Cover
Cover - USD ($) | 12 Months Ended | ||
Aug. 31, 2023 | Dec. 11, 2023 | Feb. 28, 2023 | |
Cover [Abstract] | |||
Entity Registrant Name | SHIFTPIXY, INC. | ||
Entity Central Index Key | 0001675634 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --08-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | true | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Aug. 31, 2023 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2023 | ||
Entity Ex Transition Period | false | ||
Entity Common Stock Shares Outstanding | 5,397,698 | ||
Entity Public Float | $ 7,000,000 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Fin Stmt Error Correction Flag | false | ||
Entity File Number | 024-10557 | ||
Entity Incorporation State Country Code | WY | ||
Entity Tax Identification Number | 47-4211438 | ||
Entity Address Address Line 1 | 4101 NW 25th Street | ||
Entity Address State Or Province | FL | ||
Entity Address Postal Zip Code | 33131 | ||
City Area Code | 888 | ||
Icfr Auditor Attestation Flag | false | ||
Auditor Name | Marcum LLP | ||
Auditor Location | New York, NY | ||
Auditor Firm Id | 688 | ||
Local Phone Number | 798-9100 | ||
Security 12b Title | Common Stock, par value $0.0001 per share | ||
Trading Symbol | PIXY | ||
Security Exchange Name | NASDAQ | ||
Entity Interactive Data Current | Yes | ||
Entity Address City Or Town | Miami |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Aug. 31, 2023 | Aug. 31, 2022 |
Current assets | ||
Cash | $ 75,000 | $ 618,000 |
Accounts receivable. net | 590,000 | 279,000 |
Unbilled accounts receivable | 1,784,000 | 2,105,000 |
Prepaid expenses | 839,000 | 696,000 |
Other current assets | 532,000 | 187,000 |
Cash and marketable securities held in Trust Account (See Notes 2 and 5) | 0 | 116,969,000 |
Total current assets | 3,820,000 | 120,854,000 |
Fixed assets, net | 1,622,000 | 2,769,000 |
Right-of-use asset | 866,000 | 4,076,000 |
Deposits and other assets | 192,000 | 919,000 |
Total assets | 6,500,000 | 128,618,000 |
Current liabilities | ||
Accounts payable and other accrued liabilities | 16,692,000 | 16,225,000 |
Payroll tax related liabilities | 29,595,000 | 14,175,000 |
Payroll related liabilities | 2,940,000 | 2,777,000 |
Accrued workers' compensation costs (Note 3) | 1,219,000 | 567,000 |
Current liabilities of discontinued operations | 4,389,000 | 1,362,000 |
Class A common shares subject to possible redemption 11,500,000 and no shares at $10.15 per share redemption value as of August 31, 2022 (See Notes 2 and 5) | 0 | 116,969,000 |
Total current liabilities | 54,835,000 | 152,075,000 |
Non-current liabilities | ||
Operating lease liability, non-current | 2,790,000 | 3,541,000 |
Accrued workers' compensation costs | 0 | 1,227,000 |
Non-current liabilities of discontinued operations | 0 | 3,269,000 |
Total liabilities | 57,625,000 | 160,112,000 |
Stockholders' deficit | ||
Convertible preferred stock series A, 50,000,000 authorized shares; $0.0001 par value: 0 and 358,333 shares issued and outstanding as of August 31, 2023 and August 31, 2022. | 0 | 0 |
Common stock, 750,000,000 authorized shares; $0.0001 par value; and 507,383 shares 21,390 issued and outstanding as of August 31, 2023 and August 31, 2022 | 0 | 0 |
Additional paid-in capital | 175,226,000 | 151,737,000 |
Accumulated deficit | (226,351,000) | (192,725,000) |
Total ShiftPixy, Inc. Stockholders' deficit | (51,125,000) | (40,988,000) |
Non-controlling interest in consolidated subsidiaries (See Note 4) | 0 | 9,494,000 |
Total stockholders' deficit | (51,125,000) | (31,494,000) |
Total liabilities and stockholders' deficit | $ 6,500,000 | $ 128,618,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Aug. 31, 2023 | Aug. 31, 2022 |
Consolidated Balance Sheets | ||
Class A common shares subject to possible redemption (in shares) | 0 | 11,500,000 |
Class A common shares subject to possible per shares redemption | $ 0 | $ 10.15 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued (in shares) | 0 | 358,333 |
Preferred stock, shares outstanding (in shares) | 0 | 358,333 |
Common stock, shares authorized (in shares) | 750,000,000 | 750,000,000 |
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares issued (in shares) | 507,383 | 21,390 |
Common stock, shares outstanding (in shares) | 507,383 | 21,390 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Consolidated Statements of Operations | ||
Revenue, net | $ 17,129,000 | $ 36,002,000 |
Cost of revenue | 16,251,000 | 34,227,000 |
Gross profit | 878,000 | 1,775,000 |
Operating expenses: | ||
Salaries, wages, and payroll taxes | 15,762,000 | 14,821,000 |
Professional fees | 3,609,000 | 7,673,000 |
Research and software development | 263,000 | 2,529,000 |
Depreciation and amortization | 523,000 | 509,000 |
Impaired asset expense | 1,435,000 | 0 |
Right-of-use asset impairment expense | 2,497,000 | 3,851,000 |
General and administrative | 10,746,000 | 15,636,000 |
Total operating expenses | 34,835,000 | 45,019,000 |
Operating loss | (33,957,000) | (43,244,000) |
Other (expense) income: | ||
SPAC offering expenses | 0 | (515,000) |
Other income | 642,000 | 316,000 |
Total other (expense) income | 642,000 | 199,000 |
Loss from continuing operations before income taxes | (33,315,000) | (43,443,000) |
Income tax expense (benefit) | 13,000 | (38,000) |
Loss from continuing operations | (33,328,000) | (43,405,000) |
Income (loss) from discontinued operations, net of tax | 242,000 | (590,000) |
Non-controlling interest | (540,000) | 0 |
Net loss attributable to ShiftPixy, Inc | (33,626,000) | (43,995,000) |
Preferred stock preferential dividend | (127,145,000) | 0 |
Deemed dividend from change in fair value from warrants modification | 0 | (15,703,000) |
Net loss attributable to common stockholders | $ (160,771,000) | $ (59,698,000) |
Continuing operations | $ (299.27) | $ (3,523.58) |
Discontinued operations | 0.45 | (35.17) |
Net loss per common share - Basic and diluted | $ (298.823) | $ (3,558.75) |
Weighted average common stock outstanding - Basic and diluted | 538,017 | 16,775 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders Deficit - USD ($) | Total | Common Stock Issued | Additional Paid In Capital [Member] | Retained Earnings (Accumulated Deficit) [Member] | Total Stockholders' Deficit Shoft Pixy, Inc. [Member] | Convertibles Preferred Stocks Issued | Noncontrolling interest [Member] |
Balance, shares at Aug. 31, 2021 | 10,777 | ||||||
Balance, amount at Aug. 31, 2021 | $ 40,923,000 | $ 0 | $ 142,789,000 | $ (149,338,000) | $ (6,549,000) | $ 0 | $ 47,472,000 |
ASC 842 adoption catch up adjustment | 608,000 | $ 0 | 0 | 608,000 | 608,000 | 0 | 0 |
Common stock issued for private placement, net of offering costs, shares | 1,188 | ||||||
Common stock issued for private placement, net of offering costs, amount | 4,183,000 | $ 0 | 4,183,000 | 0 | 4,183,000 | 0 | 0 |
Common stock issued on exercised warrants, net of offering cost (1), shares | 4,009 | ||||||
Common stock issued on exercised warrants, net of offering cost (1), amount | 5,409,000 | $ 0 | 5,409,000 | 0 | 5,409,000 | 0 | 0 |
Common stock issued on exercised warrants, net of offering costs (2), shares | 2,083 | ||||||
Common stock issued on exercised warrants, net of offering costs (2), amount | 1,163,000 | $ 0 | 1,163,000 | 0 | 1,163,000 | 0 | 0 |
Prefunded warrants for private placement, net of offering cost | 6,861,000 | 0 | 6,861,000 | 0 | 6,861,000 | 0 | 0 |
Stock-based compensation expense | 1,286,000 | 0 | 1,286,000 | 0 | 1,286,000 | 0 | 0 |
Remeasurement of IHC temporary equity | (13,675,000) | 0 | (13,675,000) | 0 | (13,675,000) | $ 0 | 0 |
Preferred stock series A issued, shares | 691,666 | ||||||
Preferred stock series A issued, amount | 3,721,000 | $ 0 | 3,721,000 | 0 | 3,721,000 | $ 0 | 0 |
Common stock issued for preferred stock series A conversion, shares | 3,333 | (333,333) | |||||
Common stock issued for preferred stock series A conversion, amount | 0 | $ 0 | 0 | 0 | 0 | $ 0 | 0 |
Cancellation of non-controlling on withdrawal of SPACs S-1 registration statements | (37,978,000) | 0 | 0 | 0 | 0 | 0 | (37,978,000) |
Net loss | (43,995,000) | $ 0 | 0 | (43,995,000) | (43,995,000) | $ 0 | 0 |
Balance, shares at Aug. 31, 2022 | 21,390 | 358,333 | |||||
Balance, amount at Aug. 31, 2022 | (31,494,000) | $ 0 | 151,737,000 | (192,725,000) | (40,988,000) | $ 0 | 9,494,000 |
Common stock issued for private placement, net of offering costs, shares | 86,112 | ||||||
Common stock issued for private placement, net of offering costs, amount | 2,685,000 | $ 0 | 2,685,000 | 0 | 2,685,000 | 0 | 0 |
Stock-based compensation expense | 954,000 | 0 | 954,000 | 0 | 954,000 | 0 | 0 |
Net loss | (33,086,000) | 0 | 0 | (33,626,000) | (33,626,000) | 0 | 540,000 |
Fair market value increase of preferred stock series A prior to reverse stock split | 127,145,000 | 0 | 127,145,000 | 0 | 127,145,000 | 0 | 0 |
Preferential dividend of preferred series A stock | (127,145,000) | $ 0 | (127,145,000) | 0 | (127,145,000) | 0 | 0 |
Common stock issued on exercised prefunded warrants, shares | 5,175 | ||||||
Common stock issued on exercised prefunded warrants, amount | 1,000 | $ 0 | 1,000 | 0 | 1,000 | 0 | 0 |
Common stock issued for private placement, net of offering cost, shares | 17,361 | ||||||
Common stock issued for private placement, net of offering cost, amount | 4,387,000 | $ 0 | 4,387,000 | 0 | 4,387,000 | $ 0 | 0 |
Common stock issued on conversion of preferred stock series A, shares | 358,333 | (358,333) | |||||
Common stock issued on conversion of preferred stock series A, amount | 0 | $ 0 | 0 | 0 | 0 | $ 0 | 0 |
Warrant modification expense | 324,000 | $ 0 | 324,000 | 0 | 324,000 | 0 | 0 |
Additional shares issued due to reverse stock split, shares | 707 | ||||||
Additional shares issued due to reverse stock split, amount | 0 | $ 0 | 0 | 0 | 0 | 0 | 0 |
Net proceeds of ATM, net of offering expenses, shares | 18,305 | ||||||
Net proceeds of ATM, net of offering expenses, amount | 1,973,000 | $ 0 | 1,973,000 | 0 | 1,973,000 | 0 | 0 |
Stock-based compensation conditional option preferred series A grant | 3,131,000 | 0 | 3,131,000 | 0 | 3,131,000 | 0 | 0 |
Deconsolidation of VIE | 0 | $ 0 | 10,034,000 | 0 | 10,034,000 | 0 | (10,034,000) |
Balance, shares at Aug. 31, 2023 | 507,383 | ||||||
Balance, amount at Aug. 31, 2023 | $ (51,125,000) | $ 0 | $ 175,226,000 | $ (226,351,000) | $ (51,125,000) | $ 0 | $ 0 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
OPERATING ACTIVITIES | ||
Net loss | $ (33,626,000) | $ (43,995,000) |
Net income (loss) from discontinued operations | 242,000 | (590,000) |
Net loss from non-controlling interest | (540,000) | 0 |
Net loss from continuing operations | (33,328,000) | (43,405,000) |
Adjustments to reconcile net loss from continuing operations to net cash used in continuing operating activities: | ||
Bad debt expense | 187,000 | 0 |
Depreciation and amortization | 523,000 | 509,000 |
Impaired asset expense | 1,435,000 | 0 |
Reserve for uncollectable purchase price note receivable | 0 | 4,004,000 |
Right-of-use asset impairment | 2,497,000 | 3,851,000 |
Stock-based compensation | 954,000 | 1,283,000 |
Stock compensation - shares for services to directors accrued for | 150,000 | 0 |
Stock-compensation related to conditional option grant preferred series A to CEO | (3,131,000) | 0 |
Warrant modification expense | 324,000 | 0 |
Expensed SPAC offering costs | 0 | 515,000 |
Gain from settlement | (1,040,000) | 0 |
Non-cash lease expense | 713,000 | 382,000 |
Changes in operating assets and liabilities | ||
Accounts receivable | 498,000 | (219,000) |
Unbilled accounts receivable | (321,000) | (636,000) |
Prepaid expenses and other current assets | 488,000 | 152,000 |
Deposits - workers' compensation | 0 | 541,000 |
Deposits and other assets | 0 | 25,000 |
Accounts payable and other accrued liabilities | 459,000 | 6,409,000 |
Payroll tax liabilities | 15,420,000 | 4,091,000 |
Payroll related liabilities | 163,000 | 4,088,000 |
Operating lease liability | (631,000) | 0 |
Accrued workers' compensation | 465,000 | (515,000) |
Total Adjustments | 24,085,000 | 25,886,000 |
Net cash used in continuing operating activities | (9,243,000) | (17,519,000) |
Net cash used in discontinued operating activities | 0 | (1,000) |
Net cash used in operating activities | (9,243,000) | (17,520,000) |
INVESTING ACTIVITIES | ||
Purchase of fixed assets | (346,000) | (494,000) |
Investment of IHC proceeds into IHC Trust Account | 0 | (116,969,000) |
Redemption from IHC Trust Account | 117,574,000 | 0 |
Net cash provided by (used in) investing activities | 117,228,000 | (117,463,000) |
FINANCING ACTIVITIES | ||
Proceeds from initial public offering IHC | 0 | 116,725,000 |
Payment to IHC shareholders | (117,574,000) | 0 |
SPAC offering costs paid | 0 | (3,663,000) |
Proceeds from private placement, net of offering costs | 7,072,000 | 4,183,000 |
Proceeds from At-The-Market offering, net of offering costs | 1,973,000 | 0 |
Proceeds from private placement prefunded warrants, net of offering costs | 1,000 | 6,861,000 |
Proceeds from exercised warrants | 0 | 6,573,000 |
Preferred stock series A issued | 0 | 3,723,000 |
Net cash (used in) provided by financing activities | (108,528,000) | 134,402,000 |
Net decrease in cash | (543,000) | (581,000) |
Cash - Beginning of Year | 618,000 | 1,199,000 |
Cash -End of Year | 75,000 | 618,000 |
Supplemental Disclosure of Cash Flows Information: | ||
Cash paid for interest | 175,000 | 1,000 |
Income taxes | 31,000 | 4,000 |
Non-cash Investing and Financing Activities: | ||
Increase in marketable securities in the Trust Account and Class A mandatory redeemable common shares | 801,000 | 0 |
Deconsolidation of VIE | 9,494,000 | 0 |
Conversion of preferred stock series A to common stock | 1,000 | 0 |
Remeasurement of Class A ordinary shares subject to redemption | $ 0 | $ 244,000 |
Nature of Operations
Nature of Operations | 12 Months Ended |
Aug. 31, 2023 | |
Nature of Operations | |
Nature of Operations | Note 1: Nature of Operations ShiftPixy, Inc. (the “Company”) was incorporated on June 3, 2015, in the State of Wyoming. The Company is a specialized Human Capital service provider that provides solutions for large, contingent, part-time workforce demands, primarily in the restaurant and hospitality service trades. The Company’s historic focus has been on the quick service restaurant industry in Southern California, but the Company has expanded into other geographic areas and industries that employ temporary or part-time labor sources, notably including the healthcare industry. The Company functions as an employment administrative services (“EAS”) provider primarily through its wholly owned subsidiary, ReThink Human Capital Management, Inc. (“HCM”), as well as a staffing provider through another of its wholly owned subsidiaries, ShiftPixy Staffing, Inc. (“Staffing”). These subsidiaries provide a variety of services to our clients typically as a co-employer through HCM and a direct employer through Staffing, including the following: administrative services, payroll processing, human resources consulting, and workers’ compensation administration and coverage (as permitted and/or required by state law). The Company has built a human resources information systems (“HRIS”) platform to assist in client acquisition that simplifies the onboarding of new clients into the Company’s closed proprietary operating and processing information system (the “ShiftPixy Ecosystem”). In January 2020, the Company sold the assets of Shift Human Capital Management Inc. (“SHCM”), a wholly owned subsidiary of the Company, pursuant to which the Company assigned the majority of the Company’s billable clients at the time of the sale to a third party for cash. The continuing impact of this transaction on the Company’s financial statements is described below in Note 3, Discontinued Operations. Effective August 31, 2022, ShiftPixy, Inc. filed articles of amendment to the Company’s articles of incorporation to effect a one-for-one hundred (1:100) reverse split of the Company’s issued and outstanding shares of common stock. The reverse split became effective on Nasdaq September 1, 2022. Effective October 14, 2023, the Company filed articles of amendment to the Company’s articles of incorporation to affect a one-for-twenty four (1:24) reverse split of the Company’s issued and outstanding shares of common stock. The reverse split became effective on Nasdaq October 16, 2023. All references to common stock, warrants and options except for the conditional preferred stock option granted in August 2023, to purchase common stock, including per share data and related information contained in the Consolidated Financial Statements have been retroactively adjusted to reflect the effect of the reverse stock split for all periods presented. |
Summary of Significant Accounti
Summary of Significant Accounting Policies, Going Concern and Liquidity | 12 Months Ended |
Aug. 31, 2023 | |
Summary of Significant Accounting Policies, Going Concern and Liquidity | |
Summary of Significant Accounting Policies, Going Concern and Liquidity | Note 2: Summary of Significant Accounting Policies, Going Concern and Liquidity Basis of Presentation The 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”). Principles of Consolidation 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: · Continuation as a going concern; management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets and liquidation of all liabilities in the normal course of business · Liability for legal contingencies · Projected development of workers’ compensation claims · Payroll tax and associated penalties and interest · Impairment of long-lived assets These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions that are difficult to measure of value. Management regularly reviews the key factors and assumptions to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such valuation, if deemed appropriate, those estimates are adjusted accordingly. Liquidity, Capital Resources and Going Concern As of August 31, 2023, the Company had cash of $0.1 million and a working capital deficit of $50.1 million. During the year ended August 31, 2023, the Company used approximately $9.2 million of cash from its continuing operations and incurred recurring losses, resulting in an accumulated deficit of $226.4 million. As of August 31, 2023, the Company is delinquent with respect to remitting payroll tax payments to the IRS, states and local jurisdictions. The Company has retained tax counsel and has been in near constant communication with the IRS regarding processing its Employee Retention Tax Credits (“ERTCs”). On September 14, 2023, the IRS has a moratorium on processing new ERTC claims and many of the Company’s clients are seeking refunds. Recently, the Company has filed ERTC claims for our clients and has not received any acceptance from the IRS. Some clients have filed suits against the Company, demanding that the Company take action to file for additional ERTCs for certain tax periods. ShiftPixy have received notices from the IRS that they owe approximately $11.8 million for unpaid tax liabilities, including penalties and interest. The balances reported on such notices do not represent the full payroll tax liability of ShiftPixy as of August 31, 2023. ShiftPixy expects its payroll tax liabilities, penalties and interest to increase in the future. Moreover, the IRS has threatened to take enforced collection against ShiftPixy, Inc. and ShiftPixy, potentially in addition to other subsidiaries. ShiftPixy have taken steps to preserve so-called “collection due process rights” and present collection alternatives to the proposed enforced collection. Specifically: · ShiftPixy had a collection due process hearing with the IRS Independent Office of Appeals on October 24, 2023. On October 24 and November 6, 2023, ShiftPixy requested that the IRS Independent Office of Appeals (“Appeals”), among other things, abate additions to tax and related interest for the failure to make required deposits and the failure to timely pay required tax. That request is pending before Appeals; and · On October 27, 2023, the IRS issued to ShiftPixy a Letter 1058, Final Notice, Notice of Intent to Levy and Notice of Your Right to a Hearing Request for a Collection Due Process or Equivalent Hearing Notwithstanding the above-described requests for a collection due process hearing, should the IRS determine the collectability of tax be in jeopardy, the IRS can, with limited notice, levy the affected Company’s bank accounts and subject it to enforced collection if ShiftPixy cannot obtain a resolution of the payroll tax issues, the United States Tax Court can (and will be asked to) review Appeals’ determination. There is no assurance that the IRS will abate penalties and interest currently assessed against ShiftPixy. If ShiftPixy gets abated the outstanding penalties, and interest or raise the necessary capital to fund its payroll tax obligations and collection alternative, it may cause ShiftPixy to file for bankruptcy protection in the near future. The Company has taken aggressive steps to reduce its overhead expenses. The Company’s plans and expectations for the next twelve months include raising additional capital which may help fund the Company’s operations and seeking acquisitions targets funded by debt or stock by Company’s in staffing services as the key driver towards its success. The Company expects to engage in additional sales of its securities during Fiscal 2024, either through registered public offerings or private placements, the proceeds of which the Company intends to use to fund its operations. If these sources do not provide the capital necessary to fund the Company’s operations during the next twelve months, it may need to curtail certain aspects of its operations or expansion activities, consider the sale of additional assets at distressed prices, or consider other means of financing. The Company is also seeking acquisition targets funded by debt and stock, for growth, a recurring revenue base, significant gross profit conversion, margin expansion opportunities, a light industrial sector focus, a blue-chip client base, cyclical tailwinds, and a tenured management team willing and able to execute a comprehensive integration plan. The Company can give no assurance that it will be successful in implementing its business plan and obtaining financing on advantageous terms, or that any such additional financing will be available. These Consolidated Financial Statements do not include any adjustments for this uncertainty. Under the existing accounting guidance, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the Consolidated Financial Statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the Consolidated Financial Statements are issued. When substantial doubt is determined to exist, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans; however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date the Consolidated Financial Statements are issued, and (2) it is probable that the plans, when implemented, may mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued. Therefore, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date of the issuance of the financial statements. Historically, the Company’s principal source of financing has come through the sale of the Company’s common stock, including in certain instances, warrants and the issuance of convertible notes. On October 5, 2023, the Company, entered into a securities purchase agreement with an institutional investor, pursuant to which the Company agreed to issue and sell to the investor (i) in a registered direct offering, 56,250 shares at a price of $26.40 per share, and pre-funded warrants, to purchase up to 38,125 shares of common Stock at a price of $26.40 per share and an exercise price of $0.0001 per share of common stock, and (ii) in a concurrent securities private placement, common stock purchase warrants (the “Private Placement Warrants”), exercisable for an aggregate of up to 56,250 shares of common stock, at an exercise price of $26.40 per share of common stock. The pre-funded warrants were exercised in October 2023 and the Company issued 38,125 shares of common stock. The net proceeds of this offering were $2.0 million. Revenue and Direct Cost Recognition Staffing Solutions The Company records gross billings as revenues for its staffing solutions clients. The Company is primarily responsible for fulfilling the staffing solutions services and has discretion in establishing price. The Company includes the payroll costs in revenues with a corresponding increase to cost of revenues for payroll costs associated with these services. As a result, we are the principal in this arrangement for revenue recognition purposes. EAS Solutions / HCM EAS solutions and Human Capital Management “HCM” revenues are 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) an administrative fee and (iii) if eligible, WSE can elect certain pass-through benefits. Gross billings are invoiced to each EAS and HCM client, concurrently with each periodic payroll. Revenues are offset by payroll cost component and pass through costs which are presented on a net basis for revenue recognition. WSEs perform their services at the client's worksite. The Company assumes responsibility for processing and remitting payroll to the WSE and payroll related obligations, it does not assume employment-related responsibilities such as determining the amount of the payroll and related payroll obligations. Revenues that have been recognized but not invoiced are included in unbilled accounts receivable on the Company’s consolidated balance sheets were $1.8 million and $2.1 million, as of August 31, 2023 and August 31, 2022, respectively. Disaggregation of Revenue The Company’s primary revenue streams include HCM / EAS and staffing services. The Company’s disaggregated revenues for the year ended August 31,2023 and August 31, 2022, respectively, were as follows (in millions): For the Years Ended Revenue (in thousands): August 31, 2023 August 31, 2022 HCM / EAS (1) $ 1.6 $ 6.4 Staffing 15.5 29.6 Total $ 17.1 $ 36.0 (1) HCM / EAS revenue is presented net, $39.0 gross less worksite employees payroll cost of $37.4 for the years end August 31, 2023 and August 31, 2022, $52.2 million gross less worksite employees payroll cost of $45.8, respectively. For the years ended August 31, 2023, and August 31, 2022, respectively, the following states represented more than 10% of total revenues: For the Years Ended States: August 31, 2023 August 31, 2022 California 51.7 % 52.1 % Washington 11.6 % 13.3 % New Mexico 10.8 % 8.1 % Incremental Cost of Obtaining a Contract Pursuant to the “practical expedients” provided under Accounting Standards Update “ASC” No 2014-09, the Company expenses sales commissions when incurred because the terms of its contracts are cancellable by either party upon 30-day notice. These costs are recorded in commissions in the Company’s Consolidated Statements of Operations. Segment Reporting The Company operates as one reportable segment under Accounting Standards Codification “ASC” 280, Segment Reporting 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 cash equivalent as of August 31, 2023, and August 31, 2022. Marketable Securities Held in Trust As of August 31, 2022, all of the assets held in the Trust Account were invested in U.S. Treasury securities with maturities of 180 days or less. These funds were restricted for use and were only be used for purposes of completing an initial business combination (“IB”) or redemption of the public common shares of IHC. On December 1, 2022, the Company distributed $117.6 million to the shareholders of IHC. As of August 31, 2023, and August 31, 2022, assets held in the Trust Account were $0 and $117.0 million. 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 August 31, 2023, and August 31, 2022, there was $0.0 million and $0.6 million, respectively, of cash on deposit in excess of the amounts insured by the FDIC. The following represents clients who have ten percent of total accounts receivable as of August 31, 2023, and August 31, 2022, respectively. As of August 31, 2023 August 31, 2022 Client 1 64.5 % 0.0 % Client 2 23.6 % 41.9 % Client 3 5.6 % 13.7 % Client 4 3.3 % 21.9 % Client 5 0.0 % 20.7 % The following represents clients who have ten percent of gross revenues for the years ended August 31, 2023, and August 31, 2022, respectively. August 31, 2023 August 31, 2022 Client 1 13.9 % 7.8 % Client 2 10.6 % 10.7 % 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 fixed assets for purposes of computing depreciation are as follows: Equipment: 5 years Furniture & Fixtures: 5 – 7 years Leasehold improvements Shorter of useful life or the remaining lease term, typically 5 years Depreciation and amortization expense for the years ended August 31, 2023, and August 31, 2022 were $0.5 million and $0.5 million, respectively, and included on the 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 Accounting Standards Codification “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 and 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. The net book value for computer software development is $0 as of August 31, 2023, and August 31, 2022. The Company determined that there was no material capitalized internal software development costs for the years ended August 31, 2023 and August 31, 2022. 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. The Company incurred research and development costs of $0.3 million and $2.5 million for the years ended August 31, 2023, and August 31, 2022, respectively. All costs were related to internally developed or externally contracted software and related technology for the Company’s HRIS platform and related mobile applications. Lease Recognition The Financial Accounting Standards Board “FASB” established Topic 842, Leases, by issuing ASU No. 2016-02 “ASC” 842, which required lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The standard established a right-of-use asset model (“ROU”) that required a lessee to recognize an ROU operating lease asset and lease liability on the balance sheets for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the Consolidated Statement of Operations. 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 Workers’ Compensation Everest Program Until July 2018, a portion of the Company’s workers’ compensation risk was covered by a retrospective rated policy through Everest National Insurance Company, 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 funded the policy 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 under that policy exceed the expected losses under that policy, then the Company could receive a demand for additional premium payments. The Company became engaged in litigation regarding such a demand for additional premium payments; however, the Company reached a settlement agreement with Everest for $0.4 million in June 2023 to end its litigation. As a result of the settlement, the Company recorded a gain of $1.0 million during the year ended August 31, 2023. The Company made an initial payment of $0.1 million and has monthly payment of $0.1 million. The Company owes Everest $0.3 million as of August 31, 2023, which is included in accounts payable and accrued liabilities in the accompanying balance sheet. 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 provided and maintained 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. The Company has not funded into the program for incurred claims that was expected to be paid within one year. As of August 31, 2023 and August 31, 2022, the liability owed to Sunz that is recorded in accrued workers compensation cost discounted operations liabilities is $5.6 million and $5.0 million, respectively. The Company is currently engaged in litigation with Sunz for additional claims loss funds, as discussed in Note 15, Contingencies, Sunz. 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. There were no workers compensation deposits related to these programs as of August 31, 2023, and as of August 31, 2022, respectively. 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. With regard to the prior programs, which continue until fully concluded, 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 August 31, 2023 and August 31, 2022, the Company had short-term accrued workers’ compensation costs of $1.2 million and $0.6 million, and long-term accrued workers’ compensation costs of $0 million and $1.2 million, respectively. 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, Discontinued Operations , 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 require 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 Annual 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 the Company’s 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 August 31 2023, we continue to monitor closely all workers’ compensation claims made in relation to the COVID-19 pandemic. Fair Value of Financial Instruments Accounting Standard Codification “ASC” 820, Fair Value Measurement 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 · Quoted prices for similar assets or liabilities in active markets · Quoted prices for identical or similar assets or liabilities in inactive markets · Inputs other than quoted prices that are observable for the asset or liability · Inputs that are derived principally from or corroborated by observable market data by correlation or other means; and · 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 Funds held in Trust Account represent U.S. treasury bills that was restricted for use and may only be used for purposes of completing an IBC or redemption of the public shares of common stock of the SPACs as set forth in their respective trust agreements. The funds held in trust are included within Level 1 of the fair value hierarchy and included in cash and marketable securities held in Trust Account in the accompanying Consolidated Balance Sheets. The Trustee distributed all the funds in the Trust Account to the shareholders of IHC on December 1, 2022. When the Company changes its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in current market conditions or other factors, it could be required to transfer those assets or liabilities to another level in the hierarchy based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur. 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. There were no transfers out of Level 3 for the years ended August 31, 2023 and August 31, 2022. Level 1 assets consisted of cash and marketable securities (only for August 31, 2022) as of August 31, 2023, and August 31, 2022, respectively. The Company did not have any Level 2 or 3 assets or liabilities as of August 31, 2023, or August 31, 2022. The Company has recorded approximately $1.0 million charge for an impairment expense for the year ended August 31, 2023 for its fixed assets. The Company asses the impairment charge based upon Level 3 Inputs to the valuation methodology. Below is non-recurring fair measurement, based upon significant unobservable inputs as of August 31, 2023. Fair Value at Reporting Data Using Quoted Prices Significant in Active Market Other Observable Significant for Identical Observable Unobservable Total Assets (Level 1) Inputs (Level 2) Inputs (Level 3) As of August 31, 2023 Fixed assets $ 1,622,000 $ - $ - $ 1,622,000 Advertising Costs The Company expenses all advertising as incurred. Advertising expense for the year August 31, 2023 and August 31, 2022 was $2.3 million and $2.6 million, respectively. Adverting expense includes salaries and external costs. Income Taxes The Company accounts for income taxes pursuant to ASC 740, Income Taxes. Under ASC 740, deferred income taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under ASC 740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. A full valuation allowance was recorded as of August 31, 2023, and August 31, 2022, respectively. Stock-Based Compensation The Company has one stock-based compensation plan under which the Company may issue awards, as described in Note 10, Stock Based Compensatio n Compensation-Stock Compensation 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 the Company’s 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. Net Loss Per Share Basic net loss per common share is computed by dividing net loss attributable to common shareholders by the weighted-average number of shares of common stock outstanding during the reporting period. Diluted net loss per share is computed similar to basic loss per share except that the denominator is increased to include additional common stock equivalents available upon exercise of stock options, warrants, shares of common stock to be issued to directors for services provided and the option for preferred stock Class Option 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 and conditional option for Preferred Stock Series A that is convertible into common stock. 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. The number used for the weighted average number of shares of common stock included convertible preferred shares series A for the year ended August 31, 2022 and conditional preferred option for the year ended August 31, 2023. These securities are convertible to common stock on a one for one basis to common stock without any restrictions and considered common stock since the exercise price is par value. The following potentiall |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
Aug. 31, 2023 | |
Discontinued Operations | |
Discontinued Operations | Note 3 – Discontinued Operations On January 3, 2020, the Company entered into an asset purchase agreement with Shiftable HR Acquisition, LLC, a wholly owned subsidiary of Vensure, pursuant which was the assigned client contracts was significant to its revenues for the three months ended November 30, 2019, including 100% of the Company’s existing professional employer organization or PEO business. In connection with this transaction, the Company had a Note Receivable to be paid over four years. The Company recorded the Note Receivable based on the Company’s estimate of expected collections which, in turn, was based on additional information obtained through discussions with Vensure and evaluation of the Company’s records. 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 effect of eliminating any sums owed to the Company under the Note Receivable. As indicated in the reconciliation table below, the Company had recorded $2.6 million of working capital adjustments, subject to final review and acceptance, and has provided 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. The Company assessed the collectability of this note receivable during the reporting of its Fiscal Year End as of August 31, 2022, and determined that it was probable that all contractually required payments will not be collected and recorded a reserve on collectability of approximately $4 million. The matter is discussed per Note 15 Contingencies, Vensure Litigation. In addition, on November 15, 2023, the Company won an arbitration case for $2.5 million, and the Company received $2.5 million on November 22, 2023. This is considered a gain contingency, and the Company will record a gain during the three months ended November 2023, see Note 16 Subsequent Events. The following reconciliation of the gross proceeds to the net proceeds and the Note Receivable from the Vensure Asset Sale is presented in the Consolidated Balance sheets as of August 31, 2023 and August 31, 2022 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 adjustment (2,604,000 ) Adjusted note receivable 6,896,000 Less: reserve for estimated potential claims (2,892,000 ) Less: reserve for uncollectable purchase price note receivable (4,004,000 ) Note receivable $ — As discussed above, the Company was fully reserved for the note due to purchase price disputes and deemed the note receivable net realizable value was zero as of August 31, 2023 and August 31, 2022, respectively. The Company expected a minimal tax impact from the Vensure Asset Sale as it utilized its net operating losses accumulated since inception to offset the gain resulting from discontinued operations tax provision with a corresponding offset to the valuation allowance. The Vensure Asset Sale met the criteria of discontinued operations set forth in ASC 205 and 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. The carrying amounts of the classes of assets and liabilities from the Vensure Asset Sale included in discontinued operations are as follows: August 31, 2023 August 31, 2022 Deposits – workers’ compensation $ — $ — Total current assets — — Deposits – workers’ compensation — — Total assets $ — $ — Accrued workers’ compensation cost $ 1,303,000 $ 1,362,000 Total current liabilities 1,303,000 1,362,000 Accrued workers’ compensation cost 3,068,000 3,269,000 Total liabilities 4,389,000 4,631,000 Net liability $ (4,389,000 ) $ (4,631,000 ) Reported results for the discontinued operations for the year ended August 31,2023 and August 31, 2022 were as follows: For the Years Ended August 31, 2023 August 31, 2022 Revenues $ — $ — Cost of revenue 606,000 590,000 Gross profit (606,000 ) (590,000 ) Operating expenses: Settlement gain (848,000 ) — Total operating expenses (848,000 ) — Net income (loss) from discontinued operations $ 242,000 $ (590,000 ) During the years ended August 31, 2023 and August 31, 2022, the Company recorded net income (loss) loss from discontinued operations of $0.2 million and $0.6 million, which has been fully reserved for income tax. The components of income tax expense (benefit) for discontinued operations are as follows: For the Years Ended August 31, 2023 2022 Income expense tax (benefit) Federal tax expense (benefit) $ 47,000 $ (114,000 ) State tax expense (benefit) 17,000 (45,000 ) Total tax expense (benefit) 64,000 (159,000 ) Loss carryforwards (64,000 ) 159,000 Income tax expense from discontinued operations $ — $ — |
Special Purpose Acquisition Com
Special Purpose Acquisition Company (SPAC) Sponsorship | 12 Months Ended |
Aug. 31, 2023 | |
Special Purpose Acquisition Company (SPAC) Sponsorship | |
Special Purpose Acquisition Company ("SPAC") Sponsorship | Note 4: Special Purpose Acquisition Company (“SPAC”) Sponsorship IHC closed on its IPO effective October 2021, and its net proceeds of $116.7 million, the funds were placed in a trust account (the “Trust Account”) and was invested in U.S. government securities. The Company owned approximately 15% of its issued and outstanding stock. Furthermore, we anticipated that IHC would operate as a separately managed, publicly traded entity following the completion of its IPO. The operations of IHC have been consolidated in the accompanying Consolidated Financial Statements through November 30, 2022. On October 14, 2022, the stockholders of IHC approved the proposed action to file an amended and restated certificate of incorporation to extend the date by which the Company has to consummate a Business Combination from October 22, 2022, to April 22, 2023, or a such earlier date as determined by the board of directors. The Company accordingly filed the Amendment with the Secretary of State of Delaware. In connection with the meeting, however, shareholders holding 270,032,328 Public Shares exercised their right to redeem their shares for a pro rata portion of the funds in the Trust Account, leaving 5,967,672 of the Company’s remaining Public Shares outstanding and the Trust Account substantially below the $5 million minimum net tangible asset amount required by IHC’s Amended and Restated Certificate of Incorporation to be available upon consummation of such Business Combination. IHC’s efforts to secure the decisions of some shareholders to reverse their redemptions were unsuccessful, and IHC accordingly declined to fund the extension, cancelled the Amendment as filed with the Secretary of State of Delaware, and proceeded to cease operations, dissolve and unwind. The board of directors of IHC accordingly adopted resolutions to liquidate, dissolve and unwind the entity. IHC was dissolved on November 14, 2022, and the Trustee released all the redemption funds from the Trust Account to IHC shareholders on December 1, 2022, effectively liquidating the Trust. The Class A common shares subject to redemption were, however, classified as a current liability as of August 31, 2022 and through November 30, 2022. In view of the actions taken in November and December of 2022, the Company has concluded that as of February 7, 2023, the operations of IHC shall not be included in the Company’s consolidation as IHC did not meet the criteria of a VIE. A net liability of $0.6 million was recorded to other income, and $0.5 million was recorded for the non-controlling interest, applicable to the 85% interest that the Company did not own of IHC. On February 7, 2023, three creditors of IHC filed an involuntary petition for liquidation under Chapter 7 against IHC in the US Bankruptcy Court for the Southern District of Florida. The matter is proceeding, and the Company and its subsidiary, ShiftPixy Investments, Inc., are listed as two significant creditors of IHC. However, there can be no assurance that either the Company or ShiftPixy Investments, Inc. will recover any of the amounts owed to them by IHC from the bankruptcy estate. |
Accounts Receivable, Unbilled R
Accounts Receivable, Unbilled Receivable and Advanced Payments | 12 Months Ended |
Aug. 31, 2023 | |
Accounts Receivable, Unbilled Receivable and Advanced Payments | |
Accounts Receivable, Unbilled Receivable and Advanced Payments | Note 5: Accounts Receivable, Unbilled Receivable and Advanced Payments The Company’s accounts receivable represents outstanding gross billings to clients, net of an allowance for estimated credit losses. The Company in some instances may require our clients to prefund payroll and related liabilities before payroll is processed or due for payment. If a client fails to fund payroll or misses the funding cut-off, at our sole discretion, ShiftPixy may pay the payroll and the resulting amounts due to us are recognized as accounts receivable. When client payment is received in advance of our performance under the contract, such amount is recorded as client deposits. We establish an allowance for credit losses based on the credit quality of clients, current economic conditions, the age of the accounts receivable balances, historical experience, and other factors that may affect clients’ ability to pay, and charge-off amounts against the allowance when they are deemed uncollectible. The allowance for doubtful accounts was $0.2 million and $0 as of August 31, 2023 and August 31, 2022, respectively. The Company recognized unbilled revenue when work site employee payroll and payroll tax liabilities in the period in which the WSEs perform work. When clients'' pay periods cross reporting periods, we accrue the portion of the unpaid WSE payroll where we assume, under state regulations, the obligation for the payment of wages and the corresponding payroll tax liabilities associated with the work performed prior to period-end. These estimated payroll and payroll tax liabilities are recorded in accrued wages. The associated receivables, including estimated revenues, offset by advance collections from clients and an allowance for credit losses, are recorded as unbilled revenue. As of August 31, 2023 and August 31, 2022, advance collections included in unbilled revenue were $1.8 million and $2.1million, respectively. The Company receives advanced payments from customers prior to a payment that their invoice. The Company records this as a liability and the amount as of August 31, 2023 and August 31, 2022 $0.2 million and $0, respectively. |
Fixed Assets
Fixed Assets | 12 Months Ended |
Aug. 31, 2023 | |
Fixed Assets | |
Fixed Assets | Note 6: Fixed Assets Fixed assets consisted of the following as of August 31, 2023, and August 31, 2022 August 31, 2023 August 31, 2022 Equipment $ 2,182,000 $ 2,700,000 Furniture & fixtures 614,000 614,000 Leasehold improvements 604,000 710,000 3,400,000 4,024,000 Accumulated depreciation & amortization (1,778,000 ) (1,255,000 ) Fixed assets, net $ 1,622,000 $ 2,769,000 Depreciation and amortization expense for the years ended August 31, 2023 and August 31, 2022 was $0.5 million and $0.5 million respectively. The Company recorded an impairment expense related to its fixed assets of $1.0 million and $0 for the years ended August 31, 2023 and August 31, 2022, respectively and reduced equipment and accumulated depreciation and amortization. Software consists primarily of customized software purchased from third-party providers, which is incorporated into the Company’s HRIS platform and related mobile applications. The Company has evaluated certain development costs of its software solution in accordance with ASC Topic 350-40, Internal Use Software |
Workers Compensation
Workers Compensation | 12 Months Ended |
Aug. 31, 2023 | |
Workers Compensation | |
Workers' Compensation | Note 7: Workers’ Compensation In prior years, the Company had three workers’ compensation programs in effect at various points. The Everest program covered corporate employees and WSEs from July 1, 2017 through June 30, 2018 and the SUNZ program covered corporate employees and WSEs from July 1, 2018 through February 28, 2021. During Fiscal 2021, the Company made a strategic decision to change its approach to securing workers’ compensation coverage for our clients. This was primarily due to rapidly increasing loss development factors stemming in part from the COVID-19 pandemic. The combination of increased claims from WSEs, the inability of WSEs to obtain employment quickly and return to work after injury claims and increasing loss development factor rates from our insurance and reinsurance carriers resulted in significantly larger potential loss exposures, claims payments, and additional expense accruals. 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 Starting on January 1, 2021, we began to migrate our clients to our new direct cost program, which we believe significantly limits our claims exposure. Effective March 1, 2021, all of our clients had migrated to the direct cost program. The Company is currently engaged in litigation regarding for additional premium payments from additional claims loss funds from Sunz, as discussed at Note 15 Contingencies, and Sunz Litigation |
Payroll Tax And Related Liabili
Payroll Tax And Related Liabilities | 12 Months Ended |
Aug. 31, 2023 | |
Payroll Tax And Related Liabilities | |
Accrued Payroll and Related Liabilities | Note 8: Payroll Tax And Related Liabilities Accrued payroll liabilities consisted of the following as of August 31, 2023, and August 31, 2022: August 31, 2022 August 31, 2022 Payroll taxes liabilities $ 22,840,000 $ 12,932,000 Payroll related liabilities 237,000 346,000 Accrued penalties and interest 6,518,000 897,000 Total $ 29,595,000 $ 14,175,000 Payroll tax liabilities and payroll tax accrual are associated with the Company’s WSEs as well as its corporate employees. The Company has recorded approximately $6.5 million and $0.9 million in interest and penalties on approximately $22.8 million and $12.9 million on delinquent outstanding payroll taxes to the IRS and states and local authorities. In addition, the has received notices from the IRS has for approximately $11.8 million for unpaid tax liabilities including penalties and interest. The IRS can levy the Company’s bank accounts and is subject to enforcement collections. ShiftPixy has requested for a collection due process or equivalent hearing, that are subject to enforced collection. ShiftPixy has also filed for an abatement of additions to tax and related interest for the failure to make required deposits and the failure to timely pay required tax that are subject to enforced collection. That request is pending before the IRS Independent Office of Appeals. |
Stockholders Deficit
Stockholders Deficit | 12 Months Ended |
Aug. 31, 2023 | |
Stockholders Deficit | |
Stockholders' Deficit | Note 9: Stockholders’ Deficit Preferred Stock Series A On October 22, 2021, the Company’s board of directors canceled 491,250 Preferred Options previously issued to its co-founder, J. Stephen Holmes. As noted in Note 15, Contingencies Contingencies and Note 16, Subsequent Events. On July 14, 2022, the Board of the Company approved the issuance to the Company’s founder and principal shareholder, Scott Absher, of 520,833 shares of the Company’s preferred Series A stock .par value $0.0001 per share, in exchange for (a) the surrender by Mr. Absher of his options to acquire 520,833 Preferred Shares, which Preferred Options provide for exercise upon certain triggering events as described above, and as detailed in the Company's prior filings, and (b) the tender of payment by Mr. Absher of the sum of $5,000, representing four times the par value for such Preferred Shares. The Company evaluated the Preferred Shares on the same date using Level 2 inputs based on the closing market price of the Company’s common stock. The resulting allocated common share price was then discounted for a lack of marketability of shares, which yielded a fair value of $5.57 per preferred share Series A. The Company used the following assumptions to value the expense related to the preferred shares series A: (i) life of 10 years; (ii) risk free rate of 3.1%; (iii) volatility of 125.7%; (iv) exercise price of $0.0001 per share; and (v) a fair value of $0.3 per share of the Company’s common stock. These were recorded as compensation expense in the general and administrative expenses during the fiscal year August 31, 2022. On August 12, 2022, the Company entered into an agreement with Mr. Absher whereby he waived claims to certain unpaid compensation due to him through July 31, 2022, totaling $0.8 million, in exchange for an option to receive 170,833 shares of the Company's preferred stock series A. The Company evaluated the preferred shares series A on the same date using Level 2 inputs based on the closing market price of the Company’s common stock. The resulting allocated common share price was then discounted for a lack of marketability of shares, which yielded a fair value of $0.2025 per Preferred Share. The Company used the following assumptions to value the expense related to the Preferred Shares: (i) life of 10 years; (ii) risk free rate of 3.0%; (iii) volatility of 125.7%; (iv) exercise price of $0.0001 per share; and (v) a fair value of $0.23 per share of the Company’s common stock. Pursuant to Rule 144, 170,833, when converted into shares of common stock, are subject to a six-month holding period during which they may not be sold in the marketplace. All of the 358,333 preferred shares were converted into common stock on September 1, 2022, after the Company's reverse stock split had taken effect. As of November 30, 2022, there were no preferred shares options or preferred shares outstanding. As a result of this transaction, the Company recorded a preferential dividend of $127.1 million based upon the incremental value of the stock that was held prior to the reverse stock split and the date of preferred stock conversion to common stock. In addition, this had no effect on stockholders' deficit. Resulting in a reduction of the net loss available to common shareholders in the Company’s basic net loss per share calculation. Prior to the shareholder vote to approve the reverse stock split, the Company on August 2, 2022, amended its Articles of Incorporation to state that only the common stock is affected if the reverse stock split is effectuated with no intention to affect the preferred series A stock of the company. The reverse stock split was subsequently approved by the shareholders, and effectively the terms and conditions of the preferred stock were “deemed modified” and treated as an extinguishment (in accordance with ASC 470-50 and ASC 260-10-S99-2 for the disproportionate value received (the carrying compared to the fair value received). On September 1, 2022, Mr. Absher converted 358,333 preferred shares series A to 358,333 shares of the Company’s common stock. Pursuant to Rule 144, these 358,333 shares of common stock are subject to a six-month holding period during which they may not be sold in the marketplace. All of the 358,333 preferred shares series A were converted into common shares on September 1, 2022, after the Company's reverse stock split had taken effect. Accordingly, no preferred stock series A shares are issued and outstanding as of August 31, 2023. As noted in Note 15 Contingencies Subsequent Events On August 21, 2023, holders of an aggregate of 358,672 (representing 70.7%) of the Company’s outstanding shares of common stock, approved by written consent (a) a 1-for-24 (or such other ratio as may be determined by the Board) reverse split of the Company’s common stock, and, separately, (b) the Company’s grant to the its founder and CEO of the Option Agreement providing to him a conditional right to receive 4,744,234 shares of the Company’s preferred stock series A. This was approved by the shareholders. On August 22, 2023, the Company entered into an agreement (the “Option Agreement”) with the Company’s founder and CEO, Mr. Absher, providing for the conditional issuance to him of a right to receive 4,744,234 shares of the Company’s preferred stock series A. The Company used the following assumptions to value the expense related to the preferred shares of series A: (i) life of 1.1years; (ii) risk free rate of 5.57%; (iii) volatility of 186.168%; (iv) exercise price of $0.0001 per share; and (v) market price of $0.66 per share common (based upon the Company’s traded stock price) (vi) a fair value of $0.65999 per share of the Company’s common stock. The Company recorded $3.1 million as stock-based compensation expense that is included general and administrative expenses for the year ending August 31, 2023, in the Consolidated Statements of Operations. See Note 16, Subsequent Events Common Stock and Warrants On September 23, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a large institutional investor (the “Purchaser”) pursuant to which the Company sold to the Purchaser an aggregate of 17,361 shares of its common stock together with warrants (the “Warrants”) to purchase up to 34,772 shares of common stock (collectively, the “Offering”). Each share of common stock and two accompanying Warrants were sold together at a combined offering price of $288.00. The Warrants are exercisable for a period of seven years commencing upon issuance at an exercise price of $288.00, subject to adjustment. The private placement closed on September 23, 2022. The net proceeds to the Company from the Offering were $4.4 million. In connection with the Purchase Agreement, the Company and the Purchaser entered into Amendment No. 1 to Warrants (the “Warrant Amendment”). Pursuant to the Warrant Amendment, the exercise price of (i) 1,051 warrants issued on September 3, 2021, and (ii) 4,124 warrants issued on January 28, 2022, was reduced to $0.01. As a result of the warrant modification due to the change in the exercise price, the Company recorded an expense of $0.1 million for the year ended August 31, 2023. The incremental change in the fair market values was based upon the Black- Scholes option pricing model with the following inputs. The risk free interest of 3.7%, expected volatility of 149.4%, dividend yield of 0% and expected term of 6.7 to 6.8 years. A.G.P./Alliance Global Partners (the “Placement Agent” or "AGP") acted as the exclusive placement agent in connection with the Offering pursuant to the terms of a Placement Agent Agreement, dated September 20, 2022, between the Company and the Placement Agent (the “Placement Agent Agreement”). Pursuant to the Placement Agent Agreement, the Company paid the Placement Agent a fee equal to 7.0% of the aggregate gross proceeds from the Offering. In addition to the cash fee, the Company issued to the Placement Agent warrants to purchase up to 868 shares of common stock (5% of the number of shares sold in the Offering (the “Placement Agent Warrants”). The Placement Agent Warrants are exercisable for a period commencing six months from issuance, will expire four years from the effectiveness of a registration statement for the resale of the underlying shares, and have an initial exercise price of $316.80 per share. On January 31, 2023, the Company filed a S-3 registration statement on Form S-3 for $100 million for the sale of up to $100 million of equity securities over a three-year period. The SEC declared the S-3 effective on February 2, 2023. There is a limitation on the amount of funds that the Company can access under the baby shelf rules which is the value of a company’s public float if less than $75 million, The Company can only raise ⅓ of its float value over the previous 12-month period. On January 31, 2023, the Company entered into an ATM Issuance Sales Agreement which was a part of the registration statement on Form S-3 and prospectus supplement. The at the market offering was for up to $8.2 million in shares of its common stock, could be sold from time to time and at various prices at the Company’s sole control, subject to the conditions and limitations in the sales agreement with AGP. For the year ended August 31, 2023, the Company received net proceeds of $1.9 million from the sale of 18,305 shares of the Company’s common stock, respectively. On May 22, 2023, the Company terminated the ATM. On July 12, 2023, the Company priced a best-efforts public offering for the sale by the Company of an aggregate of 48,612 shares of common stock, 37,500 pre-funded warrants, and 86,112 common warrants. The public offering price was $36.00 per share and accompanying common warrant, or $35.999 per pre-funded warrant and accompanying common warrant. The pre-funded warrants were exercised for par value, or $0.0001. The common warrants are exercisable immediately for a term of five years and have an exercise price of $36.00 per share. 48,612 common shares, 37,500 pre-funded warrants and 86,112 common warrants under the offering were sold pursuant to a securities purchase agreement with an investor. A.G.P./Alliance Global Partners acted as placement agent for the offering. The net proceeds from this offering were $2.7 million. The offering closed on July 14, 2023. Effective upon closing of the offering, the exercise price of outstanding warrants the Company issued to an investor in 2020 and 2022 was reduced to $36.00 per share, subject to further adjustment as provided in the warrants, pursuant to a warrant amendment the Company entered into with the investor. The change in the exercise price results in a non-cash warrant modification expense for the year ended August 31, 2023, of $0.2 million. In September 2021, the Company entered into a $12 million private placement transaction, inclusive of $0.9 million of placement agent fees and costs, with a large institutional investor pursuant to which the Company sold to the investor an aggregate of (i) 1,188 shares of common stock, together with warrants (the “September 2021 common warrants”) to purchase up to 1,188 shares of common stock, with each September 2021 common warrant exercisable for one share of common stock at a price per share of $3,828.00, and (ii) 1,947 prefunded warrants (the “September 2021 Prefunded Warrants”), together with the September 2021 common warrants to purchase up to 3,135 shares of common stock, with each September 2021 prefunded warrant exercisable for one share of common stock at a price per share at par value or $0.00001. Each share of common stock and accompanying September 2021 common warrant were sold together at a combined offering price of $3,828.00 and each September 2021 prefunded warrant and accompanying September 2021 common warrant were sold together at a combined offering price of $3,827.76. On May 17, 2021, the Company issued warrants to purchase up to an aggregate of 2,062 shares of our common stock, with an exercise price of $5,820.00 "the "existing warrants"). The existing warrants were immediately exercisable and expire on June 15, 2026. On January 26, 2022, we entered into a warrant exercise agreement ("the exercise agreement") with the holder of the existing Warrants "the "Exercising Holder"). Pursuant to the Exercise Agreement, the Exercising Holder and the Company agreed that, subject to any applicable beneficial ownership limitations, the Exercising Holder would cash exercise up to 2,062 of its existing warrants "the "investor warrants") into shares of our common stock underlying such existing warrants "the "exercised shares"). To induce the exercising holder to exercise the investor warrants, the exercise agreement (i) amended the investor warrants to reduce their exercise price per share to $2,880.00.and (ii) provided for the issuance of a new warrant to purchase up to approximately 4,164 shares of the Company’s common stock (the “January 2022 common warrant”), with such January 2022 common warrant being issued on the basis of two January 2022 common warrant shares for each share of the existing warrant that was exercised for cash. The January 2022 common warrant is exercisable commencing on July 28, 2022, terminates on July 28, 2027, and has an exercise price per share of $3,077.00. The exercise agreement generated aggregate proceeds to the Company of approximately $5.9 million, prior to the deduction of $0.5 million of costs consisting of placement agent commissions and offering expenses payable by the Company. The Company expects to engage in additional sales of its securities during Fiscal 2024, either through registered public offerings or private placements, the proceeds of which the Company intends to use to fund its operations. If these sources do not provide the capital necessary to fund the Company’s operations during the next twelve months, it may need to curtail certain aspects of its operations or expansion activities, consider the sale of additional assets at distressed prices, or consider other means of financing. The Company is also seeking acquisition targets for growth, a recurring revenue base, significant gross profit conversion, margin expansion opportunities, a light industrial sector focus, a blue-chip client base, cyclical tailwinds, and a tenured management team willing and able to execute a comprehensive integration plan. The Company can give no assurance that it will be successful in implementing its business plan and obtaining financing on advantageous terms, or that any such additional financing will be available. If the Company is not successful in obtaining the necessary financing, we do not currently have the cash resources to meet our operating commitments for the next twelve months. The accompanying Consolidated Financial Statements do not include any adjustments for this uncertainty. January 2022 Warrant Exercise Agreement On May 17, 2021, the Company issued warrants to purchase up to an aggregate of 2,062 shares of our common stock, par value $0.0001 with an exercise price of $5,820.00 (the “existing warrants”). The existing warrants were immediately exercisable and expire on June 15, 2026. On January 26, 2022, we entered into a warrant exercise agreement (“the exercise agreement”) with the holder of the existing warrants (the “exercising holder”). Pursuant to the exercise agreement, the exercise holder and the Company agreed that, subject to any applicable beneficial ownership limitations, the Exercising Holder would cash exercise up to 49,485 of its existing warrants (the “investor warrants”) into shares of our common stock (the “exercised shares”). To induce the exercising holder to exercise the Investor warrants, the exercise Agreement (i) amended the Investor Warrants to reduce their exercise price per share to $2,880.00 and (ii) provided for the issuance of a new warrant to purchase up to an aggregate of approximately 4,124 shares of our common stock (the “January 2022 common warrant”), with such January 2022 Common Warrant being issued on the basis of two January 2022 Common Warrant shares for each share of the Existing Warrant that was exercised for cash. The January 2022 common warrant is exercisable commencing on July 28, 2022, terminates on July 28, 2027, and has an exercise price per share of $3,720.00. The Exercise Agreement generated net proceeds for the Company of approximately $ million. As a result of the warrant modification, which reduced the exercise price of the existing warrants, as well as the issuance of the January 2022 common warrants, the Company recorded approximately (i) $0.6 million for the increased fair value of the modified warrants; and (ii) $12.6 million as the fair value of the January 2022 common warrants on the date of issuance. The Company recorded approximately $5.5 million as issuance costs that offset the $5.5 million of additional paid-in capital the Company received for the cash exercise of the Existing Warrants at the reduced exercise price, while the remaining $7.7 million was recorded as a deemed dividend on the Consolidated Statements of Operations, resulting in a reduction of loss to common shareholders in the Company’s basic earnings per share calculation. The Company accounts for the warrants as equity-classified. July 19, 2022, Warrant Exercise Agreement On July 18, 2022, the Company entered into a warrant exercise agreement (the “exercise Agreement”) with the holder of the September 2021 Warrants and January 2022 Warrants (the “exercising holder”). Pursuant to the exercise agreement, the exercising holder and the Company agreed that the exercising holder would exercise for cash $2.083.00 of its September 2021 Warrants (the “Investor Warrants”). In order to induce the Exercising Holder to exercise the investor warrants, the exercise agreement (i) amends the September 2021 Warrants and January 2022 Warrants to (a) reduce the exercise price per share of the September 2021 Warrants and January 2022 Warrants to $624.00, (b) extends the expiration date of the September 2021 Warrants to May 3, 2029, and (c) extends the expiration date of the January 2022 warrants to July 28, 2029 and (ii) provides for the issuance by the Company to the Exercising Holder of new warrants to purchase up to 348,408 shares of common stock (the “new warrants”) (equal to 200% of the sum of the September 2021 warrants and January 2022 warrants). The new warrants are exercisable for a period of seven years commencing upon issuance and have an exercise price per share of $624.00. On July 25, 2022, the Company entered into an amendment with the holder of the Company’s warrants to purchase 348,408 shares of common stock, issued July 19, 2022. Pursuant to the amendment, the warrants were amended to be exercisable commencing January 19, 2023 (six months from the date of issuance) and will terminate January 19, 2030. As a result of the warrant modification, which reduced the exercise price of the existing warrants, as well as the issuance of the July 2022 Common Warrants, the Company recorded approximately (i) $488,700 and $599,700 for the increased fair value of the September 2021 and January 2022 modified warrants, respectively; and (ii) $8 million as the fair value of the July 2022 Common Warrants on the date of issuance. The Company recorded approximately $0.1 million in paid cost and $1.2 million as issuance costs that offset the $0.1 million of additional paid-in capital the Company received for the cash exercise of the existing warrants at the reduced exercise price, while the remaining $8.0 million was recorded as a deemed dividend on the Consolidated Statements of Operations, resulting in a reduction of loss available to common shareholders in the Company’s basic net loss per share calculation. The Company accounts for the warrants as equity-classified. Common Stock and Warrants During the year ending August 31, 2022, the Company issued the following securities pursuant to the transactions described above: · 1,188 shares of common stock, prefunded warrants to purchase 1,947 shares of common stocks and warrants to purchase 3,355 common stock pursuant to the September 2021 PIPE. · 29,062 shares of common stock and warrants to purchase 4,124 shares of common stock pursuant to the · 50,000 shares of common stock and warrants to purchase 348,408 common stock in connection with the · 2,083 preferred stock series converted into 3,333 shares of the Company’s common stock, par value $0.0001 per share. commencing six months from issuance, will expire four years from the effectiveness of a registration statement for the resale of the underlying shares, and have an initial exercise price of $316.80 per share. The following table summarizes the changes in the Company’s issued and outstanding common stock and prefunded warrants from August 31 2022 to August 31, 2023: Number of shares Weighted average remaining life (years) Weighted average exercise price $ Warrants outstanding, August 31, 2021 4,006 4.4 $ 9,216.00 Issued 23,880 7.6 1,992.00 Cancelled (1 ) — 662,400.00 Exercised (6,102 ) 5.2 — Warrants outstanding, August 31, 2022 21,783 7.2 1139.76 Issued 159,201 5.4 29.05 Cancelled (5,175 ) — 3,741.94 Exercised (37,500 ) 0 — Warrants outstanding, August 31, 2023, and exercisable 138,309 5.6 $ 208.78 The following tables summarize the Company’s issued and outstanding warrants outstanding as of August 31, 2023: Warrants Outstanding Weighted Average Life of Outstanding Warrants (In years) Exercise Price July 2023 Common Warrants 86,611 4.9 $ 36.00 September 2022 Common Warrants (Note 10) 34,772 6.1 36.00 September 2022 Underwriter Warrants 868 3.6 316.80 July 2022 Common Warrants (Note 10) 14,517 6.9 36.00 Sep 2021Underwriter Warrants 157 5.7 4,210.80 May 2021Underwriter Warrants 103 2.7 5,820.00 October 2020 Common Warrants (1) 750 2.1 7920.00 October 2020 Underwriter Warrants 208 2.1 36.00 May 2020 Common Warrants 83 2.1 7960.00 May 2020 Underwriter Warrants 532 1.7 12,960.00 March 2020 Exchange Warrants 46 1.7 12,960.00 Amended March 2019 Warrants 28 0.5 96,000.00 March 2019 Services Warrants 1 0.5 168,000.00 June 2018 Warrants 3 0.3 239,040.00 June 2018 Services Warrants 2 0.3 239,040.00 Total 138,309 9.6 $ 208.78 |
Stock Based Compensation
Stock Based Compensation | 12 Months Ended |
Aug. 31, 2023 | |
Stock Based Compensation | |
Stock Based Compensation | Note 10: Stock Based Compensation Employee Stock Option Plan 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 March 6, 2023, the shareholders approved an increase in the number of shares of common stock issuable under the Plan from 1,250 to 31,250. Under the terms of the Plan, options granted prior to July 1, 2020, each option 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. 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 remainer 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, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options and future dividends. The Company 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. As of August 31, 2023, there are 30,833 shares available under the Plan. The Company recognized approximately $1.0 million and $1.3 million. of stock-based compensation expense that is recorded in general and administrative expenses in the Statement of Operations, for the year ended August 31, 2023 and August 31, 2022, respectively. This excludes stock-compensation recorded of $3.1 million for the ended August 31, 2023 for the issuance of the preferred option grant to the Company’s CEO, see Note 9, Stockholders Deficit 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 consolidated balance sheets. The Company has incurred $0.2 million and $0.2 million for the years ended August 31, 2023 and August 31, 2022, respectively. The amount accrued as of August 31, 2023 and August 2022 was $0.7 million and $0.6 million, respectively. See Note 11 Related Parties The following table summarizes the Company’s option activity from August 31, 2021, through August 31, 2023: Options Outstanding and Exercisable Number of Options Weighted Average Remaining Contractual Life Weighted Average Exercise Price (In years) Balance, August 31, 2021 740 8.9 $ 15,672.00 Granted 58 9.8 2,520.00 Exercised — — — Forfeited (309 ) 8.4 10,896.00 Balance, August 31, 2022 490 8.1 17592.00 Granted — — — Exercised — — — Forfeited (73 ) — 454.00 Balance as of August 31, 2023 expected to vest 417 7.0 $ 19,528.80 Balance as of August 31, 2023, exercisable 315 7.1 $ 21,483.64 As of August 31, 2023, the total unrecognized deferred share-based compensation of $0.8 million expected to be recognized over the remaining weighted average vesting periods of 1.9 years. There was no intrinsic value for outstanding as of August 31, 2023. The following table summarizes information about stock options outstanding and vested as of August 31, 2023: Options Outstanding Options Vested Exercise Prices Number of Options Outstanding Number of Options Exercisable Weighted Average Remaining Contractual Life Weighted Average Exercise Price $ Number of Options Weighted Remaining Contractual Life Weighted Average Exercise Price $ (In years) (In years) $ 1,200 - $ 24,000 402 300 7.0 10,874.65 300 7.3 11,045.45 $ 24,001 - $ 96,000 1 1 5.7 45,480.00 17 5.7 45,480.00 $ 96,001 - $192,000 5 5 5.5 122,911.62 5 5.7 122,911.62 $192,001 - $288,000 4 4 4.6 247,167.74 4 5.5 247,167.74 $288,001 –$384,000 5 5 3.81 374,024.83 5 4.6 374,024.83 417 315 7.0 19,528.80 315 7.1 21,483.64 The number of options and exercise prices have been presented retroactively, see Subsequent Events |
Related Parties
Related Parties | 12 Months Ended |
Aug. 31, 2023 | |
Related Parties | |
Related Parties | Note 11: Related Parties Director Compensation Scott Absher On October 22, 2021, our Board approved raising Mr. Absher’s annual salary to $1M, effective January 1, 2022, and also approved the payment of a $0.5 million bonus to Mr. Absher, 50% of which was payable upon Board approval, and the remainder of which was payable on January 1, 2022. As of August 31, 2022, Mr. Absher received payment of 50% of his bonus, or $0.3 million, in March 2022. Furthermore, as discussed in Note 5, Stockholders’ Deficit on August 12, 2022, the Company entered into an agreement with Mr. Absher whereby he waived claims to certain unpaid compensation due to him through July 31, 2022, totaling $0.8 million, in exchange for an option to receive $4.1 million of the Company preferred stock series A shares. The agreement settled, the deferred payment of his incremental base salary, his outstanding personal time off or PTO as of July 31, 2022, and the remaining 50% of his approved bonus. As of January 1, 2023, Mr. Absher’s salary was adjusted back to the level applicable prior to the time of the adjustment effective January 1, 2022. Mr. Absher salary for the years ended August 31, 2023 and August 31, 2022 was $0.9 million and $0.8 million, respectively. The Company has accrued for his salary as of August 31, 2023 and August 31, 2022 which was $0.4 million and $0, respectively. Amanda Murphy On February 10, 2020, Amanda Murphy was appointed to our Board. Ms. Murphy was our Director of Operations at the time of her appointment. Ms. Murphy received salary compensation of $0.5 million $0.3 million for the years ended August 31, 2023, and August 31, 2022, respectively. As of August 31, 2022, Ms. Murphy has deferred payment related to her salary increase of approximately $0.2 million and $0.2 million as of August 31, 2023, and August 31, 2022, respectively. The deferred payment salary is recorded in the accrued liabilities on the Consolidated Balance Sheets. As of January 1, 2023, Ms. Murphy’s salary was adjusted back to the level applicable prior to the time of the adjustment effective January 1, 2022. Related Persons to Scott Absher Mark Absher, the brother of Scott Absher, was hired by the Company as Deputy General Counsel – Special Projects, for an annual salary for the years ended August 31, 2023, and August 31, 2022 of $0.2 million and $0.2 million, respectively. Mr. Absher resigned on October 13, 2023. David May, a member of our business development team, is the son-in-law of Mr. Absher. Mr. May’s compensation for the years ended August 31, 2023, and August 31, 2022 of $0.2 million and $0.2 million, respectively. Phil Eastvold, the Executive Producer of ShiftPixy Productions, Inc., is the son-in-law of Mr. Absher. Mr. Eastvold received compensation for the years ended August 31, 2023, and August 31, 2022 was $0.2 million and $0.2 million, respectively. Jason Absher, a member of the Company’s business development team, is the nephew of Scott Absher and the son of Mark Absher. Mr. Absher’s compensation for the years ended August 31, 2023 and August 31, 2022 was $0.1 million $0.1 million, respectively, Connie Absher, (the spouse of Scott Absher), Elizabeth Eastvold, (the daughter of Scott and Connie Absher and spouse of Mr. Eastvold), and Hannah Woods, (the daughter of Scott and Connie Absher), are also employed by the Company. These individuals, as a group, received compensation for the years ended August 31, 2023 and August 31, 2022 was $0.2 million and $0.2 million, respectively. The Company has accrued stock-based compensation related to shares of common stock to be issued for services provided by three directors. Stock-based compensation expense for the years ended August 31, 2023 and August 31, 2022, was $0.2 million and $0.2 million, respectively. The Company has agreements with three directors to receive shares of common stock valued at $0.1 million per year. No shares of common stock have been issued as of August 31, 2023 and August 31, 2023, respectively. As of August 31, 2023 and August 31, 2022, there are 1,208 and 0 shares of common stock to be issued to directors, respectively. The Chair of the Audit Committee resigned in July 2023. As of August 31, 2023 and August 31, 2022, the Company has accrued $0.7 million and $0.6 million, respectively for stock-compensation related to shares to be issued for services to certain directors. The amount due to the Board of Directors that is included in accounts payable is $0.3 million and $0.2 million, respectively. Company related to Scott Absher Scott Absher, the Company’s Chief Executive Officer is a shareholder in Quelliv. Quelliv seeks to provide a non-invasive, alternative approach to wellness using laser biomodulation / LLLT, activating the body’s restorative and regenerative processes. Quelliv is a client of ShiftPixy, Inc. ShiftPixy, Inc. has earned administration fee for the years ended August 31, 2023 and August 31, 2022 of $28,000 and $38,000 respectively, In connection with unreimbursed incurred on behalf of Quelliv, the nature of expenses were software development, information technology, marketing, branding, payroll, professional and miscellaneous expenses, the amount for the years ended August 31, 2023 and August 31, 2022 were $0.5 million and $1.0 million, respectively. |
Accounts Payable and Other Accr
Accounts Payable and Other Accrued Liabilities | 12 Months Ended |
Aug. 31, 2023 | |
Accounts Payable and Other Accrued Liabilities | |
Accounts Payable and Other Accrued Liabilities | Note 12 Accounts Payable and Other Accrued Liabilities Accounts payable and other accrued liabilities as of August 31, 2023 and August 31, 2022 consists of the following: August 31, 2023 August 31, 2022 Accounts payable 6,500,000 8,566,000 Contingent lease liability 3,761,000 3,761,000 Right-of-use liability 900,000 754,000 Legal settlement 1,660,000 - Shares owed to directors for services 800,000 606,000 ERTC owed to clients 1,089,000 417,000 Financed insurance policies 457,000 - Other 1,525,000 2,121,000 16,692,000 16,225,000 |
Income Taxes
Income Taxes | 12 Months Ended |
Aug. 31, 2023 | |
Income Taxes | |
Income Taxes | Note 13: Income Taxes Current income taxes are based upon the year’s income taxable for federal and state tax reporting purposes. Deferred income taxes (benefits) are provided for certain income and expenses, which are recognized in different periods for tax and financial reporting purposes. Deferred tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the period in which the differences are expected to affect taxable income. The Company’s deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers would be limited under the Internal Revenue Code should a significant change in ownership occur within a three-year period. Significant components of the net deferred tax assets as reflected on the consolidated balance sheets are as follows: August 31, 2023 2022 Deferred tax assets: Net operating loss carryforward $ 30,936,000 $ 26,069,000 Business interest 3,349,000 2,942,000 Other accruals 1,347,000 896,000 Workers’ compensation accruals 1,487,000 1,734,000 Stock-based compensation 60,000 135,000 ASC 842 Lease liability 742,000 31,000 Other 1,000 4,000 Total deferred tax assets 37,922,000 31,811,000 Valuation allowance (37,575,000 ) (31,224,000 ) Total net deferred tax assets 347,000 587,000 Deferred tax liabilities: Fixed assets and intangible assets (347,000 ) (587,000 ) Total deferred tax liabilities (347,000 ) (587,000) Net deferred tax assets $ — $ — Income tax expense (benefit) from continuing operations consists of the following: For the Years Ended August 31, 2023 2022 Current Federal $ — $ — State 13,000 (38,000 ) Total current 13,000 (38,000 ) Deferred Federal (4,774,000 ) (6,177,000 ) State (1,715,000 ) (2,476,000 ) Total deferred (6,489,000 ) (8,653,000 ) Change in valuation allowance 6,489,000 8,653,000 Income tax expense (benefit) $ 13,000 $ (38,000 ) The reconciliation of the statutory federal rate to the Company’s effective income tax rate is as follows: August 31, 2023 August 31, 2022 Federal statutory rate (21%) $ (7,164,000 ) $ (9,124,000 ) Inducement loss 68,000 917,000 Non-deductible penalties and other permanent differences 1,813,000 1,227,000 State and local income taxes, net of federal benefit (1,420,000 ) (1,983,000 ) Redetermination of prior year taxes 227,000 272,000 Change in valuation allowance 6,489,000 8,653,000 Income tax (benefit) from continuing operations $ 13,000 $ (38,000 ) The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of August 31, 2023, and August 31, 2022, the Company had no accrued interest and penalties related to uncertain tax positions. The deferred tax assets primarily comprise net operating loss carryforwards and other net temporary deductible differences such as stock-based compensation, deferred rent, depreciation, payroll taxes and workers’ compensation accrual. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, the projected future taxable income and tax planning strategies in making this assessment. Based on management’s analysis, they concluded that it was more likely than not that the deferred tax asset would not be realized. Therefore, the Company established a full valuation allowance against the deferred tax assets. The change in the valuation allowance as of August 31, 2023, and August 31, 2022 was approximately $6.5 million and $8.7 million, respectively. As of August 31, 2023, the Company had cumulative federal net operating loss (“NOL”) carryforwards of approximately $111.8 million which begin to expire in 2035 and state net operating loss carryforwards of approximately $119.1 million The Company’s net operating losses may be limited by the provisions of IRC Section 382, for which the Company has not performed an analysis of the potential limitations. These limitations will be imposed when the Company attains taxable income against which the NOL will be utilized. As of August 31, 2023, of approximately $101.2 million which have an indefinite life but are limited to 80% of taxable income when used. As explained above, the Company has determined that it is more likely than not that the Company’s deferred tax assets related to NOL Carryforwards will not be utilized. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company’ evaluated the impact of the CARES Act and determined that there was no material effect. The Company is subject to taxation in the U.S. The tax years for 2018 and forward are subject to examination by tax authorities. The Company is not currently under examination by any tax authority. Management has evaluated tax positions in accordance with FASB ASC 740, and has not identified any tax positions, other than those discussed above, that require disclosure. The Company does not expect a material change to this assessment over the 12 months following August 31, 2023. In August 2022 the United States enacted tax legislation through the Inflation Reduction Act (IRA). The IRA introduces a 15% corporate alternative minimum tax (CAMT) for corporations whose average annual adjusted financial statement income (AFSI) for any consecutive three-tax-year period ending after December 31, 2021, and preceding the tax year exceeds $1 billion. The CAMT is effective for tax years beginning after December 31, 2022. The CAMT is currently not applicable to the Company. |
Commitments
Commitments | 12 Months Ended |
Aug. 31, 2023 | |
Commitments | |
Commitments | Note 14: Commitments Operating Leases and License Agreements Effective August 13, 2020, the Company entered into a non-cancelable seven-year lease for office space located in Miami, Florida, to house its principal executive offices commencing October 2020, and continuing through September 2027. The lease contains escalation clauses relating to increases in real property taxes as well as certain maintenance costs. The monthly rent expense under this lease is approximately $57,000. The Company has not made payments under the lease agreement since June 2022, see Note 15 Contingencies On October 1, 2020, the Company entered into a non-cancelable 64-month lease for 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 contained escalation clauses relating to increases in real property taxes as well as certain maintenance costs. The monthly rent expense under this lease is approximately $35,000. The Company relocated its corporate office due to the litigation noted above. On June 7, 2021, the Company entered into a non-cancelable 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 anticipated 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. The monthly rent expense under this lease is approximately $27,000. On June 21, 2021, the Company entered into a non-cancelable 77-month lease for premises for office space located in Sunrise, Florida, that the Company anticipates using primarily to house its operations personnel and other elements of its workforce. The Company took possession of the lease on August 1, 2022. The base rent is paid monthly and escalates annually pursuant to a schedule set forth in the lease. The monthly rent expense under this lease is approximately $27,000. During the fourth quarter of 2023, the Company stopped paying the lease and abandoned this property. The Company is obligated to pay its lease obligation. ShiftPixy recorded an impairment expense of $1.5 million for the remaining value of the right of use asset. On May 2, 2022, the Company entered into a non-cancelable 60-month operating lease, as constituted in an amendment to a prior lease, commencing on July 1, 2022, for office space in Irvine, California, which the Company anticipates using primarily for its IT, operations personnel, and other elements of its workforce. The base rent is paid monthly and escalates annually according to a schedule outlined in the lease. The monthly rent expense under this lease is approximately $24,000. As an incentive, the landlord provided a rent abatement of 50% of the monthly rent for the first four months, with a right of recapture in the event of default. During the fourth quarter of 2023, the Company stopped paying the lease and abandoned this property. The Company is obligated to pay its lease obligation. ShiftPixy recorded an impairment expense of $1.0 million for the remaining value of the right of use asset. On August 31, 2022, the Company decided to formally abandon the leases for its offices in the Courvoisier Center, including a sublease on the second floor with Verifone. The determination was based on its inability to utilize the premises as they were under extensive construction renovation by the landlord, resulting in a significant negative impact on the Company’s ability to conduct business and the health and well-being of the Company’s employees and guests. The Company formally notified the landlord of its intention to vacate the premises and has not been legally released from the Company's primary obligations under the leases. The Company received a formal complaint from the landlord, and the matter is in litigation. The Company intends to vigorously defend the lawsuit and counterclaim for relocation costs, see Note 15, Contingencies The components of lease expense are as follows: August 31, 2023 August 31, 2022 Operating lease cost $ 1,081,000 $ 1,363,000 Future minimum lease and licensing payments under non-cancelable operating leases as of August 31, 2022, are as follows: Minimum lease commitments 2024 $ 1,056,000 2024 1,090,000 2026 823,000 2027 643,000 2028 378,000 Thereafter 130,000 Total minimum payments 4,120,000 Less: present value discount 455,000 Lease Liability $ 3,655,000 Weighted-average remaining lease term - operating leases (months) 58 Weighted-average discount rate 5.54 % The current portion of the operating lease liability is included within our accounts payable and other accrued liabilities in the accompanying consolidated balance sheets. In connection with the abandonment of the leases, the Company applied part of its security deposit to it the amount owed to its landlord. The remaining amount is not recoupable and the Company recorded an impairment expense of approximately $0.4 million. SPAC Sponsorship On April 29, 2021, the Company announced its sponsorship, through a wholly owned subsidiary, of four SPAC IPOs. The Company purchased founder shares in each SPAC, through its wholly owned subsidiary, for an aggregate purchase price of $25,000 per SPAC. The number of Founder Shares issued was determined based on the expectation that such Founder Shares would represent 20% of the outstanding shares of each SPAC after its IPO (excluding the private placement warrants described below and their underlying securities). The registration statement and prospectus covering the IPO of one of these SPACs, IHC, was declared effective by the SEC on October 19, 2021, and IHC units (the “IHC Units”), consisting of one share of common stock and an accompanying warrant to purchase one share of IHC common stock, began trading on the NYSE on October 20, 2021. The IHC IPO closed on October 22, 2021, raising gross proceeds for IHC of $115 million. In connection with the IHC IPO, the Company purchased, through its wholly owned subsidiary, 4,639,102 placement warrants at a price of $1.00 per warrant, for an aggregate purchase price of $4,639,102. The Company also anticipates purchasing private placement warrants in each of the three other SPACs it is sponsoring, at a price of $1.00 per warrant, for an aggregate of $17,531,408 (or up to $18,656,408 if the over-allotment option of each SPAC is exercised in full), which includes the Company’s investment in Founder Shares and assumes that all four SPAC IPOs are consummated and the pricing terms of each other SPAC IPO is identical to the pricing of the IHC IPO. Each private placement warrant is exercisable to purchase one whole share of common stock in each SPAC at $11.50 per share. The private placement warrants of each SPAC will be worthless to the extent that they do not complete an initial business combination. The investment amounts set forth above do not include loans that the Company may extend to each SPAC in an amount not to exceed $500,000 individually (or $2 million in the aggregate), in its role as sponsor. As of October 31, 2021, the Company had advanced, through its wholly owned subsidiary, an aggregate of approximately $820,000 to the SPACs for payment of various expenses in connection with the SPAC IPOs, principally consisting of SEC registration, legal and auditing fees. With the IHC SPAC liquidation the Company impaired approximately $0.4 million in outstanding loans that are considered uncollectible. The effect of this impairment had been eliminated as part of the IHC consolidation. |
Contingencies
Contingencies | 12 Months Ended |
Aug. 31, 2023 | |
Contingencies | |
Contingencies | Note 15: 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 assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. Legal During the ordinary course of business, the Company is subject to various claims and litigation. Management believes that after consulting legal counsel 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. 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. The Company denies any liability. Discovery is proceeding in the case, and no trial date has been set. 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 the 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. As of October 27, 2023, the parties settled the claim, with ShiftPixy agreeing to pay $1,000 per month for 10 months beginning December 1, 2023. The Company accrued for this settlement as of August 31, 2023. Everest Litigation On December 18, 2020, the Company was served with a Complaint filed in the United States District Court for the Central District of California by its 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 $0.6 million, which demand has since increased to approximately $1.6 million. On February 5, 2021, the Company filed an Answer to Plaintiff’s Complaint denying its claims for relief, and also filed a crossclaim 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, the Company refiled its complaint against Gallagher Basset in the Circuit Court of Cook County, Illinois. Everest subsequently filed a complaint against Gallagher Bassett in New Jersey. Discovery proceeded in the cases, and the California Court set a trial date in the Everest case of August 8, 2023, while no trial date has been set in either of the related Illinois or New Jersey cases, which are in preliminary stages. Mediation in the matter was conducted on December 14, 2022, and the matter was kept open until further notice as the parties endeavored to settle the case. On or about June 28, 2023, the Company entered into a confidential settlement agreement with Everest National Insurance Company and Gallagher Bassett, resolving the litigation amongst the parties. The Company recorded a gain from this this settlement, see Note 8 Discounted Operations Sunz Litigation On March 19, 2021, the Company was served with a Complaint filed in the Circuit Court for the 11th Judicial Circuit, Manatee County, Florida, by its 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, which represents approximately 200% of the amount of incurred and unpaid claims. The Company denies the plaintiff’s allegations and is defending the lawsuit vigorously. On May 12, 2021, the Company filed a motion to dismiss the complaint, and Sunz filed an amended complaint in response. Discovery is proceeding in the matter and no trial date has been set. On June 21, 2022, the Court granted Plaintiff’s partial motion for summary judgment, holding that Defendant is liable under the contract, but further finding that the number of damages, if any, to which Plaintiff is entitled should be determined at trial. We believe that partial summary judgment was improvidently granted, and therefore appealed the Court’s Order by filing a petition for writ of certiorari with the Court of Appeal, which appeal is now pending. On or about November 14, 2022, a court granted Sunz’ motion for summary judgment on a contractual issue—holding that the Company waived claims regarding Sunz’ management of claims to the extent that the Company did not complain about such management within 6 months of the alleged mismanagement of the claims. This ruling may limit the scope of the Company’s counterclaim. Trial in the case has been set for February 2024. The Parties have entered comprehensive negotiations for resolution of all matters, but the Company cannot predict whether a resolution will be accomplished before the final hearing in February 2024. As of August 31, 2023 and August 31, 2022, the liability owed to Sunz that is recorded in accrued workers compensation cost discounted operations liabilities is $5.6 million and $5.0 million, respectively. Vensure Litigation On September 7, 2021, Shiftable HR Acquisition, LLC, a wholly owned subsidiary of Vensure, filed a complaint against the Company in the Court of Chancery of the State of Delaware asserting claims arising from the Asset Purchase Agreement (the “APA”) governing the Vensure Asset Sale described above. The APA provided for Vensure to purchase, through its wholly owned subsidiary, certain of the Company’s assets for total consideration of $19 million in cash, with $9.5 million to be paid at closing, and the remainder to be paid in 48 equal monthly installments (the “Installment Sum”). The Installment Sum was subject to certain adjustments to account for various post-closing payments made by the parties, and the APA provided for the following procedure to determine the final amount of the Installment Sum: (i) within 90 days of the effective date, Vensure was required to provide the Company with a “Proposed Closing Statement”, which must detail any adjustments; (ii) within 30 days of its receipt of Vensure’s Proposed Closing Statement, the Company had the right to challenge any of the proposed adjustments contained therein; and (iii) if the Company disputed Vensure’s Proposed Closing Statement, a 30-day period ensued for the parties to attempt to resolve the dispute, with the Company entitled to examine “such books and records of [Vensure] as relate to the specific items of dispute.” Vensure resisted the Company’s repeated efforts to obtain the Proposed Closing Statement for over one year after the closing of the transaction. Finally, on March 12, 2021, under threat of legal action by the Company, Vensure provided its Proposed Closing Statement, in which it contended for the first time that it owes nothing to the Company, and that the Company actually owes Vensure the sum of $1.5 million. By letter dated April 6, 2021, the Company provided Vensure with its objections to the Proposed Closing Statement, which included Vensure’s gross overstatement of payments it purportedly made on the Company’s behalf, as well as its bad faith actions in obstructing the Company’s efforts to make these payments. From April 2021 through August 2021, Vensure and the Company engaged in the “30-day negotiation period” referred to above, which was extended multiple times at Vensure’s request to provide Vensure an opportunity to provide evidence supporting its assertions. Over the course of these negotiations, Vensure withdrew its claim for approximately $1.5 million from the Company and acknowledged that Vensure owed ShiftPixy some portion of the Installment Fund. Nevertheless, in early September 2021, without warning and contrary to the dispute resolution provisions of the APA, Vensure filed suit against the Company in Delaware Chancery Court for breach of contract and declaratory judgment, seeking unspecified damages. The Company vigorously disputes and denies each of Vensure’s claims. Accordingly, on November 4, 2021, the Company filed its Answer and Counterclaim to Vensure’s Complaint, in which it not only denied Vensure’s claims, but also asserted counterclaims for breach of contract and tortious interference with contract. The counterclaim seeks damages from Vensure totaling approximately $9.5 million – the full amount due under the APA - plus an award of attorneys’ fees and expenses. The case is now settled for $2.5 million, and the Company received the funds on November 22, 2023. This resolves all claims and the case, and all claims, will be dismissed. Courvoisier Centre Litigation On August 24, 2022, the landlord of our former headquarters offices, Courvoisier Centre, LLC, filed a complaint against the Company in the Eleventh Judicial Circuit Court (Miami-Dade County, Florida) alleging breach of the lease. The Company vacated the offices and ceased payments under the lease in July of 2022, after repeatedly complaining to the landlord regarding the impact of its extensive renovations of the campus and building in which the Company's offices were situated, citing substantial impairments to the Company's ability to conduct business as well as concerns regarding the health and well-being of the Company’s employees and guests, and the landlord’s inability and refusal to provide any adequate relief. On or about October 10, 2022, the Company filed our answer to the complaint and the Company's counterclaim. The Company intends to vigorously defend the lawsuit and seek recovery for its costs of relocation. Mediation is scheduled for December 21, 2023. The Company has accrued for this liability as of August 31, 2023, and August 31, 2022 of $3.9 million. Certified Tire Litigation On June 29, 2020, the Company was served with a complaint filed by its former client, Certified Tire, in the Superior Court of the State of California, Orange County, naming the Company, two of its officers, and one of its former subsidiaries as defendants. The Complaint asserts multiple causes of action, all of which stem from the former client’s claim that the Company is obligated to reimburse it for sums it paid in settlement of a separate lawsuit brought by one of its employees pursuant to Private Attorney General Act or PAGA. This underlying lawsuit alleged the Company's former client was responsible for multiple violations of the California Labor Code. The Company and the officers named as defendants deny the former client’s allegations, and the Company is defending the lawsuit vigorously based primarily on the Company's belief that the alleged violations that gave rise to the underlying lawsuit were the responsibility of Certified Tire and not the Company. Substantial discovery has taken place; trial was set for September 5, 2023, but was moved to January 15-26, 2024. The Company’s dispositive motion for summary judgment was denied by the court because of its determination that factual disputes exist. In Re John Stephen Holmes Bankruptcy Litigation On November 8, 2022, the Chapter 7 trustee of the bankruptcy estate of John Stephen Holmes filed an action against the Company, asserting that the cancellation by the Company of Mr. Holmes' 491, 250 preferred options on October 22, 2021, violated the automatic stay applicable to Mr. Holmes' Chapter 7 proceedings. After the Company filed a motion to dismiss the trustee's complaint, the trustee endeavored to exercise an option 520,833 preferred shares) that had been issued in the early stages of the Company but that was later superseded by a modified option that did not provide for convertibility of the preferred shares to common stock and which modified option was in effect at the time that Mr. Holmes filed for bankruptcy. The trustee insists that it has a right to exercise the option for 520,833 preferred shares series A and convert the shares to common stock, notwithstanding (a) the fact that the preferred shares were not convertible to common stock at the time Mr. Holmes filed his bankruptcy petition, (b) the lapse of more than 3 years' time during which the trustee failed to take any action in relation to the option, (c) the connection of the option to Mr. Holmes, who now competes with and is believed to have taken clients from the Company, (d) the intervening 1-for-100 reverse stock split and extensive corporate governance actions and (e) the negative impact that the issuance of up to 520,833 shares would have on the Company and its shareholders. Were the trustee to be successful in its claim, the Company would be obligated to issue up to 520,833 restricted shares of the Company's common stock to the trustee, which issuance would materially dilute the share ownership of the existing shareholders and could cause a material decline in the price per share of the Company's common stock. The Company has asserted a number of defenses and intends to vigorously defend itself against the claim. Another mediation in this case was set for December 8 th Employee Retention Tax Credit (“ERTCs”) Claims The Company has filed various ERTCs claims with the IRS on behalf of its clients that have otherwise failed to obtain the related benefits afforded to them pursuant to the filing of Form 7200—the time for the filing of which has expired. To date, the Company has received ERTCs amounting to $1.2 million and based on pending claims submissions, it expects to receive an additional $3.9 million for a total of $4.1 million in ERTCs submitted to date. In addition, the Company anticipates filing additional ERTCs claims as clients continue to request that the Company complete the submission thereof to the IRS. Because of the Company’s currently existing payroll tax liability, the Company presently receives ERTCs from the IRS in the form of a credit to the Company’s outstanding payroll tax liability. The Company is not presently able to remit the ERTCs to its clients and plans to offer its clients restricted shares of the Company’s common stock in payment of the ERTCs applicable to such clients. If a client rejects the payment of its respective ERTCs in the form of the restricted shares of the Company’s common stock as proposed by ShiftPixy, such client may seek to enforce its rights to recover its ERTCs by filing lawsuits against the Company. Capistrano Catering, Inc. v. ShiftPixy, Inc. On June 13, 2022, a Complaint was filed in the Superior Court of the State of California, Orange County, Case No. 30-2022-01264583, by its former client, Capistrano Catering, Inc., asserting claims for specific performance, breach of contract, and breach of the covenant of good faith. Plaintiff’s complaint alleges that we violated our client services agreement by not applying for an employee retention tax credit (“ERTC”) on behalf of Capistrano Catering pursuant to Section 3134 of the Internal Revenue Code and seeks damages of “at least $0.5 million plus prejudgment interest thereon at the legal rate.” The Company initially maintained that it has no legal basis to apply for the ERTC on behalf of Plaintiff, and that the claim is therefore without merit. However, the Company has changed its position, based on its understanding of applicable law and is now actively offering to file for the credit on the client’s behalf. The parties have entered into a stipulation providing for the submission to the IRS by the Company of ERTC claims on behalf of Capistrano Catering and remittance to Capistrano Catering of any credit amounts received from the IRS in response thereto by the Company. The IRS has announced a suspension of accepting further ERTC claims until 2024, so the Company is unable to affect the subject submission until permitted by the IRS. The Court has set a status conference for February 15, 2024, to assess the status of the Company’s filing of ERTC claims on behalf of Capistrano Catering. The Company intends to remit to Capistrano Catering the full amount of any credits received from the IRS, although the Company may request a reasonable fee for its processing services. The Company has offered to issue to plaintiff shares of ShiftPixy’s stock in payment of the ERTC in the event that ShiftPixy receives the credit from the IRS and is unable at such time to forward the payment to plaintiff, provided, however, Capistrano Catering has not indicated whether it will accept the offer of shares, and it may insist on receiving cash in such event. Foundry ASVRF Sawgrass, LLC v. ShiftPixy, Inc. On or around October 16, 2023, the company received a variety of legal proceedings documents as filed in the County Court of the 17th Judicial Circuit in and for Broward County, Florida, as case No. COWE-23-003124, arising out of the Company’s abandonment of a lease of premises at Suite 650, 13450 W. Sunrise Blvd., Sunrise, Florida 33323. Most of the Company’s $0.3 million security deposit has been applied to the cost of unpaid improvements and rent past due for the months of June, July, August and September of 2023 (as well as unreplenished security deposit amounts for prior months). Rent and operating costs per month was approximately $0.1 million. The lease term continues until December 31, 2028. The Landlord has sued for eviction, replenishment of the security deposit and damages for future payments under the lease. Although the plaintiff will claim damages equal to the full value of the lease, the Company has defenses in the nature of the plaintiff’s duty to mitigate damages by securing one or more replacement tenants. The parties are anticipated to engage in mediation wherein the parties are expected to settle plaintiff’s claims. The Company has recorded the value the value of its lease obligation. Given the early stage of the matter, it is too early to assess the anticipated amount to which the plaintiff will be entitled; however, the plaintiff will likely be entitled to damages approximately equal to the amount of the monthly lease payment due times the number of months it would reasonably take the plaintiff to secure one or more replacement tenants, plus costs associated with the preparation of the premises for such new tenant(s), plus costs associated with the brokerage fee associated with securing the new tenant. Golden West Wings LLC v. ShiftPixy, Inc. On September 21, 2022, another of ShiftPixy’s clients, including a number of affiliates, filed suit in U.S. District Court, Southern District of California (San Diego), Case No. 822CV1834ADS, asserting claims for specific performance, breach of contract, and breach of the covenant of good faith. Plaintiff’s complaint alleges that the Company violated its client services agreement by not applying for an employee retention tax credit ERTC on behalf of client pursuant to Section 3134 of the Internal Revenue Code and seeks damages of at least $2.3 million plus prejudgment interest thereon at the legal rate. The Company was served with the complaint and summons in this matter on October 21, 2022, and the Company has filed a motion to dismiss. Plaintiffs amended their complaint to allege a claim of fraud against the CEO, Scott Absher. The Company initially maintained that it has no legal basis to apply for the ERTC on behalf of Plaintiff, and that the claim is therefore without merit. However, the Company changed its position, based on its understanding of applicable law and filed the ERTC claims on behalf of the client in July of 2023, and intends to remit to the client the full amount of the credit if and as received from the IRS. Golden West Wings voluntarily dismissed their entire complaint against all Parties on November 10, 2023. Other Matters On June 5, 2023, ShiftPixy. received a letter (the “June 5, 2023 NASDAQ Letter”) from the staff of the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“NASDAQ”), which notifies the Company that it does not presently comply with Nasdaq’s Listing Rule 5550(b)(2), which requires that the Company maintain a Market Value of Listed Securities (“MVLS”) of $35 million, and that the Company does not otherwise satisfy the requirements of Listing Rules 5550(b)(1) or 5550(b)(3). The Staff calculates MVLS based upon the most recent Total Shares Outstanding (TSO), multiplied by the closing bid price. The June 5, 2023, Nasdaq Letter does not have any immediate effect on the listing of the Company’s common stock on the Nasdaq Capital Market, and the Company has 180 calendar days from the date of the June 5, 2023, NASDAQ Letter (the “Compliance Period”) to regain compliance. If at any time during the Compliance Period the Company’s MVLS closes at $35 million or more for a minimum of ten (10) consecutive business days, NASDAQ will provide the Company with written confirmation of compliance, and this matter will be closed. If the Company does not achieve compliance within the Compliance Period, it will receive written notice from NASDAQ that its securities are subject to delisting, which is a determination that the Company could appeal to the NASDAQ Hearings Panel. On August 2, 2023, ShiftPixy received a letter (the “August 2, 2023 NASDAQ Letter”) from the staff of the Listing Qualifications Department of NASDAQ, which notifies the Company that, in view of the recent resignation of an independent director who was a member of the Company’s audit committee, the Company does not presently comply with NASDAQ’s Listing Rule 5605, which requires that a majority of the Company’s board of directors be comprised of independent directors, and that the Company has an audit committee comprised of at least three independent directors, one of which “has past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Aug. 31, 2023 | |
Subsequent Events | |
Subsequent Events | Note 16: Subsequent Events On October 5, 2023, the Company, entered into a securities purchase agreement with an institutional investor, pursuant to which the Company issued to investor (i) in a registered direct offering, 56,250 shares of common stock of the Company at a price of $26.40 per share, and pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 38,125 shares of Common Stock at a price of $26.40 per share and an exercise price of $0.0001 per share, and (ii) in a concurrent securities private placement, common stock purchase warrants (the “Private Placement Warrants”), exercisable for an aggregate of up to 56,250 shares of common stock, at an exercise price of $26.40 per share. The pre-funded warrants were exercised. The net proceeds of this offering were $2.0 million. . Effective October 14, 2023, the Company filed articles of amendment to the Company’s articles of incorporation to affect a one-for-one hundred (1:24) reverse split of the Company’s issued and outstanding shares of Common Stock. The reverse split became effective on Nasdaq October 16, 2023. All references to common stock, warrants and options, except for the preferred stock option granted in August 2023, to purchase common stock, including per share data and related information contained in the accompanying Consolidated Financial Statements have been retroactively adjusted to reflect the effect of the reverse stock split for all periods presented. Prior to the shareholder vote to approve the reverse stock split, the Company on October 14, 2023, amended its Articles of Incorporation to state that only the common stock is affected if the reverse stock split is effectuated with no intention to affect the Preferred Stock Series A of the company. The reverse stock split was subsequently approved by the shareholders, and effectively the terms and conditions of the preferred stock series A were “deemed modified” and treated as an extinguishment (in accordance with ASC 470-50 and ASC 260-10-S99-2 for the disproportionate value received (the carrying value compared to the fair value received). On October 17, 2023, Mr. Absher converted 4,744,234 shares of his preferred stock series A to common stock. As a result of this transaction, the Company is expected to record a preferential dividend of $67.4 million based upon the incremental value of the stock that was held prior to the reverse stock split and the date of preferred stock series A conversion to common stock. In addition, this had no effect on stockholders’ deficit. On November 22, 2023, the Company reached a favorable settlement with Vensure for $2.5 million. The Company received $2.5 million on November 22, 2023. On November 28, 2023, the court ruled in favor of the Company’s vendor, Ben Devs LLC for $2.0 million and the settlement and ShiftPixy paid an un upfront payment of $1.0 million on November 30, 2023. The Company has $3.5 million in accounts payable and accrued liabilities approximately $0.6 million as of August 31, 2023, and August 31, 2022, on the Company’s consolidated balance sheets. On December 8, 2022, the Company in the legal matter related to J. Stephen Holmes, came to an understanding to settle this matter for $550,000. No formal agreement was reached, and the Company has accrued $550,000 in the accompanying consolidated balance sheet as of August 31, 2023. On October 14, 2023, the Company received notice of a fraud action against ShiftPixy from the bankruptcy trustee for Industrial Human Capital involving the closure of the Industrial Human Capital SPAC. The Company has not yet had an opportunity to evaluate the merits of the claim. On December 14, 2023, the Company received a letter from the Staff notifying the Company that for the last 10 consecutive business days, from November 30 to December 13, the Company’s market value of listed securities has been $35,000,000 or greater and accordingly, the Company meets the market value of listed securities requirement as set forth in Listing Rule 5550(b)(2). The Company has evaluated events that have occurred after the date of these Consolidated Balance Sheets though the date that the consolidated financial statements were issued, and has determined that, other than those listed below, no such reportable subsequent events exist through the date the financial statements were issued in accordance with FASB ASC Topic 855, “Subsequent Events.” |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies, Going Concern and Liquidity (Policies) | 12 Months Ended |
Aug. 31, 2023 | |
Summary of Significant Accounting Policies, Going Concern and Liquidity | |
Basis of Presentation | The 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”). |
Principles of Consolidation | The consolidated financial statements include the accounts of ShiftPixy, Inc., and its wholly owned subsidiaries. The consolidated financial statements previously included the accounts of Industrial Human Capital, Inc. (“IHC”), which was a special purpose acquisition company, or “SPAC,” for which our wholly owned subsidiary, ShiftPixy Investments, Inc., served as the financial sponsor (as described below), and which SPAC was deemed to be controlled by the Company a result of the Company’s 15% equity ownership stake, the overlap of three of our executive officers for a period of time as executive officers of IHC, and significant influence that the Company exercised over the funding and acquisition of new operations for an initial business combination (“IBC”). (See below, Note 2, Variable Interest Entity, see below.). All intercompany balances have been eliminated in consolidation until February 7, 2023, at which time it was deconosolidated. As of February 7, 2023, IHC was not a part of the Company’s operations, and consolidation. IHC was dissolved on November 14, 2022, and the Trustee released all the redemption funds from the Trust Account, See Note 4, to IHC shareholders on December 1, 2022, effectively liquidating the Trust. On February 7, 2023, three creditors of IHC filed an involuntary petition for liquidation under Chapter 7 against IHC in the US Bankruptcy Court for the Southern District of Florida. See Note 4, Pursuant to ASC 810-10-15, consolidation is precluded where control does not rest for a non-controlling interest in legal reorganization or bankruptcy. In addition, IHC did not meet the criteria of a Variable Interest Entity (“VIE”), see Note 4. |
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: · Continuation as a going concern; management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets and liquidation of all liabilities in the normal course of business · Liability for legal contingencies · Projected development of workers’ compensation claims · Payroll tax and associated penalties and interest · Impairment of long-lived assets These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions that are difficult to measure of value. Management regularly reviews the key factors and assumptions to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such valuation, if deemed appropriate, those estimates are adjusted accordingly. |
Liquidity, Capital Resources and Going Concern | As of August 31, 2023, the Company had cash of $0.1 million and a working capital deficit of $50.1 million. During the year ended August 31, 2023, the Company used approximately $9.2 million of cash from its continuing operations and incurred recurring losses, resulting in an accumulated deficit of $226.4 million. As of August 31, 2023, the Company is delinquent with respect to remitting payroll tax payments to the IRS, states and local jurisdictions. The Company has retained tax counsel and has been in near constant communication with the IRS regarding processing its Employee Retention Tax Credits (“ERTCs”). On September 14, 2023, the IRS has a moratorium on processing new ERTC claims and many of the Company’s clients are seeking refunds. Recently, the Company has filed ERTC claims for our clients and has not received any acceptance from the IRS. Some clients have filed suits against the Company, demanding that the Company take action to file for additional ERTCs for certain tax periods. ShiftPixy have received notices from the IRS that they owe approximately $11.8 million for unpaid tax liabilities, including penalties and interest. The balances reported on such notices do not represent the full payroll tax liability of ShiftPixy as of August 31, 2023. ShiftPixy expects its payroll tax liabilities, penalties and interest to increase in the future. Moreover, the IRS has threatened to take enforced collection against ShiftPixy, Inc. and ShiftPixy, potentially in addition to other subsidiaries. ShiftPixy have taken steps to preserve so-called “collection due process rights” and present collection alternatives to the proposed enforced collection. Specifically: · ShiftPixy had a collection due process hearing with the IRS Independent Office of Appeals on October 24, 2023. On October 24 and November 6, 2023, ShiftPixy requested that the IRS Independent Office of Appeals (“Appeals”), among other things, abate additions to tax and related interest for the failure to make required deposits and the failure to timely pay required tax. That request is pending before Appeals; and · On October 27, 2023, the IRS issued to ShiftPixy a Letter 1058, Final Notice, Notice of Intent to Levy and Notice of Your Right to a Hearing Request for a Collection Due Process or Equivalent Hearing Notwithstanding the above-described requests for a collection due process hearing, should the IRS determine the collectability of tax be in jeopardy, the IRS can, with limited notice, levy the affected Company’s bank accounts and subject it to enforced collection if ShiftPixy cannot obtain a resolution of the payroll tax issues, the United States Tax Court can (and will be asked to) review Appeals’ determination. There is no assurance that the IRS will abate penalties and interest currently assessed against ShiftPixy. If ShiftPixy gets abated the outstanding penalties, and interest or raise the necessary capital to fund its payroll tax obligations and collection alternative, it may cause ShiftPixy to file for bankruptcy protection in the near future. The Company has taken aggressive steps to reduce its overhead expenses. The Company’s plans and expectations for the next twelve months include raising additional capital which may help fund the Company’s operations and seeking acquisitions targets funded by debt or stock by Company’s in staffing services as the key driver towards its success. The Company expects to engage in additional sales of its securities during Fiscal 2024, either through registered public offerings or private placements, the proceeds of which the Company intends to use to fund its operations. If these sources do not provide the capital necessary to fund the Company’s operations during the next twelve months, it may need to curtail certain aspects of its operations or expansion activities, consider the sale of additional assets at distressed prices, or consider other means of financing. The Company is also seeking acquisition targets funded by debt and stock, for growth, a recurring revenue base, significant gross profit conversion, margin expansion opportunities, a light industrial sector focus, a blue-chip client base, cyclical tailwinds, and a tenured management team willing and able to execute a comprehensive integration plan. The Company can give no assurance that it will be successful in implementing its business plan and obtaining financing on advantageous terms, or that any such additional financing will be available. These Consolidated Financial Statements do not include any adjustments for this uncertainty. Under the existing accounting guidance, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the Consolidated Financial Statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the Consolidated Financial Statements are issued. When substantial doubt is determined to exist, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans; however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date the Consolidated Financial Statements are issued, and (2) it is probable that the plans, when implemented, may mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued. Therefore, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date of the issuance of the financial statements. Historically, the Company’s principal source of financing has come through the sale of the Company’s common stock, including in certain instances, warrants and the issuance of convertible notes. On October 5, 2023, the Company, entered into a securities purchase agreement with an institutional investor, pursuant to which the Company agreed to issue and sell to the investor (i) in a registered direct offering, 56,250 shares at a price of $26.40 per share, and pre-funded warrants, to purchase up to 38,125 shares of common Stock at a price of $26.40 per share and an exercise price of $0.0001 per share of common stock, and (ii) in a concurrent securities private placement, common stock purchase warrants (the “Private Placement Warrants”), exercisable for an aggregate of up to 56,250 shares of common stock, at an exercise price of $26.40 per share of common stock. The pre-funded warrants were exercised in October 2023 and the Company issued 38,125 shares of common stock. The net proceeds of this offering were $2.0 million. |
Revenue and Direct Cost Recognition | The Company’s revenues are primarily disaggregated into fees for providing staffing solutions and EAS/HCM services. The Company enters into contracts with its clients for Staffing based on a stated rate and price in the contract. Contracts generally have a term of 12 months, are cancellable at any time by either party with 30 days’ written notice. Revenue is (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 performance obligations in the agreements are generally combined into one performance obligation, as they are considered a series of distinct services, and are satisfied over time because the client simultaneously receives and consumes the benefits provided as the Company performs the services. The Company does not have significant financing components or significant payment terms for its clients and consequently has no material credit losses. The Company uses the output method based on a stated rate and price over the payroll processed to recognize revenue, as the value to the client of the goods or services transferred to date appropriately depicts the Company’s performance towards complete satisfaction of the performance obligation. Staffing Solutions The Company records gross billings as revenues for its staffing solutions clients. The Company is primarily responsible for fulfilling the staffing solutions services and has discretion in establishing price. The Company includes the payroll costs in revenues with a corresponding increase to cost of revenues for payroll costs associated with these services. As a result, we are the principal in this arrangement for revenue recognition purposes. EAS Solutions / HCM EAS solutions and Human Capital Management “HCM” revenues are 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) an administrative fee and (iii) if eligible, WSE can elect certain pass-through benefits. Gross billings are invoiced to each EAS and HCM client, concurrently with each periodic payroll. Revenues are offset by payroll cost component and pass through costs which are presented on a net basis for revenue recognition. WSEs perform their services at the client's worksite. The Company assumes responsibility for processing and remitting payroll to the WSE and payroll related obligations, it does not assume employment-related responsibilities such as determining the amount of the payroll and related payroll obligations. Revenues that have been recognized but not invoiced are included in unbilled accounts receivable on the Company’s consolidated balance sheets were $1.8 million and $2.1 million, as of August 31, 2023 and August 31, 2022, respectively. Incremental Cost of Obtaining a Contract Pursuant to the “practical expedients” provided under Accounting Standards Update “ASC” No 2014-09, the Company expenses sales commissions when incurred because the terms of its contracts are cancellable by either party upon 30-day notice. These costs are recorded in commissions in the Company’s Consolidated Statements of Operations. |
Disaggregation of Revenue | The Company’s primary revenue streams include HCM / EAS and staffing services. The Company’s disaggregated revenues for the year ended August 31,2023 and August 31, 2022, respectively, were as follows (in millions): For the Years Ended Revenue (in thousands): August 31, 2023 August 31, 2022 HCM / EAS (1) $ 1.6 $ 6.4 Staffing 15.5 29.6 Total $ 17.1 $ 36.0 (1) HCM / EAS revenue is presented net, $39.0 gross less worksite employees payroll cost of $37.4 for the years end August 31, 2023 and August 31, 2022, $52.2 million gross less worksite employees payroll cost of $45.8, respectively. For the years ended August 31, 2023, and August 31, 2022, respectively, the following states represented more than 10% of total revenues: For the Years Ended States: August 31, 2023 August 31, 2022 California 51.7 % 52.1 % Washington 11.6 % 13.3 % New Mexico 10.8 % 8.1 % |
Segment Reporting | The Company operates as one reportable segment under Accounting Standards Codification “ASC” 280, Segment Reporting |
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 cash equivalent as of August 31, 2023, and August 31, 2022. |
Marketable Securities Held in Trust Account | As of August 31, 2022, all of the assets held in the Trust Account were invested in U.S. Treasury securities with maturities of 180 days or less. These funds were restricted for use and were only be used for purposes of completing an initial business combination (“IB”) or redemption of the public common shares of IHC. On December 1, 2022, the Company distributed $117.6 million to the shareholders of IHC. As of August 31, 2023, and August 31, 2022, assets held in the Trust Account were $0 and $117.0 million. |
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 August 31, 2023, and August 31, 2022, there was $0.0 million and $0.6 million, respectively, of cash on deposit in excess of the amounts insured by the FDIC. The following represents clients who have ten percent of total accounts receivable as of August 31, 2023, and August 31, 2022, respectively. As of August 31, 2023 August 31, 2022 Client 1 64.5 % 0.0 % Client 2 23.6 % 41.9 % Client 3 5.6 % 13.7 % Client 4 3.3 % 21.9 % Client 5 0.0 % 20.7 % The following represents clients who have ten percent of gross revenues for the years ended August 31, 2023, and August 31, 2022, respectively. August 31, 2023 August 31, 2022 Client 1 13.9 % 7.8 % Client 2 10.6 % 10.7 % |
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 fixed assets for purposes of computing depreciation are as follows: Equipment: 5 years Furniture & Fixtures: 5 – 7 years Leasehold improvements Shorter of useful life or the remaining lease term, typically 5 years Depreciation and amortization expense for the years ended August 31, 2023, and August 31, 2022 were $0.5 million and $0.5 million, respectively, and included on the 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 Accounting Standards Codification “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 and 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. The net book value for computer software development is $0 as of August 31, 2023, and August 31, 2022. The Company determined that there was no material capitalized internal software development costs for the years ended August 31, 2023 and August 31, 2022. 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. The Company incurred research and development costs of $0.3 million and $2.5 million for the years ended August 31, 2023, and August 31, 2022, respectively. All costs were related to internally developed or externally contracted software and related technology for the Company’s HRIS platform and related mobile applications. |
Lease Recognition | The Financial Accounting Standards Board “FASB” established Topic 842, Leases, by issuing ASU No. 2016-02 “ASC” 842, which required lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The standard established a right-of-use asset model (“ROU”) that required a lessee to recognize an ROU operating lease asset and lease liability on the balance sheets for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the Consolidated Statement of Operations. |
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 |
Workers' Compensation | Everest Program Until July 2018, a portion of the Company’s workers’ compensation risk was covered by a retrospective rated policy through Everest National Insurance Company, 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 funded the policy 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 under that policy exceed the expected losses under that policy, then the Company could receive a demand for additional premium payments. The Company became engaged in litigation regarding such a demand for additional premium payments; however, the Company reached a settlement agreement with Everest for $0.4 million in June 2023 to end its litigation. As a result of the settlement, the Company recorded a gain of $1.0 million during the year ended August 31, 2023. The Company made an initial payment of $0.1 million and has monthly payment of $0.1 million. The Company owes Everest $0.3 million as of August 31, 2023, which is included in accounts payable and accrued liabilities in the accompanying balance sheet. 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 provided and maintained 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. The Company has not funded into the program for incurred claims that was expected to be paid within one year. As of August 31, 2023 and August 31, 2022, the liability owed to Sunz that is recorded in accrued workers compensation cost discounted operations liabilities is $5.6 million and $5.0 million, respectively. The Company is currently engaged in litigation with Sunz for additional claims loss funds, as discussed in Note 15, Contingencies, Sunz. 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. There were no workers compensation deposits related to these programs as of August 31, 2023, and as of August 31, 2022, respectively. 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. With regard to the prior programs, which continue until fully concluded, 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 August 31, 2023 and August 31, 2022, the Company had short-term accrued workers’ compensation costs of $1.2 million and $0.6 million, and long-term accrued workers’ compensation costs of $0 million and $1.2 million, respectively. 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, Discontinued Operations , 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 require 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 Annual 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 the Company’s 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 August 31 2023, we continue to monitor closely all workers’ compensation claims made in relation to the COVID-19 pandemic. |
Fair Value of Financial Instruments | Accounting Standard Codification “ASC” 820, Fair Value Measurement 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 · Quoted prices for similar assets or liabilities in active markets · Quoted prices for identical or similar assets or liabilities in inactive markets · Inputs other than quoted prices that are observable for the asset or liability · Inputs that are derived principally from or corroborated by observable market data by correlation or other means; and · 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 Funds held in Trust Account represent U.S. treasury bills that was restricted for use and may only be used for purposes of completing an IBC or redemption of the public shares of common stock of the SPACs as set forth in their respective trust agreements. The funds held in trust are included within Level 1 of the fair value hierarchy and included in cash and marketable securities held in Trust Account in the accompanying Consolidated Balance Sheets. The Trustee distributed all the funds in the Trust Account to the shareholders of IHC on December 1, 2022. When the Company changes its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in current market conditions or other factors, it could be required to transfer those assets or liabilities to another level in the hierarchy based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur. 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. There were no transfers out of Level 3 for the years ended August 31, 2023 and August 31, 2022. Level 1 assets consisted of cash and marketable securities (only for August 31, 2022) as of August 31, 2023, and August 31, 2022, respectively. The Company did not have any Level 2 or 3 assets or liabilities as of August 31, 2023, or August 31, 2022. The Company has recorded approximately $1.0 million charge for an impairment expense for the year ended August 31, 2023 for its fixed assets. The Company asses the impairment charge based upon Level 3 Inputs to the valuation methodology. Below is non-recurring fair measurement, based upon significant unobservable inputs as of August 31, 2023. Fair Value at Reporting Data Using Quoted Prices Significant in Active Market Other Observable Significant for Identical Observable Unobservable Total Assets (Level 1) Inputs (Level 2) Inputs (Level 3) As of August 31, 2023 Fixed assets $ 1,622,000 $ - $ - $ 1,622,000 |
Advertising Costs | The Company expenses all advertising as incurred. Advertising expense for the year August 31, 2023 and August 31, 2022 was $2.3 million and $2.6 million, respectively. Adverting expense includes salaries and external costs. |
Income Taxes | The Company accounts for income taxes pursuant to ASC 740, Income Taxes. Under ASC 740, deferred income taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under ASC 740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. A full valuation allowance was recorded as of August 31, 2023, and August 31, 2022, respectively. |
Stock-Based Compensation | The Company has one stock-based compensation plan under which the Company may issue awards, as described in Note 10, Stock Based Compensatio n Compensation-Stock Compensation 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 the Company’s 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. |
Net Loss Per Share | Basic net loss per common share is computed by dividing net loss attributable to common shareholders by the weighted-average number of shares of common stock outstanding during the reporting period. Diluted net loss per share is computed similar to basic loss per share except that the denominator is increased to include additional common stock equivalents available upon exercise of stock options, warrants, shares of common stock to be issued to directors for services provided and the option for preferred stock Class Option 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 and conditional option for Preferred Stock Series A that is convertible into common stock. 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. The number used for the weighted average number of shares of common stock included convertible preferred shares series A for the year ended August 31, 2022 and conditional preferred option for the year ended August 31, 2023. These securities are convertible to common stock on a one for one basis to common stock without any restrictions and considered common stock since the exercise price is par value. The following potentially dilutive securities were not included in the calculation of diluted net loss per share attributable to common shareholder of ShiftPixy, Inx. Because their effect would be antidilutive for the periods presented: For the Year Ended August 31, 2023 For the Year Ended August 31, 2022 Options 417 490 Shares to be issued for services to the board of directors 1,208 - Warrants 138,309 21,783 Total potentially dilutive shares 139,934 22,272 The conditional preferred options were excluded from the potentially dilutive shares in the table above since they are included in the weighted average outstanding share count for the basic earnings per share calculation. For the table above, “Options” represent all options granted under the Company’s 2017 Stock Option/Stock Issuance Plan (the “Plan”), as described in Note 10, Stock Based Compensation, |
Recently Adopted Accounting Standards | In June 2016, the Financial Accounting Standards Board “FASB” issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). This standard requires an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, each reporting entity should estimate an allowance for expected credit losses, which is intended to result in more timely recognition of losses. This model replaces multiple existing impairment models in current. GAAP, which generally requires a loss to be incurred before it is recognized. The new standard applies to trade receivables arising from revenue transactions such as contract assets and accounts receivable. Under ASC 606, revenue is recognized when, among other criteria, it is probable that an entity will collect the consideration it is entitled to when goods or services are transferred to a client. When trade receivables are recorded, they become subject to the CECL model and estimates of expected credit losses on trade receivables over their contractual life will be required to be recorded at inception based on historical information, current conditions, and reasonable and supportable forecasts. On September 1, 2022, the Company adopted this guidance, and it was not material to the results of operations. |
Variable Interest Entity | The Company has been involved in the formation of various entities considered to be Variable Interest Entities (“VIEs”). The Company evaluates the consolidation of these entities as required pursuant to ASC Topic 810 relating to the consolidation of VIEs. These VIEs are SPACs. The Company’s determination of whether it is the primary beneficiary of a VIE is based in part on an assessment of whether or not the Company and its related parties are exposed to the majority of the risks and rewards of the entity. Typically, the Company is entitled to substantially all or a portion of the economics of these VIEs. The Company is the primary beneficiary of the VIE entities. Through November 30, 2022, only one of the four SPAC companies existed, See Note 4 Special Purpose Acquisition Company Sponsorship that has more information regarding the remaining SPAC company. There are no SPAC companies as of February 7, 2023. In connection with the IPO in October 2021, the Company purchased, through its wholly owned subsidiary, ShiftPixy Investments, Inc. (“Investments” or the “Sponsor”), 4,639,102 private placement warrants (“Placement Warrants”) at a price of $1.00 per warrant, for an aggregate purchase price of $4.6 million, and the Company currently own 2,110,000 Founder Shares of IHC common stock, representing approximately 15% of the issued and outstanding common stock of IHC. Before the closing of the IPO, the Sponsor transferred 15,000 Founder Shares to IHC’s independent directors, reducing its shareholdings from 2,125,000 to 2,110,000. Each Placement Warrant was identical to the warrants sold in the IPO, except as described in the IPO registration statement and prospectus. Following the completion of IHC’s IPO, the Company determined that IHC was a VIE in which the Company had a variable interest because IHC did not have enough equity at risk to finance its activities without additional subordinated financial support. The Company had also determined that IHC’s public stockholders did not have substantive rights, and their equity interest constitutes temporary equity, outside of permanent equity, in accordance with ASC 480-10-S99-3A, at such time. As such, the Company concluded that they were the primary beneficiary of IHC as a VIE, as the Company had the right to receive benefits or the obligation to absorb losses of the entity, as well as the power to direct a majority of the activities that significantly impact IHC’s economic performance. Since the Company was the primary beneficiary, IHC to be consolidated into the Company’ Consolidated Financial Statements through February 7, 2023. See Note 4, for the dissolution of IHC and entire amount from the Trust Account to IHC shareholders on December 1, 2022. As of December 1, 2021, the Company determined that IHC was not a VIE. The Company did not have the power to direct the operations of IHC since IHC was dissolved on November 14, 2022, and the assets of the Trust Account were distributed to its shareholders on December 1, 2022. The Company lost its voting rights, and there is no possibility of recouping its investment. As a result, the Company determined that IHC will not be consolidated into the Consolidated Financial Statements as of December 1, 2022, See Note 4 regarding three of IHC creditors forcing them into bankruptcy. As a result of the deconsolidation of the VIE on February 7, 2023, the Company recorded the elimination of $9.4 million of the non-controlling interest to additional paid-in capital as it was originally recorded. The net liabilities of IHC were $0.6 million as of February 7, 2023, that resulted in the Company recording $0.6 million to other income and $0.5 million to non-controlling or, 85% of its non- ownership interest in IHC. |
Subject to Possible Redemption | The Company previously accounts for its common stock holdings in its sponsored special purpose acquisition corporations “SPACs” (which were consolidated in the Company’s Consolidated Financial Statements through February 7, 2023, which was previously subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Shares of common stock subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable shares of common stock were classified as a current liability since the shares were redeemed as of August 31, 2022. Each sponsored SPAC’s shares of common stock feature certain redemption rights that are considered to be outside of the SPAC’s control and subject to occurrence of uncertain future events. However, since the common stock subject to redemption were paid to IHC shareholders on December 1. 2022, the fair market value as of August 31, 2022, was classified as a current liability. The Company has recorded increases or decreases in the carrying amount of the redeemable common stock are affected by charges against additional paid in-capital and accumulated deficit. |
Reclassification | The Company reclassified certain expenses to conform to the current year's presentation, for accrued penalty and interest to payroll tax related liabilities, which was included on the accompanying consolidated balances sheets. In addition for the consolidated statements of operations, penalties and interest expense was included with salaries, wages and payroll taxes which was previously included in general and administrative expenses. For the year ended August 31, 2022, the reserve for uncollectible purchase price adjustment note receivable was reclassified to general and administrative expenses. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Summary of Significant Accounting Policies, Going Concern and Liquidity | |
Disaggregation of Revenue | For the Years Ended Revenue (in thousands): August 31, 2023 August 31, 2022 HCM / EAS (1) $ 1.6 $ 6.4 Staffing 15.5 29.6 Total $ 17.1 $ 36.0 |
Revenue from External Customers by Geographic Areas | For the Years Ended States: August 31, 2023 August 31, 2022 California 51.7 % 52.1 % Washington 11.6 % 13.3 % New Mexico 10.8 % 8.1 % |
Schedules of Concentration of Risk, by Risk Factor | As of August 31, 2023 August 31, 2022 Client 1 64.5 % 0.0 % Client 2 23.6 % 41.9 % Client 3 5.6 % 13.7 % Client 4 3.3 % 21.9 % Client 5 0.0 % 20.7 % |
Schedules of Concentration of Risk, by Risk Factor One | August 31, 2023 August 31, 2022 Client 1 13.9 % 7.8 % Client 2 10.6 % 10.7 % |
Schedule of Estimated Useful Lives of Property and Equipment | Equipment: 5 years Furniture & Fixtures: 5 – 7 years Leasehold improvements Shorter of useful life or the remaining lease term, typically 5 years |
Schedule of Fair Value of Financial Instruments | Fair Value at Reporting Data Using Quoted Prices Significant in Active Market Other Observable Significant for Identical Observable Unobservable Total Assets (Level 1) Inputs (Level 2) Inputs (Level 3) As of August 31, 2023 Fixed assets $ 1,622,000 $ - $ - $ 1,622,000 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | For the Year Ended August 31, 2023 For the Year Ended August 31, 2022 Options 417 490 Shares to be issued for services to the board of directors 1,208 - Warrants 138,309 21,783 Total potentially dilutive shares 139,934 22,272 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Discontinued Operations | |
Schedule of condensed consolidated balance sheets | 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 adjustment (2,604,000 ) Adjusted note receivable 6,896,000 Less: reserve for estimated potential claims (2,892,000 ) Less: reserve for uncollectable purchase price note receivable (4,004,000 ) Note receivable $ — |
Schedule Of classes of assets and liabilities from the Vensure Asset Sale | August 31, 2023 August 31, 2022 Deposits – workers’ compensation $ — $ — Total current assets — — Deposits – workers’ compensation — — Total assets $ — $ — Accrued workers’ compensation cost $ 1,303,000 $ 1,362,000 Total current liabilities 1,303,000 1,362,000 Accrued workers’ compensation cost 3,068,000 3,269,000 Total liabilities 4,389,000 4,631,000 Net liability $ (4,389,000 ) $ (4,631,000 ) |
Schedule of Disposal Groups Including Discontinued Operations Income Statement | For the Years Ended August 31, 2023 August 31, 2022 Revenues $ — $ — Cost of revenue 606,000 590,000 Gross profit (606,000 ) (590,000 ) Operating expenses: Settlement gain (848,000 ) — Total operating expenses (848,000 ) — Net income (loss) from discontinued operations $ 242,000 $ (590,000 ) |
Schedule of Disposal Groups Including Discontinued Income Tax Expenses | For the Years Ended August 31, 2023 2022 Income expense tax (benefit) Federal tax expense (benefit) $ 47,000 $ (114,000 ) State tax expense (benefit) 17,000 (45,000 ) Total tax expense (benefit) 64,000 (159,000 ) Loss carryforwards (64,000 ) 159,000 Income tax expense from discontinued operations $ — $ — |
Fixed Assets (Tables)
Fixed Assets (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Fixed Assets | |
Schedule of Fixed Assets | August 31, 2023 August 31, 2022 Equipment $ 2,182,000 $ 2,700,000 Furniture & fixtures 614,000 614,000 Leasehold improvements 604,000 710,000 3,400,000 4,024,000 Accumulated depreciation & amortization (1,778,000 ) (1,255,000 ) Fixed assets, net $ 1,622,000 $ 2,769,000 |
Payroll Tax And Related Liabi_2
Payroll Tax And Related Liabilities (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Payroll Tax And Related Liabilities | |
Schedule of Accrued Payroll and Related Liabilities | August 31, 2022 August 31, 2022 Payroll taxes liabilities $ 22,840,000 $ 12,932,000 Payroll related liabilities 237,000 346,000 Accrued penalties and interest 6,518,000 897,000 Total $ 29,595,000 $ 14,175,000 |
Stockholders Deficit (Tables)
Stockholders Deficit (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Stockholders Deficit | |
Schedule of common stock and prefunded warrants | Number of shares Weighted average remaining life (years) Weighted average exercise price $ Warrants outstanding, August 31, 2021 4,006 4.4 $ 9,216.00 Issued 23,880 7.6 1,992.00 Cancelled (1 ) — 662,400.00 Exercised (6,102 ) 5.2 — Warrants outstanding, August 31, 2022 21,783 7.2 1139.76 Issued 159,201 5.4 29.05 Cancelled (5,175 ) — 3,741.94 Exercised (37,500 ) 0 — Warrants outstanding, August 31, 2023, and exercisable 138,309 5.6 $ 208.78 |
Schedule of Warrants Outstanding | Warrants Outstanding Weighted Average Life of Outstanding Warrants (In years) Exercise Price July 2023 Common Warrants 86,611 4.9 $ 36.00 September 2022 Common Warrants (Note 10) 34,772 6.1 36.00 September 2022 Underwriter Warrants 868 3.6 316.80 July 2022 Common Warrants (Note 10) 14,517 6.9 36.00 Sep 2021Underwriter Warrants 157 5.7 4,210.80 May 2021Underwriter Warrants 103 2.7 5,820.00 October 2020 Common Warrants (1) 750 2.1 7920.00 October 2020 Underwriter Warrants 208 2.1 36.00 May 2020 Common Warrants 83 2.1 7960.00 May 2020 Underwriter Warrants 532 1.7 12,960.00 March 2020 Exchange Warrants 46 1.7 12,960.00 Amended March 2019 Warrants 28 0.5 96,000.00 March 2019 Services Warrants 1 0.5 168,000.00 June 2018 Warrants 3 0.3 239,040.00 June 2018 Services Warrants 2 0.3 239,040.00 Total 138,309 9.6 $ 208.78 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Stock Based Compensation | |
Share-based Payment Arrangement, Option, Activity | Options Outstanding and Exercisable Number of Options Weighted Average Remaining Contractual Life Weighted Average Exercise Price (In years) Balance, August 31, 2021 740 8.9 $ 15,672.00 Granted 58 9.8 2,520.00 Exercised — — — Forfeited (309 ) 8.4 10,896.00 Balance, August 31, 2022 490 8.1 17592.00 Granted — — — Exercised — — — Forfeited (73 ) — 454.00 Balance as of August 31, 2023 expected to vest 417 7.0 $ 19,528.80 Balance as of August 31, 2023, exercisable 315 7.1 $ 21,483.64 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable | Options Outstanding Options Vested Exercise Prices Number of Options Outstanding Number of Options Exercisable Weighted Average Remaining Contractual Life Weighted Average Exercise Price $ Number of Options Weighted Remaining Contractual Life Weighted Average Exercise Price $ (In years) (In years) $ 1,200 - $ 24,000 402 300 7.0 10,874.65 300 7.3 11,045.45 $ 24,001 - $ 96,000 1 1 5.7 45,480.00 17 5.7 45,480.00 $ 96,001 - $192,000 5 5 5.5 122,911.62 5 5.7 122,911.62 $192,001 - $288,000 4 4 4.6 247,167.74 4 5.5 247,167.74 $288,001 –$384,000 5 5 3.81 374,024.83 5 4.6 374,024.83 417 315 7.0 19,528.80 315 7.1 21,483.64 |
Accounts Payable and Other Ac_2
Accounts Payable and Other Accrued Liabilities (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Accounts Payable and Other Accrued Liabilities | |
Schedule of Accounts Payable and Other Accrued Liabilities | August 31, 2023 August 31, 2022 Accounts payable 6,500,000 8,566,000 Contingent lease liability 3,761,000 3,761,000 Right-of-use liability 900,000 754,000 Legal settlement 1,660,000 - Shares owed to directors for services 800,000 606,000 ERTC owed to clients 1,089,000 417,000 Financed insurance policies 457,000 - Other 1,525,000 2,121,000 16,692,000 16,225,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Income Taxes | |
Summary of deferred tax | August 31, 2023 2022 Deferred tax assets: Net operating loss carryforward $ 30,936,000 $ 26,069,000 Business interest 3,349,000 2,942,000 Other accruals 1,347,000 896,000 Workers’ compensation accruals 1,487,000 1,734,000 Stock-based compensation 60,000 135,000 ASC 842 Lease liability 742,000 31,000 Other 1,000 4,000 Total deferred tax assets 37,922,000 31,811,000 Valuation allowance (37,575,000 ) (31,224,000 ) Total net deferred tax assets 347,000 587,000 Deferred tax liabilities: Fixed assets and intangible assets (347,000 ) (587,000 ) Total deferred tax liabilities (347,000 ) (587,000) Net deferred tax assets $ — $ — |
Summary of Income tax expense (benefit) from continuing operations | For the Years Ended August 31, 2023 2022 Current Federal $ — $ — State 13,000 (38,000 ) Total current 13,000 (38,000 ) Deferred Federal (4,774,000 ) (6,177,000 ) State (1,715,000 ) (2,476,000 ) Total deferred (6,489,000 ) (8,653,000 ) Change in valuation allowance 6,489,000 8,653,000 Income tax expense (benefit) $ 13,000 $ (38,000 ) |
Summary of statutory federal rate | August 31, 2023 August 31, 2022 Federal statutory rate (21%) $ (7,164,000 ) $ (9,124,000 ) Inducement loss 68,000 917,000 Non-deductible penalties and other permanent differences 1,813,000 1,227,000 State and local income taxes, net of federal benefit (1,420,000 ) (1,983,000 ) Redetermination of prior year taxes 227,000 272,000 Change in valuation allowance 6,489,000 8,653,000 Income tax (benefit) from continuing operations $ 13,000 $ (38,000 ) |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Commitments | |
Lease, Cost | August 31, 2023 August 31, 2022 Operating lease cost $ 1,081,000 $ 1,363,000 |
Future minimum lease and licensing payments under non-cancelable operating | Minimum lease commitments 2024 $ 1,056,000 2024 1,090,000 2026 823,000 2027 643,000 2028 378,000 Thereafter 130,000 Total minimum payments 4,120,000 Less: present value discount 455,000 Lease Liability $ 3,655,000 Weighted-average remaining lease term - operating leases (months) 58 Weighted-average discount rate 5.54 % |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Revenues | $ 17.1 | $ 36 |
HCM / EAS [Member] | ||
Revenues | 1.6 | 6.4 |
Staffing [Member] | ||
Revenues | $ 15.5 | $ 29.6 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - Revenue from Contract with Customer Benchmark - Geographic Concentration Risk | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Washington | ||
Concentration risk, percentage | 11.60% | 13.30% |
New Mexico | ||
Concentration risk, percentage | 10.80% | 8.10% |
California | ||
Concentration risk, percentage | 51.70% | 52.10% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - Accounts Receivable - Customer Concentration Risk | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Client 1 | ||
Concentration risk, percentage | 64.50% | 0% |
Client 2 | ||
Concentration risk, percentage | 23.60% | 41.90% |
Client 3 | ||
Concentration risk, percentage | 5.60% | 13.70% |
Client 4 | ||
Concentration risk, percentage | 3.30% | 21.90% |
Client 5 | ||
Concentration risk, percentage | 0% | 20.70% |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) - Gross Revenues [Member] - Customer Concentration Risk | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Client 1 | ||
Concentration risk, percentage | 13.90% | 7.80% |
Client 2 | ||
Concentration risk, percentage | 10.60% | 10.70% |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details 4) | 12 Months Ended |
Aug. 31, 2023 | |
Equipment Member | |
Property, plant and equipment, useful life | 5 years |
Furniture & Fixtures: | Minimum | |
Property, plant and equipment, useful life | 5 years |
Furniture & Fixtures: | Maximum | |
Property, plant and equipment, useful life | 7 years |
Leasehold improvements | |
Property, plant and equipment, useful life | 5 years |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Details 5) - USD ($) | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Fixed assets, Gross | $ 3,400,000 | $ 4,024,000 |
Fixed assets [Member] | ||
Quoted Prices in Active Market for Identical Assets | 0 | |
Significant Other Observable Observable Inputs | 0 | |
Significant UnObservable Inputs | 1,622,000 | |
Fixed assets, Gross | $ 1,622,000 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies (Details 6) - shares | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Total potentially dilutive shares (in shares) | 139,934 | 22,272 |
Shares to be issued for services to the board of directors | ||
Total potentially dilutive shares (in shares) | 1,208 | |
Warrants | ||
Total potentially dilutive shares (in shares) | 138,309 | 21,783 |
Options tow | ||
Total potentially dilutive shares (in shares) | 417 | 490 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||||||||
Oct. 05, 2023 | Feb. 07, 2023 | Jun. 30, 2023 | Oct. 22, 2021 | Aug. 31, 2023 | Aug. 31, 2022 | May 31, 2023 | Sep. 20, 2022 | Oct. 31, 2021 | Aug. 31, 2021 | May 17, 2021 | |
Net book value of assets | $ 6,500,000 | $ 128,618,000 | |||||||||
Cash | 100,000 | ||||||||||
Worksite employee payroll cost | 37,400,000 | $ 45,800,000 | |||||||||
Impairment expense | 1,000,000 | ||||||||||
Working capital deficit | (50,100,000) | ||||||||||
Net cash used in operating activities, continuing operations | 9,200,000 | ||||||||||
Retained earnings (accumulated deficit) | $ 226,400,000 | ||||||||||
Exercise price | $ 208.78 | $ 9,216 | $ 35.68 | $ 13.20 | $ 0.0001 | ||||||
Weighted average number of shares of common stock outstanding loss per share | 358,333 | ||||||||||
Net proceeds from sale | $ 1,900,000 | ||||||||||
Outstanding warrants | 138,309 | 21,783 | 4,006 | 49,485 | |||||||
Sale of stock, number of shares issued in transaction (in shares) | 18,305 | ||||||||||
Impairment expense | $ 3,900,000 | $ 7,900,000 | |||||||||
Assets held in the Trust Account | 0 | 117,000,000 | |||||||||
Unbilled accounts receivable | 1,800,000 | 2,100,000 | |||||||||
Cash, uninsured amount | 0 | 600,000 | |||||||||
Depreciation and amortization | 500,000 | 50,000 | |||||||||
Research and development expense | 300,000 | 2,500,000 | |||||||||
Workers' compensation asset, current | 1,200,000 | 600,000 | |||||||||
Workers' compensation asset, noncurrent | 0 | 1,200,000 | |||||||||
Workers' compensation liability, current | 4,400,000 | 1,400,000 | |||||||||
Workers' compensation liability, noncurrent | 0 | 3,300,000 | |||||||||
Settlement Amount with Everest | $ 400,000 | ||||||||||
Advertising expense | $ 2,300,000 | 2,600,000 | |||||||||
Description of everest program settlement | As a result of the settlement, the Company recorded a gain of $1.0 million during the year ended August 31, 2023. The | ||||||||||
Liability against Everest program | 1,300,000 | ||||||||||
Liability before settlement | 1,400,000 | ||||||||||
Discontinued operation liabilities | $ 5,600,000 | 5,000,000 | |||||||||
Redeemable Noncontrolling Interest, Equity, Common, Redemption Funds Distributed To Shareholders | 117,574,000 | 0 | |||||||||
Deconsolidation, loss, amount | (540,000) | 0 | |||||||||
Other Income | |||||||||||
Accounts payable and accrued payable | $ 300,000 | ||||||||||
Deconsolidation, loss, amount | $ 5,000 | ||||||||||
Noncontrolling interest [Member] | |||||||||||
Noncontrolling interest, decrease from deconsolidation | 9,400,000 | ||||||||||
Minimum | |||||||||||
Sale of stock, number of shares issued in transaction (in shares) | 2,125,000 | ||||||||||
Maximum | |||||||||||
Sale of stock, number of shares issued in transaction (in shares) | 2,110,000 | ||||||||||
IHC | |||||||||||
Variable interest entity, net liabilities | (600,000) | ||||||||||
Non-controlling interest | $ (500,000) | ||||||||||
Variable interest entity, qualitative or quantitative information, non-ownership percentage | 15% | ||||||||||
IPO | IHC | |||||||||||
Exercise price | $ 1 | ||||||||||
IPO | IHC | Placement Warrants | |||||||||||
Outstanding warrants | 4,639,102 | 4,639,102 | |||||||||
Sale of warrants, price per share (in dollars per share) | $ 1 | ||||||||||
Redeemable Noncontrolling Interest, Equity, Common, Redemption Funds Distributed To Shareholders | $ 117,600,000 | ||||||||||
Aggregate purchase price | $ 4,639,102 | $ 4,600,000 | |||||||||
Common stock, shares, transferred (in shares) | 15,000 | ||||||||||
Subsequent Event [Member] | |||||||||||
Sale of common stock, shares | 56,250 | ||||||||||
Sale of pre-funded warrants | 38,125 | ||||||||||
Offering price | $ 26.40 | ||||||||||
Offering price for pre funded warrants | 26.40 | ||||||||||
Exercise price | $ 0.0001 | ||||||||||
Net proceeds from sale | $ 2,000,000 | ||||||||||
Subsequent Event [Member] | Public Offering | |||||||||||
Sale of common stock, shares | 56,250 | ||||||||||
Sale of pre-funded warrants | 38,125 | ||||||||||
Offering price | $ 26.40 | ||||||||||
Offering price for pre funded warrants | 26.40 | ||||||||||
Exercise price | $ 0.0001 | ||||||||||
Net proceeds from sale | $ 2,000,000 | ||||||||||
Common Warrants [Member] | Subsequent Event [Member] | Public Offering | |||||||||||
Number of common warrants sold | 56,250 | ||||||||||
Exercise price | $ 26.40 | ||||||||||
Number of common warrants prefunded | 38,125 | ||||||||||
Software Development [Member] | |||||||||||
Net book value of assets | $ 0 | 0 | |||||||||
HCM / EAS [Member] | |||||||||||
Revenue net | $ 39,000,000 | $ 52,200,000 |
Discontinued Operations (Detail
Discontinued Operations (Details) - Disposal by sale - Overall business | Aug. 31, 2023 USD ($) |
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 |
Less : reserve for estimated potential claims | (2,892,000) |
Less: reserve for uncollectable purchase price note receivable | (4,004,000) |
Note receivable | $ 0 |
Discontinued Operations (Deta_2
Discontinued Operations (Details 1) - USD ($) | Aug. 31, 2023 | Aug. 31, 2022 |
Deposits - workers' compensation current | $ 0 | $ 0 |
Deposits - workers' compensation | 0 | 0 |
Total current liabilities | 4,389,000 | 1,362,000 |
Disposal by sale | Overall business | ||
Total current assets | 0 | 0 |
Total assets | 0 | 0 |
Accrued workers' compensation cost current | 1,303,000 | 1,362,000 |
Accrued workers' compensation cost non current | 3,068,000 | 3,269,000 |
Total current liabilities | 1,303,000 | 1,362,000 |
Total liabilities | 4,389,000 | 4,631,000 |
Net liability | $ (4,389,000) | $ (4,631,000) |
Discontinued Operations (Deta_3
Discontinued Operations (Details 2) - Disposal by sale - Overall business - USD ($) | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Revenues | $ 0 | $ 0 |
Cost of revenues | 606,000 | 590,000 |
Gross profit (loss) | (606,000) | (590,000) |
Settlement gain | (848,000) | 0 |
Total operating expenses | (848,000) | 0 |
Loss from discontinued operations | $ 242,000 | $ (590,000) |
Discontinued Operations (Deta_4
Discontinued Operations (Details 3) - USD ($) | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Federal tax expense (benefit) | $ (4,774,000) | $ (6,177,000) |
Total tax expense (benefit) | 13,000 | (38,000) |
Income tax expense from discontinued operations | 242,000 | (590,000) |
Income Tax Expense Member | ||
Federal tax expense (benefit) | 47,000 | (114,000) |
State tax expense (benefit) | 17,000 | (45,000) |
Total tax expense (benefit) | 64,000 | (159,000) |
Loss carryforwards | (64,000) | 159,000 |
Income tax expense from discontinued operations | $ 0 | $ 0 |
Discontinued Operations (Deta_5
Discontinued Operations (Details Narrative) - USD ($) | 12 Months Ended | |||
Aug. 31, 2023 | Aug. 31, 2022 | Mar. 12, 2021 | Jan. 03, 2020 | |
Net income (loss) loss from discontinued operations | $ 200,000 | $ 600,000 | ||
Reserve on potential collectability | 4,000,000 | |||
Disposal by sale | Overall business | ||||
Addition Information | on November 15, 2023, the Company won an arbitration case for $2.5 million, and the Company received $2.5 million on November 22, 2023 | |||
Cash remitted | $ 2,500,000 | |||
Working capital adjustment | 2,600,000 | $ 10,700,000 | ||
Disposal group, including discontinued operations, additional reserve for estimated potential claims | 290,000 | |||
Gross note receivable | $ 9,500,000 | |||
Disposal group including discontinued operations, contingent consideration | $ 0 | |||
Disposal by sale | PEO business | ||||
Percentage of business sold | 100% |
Special Purpose Acquisition C_2
Special Purpose Acquisition Company ("SPAC") Sponsorship (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | |||||
Feb. 07, 2023 | Aug. 31, 2023 | Oct. 14, 2022 | Aug. 31, 2022 | Oct. 22, 2021 | Apr. 29, 2021 | |
Net proceeds from IPO | $ 116.7 | |||||
Other commitments, percentage of outstanding shares, per acquisition company | 15% | |||||
Common stock, shares, outstanding (in shares) | 507,383 | 270,032,328 | 21,390 | |||
IHC | ||||||
Assets held-in-trust, net tangible assets threshold | $ 5 | |||||
Variable Interest Entity, Net Assets (Liabilities) | $ 0.6 | |||||
Non-controlling interest | $ 0.5 | |||||
Variable interest entity, qualitative or quantitative information, non-ownership percentage | 85% | |||||
IHC | Public Shares | ||||||
Common stock, shares, outstanding (in shares) | 5,967,672 |
Accounts Receivable and Unbille
Accounts Receivable and Unbilled Receivable (Details Narrative) - USD ($) | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Accounts Receivable, Unbilled Receivable and Advanced Payments | ||
Unbilled revenue | $ 1,800,000 | $ 2,100,000 |
Allowance for doubtful accounts | 200,000 | 0 |
liability | $ 200,000 | $ 0 |
Fixed Assets (Details)
Fixed Assets (Details) - USD ($) | Aug. 31, 2023 | Aug. 31, 2022 |
Fixed assets, net | $ 1,622,000 | $ 2,769,000 |
Fixed assets, Gross | 3,400,000 | 4,024,000 |
Accumulated depreciation & amortization | (1,778,000) | (1,255,000) |
Leasehold improvements | ||
Fixed assets, net | 604,000 | 710,000 |
Furniture & fixtures | ||
Fixed assets, net | 614,000 | 614,000 |
Equipment Member | ||
Fixed assets, net | $ 2,182,000 | $ 2,700,000 |
Fixed Assets (Details Narrative
Fixed Assets (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Fixed Assets | ||
Depreciation and amortization expense | $ 0.5 | $ 0.5 |
Impairment expense | $ 1 | $ 0 |
Computer software development | 5 years |
Payroll Tax And Related Liabi_3
Payroll Tax And Related Liabilities (Details) - USD ($) | Aug. 31, 2023 | Aug. 31, 2022 |
Payroll Tax And Related Liabilities | ||
Payroll taxes liabilities | $ 22,840,000 | $ 12,932,000 |
Payroll related liabilities | 237,000 | 346,000 |
Accrued penalties and interest | 6,518,000 | 897,000 |
Total | $ 29,595,000 | $ 14,175,000 |
Payroll Tax And Related Liabi_4
Payroll Tax And Related Liabilities (Details Narrative) - USD ($) | Aug. 31, 2023 | Aug. 31, 2022 |
Payroll Tax And Related Liabilities | ||
Accrued Interest And Penalties On Payroll Taxes | $ 6,500,000 | $ 900,000 |
Delinquent Payroll Taxes | 22,800,000 | $ 12,900,000 |
Unpaid tax liabilities | $ 11,800,000 |
Stockholders Deficit (Details)
Stockholders Deficit (Details) - $ / shares | 12 Months Ended | ||||
Aug. 31, 2023 | Aug. 31, 2022 | May 31, 2023 | Sep. 20, 2022 | May 17, 2021 | |
Number of shares | |||||
Number of shares outstanding, beginning balance (in shares) | 21,783 | 4,006 | |||
Issued (in shares) | 159,201 | 23,880 | |||
Cancelled | (5,175) | (1) | |||
Exercised (in shares) | (37,500) | (6,102) | |||
Number of shares outstanding, ending balance (in shares) | 138,309 | 21,783 | |||
Number of shares exercisable (in shares) | 138,309 | ||||
Weighted average remaining life (years) | |||||
Weighted average Life of Outstanding Warrants in years | 7 years 2 months 12 days | 4 years 4 months 24 days | |||
Issued | 5 years 4 months 24 days | 7 years 7 months 6 days | |||
Exercised | 5 years 2 months 12 days | ||||
Weighted remaining life (years) exercisable | 5 years 7 months 6 days | 7 years 2 months 12 days | |||
Weighted average exercise price | |||||
Weighted average exercise price (in dollars per share) | $ 208.78 | $ 9,216 | $ 35.68 | $ 13.20 | $ 0.0001 |
Issued (in dollars per share) | 29.05 | 1,992 | |||
Cancelled (in dollars per share) | 3,741.94 | 662,400 | |||
Weighted average exercise price exercisable (in dollars per share) | $ 208.78 | $ 1,139.76 |
Stockholders Deficit (Details 1
Stockholders Deficit (Details 1) - $ / shares | 12 Months Ended | |||||
Aug. 31, 2023 | May 31, 2023 | Sep. 20, 2022 | Aug. 31, 2022 | Aug. 31, 2021 | May 17, 2021 | |
Class of warrant or right, outstanding (in shares) | 138,309 | 21,783 | 4,006 | 49,485 | ||
Weighted average Life of Outstanding Warrants in years | 9 years 7 months 6 days | |||||
Exercise price of warrants (in dollars per share) | $ 208.78 | $ 35.68 | $ 13.20 | $ 9,216 | $ 0.0001 | |
July 2023 Common Warrants | Warrants | ||||||
Class of warrant or right, outstanding (in shares) | 86,611 | |||||
Weighted average Life of Outstanding Warrants in years | 4 years 10 months 24 days | |||||
Exercise price of warrants (in dollars per share) | $ 36 | |||||
September 2022 Common Warrants | Warrants | ||||||
Class of warrant or right, outstanding (in shares) | 34,772 | |||||
Weighted average Life of Outstanding Warrants in years | 6 years 1 month 6 days | |||||
Exercise price of warrants (in dollars per share) | $ 36 | |||||
September 2022 Underwriter Warrants | Warrants | ||||||
Class of warrant or right, outstanding (in shares) | 868 | |||||
Weighted average Life of Outstanding Warrants in years | 3 years 7 months 6 days | |||||
Exercise price of warrants (in dollars per share) | $ 316.80 | |||||
July 2022 Common Warrants | Warrants | ||||||
Class of warrant or right, outstanding (in shares) | 14,517 | |||||
Weighted average Life of Outstanding Warrants in years | 6 years 10 months 24 days | |||||
Exercise price of warrants (in dollars per share) | $ 36 | |||||
Sep 2021Underwriter Warrants | Warrants | ||||||
Class of warrant or right, outstanding (in shares) | 157 | |||||
Weighted average Life of Outstanding Warrants in years | 5 years 8 months 12 days | |||||
Exercise price of warrants (in dollars per share) | $ 4,210.80 | |||||
May 2021Underwriter Warrants | Warrants | ||||||
Class of warrant or right, outstanding (in shares) | 103 | |||||
Weighted average Life of Outstanding Warrants in years | 2 years 8 months 12 days | |||||
Exercise price of warrants (in dollars per share) | $ 5,820 | |||||
October 2020 Common Warrants | Warrants | ||||||
Class of warrant or right, outstanding (in shares) | 750 | |||||
Weighted average Life of Outstanding Warrants in years | 2 years 1 month 6 days | |||||
Exercise price of warrants (in dollars per share) | $ 7,920 | |||||
October 2020 Underwriter Warrants | Warrants | ||||||
Class of warrant or right, outstanding (in shares) | 208 | |||||
Weighted average Life of Outstanding Warrants in years | 2 years 1 month 6 days | |||||
Exercise price of warrants (in dollars per share) | $ 36 | |||||
May 2020 Common Warrants | Warrants | ||||||
Class of warrant or right, outstanding (in shares) | 83 | |||||
Weighted average Life of Outstanding Warrants in years | 2 years 1 month 6 days | |||||
Exercise price of warrants (in dollars per share) | $ 7,960 | |||||
May 2020 Underwriter Warrants | Warrants | ||||||
Class of warrant or right, outstanding (in shares) | 532 | |||||
Weighted average Life of Outstanding Warrants in years | 1 year 8 months 12 days | |||||
Exercise price of warrants (in dollars per share) | $ 12,960 | |||||
March 2020 Exchange Warrants | Warrants | ||||||
Class of warrant or right, outstanding (in shares) | 46 | |||||
Weighted average Life of Outstanding Warrants in years | 1 year 8 months 12 days | |||||
Exercise price of warrants (in dollars per share) | $ 12,960 | |||||
Amended March 2019 Warrants | Warrants | ||||||
Class of warrant or right, outstanding (in shares) | 28 | |||||
Weighted average Life of Outstanding Warrants in years | 6 months | |||||
Exercise price of warrants (in dollars per share) | $ 96,000 | |||||
March 2019 Services Warrants | Warrants | ||||||
Class of warrant or right, outstanding (in shares) | 1 | |||||
Weighted average Life of Outstanding Warrants in years | 6 months | |||||
Exercise price of warrants (in dollars per share) | $ 168,000 | |||||
June 2018 Warrants | Warrants | ||||||
Class of warrant or right, outstanding (in shares) | 3 | |||||
Weighted average Life of Outstanding Warrants in years | 3 months 18 days | |||||
Exercise price of warrants (in dollars per share) | $ 239,040 | |||||
June 2018 Services Warrants | Warrants | ||||||
Class of warrant or right, outstanding (in shares) | 2 | |||||
Weighted average Life of Outstanding Warrants in years | 3 months 18 days | |||||
Exercise price of warrants (in dollars per share) | $ 239,040 |
Stockholders Equity (Deficit) (
Stockholders Equity (Deficit) (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 5 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||
Jul. 12, 2023 | Sep. 03, 2022 | Aug. 12, 2022 | Jul. 14, 2022 | Jun. 05, 2020 | Oct. 17, 2023 | Aug. 22, 2023 | Aug. 21, 2023 | Jan. 31, 2023 | Sep. 30, 2022 | Sep. 20, 2022 | Sep. 02, 2022 | Jul. 25, 2022 | Jul. 18, 2022 | Jan. 28, 2022 | Jan. 26, 2022 | Oct. 22, 2021 | Sep. 30, 2021 | May 17, 2021 | May 31, 2023 | May 31, 2022 | Jun. 04, 2020 | May 31, 2022 | Aug. 31, 2023 | Aug. 31, 2022 | Dec. 08, 2023 | Dec. 08, 2022 | Oct. 14, 2022 | Jul. 28, 2022 | Oct. 31, 2021 | Sep. 03, 2021 | Aug. 31, 2021 | Aug. 13, 2021 | Jun. 04, 2021 | May 31, 2021 | Oct. 08, 2020 | |
Preferred stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 | ||||||||||||||||||||||||||||||||||
Compensation expense | $ 4,673,321 | $ 200,000 | $ 200,000 | $ 300,000 | $ 1,100,000 | $ 700,000 | $ 1,100,000 | |||||||||||||||||||||||||||||
Outstanding shares of common stock | 3,586,752 | |||||||||||||||||||||||||||||||||||
Stock-based compensation expense | $ 954,000 | $ 1,283,000 | ||||||||||||||||||||||||||||||||||
Description of warrant modification | (i) amended the investor warrants to reduce their exercise price per share to $2,880.00.and (ii) provided for the issuance of a new warrant to purchase up to approximately 4,164 shares of the Company’s common stock (the “January 2022 common warrant”), with such January 2022 common warrant being issued on the basis of two January 2022 common warrant shares for each share of the existing warrant that was exercised for cash. The January 2022 common warrant is exercisable commencing on July 28, 2022, terminates on July 28, 2027, and has an exercise price per share of $3,077.00. The exercise agreement generated aggregate proceeds to the Company of approximately $5.9 million, prior to the deduction of $0.5 million of costs consisting of placement agent commissions and offering expenses payable by the Company | |||||||||||||||||||||||||||||||||||
Form S-3 filed | $ 100,000,000 | |||||||||||||||||||||||||||||||||||
Equity securities sold | $ 100,000,000 | |||||||||||||||||||||||||||||||||||
Common stock shares outstanding | 507,383 | 21,390 | 270,032,328 | |||||||||||||||||||||||||||||||||
Settlement amount | $ 550,000 | |||||||||||||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 13.20 | $ 0.0001 | $ 35.68 | $ 208.78 | $ 9,216 | |||||||||||||||||||||||||||||||
Expected maturity period | 6 years 8 months 12 days | |||||||||||||||||||||||||||||||||||
Expected maturity | 6 years 9 months 18 days | |||||||||||||||||||||||||||||||||||
Share-based compensation arrangement by share-based payment award, fair value assumptions, risk free interest rate | 3.70% | |||||||||||||||||||||||||||||||||||
Share-based compensation arrangement by share-based payment award, fair value assumptions, expected volatility rate | 149.40% | |||||||||||||||||||||||||||||||||||
Divident yield | 0% | |||||||||||||||||||||||||||||||||||
Stock options exercised (in shares) | 4,400,000 | |||||||||||||||||||||||||||||||||||
Number of options available for grant to founder shareholders (in shares) | 30,833 | |||||||||||||||||||||||||||||||||||
Fair Value Adjustment of Warrants | $ 801,000 | $ 0 | ||||||||||||||||||||||||||||||||||
Additional Paid in Capital | 175,226,000 | 151,737,000 | ||||||||||||||||||||||||||||||||||
Preferred stock issued | $ 0 | $ 3,723,000 | ||||||||||||||||||||||||||||||||||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||||||||||||||||||||||||
Number of shares cancelled (in shares) | 358,333 | 1,750 | ||||||||||||||||||||||||||||||||||
Options forfeited (in shares) | 358,333 | 73 | 30,900,000 | |||||||||||||||||||||||||||||||||
Market offering | $ 8,200,000 | |||||||||||||||||||||||||||||||||||
Issued warrants to purchase to agents | 18,305 | |||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Outstanding | 49,485 | 138,309 | 21,783 | 4,006 | ||||||||||||||||||||||||||||||||
Decrease in employee related liabilities | $ 15,420,000 | $ 4,091,000 | ||||||||||||||||||||||||||||||||||
Warrants to purchase up to an aggregate | 2,062 | |||||||||||||||||||||||||||||||||||
Common warrants shares sold | 86,112 | |||||||||||||||||||||||||||||||||||
Common stock shares sold | 48,612 | 507,383 | 21,390 | |||||||||||||||||||||||||||||||||
Pre-funded warrants sold | 37,500 | |||||||||||||||||||||||||||||||||||
Public offering price per share | $ 36 | |||||||||||||||||||||||||||||||||||
Par value per share | $ 0.0001 | |||||||||||||||||||||||||||||||||||
Net proceeds from public offering | $ 2,700,000 | $ 37,978,000 | ||||||||||||||||||||||||||||||||||
Non-cash warrant modification expense | $ 200,000 | |||||||||||||||||||||||||||||||||||
Sale of stock, placement fee | 7% | |||||||||||||||||||||||||||||||||||
Net proceeds from sale of stock | $ 1,900,000 | |||||||||||||||||||||||||||||||||||
Warrant, Down Round Feature, Increase (Decrease) in Equity, Amount | $ 0 | $ (15,703,000) | ||||||||||||||||||||||||||||||||||
Proceeds from issuance of private placement | $ 12,000,000 | |||||||||||||||||||||||||||||||||||
Stock Issued During Period, Shares, New Issues | 50,000,000,000 | 29,062,000 | ||||||||||||||||||||||||||||||||||
(Exercised) | 37,500 | 6,102 | ||||||||||||||||||||||||||||||||||
Chief Executive Officer | ||||||||||||||||||||||||||||||||||||
Shares issued for services rendered (in shares) | 170,833 | |||||||||||||||||||||||||||||||||||
Scott W Absher | Chief Executive Officer | ||||||||||||||||||||||||||||||||||||
Preferred stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 | ||||||||||||||||||||||||||||||||||
Expected maturity period | 10 years | 10 years | ||||||||||||||||||||||||||||||||||
Share-based compensation arrangement by share-based payment award, fair value assumptions, risk free interest rate | 3% | 3.10% | ||||||||||||||||||||||||||||||||||
Share-based compensation arrangement by share-based payment award, fair value assumptions, expected volatility rate | 125.70% | 125.70% | ||||||||||||||||||||||||||||||||||
Fair value exercise price (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||||||||||||||||||||||||
Stock options exercised (in shares) | 520,833 | |||||||||||||||||||||||||||||||||||
Number of options available for grant to founder shareholders (in shares) | 520,833 | |||||||||||||||||||||||||||||||||||
Preferred stock issued | $ 5,000,000 | $ 1,250 | ||||||||||||||||||||||||||||||||||
Number option additionally available for grant to founder shareholders (in shares) | 52,033 | |||||||||||||||||||||||||||||||||||
Share-based compensation arrangement by share-based payment award, assets or earning power threshold for option exercise | 0.50% | |||||||||||||||||||||||||||||||||||
Options forfeited (in shares) | 520,833 | |||||||||||||||||||||||||||||||||||
Initial exercise price per share | $ 316.80 | |||||||||||||||||||||||||||||||||||
Decrease in employee related liabilities | $ 800,000 | |||||||||||||||||||||||||||||||||||
Shares issued for services rendered (in shares) | 170,833 | |||||||||||||||||||||||||||||||||||
Convertible Preferred Stock | Scott W Absher | Chief Executive Officer | ||||||||||||||||||||||||||||||||||||
Price per share (in dollars per share) | $ 0.2025 | $ 5.57 | ||||||||||||||||||||||||||||||||||
Conversion of stock, shares converted (in shares) | 358,333 | 2,083 | ||||||||||||||||||||||||||||||||||
Common Share Units | ||||||||||||||||||||||||||||||||||||
Shares issued upon conversion (in shares) | 491,250 | |||||||||||||||||||||||||||||||||||
Sale of stock, number of shares and warrants issued in transaction (in shares) | 17,361 | |||||||||||||||||||||||||||||||||||
Common Share Units | Scott W Absher | Chief Executive Officer | ||||||||||||||||||||||||||||||||||||
Common stock shares outstanding | 358,672 | |||||||||||||||||||||||||||||||||||
Reverse stock split | 1-for-24 | |||||||||||||||||||||||||||||||||||
Settlement amount | $ 550,000 | |||||||||||||||||||||||||||||||||||
Conversion of stock, shares converted (in shares) | 358,333 | |||||||||||||||||||||||||||||||||||
Convertible Preferred Stock, Shares Issued upon Conversion | 3,333 | |||||||||||||||||||||||||||||||||||
Shares issued upon conversion (in shares) | 12,500,000 | |||||||||||||||||||||||||||||||||||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | |||||||||||||||||||||||||||||||||||
Option Agreement [Member] | ||||||||||||||||||||||||||||||||||||
Outstanding shares of common stock | 4,744,234 | |||||||||||||||||||||||||||||||||||
Risk free rate | 5.57% | |||||||||||||||||||||||||||||||||||
Volatility | 186% | |||||||||||||||||||||||||||||||||||
Exercise price | $ 0.0001 | |||||||||||||||||||||||||||||||||||
Market price | 0.66 | |||||||||||||||||||||||||||||||||||
Fair value | $ 0.65999 | |||||||||||||||||||||||||||||||||||
Stock-based compensation expense | $ 3,100,000 | |||||||||||||||||||||||||||||||||||
Number of options available for grant to founder shareholders (in shares) | 4,744,234 | |||||||||||||||||||||||||||||||||||
Preferential Dividend | $ 67,400,000 | |||||||||||||||||||||||||||||||||||
Securities Purchase Agreement | ||||||||||||||||||||||||||||||||||||
Common warrants shares sold | 86,112 | |||||||||||||||||||||||||||||||||||
Common stock shares sold | 48,612 | |||||||||||||||||||||||||||||||||||
Pre-funded warrants sold | 37,500 | |||||||||||||||||||||||||||||||||||
Exercise price per share | $ 36 | |||||||||||||||||||||||||||||||||||
CEO [Member] | ||||||||||||||||||||||||||||||||||||
Outstanding shares of common stock | 4,744,234 | |||||||||||||||||||||||||||||||||||
IPO | IHC | ||||||||||||||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 1 | |||||||||||||||||||||||||||||||||||
IPO | IHC | ||||||||||||||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 1 | |||||||||||||||||||||||||||||||||||
Net proceeds from public offering | $ 115,000 | $ 0 | ||||||||||||||||||||||||||||||||||
Private Placement | ||||||||||||||||||||||||||||||||||||
Placement agent fees and costs | $ 900,000 | |||||||||||||||||||||||||||||||||||
Description of transaction | (i) 1,188 shares of common stock, together with warrants (the “September 2021 common warrants”) to purchase up to 1,188 shares of common stock, with each September 2021 common warrant exercisable for one share of common stock at a price per share of $3,828.00, and (ii) 1,947 prefunded warrants (the “September 2021 Prefunded Warrants”), together with the September 2021 common warrants to purchase up to 3,135 shares of common stock, with each September 2021 prefunded warrant exercisable for one share of common stock at a price per share at par value or $0.00001. Each share of common stock and accompanying September 2021 common warrant were sold together at a combined offering price of $3,828.00 and each September 2021 prefunded warrant and accompanying September 2021 common warrant were sold together at a combined offering price of $3,827.76 | |||||||||||||||||||||||||||||||||||
Issued warrants to purchase to agents | 3,762,000 | |||||||||||||||||||||||||||||||||||
Initial exercise price per share | $ 4,210.80 | |||||||||||||||||||||||||||||||||||
Proceeds from issuance of private placement | $ 12,000,000 | $ 5,900,000 | ||||||||||||||||||||||||||||||||||
Stock Issued During Period, Shares, New Issues | 1,188,000 | |||||||||||||||||||||||||||||||||||
Placement Warrants | IPO | IHC | ||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Outstanding | 4,639,102 | 4,639,102 | ||||||||||||||||||||||||||||||||||
Number of preferred stock options | 37,570 | |||||||||||||||||||||||||||||||||||
October 2020 Common Warrants | Warrants | ||||||||||||||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 7,920 | |||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Outstanding | 750 | |||||||||||||||||||||||||||||||||||
October 2020 Common Warrants | Common Share Units | ||||||||||||||||||||||||||||||||||||
Number of shares of common stock to be purchased accompanied by common warrant (in shares) | 5 | |||||||||||||||||||||||||||||||||||
New Warrants | ||||||||||||||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 624 | |||||||||||||||||||||||||||||||||||
Adjustments to Additional Paid in Capital, Warrant Issued | $ 1,200,000 | |||||||||||||||||||||||||||||||||||
Warrants to acquire shares of common stock (in shares) | 348,408 | 348,408 | ||||||||||||||||||||||||||||||||||
Warrants And Rights Outstanding, New Warrants As A Percentage Of Existing Warrants | 200% | |||||||||||||||||||||||||||||||||||
Warrants And Rights Outstanding, Paid Cost | $ 100,000 | |||||||||||||||||||||||||||||||||||
Warrant, Down Round Feature, Increase (Decrease) in Equity, Amount | 8,000,000 | |||||||||||||||||||||||||||||||||||
May 2021 Prefunded Warrants | Private Placement | ||||||||||||||||||||||||||||||||||||
Warrants to acquire shares of common stock (in shares) | 2,062 | |||||||||||||||||||||||||||||||||||
Common Stock Warrants | Private Placement | ||||||||||||||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 288 | $ 2,880 | $ 3,720 | |||||||||||||||||||||||||||||||||
Warrants to acquire shares of common stock (in shares) | 34,772 | |||||||||||||||||||||||||||||||||||
Sale of stock, stock and warrant price per share (in dollars per share) | $ 288 | |||||||||||||||||||||||||||||||||||
Existing Warrants | ||||||||||||||||||||||||||||||||||||
Adjustments to Additional Paid in Capital, Warrant Issued | 100,000 | |||||||||||||||||||||||||||||||||||
Fair Value Adjustment of Warrants | $ 600,000 | |||||||||||||||||||||||||||||||||||
Investor Warrants | ||||||||||||||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 624 | |||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Outstanding | 2,083 | |||||||||||||||||||||||||||||||||||
May 2021 Common Warrants | Private Placement | ||||||||||||||||||||||||||||||||||||
Shares issued, price per share (in dollars per share) | $ 5,820 | |||||||||||||||||||||||||||||||||||
Septembet 2021 Prefunded Warrants | Private Placement | ||||||||||||||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | 0.0001 | |||||||||||||||||||||||||||||||||||
Warrants to acquire shares of common stock (in shares) | 3,355 | |||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Outstanding | 1,947 | |||||||||||||||||||||||||||||||||||
September 2021 Common Warrants | ||||||||||||||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 3,328 | |||||||||||||||||||||||||||||||||||
September2021 Modified Warrants | ||||||||||||||||||||||||||||||||||||
Fair Value Adjustment of Warrants | 488,700 | |||||||||||||||||||||||||||||||||||
accounts payable and accrued expenses | 550,000 | |||||||||||||||||||||||||||||||||||
July2022 Common Warrants | ||||||||||||||||||||||||||||||||||||
Fair Value Adjustment of Warrants | $ 8,000,000 | |||||||||||||||||||||||||||||||||||
July2022 Common Warrants | Warrants | ||||||||||||||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 36 | |||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Outstanding | 14,517 | |||||||||||||||||||||||||||||||||||
January2022 Common Warrants | ||||||||||||||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 288 | 2,880 | $ 3,720 | $ 3,720 | ||||||||||||||||||||||||||||||||
Fair Value Adjustment of Warrants | $ 599,700 | $ 12,600,000 | ||||||||||||||||||||||||||||||||||
Adjustments to Additional Paid in Capital, Warrant Issued | $ 5,500,000 | |||||||||||||||||||||||||||||||||||
Additional Paid in Capital | 5,500,000 | |||||||||||||||||||||||||||||||||||
Warrant, Down Round Feature, Increase (Decrease) in Equity, Amount | $ 7,700,000 | |||||||||||||||||||||||||||||||||||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | |||||||||||||||||||||||||||||||||||
Warrants to acquire shares of common stock (in shares) | 4,124 | |||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Outstanding | 4,124 | 1,051 | ||||||||||||||||||||||||||||||||||
Warrants to acquire shares of common stock (in shares) | 348,408 | 348,408 | 4,124 | 2,062 | ||||||||||||||||||||||||||||||||
Shares issued, price per share (in dollars per share) | $ 5,820 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - $ / shares | 1 Months Ended | 12 Months Ended | |
Sep. 02, 2022 | Aug. 31, 2023 | Aug. 31, 2022 | |
Stock Based Compensation | |||
Options vested, beginning balance (in shares) | 490 | 740 | |
Granted (in shares) | 0 | 58 | |
Exercised | 0 | 0 | |
Forfeited (in shares) | (358,333) | (73) | (30,900,000) |
Options vested, ending balance (in shares) | 417 | 490 | |
Weighted remaining contractual life, beginning | 8 years 10 months 24 days | ||
Vested | 9 years 9 months 18 days | ||
Exercisable | 7 years 1 month 6 days | ||
Forfeited | 8 years 4 months 24 days | ||
Weighted remaining contractual life, ending | 7 years | 8 years 1 month 6 days | |
Weighted average exercise price, beginning | $ 15,672 | ||
Exercisable (in dollars per share) | $ 21,483.64 | ||
Granted (in dollars per share) | 2,520 | ||
Forfeited (in dollars per share) | 454 | 10,896 | |
Weighted average exercise price, ending | 19,528.80 | $ 17,592 | |
Exercisable | $ 315 |
Stock Based Compensation (Det_2
Stock Based Compensation (Details 1) - $ / shares | 12 Months Ended | ||
Aug. 31, 2023 | Aug. 31, 2022 | Aug. 31, 2021 | |
Number of Options Outstanding, Outstanding (in shares) | 417 | ||
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 315 | ||
Weighted Average Remaining Contractual Life, Outstanding | 7 months | ||
Weighted Average Exercise Price (in dollars per share) | $ 19,528.80 | ||
Number of Options Vested (in shares) | 315 | ||
Weighted Average Remaining Contractual Life | 7 years 1 month 6 days | ||
Weighted Average Exercise Price (in dollars per share) | $ 21,483.64 | ||
Number of Options Exercisable, Outstanding (in shares) | 315 | ||
Number of Options Vested (in shares) | 417 | 490 | 740 |
Exercise Price Range One | |||
Number of Options Outstanding, Outstanding (in shares) | 402 | ||
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 10,874.65 | ||
Weighted Average Remaining Contractual Life, Outstanding | 7 months | ||
Weighted Average Exercise Price (in dollars per share) | $ 11,045.45 | ||
Weighted Average Remaining Contractual Life | 7 years 3 months 18 days | ||
Number of Options Exercisable, Outstanding (in shares) | 300 | ||
Number of Options Vested (in shares) | 300 | ||
Exercise Price Range Two | |||
Number of Options Outstanding, Outstanding (in shares) | 1 | ||
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 45,480 | ||
Weighted Average Remaining Contractual Life, Outstanding | 5 years 8 months 12 days | ||
Weighted Average Exercise Price (in dollars per share) | $ 45,480 | ||
Weighted Average Remaining Contractual Life | 5 years 8 months 12 days | ||
Number of Options Exercisable, Outstanding (in shares) | 1 | ||
Number of Options Vested (in shares) | 17 | ||
Exercise Price Range Three | |||
Number of Options Outstanding, Outstanding (in shares) | 5 | ||
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 122,911.62 | ||
Weighted Average Remaining Contractual Life, Outstanding | 5 years 6 months | ||
Weighted Average Exercise Price (in dollars per share) | $ 122,911.62 | ||
Weighted Average Remaining Contractual Life | 5 years 8 months 12 days | ||
Number of Options Exercisable, Outstanding (in shares) | 5 | ||
Number of Options Vested (in shares) | 5 | ||
Exercise Price Range Four | |||
Number of Options Outstanding, Outstanding (in shares) | 4 | ||
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 247,167.74 | ||
Weighted Average Remaining Contractual Life, Outstanding | 4 years 7 months 6 days | ||
Weighted Average Exercise Price (in dollars per share) | $ 247,167.74 | ||
Weighted Average Remaining Contractual Life | 5 years 6 months | ||
Number of Options Exercisable, Outstanding (in shares) | 4 | ||
Number of Options Vested (in shares) | 4 | ||
Exercise Price Range Five | |||
Number of Options Outstanding, Outstanding (in shares) | 5 | ||
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 374,024.83 | ||
Weighted Average Remaining Contractual Life, Outstanding | 3 years 9 months 21 days | ||
Weighted Average Exercise Price (in dollars per share) | $ 374,024.83 | ||
Weighted Average Remaining Contractual Life | 4 years 7 months 6 days | ||
Number of Options Exercisable, Outstanding (in shares) | 5 | ||
Number of Options Vested (in shares) | 5 | ||
Minimum | Exercise Price Range One | |||
Exercise Prices (in dollars per share) | $ 1,200 | ||
Minimum | Exercise Price Range Two | |||
Exercise Prices (in dollars per share) | 24,001 | ||
Minimum | Exercise Price Range Three | |||
Exercise Prices (in dollars per share) | 96,001 | ||
Minimum | Exercise Price Range Four | |||
Exercise Prices (in dollars per share) | 192,001 | ||
Minimum | Exercise Price Range Five | |||
Exercise Prices (in dollars per share) | 288,001 | ||
Maximum | Exercise Price Range One | |||
Exercise Prices (in dollars per share) | 24,000 | ||
Maximum | Exercise Price Range Three | |||
Exercise Prices (in dollars per share) | 192,000 | ||
Maximum | Exercise Price Range Four | |||
Exercise Prices (in dollars per share) | 288,000 | ||
Maximum | Exercise Price Range Five | |||
Exercise Prices (in dollars per share) | 384,000 | ||
Maximum | Exercise Price Range Two One | |||
Exercise Prices (in dollars per share) | $ 96,000 |
Stock Based Compensation (Det_3
Stock Based Compensation (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2022 | May 17, 2021 | May 31, 2023 | May 31, 2022 | May 31, 2022 | Aug. 31, 2023 | Aug. 31, 2022 | Mar. 06, 2023 | Mar. 05, 2023 | |
Share-based compensation arrangement by share-based payment award, number of shares authorized (in shares) | 30,833 | ||||||||
Stock-based compensation expense | $ 1,000,000 | $ 1,300,000 | |||||||
Stock-compensation | 3,100,000 | 0 | |||||||
Accounts payable and other accrued liabilities | 200,000 | 200,000 | |||||||
Amount accrued | 700,000 | 600,000 | |||||||
Share-Based Payment Arrangement, Expense | $ 4,673,321 | $ 200,000 | $ 200,000 | $ 300,000 | $ 1,100,000 | $ 700,000 | $ 1,100,000 | ||
Share-based payment arrangement, nonvested award, cost not yet recognized, period for recognition | 1 year 10 months 24 days | ||||||||
Share-based payment arrangement, nonvested award, cost not yet recognized, amount | $ 800,000 | ||||||||
Share-based compensation arrangement by share-based payment award, options, outstanding, intrinsic value | $ 0 | ||||||||
March 6, 2023 [Member] | |||||||||
Share-based compensation arrangement by share-based payment award, number of shares authorized (in shares) | 31,250 | 1,250 | |||||||
Granted Prior to July 1, 2020 | Share-based payment arrangement, tranche one | |||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 25% | ||||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 12 months | ||||||||
Granted Prior to July 1, 2020 | Share-based payment arrangement, tranche two | |||||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 36 months | ||||||||
Options Granted on or After July 1, 2020 | Share-based payment arrangement, tranche one | |||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 25% | ||||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 10 years | ||||||||
Related Parties | |||||||||
Share-based payment arrangement, nonvested award, cost not yet recognized, period for recognition | 1 year 10 months 24 days | ||||||||
Share-based payment arrangement, nonvested award, cost not yet recognized, amount | $ 800,000 |
Related Parties (Details Narrat
Related Parties (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Aug. 12, 2022 | Sep. 30, 2022 | Mar. 31, 2022 | Oct. 22, 2021 | May 17, 2021 | May 31, 2023 | May 31, 2022 | May 31, 2022 | Aug. 31, 2023 | Aug. 31, 2022 | Jul. 31, 2022 | |
Decrease in employee related liabilities | $ 15,420,000 | $ 4,091,000 | |||||||||
Salary | 15,762,000 | 14,821,000 | |||||||||
Professional fees | 500,000 | 1,000,000 | |||||||||
Administration fees expense | 28,000 | 38,000 | |||||||||
Stock-based compensation expense | $ 4,673,321 | $ 200,000 | $ 200,000 | $ 300,000 | $ 1,100,000 | 700,000 | 1,100,000 | ||||
Mark Absher [Member] | |||||||||||
Payments to employees | 200,000 | 200,000 | |||||||||
David May [Member] | |||||||||||
Payments to employees | 200,000 | 200,000 | |||||||||
Phil Eastvold [Member] | |||||||||||
Payments to employees | 200,000 | 200,000 | |||||||||
Jason Absher [Member] | |||||||||||
Payments to employees | 100,000 | 100,000 | |||||||||
Connie Absher, Elizabeth Eastvold, and Hannah Absher [Member] | |||||||||||
Payments to employees | 200,000 | 200,000 | |||||||||
Scott Absher [Member] | |||||||||||
Discretionary bonus, amount | $ 500,000 | ||||||||||
Employee compensation, discretionary bonus, percent of tranche one | 50% | 50% | |||||||||
Employee compensation, discretionary bonus, percent of tranche two | 50% | ||||||||||
Payments of discretionary bonus | $ 300,000 | ||||||||||
Decrease in employee related liabilities | $ 80,000 | ||||||||||
Shares issued for services rendered (in shares) | 4,100,000 | ||||||||||
Accrued salary | 400,000 | 0 | |||||||||
Salary | $ 900,000 | $ 800,000 | |||||||||
Directors [Member] | |||||||||||
Shares issued for services rendered (in shares) | 1,208 | 0 | |||||||||
Stock-based compensation expense | $ 200,000 | $ 200,000 | |||||||||
Amount due to related parties included in accounts payable | 300,000 | 200,000 | |||||||||
Share-based payment arrangement, value agreed to be issued per year | 100,000 | ||||||||||
Accrued stock-compensation | 700,000 | 600,000 | |||||||||
Amanda Murphy [Member] | |||||||||||
Received salary compensation | 500,000 | 300,000 | |||||||||
Increase annual salary | $ 200,000 | 200,000 | |||||||||
Accrued liabilities | $ 200,000 |
Accounts Payable and Other Ac_3
Accounts Payable and Other Accrued Liabilities (Details) - USD ($) | Aug. 31, 2023 | Aug. 31, 2022 |
Accounts Payable and Other Accrued Liabilities | ||
Accounts payable | $ 6,500,000 | $ 8,566,000 |
Contingent lease liability | 3,761,000 | 3,761,000 |
Right-of-use liability | 900,000 | 754,000 |
Legal settlement | 1,660,000 | 0 |
Shares owed to directors for services | 800,000 | 606,000 |
ERTC owed to clients | 1,089,000 | 417,000 |
Financed insurance policies | 457,000 | 0 |
Other | 1,525,000 | 2,121,000 |
Total | $ 16,692,000 | $ 16,225,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Aug. 31, 2023 | Aug. 31, 2022 |
Deferred tax assets: | ||
Net operating loss carryforward | $ 30,936,000 | $ 26,069,000 |
Business interest | 3,349,000 | 2,942,000 |
Other accruals | 1,347,000 | 896,000 |
Workers' compensation accruals | 1,487,000 | 1,734,000 |
Stock-based compensation | 60,000 | 135,000 |
ASC 842 Lease liability | 742,000 | 31,000 |
Other | 1,000 | 4,000 |
Total deferred tax assets | 37,922,000 | 31,811,000 |
Valuation allowance | (37,575,000) | (31,224,000) |
Total net deferred tax assets | 347,000 | 587,000 |
Deferred tax liabilities: | ||
Fixed assets and intangible assets | (347,000) | (587,000) |
Total deferred tax liabilities | (347,000) | (587,000) |
Net deferred tax assets | $ 0 | $ 0 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Current | ||
Federal | $ 0 | $ 0 |
State | 13,000 | (38,000) |
Total current | 13,000 | (38,000) |
Deferred | ||
Federal | (4,774,000) | (6,177,000) |
State | (1,715,000) | (2,476,000) |
Total deferred | (6,489,000) | (8,653,000) |
Change in valuation allowance | 6,489,000 | 8,653,000 |
Total Income Tax Expense (Benefittax expense (benefit) | $ 13,000 | $ (38,000) |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Income Taxes | ||
Federal statutory rate (21%) | $ (7,164,000) | $ (9,124,000) |
Inducement Loss | 68,000 | 917,000 |
Non-deductible penalties and other permanent differences | 1,813,000 | 1,227,000 |
State and local income taxes, net of federal benefit | (1,420,000) | (1,983,000) |
Redetermination of prior year taxes | (227,000) | 272,000 |
Change in valuation allowance | 6,489,000 | 8,653,000 |
Total Income Tax Expense (Benefittax expense (benefit) | $ 13,000 | $ (38,000) |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Millions | Aug. 31, 2023 | Aug. 31, 2022 |
Operating loss carryforwards, valuation allowance | $ 6.5 | $ 8.7 |
Net operating losses | 101.2 | |
Domestic Tax Authority | ||
Operating loss carryforwards | 111.8 | |
State and Local Jurisdiction | ||
Operating loss carryforwards | $ 119.1 |
Commitments (Details)
Commitments (Details) - USD ($) | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Commitments | ||
Operating Lease Cost | $ 1,081,000 | $ 1,363,000 |
Commitments (Details 1)
Commitments (Details 1) | 12 Months Ended |
Aug. 31, 2022 USD ($) | |
Commitments | |
2024 | $ 1,056,000 |
2024 | 1,090,000 |
2026 | 823,000 |
2027 | 643,000 |
2028 | 378,000 |
Thereafter | 130,000 |
Total minimum payments | 4,120,000 |
Less: present value discount | 455,000 |
Lease Liability | $ 3,655,000 |
Weighted-average remaining lease term - operating leases (months) | 58 years |
Weighted-average discount rate | 5.54% |
Commitments (Details Narrative)
Commitments (Details Narrative) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
Jul. 12, 2023 USD ($) | May 02, 2022 | Jun. 07, 2021 ft² | Oct. 01, 2020 | Oct. 31, 2021 USD ($) shares | Oct. 22, 2021 USD ($) $ / shares shares | Apr. 29, 2021 USD ($) | May 31, 2022 USD ($) | Aug. 31, 2023 USD ($) $ / shares shares | Aug. 31, 2022 USD ($) $ / shares shares | May 31, 2023 $ / shares | Sep. 20, 2022 $ / shares | Aug. 31, 2021 shares | May 17, 2021 $ / shares shares | |
Contingent liability | $ 3,800,000 | $ 3,800,000 | ||||||||||||
Impairment expense | 1,000,000 | 0 | ||||||||||||
ROU asset impairment | $ 100,000 | $ 380,000 | ||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 208.78 | $ 9,216 | $ 35.68 | $ 13.20 | $ 0.0001 | |||||||||
Proceeds from issuance initial public offering | $ 2,700,000 | $ 37,978,000 | ||||||||||||
Class of Warrant or Right, Outstanding | shares | 138,309 | 21,783 | 4,006 | 49,485 | ||||||||||
Irvine Facility | ||||||||||||||
Operating lease, monthly expense | $ 24,000 | |||||||||||||
Impairment expense | $ 1,000,000 | |||||||||||||
Lessee, Operating Lease, Term of Contract | 60 years | |||||||||||||
Miami Office Space Facility | ||||||||||||||
Operating lease, monthly expense | 57,000 | |||||||||||||
Contingent liability | 3,700,000 | 3,700,000 | ||||||||||||
Impairment expense | 3,700,000 | |||||||||||||
ShiftPixy Labs Facility | ||||||||||||||
Operating lease, monthly expense | 35,000 | |||||||||||||
Lessee, Operating Lease, Term of Contract | 64 years | |||||||||||||
Miami Verifone Facility | ||||||||||||||
Operating lease, monthly expense | 27,000 | |||||||||||||
Area of real estate property | ft² | 8,000 | |||||||||||||
Sunrise Facility | ||||||||||||||
Operating lease, monthly expense | $ 27,000 | |||||||||||||
Impairment expense | $ 1,500,000 | |||||||||||||
Lessee, Operating Lease, Term of Contract | 77 years | |||||||||||||
Second Irvine Facility | ||||||||||||||
Operating lease, rent abatement percentage | 50% | |||||||||||||
SPAC 1 | ||||||||||||||
Other commitment | $ 25,000,000 | |||||||||||||
Other Commitments, Percentage of Outstanding Shares | 20% | |||||||||||||
SPAC 2 | ||||||||||||||
Other commitment | $ 500,000,000 | |||||||||||||
Loan impairment | $ 400,000 | |||||||||||||
Payments For Other Commitments | $ 820,000 | |||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 1 | $ 11.50 | ||||||||||||
Class of warrant or right, outstanding (in value) | $ 17,531,408 | |||||||||||||
IHC | IPO | ||||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 1 | |||||||||||||
Proceeds from issuance initial public offering | $ 115,000 | $ 0 | ||||||||||||
IHC | IPO | Placement Warrants | ||||||||||||||
Class of warrant or right, outstanding (in value) | $ 4,600,000 | $ 4,639,102 | ||||||||||||
Class of Warrant or Right, Outstanding | shares | 4,639,102 | 4,639,102 |
Contingencies (Details Narrativ
Contingencies (Details Narrative) - USD ($) | 1 Months Ended | 5 Months Ended | 12 Months Ended | ||||||||
Jun. 05, 2023 | Nov. 08, 2022 | Mar. 12, 2021 | Jan. 03, 2020 | Mar. 19, 2021 | Dec. 18, 2020 | Aug. 31, 2021 | Aug. 31, 2023 | Aug. 31, 2022 | Nov. 04, 2021 | Sep. 07, 2021 | |
Accrue liability | $ 3,900,000 | $ 3,900,000 | |||||||||
Received Employee Retention Tax Credit, Amount | 1,200,000 | ||||||||||
Total received employee retention tax credit, Amount | 4,100,000 | ||||||||||
Disposal by sale | Overall business | |||||||||||
Gross proceeds | 19,166,000 | ||||||||||
Capistrano Catering, Inc | |||||||||||
Loss contingency, damages sought, value | 2,500,000 | ||||||||||
Foundry ASVRF Sawgrass, LLC | |||||||||||
Loss contingency, damages sought, value | 300,000 | ||||||||||
Golden West Wings LLC | |||||||||||
Loss contingency, damages sought, value | 2,300,000 | ||||||||||
Other Matters | |||||||||||
Loss contingency, damages sought, value | $ 35,000,000 | 35,000,000 | |||||||||
Everest Litigaton | |||||||||||
Loss contingency, damages sought, value | $ 600,000 | $ 1,600,000 | |||||||||
Sunz Litigation | |||||||||||
Loss contingency, damages sought, value | $ 10,000,000 | ||||||||||
Loss contingency, damages sought, value as a percentage of incurred and unpaid claims | 200% | ||||||||||
Vensure Litigation | |||||||||||
Loss contingency, damages sought, value | $ 1,500,000 | ||||||||||
Discontinued operation, proposed adjustments period | 90 days | ||||||||||
Discontinued operation, negotiation period | 30 days | ||||||||||
Vensure Litigation | Disposal by sale | Overall business | |||||||||||
Gross proceeds | $ 19,000,000 | ||||||||||
Gross note receivable | $ 9,500,000 | ||||||||||
Vensure Litigation | Withdrawn Claim | |||||||||||
Loss contingency, damages sought, value | $ 1,500,000 | ||||||||||
Vensure Litigation | Pending Litigation | |||||||||||
Gain contingency, unrecorded amount | $ 950,000 | ||||||||||
John Stephen Holmes Bankruptcy Litigation | |||||||||||
Loss contingency, damages sought (in shares) | 550,000 | ||||||||||
Period of time during which trustee failed to take any action (in years) | 3 years |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||||||||
Dec. 14, 2023 | Oct. 05, 2023 | Nov. 22, 2023 | Oct. 17, 2023 | Aug. 21, 2023 | Aug. 31, 2022 | Aug. 31, 2023 | May 31, 2023 | Dec. 08, 2022 | Sep. 20, 2022 | May 17, 2021 | |
Outstanding shares of common stock | 3,586,752 | ||||||||||
Exercise price of warrants (in dollars per share) | $ 9,216 | $ 208.78 | $ 35.68 | $ 13.20 | $ 0.0001 | ||||||
Net proceeds from sale | $ 1,900,000 | ||||||||||
Settlement amount | $ 550,000 | ||||||||||
Accounts payable and accrued expenses | $ 3,500,000 | $ 550,000 | |||||||||
Subsequent Event [Member] | |||||||||||
Description of market value of listed securities | the Company received a letter from the Staff notifying the Company that for the last 10 consecutive business days, from November 30 to December 13, the Company’s market value of listed securities has been $35,000,000 or greater and accordingly, the Company meets the market value of listed securities requirement as set forth in Listing Rule 5550(b)(2) | ||||||||||
Discription of settlement | the Company reached a favorable settlement with Vensure for $2.5 million. The Company received $2.5 million on November 22, 2023. On November 28, 2023, the court ruled in favor of the Company’s vendor, Ben Devs LLC for $2.0 million and the settlement and ShiftPixy paid an un upfront payment of $1.0 million on November 30, 2023 | ||||||||||
Outstanding shares of common stock | 4,744,234 | ||||||||||
Sale of common stock, shares | 56,250 | ||||||||||
Sale of pre-funded warrants | 38,125 | ||||||||||
Sale of common warrants | 56,250 | ||||||||||
Offering price | $ 26.40 | ||||||||||
Offering price for pre funded warrants | 26.40 | ||||||||||
Exercise price of warrants (in dollars per share) | $ 0.0001 | ||||||||||
Preferential dividend | $ 67,400,000 | ||||||||||
Net proceeds from sale | $ 2,000,000 |