Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
May 31, 2021 | Nov. 29, 2021 | |
Document And Entity Information | ||
Document Type | 10-Q/A | |
Document Period End Date | May 31, 2021 | |
Entity Registrant Name | ShiftPixy, Inc. | |
Entity Central Index Key | 0001675634 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Amendment Flag | true | |
Current Fiscal Year End Date | --08-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock Shares Outstanding | 28,713,099 | |
Entity Address Address Line1 | 501 Brickell Key Drive | |
Entity Address Address Line2 | Suite 300 | |
Entity Address Postal Zip Code | 33131 | |
Entity Tax Identification Number | 47-4211438 | |
Entity Address City Or Town | Miami | |
Local Phone Number | 798-9100 | |
City Area Code | 888 | |
Entity Address State Or Province | FL | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | PIXY | |
Security Exchange Name | NASDAQ | |
Amendment Description | Amendment No. 1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | May 31, 2021 | Aug. 31, 2020 |
Current assets | ||
Cash | $ 8,951,000 | $ 4,303,000 |
Accounts receivable | 112,000 | 308,000 |
Unbilled accounts receivable | 2,681,000 | 2,303,000 |
Deposit - workers' compensation | 271,000 | 293,000 |
Prepaid expenses and other current assets | 583,000 | 796,000 |
Current assets of discontinued operations | 623,000 | 1,030,000 |
Total current assets | 13,221,000 | 9,033,000 |
Fixed assets, net | 2,192,000 | 575,000 |
Note receivable, net | 4,004,000 | 4,045,000 |
Deposits - workers' compensation | 490,000 | 736,000 |
Deposits and other assets | 951,000 | 449,000 |
Deferred offering costs - SPACs (see Note 2) | 48,083,000 | |
Non-current assets of discontinued operations (see Note 1) | 1,126,000 | 2,582,000 |
Total assets | 70,067,000 | 17,420,000 |
Current liabilities | ||
Accounts payable and other accrued liabilities | 5,049,000 | 3,831,000 |
Payroll related liabilities | 7,772,000 | 5,752,000 |
Accrued workers' compensation costs | 734,000 | 497,000 |
Current liabilities of discontinued operations | 1,687,000 | 1,746,000 |
Total current liabilities | 15,242,000 | 11,826,000 |
Non-current liabilities | ||
Accrued workers' compensation costs | 1,327,000 | 1,247,000 |
Payroll related liabilities, long term | 639,000 | |
Non-current liabilities of discontinued operations | 3,050,000 | 4,377,000 |
Total liabilities | 20,258,000 | 17,450,000 |
Commitments and contingencies | ||
Equity (deficit) | ||
Preferred stock, 50,000,000 authorized shares; $0.0001 par value | ||
Common stock, 750,000,000 authorized shares; $0.0001 par value; 23,234,646 and 16,902,146 shares issued as of May 31, 2021 and August 31, 2020 | 2,000 | 1,000 |
Additional paid-in capital | 142,444,000 | 119,431,000 |
Accumulated deficit | (140,109,000) | (119,462,000) |
Total ShiftPixy, Inc. Stockholders' Equity (Deficit) | 2,337,000 | (30,000) |
Noncontrolling interests in consolidated subsidiaries | 47,472,000 | |
Total Equity (Deficit) | 49,809,000 | (30,000) |
Total liabilities and equity (deficit) | $ 70,067,000 | $ 17,420,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | May 31, 2021 | Aug. 31, 2020 |
Stockholders' deficit | ||
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 750,000,000 | 750,000,000 |
Common stock, shares par value | $ 0.0001 | $ 0.0001 |
Common Stock, Shares, Issued | 23,234,646 | 16,902,146 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | |
Condensed Consolidated Statements of Operations | ||||
Revenues (gross billings of $20.1 million and $14.4 million less worksite employee payroll cost of $10.6 million and $12.4 million, respectively for the three months ended, respectively; and gross billings of $57.7 million and $46.8 million less worksite employee payroll cost of $43.3 million and $40.5 million for the nine months ended, respectively) | $ 9,475,000 | $ 2,014,000 | $ 14,397,000 | $ 6,281,000 |
Cost of revenue | 9,922,000 | 1,873,000 | 13,968,000 | 5,824,000 |
Gross profit (loss) | (447,000) | 141,000 | 429,000 | 457,000 |
Operating expenses: | ||||
Salaries, wages, and payroll taxes | 2,993,000 | 1,793,000 | 7,778,000 | 5,351,000 |
Stock-based compensation - general and administrative | 444,000 | 150,000 | 1,363,000 | 896,000 |
Commissions | 49,000 | 27,000 | 136,000 | 144,000 |
Professional fees | 1,129,000 | 439,000 | 2,842,000 | 2,276,000 |
Software development | 1,057,000 | 686,000 | 2,720,000 | 1,389,000 |
Depreciation and amortization | 120,000 | 383,000 | 268,000 | 539,000 |
General and administrative | 1,309,000 | 1,054,000 | 4,448,000 | 2,617,000 |
Total operating expenses | 7,101,000 | 4,532,000 | 19,555,000 | 13,212,000 |
Operating Loss | (7,548,000) | (4,391,000) | (19,126,000) | (12,755,000) |
Other (expense) income: | ||||
Interest expense | (3,000) | (559,000) | (9,000) | (2,524,000) |
Expense related to preferred options | 0 | (62,091,000) | (62,091,000) | |
Expense related to modification of warrants | 0 | 0 | (22,000) | |
Loss from debt conversion | 0 | (2,842,000) | (3,500,000) | |
Inducement loss | 0 | (57,000) | (624,000) | |
Loss on debt extinguishment | 0 | (1,592,000) | (1,592,000) | |
Change in fair value derivative and warrant liability | 0 | 6,000 | 1,777,000 | |
Gain on convertible note penalties accrual | 0 | 0 | 760,000 | |
Total other expense | (3,000) | (67,135,000) | (9,000) | (67,816,000) |
Loss from continuing operations | (7,551,000) | (71,526,000) | (19,135,000) | (80,571,000) |
(Loss) income from discontinued operations | ||||
(Loss) income from discontinued operations | 23,000 | (1,490,000) | (1,512,000) | (914,000) |
Gain from asset sale | 0 | 0 | 15,682,000 | |
Total (loss) income from discontinued operations, net of tax | 23,000 | (1,490,000) | (1,512,000) | 14,768,000 |
Net (loss) income | $ (7,528,000) | $ (73,016,000) | $ (20,647,000) | $ (65,803,000) |
Net loss per share, Basic and diluted | ||||
Continuing operations | $ (0.22) | $ (2.72) | $ (0.59) | $ (5.48) |
Discontinued operations | ||||
Operating (loss) income | 0 | (0.06) | (0.05) | (0.06) |
Gain on sale of assets | 0 | 0 | 1.07 | |
Total discontinued operations | 0 | (0.06) | (0.05) | 1.01 |
Net Loss per share of common stock - Basic | (0.22) | (2.78) | (0.64) | (4.47) |
Net Loss per share of common stock - Diluted | $ (0.22) | $ (2.78) | $ (0.64) | $ (4.47) |
Weighted average common stock outstanding - Basic | 33,596,111 | 26,249,518 | 32,385,287 | 14,708,554 |
Weighted average common stock outstanding - Diluted | 33,596,111 | 26,249,518 | 32,385,287 | 14,708,554 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | |
Condensed Consolidated Statements of Operations | ||||
Gross billings | $ 20.1 | $ 14.4 | $ 57.7 | $ 46.8 |
Worksite employee payroll cost | $ 10.6 | $ 12.4 | $ 43.3 | $ 40.5 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Equity (Deficit) - USD ($) | Common StockTreasury Stock | Common StockPrivate Placement | Common Stock | Preferred Stock | Additional Paid-in CapitalTreasury Stock | Additional Paid-in CapitalPrivate Placement | Additional Paid-in Capital | Total ShiftPixy, Inc. Stockholders' Equity (Deficit)Private Placement | Total ShiftPixy, Inc. Stockholders' Equity (Deficit) | Noncontrolling interest | Accumulated Deficit | Treasury Stock | Private Placement | Total |
Balance, shares at Aug. 31, 2019 | 909,222 | |||||||||||||
Balance, amount at Aug. 31, 2019 | $ 32,505,000 | $ (45,900,000) | $ (325,000) | $ (13,720,000) | ||||||||||
Stock-based compensation expense | 745,000 | 745,000 | ||||||||||||
Reclassification of derivative liabilities to paid in capital | 1,979,000 | 1,979,000 | ||||||||||||
Common stock issued upon conversion of convertible notes and interest | 6,238,000 | 6,238,000 | ||||||||||||
Common stock issued upon conversion of convertible notes and interest, shares | 589,695 | |||||||||||||
Common stock issued for underwritten offering, net of offering costs | 10,332,000 | 10,332,000 | ||||||||||||
Common stock issued for underwritten offering, net of offering costs, shares | 2,222,160 | |||||||||||||
Treasury stock retired | $ (325,000) | $ (325,000) | ||||||||||||
Treasury stock retired, shares | (13,953) | (21,750) | ||||||||||||
Common stock issued for note exchange | 200,000 | 200,000 | ||||||||||||
Inducement loss on note conversions, amount | 624,000 | 624,000 | ||||||||||||
Inducement loss on note conversions, shares | 38,658 | |||||||||||||
Common stock issued for warrant exchange | 552,000 | 552,000 | ||||||||||||
Common stock issued for warrant exchange, shares | 82,653 | |||||||||||||
Allocated fair value of beneficial conversion feature - exchanged notes payable | 653,000 | 653,000 | ||||||||||||
Allocated fair value of warrants issued - exchanged notes payable | 2,006,000 | 2,006,000 | ||||||||||||
Modification of warrants | 22,000 | 22,000 | ||||||||||||
Expense related to preferred options | 62,091,000 | 62,091,000 | ||||||||||||
Net Loss | (65,803,000) | (65,803,000) | ||||||||||||
Balance, shares at May. 31, 2020 | 3,857,316 | |||||||||||||
Balance, amount at May. 31, 2020 | 117,730,000 | (111,703,000) | 6,027,000 | |||||||||||
Balance, shares at Feb. 29, 2020 | 1,103,643 | |||||||||||||
Balance, amount at Feb. 29, 2020 | 37,620,000 | (38,687,000) | (1,067,000) | |||||||||||
Stock-based compensation expense | 75,000 | 75,000 | ||||||||||||
Reclassification of derivative liabilities to paid in capital | 288,000 | 288,000 | ||||||||||||
Common stock issued upon conversion of convertible notes and interest | 4,023,000 | 4,023,000 | ||||||||||||
Common stock issued upon conversion of convertible notes and interest, shares | 441,573 | |||||||||||||
Common stock issued for underwritten offering, net of offering costs | 10,332,000 | 10,332,000 | ||||||||||||
Common stock issued for underwritten offering, net of offering costs, shares | 2,222,160 | |||||||||||||
Inducement loss on note conversions | 57,000 | 57,000 | ||||||||||||
Common stock issued for services rendered, amount | 75,000 | 75,000 | ||||||||||||
Common stock issued for services rendered, shares | 856 | |||||||||||||
Common stock issued for warrant exercise | 33,000 | 33,000 | ||||||||||||
Common stock issued for warrant exercise, shares | 6,275 | |||||||||||||
Inducement loss on note conversions, shares | 1,012 | |||||||||||||
Common stock issued for warrant exchange | 552,000 | 552,000 | ||||||||||||
Common stock issued for warrant exchange, shares | 82,653 | |||||||||||||
Allocated fair value of beneficial conversion feature - exchanged notes payable | 653,000 | 653,000 | ||||||||||||
Allocated fair value of warrants issued - exchanged notes payable | 2,006,000 | 2,006,000 | ||||||||||||
Expense related to preferred options | 62,091,000 | 62,091,000 | ||||||||||||
Net Loss | (73,016,000) | (73,016,000) | ||||||||||||
Balance, shares at May. 31, 2020 | 3,857,316 | |||||||||||||
Balance, amount at May. 31, 2020 | 117,730,000 | (111,703,000) | 6,027,000 | |||||||||||
Balance, shares at Aug. 31, 2020 | 16,902,146 | 0 | ||||||||||||
Balance, amount at Aug. 31, 2020 | (30,000) | |||||||||||||
Balance, amount at Aug. 31, 2020 | $ 1,000 | 119,431,000 | $ (30,000) | (119,462,000) | (30,000) | |||||||||
Stock-based compensation expense | 1,250,000 | 1,250,000 | 1,250,000 | |||||||||||
Excess fair value of SPAC Founder shares transferred to underwriter | $ 47,472,000 | 47,472,000 | ||||||||||||
Common stock issued for underwritten offering, net of offering costs | $ 1,000 | $ 11,062,000 | 10,701,000 | $ 11,063,000 | 10,701,000 | $ 11,063,000 | 10,701,000 | |||||||
Common stock issued for underwritten offering, net of offering costs, shares | 2,320,000 | 4,000,000 | ||||||||||||
Preferred stock issued for preferred option exercise (in shares) | 12,500 | |||||||||||||
Common stock issued for preferred stock exchange (in shares) | 12,500 | (12,500) | ||||||||||||
Net Loss | (20,647,000) | (20,647,000) | (20,647,000) | |||||||||||
Balance, shares at May. 31, 2021 | 23,234,646 | 0 | ||||||||||||
Balance, amount at May. 31, 2021 | $ 2,000 | 142,444,000 | 2,337,000 | 47,472,000 | (140,109,000) | 49,809,000 | ||||||||
Balance, amount at May. 31, 2021 | $ 2,000 | 2,337,000 | ||||||||||||
Balance, shares at Feb. 28, 2021 | 20,914,646 | 0 | ||||||||||||
Balance, amount at Feb. 28, 2021 | $ 1,000 | |||||||||||||
Balance, amount at Feb. 28, 2021 | 130,995,000 | (1,585,000) | (132,581,000) | (1,585,000) | ||||||||||
Stock-based compensation expense | 387,000 | 387,000 | 387,000 | |||||||||||
Excess fair value of SPAC Founder shares transferred to underwriter | 47,472,000 | 47,472,000 | ||||||||||||
Common stock issued for underwritten offering, net of offering costs | $ 1,000 | $ 11,062,000 | $ 11,063,000 | $ 11,063,000 | ||||||||||
Common stock issued for underwritten offering, net of offering costs, shares | 2,320,000 | |||||||||||||
Net Loss | (7,528,000) | (7,528,000) | (7,528,000) | |||||||||||
Balance, shares at May. 31, 2021 | 23,234,646 | 0 | ||||||||||||
Balance, amount at May. 31, 2021 | $ 2,000 | $ 142,444,000 | $ 2,337,000 | $ 47,472,000 | $ (140,109,000) | 49,809,000 | ||||||||
Balance, amount at May. 31, 2021 | $ 2,000 | $ 2,337,000 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 9 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | |
OPERATING ACTIVITIES | ||||
Net loss | $ (20,647,000) | $ (65,803,000) | ||
(Loss) Income from discontinued operations | $ 23,000 | $ (1,490,000) | (1,512,000) | 14,768,000 |
Net loss from continuing operations | (7,551,000) | (71,526,000) | (19,135,000) | (80,571,000) |
Adjustments to reconcile net loss from continuing operations to net cash used in continuing operating activities: | ||||
Expense related to Preferred Options | 0 | 62,091,000 | 62,091,000 | |
Depreciation and amortization | 120,000 | 383,000 | 268,000 | 539,000 |
Gain on convertible note penalties accrual | 0 | 0 | (760,000) | |
Amortization debt discount and debt issuance cost | 6,749,000 | |||
Stock issued for services | 75,000 | |||
Stock-based compensation- general and administrative | 1,250,000 | 745,000 | ||
Expense related to warrant modification | 22,000 | |||
Inducement loss on note conversions | 0 | 57,000 | 624,000 | |
Expense related to warrant exchange | 552,000 | |||
Change in fair value of derivative and warrant liability | 0 | (6,000) | (1,777,000) | |
Changes in operating assets and liabilities | ||||
Accounts receivable | 196,000 | (763,000) | ||
Unbilled accounts receivable | (378,000) | (996,000) | ||
Prepaid expenses and other current assets | 212,000 | 108,000 | ||
Deposits - workers' compensation | 268,000 | 3,283,000 | ||
Deposits and other assets | (502,000) | (16,000) | ||
Accounts payable | 1,218,000 | (151,000) | ||
Payroll related liabilities | 2,659,000 | (108,000) | ||
Accrued workers' compensation | 317,000 | 1,665,000 | ||
Other current liabilities | (2,284,000) | |||
Total Adjustments | 5,509,000 | 69,598,000 | ||
Net cash used in continuing operating activities | (13,626,000) | (10,973,000) | ||
Net cash (used in) provided by discontinued operating activities | (1,035,000) | 455,000 | ||
Net cash used in operating activities | (14,661,000) | (10,518,000) | ||
INVESTING ACTIVITIES | ||||
Note receivable | 41,000 | |||
Purchase of fixed assets | (1,885,000) | (81,000) | ||
Disposal of fixed assets | 34,000 | |||
Proceeds from working capital adjustment - sale of assets | 1,214,000 | |||
Proceeds from sale of assets | 9,500,000 | |||
Net cash (used in) provided by investing activities | (1,844,000) | 10,667,000 | ||
FINANCING ACTIVITIES | ||||
Deferred offering costs | (611,000) | |||
Proceeds from underwritten public offering, net of offering costs | 10,701,000 | 10,332,000 | ||
Common stock issued for private placement, net of offering costs | 11,063,000 | |||
Repayment of convertible notes | (1,240,000) | |||
Proceeds from exercise of warrants | 33,000 | |||
Net cash provided by financing activities | 21,153,000 | 9,125,000 | ||
Net increase in cash | 4,648,000 | 9,274,000 | ||
Cash - Beginning of Period | 4,303,000 | 1,561,000 | ||
Cash - End of Period | 8,951,000 | $ 10,835,000 | 8,951,000 | 10,835,000 |
Supplemental Disclosure of Cash Flows Information: | ||||
Cash paid for interest | 9,000 | 315,000 | ||
Non-cash Investing and Financing Activities: | ||||
Conversion of debt and accrued interest into common stock | 6,238,000 | |||
Common shares issued for services | 75,000 | |||
Common shares issued for note exchange | 200,000 | |||
Additional principal issued for note exchange | 43,000 | |||
Interest capitalized into notes receivable | 59,000 | |||
Common stock issued in exchange for warrants | 552,000 | |||
Discount recorded for asset sale note receivable | 1,818,000 | |||
Reclassification of derivative liabilities to paid in capital | 1,979,000 | |||
Expense related to warrant modification | $ 22,000 | |||
Excess fair value of SPAC founder shares transferred to underwriter | $ 47,472,000 | $ 47,472,000 |
Nature of Operations and Restat
Nature of Operations and Restatement | 9 Months Ended |
May 31, 2021 | |
Nature of Operations and Restatement | |
Nature of Operations and Restatement | Note 1: Nature of Operations and Restatement Nature of Operations ShiftPixy, Inc., (“we,” “us,” “our,” the “Company” or “ShiftPixy”), was incorporated on June 3, 2015, in the State of Wyoming. We are currently operating as a human capital outsourcing services provider that offers solutions for large contingent part-time workforce demands, primarily in the restaurant and hospitality service trades. Our historic focus has been on the quick service restaurant industry in Southern California, but we have begun to expand into other geographic areas and industries employing temporary or part-time labor sources as well as additional services ancillary to those labor sources. The Company offers a variety of human capital services to its clients, including staffing, employment administrative services (“EAS”), payroll processing, human resources consulting, and workers’ compensation coverage and administration related services, as permitted by applicable law. We offer these services through various wholly-owned subsidiaries, including the following: (i) ShiftPixy Staffing, Inc., which provides traditional staffing services; (ii) ReThink Administrative Services, Inc., which operates as an administrative services organization, or “ASO”, often in conjunction with ShiftPixy Staffing; and (iii) Rethink Human Capital Management, Inc., which offers a combination of services provided by ShiftPixy Staffing and ReThink Administrative Services, including EAS. We have built a human resources information systems (“HRIS”) platform to assist in customer acquisition that simplifies the onboarding of new clients into our closed proprietary operating and processing information system (the “ShiftPixy Ecosystem”). This platform is expected to facilitate additional value-added services in future reporting periods. In January 2020, we sold the assets of Shift Human Capital Management, Inc. (“SHCM”), a wholly-owned subsidiary of the Company, pursuant to which we assigned the majority of our billable clients, at that time, to a third party for cash as described below in Note 3. The Company also announced, in late 2020, its “ShiftPixy Labs” initiative, which includes the creation of incubator “ghost kitchens” to be operated in conjunction with its wholly-owned subsidiary, ShiftPixy Ghost Kitchens, Inc. Through this initiative, the Company intends to provide resources and guidance to entrepreneurs seeking to bring their food delivery concepts to market, in return for the opportunity to combine with the ShiftPixy HRIS platform to create a co-branded, or “ghost” branded, food preparation and delivery solution. The initial phase of this initiative will be implemented in a dedicated showcase kitchen facility located in close proximity to our Miami headquarters, which is currently under renovation and which we expect to be operational in the fourth quarter of our fiscal year ending August 31, 2021 (“Fiscal 2021”). We intend to partner with various culinary training organizations and experts in testing these concepts, and to showcase these efforts through the distribution of video programming on social media produced and distributed by our wholly owned subsidiary, ShiftPixy Productions, Inc. If successful, we intend to replicate this initiative in similarly constructed facilities throughout the United States and in selected international locations. We also intend to provide similar services via mobile kitchen concepts, all of which will be heavily reliant on our HRIS platform and which we believe will capitalize on trends observed during the COVID-19 pandemic toward providing customers with a higher quality prepared food delivery product that is more responsive to their needs. On March 25, 2020, the Company filed Amended and Restated Articles of Incorporation (the “Restated Articles of Incorporation”) with the Wyoming Secretary of State, which were approved by the Company’s board of directors (the “Board of Directors”) and its shareholders representing a majority of its outstanding shares of capital stock. The Restated Articles of Incorporation, among other things, set conversion rights for the Company’s Class A Preferred Stock, par value $0.0001 per share, to convert into shares of common stock on a one-for-one basis. On March 31, 2021, shareholders representing a majority of the Company’s outstanding shares of capital stock approved a further amendment to the Restated Articles of Incorporation (the “Amended Restated Articles of Incorporation”), which makes the federal district courts of the United States the exclusive forum for the resolution of any complaint asserting a cause of action against the Company arising under the Securities Act of 1933, as amended. On May 13, 2021, the Company filed the Amended Restated Articles of Incorporation with the Wyoming Secretary of State. Restatement of Financial Statements During the preparation of our consolidated financial statements for our fiscal year ended August 31, 2021 (“Fiscal 2021), we determined that we had not consolidated our majority owned special purpose acquisition companies ("SPACs ") . In addition, upon review of the Company’s billings and revenue recognition during our transition from ASC 605 to ASC 606 we determined that additional staffing solutions revenues and an equivalent amount of additional cost of revenues should have been recorded for the three and nine months ended May 31, 2021. As a result, we are restating these financial statements to properly reflect the consolidation of these majority owned SPACs and for the inclusion of the additional revenues and cost of revenues. The revenue and cost of revenue increases had no impact on the Company’s gross profit or net loss for the periods affected . On April 22, 2021, we transferred a total of 10,000,000 Founder Shares that we held in four SPACs that we are sponsoring through our wholly-owned subsidiary, Investments. Prior to the transfer, we were the sole shareholder in each of the SPACs through Investments. The transfer of these shares created a minority unaffiliated interest in each of the four SPACs. The accounting guidance provided under Staff Accounting Bulletin Topic 5T, ASC 340-10-S99-1, and SAB Topic 5A requires that, when shares of common stock such as these Founder Shares are transferred to an unaffiliated third party at below fair market value, the difference is deemed a capital contribution by the shareholder and the incremental fair value recorded as a deferred offering cost for the SPAC, and the creation of a minority interest. The deferred offering cost consists of $47,472,000 related to the minority unaffiliated interest and $611,000 of professional fees consisting of legal and accounting fees related to the initial public offerings of the SPACs, which the Company previously accounted for as professional fees ($456,000) and deposits ($155,000). In addition, as part of our transition to the adoption of ASC 606, which became effective for the year ended August 31, 2021 and was implemented as of the Fiscal 2021 reporting period, we performed a review of all of our client billings during Fiscal 2021. Beginning in the third quarter of Fiscal 2021, our clients began to migrate to an updated CSA that changed the nature of the legal relationship with our clients to clarify our status as the legal employer of our clients’ WSEs, along with the power to control such factors as the wages paid to the WSE, hours worked, and placement of work assignments. As such, this differentiation of control results in the recognition of those WSEs as staffing solutions revenues as opposed to EAS solutions revenues. As originally reported, all revenues pertaining to these clients were recorded as EAS solutions revenues, which provides for the exclusion of gross payroll billings as an element of revenues. The change to a staffing solutions revenue recognition model for these clients, however, requires us to include gross payroll billings as revenues, and to include such billings as an element of cost of revenues. The impact of this change is to increase our revenues and cost of revenues for the three and nine months ended May 31, 2021 by $6,827,000. There was no impact to our gross profit (loss) as a result of this correction. The effect of this restatement on the line items included in our condensed consolidated financial statements for our fiscal quarter ended May 31, 2021, is as follows: May 31, 2021 As Previously As Reported Adjustments Restated Prepaid expenses and other current assets $ 738,000 (155,000) $ 583,000 Deferred Offering Costs - SPACs — 48,083,000 48,083,000 Total Assets 22,139,000 47,928,000 70,067,000 Noncontrolling interests in consolidated subsidiaries — 47,472,000 47,472,000 Total Equity (Deficit) 22,139,000 47,928,000 70,067,000 Revenues – three months ended May 31, 2021 2,648,000 6,827,000 9,475,000 Cost of revenues – three months ended May 31, 2021 3,095,000 6,827,000 9,922,000 Gross profit – three months ended May 31, 2021 (447,000) — (447,000) Revenues – nine months ended May 31, 2021 7,570,000 6,827,000 14,397,000 Cost of revenues – nine months ended May 31, 2021 7,141,000 6,827,000 13,968,000 Gross profit - nine months ended May 31, 2021 429,000 — 429,000 Three months ended May 31, 2021: Operating expenses – Professional fees 1,585,000 (456,000) 1,129,000 All other operating expenses 5,972,000 — 5,972,000 Total Operating expenses 7,557,000 (456,000) 7,101,000 Nine months ended May 31, 2021: Operating expenses – Professional fees 3,298,000 (456,000) 2,842,000 All other operating expenses 16,713,000 — 16,713,000 Total Operating expenses 20,011,000 (456,000) 19,555,000 Net loss – three months ended May 31, 2021 7,984,000 (456,000) 7,528,000 Net loss – nine months ended May 31, 2021 21,103,000 (456,000) 20,647,000 Net loss per share, basic and diluted Continuing operations for the 3 months ended May 31, 2021 (0.24) 0.02 (0.22) Continuing operations for the 9 months ended May 31, 2021 (0.60) 0.01 (0.59) Cash used in operations (15,272,000) 611,000 Cash provided by financing operations 21,764,000 (611.000) 21,153,000 We arrived at these adjustments by estimating the total value of the 10,000,000 shares transferred, which represents deferred compensation to the underwriter (as defined below), to be $47,472,000. We arrived at this valuation as set forth below: 1. Consistent with most SPAC IPOs, the market price of units (consisting of some combination of common stock and warrants) sold to the public in a SPAC IPO is $10 per unit. 2. We have valued the warrant portion of each Unit at $0.75. We arrived at this value though reference to a variety of factors and data available through examination of publicly available information regarding typical SPAC IPOs. Deducting this value from the Unit yields a value of $9.25 per common share at the time of the IPO, which we have applied to value of each of the Founder Shares that we issued to the underwriter (as defined below). 3. We have applied a further discount of 48.8%, exclusive of the warrant, which is a blended discount designed to reflect the following contingencies and uncertainties: (a) 20% probability that the IPOs for our sponsored SPAC are never consummated; (b) 20% probability that none of our sponsored SPACs successfully completed their initial business combinations (“IBCs”); and (c) 21% additional discounts to account for future sponsor and Representative concessions, as well as the possibility of decrease in the value of the common stock of each SPAC. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
May 31, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2: Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) applicable to interim reports of companies filing as a small reporting company. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. The results of operations for the three and nine months ended May 31, 2021 are not necessarily indicative of the results that may be expected for the full year ending Fiscal 2021. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10‑K for the fiscal year ended August 31, 2020 (“Fiscal 2020”), filed with the SEC on November 30, 2020, as well as the amendment to Item 13 of our Annual Report on Form 10-K/A for Fiscal 2020 filed with the SEC on January 12, 2021. Principles of Consolidation The Company and its wholly-owned subsidiaries have been consolidated in the accompanying financial statements. All intercompany balances have been eliminated in consolidation. On April 29, 2021, we announced our sponsorship, through our wholly-owned subsidiary, ShiftPixy Investments, Inc., of four special purpose acquisition companies, or “SPACs”. Three of the SPACs are each seeking to raise $250 million in capital investment, through an initial public offering, or “IPO”, to acquire companies in the light industrial, healthcare, and technology segments of the staffing industry, while the fourth SPAC is seeking to raise $500 million through an IPO to acquire one or more insurance entities. We anticipate that, through our wholly-owned subsidiary, we will own approximately 20% of the issued and outstanding stock in each entity upon their IPOs being consummated, and that each will operate as a separately managed, publicly traded entity following the completion of their respective initial business combinations, or “De-SPAC”. We anticipate entering into service agreements with each of the staffing entities that will allow them to participate in our HRIS platform. We also expect to facilitate the procurement of workers’ compensation, personal liability, and other similar insurance products for these staffing entities through our anticipated relationship with the insurance SPAC after it completes the De-SPAC process. For the period ended May 31, 2021, the sponsorship operations for these entities are consolidated in the accompanying financial statements as they were being conducted under a wholly-owned subsidiary. Use of Estimates The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include: · Liability for legal contingencies; · Useful lives of property and equipment; · Deferred income taxes and related valuation allowance; · Valuation of long-lived assets including fair value and net realizable value of long term notes receivable; · Projected development of workers’ compensation claims ; · Valuation of transfer of SPACs founder shares - deferred offering costs; and. · Valuation expense related to preferred stock options. Revenue and Direct Cost Recognition The Company provides an array of human resources and business solutions designed to help improve business performance. The Company’s revenues are primarily attributable to fees for providing staffing solutions and EAS/human capital management services. The Company recognizes revenue when all of the following criteria are met: (i) persuasive evidence of an arrangement exists; (ii) the services have been rendered to the customer; (iii) the sales price is fixed or determinable; and (iv) collectability is reasonably assured. The Company enters into contracts with its clients for EAS based on a stated rate and price in the contract. Contracts generally have a term of 12 months but are cancellable at any time by either party with 60 days’ written notice. Contract performance obligations are satisfied as services are rendered, and the time period between invoicing and when the performance obligations are satisfied is not significant. The Company does not have significant financing components or significant payment terms for its customers and consequently has no material credit losses. Payments for the Company’s services are typically made in advance of, or at the time that the services are provided. The Company accounts for its EAS revenues in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-45, Revenue Recognition, Principal Agent Considerations . EAS solutions revenue is primarily derived from the Company’s gross billings, which are based on (i) the payroll cost of the Company’s worksite employees (“WSEs”) and (ii) a mark-up computed as a percentage of payroll costs for payroll taxes and workers’ compensation premiums. Gross billings are invoiced to each client concurrently with each periodic payroll of the Company’s WSEs, which coincides with the services provided and which is typically a fixed percentage of the payroll processed. Revenues, which exclude the payroll cost component of gross billings and therefore consist solely of markup, are recognized ratably over the payroll period as WSEs perform their services at the client worksite. Revenues that have been recognized but not invoiced are included in unbilled accounts receivable on the Company’s consolidated balance sheets, and were not material as of May 31, 2021 and August 31, 2020, respectively. Consistent with the Company’s revenue recognition policy, direct costs do not include the payroll cost of its WSEs. The cost of revenue associated with the Company’s revenue generating activities is primarily comprised of all other costs related to its WSEs, such as the employer portion of payroll-related taxes, employee benefit plan premiums and workers’ compensation insurance costs. The Company has evaluated its revenue recognition policies in conjunction with its business as it migrates to a staffing business model. We had no billings for Fiscal 2020 that were recorded as staffing revenues. In Fiscal 2021, beginning in the quarter ended May 31, 2021, we migrated certain clients to CSAs that required their entire billings, including gross payroll paid to WSEs, be recorded as staffing revenues and the gross payroll paid be included in cost of revenues. The total revenues associated with staffing revenues for the three and nine months ended May 31, 2021 was $6,827,000. Segment Reporting Prior to Fiscal 2021, the Company operated as one reportable segment under ASC 280, Segment Reporting . The chief operating decision maker regularly reviews the financial information of the Company at a consolidated level in deciding how to allocate resources and in assessing performance. During Fiscal 2021, the Company entered into new business lines and geographic areas that, to date, are not material. However, with the migration to Staffing during the fiscal quarter ending May 31, 2021, the Company expects to manage the business on a segmented basis in the future and will therefore report such information once systems and processes are updated accordingly. Reporting and monitoring activities on a segment basis will allow the chief operating decision maker to evaluate operating performance more effectively. The Company currently principally operates as one reportable segment under ASC 280, Segment Reporting . The chief operating decision maker regularly reviews the financial information of the Company at a consolidated level in deciding how to allocate resources and in assessing performance. During Fiscal 2020, the Company began to enter into new business lines and geographic areas that, to date, are not material. The Company expects to operate in multiple segments in the future as its business evolves and will evaluate these changes prospectively. The impact from the SPACs for the three and nine months ended May 31, 2021, in our operations has not been material. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased as cash equivalents. The Company had no such investments as of May 31, 2021 or August 31, 2020. Concentration of Credit Risk The Company maintains cash with a commercial bank, which is insured by the Federal Deposit Insurance Corporation (“FDIC”). At various times, the Company has deposits in this financial institution in excess of the amount insured by the FDIC. The Company has not experienced any losses related to these balances and believes its credit risk to be minimal. As of May 31, 2021, there was $9,138,000 of cash in excess of the amounts insured by the FDIC. For the three and nine months ended May 31, 2021, one and zero individual clients represented more than 10% of revenues, respectively.No individual clients represented more than 10% of revenues for the three months and nine months ended May 31, 2020. However, two clients represented 92% of total accounts receivable at May 31, 2021. Fixed Assets Fixed assets are recorded at cost, less accumulated depreciation and amortization. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When fixed assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Leasehold improvements are amortized over the shorter of the useful life or the initial lease term. Fixed assets are recorded at cost and are depreciated over the estimated useful lives of the related assets using the straight-line method. The estimated useful lives of property and equipment for purposes of computing depreciation are as follows: Equipment: 5 years Furnitures & Fixtures: 5 - 7 years The amortization of these assets is included in depreciation expense on the condensed consolidated statements of operations. Computer Software Development Software development costs relate primarily to software coding, systems interfaces and testing of the Company’s proprietary employer information systems and are accounted for in accordance with ASC 350-40, Internal Use Software . Internal software development costs are capitalized from the time the internal use software is considered probable of completion until the software is ready for use. Business analysis, system evaluation and software maintenance costs are expensed as incurred. The capitalized computer software development costs are reported under the section fixed assets, net in the consolidated balance sheets. The Company determined that there were no material capitalized internal software development costs for the three and nine months ended May 31, 2021 or May 31, 2020. All capitalized software recorded was purchased from third party vendors. Capitalized software development costs are amortized using the straight-line method over the estimated useful life of the software, generally three to five years from when the asset is placed in service. Impairment and Disposal of Long-Lived Assets The Company periodically evaluates its long-lived assets for impairment in accordance with ASC 360‑10, Property, Plant, and Equipment . ASC 360‑10 requires that an impairment loss be recognized for assets to be disposed of or held-for-use when the carrying amount of an asset is deemed to not be recoverable. If events or circumstances were to indicate that any of our long-lived assets might be impaired, the Company would assess recoverability based on the estimated undiscounted future cash flows to be generated from the applicable asset. In addition, the Company may record an impairment loss to the extent that the carrying value of the asset exceeds the fair value of the asset. Fair value is generally determined using an estimate of discounted future net cash flows from operating activities or upon disposal of the asset. There were no indicators noted of impairments during the periods ended May 31, 2021 or May 31, 2020. Workers’ Compensation Everest Program Until July 2018, a portion of the Company’s workers’ compensation risk was covered by a retrospective rated policy, which calculates the final policy premium based on the Company’s loss experience during the term of the policy and the stipulated formula set forth in the policy. The Company funds the policy premium based on standard premium rates on a monthly basis and based on the gross payroll applicable to workers covered by the policy. During the policy term and thereafter, periodic adjustments may involve either a return of previously paid premiums or a payment of additional premiums by the Company or a combination of both. If the Company’s losses exceed the expected losses under that policy, then the Company could receive a demand for additional premium payments. The Company is currently engaged in litigation regarding such a demand for additional premium payments, which we believe to be without merit, as discussed at Note 9, Contingencies, Everest Litigation , below. Sunz Program From July 2018 through February 28, 2021, the Company’s workers’ compensation program for its WSEs was provided primarily through an arrangement with United Wisconsin Insurance Company and administered by Sunz Insurance Solutions, LLC (“Sunz”). Under this program, the Company has financial responsibility for the first $0.5 million of claims per occurrence. The Company provides and maintains a loss fund that is earmarked to pay claims and claims related expenses. The workers’ compensation insurance carrier establishes monthly funding requirements comprised of premium costs and funds to be set aside for payment of future claims (“claim loss funds”). The level of claim loss funds is primarily based upon anticipated WSE payroll levels and expected workers’ compensation loss rates, as determined by the insurance carrier. Monies funded into the program for incurred claims expected to be paid within one year are recorded as Deposit - workers’ compensation, a short-term asset, while the remainder of claim funds are included in Deposit- workers’ compensation, a long-term asset in its consolidated balance sheets. The Company is currently engaged in litigation regarding demands by Sunz for additional claims loss funds, which we believe to be without merit, as discussed at Note 9, Contingencies, Sunz Litigation , below. Current Program Effective March 1, 2021, the Company migrated its clients to a guaranteed cost program. Under this program, the Company’s financial responsibility is limited to the cost of the workers’ compensation premium. The Company funds the workers’ compensation premium based on standard premium rates on a monthly basis and based on the gross payroll applicable to workers covered by the policy. Any final adjustments to the premiums are based on the final audited exposure multiplied by the applicable rates, classifications, experience modifications and any other associated rating criteria. Under the Everest and Sunz programs, the Company utilized a third party to estimate its loss development rate, which was based primarily upon the nature of WSEs’ job responsibilities, the location of WSEs, the historical frequency and severity of workers’ compensation claims, and an estimate of future cost trends. Each reporting period, changes in the assumptions resulting from changes in actual claims experience and other trends are incorporated into its workers’ compensation claims cost estimates. As of May 31, 2021, the Company had $0.3 million in Deposit – workers’ compensation classified as a short-term asset and $0.5 million classified as a long-term asset. The Company’s estimate of incurred claim costs expected to be paid within one year is included in short-term liabilities, while its estimate of incurred claim costs expected to be paid beyond one year is included in long-term liabilities on its consolidated balance sheets. As of May 31, 2021, the Company had short term accrued workers’ compensation costs of $0.7 million and long term accrued workers’ compensation costs of $1.3 million. The Company retained workers’ compensation asset reserves and workers’ compensation related liabilities for former WSEs of clients transferred to Shiftable HR Acquisition, LLC, a wholly-owned subsidiary of Vensure Employer Services, Inc. (“Vensure”), in connection with the Vensure Asset Sale described in Note 3, below. As of May 31, 2021, the retained workers’ compensation assets and liabilities are presented as a discontinued operation net asset or liability. As of May 31, 2021, the Company had $0.6 million in short term assets and $1.7 million of short term liabilities, and had $1.1 million of long term assets and $3.1 million of long term liabilities. Because the Company bears the financial responsibility for claims up to the level noted above, such claims, which are the primary component of its workers’ compensation costs, are recorded in the period incurred. Workers’ compensation insurance includes ongoing health care and indemnity coverage whereby claims are paid over numerous years following the date of injury. Accordingly, the accrual of related incurred costs in each reporting period includes estimates, which take into account the ongoing development of claims and therefore requires a significant level of judgment. In estimating ultimate loss rates, the Company utilizes historical loss experience, exposure data, and actuarial judgment, together with a range of inputs that are primarily based upon the WSE’s job responsibilities, their location, the historical frequency and severity of workers’ compensation claims, and an estimate of future cost trends. For each reporting period, changes in the actuarial assumptions resulting from changes in actual claims experience and other trends are incorporated into the Company’s workers’ compensation claims cost estimates. The estimated incurred claims are based upon: (i) the level of claims processed during each quarter; (ii) estimated completion rates based upon recent claim development patterns under the plan; and (iii) the number of participants in the plan. The Company has had very limited and immaterial COVID-19 related claims between March 2020 through the date of this Quarterly Report, although there is a possibility of additional workers’ compensation claims being made by furloughed WSEs as a result of the employment downturn caused by the pandemic. On May 4, 2020, the State of California indicated that workers who become ill with COVID-19 would have a potential claim against workers’ compensation insurance for their illnesses. There is a possibility that additional workers’ compensation claims could be made by employees required to work by their employers during the COVID-19 pandemic, which could have a material impact on our workers’ compensation liability estimates. While the Company has not seen significant additional expenses as a result of any such potential claims to date, which would include claims for reporting periods after May 31, 2021, we continue to monitor closely all workers’ compensation claims made as the COVID-19 pandemic continues. Fair Value of Financial Instruments ASC 825, Financial Instruments , requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practical to estimate fair value. ASC 825 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. At May 31, 2021 and August 31, 2020, the carrying value of certain financial instruments (cash, accounts receivable and payable) approximated fair value due to the short-term nature of the instruments. Notes Receivable was valued at estimated fair value as described below as of August 31, 2020 and through December 31, 2020 (end of the earnout period provided for under the terms of the Note Receivable), and at estimated net realizable value as of May 31, 2021. The Company measures fair value under a framework that utilizes a hierarchy prioritizing the inputs to relevant valuation techniques. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of inputs used in measuring fair value are: · Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access. · Level 2: Inputs to the valuation methodology include: o Quoted prices for similar assets or liabilities in active markets; o Quoted prices for identical or similar assets or liabilities in inactive markets; o Inputs other than quoted prices that are observable for the asset or liability; o Inputs that are derived principally from or corroborated by observable market data by correlation or other means; and o If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. · Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. We did not have any Level 1 or Level 2 assets or liabilities at May 31, 2021 or August 31, 2020. The Fair Value of the SPAC Founder Shares We recorded the fair value of the SPAC founder shares that we transferred to the underwriters using non-recurring Level 3 assumptions, including quoted asset prices for SPAC shares and warrants and estimates of the likelihood of the IPOs and IBCs of our sponsored SPACs being consummated. Vensure Note Receivable The valuation of the Note Receivable (as defined below) from the Vensure Asset Sale, as defined below, is a Level 3 fair value measurement as of August 31, 2020 and through December 31, 2020 (end of the earnout period as defined under the terms of the Note Receivable). The Note Receivable, as described in Note 3, below, was estimated using a discounted cash flow technique based on expected contingent payments identified in the Vensure Asset Sale contract and with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820. The Company valued the Note Receivable on the January 1, 2020 transaction date using a 10% discount rate, and on August 31, 2020 and through December 31, 2020 using a 15% discount rate, which contemplates the risk and probability assessments of the expected future cash flows. The significant inputs in the Level 3 measurement not supported by market activity include the probability assessments of expected future cash flows related to the Vensure Asset Sale, appropriately discounted considering the uncertainties associated with the obligation, and as calculated in accordance with the terms of the Vensure Asset Sale agreement. The Company believes there are risks associated with the value of the Note Receivable due to business impacts of the COVID-19 pandemic. The expected cash payments from the Note Receivable are based on estimated gross wages billed for the clients transferred to Vensure pursuant to the Vensure Asset Sale as of the measurement date. Those transferred clients may have had their businesses impacted due to the pandemic which, in turn, would have resulted in lower gross wage billings. While the Company believes the current valuation of the Note Receivable was fairly recorded as of December 31, 2020, a material change in the business transferred may result in a reduction of the estimate of the contingent payments expected to be received and therefore the value of this asset. The Company used the following assumptions to value the Note Receivable as of August 31, 2020: · Discount rate of 15% · Actual monthly wages billed to the extent available to the Company The development and determination of the unobservable inputs for Level 3 fair value measurements and the fair value calculations are the responsibility of the Company’s chief financial officer and are approved by the chief executive officer. Research and Development During the three months ended May 31, 2021 and May 31, 2020, the Company incurred research and development costs of approximately $1 million and $1.5 million, respectively. During the nine months ended May 31, 2021 and May 31, 2020, the Company incurred research and development costs of approximately $2.7 million and $3.4 million, respectively. All costs were related to internally developed or externally contracted software and related technology for the Company’s HRIS platform and related mobile application. No software costs were capitalized for the three months and nine months ended May 31, 2021 and May 31, 2020, respectively. Advertising Costs The Company expenses all advertising as incurred. The Company incurred advertising costs totaling $410,000 and $1,331,000 for the three months and nine months ended May 31, 2021, respectively, and advertising costs of $206,000 and $389,000 for the three and nine months ended May 31, 2020, respectively. E arnings (Loss) Per Share The Company utilizes ASC 260, Earnings per Share . Basic earnings (loss) per share is computed by dividing earnings (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the reporting period. Common stock outstanding for purposes of earnings (loss) per share calculations include unexercised Preferred Options and unexercised prefunded warrants, as described in Note 5, below. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include additional common stock equivalents available upon exercise of stock options and warrants using the treasury stock method. Dilutive common stock equivalents include the dilutive effect of in-the-money stock equivalents, which are calculated based on the average share price for each period using the treasury stock method, excluding any common stock equivalents if their effect would be anti-dilutive. In periods in which a net loss has been incurred, all potentially dilutive common stock shares are considered anti-dilutive and thus are excluded from the calculation. Securities that are excluded from the calculation of weighted average dilutive common stock, because their inclusion would have been antidilutive, are: For the Three and Nine For the Three and Nine Months Ended Months Ended May 31, May 31, 2021 2020 Options 1,826,548 43,406 Warrants (Note 5) 9,592,086 1,896,209 Total potentially dilutive shares 11,418,634 1,939,615 For the table above, “Options” represent all options granted under the Company’s 2017 Stock Option/Stock Issuance Plan, as described in Note 6, below. Stock-Based Compensation At May 31, 2021, the Company had one stock-based compensation plan under which the Company may issue awards, as described in Note 6, below. The Company accounts for this plan under the recognition and measurement principles of ASC 718, Compensation- Stock Compensation , which requires all stock-based payments to employees, including grants of employee stock options, to be recognized in the condensed consolidated statements of operations at their fair values. The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model. For all employee stock options, the Company recognizes expense on an accelerated basis over the employee’s requisite service period (generally the vesting period of the equity grant). The Company’s option pricing model requires the input of highly subjective assumptions, including the expected stock price volatility and expected term. The expected volatility is based on the historical volatility of the Company's common stock since our initial public offering. Any changes in these highly subjective assumptions significantly impact stock-based compensation expense. The Company elects to account for forfeitures as they occur. As such, compensation cost previously recognized for an unvested award that is forfeited because of the failure to satisfy a service condition is revised in the period of forfeiture. The methods and assumptions used in the determination of the fair value of stock-based awards are consistent with those described in the Company’s Annual Report on Form 10-K for Fiscal 2020. See the Company’s Annual Report on Form 10-K for Fiscal 2020 for a detailed description of the Company’s stock-based compensation awards, including information related to vesting terms, service and performance conditions, payout percentages, and process for estimating the fair value of stock options granted. Revisions and Reclassifications of Financial Statements for the Three and Nine months ended May 31, 2020 Revision of Financial Statements During the preparation of the consolidated financial statements for Fiscal 2020, the Company determined that it had improperly amortized capitalized software that had not been placed into service. The Company assessed the materiality of the misstatements in accordance with Staff Accounting Bulletin No. 99, Materiality , and No. 108, Quantifying Misstatements , and concluded that this error was not qualitatively material to the Company’s consolidated balance sheet, statement of operations, statement of cash flows, statement of stockholders’ equity (deficit) or net loss for the periods then ended. Reclassification of Discontinued Operations During the preparation of the consolidated financial statements for Fiscal 2020, the Company determined that it had included in continuing operations certain customer revenues, cost of revenues, and commission expense related to customers transferred to Vensure as part of the Vensure Asset Sale. For consistency of presentation, those customer activities were reclassified to discontinued operations for the three and nine months ended May 31, 2020. Such reclassifications had no material impact on the Company’s financial condition, operating results, cash flows or stockholder’s equity. Reclassifications to discontinued operations and the impact on earnings (loss) per share have been represented in the table below. The effect of the revisions and reclassifications on the line items within the Company’s condensed consolidated statement of operations for the three and nine months ended May 31, 2020, was as follows: For the three months ended May 31, 2020 (unaudited) Discontinued As Restated As Previously Revision As Operations and Reported Adjustments Restated Reclassification Reclassified Revenues $ 2,014,000 $ — $ 2,014,000 $ — $ 2,014,000 Cost of revenue 1,873,000 $ — 1,873,000 — 1,873,000 Gross profit $ 141,000 $ — $ 141,000 $ — $ 141,000 Operating Expenses Depreciation and amortization 545,000 (162,000) 383,000 — 383,000 All other operating expenses $ 4,149,000 $ — $ 4,149,000 $ — $ 4,149,000 Operating loss $ (4,553,000) $ 162,000 $ (4,391,000) $ — $ (4,391,000) Net loss from continuing operations $ (71,688,000) $ 162,000 $ (71,526,000) $ — $ (71,526,000) Total income from discontinued operations $ (1,490,000) $ — $ (1,490,000) $ — $ (1,490,000) Net loss $ (73,178,000) $ 162,000 $ (73,016,000) $ — $ (73,016,000) Net loss per common share - continuing operations, Basic and diluted $ (2.73) $ 0.01 $ (2.72) $ — $ (2.72) Discontinued operations Operating income (loss) per common share $ (0.06) $ — $ (0.06) $ — $ (0.06) Net income (loss) per common share, Basic and diluted $ (2.79) $ 0.01 $ (2.78) $ — $ (2.78) Weighted average number of common stock shares, Basic and diluted 26,249,518 26,249,518 26,249,518 For the nine months ended May 31, 2020 (unaudited) Discontinued As Restated As Previously Revision As Operations and Reported Adjustments Restated Reclassification Reclassified Revenues $ 6,775,000 $ — $ 6,775,000 $ (494,000) $ 6,281,000 Cost of revenue 6,05 |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
May 31, 2021 | |
Discontinued Operations | |
Discontinued Operations | Note 3: Discontinued Operations On January 3, 2020, the Company executed an asset purchase agreement assigning client contracts comprising approximately 88% of its quarterly revenue through the date of the transaction, including 100% of its existing professional employer organization (“PEO”) business effective as of December 31, 2019, and the transfer of $1.5 million of working capital assets, including cash balances and certain operating assets associated with the assigned client contracts included in the agreement, to a wholly owned subsidiary of Vensure (the “Vensure Asset Sale”). Gross proceeds from the Vensure Asset Sale were $19.2 million, of which $9.7 million was received at closing and $9.5 million was to be paid out in equal monthly payments over the next four years (the “Note Receivable”), subject to adjustments for working capital and customer retention, (as measured by a gross wage guarantee included in the governing agreement), over the twelve month period following the Vensure Asset Sale. During the three months and nine months ended May 31, 2021, the Company identified an additional $41,000 of net cash paid on behalf of the Company and adjusted the Note Receivable accordingly. On March 12, 2021, the Company received correspondence from Vensure proposing approximately $10.7 million of working capital adjustments under the terms of the Vensure Asset Sale agreement which, if accepted, would have had the impact of eliminating any sums owed to the Company under the Note Receivable. As indicated in the reconciliation table below, the Company has recorded $2.6 million of working capital adjustments, subject to final review and acceptance, and has provided for an additional reserve of $2.9 million for potential claims. By letter dated April 6, 2021, the Company disputed Vensure’s proposed adjustments, and maintains that the amount Vensure owes the Company pursuant to the Note Receivable is as much as $9.5 million. Any disputes regarding working capital adjustments under the Vensure Asset Sale agreement are subject to a resolution process that includes a 30-day negotiation period followed by binding arbitration, which the parties have mutually agreed to extend as of the date of this filing. The following is a reconciliation of the gross proceeds to the net proceeds from the Vensure Asset Sale as presented in the balance sheet for the period ended May 31, 2021. Gross proceeds $ 19,166,000 Cash received at closing – asset sale (9,500,000) Cash received at closing – working capital (166,000) Gross note receivable $ 9,500,000 Less: Transaction reconciliation – estimated working capital adjustments (2,604,000) Adjusted Note Receivable 6,896,000 Reserve for estimated potential claims (2,892,000) Long-term note receivable, estimated net realizable value $ 4,004,000 The Vensure Asset Sale met the criteria of discontinued operations set forth in ASC 205. As such, the Company has reclassified its discontinued operations for all periods presented and has excluded the results of its discontinued operations from continuing operations for all periods presented. Until December 31, 2020, the Company estimated the fair value of the adjustments to the Note Receivable using Level 3 inputs. For the period ended May 31, 2021, the Company estimated the net realizable value of the Note Receivable, which approximates the fair value as of December 31, 2020. The Vensure Asset Sale calls for adjustments to the Note Receivable either for: (i) working capital adjustments or (ii) in the event that the gross wages of the business transferred is less than the required amount, as detailed below: Working capital adjustments : Through May 31, 2021, the Company has identified $2,604,000 of likely working capital adjustments, including $88,000 related to lower net assets transferred at closing, and $2,516,000 of cash remitted to the Company’s bank accounts, net of cash remitted to Vensure’s bank accounts. Under the terms of the Vensure Asset Sale, a reconciliation of the working capital was to have been completed by April 15, 2020. Due to operational difficulties and quarantined staff caused by the outbreak of COVID-19, Vensure requested a postponement of the working capital reconciliation that was due in Fiscal 2020. Although Vensure provided the Company with its working capital reconciliation on March 12, 2021, it failed to provide adequate documentation to support its calculations. Accordingly, the working capital adjustment recorded as of May 31, 2021, represents the Company’s estimate of the reconciliation by using Vensure's claims and the limited supporting information Vensure provided as a starting point, and then making adjustments for amounts in dispute based upon our internal records and best estimates. There is no assurance that the working capital change identified as of May 31, 2021 represents the final working capital adjustment. Gross billings adjustment : Under the terms of the Vensure Asset Sale, the proceeds of the transaction are reduced if the actual gross wages of customers transferred for calendar 2020 are less than 90% of those customers’ 2019 gross wages. For the year ended August 31, 2020 and the quarter ended November 30, 2020, the Company recorded a reserve for its estimate of a gross billings adjustment. Vensure did not identify any such adjustments in their March 2021 correspondence. Based on the information available, the Company reclassified the previously recorded gross wages claim to a general potential claims reserve during the quarter ended February 28, 2021. No additional adjustment was made during the three months ended on May 31, 2021. The $2.9 million reserve for estimated potential claims is based on an evaluation of the disputed claims made by Vensure that are in excess of the $2.6 million of likely working capital claims previously identified. The entire Note Receivable is recorded as a long term note receivable as of May 31, 2021. Any adjustments to the gross $9.5 million note receivable are to be applied against payments in the order they are due to be paid. Under the terms of the Vensure Asset Sale, any dispute regarding the amount due under the Note Receivable is subject to a reconciliation process that provides for negotiation, followed by binding arbitration of any disputes that cannot be resolved. As of the date of this filing, the parties agree that some amount is due to the Company under the Note Receivable, although the precise amount remains subject to ongoing negotiations. As such, although we are hopeful for a prompt resolution, we cannot state with certainty whether we anticipate any collections prior to May 31, 2022, and therefore have classified the Note Receivable as long-term. Vensure Note Receivable Net Realizable Value For the period ended May 31, 2021, the Company estimated the net realizable value based on the available information through the date of this report. In March 2021, Vensure provided the Company with approximately $10.7 million of proposed working capital adjustments and no adjustments for the actual 2020 wages billed, which would have had the effect of eliminating any sums due to the Company under the Note Receivable. The Company used these proposed adjustments as a starting point and considered each potential adjustment based on items deemed to be more or less likely and the level of the dispute for any disputed items. The Company disputes a significant portion of the working capital adjustments, and Vensure has since conceded that the Company is owed sums under the Note Receivable, although the precise amount remains in dispute. In conducting its analysis, the Company identified approximately $2.6 million of adjustments deemed to be likely and retained a $2.9 million additional reserve for a total reserve of $5.5 million. The $2.9 million additional reserve was developed using a weighted probability approach of the known claims and demands and combined with an estimate of legal and collection costs. The total reserve of $5.5 million is equivalent to approximately 50% of the difference between the value of the Note Receivable after giving full effect to Vensure’s March 2021 proposed adjustments and the gross carrying value of the $9.5 million Note Receivable. In April 2021, the Company provided Vensure with its objections to Vensure’s March 2021 proposed adjustments. Based upon ongoing negotiations between the parties, Vensure has conceded that sums remain due to the Company under the Note Receivable, though the precise amount owed remains in dispute, as noted above. Based on our analysis we made no material changes to the carrying value of the Note Receivable between December 31, 2020, the last internal measurement date, and the current reporting date of May 31, 2021. The carrying amounts of the classes of assets and liabilities from the Vensure Asset Sale included in discontinued operations were as follows: May 31, August 31, 2021 2020 Cash $ — $ — Accounts receivable and unbilled account receivable — — Prepaid expenses and other current assets — — Deposits – workers’ compensation 623,000 1,030,000 Total current assets 623,000 1,030,000 Fixed assets, net — — Deposits - workers' compensation 1,126,000 2,582,000 Total assets $ 1,749,000 $ 3,612,000 Accounts payable and other current liabilities $ — $ — Payroll related liabilities — — Accrued workers’ compensation cost 1,687,000 1,746,000 Total current liabilities 1,687,000 1,746,000 Accrued workers’ compensation cost 3,050,000 4,377,000 Total liabilities 4,737,000 6,123,000 Net liability $ (2,988,000) $ (2,511,000) Reported results for the discontinued operations by period were as follows: For the Three Months Ended For the Nine Months Ended May 31, May 31, May 31, May 31, 2021 2020 2021 2020 Revenues (gross billings of $0 and $0 million less worksite employee payroll cost of $0 million and $0 million, respectively for the three months ended; gross billings of $0 million and $120.6 million less worksite employee payroll cost of $0 million and $103.0 million, respectively for the nine months ended) $ — $ — $ — $ 17,632,000 Cost of revenue (23,000) 1,490,000 1,512,000 17,252,000 Gross profit (loss) 23,000 (1,490,000) (1,512,000) 380,000 Operating expenses: Salaries, wages and payroll taxes — — — 553,000 Commissions — — — 741,000 Total operating expenses — — — 1,294,000 (Loss) income from discontinued operations $ 23,000 $ (1,490,000) $ (1,512,000) $ (914,000) The loss from discontinued operations for the three and nine months ended May 31, 2021, represents the change in the estimated workers’ compensation accruals required for the residual workers’ compensation liabilities retained after the Vensure Asset Sale. |
Going Concern
Going Concern | 9 Months Ended |
May 31, 2021 | |
Going Concern | |
Going Concern | Note 4: Going Concern As of May 31, 2021, the Company had cash of $9 million and a working capital deficit of $1.9 million. During the nine months ended May 31, 2021, the Company used approximately $14 million of cash from its continuing operations. The Company has incurred recurring losses, which has resulted in an accumulated deficit of $140.6 million as of May 31, 2021. The recurring losses and cash used in operations raise substantial doubt as to our ability to continue as a going concern within one year from the issuance date of these financial statements. Historically, the Company’s principal source of financing has come through the sale of its common stock and issuance of convertible notes. On May 26, 2020, the Company successfully completed an underwritten public offering, raising a total of $12 million ($10.3 million net of costs), and closed an additional $1.35 million ($1.24 million net of costs) between June 1, 2020 and July 7, 2020 pursuant to the underwriter’s overallotment. In October 2020, the Company closed a $12 million equity offering ($10.7 million net of costs), and in May 2021 the Company closed an additional $12 million private equity offering with a large institutional investor ($11.9 million net of costs). The Company's plans and expectations for the next 12 months include raising additional capital to help fund expansion of its operations, including the continued development and support of its IT and HRIS platform, as well as its activities in connection with its sponsorship of the SPACs described above. During Fiscal 2021, the Company has continued to invest in its HRIS platform, ShiftPixy Labs, and other growth initiatives, including its SPAC sponsorship activities, all of which have required significant cash expenditures. The Company expects to deploy significant additional capital resources to continue with these growth initiatives, which include making ShiftPixy Labs and our ghost kitchens fully operational. The Company has been and expects to continue to be impacted by the COVID-19 pandemic, from which it has experienced both positive and negative impacts. Its current business focus is providing human capital and payroll services for the restaurant and hospitality industries, which have seen a reduction in payroll and consequently a reduction in payroll processing fees on a per WSE and per location basis. However, the Company believes that it provides the means for current and potential clients to adapt to many of the obstacles posed by COVID-19 by offering additional services such as delivery, which have facilitated an increase by the Company in its client and client location counts, resulting in recovery of billings lost during the first months of the pandemic. Beginning in June 2020, the Company’s billings per WSE and per location improved as lockdowns in its primary Southern California market were lifted. Although the State of California re-implemented lockdowns in November 2020, the Company believes that many of its clients have modified their businesses after the initial lockdowns to adapt somewhat to these adverse circumstances. Further, the recent acceleration in the roll-out of COVID-19 vaccines throughout California and the entire country has resulted in an easing of business operating restrictions. Nevertheless, if lockdowns resume, the Company’s clients delay hiring or rehiring employees, or if our clients shut down operations, our ability to generate operational cash flows may be significantly impaired. In August 2020, the Company signed an agreement with the Washington Hospitality Association Member Services Corporation (“Washington Hospitality”), a consortium representing approximately 200,000 potential WSEs in the food industry located in the State of Washington. This agreement expands the Company’s geographic reach and is expected to drive revenue growth during the second half of calendar 2021. The Company also signed a new client in July 2020 representing a significant revenue opportunity. This client provides outsourced nurses that are paid gross wages in an amount approximately three times what the Company’s typical restaurant and hospitality WSEs receive, with the Company receiving the same administrative fee rates per wage dollar paid. We believe that this client will generate new business for the Company, as the need for nurses increases to administer COVID-19 testing and vaccination services. We began to see an increase in these billed nurses in the quarter ended May 31, 2021. The Company’s management believes that the Company’s current cash position will not be sufficient to fund our operations for at least a year from the date these financials are issued without additional capital funding. While the Company has successfully raised capital from debt and equity investors in the past, if these sources do not provide the capital necessary to fund the Company’s operations during the twelve months following the issuance of this Quarterly Report, the Company may need to curtail certain aspects of its operations or expansion activities, consider the sale of additional assets, or consider other means of financing. The Company can give no assurance that it will be successful in implementing its business plan and obtaining financing on terms advantageous to the Company, or that any such additional financing will be available. These condensed consolidated financial statements do not include any adjustments for this uncertainty. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
May 31, 2021 | |
Stockholders' Equity. | |
Stockholders' Equity | Note 5: Stockholders’ Equity Preferred Stock As previously disclosed, in September 2016, the founding shareholders of the Company were granted options to acquire ShiftPixy preferred stock (the “Preferred Options”). The number of Preferred Options granted was based upon the number of shares held at that time. These Preferred Options are nontransferable and forfeited upon the sale of the related founding shares of common stock. Upon the occurrence of certain specified events, such founding shareholders may exercise each Preferred Option to purchase one share of preferred stock of the Company at an exercise price of $0.0001 per share. The preferred stock underlying the Preferred Options does not include any rights to dividends or preference upon liquidation of the Company and is convertible into shares of common stock on a one-for-one basis pursuant to the Amended Restated Articles of Incorporation. The Preferred Options became exercisable to purchase shares of preferred stock in January 2020 and in March 2020 became exchangeable into an equal number of shares of common stock. On June 4, 2020, Scott W. Absher, the Company's Chief Executive Officer, exercised 12,500,000 Preferred Options to purchase an equal number of shares of preferred stock. Immediately thereafter, Mr. Absher converted all 12,500,000 shares of preferred stock into 12,500,000 shares of common stock. These shares of common stock are subject to a two-year lockup from the date of the conversion. Between June 4, 2020 and August 31, 2020, an additional 294,490 Preferred Options were exercised and exchanged for a like number of shares of common stock. During the three months ended May 31, 2021, no preferred options were exercised or exchanged for a like number of shares of common stock. During the nine months ended May 31, 2021, an additional 12,500 Preferred Options were exercised and exchanged for a like number shares of common stock. As of the date of this Quarterly Report, 11,827,570 Preferred Options remain outstanding and exercisable. The right to exercise the options terminates on December 31, 2023. As stated above, the amount of the Preferred Options, and the number of shares of preferred stock issuable upon exercise of such options, is based upon the number of shares of common stock held by such founding shareholders at the time such options were issued. Accordingly, in order to confirm the original intent of the granting options to purchase up to 50,000,000 shares of preferred stock to two of our founding shareholders, Mr. Absher and J. Stephen Holmes, at some point in the future the Company intends to adopt a second grant of options, exercisable upon the occurrence of certain specified events, granting an additional 12,500,000 options to each of Messrs. Absher and Holmes, whereby each option permits the holder to acquire one share of preferred stock of the Company for $0.0001 per share. Each share of preferred stock will be convertible into common stock on a one-for-one basis. October 2020 Public Offering On October 8, 2020, the Company entered into an underwriting agreement (the “October Underwriting Agreement”) with A.G.P./Alliance Global Partners (“AGP”) in connection with a public offering (the “October 2020 Offering”) of an aggregate of (i) 4,000,000 shares of our common stock and (ii) warrants to purchase 2,300,000 shares of common stock (the “October 2020 Common Warrants”), which included the partial exercise of AGP’s over-allotment option to purchase 300,000 additional October 2020 Common Warrants. Each share of common stock was sold together with an October 2020 Common Warrant as a fixed combination, with each share of common stock sold being accompanied by an October 2020 Common Warrant to purchase 0.5 shares of common stock. Each share of common stock and accompanying October 2020 Common Warrant was sold at a price to the public of $3.00. The October 2020 Common Warrants were immediately exercisable, will expire on October 13, 2025, and have an exercise price of $3.30 per share, subject to anti-dilution and other adjustments for certain stock splits, stock dividends, or recapitalizations. The October 2020 Offering closed on October 14, 2020, for gross proceeds of approximately $12.0 million, prior to deducting $1.3 million of costs consisting of underwriting discounts and commissions and offering expenses payable by the Company, which includes a partial exercise of the underwriter’s over-allotment option to purchase additional October 2020 Common Warrants. Pursuant to the October Underwriting Agreement, the Company, upon closing of the October 2020 Offering, issued to AGP warrants to purchase up to 200,000 shares of common stock (the “October Underwriter Warrants”), which is equivalent to 5.0% of the aggregate number of shares of common stock sold in the October 2020 Offering. The October Underwriter Warrants are exercisable at any time and from time to time, in whole or in part, commencing six months after the closing date and ending five years from the closing date, at a price per share equal to $3.30, which is equivalent to 110% of the public offering price per share. May 2021 Private Placement On May 13, 2021, the Company entered into a Securities Purchase Agreement with a large institutional investor (the “Purchaser”) pursuant to which the Company agreed to sell to the Purchaser an aggregate of (i) 2,320,000 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), together with warrants (the “May 2021 Common Warrants”) to purchase up to 2,320,000 shares of Common Stock, with each May 2021 Common Warrant exercisable for one share of Common Stock at a price per share of $2.425, and (ii) 2,628,453 prefunded warrants (the “May 2021 Prefunded Warrants”), together with the May 2021 Common Warrants to purchase up to 2,628,453 shares of Common Stock, with each May 2021 Prefunded Warrant exercisable for one share of Common Stock at a price per share of $0.0001. Each share of Common Stock and accompanying May 2021 Common Warrant were sold together at a combined offering price of $2.425, and each May 2021 Prefunded Warrant and accompanying May 2021 Common Warrant were sold together at a combined offering price of $2.4249. The May 2021 Prefunded Warrants are immediately exercisable, at a nominal exercise price of $0.0001, and may be exercised at any time until all of the May 2021 Prefunded Warrants are exercised in full. The May 2021 Common Warrants have an exercise price of $2.425 per share, are immediately exercisable, and will expire five years from June 15, 2021, which is the date that the registration statement covering the resale of the shares underlying the Common Warrants was declared effective. The private placement closed on May 17, 2021, for gross proceeds of approximately $12.0 million, prior to deducting $0.94 million of costs consisting of Placement Agent commissions and offering expenses payable by the Company. In addition to the 7.0% of the aggregate gross proceeds cash fee, the Company issued to the Placement Agent 247,423 warrants to purchase an aggregate of up to five percent (5)% of the aggregate number of Shares and shares of Common Stock issuable upon exercise of the May 2021 Prefunded Warrants sold in the offering (the “Placement Agent Warrants”). The Placement Agent Warrants are exercisable for a period commencing six months after issuance and expire four years from the effective date of a registration statement for the resale of the underlying shares, and shall have an initial exercise price of $2.6675 per share. Common Stock and Warrants During the nine months ended May 31, 2021, the Company issued 4,000,000 shares of common stock pursuant to the October 2020 Offering at $3.00 per share, 2,320,000 shares of Common Stock, 2,628,453 May 2021 Prefunded Warrants and Common Warrants to purchase up to 4,948,453 shares of Common Stock pursuant to the May 2021 Private Placement. Each share of Common Stock and accompanying May 2021 Common Warrant were sold together at a combined offering price of $2.425, and each May 2021 Prefunded Warrant and accompanying May 2021 Common Warrant were sold together at a combined offering price of $2.4249. The following table summarizes the changes in the Company's common stock and Prefunded warrants from August 31, 2020 to May 31, 2021: Weighted average Weighted Number remaining average of life exercise shares (years) price Warrants outstanding, August 31, 2020 1,896,209 4.7 $ 7.91 Issued 10,324,329 4.8 2.03 (Cancelled) — — — (Exercised) — — — Warrants outstanding, May 31, 2021 12,220,538 4.7 3.02 Warrants exercisable, May 31, 2021 11,973,116 4.7 $ 3.02 The following table summarizes the Company's warrants outstanding as of May 31, 2021: Weighted average Life of Outstanding Warrants Warrants Exercise Outstanding in years price May 2021 Common Warrants 4,948,453 5.0 $ 2.43 May 2021 Prefunded Warrants (1) 2,628,453 5.0 $ 0.00 May 2021 Underwriter Warrants (2) 247,423 5.5 $ 2.67 October 2020 Common Warrants 2,300,000 4.4 3.30 October 2020 Underwriter Warrants 200,000 4.4 3.30 May 2020 Common Warrants 1,277,580 4.0 5.40 May 2020 Underwriter Warrants 111,108 4.0 5.40 March 2020 Exchange Warrants 423,669 4.3 10.17 Amended March 2019 Warrants 66,288 2.8 40.00 March 2019 Services Warrants 3,366 2.8 70.00 June 2018 Warrants 6,276 2.5 40.00 June 2018 Services Warrants 5,422 2.5 99.60 2017 PIPE Warrants 2,500 1.1 276.00 12,220,538 4.7 $ 3.02 (1) The May 2021 Prefunded Warrants were sold as part of a Prefunded Warrant Unit as described above. The exercise price is $0.0001 per share. As of July 15, 2021, all of the Prefunded Warrants have been exercised. (2) The May 2021 Underwriter Warrants are not exercisable until November 17, 2021. |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
May 31, 2021 | |
Stock Based Compensation | |
Stock Based Compensation | Note 6: Stock Based Compensation In March 2017, the Company adopted its 2017 Stock Option/Stock Issuance Plan (the “Plan”). The Plan provides incentives to eligible employees, officers, directors and consultants in the form of incentive stock options (“ISOs”), non-qualified stock options (“NQs”), (each of which is exercisable into shares of common stock) (collectively, “Options”) or shares of common stock (“Share Grants”). On July 1, 2020, our Board of Directors unanimously approved an increase in the number of shares of common stock issuable under the Plan from 250,000 to 3,000,000 and granted options that were contingent upon shareholder approval. On March 31, 2021, the Company’s shareholders approved the increase in the number of shares of common stock issuable under the Plan as well as the various contingent grant awards under the Plan since July 1, 2020. Effective with the shareholders’ approval, all previously unexercisable option grant awards became exercisable and the option awards granted since July 1, 2020 were no longer subject to any contingency not set forth in the Plan. On June 4, 2021, the Company registered an aggregate of 3,000,000 shares, par value $.0001 per share, reserved for issuance under the Plan. For all options granted prior to July 1, 2020, each option is immediately exercisable and has a term of service vesting provision over a period of time as follows: 25% vest after a 12-month service period following the award, with the balance vesting in equal monthly installments over the succeeding 36 months.The options granted on or after July 1, 2020, typically vest over four years, with 25% of the grant vesting one year from the grant date, and the remainder in equal quarterly installments over the succeeding 12 quarters. All options granted to date have a stated ten-year term. Stock grants are issued at fair value, considered to be the market price on the grant date. The fair value of option awards is estimated on the grant date using the Black-Scholes stock option pricing model. Following our adoption of ASU 2016-09, we elected to account for forfeitures under the Plan as they occur. Any compensation cost previously recognized for an unvested award that is forfeited because of a failure to satisfy a service condition is reversed in the period of the forfeiture. The Company recognized approximately $444,000 and $1,363,000 of compensation expense for the three and nine months ended May 31, 2021, respectively. The Company recognized approximately $75,000 and $745,000 of compensation expense for the three and nine months ended May 31, 2020, respectively. The Company compensates its Board members through grants of common stock for services performed. These services have been accrued within the accounts payable and other accrued liabilities on the Condensed Consolidated Balance Sheet. The Company has incurred $56,000 and $113,000 for the three and nine months ended May 31, 2021, respectively. The Company incurred $75,000 and $150,000 for the three and nine months ended May 31, 2020, respectively. At May 31, 2021, the total unrecognized deferred stock-based compensation expected to be recognized over the remaining weighted average vesting periods of 3.1 years for outstanding grants was $4.8 million. The following table summarizes option activity during the nine months ended May 31, 2021: Options Outstanding and Exercisable Weighted Average Weighted Number Remaining Average of Contractual Exercise Options Life Price (In years) Balance Outstanding, August 31, 2020 1,398,740 9.5 $ 8.18 Granted 715,000 10.0 3.07 Exercised — — — Forfeited (287,192) 9.5 4.32 Balance Outstanding at May 31, 2021 1,826,548 9.1 $ 6.62 Balance Exercisable at May 31, 2021 1,826,548 Options outstanding as of May 31, 2021 had aggregate intrinsic value of $45,000. Option vesting activity during the nine months ended May 31, 2021 was as follows: Weighted Weighted Number Remaining Average of Contractual Exercise Options Vested Options Life Price (In years) Balance, August 31, 2020 28,410 7.2 $ 115.10 Vested 5,631 7.4 93.61 Exercised — — — Forfeited (656) 7.2 50.33 Balance at May 31, 2021 33,385 7.0 $ 112.74 The following table summarizes information about stock options outstanding and vested at May 31, 2021: Options Outstanding Options Vested Weighted Weighted Average Weighted Average Weighted Number of Remaining Average Remaining Average Options Contractual Exercise Number of Contractual Exercise Exercise Prices Exercisable Life Price Options Life Price (In Years) (In Years) $2.23‑10.00 1,785,730 9.3 $ 4.59 — — $ — $10.01‑$40.00 3,500 8.0 21.69 1,882 8.0 21.66 $40.01–$80.00 13,396 7.8 51.21 9,529 7.8 51.22 $80.01–$120.00 10,303 7.0 102.90 8,542 7.0 102.79 $120.01–$160.00 12,495 6.3 155.24 12,307 6.2 155.73 $160.01‑$391.60 1,126 6.1 391.60 1,125 6.1 391.60 1,826,548 9.1 $ 6.62 33,385 7.0 $ 112.74 On March 31, 2021, with the shareholders approval for the increase in the option pool, the contingent options granted by our Board of Directors between July 1, 2020 and May 31, 2021 became exercisable. The options remain subject to service vesting period requirements retroactive to the grant date, as described above. |
Related Parties
Related Parties | 9 Months Ended |
May 31, 2021 | |
Related Parties. | |
Related Parties | Note 7: Related Parties J. Stephen Holmes, our non-employee sales manager, is an advisor to and significant shareholder of the Company. The Company incurred $180,000 and $570,000 in professional fees for services provided by Mr. Holmes in the three and nine months ended May 31, 2021 and $180,000 and $570,000 for the three and nine months ended May 31, 2020, respectively. During the three and nine month periods ended May 31, 2021, we made one-time payments to certain of our employees totaling approximately $53,000 and $653,000, respectively, in connection with their agreement to relocate from California to our new principal executive offices in Miami, Florida. Included among these were payments to the following related parties, in the amounts indicated: (i) Mr. Absher, $160,000; (ii) Amanda Murphy, our Director of Operations and a member of our Board, $80,000; (iii) David May, a member of our business development team, and the son-in-law of Mr. Absher, $80,000; (iv) Phil Eastvold, the Executive Producer of ShiftPixy Productions, Inc., and the son-in-law of Mr. Absher, $88,000; (v) Hannah Absher, an employee of the Company and the daughter of Scott Absher, $18,000 ; and(vi) Jared Holmes, an employee of the Company and son of Stephen Holmes, $18,000. |
Commitments
Commitments | 9 Months Ended |
May 31, 2021 | |
Commitments | |
Commitments | Note 8: Commitments Operating Leases & License Agreements Effective April 15, 2016, the Company entered into a non-cancelable five-year operating lease for its Irvine, California facility. On July 25, 2017, the Company entered into a non-cancelable operating lease for expansion space at its Irvine offices with a termination date that coincides with the termination date of the prior lease and extended the terms of the original lease until 2022. The leases for certain facilities contain escalation clauses relating to increases in real property taxes as well as certain maintenance costs. Effective August 13, 2020, the Company entered into a non-cancelable seven-year operating lease for its Miami, Florida office facility commencing October 2020 through September 2027. The lease contains escalation clauses relating to increases in real property taxes as well as certain maintenance costs. Effective October 1, 2020, the Company entered into a non-cancelable 64-month lease for 23,500 square feet of primarily industrial space located in Miami, Florida, to house ghost kitchens, production facilities, and certain marketing and technical functions, including those associated with ShiftPixy Labs. The lease contains escalation clauses relating to increases in real property taxes as well as certain maintenance costs. Future minimum lease and licensing payments under non-cancelable operating leases at May 31, 2021, are as follows: Years ended August 31, 2021 $ 289,000 2022 1,198,000 2023 1,014,000 2024 1,075,000 2025 1,108,000 Thereafter 1,652,000 Total minimum payments $ 6,336,000 ShiftPixy Labs Ghost Kitchens On March 17, 2021, the Company entered into a master service agreement for the construction of six ghost kitchens to be placed in its ShiftPixy Labs facility in Miami for a total cost of $962,000. As of May 31, 2021, the Company has made payments totaling $577,000 of service was provided and capitalized as construction in progress and included in Fixed Assets on the Condense Consolidated Balance Sheet and has an additional cost to complete of $385,000 under this contract, which is expected to be completed by the end of the current fiscal year. Non-contributory 401(k) Plan The Company has a non-contributory 401(k) Plan (the “401(k) Plan”). The 401(k) Plan covers all non-union employees who are at least 21 years of age and have completed 3 months of service. There were no employer contributions to the 401(k) Plan for the three or nine months ended May 31, 2021 and May 31, 2020. Stock Repurchase Plan On July 9, 2019, the Board of Directors authorized the repurchase of up to 10 million shares of the Company’s outstanding common stock as market conditions warrant over a period of 18 months. The Company has not implemented the stock repurchase plan to date and has not repurchased any stock under this authorization, which has now expired. Special Purpose Acquisition Company (“SPAC”) Sponsorship On April 29, 2021, ShiftPixy Investments, Inc. (the “Sponsor”), a wholly owned subsidiary of the Company, announced the filing of registration statements relating to initial public offerings (“IPOs”) of the following four SPACs: (i) Industrial Human Capital Inc., which proposes to raise $250 million to acquire one or more light industrial staffing companies; (ii) Vital Human Capital, Inc., which proposes to raise $250 million to acquire one or more healthcare staffing companies; (iii) TechStackery, Inc., which proposes to raise $250 million to acquire one or more technology staffing companies; and (iv) Firemark Global Capital, Inc., (formerly known as Insurity Capital, Inc.), which proposes to raise $500 million to acquire one or more commercial insurance company “shells” licensed to conduct business throughout the United States. It is anticipated that the Board of Directors of each of these entities will be comprised of the same individuals (none of whom will be directors of the Company aside from our Chairman and Chief Executive Officer, Scott W. Absher) and that Mr. Absher, Domonic J. Carney (our Chief Financial Officer), and Robert S. Gans (our General Counsel) will serve as the Chief Executive Officer, Chief Financial Officer, and General Counsel of each entity, respectively. Details of the Sponsor’s financial commitment to each SPAC is set forth below. The Company has advanced approximately $.5 million in connection with its sponsorship of the SPACs as of the three and nine months ended May 31, 2021. Industrial Human Capital, Inc (“IHC”) The Sponsor has agreed to purchase an aggregate of 4,279,000 warrants (the “IHC Placement Warrants”) (or 4,654,000 IHC Placement Warrants if the over-allotment option is exercised in full) at a price of $1.00 per warrant, for an aggregate purchase price of $4,279,000 ($4,654,000 if the over-allotment option is exercised in full). Each IHC Placement Warrant will be identical to warrants sold in the IPO, subject to certain exceptions. The IHC Placement Warrants will be sold in a private placement that will close simultaneously with the closing of the IPO. The Sponsor currently owns 5,187,500 shares of IHC common stock, prior to the exercise of any of the IHC Placement Warrants. Vital Human Capital, Inc. (“VHC”) The Sponsor has agreed to purchase an aggregate of 4,279,000 warrants (the “VHC Placement Warrants”) (or 4,654,000 VHC Placement Warrants if the over-allotment option is exercised in full) at a price of $1.00 per warrant, for an aggregate purchase price of $4,279,000 ($4,654,000 if the over-allotment option is exercised in full). Each VHC Placement Warrant will be identical to warrants sold in the IPO, subject to certain exceptions. The VHC Placement Warrants will be sold in a private placement that will close simultaneously with the closing of the IPO. The Sponsor currently owns 5,187,500 shares of VHC common stock, prior to the exercise of any of the VHC Placement Warrants. TechStackery, Inc. (“TSI”) The Sponsor has agreed to purchase an aggregate of 4,279,000 warrants (the “TSI Placement Warrants”) (or 4,654,000 TSI Placement Warrants if the over-allotment option is exercised in full) at a price of $1.00 per warrant, for an aggregate purchase price of $4,279,000 ($4,654,000 if the over-allotment option is exercised in full). Each TSI Placement Warrant will be identical to the warrants sold in the IPO, subject to certain exceptions. The TSI Placement Warrants will be sold in a private placement that will close simultaneously with the closing of the IPO. The Sponsor currently owns 5,187,500 shares of TSI common stock, prior to the exercise of any of the TSI Placement Warrants. Firemark Global Capital, Inc. (“FGC”) The Sponsor has agreed to purchase an aggregate of 7,447,000 warrants (the “FGC Placement Warrants”) (or 8,197,000 FGC Placement Warrants if the over-allotment option is exercised in full) at a price of $1.00 per warrant, for an aggregate purchase price of $7,447,000 ($8,197,000 if the over-allotment option is exercised in full). Each FGC Placement Warrant will be identical to the warrants sold in the IPO, subject to certain exceptions. The FGC Placement Warrants will be sold in a private placement that will close simultaneously with the closing of the IPO. The Sponsor currently owns 10,375,000 shares of FGC common stock, prior to the exercise of any of the FGC Placement Warrants. The Sponsor has agreed to loan up to $500,000 to each of the sponsored SPACs to be used for a portion of their IPO expenses. The source of repayment of these loans will be from the IPO proceeds and the sale of the Placement Warrants described above, as permitted and described in the respective registration statements for each SPAC. |
Contingencies
Contingencies | 9 Months Ended |
May 31, 2021 | |
Contingencies | |
Contingencies | Note 9: Contingencies Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will be resolved only when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. During the ordinary course of business, the Company is subject to various claims and litigation. Management believes that the outcome of such claims or litigation will not have a material adverse effect on the Company’s financial position, results of operations or cash flow. Kadima Litigation The Company is in a dispute with its former software developer, Kadima Ventures (“Kadima”), over incomplete but paid for software development work. In May 2016, the Company entered into a contract with Kadima for the development and deployment of user features that were proposed by Kadima for an original build cost of $2.2 million to complete. This proposal was later revised upward to approximately $7.2 million to add certain features to the original proposal. As of the date of this Quarterly Report, the Company has paid approximately $11 million to Kadima, but has never been provided access to the majority of the promised software. Kadima refused to continue development work, denied access to developed software, and refuses to surrender to the Company any software that it has developed unless the Company pays an additional $12.0 million above the $11.0 million already paid. In April 2019, Kadima filed a complaint against the Company in the Superior Court of the State of Arizona, Maricopa County, alleging claims for breach of contract, promissory estoppel and unjust enrichment, and seeking damages in excess of $11.0 million. The Company vigorously disputes and denies each of Kadima’s claims, including that it owes any sums to Kadima, and further believes that it is entitled, at a minimum, to a refund of a substantial portion of the sums that it has already paid, along with the release of the software modules currently being withheld. In June 2020 the Company engaged in a mediation with Kadima in an attempt to resolve the matter, which was unsuccessful. On July 14, 2020 the Company filed an answer to Kadima’s complaint, which denied Kadima’s claims and asserted counter-claims for breach of contract and fraud. Discovery is underway, and a trial date has not been set. Splond Litigation On April 8, 2019, claimant, Corey Splond, filed a class action lawsuit, on behalf of himself and other similarly situated individuals, in the Eighth Judicial District Court for the State of Nevada, Clark County, naming the Company and its client as defendants, and alleging violations of certain wage and hour laws. This lawsuit is in the initial stages, and the Company denies any liability. Even if the plaintiff ultimately prevails, the potential damages recoverable will depend substantially upon whether the Court determines in the future that this lawsuit may appropriately be maintained as a class action. Further, in the event that the Court ultimately enters a judgment in favor of plaintiff, the Company believes that it would be contractually entitled to be indemnified by its client against at least a portion of any damage award. Radaro Litigation On July 9, 2020, we were served with a complaint filed by one of our former software vendors, Radaro Inc., in the United States District Court for the Central District of California, alleging damages arising from claims sounding in breach of contract and fraud. By Order filed October 21, 2020, the Court dismissed plaintiff’s claims for fraud and for punitive damages, with leave to replead. On January 4, 2021, plaintiff filed its Second Amended Complaint, in which it abandoned its claims for fraud and punitive damages. The Company denies plaintiff’s remaining claims and is defending the lawsuit vigorously. Discovery is underway, and the Court has set a trial date of March 1, 2022. Diamond Litigation On September 8, 2020, a former financial advisor to the Company filed a Complaint in the United States District Court for the Southern District of New York naming the Company and one of its officers as defendants. The Complaint asserts multiple causes of action, all of which stem from plaintiff’s claim that he is entitled to compensation from the Company, in the form of warrants to purchase ShiftPixy common stock, based upon a prior agreement to provide financial advisory services to the Company in connection with a prior transaction. By Order entered July 13, 2021, the Court dismissed the Complaint in its entirety, with prejudice, and without granting leave to amend. Everest Litigation On December 18, 2020, we were served with a Complaint filed in the United States District Court for the Central District of California by our former workers’ compensation insurance carrier, Everest National Insurance Company. The Complaint asserts claims for breach of contract, alleging that the Company owes certain premium payments to plaintiff under a retrospective rated policy, and seeks damages of approximately $600,000. On February 5, 2021, we filed an Answer to Plaintiff’s Complaint denying its claims for relief, and also filed a cross-claim against the third party claims administrator, Gallagher Bassett Services, Inc., for claims sounding in breach of contract and negligence based upon its administration of claims arising under the policy. By order dated April 7, 2021, the Court dismissed the Company’s complaint against Gallagher Bassett without prejudice to re-filing in another forum. On May 17, 2021, we refiled our complaint against Gallagher Basset in the Circuit Court of Cook County, Illinois. Discovery is underway in both cases, and the California Court has set a trial date in the Everest case of February 22, 2022. Benchmark Litigation On March 8, 2021, we were served with a Complaint filed in the United States District Court for the Southern District of New York by Benchmark Investments, Inc. d/b/a Kingswood Capital Markets, asserting a single claim for breach of contract arising from a non-binding engagement letter pursuant to which plaintiff offered to provide certain investment banking services to an affiliate of the Company. The Complaint seeks damages in an unspecified amount. On April 8, 2021, we filed an Answer to Plaintiff’s Complaint denying its claims for relief, and asserting various affirmative defenses. On April 23, 2021, the Company entered into a settlement with the plaintiff resolving the litigation on terms that do not provide for any payment by the Company. Sunz Litigation On March 19, 2021, we were served with a Complaint filed in the Circuit Court for the 11th Judicial Circuit, Manatee County, Florida, by our former workers’ compensation insurance carrier, Sunz Insurance Solutions, LLC. The Complaint asserts claims for breach of contract, alleging that the Company owes payments for loss reserve funds totaling approximately $10 million. The Company denies plaintiff’s allegations and intends to defend the lawsuit vigorously. On May 12, 2021, the Company filed a motion to dismiss the complaint. The case is in discovery and no trial date has been set. Internal Revenue Service (“IRS”) Notice On May 13, 2021, the Company received a Notice of Federal Tax Lien Filing and Right to a Hearing Under IRC 6320 (the “Notice”) from the IRS, claiming underpayment of Federal income taxes for the 2020 tax year totaling $1,983,051, consisting of the following: (i) Federal income tax withholding; (ii) employee OASDI or Medicare withholding; (iii) employer OASDI or Medicare taxes; and (iv) FUTA taxes. By letter dated June 9, 2021, the Company requested a Due Process Hearing before the IRS, and further stated that it denies any underpayment on the grounds that the taxes in question are subject to various deferrals and credits arising under the CARES Act, including the following: (i) Section 2302, which permits eligible employers to defer payment of OASDI employer taxes; and (ii) Section 2301, which allows eligible employers to apply the Employee Retention Tax Credit, or “ERTC”, to taxes owed for the 2020 tax year. Further, subsequent to receiving the Notice, the Company made tax payments totaling $880,109, which it believes should be credited against any alleged underpayment in the event that the claims underlying the Notice are ultimately determined to be valid. As of the date of this Form 10-Q, the Company has received no response from the IRS, and no date for a Due Process Hearing has been set. |
Subsequent Events
Subsequent Events | 9 Months Ended |
May 31, 2021 | |
Subsequent Events | |
Subsequent Events | Note 10: Subsequent Events Leases Effective June 7, 2021, the Company entered into a sublease agreement with Verifone, Inc. to sublease premises consisting of approximately 8,000 square feet of office space located in Miami, Florida, that the Company anticipates using for its sales and operations workforce. The lease has a term of three years expiring on May 31, 2024. The base rent is paid monthly and escalates annually pursuant to a schedule set forth in the sublease. Effective June 21, 2021, the Company entered into a 77 month lease agreement, which is anticipated to commence on January 1, 2022, for premises consisting of approximately 13,418 square feet of office space located in Sunrise, Florida, that the Company anticipates using primarily to house its operations personnel and other elements of its workforce. The base rent is paid monthly and escalates annually pursuant to a schedule set forth in the lease. Registration Statement On June 4, 2021, the Company filed a registration statement on Form S-8 with the SEC covering an aggregate of 3,000,000 shares of its common stocks, par value $.0001 per share, that may be issued from time to time pursuant to the terms of the ShiftPixy, Inc. 2017 Stock Option / Stock Issuance Plan (the “Plan”). May 2021 Prefunded Warrant Exercises As indicated in Note 5 above, the Purchaser in the Company’s May 2021 Private Placement received a total of 2,628,453 May 2021 Prefunded Warrants. Between June 30, 2021 and July 8, 2021, the Purchaser exercised all of its May 2021 Prefunded Warrants. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
May 31, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) applicable to interim reports of companies filing as a small reporting company. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. The results of operations for the three and nine months ended May 31, 2021 are not necessarily indicative of the results that may be expected for the full year ending Fiscal 2021. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10‑K for the fiscal year ended August 31, 2020 (“Fiscal 2020”), filed with the SEC on November 30, 2020, as well as the amendment to Item 13 of our Annual Report on Form 10-K/A for Fiscal 2020 filed with the SEC on January 12, 2021. |
Principles of Consolidation | Principles of Consolidation The Company and its wholly-owned subsidiaries have been consolidated in the accompanying financial statements. All intercompany balances have been eliminated in consolidation. On April 29, 2021, we announced our sponsorship, through our wholly-owned subsidiary, ShiftPixy Investments, Inc., of four special purpose acquisition companies, or “SPACs”. Three of the SPACs are each seeking to raise $250 million in capital investment, through an initial public offering, or “IPO”, to acquire companies in the light industrial, healthcare, and technology segments of the staffing industry, while the fourth SPAC is seeking to raise $500 million through an IPO to acquire one or more insurance entities. We anticipate that, through our wholly-owned subsidiary, we will own approximately 20% of the issued and outstanding stock in each entity upon their IPOs being consummated, and that each will operate as a separately managed, publicly traded entity following the completion of their respective initial business combinations, or “De-SPAC”. We anticipate entering into service agreements with each of the staffing entities that will allow them to participate in our HRIS platform. We also expect to facilitate the procurement of workers’ compensation, personal liability, and other similar insurance products for these staffing entities through our anticipated relationship with the insurance SPAC after it completes the De-SPAC process. For the period ended May 31, 2021, the sponsorship operations for these entities are consolidated in the accompanying financial statements as they were being conducted under a wholly-owned subsidiary. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include: · Liability for legal contingencies; · Useful lives of property and equipment; · Deferred income taxes and related valuation allowance; · Valuation of long-lived assets including fair value and net realizable value of long term notes receivable; · Projected development of workers’ compensation claims ; · Valuation of transfer of SPACs founder shares - deferred offering costs; and. · Valuation expense related to preferred stock options. |
Revenue and Direct Cost Recognition | Revenue and Direct Cost Recognition The Company provides an array of human resources and business solutions designed to help improve business performance. The Company’s revenues are primarily attributable to fees for providing staffing solutions and EAS/human capital management services. The Company recognizes revenue when all of the following criteria are met: (i) persuasive evidence of an arrangement exists; (ii) the services have been rendered to the customer; (iii) the sales price is fixed or determinable; and (iv) collectability is reasonably assured. The Company enters into contracts with its clients for EAS based on a stated rate and price in the contract. Contracts generally have a term of 12 months but are cancellable at any time by either party with 60 days’ written notice. Contract performance obligations are satisfied as services are rendered, and the time period between invoicing and when the performance obligations are satisfied is not significant. The Company does not have significant financing components or significant payment terms for its customers and consequently has no material credit losses. Payments for the Company’s services are typically made in advance of, or at the time that the services are provided. The Company accounts for its EAS revenues in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-45, Revenue Recognition, Principal Agent Considerations . EAS solutions revenue is primarily derived from the Company’s gross billings, which are based on (i) the payroll cost of the Company’s worksite employees (“WSEs”) and (ii) a mark-up computed as a percentage of payroll costs for payroll taxes and workers’ compensation premiums. Gross billings are invoiced to each client concurrently with each periodic payroll of the Company’s WSEs, which coincides with the services provided and which is typically a fixed percentage of the payroll processed. Revenues, which exclude the payroll cost component of gross billings and therefore consist solely of markup, are recognized ratably over the payroll period as WSEs perform their services at the client worksite. Revenues that have been recognized but not invoiced are included in unbilled accounts receivable on the Company’s consolidated balance sheets, and were not material as of May 31, 2021 and August 31, 2020, respectively. Consistent with the Company’s revenue recognition policy, direct costs do not include the payroll cost of its WSEs. The cost of revenue associated with the Company’s revenue generating activities is primarily comprised of all other costs related to its WSEs, such as the employer portion of payroll-related taxes, employee benefit plan premiums and workers’ compensation insurance costs. The Company has evaluated its revenue recognition policies in conjunction with its business as it migrates to a staffing business model. We had no billings for Fiscal 2020 that were recorded as staffing revenues. In Fiscal 2021, beginning in the quarter ended May 31, 2021, we migrated certain clients to CSAs that required their entire billings, including gross payroll paid to WSEs, be recorded as staffing revenues and the gross payroll paid be included in cost of revenues. The total revenues associated with staffing revenues for the three and nine months ended May 31, 2021 was $6,827,000. |
Segment Reporting | Segment Reporting Prior to Fiscal 2021, the Company operated as one reportable segment under ASC 280, Segment Reporting . The chief operating decision maker regularly reviews the financial information of the Company at a consolidated level in deciding how to allocate resources and in assessing performance. During Fiscal 2021, the Company entered into new business lines and geographic areas that, to date, are not material. However, with the migration to Staffing during the fiscal quarter ending May 31, 2021, the Company expects to manage the business on a segmented basis in the future and will therefore report such information once systems and processes are updated accordingly. Reporting and monitoring activities on a segment basis will allow the chief operating decision maker to evaluate operating performance more effectively. The Company currently principally operates as one reportable segment under ASC 280, Segment Reporting . The chief operating decision maker regularly reviews the financial information of the Company at a consolidated level in deciding how to allocate resources and in assessing performance. During Fiscal 2020, the Company began to enter into new business lines and geographic areas that, to date, are not material. The Company expects to operate in multiple segments in the future as its business evolves and will evaluate these changes prospectively. The impact from the SPACs for the three and nine months ended May 31, 2021, in our operations has not been material. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased as cash equivalents. The Company had no such investments as of May 31, 2021 or August 31, 2020. |
Concentration of Credit Risk | Concentration of Credit Risk The Company maintains cash with a commercial bank, which is insured by the Federal Deposit Insurance Corporation (“FDIC”). At various times, the Company has deposits in this financial institution in excess of the amount insured by the FDIC. The Company has not experienced any losses related to these balances and believes its credit risk to be minimal. As of May 31, 2021, there was $9,138,000 of cash in excess of the amounts insured by the FDIC. For the three and nine months ended May 31, 2021, one and zero individual clients represented more than 10% of revenues, respectively.No individual clients represented more than 10% of revenues for the three months and nine months ended May 31, 2020. However, two clients represented 92% of total accounts receivable at May 31, 2021. |
Fixed Assets | Fixed Assets Fixed assets are recorded at cost, less accumulated depreciation and amortization. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When fixed assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Leasehold improvements are amortized over the shorter of the useful life or the initial lease term. Fixed assets are recorded at cost and are depreciated over the estimated useful lives of the related assets using the straight-line method. The estimated useful lives of property and equipment for purposes of computing depreciation are as follows: Equipment: 5 years Furnitures & Fixtures: 5 - 7 years The amortization of these assets is included in depreciation expense on the condensed consolidated statements of operations. |
Computer Software Development | Computer Software Development Software development costs relate primarily to software coding, systems interfaces and testing of the Company’s proprietary employer information systems and are accounted for in accordance with ASC 350-40, Internal Use Software . Internal software development costs are capitalized from the time the internal use software is considered probable of completion until the software is ready for use. Business analysis, system evaluation and software maintenance costs are expensed as incurred. The capitalized computer software development costs are reported under the section fixed assets, net in the consolidated balance sheets. The Company determined that there were no material capitalized internal software development costs for the three and nine months ended May 31, 2021 or May 31, 2020. All capitalized software recorded was purchased from third party vendors. Capitalized software development costs are amortized using the straight-line method over the estimated useful life of the software, generally three to five years from when the asset is placed in service. |
Impairment and Disposal of Long-Lived Assets | Impairment and Disposal of Long-Lived Assets The Company periodically evaluates its long-lived assets for impairment in accordance with ASC 360‑10, Property, Plant, and Equipment . ASC 360‑10 requires that an impairment loss be recognized for assets to be disposed of or held-for-use when the carrying amount of an asset is deemed to not be recoverable. If events or circumstances were to indicate that any of our long-lived assets might be impaired, the Company would assess recoverability based on the estimated undiscounted future cash flows to be generated from the applicable asset. In addition, the Company may record an impairment loss to the extent that the carrying value of the asset exceeds the fair value of the asset. Fair value is generally determined using an estimate of discounted future net cash flows from operating activities or upon disposal of the asset. There were no indicators noted of impairments during the periods ended May 31, 2021 or May 31, 2020. |
Workers' compensation | Workers’ Compensation Everest Program Until July 2018, a portion of the Company’s workers’ compensation risk was covered by a retrospective rated policy, which calculates the final policy premium based on the Company’s loss experience during the term of the policy and the stipulated formula set forth in the policy. The Company funds the policy premium based on standard premium rates on a monthly basis and based on the gross payroll applicable to workers covered by the policy. During the policy term and thereafter, periodic adjustments may involve either a return of previously paid premiums or a payment of additional premiums by the Company or a combination of both. If the Company’s losses exceed the expected losses under that policy, then the Company could receive a demand for additional premium payments. The Company is currently engaged in litigation regarding such a demand for additional premium payments, which we believe to be without merit, as discussed at Note 9, Contingencies, Everest Litigation , below. Sunz Program From July 2018 through February 28, 2021, the Company’s workers’ compensation program for its WSEs was provided primarily through an arrangement with United Wisconsin Insurance Company and administered by Sunz Insurance Solutions, LLC (“Sunz”). Under this program, the Company has financial responsibility for the first $0.5 million of claims per occurrence. The Company provides and maintains a loss fund that is earmarked to pay claims and claims related expenses. The workers’ compensation insurance carrier establishes monthly funding requirements comprised of premium costs and funds to be set aside for payment of future claims (“claim loss funds”). The level of claim loss funds is primarily based upon anticipated WSE payroll levels and expected workers’ compensation loss rates, as determined by the insurance carrier. Monies funded into the program for incurred claims expected to be paid within one year are recorded as Deposit - workers’ compensation, a short-term asset, while the remainder of claim funds are included in Deposit- workers’ compensation, a long-term asset in its consolidated balance sheets. The Company is currently engaged in litigation regarding demands by Sunz for additional claims loss funds, which we believe to be without merit, as discussed at Note 9, Contingencies, Sunz Litigation , below. Current Program Effective March 1, 2021, the Company migrated its clients to a guaranteed cost program. Under this program, the Company’s financial responsibility is limited to the cost of the workers’ compensation premium. The Company funds the workers’ compensation premium based on standard premium rates on a monthly basis and based on the gross payroll applicable to workers covered by the policy. Any final adjustments to the premiums are based on the final audited exposure multiplied by the applicable rates, classifications, experience modifications and any other associated rating criteria. Under the Everest and Sunz programs, the Company utilized a third party to estimate its loss development rate, which was based primarily upon the nature of WSEs’ job responsibilities, the location of WSEs, the historical frequency and severity of workers’ compensation claims, and an estimate of future cost trends. Each reporting period, changes in the assumptions resulting from changes in actual claims experience and other trends are incorporated into its workers’ compensation claims cost estimates. As of May 31, 2021, the Company had $0.3 million in Deposit – workers’ compensation classified as a short-term asset and $0.5 million classified as a long-term asset. The Company’s estimate of incurred claim costs expected to be paid within one year is included in short-term liabilities, while its estimate of incurred claim costs expected to be paid beyond one year is included in long-term liabilities on its consolidated balance sheets. As of May 31, 2021, the Company had short term accrued workers’ compensation costs of $0.7 million and long term accrued workers’ compensation costs of $1.3 million. The Company retained workers’ compensation asset reserves and workers’ compensation related liabilities for former WSEs of clients transferred to Shiftable HR Acquisition, LLC, a wholly-owned subsidiary of Vensure Employer Services, Inc. (“Vensure”), in connection with the Vensure Asset Sale described in Note 3, below. As of May 31, 2021, the retained workers’ compensation assets and liabilities are presented as a discontinued operation net asset or liability. As of May 31, 2021, the Company had $0.6 million in short term assets and $1.7 million of short term liabilities, and had $1.1 million of long term assets and $3.1 million of long term liabilities. Because the Company bears the financial responsibility for claims up to the level noted above, such claims, which are the primary component of its workers’ compensation costs, are recorded in the period incurred. Workers’ compensation insurance includes ongoing health care and indemnity coverage whereby claims are paid over numerous years following the date of injury. Accordingly, the accrual of related incurred costs in each reporting period includes estimates, which take into account the ongoing development of claims and therefore requires a significant level of judgment. In estimating ultimate loss rates, the Company utilizes historical loss experience, exposure data, and actuarial judgment, together with a range of inputs that are primarily based upon the WSE’s job responsibilities, their location, the historical frequency and severity of workers’ compensation claims, and an estimate of future cost trends. For each reporting period, changes in the actuarial assumptions resulting from changes in actual claims experience and other trends are incorporated into the Company’s workers’ compensation claims cost estimates. The estimated incurred claims are based upon: (i) the level of claims processed during each quarter; (ii) estimated completion rates based upon recent claim development patterns under the plan; and (iii) the number of participants in the plan. The Company has had very limited and immaterial COVID-19 related claims between March 2020 through the date of this Quarterly Report, although there is a possibility of additional workers’ compensation claims being made by furloughed WSEs as a result of the employment downturn caused by the pandemic. On May 4, 2020, the State of California indicated that workers who become ill with COVID-19 would have a potential claim against workers’ compensation insurance for their illnesses. There is a possibility that additional workers’ compensation claims could be made by employees required to work by their employers during the COVID-19 pandemic, which could have a material impact on our workers’ compensation liability estimates. While the Company has not seen significant additional expenses as a result of any such potential claims to date, which would include claims for reporting periods after May 31, 2021, we continue to monitor closely all workers’ compensation claims made as the COVID-19 pandemic continues. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC 825, Financial Instruments , requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practical to estimate fair value. ASC 825 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. At May 31, 2021 and August 31, 2020, the carrying value of certain financial instruments (cash, accounts receivable and payable) approximated fair value due to the short-term nature of the instruments. Notes Receivable was valued at estimated fair value as described below as of August 31, 2020 and through December 31, 2020 (end of the earnout period provided for under the terms of the Note Receivable), and at estimated net realizable value as of May 31, 2021. The Company measures fair value under a framework that utilizes a hierarchy prioritizing the inputs to relevant valuation techniques. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of inputs used in measuring fair value are: · Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access. · Level 2: Inputs to the valuation methodology include: o Quoted prices for similar assets or liabilities in active markets; o Quoted prices for identical or similar assets or liabilities in inactive markets; o Inputs other than quoted prices that are observable for the asset or liability; o Inputs that are derived principally from or corroborated by observable market data by correlation or other means; and o If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. · Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. We did not have any Level 1 or Level 2 assets or liabilities at May 31, 2021 or August 31, 2020. The Fair Value of the SPAC Founder Shares We recorded the fair value of the SPAC founder shares that we transferred to the underwriters using non-recurring Level 3 assumptions, including quoted asset prices for SPAC shares and warrants and estimates of the likelihood of the IPOs and IBCs of our sponsored SPACs being consummated. Vensure Note Receivable The valuation of the Note Receivable (as defined below) from the Vensure Asset Sale, as defined below, is a Level 3 fair value measurement as of August 31, 2020 and through December 31, 2020 (end of the earnout period as defined under the terms of the Note Receivable). The Note Receivable, as described in Note 3, below, was estimated using a discounted cash flow technique based on expected contingent payments identified in the Vensure Asset Sale contract and with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820. The Company valued the Note Receivable on the January 1, 2020 transaction date using a 10% discount rate, and on August 31, 2020 and through December 31, 2020 using a 15% discount rate, which contemplates the risk and probability assessments of the expected future cash flows. The significant inputs in the Level 3 measurement not supported by market activity include the probability assessments of expected future cash flows related to the Vensure Asset Sale, appropriately discounted considering the uncertainties associated with the obligation, and as calculated in accordance with the terms of the Vensure Asset Sale agreement. The Company believes there are risks associated with the value of the Note Receivable due to business impacts of the COVID-19 pandemic. The expected cash payments from the Note Receivable are based on estimated gross wages billed for the clients transferred to Vensure pursuant to the Vensure Asset Sale as of the measurement date. Those transferred clients may have had their businesses impacted due to the pandemic which, in turn, would have resulted in lower gross wage billings. While the Company believes the current valuation of the Note Receivable was fairly recorded as of December 31, 2020, a material change in the business transferred may result in a reduction of the estimate of the contingent payments expected to be received and therefore the value of this asset. The Company used the following assumptions to value the Note Receivable as of August 31, 2020: · Discount rate of 15% · Actual monthly wages billed to the extent available to the Company The development and determination of the unobservable inputs for Level 3 fair value measurements and the fair value calculations are the responsibility of the Company’s chief financial officer and are approved by the chief executive officer. |
Research and Development | Research and Development During the three months ended May 31, 2021 and May 31, 2020, the Company incurred research and development costs of approximately $1 million and $1.5 million, respectively. During the nine months ended May 31, 2021 and May 31, 2020, the Company incurred research and development costs of approximately $2.7 million and $3.4 million, respectively. All costs were related to internally developed or externally contracted software and related technology for the Company’s HRIS platform and related mobile application. No software costs were capitalized for the three months and nine months ended May 31, 2021 and May 31, 2020, respectively. |
Advertising Costs | Advertising Costs The Company expenses all advertising as incurred. The Company incurred advertising costs totaling $410,000 and $1,331,000 for the three months and nine months ended May 31, 2021, respectively, and advertising costs of $206,000 and $389,000 for the three and nine months ended May 31, 2020, respectively. |
Earnings (Loss) Per Share | E arnings (Loss) Per Share The Company utilizes ASC 260, Earnings per Share . Basic earnings (loss) per share is computed by dividing earnings (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the reporting period. Common stock outstanding for purposes of earnings (loss) per share calculations include unexercised Preferred Options and unexercised prefunded warrants, as described in Note 5, below. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include additional common stock equivalents available upon exercise of stock options and warrants using the treasury stock method. Dilutive common stock equivalents include the dilutive effect of in-the-money stock equivalents, which are calculated based on the average share price for each period using the treasury stock method, excluding any common stock equivalents if their effect would be anti-dilutive. In periods in which a net loss has been incurred, all potentially dilutive common stock shares are considered anti-dilutive and thus are excluded from the calculation. Securities that are excluded from the calculation of weighted average dilutive common stock, because their inclusion would have been antidilutive, are: For the Three and Nine For the Three and Nine Months Ended Months Ended May 31, May 31, 2021 2020 Options 1,826,548 43,406 Warrants (Note 5) 9,592,086 1,896,209 Total potentially dilutive shares 11,418,634 1,939,615 For the table above, “Options” represent all options granted under the Company’s 2017 Stock Option/Stock Issuance Plan, as described in Note 6, below. |
Stock-Based Compensation | Stock-Based Compensation At May 31, 2021, the Company had one stock-based compensation plan under which the Company may issue awards, as described in Note 6, below. The Company accounts for this plan under the recognition and measurement principles of ASC 718, Compensation- Stock Compensation , which requires all stock-based payments to employees, including grants of employee stock options, to be recognized in the condensed consolidated statements of operations at their fair values. The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model. For all employee stock options, the Company recognizes expense on an accelerated basis over the employee’s requisite service period (generally the vesting period of the equity grant). The Company’s option pricing model requires the input of highly subjective assumptions, including the expected stock price volatility and expected term. The expected volatility is based on the historical volatility of the Company's common stock since our initial public offering. Any changes in these highly subjective assumptions significantly impact stock-based compensation expense. The Company elects to account for forfeitures as they occur. As such, compensation cost previously recognized for an unvested award that is forfeited because of the failure to satisfy a service condition is revised in the period of forfeiture. The methods and assumptions used in the determination of the fair value of stock-based awards are consistent with those described in the Company’s Annual Report on Form 10-K for Fiscal 2020. See the Company’s Annual Report on Form 10-K for Fiscal 2020 for a detailed description of the Company’s stock-based compensation awards, including information related to vesting terms, service and performance conditions, payout percentages, and process for estimating the fair value of stock options granted. |
Revision of Financial Statements | Revisions and Reclassifications of Financial Statements for the Three and Nine months ended May 31, 2020 Revision of Financial Statements During the preparation of the consolidated financial statements for Fiscal 2020, the Company determined that it had improperly amortized capitalized software that had not been placed into service. The Company assessed the materiality of the misstatements in accordance with Staff Accounting Bulletin No. 99, Materiality , and No. 108, Quantifying Misstatements , and concluded that this error was not qualitatively material to the Company’s consolidated balance sheet, statement of operations, statement of cash flows, statement of stockholders’ equity (deficit) or net loss for the periods then ended. |
Reclassifications of Discontinued Operations | Reclassification of Discontinued Operations During the preparation of the consolidated financial statements for Fiscal 2020, the Company determined that it had included in continuing operations certain customer revenues, cost of revenues, and commission expense related to customers transferred to Vensure as part of the Vensure Asset Sale. For consistency of presentation, those customer activities were reclassified to discontinued operations for the three and nine months ended May 31, 2020. Such reclassifications had no material impact on the Company’s financial condition, operating results, cash flows or stockholder’s equity. Reclassifications to discontinued operations and the impact on earnings (loss) per share have been represented in the table below. The effect of the revisions and reclassifications on the line items within the Company’s condensed consolidated statement of operations for the three and nine months ended May 31, 2020, was as follows: For the three months ended May 31, 2020 (unaudited) Discontinued As Restated As Previously Revision As Operations and Reported Adjustments Restated Reclassification Reclassified Revenues $ 2,014,000 $ — $ 2,014,000 $ — $ 2,014,000 Cost of revenue 1,873,000 $ — 1,873,000 — 1,873,000 Gross profit $ 141,000 $ — $ 141,000 $ — $ 141,000 Operating Expenses Depreciation and amortization 545,000 (162,000) 383,000 — 383,000 All other operating expenses $ 4,149,000 $ — $ 4,149,000 $ — $ 4,149,000 Operating loss $ (4,553,000) $ 162,000 $ (4,391,000) $ — $ (4,391,000) Net loss from continuing operations $ (71,688,000) $ 162,000 $ (71,526,000) $ — $ (71,526,000) Total income from discontinued operations $ (1,490,000) $ — $ (1,490,000) $ — $ (1,490,000) Net loss $ (73,178,000) $ 162,000 $ (73,016,000) $ — $ (73,016,000) Net loss per common share - continuing operations, Basic and diluted $ (2.73) $ 0.01 $ (2.72) $ — $ (2.72) Discontinued operations Operating income (loss) per common share $ (0.06) $ — $ (0.06) $ — $ (0.06) Net income (loss) per common share, Basic and diluted $ (2.79) $ 0.01 $ (2.78) $ — $ (2.78) Weighted average number of common stock shares, Basic and diluted 26,249,518 26,249,518 26,249,518 For the nine months ended May 31, 2020 (unaudited) Discontinued As Restated As Previously Revision As Operations and Reported Adjustments Restated Reclassification Reclassified Revenues $ 6,775,000 $ — $ 6,775,000 $ (494,000) $ 6,281,000 Cost of revenue 6,051,000 — 6,051,000 (227,000) 5,824,000 Gross profit $ 724,000 $ — $ 724,000 $ (267,000) $ 457,000 Operating Expenses Depreciation and amortization 1,025,000 (486,000) 539,000 — 539,000 All other operating expenses $ 12,561,000 $ — $ 12,561,000 $ 112,000 $ 12,673,000 Operating loss $ (12,862,000) $ 486,000 $ (12,376,000) $ (379,000) $ (12,755,000) Net loss from continuing operations $ (80,678,000) $ 486,000 $ (80,192,000) $ (379,000) $ (80,571,000) Total income from discontinued operations $ 14,389,000 $ — $ 14,389,000 $ 379,000 $ 14,768,000 Net loss $ (66,289,000) $ 486,000 $ (65,803,000) $ — $ (65,803,000) Net loss per common share - continuing operations, Basic and diluted $ (5.49) $ 0.04 $ (5.45) $ (0.03) $ (5.48) Discontinued operations Operating income (loss) per common share $ 0.98 $ — $ 0.98 $ 0.03 $ 1.01 Net income (loss) per common share, Basic and diluted $ (4.51) $ 0.04 $ (4.47) $ — $ (4.47) Weighted average number of common stock shares, Basic and diluted |
Recent Accounting Standards | Recent Accounting Standards In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” The standard provides enhancements to the quality and consistency of how revenue is reported by companies, while also improving comparability in the financial statements of companies reporting using International Financial Reporting Standards or GAAP. The new standard also requires enhanced revenue disclosures, provides guidance for transactions that were not previously addressed comprehensively, and improves guidance for multiple-element arrangements. This accounting standard was initially scheduled to become effective for the Company for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019 but has since been delayed. Early adoption was permitted for annual reporting periods (including interim periods) beginning after December 15, 2016. This new standard permits the use of either the retrospective or cumulative effect transition method. The Company is still evaluating the effect of the new standard. In March 2016, the FASB issued ASU No. 2016‑08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations . The purpose of this standard is to clarify the implementation of guidance on principal versus agent considerations related to ASU 2014‑09. The standard has the same effective date as ASU 2014‑09 described above. In April 2016, the FASB issued ASU No. 2016‑10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , which provides clarity related to ASU 2014‑09 regarding identification of performance obligations and licensing implementation. The standard has the same effective date as ASU 2014‑09 described above. In May 2016, the FASB issued ASU 2016‑12: Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients , which provides narrow scope improvements and practical expedients related to ASU 2014‑09. The purpose of this standard is to clarify certain narrow aspects of ASU 2014‑09, such as assessing the collectability criterion, presentation of sales taxes, and other similar taxes collected from customers, noncash consideration, contract modifications at transition, completed contracts at transition, and technical correction. The standard has the same effective date as ASU 2014‑09 described above. In December 2016, the FASB issued ASU 2016‑20: Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers . The amendments in this standard affect narrow aspects of guidance issued in ASU 2014‑09. In June 2020, the FASB issued ASU 2020-05: Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842) . For entities that, as of June 2020, had not issued financial statements under Topic 606, the effective date was extended by one year to annual periods beginning after December 15, 2019 and interim periods within annual periods beginning after December 15, 2020. Entities that have not issued financial statements under Topic 842 are required to adopt this standard for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Earlier application is permitted. The Company is evaluating the effect of adopting this new accounting guidance and is currently finalizing its analysis of the financial impact of adoption. The Company expects to adopt the guidance using the modified retrospective method. In February 2016, the FASB issued ASU 2016-02, Leases . The new standard requires that a lessee recognize assets and liabilities on the balance sheet for leases with terms longer than 12 months. The recognition, measurement and presentation of lease expenses and cash flows by a lessee will depend on its classification of the lease as a finance or operating lease. The guidance also includes new disclosure requirements providing information on the amounts recorded in the financial statements. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases . For entities that early adopted Topic 842, the amendments are effective upon issuance of ASU 2018-10, and the transition requirements are the same as those in Topic 842. For entities that have not adopted Topic 842, the effective date and transition requirements will be the same as the effective date and transition requirements in Topic 842. In June 2020, the FASB voted to defer the effective date for private companies for one year. The updated effective date will be for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company is evaluating the effect of adopting this new accounting guidance and is currently finalizing its analysis of the financial impact of the adoption. The Company expects to adopt the guidance using the modified retrospective method. In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract. The update also requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. The new guidance is effective for annual periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update can be adopted on either a fully retrospective or a modified retrospective basis. The Company is evaluating the effects of the adoption . In May 2021, the FASB issued ASU 2021-04 Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force). The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company is evaluating the effects of the adoption. |
Nature of Operations and Rest_2
Nature of Operations and Restatement (Tables) | 9 Months Ended |
May 31, 2021 | |
Nature of Operations and Restatement | |
Schedule of The effect of this restatement on the line items included in our condensed financial statements | The effect of this restatement on the line items included in our condensed consolidated financial statements for our fiscal quarter ended May 31, 2021, is as follows: May 31, 2021 As Previously As Reported Adjustments Restated Prepaid expenses and other current assets $ 738,000 (155,000) $ 583,000 Deferred Offering Costs - SPACs — 48,083,000 48,083,000 Total Assets 22,139,000 47,928,000 70,067,000 Noncontrolling interests in consolidated subsidiaries — 47,472,000 47,472,000 Total Equity (Deficit) 22,139,000 47,928,000 70,067,000 Revenues – three months ended May 31, 2021 2,648,000 6,827,000 9,475,000 Cost of revenues – three months ended May 31, 2021 3,095,000 6,827,000 9,922,000 Gross profit – three months ended May 31, 2021 (447,000) — (447,000) Revenues – nine months ended May 31, 2021 7,570,000 6,827,000 14,397,000 Cost of revenues – nine months ended May 31, 2021 7,141,000 6,827,000 13,968,000 Gross profit - nine months ended May 31, 2021 429,000 — 429,000 Three months ended May 31, 2021: Operating expenses – Professional fees 1,585,000 (456,000) 1,129,000 All other operating expenses 5,972,000 — 5,972,000 Total Operating expenses 7,557,000 (456,000) 7,101,000 Nine months ended May 31, 2021: Operating expenses – Professional fees 3,298,000 (456,000) 2,842,000 All other operating expenses 16,713,000 — 16,713,000 Total Operating expenses 20,011,000 (456,000) 19,555,000 Net loss – three months ended May 31, 2021 7,984,000 (456,000) 7,528,000 Net loss – nine months ended May 31, 2021 21,103,000 (456,000) 20,647,000 Net loss per share, basic and diluted Continuing operations for the 3 months ended May 31, 2021 (0.24) 0.02 (0.22) Continuing operations for the 9 months ended May 31, 2021 (0.60) 0.01 (0.59) Cash used in operations (15,272,000) 611,000 Cash provided by financing operations 21,764,000 (611.000) 21,153,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
May 31, 2021 | |
Summary of Significant Accounting Policies | |
Schedule of estimated useful lives of property and equipment | Equipment: 5 years Furnitures & Fixtures: 5 - 7 years |
Schedule of weighted average dilutive common shares | For the Three and Nine For the Three and Nine Months Ended Months Ended May 31, May 31, 2021 2020 Options 1,826,548 43,406 Warrants (Note 5) 9,592,086 1,896,209 Total potentially dilutive shares 11,418,634 1,939,615 |
Schedule of The effect of the revisions and reclassifications on the line items | The effect of the revisions and reclassifications on the line items within the Company’s condensed consolidated statement of operations for the three and nine months ended May 31, 2020, was as follows: For the three months ended May 31, 2020 (unaudited) Discontinued As Restated As Previously Revision As Operations and Reported Adjustments Restated Reclassification Reclassified Revenues $ 2,014,000 $ — $ 2,014,000 $ — $ 2,014,000 Cost of revenue 1,873,000 $ — 1,873,000 — 1,873,000 Gross profit $ 141,000 $ — $ 141,000 $ — $ 141,000 Operating Expenses Depreciation and amortization 545,000 (162,000) 383,000 — 383,000 All other operating expenses $ 4,149,000 $ — $ 4,149,000 $ — $ 4,149,000 Operating loss $ (4,553,000) $ 162,000 $ (4,391,000) $ — $ (4,391,000) Net loss from continuing operations $ (71,688,000) $ 162,000 $ (71,526,000) $ — $ (71,526,000) Total income from discontinued operations $ (1,490,000) $ — $ (1,490,000) $ — $ (1,490,000) Net loss $ (73,178,000) $ 162,000 $ (73,016,000) $ — $ (73,016,000) Net loss per common share - continuing operations, Basic and diluted $ (2.73) $ 0.01 $ (2.72) $ — $ (2.72) Discontinued operations Operating income (loss) per common share $ (0.06) $ — $ (0.06) $ — $ (0.06) Net income (loss) per common share, Basic and diluted $ (2.79) $ 0.01 $ (2.78) $ — $ (2.78) Weighted average number of common stock shares, Basic and diluted 26,249,518 26,249,518 26,249,518 For the nine months ended May 31, 2020 (unaudited) Discontinued As Restated As Previously Revision As Operations and Reported Adjustments Restated Reclassification Reclassified Revenues $ 6,775,000 $ — $ 6,775,000 $ (494,000) $ 6,281,000 Cost of revenue 6,051,000 — 6,051,000 (227,000) 5,824,000 Gross profit $ 724,000 $ — $ 724,000 $ (267,000) $ 457,000 Operating Expenses Depreciation and amortization 1,025,000 (486,000) 539,000 — 539,000 All other operating expenses $ 12,561,000 $ — $ 12,561,000 $ 112,000 $ 12,673,000 Operating loss $ (12,862,000) $ 486,000 $ (12,376,000) $ (379,000) $ (12,755,000) Net loss from continuing operations $ (80,678,000) $ 486,000 $ (80,192,000) $ (379,000) $ (80,571,000) Total income from discontinued operations $ 14,389,000 $ — $ 14,389,000 $ 379,000 $ 14,768,000 Net loss $ (66,289,000) $ 486,000 $ (65,803,000) $ — $ (65,803,000) Net loss per common share - continuing operations, Basic and diluted $ (5.49) $ 0.04 $ (5.45) $ (0.03) $ (5.48) Discontinued operations Operating income (loss) per common share $ 0.98 $ — $ 0.98 $ 0.03 $ 1.01 Net income (loss) per common share, Basic and diluted $ (4.51) $ 0.04 $ (4.47) $ — $ (4.47) Weighted average number of common stock shares, Basic and diluted |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
May 31, 2021 | |
Discontinued Operations | |
Schedule of a reconciliation of the gross proceeds to the net proceeds from the Vensure Asset Sale as presented in the statement of cash flows | Gross proceeds $ 19,166,000 Cash received at closing – asset sale (9,500,000) Cash received at closing – working capital (166,000) Gross note receivable $ 9,500,000 Less: Transaction reconciliation – estimated working capital adjustments (2,604,000) Adjusted Note Receivable 6,896,000 Reserve for estimated potential claims (2,892,000) Long-term note receivable, estimated net realizable value $ 4,004,000 |
Schedule of carrying amounts of the classes of assets and liabilities from the Asset Sale included in discontinued operations | May 31, August 31, 2021 2020 Cash $ — $ — Accounts receivable and unbilled account receivable — — Prepaid expenses and other current assets — — Deposits – workers’ compensation 623,000 1,030,000 Total current assets 623,000 1,030,000 Fixed assets, net — — Deposits - workers' compensation 1,126,000 2,582,000 Total assets $ 1,749,000 $ 3,612,000 Accounts payable and other current liabilities $ — $ — Payroll related liabilities — — Accrued workers’ compensation cost 1,687,000 1,746,000 Total current liabilities 1,687,000 1,746,000 Accrued workers’ compensation cost 3,050,000 4,377,000 Total liabilities 4,737,000 6,123,000 Net liability $ (2,988,000) $ (2,511,000) |
Schedule of reported results for the discontinued operations by period | For the Three Months Ended For the Nine Months Ended May 31, May 31, May 31, May 31, 2021 2020 2021 2020 Revenues (gross billings of $0 and $0 million less worksite employee payroll cost of $0 million and $0 million, respectively for the three months ended; gross billings of $0 million and $120.6 million less worksite employee payroll cost of $0 million and $103.0 million, respectively for the nine months ended) $ — $ — $ — $ 17,632,000 Cost of revenue (23,000) 1,490,000 1,512,000 17,252,000 Gross profit (loss) 23,000 (1,490,000) (1,512,000) 380,000 Operating expenses: Salaries, wages and payroll taxes — — — 553,000 Commissions — — — 741,000 Total operating expenses — — — 1,294,000 (Loss) income from discontinued operations $ 23,000 $ (1,490,000) $ (1,512,000) $ (914,000) |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
May 31, 2021 | |
Stockholders' Equity. | |
Summary of warrants outstanding | Weighted average Weighted Number remaining average of life exercise shares (years) price Warrants outstanding, August 31, 2020 1,896,209 4.7 $ 7.91 Issued 10,324,329 4.8 2.03 (Cancelled) — — — (Exercised) — — — Warrants outstanding, May 31, 2021 12,220,538 4.7 3.02 Warrants exercisable, May 31, 2021 11,973,116 4.7 $ 3.02 |
Summary of information about warrants outstanding | The following table summarizes the Company's warrants outstanding as of May 31, 2021: Weighted average Life of Outstanding Warrants Warrants Exercise Outstanding in years price May 2021 Common Warrants 4,948,453 5.0 $ 2.43 May 2021 Prefunded Warrants (1) 2,628,453 5.0 $ 0.00 May 2021 Underwriter Warrants (2) 247,423 5.5 $ 2.67 October 2020 Common Warrants 2,300,000 4.4 3.30 October 2020 Underwriter Warrants 200,000 4.4 3.30 May 2020 Common Warrants 1,277,580 4.0 5.40 May 2020 Underwriter Warrants 111,108 4.0 5.40 March 2020 Exchange Warrants 423,669 4.3 10.17 Amended March 2019 Warrants 66,288 2.8 40.00 March 2019 Services Warrants 3,366 2.8 70.00 June 2018 Warrants 6,276 2.5 40.00 June 2018 Services Warrants 5,422 2.5 99.60 2017 PIPE Warrants 2,500 1.1 276.00 12,220,538 4.7 $ 3.02 (1) The May 2021 Prefunded Warrants were sold as part of a Prefunded Warrant Unit as described above. The exercise price is $0.0001 per share. As of July 15, 2021, all of the Prefunded Warrants have been exercised. (2) The May 2021 Underwriter Warrants are not exercisable until November 17, 2021. |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
May 31, 2021 | |
Stock Based Compensation | |
Summary of option activity | Options Outstanding and Exercisable Weighted Average Weighted Number Remaining Average of Contractual Exercise Options Life Price (In years) Balance Outstanding, August 31, 2020 1,398,740 9.5 $ 8.18 Granted 715,000 10.0 3.07 Exercised — — — Forfeited (287,192) 9.5 4.32 Balance Outstanding at May 31, 2021 1,826,548 9.1 $ 6.62 Balance Exercisable at May 31, 2021 1,826,548 |
Schedule of Option vesting activity | Weighted Weighted Number Remaining Average of Contractual Exercise Options Vested Options Life Price (In years) Balance, August 31, 2020 28,410 7.2 $ 115.10 Vested 5,631 7.4 93.61 Exercised — — — Forfeited (656) 7.2 50.33 Balance at May 31, 2021 33,385 7.0 $ 112.74 |
Summarizes of stock options outstanding | Options Outstanding Options Vested Weighted Weighted Average Weighted Average Weighted Number of Remaining Average Remaining Average Options Contractual Exercise Number of Contractual Exercise Exercise Prices Exercisable Life Price Options Life Price (In Years) (In Years) $2.23‑10.00 1,785,730 9.3 $ 4.59 — — $ — $10.01‑$40.00 3,500 8.0 21.69 1,882 8.0 21.66 $40.01–$80.00 13,396 7.8 51.21 9,529 7.8 51.22 $80.01–$120.00 10,303 7.0 102.90 8,542 7.0 102.79 $120.01–$160.00 12,495 6.3 155.24 12,307 6.2 155.73 $160.01‑$391.60 1,126 6.1 391.60 1,125 6.1 391.60 1,826,548 9.1 $ 6.62 33,385 7.0 $ 112.74 |
Commitments (Tables)
Commitments (Tables) | 9 Months Ended |
May 31, 2021 | |
Operating Lease [Member] | |
Schedule of Future minimum lease payments under non-cancelable operating leases | Future minimum lease and licensing payments under non-cancelable operating leases at May 31, 2021, are as follows: Years ended August 31, 2021 $ 289,000 2022 1,198,000 2023 1,014,000 2024 1,075,000 2025 1,108,000 Thereafter 1,652,000 Total minimum payments $ 6,336,000 |
Nature of Operations and Rest_3
Nature of Operations and Restatement (Details) | Mar. 25, 2020$ / shares | May 31, 2021$ / shares | Aug. 31, 2020$ / shares | Jan. 31, 2020$ / shares |
Preferred stock, shares par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Stockholders' Equity Note, Stock Split, Conversion Ratio | 1 | |||
Preferred Class A [Member] | ||||
Preferred stock, shares par value | $ 0.0001 |
Nature of Operations and Rest_4
Nature of Operations and Restatement - The effect of this restatement on the line items (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
May 31, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | Aug. 31, 2020 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Prepaid expenses and other current assets | $ 583,000 | $ 583,000 | $ 796,000 | ||
Deferred Offering Costs - SPACs | 48,083,000 | 48,083,000 | |||
Total Assets | 70,067,000 | 70,067,000 | 17,420,000 | ||
Noncontrolling interests in consolidated subsidiaries | 47,472,000 | 47,472,000 | |||
Total Equity (Deficit) | 70,067,000 | 70,067,000 | $ 17,420,000 | ||
Revenues | 9,475,000 | $ 2,014,000 | 14,397,000 | $ 6,281,000 | |
Cost of revenues | 9,922,000 | 1,873,000 | 13,968,000 | 5,824,000 | |
Gross profit | (447,000) | 141,000 | 429,000 | 457,000 | |
Operating expenses - Professional fees | 1,129,000 | 439,000 | 2,842,000 | 2,276,000 | |
Total Operating expenses | 7,101,000 | 4,532,000 | 19,555,000 | 13,212,000 | |
Net Loss | $ (7,528,000) | $ (73,016,000) | $ (20,647,000) | $ (65,803,000) | |
Net loss per share, basic and diluted | |||||
Net loss per common share - continuing operations, Basic and diluted | $ (0.22) | $ (2.72) | $ (0.59) | $ (5.48) | |
Cash used in operations | $ (14,661,000) | $ (10,518,000) | |||
Cash provided by financing operations | 21,153,000 | 9,125,000 | |||
As Previously Reported | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Prepaid expenses and other current assets | $ 738,000 | 738,000 | |||
Total Assets | 22,139,000 | 22,139,000 | |||
Total Equity (Deficit) | 22,139,000 | 22,139,000 | |||
Revenues | 2,648,000 | $ 2,014,000 | 7,570,000 | 6,775,000 | |
Cost of revenues | 3,095,000 | 1,873,000 | 7,141,000 | 6,051,000 | |
Gross profit | (447,000) | 141,000 | 429,000 | 724,000 | |
Operating expenses - Professional fees | 1,585,000 | 3,298,000 | |||
All other operating expenses | 5,972,000 | 16,713,000 | |||
Total Operating expenses | 7,557,000 | 20,011,000 | |||
Net Loss | $ 7,984,000 | $ (73,178,000) | $ 21,103,000 | $ (66,289,000) | |
Net loss per share, basic and diluted | |||||
Net loss per common share - continuing operations, Basic and diluted | $ (0.24) | $ (2.73) | $ (0.60) | $ (5.49) | |
Cash used in operations | $ (15,272,000) | ||||
Cash provided by financing operations | 21,764,000 | ||||
Revision Adjustments | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Prepaid expenses and other current assets | $ (155,000) | (155,000) | |||
Deferred Offering Costs - SPACs | 48,083,000 | 48,083,000 | |||
Total Assets | 47,928,000 | 47,928,000 | |||
Noncontrolling interests in consolidated subsidiaries | 47,472,000 | 47,472,000 | |||
Total Equity (Deficit) | 47,928,000 | 47,928,000 | |||
Revenues | 6,827,000 | 6,827,000 | |||
Cost of revenues | 6,827,000 | 6,827,000 | |||
Gross profit | 0 | 0 | |||
Operating expenses - Professional fees | (456,000) | (456,000) | |||
All other operating expenses | 0 | 0 | |||
Total Operating expenses | (456,000) | (456,000) | |||
Net Loss | $ (456,000) | $ 162,000 | $ (456,000) | $ 486,000 | |
Net loss per share, basic and diluted | |||||
Net loss per common share - continuing operations, Basic and diluted | $ 0.02 | $ 0.01 | $ 0.01 | $ 0.04 | |
Cash used in operations | $ 611,000 | ||||
Cash provided by financing operations | (611,000) | ||||
As Restated | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Prepaid expenses and other current assets | $ 583,000 | 583,000 | |||
Deferred Offering Costs - SPACs | 48,083,000 | 48,083,000 | |||
Total Assets | 70,067,000 | 70,067,000 | |||
Noncontrolling interests in consolidated subsidiaries | 47,472,000 | 47,472,000 | |||
Total Equity (Deficit) | 70,067,000 | 70,067,000 | |||
Revenues | 9,475,000 | $ 2,014,000 | 14,397,000 | $ 6,775,000 | |
Cost of revenues | 9,922,000 | 1,873,000 | 13,968,000 | 6,051,000 | |
Gross profit | (447,000) | 141,000 | 429,000 | 724,000 | |
Operating expenses - Professional fees | 1,129,000 | 2,842,000 | |||
All other operating expenses | 5,972,000 | 16,713,000 | |||
Total Operating expenses | 7,101,000 | 19,555,000 | |||
Net Loss | $ 7,528,000 | $ (73,016,000) | $ 20,647,000 | $ (65,803,000) | |
Net loss per share, basic and diluted | |||||
Net loss per common share - continuing operations, Basic and diluted | $ (0.22) | $ (2.72) | $ (0.59) | $ (5.45) | |
Cash used in operations | $ (14,661,000) | ||||
Cash provided by financing operations | $ 21,153,000 |
Nature of Operations and Rest_5
Nature of Operations and Restatement - Additional Information (Details) - USD ($) | Apr. 22, 2021 | May 31, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | Jun. 04, 2021 | May 17, 2021 | Aug. 31, 2020 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||
Minority interest - deferred financing cost | $ 47,472,000 | $ 47,472,000 | ||||||
Professional fees | 1,129,000 | $ 439,000 | 2,842,000 | $ 2,276,000 | ||||
Revenues | 9,475,000 | 2,014,000 | 14,397,000 | 6,281,000 | ||||
Cost of revenues | $ 9,922,000 | 1,873,000 | 13,968,000 | 5,824,000 | ||||
Stock Issued During Period, Value, New Issues | $ 10,332,000 | $ 10,701,000 | $ 10,332,000 | |||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.6675 | |||||||
Common stock, shares par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Percentage of blended discount | 48.80% | |||||||
Percentage probability IPO firemark | 20.00% | |||||||
Percentage of discount on sponsor | 20.00% | |||||||
Percentage of discount on future sponsor | 21.00% | |||||||
Common Stock | ||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||
Stock Issued During Period, Shares, New Issues | 2,222,160 | 4,000,000 | 2,222,160 | |||||
As Previously Reported | ||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||
Professional fees | $ 1,585,000 | $ 3,298,000 | ||||||
Accrued Professional Fees | 456,000 | 456,000 | ||||||
Deposits | 155,000 | 155,000 | ||||||
Revenues | 2,648,000 | $ 2,014,000 | 7,570,000 | $ 6,775,000 | ||||
Cost of revenues | 3,095,000 | $ 1,873,000 | 7,141,000 | $ 6,051,000 | ||||
Revision Adjustments | ||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||
Professional fees | (456,000) | (456,000) | ||||||
Revenues | 6,827,000 | 6,827,000 | ||||||
Cost of revenues | $ 6,827,000 | 6,827,000 | ||||||
SPAC IPO | ||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||
Professional fees | $ 611,000 | |||||||
SPAC IPO | Common Stock | ||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||
Share Price | $ 10 | |||||||
IPO | Common Stock | ||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | 0.75 | |||||||
Common stock, shares par value | $ 9.25 | |||||||
Founder Shares | ||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||
Transfer of shares | 10,000,000 | |||||||
Founder Shares | Common Stock | ||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||
Stock Issued During Period, Shares, New Issues | 10,000,000 | |||||||
Stock Issued During Period, Value, New Issues | $ 47,472,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) $ in Millions | Apr. 29, 2021USD ($)company | May 31, 2021 |
Number of special purpose acquisition company | company | 4 | |
Number of SPACs seeking to raise capital investments to acquire companies in light industrial, healthcare and technology segments of staffing industries | company | 3 | |
Capital Investments from each three SPACs to acquire companies in light industrial, healthcare and technology segments of staffing industries | $ | $ 250 | |
Capital Investments to acquire insurance entities | $ | $ 500 | |
Percentage of Issued and Outstanding Stock to be Acquired | 20 | |
Equipment | 5 years | |
Minimum | ||
Furnitures & Fixtures | 5 years | |
Capitalized software development | 3 years | |
Maximum | ||
Furnitures & Fixtures | 7 years | |
Capitalized software development | 5 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | |
Revenues | $ 9,475,000 | $ 2,014,000 | $ 14,397,000 | $ 6,281,000 |
Staffing | ||||
Revenues | $ 6,827,000 | $ 6,827,000 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Weighted average dilutive common shares (Details) - shares | 9 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Total potentially dilutive stock | 11,418,634 | 1,939,615 |
Options [Member] | ||
Total potentially dilutive stock | 1,826,548 | 43,406 |
Warrant [Member] | ||
Total potentially dilutive stock | 9,592,086 | 1,896,209 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Effect of the revision and reclassifications on condensed consolidated statement of operations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | |
Reclassification [Line Items] | ||||
Revenues | $ 9,475,000 | $ 2,014,000 | $ 14,397,000 | $ 6,281,000 |
Cost of revenue | 9,922,000 | 1,873,000 | 13,968,000 | 5,824,000 |
Gross profit (loss) | (447,000) | 141,000 | 429,000 | 457,000 |
Operating Expenses | ||||
Depreciation and amortization | 120,000 | 383,000 | 268,000 | 539,000 |
All other operating expenses | (3,000) | (67,135,000) | (9,000) | (67,816,000) |
Operating Loss | (7,548,000) | (4,391,000) | (19,126,000) | (12,755,000) |
Loss from continuing operations | (7,551,000) | (71,526,000) | (19,135,000) | (80,571,000) |
Total income from discontinued operations | 23,000 | (1,490,000) | (1,512,000) | 14,768,000 |
Net (loss) income | $ (7,528,000) | $ (73,016,000) | $ (20,647,000) | $ (65,803,000) |
Net loss per common share - continuing operations, Basic and diluted | $ (0.22) | $ (2.72) | $ (0.59) | $ (5.48) |
Discontinued operations Operating income (loss) per common share | 0 | (0.06) | (0.05) | (0.06) |
Net Loss per share of common stock - Basic | (0.22) | (2.78) | (0.64) | (4.47) |
Net Loss per share of common stock - Diluted | $ (0.22) | $ (2.78) | $ (0.64) | $ (4.47) |
Weighted average common stock outstanding - Basic | 33,596,111 | 26,249,518 | 32,385,287 | 14,708,554 |
Weighted average common stock outstanding - Diluted | 33,596,111 | 26,249,518 | 32,385,287 | 14,708,554 |
As Previously Reported | ||||
Reclassification [Line Items] | ||||
Revenues | $ 2,648,000 | $ 2,014,000 | $ 7,570,000 | $ 6,775,000 |
Cost of revenue | 3,095,000 | 1,873,000 | 7,141,000 | 6,051,000 |
Gross profit (loss) | (447,000) | 141,000 | 429,000 | 724,000 |
Operating Expenses | ||||
Depreciation and amortization | 545,000 | 1,025,000 | ||
All other operating expenses | 4,149,000 | 12,561,000 | ||
Operating Loss | (4,553,000) | (12,862,000) | ||
Loss from continuing operations | (71,688,000) | (80,678,000) | ||
Total income from discontinued operations | (1,490,000) | 14,389,000 | ||
Net (loss) income | $ 7,984,000 | $ (73,178,000) | $ 21,103,000 | $ (66,289,000) |
Net loss per common share - continuing operations, Basic and diluted | $ (0.24) | $ (2.73) | $ (0.60) | $ (5.49) |
Discontinued operations Operating income (loss) per common share | (0.06) | 0.98 | ||
Net Loss per share of common stock - Basic | (2.79) | (4.51) | ||
Net Loss per share of common stock - Diluted | $ (2.79) | $ (4.51) | ||
Weighted average common stock outstanding - Basic | 26,249,518 | 14,708,554 | ||
Weighted average common stock outstanding - Diluted | 26,249,518 | 14,708,554 | ||
Revision Adjustments | ||||
Reclassification [Line Items] | ||||
Revenues | $ 6,827,000 | $ 6,827,000 | ||
Cost of revenue | 6,827,000 | 6,827,000 | ||
Gross profit (loss) | 0 | 0 | ||
Operating Expenses | ||||
Depreciation and amortization | $ (162,000) | $ (486,000) | ||
Operating Loss | 162,000 | 486,000 | ||
Loss from continuing operations | 162,000 | 486,000 | ||
Net (loss) income | $ (456,000) | $ 162,000 | $ (456,000) | $ 486,000 |
Net loss per common share - continuing operations, Basic and diluted | $ 0.02 | $ 0.01 | $ 0.01 | $ 0.04 |
Net Loss per share of common stock - Basic | 0.01 | 0.04 | ||
Net Loss per share of common stock - Diluted | $ 0.01 | $ 0.04 | ||
As Restated | ||||
Reclassification [Line Items] | ||||
Revenues | $ 9,475,000 | $ 2,014,000 | $ 14,397,000 | $ 6,775,000 |
Cost of revenue | 9,922,000 | 1,873,000 | 13,968,000 | 6,051,000 |
Gross profit (loss) | (447,000) | 141,000 | 429,000 | 724,000 |
Operating Expenses | ||||
Depreciation and amortization | 383,000 | 539,000 | ||
All other operating expenses | 4,149,000 | 12,561,000 | ||
Operating Loss | (4,391,000) | (12,376,000) | ||
Loss from continuing operations | (71,526,000) | (80,192,000) | ||
Total income from discontinued operations | (1,490,000) | 14,389,000 | ||
Net (loss) income | $ 7,528,000 | $ (73,016,000) | $ 20,647,000 | $ (65,803,000) |
Net loss per common share - continuing operations, Basic and diluted | $ (0.22) | $ (2.72) | $ (0.59) | $ (5.45) |
Discontinued operations Operating income (loss) per common share | (0.06) | 0.98 | ||
Net Loss per share of common stock - Basic | (2.78) | (4.47) | ||
Net Loss per share of common stock - Diluted | $ (2.78) | $ (4.47) | ||
Weighted average common stock outstanding - Basic | 26,249,518 | 14,708,554 | ||
Weighted average common stock outstanding - Diluted | 26,249,518 | 14,708,554 | ||
Discontinued Operations Reclassification | ||||
Reclassification [Line Items] | ||||
Revenues | $ (494,000) | |||
Cost of revenue | (227,000) | |||
Gross profit (loss) | (267,000) | |||
Operating Expenses | ||||
All other operating expenses | 112,000 | |||
Operating Loss | (379,000) | |||
Loss from continuing operations | (379,000) | |||
Total income from discontinued operations | $ 379,000 | |||
Net loss per common share - continuing operations, Basic and diluted | $ (0.03) | |||
Discontinued operations Operating income (loss) per common share | $ 0.03 | |||
As Restated and Reclassified | ||||
Reclassification [Line Items] | ||||
Revenues | $ 2,014,000 | $ 6,281,000 | ||
Cost of revenue | 1,873,000 | 5,824,000 | ||
Gross profit (loss) | 141,000 | 457,000 | ||
Operating Expenses | ||||
Depreciation and amortization | 383,000 | 539,000 | ||
All other operating expenses | 4,149,000 | 12,673,000 | ||
Operating Loss | (4,391,000) | (12,755,000) | ||
Loss from continuing operations | (71,526,000) | (80,571,000) | ||
Total income from discontinued operations | (1,490,000) | 14,768,000 | ||
Net (loss) income | $ (73,016,000) | $ (65,803,000) | ||
Net loss per common share - continuing operations, Basic and diluted | $ (2.72) | $ (5.48) | ||
Discontinued operations Operating income (loss) per common share | (0.06) | 1.01 | ||
Net Loss per share of common stock - Basic | (2.78) | (4.47) | ||
Net Loss per share of common stock - Diluted | $ (2.78) | $ (4.47) | ||
Weighted average common stock outstanding - Basic | 26,249,518 | 14,708,554 | ||
Weighted average common stock outstanding - Diluted | 26,249,518 | 14,708,554 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Additional Information (Details) | 3 Months Ended | 9 Months Ended | 32 Months Ended | ||||||
May 31, 2021USD ($)client | Feb. 28, 2021USD ($) | May 31, 2020USD ($) | May 31, 2021USD ($)segmentclient | May 31, 2020USD ($) | Feb. 28, 2021USD ($) | Dec. 31, 2020 | Aug. 31, 2020 | Jan. 01, 2020 | |
Revenues | $ 9,475,000 | $ 2,014,000 | $ 14,397,000 | $ 6,281,000 | |||||
Cash in excess by FDIC | 9,138,000 | 9,138,000 | |||||||
Advertising costs | $ 410,000 | 206,000 | $ 1,331,000 | 389,000 | |||||
Reportable segment | segment | 1 | ||||||||
Concentration of credit Risk description | For the three and nine months ended May 31, 2021, one and zero individual clients represented more than 10% of revenues, respectively.No individual clients represented more than 10% of revenues for the three months and nine months ended May 31, 2020. | ||||||||
Short-term asset and workers compensation - deposits | 300,000 | $ 300,000 | |||||||
Long-term asset and workers compensation - deposits | 500,000 | 500,000 | |||||||
Short term accrued workers compensation | 700,000 | 700,000 | |||||||
Long term accrued workers compensation | 1,300,000 | 1,300,000 | |||||||
Short term assets | 600,000 | 600,000 | |||||||
Short term liabilities | 1,700,000 | 1,700,000 | |||||||
Long term assets | 1,100,000 | 1,100,000 | |||||||
Long term liabilities | 3,100,000 | 3,100,000 | |||||||
Discount rate (as a percent) | 15.00% | 15.00% | 10.00% | ||||||
Research and developments costs | $ 1,000,000 | 1,500,000 | 2,700,000 | 3,400,000 | |||||
Capitalized computer software cost | 0 | 0 | 0 | 0 | |||||
Staffing | |||||||||
Revenues | 6,827,000 | 6,827,000 | |||||||
As Previously Reported | |||||||||
Revenues | 2,648,000 | $ 2,014,000 | 7,570,000 | $ 6,775,000 | |||||
Revision Adjustments | |||||||||
Revenues | $ 6,827,000 | $ 6,827,000 | |||||||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | |||||||||
Number of client | client | 2 | 2 | |||||||
Concentration of credit risk percent | 92 | ||||||||
Sunz Program | |||||||||
Settlement claims | $ 500,000 |
Discontinued Operations (Detail
Discontinued Operations (Details) - Disposal by sale - USD ($) | Mar. 12, 2021 | Jan. 03, 2020 | Mar. 31, 2021 | May 31, 2021 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Gross proceeds to be received in equal monthly payments | $ 9,500,000 | |||
Overall business | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Percentage of business sold | 88.00% | |||
Working capital assets transferred | $ 1,500,000 | |||
Gross proceeds to be received | 19,200,000 | 19,166,000 | ||
Net cash proceeds as presented in the statement of cash flows | 9,700,000 | 9,500,000 | ||
Gross proceeds to be received in equal monthly payments | $ 9,500,000 | 6,896,000 | ||
Period for payment of gross proceeds (in years) | 4 years | |||
Customer retention period (in years) | 12 months | |||
Working capital changes | $ 10,700,000 | $ 10,700,000 | 41,000 | |
Working capital adjustment | 2,600,000 | 0 | 2,604,000 | |
Additional potential claims and reserves | 2,900,000 | 2,900,000 | 2,892,000 | |
Total reserve | $ 5,500,000 | |||
Percentage of total reserve on the difference between the net and gross carrying values | 50.00% | |||
Gross note receivable | $ 9,500,000 | $ 9,500,000 | $ 9,500,000 | |
PEO business | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Percentage of business sold | 100.00% |
Discontinued Operations - Recon
Discontinued Operations - Reconciliation of gross proceeds to net proceeds from sale transaction (Details) - USD ($) | Jan. 03, 2020 | May 31, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | Mar. 31, 2021 | Mar. 12, 2021 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Gain from asset sale | $ 0 | $ 0 | $ 15,682,000 | ||||
Disposal by sale | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Adjusted Note Receivable | 9,500,000 | $ 9,500,000 | |||||
Overall business | Disposal by sale | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Gross proceeds | $ 19,200,000 | 19,166,000 | 19,166,000 | ||||
Cash received at closing - asset sale | (9,700,000) | (9,500,000) | |||||
Cash received at closing - working capital | (166,000) | ||||||
Gross note receivable | 9,500,000 | 9,500,000 | $ 9,500,000 | $ 9,500,000 | |||
Less: Transaction reconciliation - working capital adjustment | (2,604,000) | (2,604,000) | 0 | (2,600,000) | |||
Adjusted Note Receivable | $ 9,500,000 | 6,896,000 | 6,896,000 | ||||
Reserve for estimated potential claims | 2,892,000 | 2,892,000 | $ 2,900,000 | $ 2,900,000 | |||
Long-term note receivable, estimated net realizable value | $ 4,004,000 | $ 4,004,000 |
Discontinued Operations - Notes
Discontinued Operations - Notes receivable (Details) - USD ($) | May 31, 2021 | Feb. 28, 2021 | Dec. 31, 2020 | Aug. 31, 2020 | Jan. 03, 2020 | Jan. 01, 2020 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Discount rate (as a percent) | 15.00% | 15.00% | 10.00% | |||
Disposal by sale | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Adjusted Note Receivable | $ 9,500,000 | |||||
Disposal by sale | Overall business | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Adjusted Note Receivable | 6,896,000 | $ 9,500,000 | ||||
Lower net assets transferred at closing | 88,000 | |||||
Liabilities paid on behalf of the Company | 2,516,000 | |||||
Percentage of gross wages | 90.00% | |||||
Estimated amount of gross wages | 2,900,000 | |||||
Additional reserve on lower end of the range of gross wages | $ 2,600,000 |
Discontinued Operations - Carry
Discontinued Operations - Carrying amounts of assets and liabilities (Details) - USD ($) | May 31, 2021 | Aug. 31, 2020 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Total current assets | $ 623,000 | $ 1,030,000 |
Total current liabilities | 1,687,000 | 1,746,000 |
Disposal by sale | Overall business | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Deposits - workers' compensation | 623,000 | 1,030,000 |
Total current assets | 623,000 | 1,030,000 |
Deposits - workers' compensation | 1,126,000 | 2,582,000 |
Total assets | 1,749,000 | 3,612,000 |
Accrued workers' compensation cost | 1,687,000 | 1,746,000 |
Total current liabilities | 1,687,000 | 1,746,000 |
Accrued workers' compensation cost | 3,050,000 | 4,377,000 |
Total liabilities | 4,737,000 | 6,123,000 |
Net liability | $ (2,988,000) | $ (2,511,000) |
Discontinued Operations - Repor
Discontinued Operations - Reported results for the discontinued operations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
May 31, 2021 | Feb. 28, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | |
Operating expenses: | |||||
(Loss) income from discontinued operations | $ 23,000 | $ (1,490,000) | $ (1,512,000) | $ (914,000) | |
Revenues, Gross | 0 | 120,600,000 | |||
Worksite employee payroll cost | 0 | 103,000,000 | |||
Disposal by sale | Overall business | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Revenues (gross billings of $0 and $0 million less worksite employee payroll cost of $0 million and $0 million, respectively for the three months ended; gross billings of $0 million and $120.6 million less worksite employee payroll cost of $0 million and $103.0 million, respectively for the nine months ended) | 17,632,000 | ||||
Cost of revenue | 23,000 | 1,490,000 | 1,512,000 | 17,252,000 | |
Gross profit (loss) | 23,000 | (1,490,000) | (1,512,000) | 380,000 | |
Operating expenses: | |||||
Salaries, wages and payroll taxes | 553,000 | ||||
Commissions | 741,000 | ||||
Total operating expenses | 1,294,000 | ||||
(Loss) income from discontinued operations | $ 23,000 | (1,490,000) | $ (1,512,000) | $ (914,000) | |
Revenues, Gross | $ 0 | 0 | |||
Worksite employee payroll cost | $ 0 | $ 0 |
Going Concern (Details)
Going Concern (Details) - USD ($) | May 17, 2021 | May 26, 2020 | Oct. 31, 2020 | Jul. 07, 2020 | May 31, 2021 | May 31, 2020 | Aug. 31, 2020 |
Cash | $ 9,000,000 | ||||||
Working capital deficit | 1,900,000 | ||||||
Cash from its continuing operations | (13,626,000) | $ (10,973,000) | |||||
Retained Earnings (Accumulated Deficit) | (140,109,000) | $ (119,462,000) | |||||
Proceeds from underwritten public offering, net of offering costs | $ 10,701,000 | $ 10,332,000 | |||||
Equity offering | $ 12,000,000 | ||||||
October 2020 Public Offering | |||||||
Equity offering | 12,000,000 | $ 12,000,000 | |||||
Equity offering, net of cost | $ 11,900,000 | $ 10,700,000 | |||||
Underwritten Public Offering [Member] | |||||||
Proceeds from underwritten public offering, net of offering costs | $ 10,300,000 | ||||||
Gross proceeds from issuance of shares | $ 12,000,000 | ||||||
Overallotment | |||||||
Gross proceeds from issuance of shares | $ 1,350,000 | ||||||
Convertible notes payable | $ 1,240,000 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of warrants outstanding (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
May 31, 2021 | Aug. 31, 2020 | |
Number of shares | ||
Number of shares outstanding, beginning balance | 1,896,209 | |
Issued | 10,324,329 | |
Number of shares outstanding, ending balance | 12,220,538 | |
Number of shares Exercisable | 11,973,116 | |
Weighted remaining life (years) | ||
Weighted remaining life (years), beginning | 4 years 8 months 12 days | |
Weighted remaining life (years), issued | 4 years 9 months 18 days | |
Weighted remaining life (years), cancelled | 0 years | |
Weighted remaining life (years), exercised | 0 years | |
Weighted remaining life (years), ending | 4 years 8 months 12 days | |
Weighted Remaining Life (Years) Exercisable | 4 years 8 months 12 days | |
Weighted average exercise prices | ||
Weighted average exercise prices, beginning | $ 7.91 | |
Weighted average exercise prices, issued | 2.03 | |
Weighted average exercise prices, ending | 3.02 | |
Weighted Average Exercise Prices Exercisable | $ 3.02 |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of information about warrants outstanding (Details) - $ / shares | May 17, 2021 | Oct. 08, 2020 | Nov. 30, 2020 | May 31, 2021 |
Warrants Outstanding | 247,423 | |||
Exercise price (in dollars per share) | $ 3.07 | |||
May 2021 Common Warrants | ||||
Warrants Outstanding | 4,948,453 | |||
Weighted average Life of Outstanding Warrants in years | 5 years | |||
Exercise price (in dollars per share) | $ 2.43 | |||
May 2021 Prefunded Warrants | ||||
Warrants Outstanding | 2,628,453 | |||
Weighted average Life of Outstanding Warrants in years | 5 years | |||
Exercise price (in dollars per share) | $ 0.0001 | $ 0 | ||
May 2021 Underwriter Warrants | ||||
Warrants Outstanding | 247,423 | |||
Weighted average Life of Outstanding Warrants in years | 5 years 6 months | |||
Exercise price (in dollars per share) | $ 2.67 | |||
October 2020 Common Warrants | ||||
Warrants Outstanding | 200,000 | 2,300,000 | ||
Weighted average Life of Outstanding Warrants in years | 4 years 4 months 24 days | |||
Exercise price (in dollars per share) | $ 3.30 | |||
October 2020 Underwriter Warrants | ||||
Warrants Outstanding | 200,000 | |||
Weighted average Life of Outstanding Warrants in years | 4 years 4 months 24 days | |||
Exercise price (in dollars per share) | $ 3.30 | |||
May 2020 Common Warrants | ||||
Warrants Outstanding | 1,277,580 | |||
Weighted average Life of Outstanding Warrants in years | 4 years | |||
Exercise price (in dollars per share) | $ 5.40 | |||
May 2020 Underwriter Warrants | ||||
Warrants Outstanding | 111,108 | |||
Weighted average Life of Outstanding Warrants in years | 4 years | |||
Exercise price (in dollars per share) | $ 5.40 | |||
March 2020 Exchange Warrants. | ||||
Warrants Outstanding | 423,669 | |||
Weighted average Life of Outstanding Warrants in years | 4 years 3 months 18 days | |||
Exercise price (in dollars per share) | $ 10.17 | |||
Amended March 2019 Warrants | ||||
Warrants Outstanding | 66,288 | |||
Weighted average Life of Outstanding Warrants in years | 2 years 9 months 18 days | |||
Exercise price (in dollars per share) | $ 40 | |||
March 2019 Services Warrants | ||||
Warrants Outstanding | 3,366 | |||
Weighted average Life of Outstanding Warrants in years | 2 years 9 months 18 days | |||
Exercise price (in dollars per share) | $ 70 | |||
June 2018 Notes Warrants | ||||
Warrants Outstanding | 6,276 | |||
Weighted average Life of Outstanding Warrants in years | 2 years 6 months | |||
Exercise price (in dollars per share) | $ 40 | |||
June 2018 Services Warrants | ||||
Warrants Outstanding | 5,422 | |||
Weighted average Life of Outstanding Warrants in years | 2 years 6 months | |||
Exercise price (in dollars per share) | $ 99.60 | |||
2017 PIPE Warrants | ||||
Warrants Outstanding | 2,500 | |||
Weighted average Life of Outstanding Warrants in years | 1 year 1 month 6 days | |||
Exercise price (in dollars per share) | $ 276 | |||
Warrant [Member] | ||||
Warrants Outstanding | 12,220,538 | |||
Weighted average Life of Outstanding Warrants in years | 4 years 8 months 12 days | |||
Exercise price (in dollars per share) | $ 3.02 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional information (Details) $ / shares in Units, $ in Thousands | May 17, 2021USD ($)$ / sharesshares | May 13, 2021$ / sharesshares | Oct. 08, 2020USD ($)$ / sharesshares | Jun. 04, 2020shares | May 26, 2020USD ($) | Mar. 25, 2020 | Jul. 07, 2020USD ($) | Jan. 31, 2020$ / sharesshares | May 31, 2021$ / sharesshares | Nov. 30, 2020shares | Aug. 31, 2020$ / sharesshares | May 31, 2021$ / sharesshares | Jun. 04, 2021shares |
Preferred stock, per share | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||
Exercise price (in dollars per share) | $ / shares | $ 3.07 | ||||||||||||
Number of options available for grant to founder shareholders | 3,000,000 | ||||||||||||
Shares conversion ratio | 1 | ||||||||||||
Common stock shares issued | 23,234,646 | 16,902,146 | 23,234,646 | ||||||||||
Exercise price of warrants | $ / shares | $ 2.6675 | ||||||||||||
Issued | 10,324,329 | ||||||||||||
Warrants Outstanding | 247,423 | ||||||||||||
Percentage on aggregate number of shares of common stock | 7.00% | ||||||||||||
Gross proceeds from issuance of private placement | $ | $ 12,000 | ||||||||||||
Offering costs | $ | $ 940 | ||||||||||||
Percentage of warrants exercisable price on offering price | 5.00% | ||||||||||||
securities purchase agreement | |||||||||||||
Shares of common stock issued | 2,320,000 | ||||||||||||
Price per share | $ / shares | $ 0.0001 | ||||||||||||
Amended March 2019 Warrants | |||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 40 | ||||||||||||
Warrants Outstanding | 66,288 | ||||||||||||
June 2018 Notes Warrants | |||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 40 | ||||||||||||
Warrants Outstanding | 6,276 | ||||||||||||
October 2020 Common Warrants | |||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 3.30 | ||||||||||||
Warrants Outstanding | 200,000 | 2,300,000 | |||||||||||
Percentage on aggregate number of shares of common stock | 5.00% | ||||||||||||
Price per share | $ / shares | $ 3.30 | ||||||||||||
Percentage of warrants exercisable price on offering price | 110.00% | ||||||||||||
October 2020 Common Warrants | Minimum | |||||||||||||
Warrants term | 6 months | ||||||||||||
October 2020 Common Warrants | Maximum | |||||||||||||
Warrants term | 5 years | ||||||||||||
May 2021 Underwriter Warrants | |||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 2.67 | ||||||||||||
Warrants Outstanding | 247,423 | ||||||||||||
May 2021 Common Warrants | |||||||||||||
Shares of common stock issued | 2,320,000 | ||||||||||||
Price per share | $ / shares | $ 2.425 | $ 2.425 | |||||||||||
Combined offering price per share | $ / shares | 2.4249 | 2.4249 | |||||||||||
Exercise price (in dollars per share) | $ / shares | $ 2.43 | ||||||||||||
Common stock shares issued | 4,948,453 | 4,948,453 | |||||||||||
Warrants Outstanding | 4,948,453 | ||||||||||||
May 2021 Common Warrants | securities purchase agreement | |||||||||||||
Shares issued upon exercise of warrants | 2,320,000 | ||||||||||||
Price per share | $ / shares | $ 2.425 | ||||||||||||
May 2021 Prefunded Warrants | |||||||||||||
Shares of common stock issued | 2,628,453 | ||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.0001 | $ 0 | |||||||||||
Warrants Outstanding | 2,628,453 | ||||||||||||
May 2021 Prefunded Warrants | securities purchase agreement | |||||||||||||
Shares issued upon exercise of warrants | 2,628,453 | ||||||||||||
Price per share | $ / shares | $ 2.4249 | ||||||||||||
Prefunded warrants | securities purchase agreement | |||||||||||||
Exercise price of warrants | $ / shares | $ 0.0001 | ||||||||||||
Number of share of common stock per warrant | 2,628,453 | ||||||||||||
Scott W Absher | |||||||||||||
Number option additionally available for grant to founder shareholders | 12,500,000 | ||||||||||||
Stephen Holmes [Member] | |||||||||||||
Number option additionally available for grant to founder shareholders | 12,500,000 | ||||||||||||
Preferred Stock | |||||||||||||
Preferred options Exercised | 0 | 294,490 | |||||||||||
Preferred Stock Shares Options Outstanding and Exercisable | 11,827,570 | ||||||||||||
Shares conversion ratio | 1 | 1 | |||||||||||
Preferred Stock | Scott W Absher | |||||||||||||
Preferred options Exercised | 12,500,000 | 12,500 | 12,500 | ||||||||||
Shares issued upon conversion | 12,500,000 | ||||||||||||
Stock Option | Scott W Absher and Stephen Holmes | |||||||||||||
Number of options available for grant to founder shareholders | 50,000,000 | ||||||||||||
Common Share Units [Member] | October 2020 Common Warrants | |||||||||||||
Shares of common stock issued | 4,000,000 | ||||||||||||
Price per share | $ / shares | $ 3 | $ 3 | |||||||||||
Common Share Units [Member] | Scott W Absher | |||||||||||||
Shares issued upon conversion | 12,500,000 | ||||||||||||
Common shares lock up period | 2 years | ||||||||||||
Warrant [Member] | |||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 3.02 | ||||||||||||
Warrants Outstanding | 12,220,538 | ||||||||||||
Common Stock | securities purchase agreement | |||||||||||||
Combined offering price per share | 2.425 | ||||||||||||
Exercise price of warrants | $ / shares | $ 2.425 | ||||||||||||
Price per share | $ / shares | $ 0.0001 | ||||||||||||
Warrants term | 5 years | ||||||||||||
Underwritten Public Offering [Member] | |||||||||||||
Gross proceeds from issuance of shares | $ | $ 12,000 | ||||||||||||
Underwritten Public Offering [Member] | October 2020 Common Warrants | |||||||||||||
Price per share | $ / shares | $ 3 | ||||||||||||
Exercise price of warrants | $ / shares | $ 3.30 | ||||||||||||
Gross proceeds from issuance of shares | $ | $ 12,000 | ||||||||||||
Offering costs | $ | $ 1,300 | ||||||||||||
Underwritten Public Offering [Member] | Common Share Units [Member] | October 2020 Common Warrants | |||||||||||||
Number of Shares of Common Stock to be Purchased Accompanied by Common Warrant | 0.5 | ||||||||||||
Common stock shares issued | 4,000,000 | ||||||||||||
Underwritten Public Offering [Member] | Warrant [Member] | October 2020 Common Warrants | |||||||||||||
Shares of common stock issued | 2,300,000 | ||||||||||||
Overallotment | |||||||||||||
Gross proceeds from issuance of shares | $ | $ 1,350 | ||||||||||||
Overallotment | October 2020 Common Warrants | |||||||||||||
Shares of common stock issued | 300,000 |
Stock Based Compensation - Opti
Stock Based Compensation - Option activity (Details) | 9 Months Ended | 12 Months Ended |
May 31, 2021$ / sharesshares | Aug. 31, 2020shares | |
Number of Options | ||
Balance Outstanding, August 31, 2021 | 1,398,740 | |
Granted | 715,000 | |
Forfeited | (287,192) | |
Balance Outstanding at February 28, 2021 | 1,826,548 | 1,398,740 |
Balance exercisable | 1,826,548 | |
Weighted Average Remaining Contractual Life (In years) | ||
Weighted Average Remaining Contractual Life In Years, beginning balance | 9 years 6 months | |
Weighted Average Remaining Contractual Life In Years, Granted | 10 years | |
Weighted Average Remaining Contractual Life In Years, Exercised | 0 years | |
Weighted Average Remaining Contractual Life In Years, Forfeited | 9 years 6 months | |
Weighted Average Remaining Contractual Life In Years, Ending balance | 9 years 1 month 6 days | |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Beginning | $ / shares | $ 8.18 | |
Granted | $ / shares | 3.07 | |
Forfeited | $ / shares | 4.32 | |
Weighted Average Exercise Price Ending | $ / shares | $ 6.62 |
Stock Based Compensation - Op_2
Stock Based Compensation - Option vesting activity (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
May 31, 2021 | Aug. 31, 2020 | |
Number of Option | ||
Options Vested, Beginning balance | 28,410 | |
Vested | 5,631 | |
Exercised | 0 | |
Forfeited | (656) | |
Options Vested, Ending balance | 33,385 | |
Weighted Average Remaining Contractual Life (In years) | ||
Weighted Average Remaining Contractual Life In Years, beginning balance | 9 years 6 months | |
Weighted Average Remaining Contractual Life In Years, beginning balance | 7 years 2 months 12 days | |
Weighted Average Remaining Contractual Life In Years, Vested | 7 years 4 months 24 days | |
Weighted Average Remaining Contractual Life In Years Exercised Options Vested | 0 years | |
Weighted Average Remaining Contractual Life In Years, Forfeited | 7 years 2 months 12 days | |
Weighted Average Remaining Contractual Life In Years, Ending balance | 9 years 1 month 6 days | |
Weighted Average Remaining Contractual Life In Years, Ending balance | 7 years | |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Beginning | $ 115.10 | |
Vested | 93.61 | |
Exercised | 0 | |
Forfeited | 50.33 | |
Weighted Average Exercise Price Ending | $ 112.74 |
Stock Based Compensation - Stoc
Stock Based Compensation - Stock options outstanding and vested (Details) | 9 Months Ended |
May 31, 2021$ / sharesshares | |
Exercise Prices One [Member] | Minimum | |
Exercise Prices | $ 2.23 |
Exercise Prices One [Member] | Maximum | |
Exercise Prices | 10 |
Exercise Prices Two [Member] | Minimum | |
Exercise Prices | 10.01 |
Exercise Prices Two [Member] | Maximum | |
Exercise Prices | 40 |
Exercise Prices Three [Member] | Minimum | |
Exercise Prices | 40.01 |
Exercise Prices Three [Member] | Maximum | |
Exercise Prices | 80 |
Exercise Prices Four [Member] | Minimum | |
Exercise Prices | 80.01 |
Exercise Prices Four [Member] | Maximum | |
Exercise Prices | 120 |
Exercise Prices Five [Member] | Minimum | |
Exercise Prices | 120.01 |
Exercise Prices Five [Member] | Maximum | |
Exercise Prices | 160 |
Exercise Prices Six [Member] | Minimum | |
Exercise Prices | 160.01 |
Exercise Prices Six [Member] | Maximum | |
Exercise Prices | $ 391.60 |
Options Outstanding and Exercisable One [Member] | |
Number of options | shares | 1,785,730 |
Weighted Average Remaining Contractual Life In Years | 9 years 3 months 18 days |
Weighted Average Exercise Price | $ 4.59 |
Options Outstanding and Exercisable Two [Member] | |
Number of options | shares | 3,500 |
Weighted Average Remaining Contractual Life In Years | 8 years |
Weighted Average Exercise Price | $ 21.69 |
Options Outstanding and Exercisable Three [Member] | |
Number of options | shares | 13,396 |
Weighted Average Remaining Contractual Life In Years | 7 years 9 months 18 days |
Weighted Average Exercise Price | $ 51.21 |
Options Outstanding and Exercisable Four [Member] | |
Number of options | shares | 10,303 |
Weighted Average Remaining Contractual Life In Years | 7 years |
Weighted Average Exercise Price | $ 102.90 |
Options Outstanding and Exercisable Five [Member] | |
Number of options | shares | 12,495 |
Weighted Average Remaining Contractual Life In Years | 6 years 3 months 18 days |
Weighted Average Exercise Price | $ 155.24 |
Options Outstanding Six [Member] | |
Number of options | shares | 1,126 |
Weighted Average Remaining Contractual Life In Years | 6 years 1 month 6 days |
Weighted Average Exercise Price | $ 391.60 |
Options Outstanding and Exercisable [Member] | |
Number of options | shares | 1,826,548 |
Weighted Average Remaining Contractual Life In Years | 9 years 1 month 6 days |
Weighted Average Exercise Price | $ 6.62 |
Options Vested One [Member] | |
Weighted Average Remaining Contractual Life In Years | 0 years |
Options Vested Two [Member] | |
Number of options vested | shares | 1,882 |
Weighted Average Remaining Contractual Life In Years | 8 years |
Weighted Average Exercise Price | $ 21.66 |
Options Vested Three [Member] | |
Number of options vested | shares | 9,529 |
Weighted Average Remaining Contractual Life In Years | 7 years 9 months 18 days |
Weighted Average Exercise Price | $ 51.22 |
Options Vested Four [Member] | |
Number of options vested | shares | 8,542 |
Weighted Average Remaining Contractual Life In Years | 7 years |
Weighted Average Exercise Price | $ 102.79 |
Options Vested Five [Member] | |
Number of options vested | shares | 12,307 |
Weighted Average Remaining Contractual Life In Years | 6 years 2 months 12 days |
Weighted Average Exercise Price | $ 155.73 |
Options Vested Six [Member] | |
Number of options vested | shares | 1,125 |
Weighted Average Remaining Contractual Life In Years | 6 years 1 month 6 days |
Weighted Average Exercise Price | $ 391.60 |
Options Vested [Member] | |
Number of options vested | shares | 33,385 |
Weighted Average Remaining Contractual Life In Years | 7 years |
Weighted Average Exercise Price | $ 112.74 |
Stock Based Compensation - Addi
Stock Based Compensation - Additional Information (Details) - USD ($) | Jul. 01, 2020 | May 31, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | Jul. 01, 2021 | Jun. 04, 2021 | Aug. 31, 2020 |
Number of shares authorized | 715,000 | |||||||
Exercise price (in dollars per share) | $ 3.07 | |||||||
Par value per share | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Options outstanding | 1,826,548 | 1,826,548 | 1,398,740 | |||||
Number of options available for grant to founder shareholders | 3,000,000 | |||||||
Vesting period | 4 years | |||||||
Compensation expense | $ 444,000 | $ 150,000 | $ 1,363,000 | $ 896,000 | ||||
Weighted average vesting period for unrecognized deferred share-based compensation (in years) | 3 years 1 month 6 days | |||||||
Unrecognized deferred share-based compensation expense expected to be recognized | 4,800,000 | $ 4,800,000 | ||||||
Share Based Compensation [Member] | ||||||||
Compensation expense | 444,000 | 75,000 | 1,363,000 | 745,000 | ||||
Aggregate intrinsic value | 45,000 | 45,000 | ||||||
Intrinsic value of options | 45,000 | 45,000 | ||||||
Share Based Compensation [Member] | Accounts payable and other accrued liabilities | ||||||||
Compensation expense | $ 56,000 | $ 75,000 | $ 113,000 | $ 150,000 | ||||
Minimum | ||||||||
Number of shares of common stock issuable | 250,000 | |||||||
Maximum | Share Based Compensation [Member] | ||||||||
Number of shares of common stock issuable | 3,000,000 | |||||||
Vesting on July 1, 2020 | ||||||||
Vesting percentage | 25.00% | |||||||
Vesting period | 1 year | |||||||
Vesting prior to July 1, 2020 | ||||||||
Vesting percentage | 25.00% | |||||||
Contractual life | 12 months |
Related Parties (Details)
Related Parties (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
May 31, 2021 | Nov. 30, 2020 | May 31, 2020 | May 31, 2021 | May 31, 2020 | Aug. 31, 2020 | |
Common stock shares issued | 23,234,646 | 23,234,646 | 16,902,146 | |||
Common stock, shares value | $ 2,000 | $ 2,000 | $ 1,000 | |||
Exercise price (in dollars per share) | $ 3.07 | |||||
Professional fees | 1,129,000 | $ 439,000 | $ 2,842,000 | $ 2,276,000 | ||
Employee relocation expenses | 53,000 | 653,000 | ||||
Chief Executive Officer | ||||||
Related party transaction, relocation expenses | 88,000 | |||||
Director | ||||||
Related party transaction, relocation expenses | $ 160,000 | 80,000 | ||||
Scott W Absher | ||||||
Related party transaction, relocation expenses | 80,000 | |||||
J. Stephan Holmes [Member] | ||||||
Professional fees | $ 180,000 | $ 180,000 | 570,000 | $ 570,000 | ||
Mark Absher One [Member] | ||||||
Related party transaction, relocation expenses | 160,000 | |||||
Hannah Absher [Member] | ||||||
Related party transaction, relocation expenses | 18,000 | |||||
Jared Holmes | ||||||
Related party transaction, relocation expenses | $ 18,000 |
Commitments - Future minimum le
Commitments - Future minimum lease payments under non-cancelable operating leases (Details) | May 31, 2021USD ($) |
Contingencies | |
2021 | $ 289,000 |
2022 | 1,198,000 |
2023 | 1,014,000 |
2024 | 1,075,000 |
2025 | 1,108,000 |
Thereafter | 1,652,000 |
Total minimum payments | $ 6,336,000 |
Commitments - Additional Inform
Commitments - Additional Information (Details) shares in Millions | Mar. 17, 2021USD ($) | May 31, 2021USD ($) | May 31, 2021USD ($) | May 31, 2020USD ($) | May 31, 2021USD ($) | May 31, 2020USD ($) | Oct. 01, 2020ft² | Aug. 13, 2020 | Jul. 09, 2019shares | Apr. 15, 2016 |
Employer contribution plan | $ 0 | $ 0 | $ 0 | $ 0 | ||||||
Repurchase of Common Stock | shares | 10 | |||||||||
Irvine Facility [Member] | ||||||||||
Term of operating lease | 5 years | |||||||||
Miami Facility | ||||||||||
Term of operating lease | 64 months | 7 years | ||||||||
Square feet of industrial space | ft² | 23,500 | |||||||||
Miami Facility | Master service agreement for the construction of six ghost kitchens | ||||||||||
Additional Funds | $ 385,000 | |||||||||
Total cost | $ 962,000 | |||||||||
Payments | 577,000 | |||||||||
Additional Funds | $ 385,000 |
Commitments - Special Purpose A
Commitments - Special Purpose Acquisition Company ("SPAC") Sponsorship (Details) | Apr. 29, 2021USD ($)item$ / sharesshares | May 31, 2020USD ($) | May 31, 2021USD ($) | May 31, 2020USD ($) | May 17, 2021$ / shares |
Proposed amount relating to IPOs | $ 10,332,000 | $ 10,701,000 | $ 10,332,000 | ||
Exercise price of warrants | $ / shares | $ 2.6675 | ||||
IHC | |||||
Shares owned prior to exercise of any of Placement Warrants | shares | 5,187,500 | ||||
IHC | Placement Warrants | |||||
Warrants to purchase shares of common stock | shares | 4,279,000 | ||||
Exercise price of warrants | $ / shares | $ 1 | ||||
Aggregate purchase price | $ 4,279,000 | ||||
IHC | Placement Warrants | Overallotment | |||||
Warrants to purchase shares of common stock | shares | 4,654,000 | ||||
Aggregate purchase price | $ 4,654,000 | ||||
VHC | |||||
Shares owned prior to exercise of any of Placement Warrants | shares | 5,187,500 | ||||
VHC | Placement Warrants | |||||
Warrants to purchase shares of common stock | shares | 4,279,000 | ||||
Exercise price of warrants | $ / shares | $ 1 | ||||
Aggregate purchase price | $ 4,279,000 | ||||
VHC | Placement Warrants | Overallotment | |||||
Warrants to purchase shares of common stock | shares | 4,654,000 | ||||
Aggregate purchase price | $ 4,654,000 | ||||
TSI | |||||
Shares owned prior to exercise of any of Placement Warrants | shares | 5,187,500 | ||||
TSI | Placement Warrants | |||||
Warrants to purchase shares of common stock | shares | 4,279,000 | ||||
Exercise price of warrants | $ / shares | $ 1 | ||||
Aggregate purchase price | $ 4,279,000 | ||||
TSI | Placement Warrants | Overallotment | |||||
Warrants to purchase shares of common stock | shares | 4,654,000 | ||||
Aggregate purchase price | $ 4,654,000 | ||||
FGC | |||||
Shares owned prior to exercise of any of Placement Warrants | shares | 10,375,000 | ||||
FGC | Placement Warrants | |||||
Warrants to purchase shares of common stock | shares | 7,447,000 | ||||
Exercise price of warrants | $ / shares | $ 1 | ||||
Aggregate purchase price | $ 7,447,000 | ||||
FGC | Placement Warrants | Overallotment | |||||
Warrants to purchase shares of common stock | shares | 8,197,000 | ||||
Aggregate purchase price | $ 8,197,000 | ||||
Sponsor | |||||
Number of SPACs | item | 4 | ||||
Maximum loan amount to each SPACs | $ 500,000 | ||||
Advance paid in cost associated to the SPAC's | $ 500,000 | ||||
Sponsor | IHC | |||||
Proposed amount relating to IPOs | 250,000,000 | ||||
Sponsor | VHC | |||||
Proposed amount relating to IPOs | 250,000,000 | ||||
Sponsor | TSI | |||||
Proposed amount relating to IPOs | 250,000,000 | ||||
Sponsor | FGC | |||||
Proposed amount relating to IPOs | $ 500,000,000 |
Contingencies (Details)
Contingencies (Details) - USD ($) | Mar. 19, 2021 | Dec. 18, 2020 | Apr. 30, 2020 | Apr. 30, 2019 | May 31, 2016 | May 31, 2021 |
Kadima Ventures [Member] | Software Development [Member] | ||||||
Software development cost | $ 2,200,000 | |||||
Revised development costs | 7,200,000 | |||||
Software modules cost | $ 11,000,000 | $ 11,000,000 | ||||
Additional software modules cost demanded | $ 12,000,000 | |||||
Additional cost | $ 11,000,000 | |||||
Everest Litigation [Member] | Software Development [Member] | ||||||
Additional cost | $ 600,000 | |||||
Sunz Litigation | ||||||
Amount of allegation against the company | $ 10,000,000 | |||||
Internal Revenue Service | ||||||
Federal income tax | 1,983,051 | |||||
Tax payments | $ 880,109 |
Subsequent Events (Details)
Subsequent Events (Details) | May 13, 2021shares | Jul. 01, 2021shares | Jun. 21, 2021ft² | Jun. 07, 2021ft² | Jun. 04, 2021$ / sharesshares | May 31, 2021$ / shares | Aug. 31, 2020$ / shares |
Subsequent Event [Line Items] | |||||||
Common stock par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Minimum | |||||||
Subsequent Event [Line Items] | |||||||
Number of shares of common stock issuable under the Company's 2017 Stock Option/Stock Issuance Plan | 250,000 | ||||||
Private Placement | May 2021 Prefunded Warrants | |||||||
Subsequent Event [Line Items] | |||||||
Warrants issued | 2,628,453 | ||||||
Subsequent Event | Plan | |||||||
Subsequent Event [Line Items] | |||||||
Number of shares of common stock issuable under the Company's 2017 Stock Option/Stock Issuance Plan | 3,000,000 | ||||||
Common stock par value | $ / shares | $ 0.0001 | ||||||
Subsequent Event | Lease agreement with Verifone Inc. to sublease | |||||||
Subsequent Event [Line Items] | |||||||
Square feet of office space under sublease | ft² | 8,000 | ||||||
Lease term | 3 years | ||||||
Subsequent Event | Lease agreement to lease premises | |||||||
Subsequent Event [Line Items] | |||||||
Square feet of office space under sublease | ft² | 13,418 | ||||||
Lease term | 77 months |