PARENT COMPANY CONDENSED FINANCIAL INFORMATION (Tables)

12 Months Ended

Jul. 31, 2019

STEEL CONNECT, INC. (Parent Only)

BALANCE SHEETS

(in thousands, except share and per share data)



	July 31, 2019			July 31, 2018
ASSETS
Cash and cash equivalents	$	4,083		$	7,978
Prepaid expenses and other current assets	227			120
Total current assets	4,310			8,098
Investments in affiliates	96,940			188,534
Other assets	337			87
Due from subsidiaries	—			13,579
Total assets	$	101,587		$	210,298
LIABILITIES, CONTINGENTLY REDEEMABLE PREFERRED STOCK & STOCKHOLDERS' EQUITY
Accounts payable	$	1,253		$	674
Accrued expenses	2,364			2,274
Convertible Notes payable	—			50,274
Total current liabilities	3,617			53,222
Convertible Notes payable	7,432			14,256
Due to subsidiaries	2,660			—
Total long-term liabilities	10,092			14,256
Total liabilities	13,709			67,478
Contingently redeemable preferred stock, $0.01 par value per share. 35,000 shares authorized, issued and outstanding at July 31, 2019 and 2018	35,186			35,192
Stockholders' equity:
Preferred stock, $0.01 par value per share. 4,965,000 shares authorized at July 31, 2019 and July 31, 2018; zero shares issued and outstanding at July 31, 2019 and 2018	—			—
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 61,805,856 issued and outstanding shares at July 31, 2019; 60,742,859 issued and outstanding shares at July 31, 2018	618			608
Additional paid-in capital	7,477,327			7,467,855
Accumulated deficit	(7,426,287		)	(7,363,569		)
Accumulated other comprehensive income	1,034			2,734
Total stockholders' equity	52,692			107,628
Total liabilities, contingently redeemable preferred stock and stockholders' equity	$	101,587		$	210,298

STEEL CONNECT, INC. (Parent Only)

STATEMENTS OF OPERATIONS

(in thousands)



	Twelve Months Ended July 31,
	2019			2018
Selling, general and administrative	$	12,303		$	16,742
Total operating expenses	12,303			16,742
Operating loss	(12,303		)	(16,742		)
Other income (expense):
Interest expense	(6,081		)	(8,427		)
Other income (expense), net	(306		)	6,807
Total other expense	(6,387		)	(1,620		)
Loss before income taxes	(18,690		)	(18,362		)
Equity (gains) losses of subsidiaries, net of tax	48,079			(54,276		)
Gains on investments in affiliates, net of tax	(42		)	(801		)
Net income (loss)	$	(66,727	)	$	36,715

STEEL CONNECT, INC. (Parent Only)

STATEMENTS OF CASH FLOWS

(in thousands)



	Twelve Months Ended July 31,
	2019			2018
Cash flows from operating activities:
Net income (loss)	$	(66,727	)	$	36,715
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Amortization of deferred financing costs	243			388
Accretion of debt discount	3,433			4,384
Share-based compensation	1,267			10,763
Non-cash (gains) losses, net	7			(354		)
Equity (gains) losses of subsidiaries, net of tax	48,079			(54,276		)
Gains on investments in affiliates and impairments	(42		)	(801		)
Changes in operating assets and liabilities, net of business acquired:
Prepaid expenses and other current assets	(107		)	(36		)
Accounts payable and accrued expenses	669			698
Other assets and liabilities	(250		)	(1,860		)
Net cash used in operating activities	(13,428		)	(4,379		)
Cash flows from investing activities:
Intercompany advances, net	64,332			(22,216		)
Net cash provided by (used in) investing activities	64,332			(22,216		)
Cash flows from financing activities:
Proceeds from issuance of preferred stock	—			35,000
Proceeds from issuance of Convertible Note	14,940			—
Payments on maturity of Convertible Notes	(63,925		)	—
Payment of preferred dividends	(2,129		)	(1,143		)
Purchase of the Company's Convertible Notes	(3,700		)	—
Proceeds from issuance of common stock	15			8
Net cash provided by (used in) financing activities	(54,799		)	33,865
Net increase (decrease) in cash and cash equivalents	(3,895		)	7,270
Cash and cash equivalents at beginning of period	7,978			708
Cash and cash equivalents at end of period	$	4,083		$	7,978