability

The following is a reconciliation of the derivative liability related to these instruments for the three months ended November 30, 2016:

Value at August 31, 2016	$	846,583
Issuance of instruments		1,161,043
Change in value		(478,762	)
Net settlements		(347,690	)
Value as of November 30, 2016	$	1,181,175

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PROPERTY AND EQUIPMENT (Tables)

3 Months Ended

Nov. 30, 2016

Property, Plant and Equipment [Abstract]

Schedule of property and equipment

At November 30, 2016 and August 31, 2016, property and equipment consists of the following:

	November 2016			August 2016
Computer equipment	$	553,255			553,255
Software and Equipment		42,398			42,398
Furniture & Fixtures		9,177			9,177
		604,830			604,830
Accumulated depreciation		(539,633	)		(524,515	)
Net property and equipment	$	65,197			80,315

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NOTES PAYABLE (Tables)

3 Months Ended

Nov. 30, 2016

Debt Disclosure [Abstract]

Schedule of aggregate maturities of notes payble

The following is a schedule, by year, of the aggregate maturities of the notes payable as of November 30, 2016:

Periods ending November 30,
2017	$	1,651,830.00
2018	$	4,204,487.00
2019	$	935,000.00
2020	$	0
2021	$	0
Thereafter	$	0

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STOCKHOLDERS' EQUITY (Tables)

3 Months Ended

Nov. 30, 2016

Stockholders' Equity Note [Abstract]

Schedule of stock options activity

As of November 30, 2016, the members of the Board of Directors hold options to purchase an aggregate of 1,750,000 shares of Common Stock at exercise prices ranging from $0.01 to $0.75, which were granted prior to August 31, 2016.

Transactions in Q1 2017	Quantity		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life
Outstanding, August 31, 2016		4,985,000	$	0.23		8.78
Granted		0	$	-		-
Exercised		0		-		-
Cancelled/Forfeited		0		-		-
Outstanding, November 30, 2016		4,985,000	$	0.23		8.78
Exercisable, November 30, 2016		1,750,000	$	0.36		8.35

Schedule of stock options, exercise price

The weighted average remaining contractual life of options outstanding issued under the Plan was 9.03 years at November 30, 2016. The exercise prices for the options outstanding at November 30, 2016 ranged from $0.01 to $0.75, and the information relating to these options is as follows:

OPTIONS OUTSTANDING						OPTIONS EXERCISABLE
Quantity		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life		Quantity		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life
	700,000	$	0.01		7.65		700,000		0.01		7.65
	600,000	$	0.50		8.28		600,000		0.50		8.28
	450,000	$	0.75		8.34		450,000		0.75		8.34
	910,000	$	0.35		8.94		910,000		0.35		8.94
	1,825,000	$	0.08		9.24		-		-		-
	500,000	$	0.11		9.34		-		-		-
	4,985,000	$	0.23		8.78			$	0.36		8.35

Schedule of warrants outstanding

The following is a summary of warrants outstanding at November 30, 2016:

Exercise Price		Number of Warrants		Expiration Date
$	1.000		1,264,023	Dec-24
$	0.010		100,000	Jul-16
$	1.000		-	Apr-20
$	0.010		150,000	Feb-18
$	0.500		1,176,473	Aug-20
$	1.000		-	Aug-20
$	1.000		1,200,000	Aug-21
$	1.000		-	Aug-21
$	1.000		20,000	Aug-21
$	1.000		10,000	Aug-21
$	0.010		-	Dec-19
$	1.100		-	Mar-21
$	0.100		800,000	Jun-18
$	0.125		800,000	Jun-18
$	0.032		3,184,126	Jun-18
$	0.040		3,184,126	Jun-18
$	0.050		100,000	Jun-21
$	0.100		1,428,571	Dec-09
$	0.100		523,587	Dec-20
$	0.100		2,000,000	Oct-20
$	0.100		5,000,000	Oct-21
$	0.120		3,500,000	Oct-21
$	0.140		8,125,000	Oct-21

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COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Nov. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Schedule of future minimum rental payments for operating leases

The following is a schedule, by year, of future minimum lease payments required under non-cancelable operating leases as of August 31, 2016:

Years Ending August 31,
2017	516,484
2018	555,762
2019	571,259
2020	571,513
2021	467,211
Thereafter	1,258,745

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	3 Months Ended
	Nov. 30, 2016
Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful life	5 years
Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful life	7 years
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Useful life	7 years

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	Nov. 30, 2016	Aug. 31, 2016
Derivative Liabilities	$ 1,181,175	$ 846,583
Level 1 [Member]
Derivative Liabilities
Level 2 [Member]
Derivative Liabilities
Level 3 [Member]
Derivative Liabilities	$ 1,181,175	$ 846,583

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2)	3 Months Ended
	Nov. 30, 2016
Dividend yield
Minimum [Member]
Risk free interest rate	0.51%
Expected life	1 month 6 days
Volatility	68.00%
Maximum [Member]
Risk free interest rate	1.22%
Expected life	5 years
Volatility	137.00%

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3)	3 Months Ended
	Nov. 30, 2016 USD ($)
Reconciliation of derivative liability [Roll Forward]
Value at beginning	$ 846,583
Issuance of instruments	1,161,043
Change in value	(478,762)
Net settlements	(347,690)
Value at ending	$ 1,181,175

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)

3 Months Ended

Nov. 30, 2016

USD ($)

Number

shares

Nov. 30, 2015

USD ($)

Aug. 31, 2016

USD ($)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

$ 1,184,723

$ 399,819

Marketing and advertising expense

7,209

12,833

Net cash from financing activities

$ 1,184,723

399,819

Description of organization

Our Company currently has 158 employees and has served more than 62 education clients and over 75 degree programs.

Stock-based compensation

20,084

Change in value of derivatives

(478,762)

$ (202,249)

Accumulated deficit

$ (23,674,029)

$ (27,666,656)

Percentage decreased in accumulated deficit

14.90%

John Hall and Zan Greenwood [Member]

Percentage of variable interest ownership

60.00%

Percentage of equity ownership

92.50%

PCS Link, Inc. [Member]

Number of outstanding common shares | shares

25,250,000

Total percentage of common stock

71.00%

Total number of directors | Number

5

Number of directors nominated | Number

4

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PROPERTY AND EQUIPMENT (Details) - USD ($)	Nov. 30, 2016	Aug. 31, 2016
Property, Plant and Equipment [Line Items]
Gross property and equipment	$ 604,830	$ 604,830
Accumulated depreciation	(539,633)	(524,515)
Net property and equipment	65,197	80,315
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Gross property and equipment	553,255	553,255
Software And Equipment [Member]
Property, Plant and Equipment [Line Items]
Gross property and equipment	42,398	42,398
Furniture & Fixtures [Member]
Property, Plant and Equipment [Line Items]
Gross property and equipment	$ 9,177	$ 9,177

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PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended
	Nov. 30, 2016	Nov. 30, 2015
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 15,850	$ 16,179

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NOTES PAYABLE (Details)	Nov. 30, 2016 USD ($)
Debt Disclosure [Abstract]
2017	$ 1,651,830.00
2018	4,204,487.00
2019	935,000.00
2020	0
2021	0
Thereafter	$ 0

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NOTES PAYABLE (Details Narrative) - USD ($)

3 Months Ended

Oct. 16, 2016

Oct. 14, 2016

Oct. 13, 2016

Oct. 06, 2016

Oct. 03, 2016

Sep. 30, 2016

Oct. 07, 2014

Nov. 30, 2016

Aug. 31, 2016

Debt outstanding

$ 3,583,281

Opus Bank [Member]

Repayment of debt

120,000

Opus Bank [Member] | Secured Promissory Note and Letter of Credit Agreement [Member]

Repayment of debt

$ 1,205,778

Face amount

3,515,152

Accrued and unpaid interest

218,000

California United Bank [Member]

Repayment of debt

177,578

California United Bank [Member] | Secured Promissory Note [Member]

Repayment of debt

$ 177,578

Face amount

1,250,000

Debt outstanding

876,251

Accrued and unpaid interest

$ 75,000

Issuance date

Oct. 21, 2010

Colgan Financial Group, Inc. [Member]

Repayment of debt

150,000

Colgan Financial Group, Inc. [Member] | Secured Promissory Note [Member]

Maturity date

Dec. 31, 2017

Dec. 31, 2017

Repayment of debt

$ 15,000

Accrued and unpaid interest forgiven

$ 150,000

Issuance date

Dec. 23, 2013

Dec. 18, 2014

Interest rate

12.00%

12.00%

First Fire Capital [Member]

Repayment of debt

305,000

First Fire Capital [Member] | Secured Promissory Note [Member]

Repayment of debt

305,000

Face amount

392,500

Debt outstanding

24,500

Accrued and unpaid interest

$ 18,000

Issuance date

Dec. 21, 2015

Number of shares issued for common stock

3,122,222

Redwood Fund [Member]

Repayment of debt

187,257

Redwood Fund [Member] | Secured Promissory Note Due September 30, 2017 [Member]

Repayment of debt

$ 300,000

Face amount

$ 1,418,496

Interest rate

12.00%

Description of new promissory note issued

Exchange for a payment of $300,000 and the cancelation of the promissory notes dated March 31, 2015, August 14, 2015, November 6, 2015, December 14, 2015, and February 4, 2016 and all accrued and unpaid interest under these notes.

Redwood Fund [Member] | Secured Promissory Note Dated November 6, 2015 and January 18, 2016 [Member]

Repayment of debt

$ 187,257

Debt outstanding

170,000

Accrued and unpaid interest

$ 17,000

Lincoln Park Capital Fund LLP [Member] | Promissory Note Due September 30, 2019 [Member]

Face amount

$ 685,000

Accrued and unpaid interest

$ 75,000

Interest rate

12.00%

Description of new promissory note issued

Exchange for the cancelation of the promissory notes dated April 24, 2015 in the amount of $295,000 and August 21, 2015 in the amount of $295,000 and all accrued and unpaid interest under these notes of approximately $75,000.

Lincoln Park Capital Fund LLP [Member] | Promissory Note Two Due September 30, 2019 [Member]

Face amount

$ 250,000

Interest rate

12.00%

Warrant [Member] | Opus Bank [Member] | Secured Promissory Note and Letter of Credit Agreement [Member]

Number of shares issued

2,000,000

Exercise price (in dollars per share)

$ 0.10

Warrant [Member] | California United Bank [Member] | Secured Promissory Note [Member]

Number of shares issued

523,587

Exercise price (in dollars per share)

$ 0.10

Revolving Loan [Member]

Prepaid interest

131,000

New Credit Agreement [Member] | Moriah Educational Management, LLC [Member] | 5 years Put Option [Member]

Number of common shares indexed

8,125,000

Strike price (in dollars per share)

$ 0.14

Purchase price of option

$ 1,137,500

Fair value of option

1,137,500

1,137,500

New Credit Agreement [Member] | Moriah Educational Management, LLC [Member] | Call Option [Member]

Fair value of option

0

0

New Credit Agreement [Member] | Moriah Educational Management, LLC [Member] | 7 years Warrant [Member]

Fair value of warrant

$ 23,000

$ 43,000

Number of shares issued

3,500,000

Exercise price (in dollars per share)

$ 0.12

New Credit Agreement [Member] | Revolving Loan [Member] | Moriah Educational Management, LLC [Member]

Maximum borrowing capacity

$ 3,500,000

Advance Date

Oct. 14, 2016

Description of debt interest rate

Interest on the Revolving Loan shall be computed on the basis of the actual number of days elapsed and a year of 360 days and shall accrue on the outstanding principal balance of advances at an annual rate equal to the greater of (i) the sum of (A) the “Prime Rate” as reported in the “Money Rates” column of The Wall Street Journal, adjusted as and when such Prime Rate changes, plus (B) Seven and Three Quarters Percent (7.75%), or (ii) Ten Percent (10.0%), but in no event in excess of Fourteen Percent (14%) per annum unless an event of default has occurred and is continuing. The prime rate was 3.5% on the Advance date.

Maturity date

Oct. 13, 2018

Frequency of payment

monthly

Debt Instrument, Periodic Payment

$ 29,167

First required payment date

Apr. 01, 2017

Prepayment penalty rate

3.00%

Description of covenant

Adjusted Gross Revenues. Borrower will maintain (i) minimum monthly gross revenues of not less than eighty percent (80%) of the projected monthly plan provided by Borrower to Lender prior to the date hereof and annexed hereto as Exhibit 9.18, as measured monthly as of the last day of each month during the Term, and (ii) minimum quarterly gross revenues of not less than eighty-five percent (85%) of the projected quarterly plan provided by Borrower to Lender prior to, as measured quarterly as of the last day of each fiscal quarter during the Term .

EBITDA. Borrower will maintain minimum quarterly EBITDA of not less than eighty-five percent (85%) of the projected quarterly plan provided by Borrower to Lender, as measured quarterly as of the last day of each fiscal quarter during the Term.

New Credit Agreement [Member] | Revolving Loan [Member] | Moriah Educational Management, LLC [Member] | Minimum [Member]

Amount to be drawn

$ 500,000

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STOCKHOLDERS' EQUITY (Details)	3 Months Ended
	Nov. 30, 2016 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding, beginning balance | shares	4,985,000
Granted | shares	0
Exercised | shares	0
Cancelled/Forfeited | shares	0
Outstanding, ending balance | shares	4,985,000
Exercisable, ending balance | shares	1,750,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll forward]
Outstanding, beggining balance | $ / shares	$ 0.23
Granted | $ / shares
Exercised | $ / shares
Cancelled/Forfeited | $ / shares
Outstanding, ending balance | $ / shares	0.23
Exercisable, ending balance | $ / shares	$ 0.36
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted-Average Remaining Contractual Life [Roll Forward]
Outstanding, beginning balance	8 years 9 months 10 days
Outstanding, ending balance	8 years 9 months 10 days
Exercisable, ending balance	8 years 4 months 6 days

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STOCKHOLDERS' EQUITY (Details 1) - $ / shares	3 Months Ended
	Nov. 30, 2016	Aug. 31, 2016
Option Outstanding	4,985,000	4,985,000
Option Exercise Price	$ 0.23	$ 0.23
Option Remaining Contractual Life	8 years 9 months 10 days
Option Exercisable	1,750,000
Option Exercisable, Price	$ 0.36
Option Exercisable, Remaining Contractual Life	8 years 4 months 6 days
Employee Stock Options [Member]
Option Outstanding	4,985,000
Option Exercise Price	$ 0.23
Option Remaining Contractual Life	8 years 9 months 10 days
Option Exercisable, Price	$ 0.36
Option Exercisable, Remaining Contractual Life	8 years 4 months 6 days
Employee Stock Options [Member] | Exercise Price $ 0.01 [Member]
Option Outstanding	700,000
Option Exercise Price	$ 0.01
Option Remaining Contractual Life	7 years 7 months 24 days
Option Exercisable	700,000
Option Exercisable, Price	$ 0.01
Option Exercisable, Remaining Contractual Life	7 years 7 months 24 days
Employee Stock Options [Member] | Exercise Price $ 0.50 [Member]
Option Outstanding	600,000
Option Exercise Price	$ 0.50
Option Remaining Contractual Life	8 years 3 months 11 days
Option Exercisable	600,000
Option Exercisable, Price	$ 0.50
Option Exercisable, Remaining Contractual Life	8 years 3 months 11 days
Employee Stock Options [Member] | Exercise Price $ 0.75 [Member]
Option Outstanding	450,000
Option Exercise Price	$ 0.75
Option Remaining Contractual Life	8 years 4 months 2 days
Option Exercisable	450,000
Option Exercisable, Price	$ 0.75
Option Exercisable, Remaining Contractual Life	8 years 4 months 2 days
Employee Stock Options [Member] | Exercise Price $ 0.35 [Member]
Option Outstanding	910,000
Option Exercise Price	$ 0.35
Option Remaining Contractual Life	8 years 11 months 8 days
Option Exercisable	910,000
Option Exercisable, Price	$ 0.35
Option Exercisable, Remaining Contractual Life	8 years 11 months 8 days
Employee Stock Options [Member] | Exercise Price $ 0.08 [Member]
Option Outstanding	1,825,000
Option Exercise Price	$ 0.08
Option Remaining Contractual Life	9 years 2 months 26 days
Employee Stock Options [Member] | Exercise Price $ 0.11 [Member]
Option Outstanding	500,000
Option Exercise Price	$ 0.11
Option Remaining Contractual Life	9 years 4 months 2 days

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STOCKHOLDERS' EQUITY (Details 2) - Warrant [Member]	3 Months Ended
	Nov. 30, 2016 $ / shares shares
Exercise Price $ 1.000 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 1.000
Number of Warrants Outstanding | shares	1,264,023
Warrants Outstanding Expiration Date	Dec. 31, 2024
Exercise Price $ 0.010 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 0.010
Number of Warrants Outstanding | shares	100,000
Warrants Outstanding Expiration Date	Jul. 31, 2016
Exercise Price $ 1.000 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 1.000
Number of Warrants Outstanding | shares
Warrants Outstanding Expiration Date	Apr. 30, 2020
Exercise Price $ 0.010 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 0.010
Number of Warrants Outstanding | shares	150,000
Warrants Outstanding Expiration Date	Feb. 28, 2018
Exercise Price $ 0.500 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 0.500
Number of Warrants Outstanding | shares	1,176,473
Warrants Outstanding Expiration Date	Aug. 31, 2020
Exercise Price $ 1.000 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 1.000
Number of Warrants Outstanding | shares
Warrants Outstanding Expiration Date	Aug. 31, 2020
Exercise Price $ 1.000 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 1.000
Number of Warrants Outstanding | shares	1,200,000
Warrants Outstanding Expiration Date	Aug. 31, 2021
Exercise Price $ 1.000 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 1.000
Number of Warrants Outstanding | shares
Warrants Outstanding Expiration Date	Aug. 31, 2021
Exercise Price $ 1.000 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 1.000
Number of Warrants Outstanding | shares	20,000
Warrants Outstanding Expiration Date	Aug. 31, 2021
Exercise Price $ 1.000 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 1.000
Number of Warrants Outstanding | shares	10,000
Warrants Outstanding Expiration Date	Aug. 31, 2021
Exercise Price $ 0.010 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 0.010
Number of Warrants Outstanding | shares
Warrants Outstanding Expiration Date	Dec. 31, 2019
Exercise Price $ 1.100 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 1.100
Number of Warrants Outstanding | shares
Warrants Outstanding Expiration Date	Mar. 31, 2021
Exercise Price $ 0.100 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 0.100
Number of Warrants Outstanding | shares	800,000
Warrants Outstanding Expiration Date	Jun. 30, 2018
Exercise Price $ 0.125 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 0.125
Number of Warrants Outstanding | shares	800,000
Warrants Outstanding Expiration Date	Jun. 30, 2018
Exercise Price $ 0.032 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 0.032
Number of Warrants Outstanding | shares	3,184,126
Warrants Outstanding Expiration Date	Jun. 30, 2018
Exercise Price $ 0.040 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 0.040
Number of Warrants Outstanding | shares	3,184,126
Warrants Outstanding Expiration Date	Jun. 30, 2018
Exercise Price $ 0.050 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 0.050
Number of Warrants Outstanding | shares	100,000
Warrants Outstanding Expiration Date	Jun. 30, 2021
Exercise Price $ 0.100 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 0.100
Number of Warrants Outstanding | shares	1,428,571
Warrants Outstanding Expiration Date	Dec. 31, 2009
Exercise Price $ 0.100 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 0.100
Number of Warrants Outstanding | shares	523,587
Warrants Outstanding Expiration Date	Dec. 31, 2020
Exercise Price $ 0.100 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 0.100
Number of Warrants Outstanding | shares	2,000,000
Warrants Outstanding Expiration Date	Oct. 31, 2020
Exercise Price $ 0.100 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 0.100
Number of Warrants Outstanding | shares	5,000,000
Warrants Outstanding Expiration Date	Oct. 31, 2021
Exercise Price $ 0.120 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 0.120
Number of Warrants Outstanding | shares	3,500,000
Warrants Outstanding Expiration Date	Oct. 31, 2021
Exercise Price $ 0.140 [Member]
Warrants Outstanding Exercise Price | $ / shares	$ 0.140
Number of Warrants Outstanding | shares	8,125,000
Warrants Outstanding Expiration Date	Oct. 31, 2021

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STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)	3 Months Ended
	Nov. 30, 2016	Nov. 30, 2015	Aug. 31, 2016	Jul. 31, 2014
Common stock, authorized	937,500,000		937,500,000
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001
Proceeds from issuance of stock		$ 310,000
Common stock issued	58,741,683		53,717,501
Number of shares outstanding	4,985,000		4,985,000
Weighted average remaining contractual life	8 years 9 months 10 days
Excercise price of options	$ 0.23		$ 0.23
Employee Stock Options [Member]
Number of shares outstanding	4,985,000
Expected life	5 years 6 months
Expected Volatility	100.00%
Weighted average remaining contractual life	8 years 9 months 10 days
Excercise price of options	$ 0.23
Employee Stock Options [Member] | Minimum [Member]
Risk free interest rate	1.21%
Excercise price of options	$ 0.01
Employee Stock Options [Member] | Maximum [Member]
Risk free interest rate	1.65%
Excercise price of options	$ 0.75
Employee Stock Options [Member] | Board Of Directors [Member]
Number of shares outstanding	1,750,000
Employee Stock Options [Member] | Board Of Directors [Member] | Minimum [Member]
Excercise price of options	$ 0.01
Employee Stock Options [Member] | Board Of Directors [Member] | Maximum [Member]
Excercise price of options	$ 0.75
2014 Stock Option Plan [Member]
Number of shares authorized				5,000,000
Consulting Agreements [Member] | Warrant [Member]
Number of shares issued
Value of shares issued
Number of warrants granted	20,577,158
Consulting Agreements [Member] | Warrant [Member] | Minimum [Member]
Exercise price (in dollars per share)	$ 0.10
Consulting Agreements [Member] | Warrant [Member] | Maximum [Member]
Exercise price (in dollars per share)	$ 0.14

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CONCENTRATIONS (Details Narrative) - Sales Revenue, Services, Net [Member] - Customer Concentration Risk [Member] - Number	3 Months Ended
	Nov. 30, 2016	Nov. 30, 2015
Concentration Risk [Line Items]
Percentage of concentration risk	53.00%	53.00%
Number of customer	3	4

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INCOME TAXES (Details Narrative)	3 Months Ended
	Nov. 30, 2016	Nov. 30, 2015
Income Tax Disclosure [Abstract]
Percentage of valuation allowance	100.00%	100.00%

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COMMITMENTS AND CONTINGENCIES (Details)	Aug. 31, 2016 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2017	$ 516,484
2018	555,762
2019	571,259
2020	571,513
2021	467,211
Thereafter	$ 1,258,745

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COMMITMENTS AND CONTINGENCIES (Details Narrative)			3 Months Ended
	Jan. 09, 2017 USD ($)	Mar. 11, 2016 USD ($)	Nov. 30, 2016 USD ($)	Nov. 30, 2015 USD ($)	Sep. 23, 2016 USD ($)
Lease expiration period			2024
Rent expense			$ 134,725	$ 184,111
Gain (loss) on contract termination		$ 100,000
Subsequent Event [Member] | Settlement Agreement [Member]
Total settlement	$ 115,000
Interest rate	0.055
Settlement amount	$ 10,000
Arbitrator [Member]
Litigation issued					$ 236,250.79