Cover
Cover - shares | 6 Months Ended | |
Feb. 28, 2023 | Apr. 11, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Feb. 28, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-37954 | |
Entity Registrant Name | SHIFTPIXY, INC. | |
Entity Incorporation, State or Country Code | WY | |
Entity Tax Identification Number | 47-4211438 | |
Entity Address, Address Line One | 13450 W Sunrise Blvd | |
Entity Address, Address Line Two | Suite 650 | |
Entity Address, City or Town | Sunrise | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 33323 | |
City Area Code | 888 | |
Local Phone Number | 798-9100 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | PIXY | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Small Business | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,055,515 | |
Entity Central Index Key | 0001675634 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --08-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Feb. 28, 2023 | Aug. 31, 2022 |
Current assets | ||
Cash | $ 818 | $ 618 |
Accounts receivable | 745 | 279 |
Unbilled accounts receivable | 2,172 | 2,105 |
Prepaid expenses | 198 | 696 |
Other current assets | 293 | 187 |
Cash and marketable securities held in Trust Account (See Notes 2 and 4) | 0 | 116,969 |
Total current assets | 4,226 | 120,854 |
Fixed assets, net | 2,769 | 2,769 |
Right-of-use operating lease | 3,767 | 4,076 |
Deposits and other assets | 1,019 | 919 |
Total assets | 11,781 | 128,618 |
Current liabilities | ||
Accounts payable and other accrued liabilities | 16,546 | 17,122 |
Payroll related liabilities | 20,926 | 16,055 |
Accrued workers’ compensation costs | 439 | 567 |
Current liabilities of discontinued operations | 1,628 | 1,362 |
Class A common shares of SPAC mandatory redeemable 0 shares and 11,500,000 shares as of February 28, 2023 and August 31, 2022 (See Notes 2 and 4) | 0 | 116,969 |
Total current liabilities | 39,539 | 152,075 |
Non-current liabilities | ||
Operating lease liability, non-current | 3,237 | 3,541 |
Accrued workers’ compensation costs | 913 | 1,227 |
Non-current liabilities of discontinued operations | 3,810 | 3,269 |
Total liabilities | 47,499 | 160,112 |
Commitments and contingencies | ||
Stockholders’ deficit | ||
Preferred stock, 50,000,000 authorized shares; $0.0001 par value: 0 and 8,600,000 shares issued and outstanding as of February 28, 2023 and August 31, 2022. | 0 | 1 |
Common stock, 750,000,000 authorized shares; $0.0001 par value; 9,976,536 and 513,349 shares issued as of February 28, 2023 and August 31, 2022. | 6 | 5 |
Additional paid-in capital | 168,193 | 151,731 |
Accumulated deficit | (203,917) | (192,725) |
Total ShiftPixy, Inc. Stockholders' deficit | (35,718) | (40,988) |
Non-controlling interest in consolidated subsidiary (See Note 4) | 0 | 9,494 |
Total stockholders' deficit | (35,718) | (31,494) |
Total liabilities and stockholders' deficit | $ 11,781 | $ 128,618 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Feb. 28, 2023 | Aug. 31, 2022 |
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||
Class A common shares of SPAC mandatory redeemable (in shares) | 0 | 11,500,000 |
Stockholders’ deficit | ||
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 | 8,600,000 |
Preferred stock, shares outstanding (in shares) | 0 | 8,600,000 |
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) | 9,976,536 | 513,349 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | |
Income Statement [Abstract] | ||||
Revenues (See Note 2) | $ 4,579 | $ 10,437 | $ 9,844 | $ 19,378 |
Cost of revenues | 4,095 | 10,498 | 8,941 | 18,743 |
Gross profit | 484 | (61) | 903 | 635 |
Operating expenses: | ||||
Salaries, wages, and payroll taxes | 2,598 | 3,653 | 4,857 | 7,543 |
Commissions | 7 | 28 | 17 | 56 |
Professional fees | 870 | 1,677 | 2,065 | 3,414 |
Software development | 119 | 1,073 | 179 | 2,234 |
Depreciation and amortization | 150 | 130 | 299 | 253 |
General and administrative | 1,765 | 2,354 | 3,516 | 4,693 |
Total operating expenses | 5,509 | 8,915 | 10,933 | 18,193 |
Operating loss | (5,025) | (8,976) | (10,030) | (17,558) |
Other (expense) income: | ||||
Interest expense | (239) | (1) | (457) | (2) |
Other income | 642 | 13 | 642 | 16 |
Expensed SPAC offering cost | 0 | (515) | 0 | (515) |
Total other expense | 403 | (503) | 185 | (501) |
Net loss attributable to ShiftPixy, Inc | (4,622) | (9,479) | (9,845) | (18,059) |
Loss from discontinued operations, net of tax | (607) | (18) | (807) | (151) |
Non-controlling interest | (540) | 0 | (540) | 0 |
Net loss | (5,769) | (9,497) | (11,192) | (18,210) |
Preferred stock preferential dividend | 0 | 0 | (127,145) | 0 |
Deemed dividend from change in fair value from warrants modification | 0 | (7,731) | 0 | (7,731) |
Net loss attributable to common shareholders | $ (5,769) | $ (17,228) | $ (138,337) | $ (25,941) |
Net loss per share attributable to ShiftPixy shareholder, , basic and diluted | ||||
Continuing operations, basic (in dollars per share) | $ (0.53) | $ (55.13) | $ (14.29) | $ (76.77) |
Continuing operations, diluted (in dollars per share) | (0.53) | (55.13) | (14.29) | (76.77) |
Discontinued operations, basic (in dollars per share) | (0.06) | (0.06) | (0.08) | (0.45) |
Discontinued operations, diluted (in dollars per share) | (0.06) | (0.06) | (0.08) | (0.45) |
Net loss per common share, basic (in dollars per share) | (0.59) | (55.19) | (14.37) | (77.22) |
Net loss per common share, diluted (in dollars per share) | $ (0.59) | $ (55.19) | $ (14.37) | $ (77.22) |
Weighted average common shares outstanding, basic (in shares) | 9,703,645 | 312,155 | 9,625,660 | 335,934 |
Weighted average common shares outstanding, diluted (in shares) | 9,703,645 | 312,155 | 9,625,660 | 335,934 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands | Total | Cumulative effect adjustment for ASC 842 lease accounting adoption | Warrants | Private Placement | At-The-Market Offering | Parent | Parent Cumulative effect adjustment for ASC 842 lease accounting adoption | Parent Warrants | Parent Private Placement | Parent At-The-Market Offering | Preferred Stock Issued | Common Stock Issued | Common Stock Issued Warrants | Common Stock Issued Private Placement | Common Stock Issued At-The-Market Offering | Additional Paid-In Capital | Additional Paid-In Capital Warrants | Additional Paid-In Capital Private Placement | Additional Paid-In Capital At-The-Market Offering | Accumulated Deficit | Accumulated Deficit Cumulative effect adjustment for ASC 842 lease accounting adoption | Noncontrolling interest |
Beginning balance (in shares) at Aug. 31, 2021 | 0 | |||||||||||||||||||||
Beginning balance at Aug. 31, 2021 | $ 40,923 | $ 608 | $ (6,549) | $ 608 | $ 0 | $ 3 | $ 142,786 | $ (149,338) | $ 608 | $ 47,472 | ||||||||||||
Beginning balance (in shares) at Aug. 31, 2021 | 25,863,099 | |||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||
Common stock issued for convertible securities (in shares) | 4,948,453 | |||||||||||||||||||||
Common stock issued for convertible securities | $ 5,409 | $ 5,409 | $ 5,409 | |||||||||||||||||||
Common stock issued, net of offering costs (in shares) | 2,850,000 | |||||||||||||||||||||
Common stock issued, net of offering costs | $ 4,183 | $ 4,183 | $ 4,183 | |||||||||||||||||||
Prefunded warrants from private placement, net of offering costs | 6,861 | 6,861 | 6,861 | |||||||||||||||||||
Stock-based compensation expense | 747 | 747 | 747 | |||||||||||||||||||
Excess of proceeds from the sale of private placement warrants to Sponsor | (13,270) | (13,270) | (13,270) | |||||||||||||||||||
Withdrawal of SPAC registrations under Form S-1 | (37,978) | (37,978) | ||||||||||||||||||||
Net loss | (18,210) | (18,210) | (18,210) | |||||||||||||||||||
Ending balance (in shares) at Feb. 28, 2022 | 0 | |||||||||||||||||||||
Ending balance (in shares) at Feb. 28, 2022 | 33,661,552 | |||||||||||||||||||||
Ending balance at Feb. 28, 2022 | (10,727) | (20,221) | $ 0 | $ 3 | 146,716 | (166,940) | 9,494 | |||||||||||||||
Beginning balance (in shares) at Nov. 30, 2021 | 0 | |||||||||||||||||||||
Beginning balance at Nov. 30, 2021 | 30,392 | $ 608 | (17,080) | $ 608 | $ 0 | $ 3 | 140,968 | (158,051) | $ 608 | 47,472 | ||||||||||||
Beginning balance (in shares) at Nov. 30, 2021 | 28,713,099 | |||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||
Common stock issued for convertible securities (in shares) | 4,948,453 | |||||||||||||||||||||
Common stock issued for convertible securities | 5,409 | 5,409 | 5,409 | |||||||||||||||||||
Stock-based compensation expense | 339 | 339 | 339 | |||||||||||||||||||
Withdrawal of SPAC registrations under Form S-1 | (37,978) | (37,978) | ||||||||||||||||||||
Net loss | (9,497) | (9,497) | (9,497) | |||||||||||||||||||
Ending balance (in shares) at Feb. 28, 2022 | 0 | |||||||||||||||||||||
Ending balance (in shares) at Feb. 28, 2022 | 33,661,552 | |||||||||||||||||||||
Ending balance at Feb. 28, 2022 | $ (10,727) | (20,221) | $ 0 | $ 3 | 146,716 | (166,940) | 9,494 | |||||||||||||||
Beginning balance (in shares) at Aug. 31, 2022 | 8,600,000 | 8,600,000 | ||||||||||||||||||||
Beginning balance at Aug. 31, 2022 | $ (31,494) | (40,988) | $ 1 | $ 5 | 151,731 | (192,725) | 9,494 | |||||||||||||||
Beginning balance (in shares) at Aug. 31, 2022 | 513,349 | 513,349 | ||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||
Fair Market value increase of preferred stock prior to reverse stock split | $ 127,145 | 127,145 | 127,145 | |||||||||||||||||||
Preferential dividend of preferred stock | (127,145) | (127,145) | (127,145) | |||||||||||||||||||
Common stock issued for convertible securities (in shares) | (8,600,000) | 8,600,000 | 124,204 | |||||||||||||||||||
Common stock issued for convertible securities | 0 | $ 1 | 0 | $ 1 | $ (1) | $ 1 | $ 1 | |||||||||||||||
Common stock issued, net of offering costs (in shares) | 416,667 | 305,340 | ||||||||||||||||||||
Common stock issued, net of offering costs | 1,434 | $ 4,387 | 1,434 | $ 4,387 | 1,434 | $ 4,387 | ||||||||||||||||
Stock-based compensation expense | 500 | 500 | 500 | |||||||||||||||||||
Warrant modification expense | 106 | 106 | 106 | |||||||||||||||||||
Additional Shares issued due to reverse stock split (in shares) | 16,976 | |||||||||||||||||||||
Deconsolidation of VIE | 540 | 10,034 | 10,034 | (9,494) | ||||||||||||||||||
Net loss | $ (11,192) | (11,192) | (11,192) | |||||||||||||||||||
Ending balance (in shares) at Feb. 28, 2023 | 0 | 0 | ||||||||||||||||||||
Ending balance (in shares) at Feb. 28, 2023 | 9,976,536 | 9,976,536 | ||||||||||||||||||||
Ending balance at Feb. 28, 2023 | $ (35,718) | (35,718) | $ 0 | $ 6 | 168,193 | (203,917) | 0 | |||||||||||||||
Beginning balance (in shares) at Nov. 30, 2022 | 0 | |||||||||||||||||||||
Beginning balance at Nov. 30, 2022 | (32,168) | (41,662) | $ 0 | $ 6 | 156,480 | (198,148) | 9,494 | |||||||||||||||
Beginning balance (in shares) at Nov. 30, 2022 | 9,671,196 | |||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||
Common stock issued, net of offering costs (in shares) | 305,340 | |||||||||||||||||||||
Common stock issued, net of offering costs | $ 1,434 | $ 1,434 | $ 1,434 | |||||||||||||||||||
Stock-based compensation expense | 245 | 245 | 245 | |||||||||||||||||||
Deconsolidation of VIE | 540 | 10,034 | 10,034 | (9,494) | ||||||||||||||||||
Net loss | $ (5,769) | (5,769) | (5,769) | |||||||||||||||||||
Ending balance (in shares) at Feb. 28, 2023 | 0 | 0 | ||||||||||||||||||||
Ending balance (in shares) at Feb. 28, 2023 | 9,976,536 | 9,976,536 | ||||||||||||||||||||
Ending balance at Feb. 28, 2023 | $ (35,718) | $ (35,718) | $ 0 | $ 6 | $ 168,193 | $ (203,917) | $ 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Feb. 28, 2023 | Feb. 28, 2022 | |
OPERATING ACTIVITIES | ||
Net loss | $ (11,192,000) | $ (18,210,000) |
Loss from discontinued operations | (807,000) | (151,000) |
Non-Controlling Interest | (540,000) | 0 |
Net loss attributable to ShiftPixy, Inc | (9,845,000) | (18,059,000) |
Adjustments to reconcile net loss to net cash used in operations of ShiftPixy, Inc: | ||
Depreciation and amortization | 299,000 | 253,000 |
Stock-based compensation | 500,000 | 747,000 |
Warrant modification expense | 106,000 | 0 |
Stock-based compensation - shares for services accrued to directors | 113,000 | 0 |
Expensed SPAC offering cost | 0 | 515,000 |
Amortization of operating lease | 85,000 | 217,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (466,000) | 117,000 |
Unbilled accounts receivable | (67,000) | 126,000 |
Prepaid expenses and other current assets | 392,000 | (573,000) |
Deposits - workers' compensation | 0 | 414,000 |
Deposits and other assets | 0 | 0 |
Other long-term assets | (100,000) | 0 |
Accounts payable and other accrued liabilities | (769,000) | 3,065,000 |
Payroll related liabilities | 4,871,000 | 3,297,000 |
Accrued workers’ compensation costs | (442,000) | (452,000) |
Total adjustment | 4,522,000 | 7,726,000 |
Net cash used in operations of ShiftPixy, Inc | (5,323,000) | (10,333,000) |
Net cash provided by non- controlling activities | 0 | 0 |
Net cash provided by discontinued operating activities | 0 | 0 |
Net cash used in operations of ShiftPixy, Inc. | (5,323,000) | (10,333,000) |
INVESTING ACTIVITIES | ||
Investment of IHC IPO proceeds into Trust Account | 0 | (116,732,000) |
Redemption of Trust Account | 117,574,000 | 0 |
Purchase of fixed assets | (299,000) | (461,000) |
Net cash provided by (used in) investing activities | 117,275,000 | (117,193,000) |
FINANCING ACTIVITIES | ||
Deferred offering costs | 0 | (3,502,000) |
Proceeds from initial public offering of IHC | 0 | 116,725,000 |
Payment to IHC shareholders | (117,574,000) | 0 |
Proceeds from prefunded warrant exercises | 1,000 | 5,409,000 |
Proceeds from private placement, net of offering costs | 4,387,000 | 4,183,000 |
Net cash (used in) provided by financing activities | (111,752,000) | 129,676,000 |
Net increase in cash | 200,000 | 2,150,000 |
Cash - beginning of period | 618,000 | 1,199,000 |
Cash - end of period | 818,000 | 3,349,000 |
Supplemental Disclosure of Cash Flows Information: | ||
Cash paid for interest | 102,000 | 2,000 |
Cash paid for income taxes | 0 | 0 |
Non-cash Investing and Financing Activities: | ||
Deconsolidation of VIE | 9,494,000 | 0 |
Deferred offering costs SPACs | 0 | 37,978,000 |
Change in fair value due to warrant modification | 0 | 13,728,000 |
Operating lease assets and liabilities s from adoption of ASC 842 | 0 | 7,687,000 |
Increase in marketable securities in trust account and Class A mandatory redeemable common shares | 801,000 | 0 |
Transfer of preferred shares to common shares | 1,000 | 0 |
At-The-Market Offering | ||
FINANCING ACTIVITIES | ||
Proceeds from issuance of common stock | 1,434,000 | 0 |
Private Placement | ||
FINANCING ACTIVITIES | ||
Proceeds from issuance of common stock | $ 0 | $ 6,861,000 |
Nature of Operations
Nature of Operations | 6 Months Ended |
Feb. 28, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | 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 customer acquisition that simplifies the onboarding of new clients into the Company’s closed proprietary operating and processing information system (the “ShiftPixy Ecosystem”). The Company expects this HRIS platform to facilitate additional value-added services in future reporting periods. 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Feb. 28, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) applicable to interim reports of companies filing as a small reporting company. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. The results of unaudited condensed operations for the three and six months end February 28, 2023 are not necessarily indicative of the results that may be expected for the full year ending August 31, 2023. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2022 (“Fiscal 2022”), filed with the SEC on December 13, 2022, as amended by Forms 10-K/A, filed with the SEC on December 14, 2022, February 3, 2023 and February 9, 2023, respectively. Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of ShiftPixy, Inc., and its wholly owned subsidiaries. The unaudited condensed consolidated financial statements also include 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 us as 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 Note 2, Variable Interest Entity). All intercompany balances have been eliminated in consolidation. 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, 20122, 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. Se e 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 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: • Assumption 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 • Useful lives of property and equipment • Deferred income taxes and related valuation allowance • Valuation of illiquid non-controlling interest in SPAC shares transferred and • Projected development of workers’ compensation claims. 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 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 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 condensed 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 unaudited condensed 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 unaudited condensed 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 condensed consolidated financial statements are issued. As of February 28, 2023, the Company had cash of $0.8 million and a working capital deficit of $35.3 million. During the six months ended February 28, 2023, the Company used approximately $5.3 million of cash from its continuing operations and incurred recurring losses, resulting in an accumulated deficit of $203.9 million. As of February 28, 2023, the Company is delinquent with respect to remitting payroll tax payments to the IRS. The Company has been in communication with the IRS regarding amounts owing in relation to Employee Retention Credits due. In addition, some clients have filed suits against the Company, demanding that the Company take action to file for additional Employee Retention Credits for certain tax periods. Until the matter is concluded and the taxes are paid, the IRS could, subject to its standard processes and the Company’s rights to respond, implement collection actions, including such actions as levying against Company bank accounts, to recover the amounts that it calculates to be due and owing. 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 issuance of convertible notes. In September 2022, the Company raised approximately $5 million ($4.4 million, net of costs) in connection with the underwriting of a private placement offering, see Note 5, Stockholders' Deficit. On January 31, 2023, the Company entered into an At-The-Market "(ATM") Issuance Sales Agreement and filed a registration statement on Form S-3 and prospectus supplement with the Securities and Exchange Commission, for an offering of up to $8.2 million in shares of its common stock, see Note 5, Stockholders Deficit. For the three months ended February 28, 2023, the Company received $1.9 million gross proceeds ($1.4 million net of costs) from the sale of 305,340 shares of the Company’s common stock. As of February 28, 2023, approximately $6.3 million remains available for the sale of shares of the Company's common stock under the ATM. The Company's plans and expectations for the next twelve months include raising additional capital to help fund expansion of the Company's operations and strengthening of the Company's sales force strategy by focusing on staffing services as the key driver to improve the Company's margin and the continued support and functionality improvement of the Company's information technology (“IT”) and HRIS platform. This expanded go-to-market strategy will focus on building a national account portfolio managed by a newly-formed regional team of senior sales executives singularly focused on sustained quarterly revenue growth and gross profit margin expansion. The Company expects to continue to invest in the Company's HRIS platform, ShiftPixy Labs, and other growth initiatives, all of which have required and will continue to require significant cash expenditures. The Company expects to raise capital from additional sales of its securities during this fiscal year either through its ATM, registered public offerings or private placements, the proceeds of which the Company intends to use to fund its operations and growth initiatives. There can be no assurance that we will meet the requirements to be able to sell securities on terms that the Company is seeking. Although management believes that its current cash position, along with its anticipated revenue growth and proceeds from future sales of its securities, when combined with prudent expense management, will not alleviate substantial doubt, there is no assurance that about its ability to continue as a going concern and to fund its operations for at least one year from the date these financials are available (even with the absence of any funded debt outstanding on its balance sheet). 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, or consider other means of financing. The Company can give no assurance that it will be successful in implementing its business plan and obtaining financing on 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. These consolidated financial statements do not include any adjustments for this uncertainty. 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 or EAS based on a stated rate and price in the contract. Contracts generally have a term of 12 months, however are cancellable at any time by either party with 30 days’ written notice. 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. Payments for the Company’s services are typically made in advance of, or at the time that the services are provided. The Company does not have significant financing components or significant payment terms for its customers 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 revenue is primarily derived from the Company’s gross billings, which are based on (i) the payroll cost of the Company’s worksite employees (“WSEs”) and (ii) a mark-up computed as a percentage of payroll costs for payroll taxes and workers’ compensation premiums. Gross billings are invoiced to each EAS client concurrently with each periodic payroll of the Company’s WSEs, which coincides with the services provided and which is typically a fixed percentage of the payroll processed. Revenues, which exclude the payroll cost component of gross billings and therefore consist solely of markup, are recognized ratably over the payroll period as WSEs perform their services at the client worksite. Although the Company assumes responsibility for processing and remitting payroll and payroll related obligations, it does not assume employment-related responsibilities such as determining the amount of the payroll and related payroll obligations. As a result, the Company records revenue on a “net” basis in this arrangement for revenue recognition purposes. Revenues that have been recognized but not invoiced for EAS clients are included in unbilled accounts receivable on the Company’s condensed consolidated balance sheets were $2.2 million and $2.1 million, as of February 28, 2023 and August 31, 2022, respectively. Consistent with the Company’s revenue recognition policy for EAS clients, direct costs do not include the payroll cost of its WSEs. The cost of revenue associated with the Company’s revenue generating activities is primarily comprised of all other costs related to its WSEs, such as the employer portion of payroll-related taxes, employee benefit plan premiums and workers’ compensation insurance costs. The fees collected from the worksite employers for benefits (i.e. zero-margin benefits pass-through), workers’ compensation and state unemployment taxes are presented in revenues and the associated costs of benefits, workers’ compensation and state unemployment taxes are included in operating expenses for EAS clients, as the Company does retain risk and acts as a principal with respect to this aspect of the arrangement. With respect to these fees, the Company is primarily responsible for fulfilling the service and has discretion in establishing price. Disaggregation of Revenue The Company’s primary revenue streams include HCM and staffing services. The Company’s disaggregated revenues for the three and six months ended February 28, 2023 and February 28, 2022, respectively, were as follows: For the Three Months Ended For the Six Months Ended Revenue (in thousands): February 28, February 28, 2022 February 28, February 28, 2022 HCM 1 $ 1,558 $ 1,588 $ 2,970 $ 3,333 Staffing 3,021 8,849 6,874 16,045 $ 4,579 $ 10,437 $ 9,844 $ 19,378 1 HCM revenue is presented net, $12 million and $23.6 million gross billings less WSE payroll costs of $10.4 million and $20.6 million for the three and six months ended February 28, 2023 and $12.6 million and $25.5 million, respectively Gross billings less WSE payroll costs for the three and six months ended February 2022, was $11 million and $22.2 million, respectively. For the three and six months ended February 28, 2023 and February 28, 2022, respectively, the following geographical regions represented more than 10% of total revenues: For the Three Months Ended For the Six Months Ended Region: February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 California 43.6 % 53.5 % 46.3 % 53.9 % Washington 11.1 % 12.5 % 11.7 % 13.1 % New Mexico 12.9 % 8 % 11.7 % 7.2 % Incremental Cost of Obtaining a Contract Pursuant to the “practical expedients” provided under Accounting Standards Update "ASU" No 2014-09, the Company expenses sales commissions when incurred because the terms of its contracts are cancellable by either party upon 30 days' notice. These costs are recorded in commissions in the Company’s unaudited condensed consolidated statements of operations. Segment Reporting Prior to August 31, 2021, the Company operated as one reportable segment under Accounting Standards Codification "ASC" 280, Segment Reporting . The chief operating decision maker regularly reviews the financial information of the Company at a consolidated level in deciding how to allocate resources and in assessing performance. During Fiscal 2021, the Company entered into new business lines and geographic areas that, to date, are not material. However, with the migration to Staffing during the fiscal quarter ending May 31, 2021, the Company is beginning to manage the business on a segmented basis and therefore intends to report such information once systems and processes are updated accordingly. Reporting and monitoring activities on a segment basis will allow the chief operating decision maker to evaluate operating performance more effectively. However, the Company is working on its systems to properly allocate to its business segments. However, the CEO is actively involved in the day to day business and is aware of the overall segment information. 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 February 28, 2023 and August 31, 2022. Marketable Securities Held in Trust Account As of August 31, 2022, substantially 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 are restricted for use and may only be used for purposes of completing an initial business combination ("IBC") or redemption of the public common shares of IHC. On December 1, 2022, the Company distributed $117.6 million to the shareholders of IHC. There were no assets held in the Trust Account as of February 28, 2023. 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 February 28, 2023 and August 31, 2022, there was $1 million $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 February 28, 2023 and August 31, 2022, respectively. As of February 28, 2023 August 31, 2022 Clients: (Unaudited) Client 1 71.5 % — % Client 2 15.7 % 39.2 % Client 3 6.3 % 15.4 % Client 4 5.8 % 22.0 % Fixed Assets Fixed assets are recorded at cost, less accumulated depreciation and amortization. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When fixed assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Leasehold improvements are amortized over the shorter of the useful life or the initial lease term. Fixed assets are recorded at cost and are depreciated over the estimated useful lives of the related assets using the straight-line method. The estimated useful lives of property and equipment for purposes of computing depreciation are as follows: Equipment: 5 years 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 three and six months are $0.2 million and $0.3 million for February 28, 2023 and $0.1 million and $0.3 million for February 28, 2022, respectively and is included on the unaudited condensed consolidated statements of operations and included in operating expenses. 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 The Company determined that there were no material capitalized internal software development costs for the three and six months ended February 28, 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 The Company incurred research and development costs of $0.1 million and $0.2 million for the three and six months ended February 28, 2023, respectively. During the three and six months ended February 28, 2022 the Company incurred research and development costs of approximately $1.1 million and $2.2 million, respectively. All costs were related to internally developed or externally contracted software and related technology for the Company’s HRIS platform and related mobile application. In addition, there were no software costs were capitalized for the three and six ended February 28, 2023 and February 28, 2022, respectively. 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 condensed 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 unaudited condensed 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 . ASC 360-10 requires that an impairment loss be recognized for assets to be disposed of or held-for-use when the carrying amount of an asset is deemed not to be recoverable. If events or circumstances were to indicate that any of the Company's long-lived assets might be impaired, the Company would assess recoverability based on the estimated undiscounted future cash flows to be generated from the applicable asset. In addition, the Company may record an impairment loss to the extent that the carrying value of the asset exceeds the fair value of the asset. Fair value is generally determined using an estimate of discounted future net cash flows from operating activities or upon disposal of the asset. The Company assessed impairment for the periods presented and no impairment charges were deemed necessary. 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 funds the policy premium based on standard premium rates on a monthly basis and based on the gross payroll applicable to workers covered by the policy. During the policy term and thereafter, periodic adjustments may involve either a return of previously paid premiums or a payment of additional premiums by the Company or a combination of both. If the Company’s losses under that policy exceed the expected losses under that policy, then the Company could receive a demand for additional premium payments. The Company is currently engaged in litigation regarding such a demand for additional premium payments, which we believe to be without merit, See Note 8, Contingencies, Everest Litigatio n , below. Sunz Program From July 2018 through February 28, 2021, the Company’s workers’ compensation program for its WSEs was provided primarily through an arrangement with United Wisconsin Insurance Company and administered by Sunz Insurance Solutions, LLC (“Sunz”). Under this program, the Company has financial responsibility for the first $0.5 million of claims per occurrence. The Company provides and maintains a loss fund that is earmarked to pay claims and claims related expenses. The workers’ compensation insurance carrier establishes monthly funding requirements comprised of premium costs and funds to be set aside for payment of future claims (“claim loss funds”). The level of claim loss funds is primarily based upon anticipated WSE payroll levels and expected workers’ compensation loss rates, as determined by the insurance carrier. Monies funded into the program for incurred claims expected to be paid within one year are recorded as Deposit - workers’ compensation, a short-term asset, while the remainder of claim funds are included in Deposit - workers’ compensation, a long-term asset in our condensed consolidated balance sheets. The Company is currently engaged in litigation regarding demands by Sunz for additional claims loss funds, which we believe to be without merit, as discussed at Note 8, Contingencies , Sunz Litigation , below. 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 theses programs as of February 28, 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 February 28, 2023 and August 31, 2022, the Company had short term accrued workers’ compensation costs of $0.4 million and $0.6 million, and long-term accrued workers’ compensation costs of $0.9 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 , below. As of February 28, 2023, the retained workers’ compensation assets and liabilities are presented as a discontinued operation net asset or liability. As of February 28, 2023 and August 31, 2022, the Company had $1.6 million and $1.4 million in short-term liabilities, and $3.8 million and $3.3 million in long-term liabilities, respectively. The Company had no related worker's compensation assets as of February 28, 2023 and as of August 31, 2022, respectively. Because the Company bears the financial responsibility for claims up to the level noted above, such claims, which are the primary component of its workers’ compensation costs, are recorded in the period incurred. Workers’ compensation insurance includes ongoing health care and indemnity coverage whereby claims are paid over numerous years following the date of injury. Accordingly, the accrual of related incurred costs in each reporting period includes estimates, which take into account the ongoing development of claims and therefore requires a significant level of judgment. In estimating ultimate loss rates, the Company utilizes historical loss experience, exposure data, and actuarial judgment, together with a range of inputs that are primarily based upon the WSE’s job responsibilities, their location, the historical frequency and severity of workers’ compensation claims, and an estimate of future cost trends. For each reporting period, changes in the actuarial assumptions resulting from changes in actual claims experience and other trends are incorporated into the Company’s workers’ compensation claims cost estimates. The estimated incurred claims are based upon: (i) the level of claims processed during each quarter; (ii) estimated completion rates based upon recent claim development patterns under the plan; and (iii) the number of participants in the plan. The Company has had very limited and immaterial COVID-19 related claims between March 2020 through the date of this Quarterly Report, although there is a possibility of additional workers’ compensation claims being made by furloughed WSEs as a result of the employment downturn caused by the pandemic. On May 4, 2020, the State of California indicated that workers who become ill with COVID-19 would have a potential claim against workers’ compensation insurance for their illnesses. There is a possibility that additional workers’ compensation claims could be made by employees required to work by their employers during the COVID-19 pandemic, which could have a material impact on 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 February 28, 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 , requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practical to estimate fair value. ASC 820 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of February 28, 2023 and August 31, 2022, the carrying value of certain financial instruments (cash, accounts receivable and payable) approximated fair value due to the short-term nature of the instruments. Notes Receivable is valued at the Company's estimate of expected collections value as described below, See Note 3, Discontinued Operations. 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 i |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Feb. 28, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | 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 PEO business. In connection with this transaction, the Company had a Note Receivable to be paid over four years. For Fiscal 2020, the Company estimated the value of the Note Receivable at fair value as discussed in Note 2, Summary of Significant Accounting Policies, above. 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 impact of eliminating any sums owed to the Company under the Note Receivable. As indicated in the reconciliation table below, the Company has recorded $2.6 million of working capital adjustments, subject to final review and acceptance, and has provided for an additional reserve of $2.9 million for potential claims. By letter dated April 6, 2021, the Company disputed Vensure’s proposed adjustments and maintains that the amount Vensure owes the Company pursuant to the Note Receivable is as much as $9.5 million. 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 disputes between the Company and Vensure regarding working capital adjustments under the Vensure Asset Sale agreement are currently the subject of litigation pending in the Delaware Chancery Court, as discussed at Note 8, Contingencies, Vensure Litigation, below. The following reconciliation of the gross proceeds to the net proceeds from the Vensure Asset Sale is presented in the condensed consolidated balance sheets as of February 28, 2023 and August 31, 2022. As of February 28, 2023 (Unaudited) August 31, 2022 Gross proceeds $ 19,166,000 $ 19,166,000 Cash received at closing – asset sale (9,500,000) (9,500,000) Cash received at closing – working capital (166,000) (166,000) Gross note receivable $ 9,500,000 $ 9,500,000 Less: Transaction reconciliation – estimated working capital adjustments (2,604,000) (2,604,000) Adjusted Note Receivable 6,896,000 6,896,000 Reserve for estimated potential claims (2,892,000) (2,892,000) Reserve for potential collectability concerns $ (4,004,000) $ (4,004,000) Long-term note receivable, estimated net realizable value $ — $ — As of February 28, 2023 and August 31, 2022, as discussed abo ve, the note receivables asset has been impaired to adjust the net realizable value of the long-term note receivable to zero and zero, respectively. The Vensure Asset Sale generated a gain of $15.6 million for during the fiscal year end August 31, 2020. 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 terms of the Vensure Asset Sale call for adjustments to the Note Receivable either for: (i) working capital adjustments or (ii) in the event that the gross wages of the business transferred is less than the required amount. (i) Working capital adjustments: Through February 28, 2023, the Company has identified $2.6 million of likely working capital adjustments, including $88,000 related to lower net assets transferred at closing, and $2.5 million of cash remitted to the Company’s bank accounts, net of cash remitted to Vensure’s bank accounts. Under the terms of the Vensure Asset Sale, a reconciliation of the working capital was to have been completed by April 15, 2020. Due to operational difficulties and quarantined staff caused by the outbreak of COVID-19, Vensure requested a postponement of the working capital reconciliation that was due in Fiscal 2020. Although Vensure provided the Company with its working capital reconciliation on March 12, 2021, it failed to provide adequate documentation to support its calculations. Accordingly, the working capital adjustment recorded as of February 28, 2023, represents the Company’s estimate of the reconciliation adjustment by using Vensure’s claims and the limited supporting information Vensure provided as a starting point, and then making adjustments for amounts in dispute based upon the Company's internal records and best estimates. There is no assurance that the working capital change identified as of February 28, 2023, represents the final working capital adjustment. (ii) Gross billings adjustment: Under the terms of the Vensure Asset Sale, the proceeds of the transaction are reduced if the actual gross wages of customers transferred for Calendar 2020 are less than 90% of those customers’ Calendar 2019 gross wages. The Company has prepared an estimate of the Calendar 2020 gross wages based on a combination of factors including reports of actual transferred client billings in early Calendar 2020, actual gross wages of continuing customers of the Company, publicly available unemployment reports for the Southern California markets and the relevant COVID-19 impacts on employment levels, and other information. Based on the information available, the Company estimated that it would receive additional consideration below the required threshold and reduced the contingent consideration by $1.4 million. Vensure has not identified any such adjustments to date. Based on the information available, the Company reclassified the previously recorded gross wages claim to a general potential claims reserve for Fiscal 2021. No additional adjustments were made during the three and six months ended February 28, 2023 and February 28, 2022. The carrying amounts of the classes of assets and liabilities from the Vensure Asset Sale included in discontinued operations are as follows: As of February 28, August 31, (Unaudited) Deposits – workers’ compensation — — Total current assets — — Deposits – workers’ compensation — — Total assets $ — $ — Accrued workers’ compensation cost 1,628,000 1,362,000 Total current liabilities 1,628,000 1,362,000 Accrued workers’ compensation cost 3,810,000 3,269,000 Total liabilities 5,438,000 4,631,000 Net liability $ (5,438,000) $ (4,631,000) Reported results for the discontinued operations by period were as follows: For the Three Months Ended For the Six Months Ended February 28, February 28, 2022 February 28, February 28, 2022 Revenues $ — $ — $ — $ — Cost of revenues 607,000 18,000 807,000 151,000 Gross profit (loss) (607,000) (18,000) (807,000) (151,000) Total operating expenses — — — — Loss from discontinued operations $ (607,000) $ (18,000) $ (807,000) $ (151,000) |
Special Purpose Acquisition Com
Special Purpose Acquisition Company ("SPAC") Sponsorship | 6 Months Ended |
Feb. 28, 2023 | |
Investments in and Advances to Affiliates [Abstract] | |
Special Purpose Acquisition Company ("SPAC") Sponsorship | Special Purpose Acquisition Company ("SPAC") Sponsorship IHC closed on its IPO effective October 2021, and its net proceeds of $116.7 million, the funds was placed in a rust account (the “Trust Account”), and was invested in U.S. government securities. Th 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 unaudited condensed 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 11,251,347 Public Shares exercised their right to redeem their shares for a pro rata portion of the funds in the Trust Account, leaving 248,653 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, was 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 the IHC did not meet the criteria of a VIE. There was a net liability of $0.6 million for IHC and recorded this to other income and $0.5 million to non-controlling interest or 85% that the Company did not own of IHC. |
Stockholders' Deficit
Stockholders' Deficit | 6 Months Ended |
Feb. 28, 2023 | |
Equity [Abstract] | |
Stockholders' Deficit | Stockholders’ Deficit Preferred Stock In September 2016, the founding shareholders of the Company were granted options to acquire preferred stock of the Company (the “Preferred Options”). The number of Preferred Options granted was based upon the number of shares held at the time of the grant. These Preferred Options are nontransferable and forfeited upon the sale of the related founding shares of common stock held by the option holder. Upon the occurrence of certain specified events, such founding shareholders can exercise each Preferred Option to purchase one share of preferred stock of the Company at an exercise price of $0.0001 per share. The preferred stock underlying the Preferred Options does not include any rights to dividends or preference upon liquidation of the Company and is convertible into shares of the Company’s common stock on a one-for-one basis. Upon consummation of the Vensure Asset Sale in January 2020, a total of 24,634,560 Preferred Options became exercisable and exchangeable into an equal number of shares of the Company's common stock. On June 4, 2020, Scott W. Absher, the Company’s Chief Executive Officer, exercised 12,500,000 Preferred Options to purchase 12,500,000 shares of the Company's preferred stock for an aggregate purchase price of $1,250 per share, Immediately following the exercise of the Preferred Options, Mr. Absher elected to convert the 12,500,000 shares of preferred stock into 12,500,000 shares of common stock, which were subject to a 24-month lock-up period during which such shares could not be traded. Between July 20, 2020 and November 30, 2020, an additional 294,490 Preferred Options were exercised and converted into 294,490 shares of common stock, which are freely tradable. On October 22, 2021, the Company’s board of directors canceled 11,790,000 Preferred Options previously issued to its co-founder, J. Stephen Holmes. As noted in Note 8, Contingencies, the trustee of the bankruptcy estate of Mr. Holmes is now asserting rights to these preferred options. Were the trustee to be successful in its claim, the Company would be obligated to issue up to 12,500,000 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. A total of 37,570 Preferred Options, in excess of the options claimed by the trustee of the bankruptcy estate of Mr. Holmes and issued pursuant to the September 2016 grant and triggered by the Vensure Asset Sale remain unexercised. The Preferred Options expire on December 31, 2023. The amount of Preferred Options, and the number of shares of preferred stock issuable upon exercise of such options, is based upon the number of shares of common stock held by the option holders at the time the Preferred Options were issued in September 2016. Accordingly, in order to confirm the original intent of the granting of up to 25,000,000 Preferred Options to Mr. Absher, it has always been the Company’s intent to adopt a second grant of an additional 12,500,000 Preferred Options to Mr. Absher, whereby each option permits the holder to acquire one share of the Company’s preferred stock for $0.0001 per share. On August 13, 2021, consistent with this intent, the Company granted 12,500,000 Preferred Options to Mr. Absher to purchase shares of Preferred Stock, par value $0.0001 for consideration of $0.0001 per share. Each Preferred Option is exercisable for a period of twenty-four months upon (i) the acquisition of a Controlling Interest (as defined below) in the Company by any single shareholder or group of shareholders acting in concert (other than Mr. Absher), or (ii) the announcement of (x) any proposed merger, consolidation, or business combination in which the Company’s Common Stock is changed or exchanged, or (y) any sale or distribution of at least 50% of the Company’s assets or earning power, other than through a reincorporation. Each share of Preferred Stock is convertible into Common Stock on a one-for-one basis. “Controlling Interest” means the ownership or control of outstanding voting shares of the Company sufficient to enable the acquiring person, directly or indirectly and individually or in concert with others, to exercise one-fifth or more of all the voting power of the Company in the election of directors or any other business matter on which shareholders have the right to vote under the Wyoming Business Corporation Act. On July 14, 2022, the Board of the Company approved the issuance to the Company’s founder and principal shareholder, Scott Absher, of 12,500,000 shares of the Company’s Preferred Class A Stock ("Preferred Shares"), par value $0.0001 per share, in exchange for (a) the surrender by Mr. Absher of his options to acquire 12,500,000 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 $0.2322 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 3.1%; (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 $0.82 million, in exchange for an option to receive 4,100,000 shares of the Company's Preferred Class A Stock. 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 $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, these 4,100,000, 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 8,600,000 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, t he 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, t his had no effect on stockholders' deficit. Prior to the share holder 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 stock of the company reflected. 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 value compared to the fair value received). On September 1, 2022, Mr. Absher converted 8,600,000 Preferred Shares to 8,600,000 shares of the Company’s common stock. Pursuant to Rule 144, these 8,000,000 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 8,600,000 preferred shares were converted into common shares on September 1, 2022, after the Company's reverse stock split had taken effect. Accordingly, no preferred shares are issued and outstanding as of February 28, 2023. As noted in Note 8 Contingencies, however, the trustee of the bankruptcy estate of Mr. Holmes is now asserting rights to preferred options and has attempted to convert preferred options into shares of preferred stock. Common Stock and Warrants As reported in our 8-K filed on September 23, 2022 , on September 20, 2022, the Company entered into a S ecurities P urchase A greement (the “Purchase Agreement”) with a large institutional investor (the “Purchaser”) pursuant to which the Company sold to the Purchaser an aggregate of 416,667 shares (the “Shares”) of its common stock together with warrants (the “Warrants”) to purchase up to 833,334 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 $12.00. The Warrants are exercisable for a period of seven years commencing upon issuance at an exercise price of $12.00, subject to adjustment. The Offering closed on September 23, 2022. The net proceeds to the Company from the Offering were $4,378,000. In connection with the Purchase Agreement, the Company and the Purchaser entered into A mendment No. 1 to W arrants (the “Warrant Amendment”). Pursuant to the Warrant Amendment, the exercise price of (i) 25,233 warrants issued on September 3, 2021, and (ii) 98,969 warrants issued on January 28, 2022, was reduced to $0.01. As a result of the change in exercise price, the Company recorded an expense of $106,000. 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 P lacement A gent A greement, 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 20,833 shares of common stock (5% of the number of shares sold in the Offering (the “Placement Agent Warrants”). The Placement Agent Warrants will be 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 $13.20 per share. On January 31, 2023, the Company entered into an ATM Issuance Sales Agreement and filed a registration statement on Form S-3 and prospectus supplement for an at the market offering of up to $8.2 million in shares of its common stock 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. The ATM expires on January 31, 2026. For the three months ended February 28, 2023, the Company received $1.9 million in gross proceeds ($1.4 million, net of costs) from the sale of 305,340 shares of the Company’s common stock. As of February 28, 2023, approximately $6.3 million remains available for the sale of shares of the Company's common stock under the ATM. On May 17, 2021, we issued warrants to purchase up to an aggregate of 49,484 shares of our common stock, with an exercise price of $242.50 (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 49,484 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 $120.00 and (ii) provided for the issuance of a new warrant to purchase up to an aggregate of approximately 98,969 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 $155.00. 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. 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) $0.64 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. We recorded approximately $5.5 million as issuance costs that offset the $5.5 million of additional paid-in capital the 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 unaudited condensed consolidated statements of operations, resulting in a reduction of income available to common shareholders in our basic earnings per share calculation. The following table summarizes the changes in the Company’s common stock and Prefunded Warrants for the period ended February 28, 2023. Number Weighted Weighted Warrants outstanding, August 31, 2022 522,786 7.2 $ 47.99 Issued 854,166 7.1 12.00 Exercised (124,203) 0 — Warrants outstanding, February 28, 2023 1,252,749 6.6 33.61 Warrants exercisable, February 28, 2023 398,582 6.8 $ 86.38 The following table summarizes the Company’s warrants outstanding as of February 28, 2023 (Unaudited): Warrants Weighted average Exercise September 2022 Common Warrants (1) 833,334 6.6 $ 12.00 September 2022 Underwriter Warrants 20,833 4.3 13.20 July 2022 Common Warrants (2) 348,408 7.4 26.00 Sep 2021Underwriter Warrants 3,762 6.2 175.45 May 2021Underwriter Warrants 2,474 3.2 242.50 October 2020 Common Warrants 23,000 2.6 330.00 October 2020 Underwriter Warrants 2,000 2.6 330.00 May 2020 Common Warrants 12,776 2.2 540.00 May 2020 Underwriter Warrants 1,111 2.2 540.00 March 2020 Exchange Warrants 4,237 2.6 1,017.00 Amended March 2019 Warrants 663 1.0 4,000.00 March 2019 Services Warrants 34 1.0 7,000.00 June 2018 Warrants 63 0.8 9,960.00 June 2018 Services Warrants 54 0.8 9,960.00 1,252,749 6.6 $ 34.78 (1) The September 2022 Common Warrants are exercisable commencing March 23, 2023 (six months from the date of issuance) and will terminate March 23, 2030. |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Feb. 28, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock Based Compensation | Stock Based Compensation Employee Stock Option Plan Increase 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”). March 31, 2021, the Shareholders approved an increase in the number of shares of common stock issuable under the Plan from 2,500 to 30,000. On March 6, 2023, the shareholders approved an increase in the number of shares of common stock issuable under the Plan from 30,000 to 750,000. As of February 28, 2023, there are 749,997 shares available under the Plan. For all options to purchase common stock 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 remainder in equal quarterly installments over the succeeding 12 quarters. All options granted to purchase common stock have a ten year term. Stock grants are issued at fair value, considered to be the market price on the grant date. The fair value of option awards is estimated on the grant date using the Black-Scholes stock option pricing model. Following its adoption of ASU 2016-9, 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. Stock-based compensation expense was $0.2 million and $0.5 million for the three and six months ended February 28, 2023, respectively. The Company recognized approximately $0.3 million and $0.7 million of compensation expense for the three and six months ended February 28, 2023, respectively. The following table summarizes option activity for the six months ending February 28, 2023. Options Outstanding and Exercisable Number Weighted Weighted (In years) Balance outstanding as of August 31, 2022 11,753 8.1 $ 733.00 Forfeited (1,750) 8.3 2.70 Balance outstanding expected to be exercisable as of February 28, 2023 10,003 7.5 $ 813.70 As of February 28, 2023, the total unrecognized deferred share-based compensation expected to be recognized over the remaining weighted average vesting periods of 1.7 years for outstanding grants was $1,153,000. Options outstanding as of February 28, 2023 had an aggregate intrinsic value of $0. Option vesting activity from August 31, 2022, through February 28, 2023 was as follows: Options Vested Number Weighted Weighted (In years) Balance, August 31, 2022 5,269 8.1 $ 1,146.00 Vested 1,560 7.8 434.00 Forfeited (716) 8.1 293.00 Balance, February 28, 2023 6,113 7.4 $ 1,064.00 Options Outstanding Options Vested Exercise Prices Number of Weighted Weighted Number Weighted Weighted (In Years) (In Years) $50.00 - 1,000.00 9,641 7.6 $ 453 5,754 7.5 $ 466 $1,001.00 - $4,000.00 20 6.3 1,895 19 6.7 1,896 $4,001.00 - $8,000.00 121 6.1 5,121 120 6.2 5,120 $8,001.00 - $12,000.00 101 5.2 10,298 101 5.2 10,298 $12,001.00 - $16,000.00 109 4.4 15,584 109 4.4 15,584 $16,001.00 - $39,160.00 11 4.4 39,160 11 4.4 39,160 10,003 7.6 $ 814 6,113 7.4 $ 1,064 |
Related Parties and Certain Dir
Related Parties and Certain Directors and Officers | 6 Months Ended |
Feb. 28, 2023 | |
Related Party Transactions [Abstract] | |
Related Parties and Certain Directors and Officers | Related Parties and Certain Directors and Officers Director Compensation 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 $0.3 million for Fiscal 2022 , respectively. On October 22, 2021, our Board approved the promotion of Ms. Murphy to the position of Chief Operating Officer, as well as an increase in her annual salary to $0.5 million, all of which were effective January 1, 2022. As of August 31, 2022 , Ms. Murphy has deferred payment related to her salary increase of approximately $0.2 million. The deferred payment salary is recorded in the accrued liabilities on the condensed consolidated balance sheets. 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 Company Preferred 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. J. Stephen Holmes formerly served as a non-employee sales manager, advisor to and significant shareholder of the Company. The Company incurred $0.8 million in professional fees for services provided by Mr. Holmes during Fiscal 2021. On October 22, 2021, the Company severed all ties with Mr. Holmes, effective immediately, and cancelled Preferred Options that had previously been issued to him but had not been exercised. As a result of these actions, the Company no longer has any financial obligation to Mr. Holmes, and believes that he is no longer a significant shareholder of the Company, see Note 5, Stockholders’ Deficit and Note 8 Contingencies. Related Persons to Scott Absher Mark Absher, the brother of Scott Absher and was hired Company as Deputy General Counsel – Special Projects, for an annual salary of $0.2 million. Mr. Absher's compensation for the three and six month period ending February 28, 2023 , was $60,000 and $0.12 million, respectively. His compensation for the three and six month period ending February 28, 2022 , was $0 and $58,000, respectively. David May, a member of our business development team, is the son-in-law of Mr. Absher. His compensation includes sales commissions of approximately $0.1 million for Fiscal 2022 . Mr. May's compensation for the three month and six month period ending February 28, 2023 , was $37,000 and $75,000 , respectively. H is compensation for the three and six month period ending February 28, 2022 , was $43,000 and was $86,000, respectively. Phil Eastvold, the Executive Producer of ShiftPixy Productions, Inc., is the son-in-law of Mr. Absher. In addition to the relocation bonus noted above, Mr. Eastvold received compensation of approximately $0.2 million and $0.2 million for Fiscal 2022 . Mr. Eastvold's compensation for the three and six month period ending February 28, 2023 , was $56,000 and $0.1 million, respectively. His compensation for the three and six month period ending February 28, 2022 , was $56,000 and $0.1 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 annual salary is $0.1 million, Mr. Absher's compensation for the three month period and six month period ending February 28, 2023 , was $30,000 and $60,000 respectively, His compensation for the three month period and six month period ending February 28, 2022 , was $30,000 and $60,000 respectively. Connie Absher, (the spouse of Scott Absher), Elizabeth Eastvold, (the daughter of Scott and Connie Absher and spouse of Mr. Eastvold), and Hannah Absher, (the daughter of Scott and Connie Absher), are also employed by the Company. These individuals, as a group, received aggregate compensation of $0.2 million for Fiscal 2022 . In addition, as noted above, Hannah Absher received a relocation bonus of approximately $18,000 during Fiscal 2021, in connection with her relocation. Neither Connie Absher nor Elizabeth Eastvold received any such relocation bonus. These individuals, as a group, received compensation for the three and six month period ending February 28, 2023 , of $60,000 and $0.1 million, respectively. Compensation as a group for these individuals for the three month period and six month period ending February 28, 2022 was $56,000 and $0.1 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 three months ended February 28, 2023 and February 28, 2022 was $56,250 and $56,250, respectively. Stock-based compensation expense for the six months ended February 28, 2023 and 2022 was $0.1 million was $0.1 million, respectively. The Company has agreements with three directors to receive shares of common stock was valued at $0.1 million per year. No shares of common stock have been issued as of August 31, 2022 and February 28, 2023, respectively. As of February 28, 2023, the shares of common stock to be issued to directors was 59.040. As of February 28, 2023 and August 30, 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. |
Commitments
Commitments | 6 Months Ended |
Feb. 28, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Commitments Operating Leases & 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. 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 8 Contingencies related to the legal case with the litigation with the landlord, Courvoisier Centre. 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 contains escalation clauses relating to increases in real property taxes as well as certain maintenance costs. Monthly rent expense under this lease is approximately $34,000. 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 anticipates using for its sales and operations workforce. The lease has a term of three years expiring on May 31, 2024. The base rent is paid monthly and escalates annually pursuant to a schedule set forth in the sublease. Monthly rent expense under this lease is approximately $26,000. 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 lease had possession date of August 1, 2022. The base rent is paid monthly and escalates annually pursuant to a schedule set forth in the lease. Monthly rent expense under this lease is approximately $27,000. 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. 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 8, Contingencies. As a result of the abandonment, the Company evaluated the ROU assets for impairment as of August 31, 2022, and recorded an impairment charge of $3.9 million, within the impairment loss line item for the year ended., Furthermore, the Company released the corresponding lease liability and evaluated the need for a loss contingency in accordance with ASC 450, recording a contingent liability of $3.8 million, included within accrued expenses of the consolidated balance sheets as of February 28, 2023 and August 31, 2022, respectively. The components of lease expense are as follows: Three Months Ended February 28, 2023 Six Months Ended February 28, 2023 Operating Lease Cost $ 307,792 $ 563,753 Future minimum lease and licensing payments under non-cancelable operating leases at February 28, 2023, are as follows: Minimum lease commitments 2024 $ 1,039,000 2025 1,073,000 2026 1,032,000 2027 746,000 2028 488,000 Thereafter 256,000 Total minimum payments $ 4,634,000 Less: present value discount 563,000 Lease liability $ 4,071,000 Weighted-average remaining lease term - operating leases (months) 63 Weighted-average discount rate 5.54 % The current portion of the operating lease liability is included within our accounts payable and other accrued liabilities Special Purpose Acquisition Company 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 (the "Founder Shares"), 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 15% 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 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 $4.6 million . Each private placement warrant was exercisable to purchase one whole share of common stock in IHC at $11.50 per share. In as much as IHC was dissolved on November 14, 2022, and the Trust released all the redemption funds to shareholders on December 1, 2022, effectively liquidating the Trust Account, (See Note 4: Special Purpose Acquisition Company ("SPAC") Sponsorship), the private placement warrants have been deemed worthless. The investment amounts set forth above do not include loans that the Company's subsidiary, ShiftPixy Investments, Inc., has extended to IHC in an amount not to exceed $0.5 million, in its role as sponsor. Nor do they include sums advanced by the Company to IHC to enable it to conduct its activities. As of February 28, 2023, the Company had advanced, through its wholly owned subsidiary, an aggregate of approximately $0.9 million to the SPACs for payment of various expenses in connection with the SPAC IPOs, principally consisting of SEC registration, legal and auditing fees. |
Contingencies
Contingencies | 6 Months Ended |
Feb. 28, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | 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. 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. Some of the matters are detailed below. Kadima Litigation The Company became engaged in a dispute with its former software developer, Kadima Ventures (“Kadima”), over incomplete but paid for software development work. In May 2016, the Company entered into a contract with Kadima for the development and deployment of user features that were proposed by Kadima for an original build cost of $2.2 million to complete. This proposal was later revised upward to approximately $7.2 million to add certain features to the original proposal. As of February 28, 2023, the Company has paid approximately $11 million to Kadima, but has never been provided access to the majority of the promised software. Kadima has refused to continue development work, denied access to developed software, and refused to surrender to the Company any software that it has developed unless the Company pays an additional $12 million above the $11 million already paid. In April 2019, Kadima filed a complaint against the Company in the Superior Court of the State of Arizona, Maricopa County, alleging claims for breach of contract, promissory estoppel and unjust enrichment, and seeking damages in excess of $11 million. The Company vigorously disputed and denied each of Kadima’s claims, including that it owes any sums to Kadima, and further asserted that it is entitled, at a minimum, to a refund of a substantial portion of the sums that it has already paid, along with the release of the software modules currently being withheld. Following trial of the case, the court, on November 23, 2022, entered a minute order, finding in favor of the Company and against Kadima in the amount of $5 million plus costs and fees. The minute order was converted to a final judgment order, entered on January 4, 2023, in favor of the Company and against Kadima for $5 million in compensatory damages, plus an amount in excess of $1.8 million in prejudgment interest, plus expert witness fees of $0.3 million, plus costs, plus post judgment interest. There is no assurance that the Company will collect the money it is owed from the judgement. 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 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. 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 cross-claim against the third party claims administrator, Gallagher Bassett Services, Inc., for claims sounding in breach of contract and negligence based upon its administration of claims arising under the policy. By order dated April 7, 2021, the Court dismissed the Company’s complaint against Gallagher Bassett without prejudice to re-filing in another forum. On May 17, 2021, 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 is underway in the cases, and the California Court has 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 are endeavoring to settle the case. 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 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 amount 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. 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 proceeding, and no trial date has been set. Courvoisier Centre Litigation On August 24, 2022, the landlord of our 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. 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. Trial in the matter has been set for September 5, 2023. 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 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Feb. 28, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsManagement has evaluated events that have occurred subsequent to the date of these financial statements 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 (Policies) | 6 Months Ended |
Feb. 28, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) applicable to interim reports of companies filing as a small reporting company. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. The results of unaudited condensed operations for the three and six months end February 28, 2023 are not necessarily indicative of the results that may be expected for the full year ending August 31, 2023. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2022 (“Fiscal 2022”), filed with the SEC on December 13, 2022, as amended by Forms 10-K/A, filed with the SEC on December 14, 2022, February 3, 2023 and February 9, 2023, respectively. |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of ShiftPixy, Inc., and its wholly owned subsidiaries. The unaudited condensed consolidated financial statements also include 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 us as 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 Note 2, Variable Interest Entity). All intercompany balances have been eliminated in consolidation. 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, 20122, 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. Se e 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 VIE, see Note 4. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include: • Assumption 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 • Useful lives of property and equipment • Deferred income taxes and related valuation allowance • Valuation of illiquid non-controlling interest in SPAC shares transferred and • Projected development of workers’ compensation claims. 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 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. |
Revenue and Direct Cost Recognition | 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 or EAS based on a stated rate and price in the contract. Contracts generally have a term of 12 months, however are cancellable at any time by either party with 30 days’ written notice. 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. Payments for the Company’s services are typically made in advance of, or at the time that the services are provided. The Company does not have significant financing components or significant payment terms for its customers 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 revenue is primarily derived from the Company’s gross billings, which are based on (i) the payroll cost of the Company’s worksite employees (“WSEs”) and (ii) a mark-up computed as a percentage of payroll costs for payroll taxes and workers’ compensation premiums. Gross billings are invoiced to each EAS client concurrently with each periodic payroll of the Company’s WSEs, which coincides with the services provided and which is typically a fixed percentage of the payroll processed. Revenues, which exclude the payroll cost component of gross billings and therefore consist solely of markup, are recognized ratably over the payroll period as WSEs perform their services at the client worksite. Although the Company assumes responsibility for processing and remitting payroll and payroll related obligations, it does not assume employment-related responsibilities such as determining the amount of the payroll and related payroll obligations. As a result, the Company records revenue on a “net” basis in this arrangement for revenue recognition purposes. Revenues that have been recognized but not invoiced for EAS clients are included in unbilled accounts receivable on the Company’s condensed consolidated balance sheets were $2.2 million and $2.1 million, as of February 28, 2023 and August 31, 2022, respectively. Consistent with the Company’s revenue recognition policy for EAS clients, direct costs do not include the payroll cost of its WSEs. The cost of revenue associated with the Company’s revenue generating activities is primarily comprised of all other costs related to its WSEs, such as the employer portion of payroll-related taxes, employee benefit plan premiums and workers’ compensation insurance costs. The fees collected from the worksite employers for benefits (i.e. zero-margin benefits pass-through), workers’ compensation and state unemployment taxes are presented in revenues and the associated costs of benefits, workers’ compensation and state unemployment taxes are included in operating expenses for EAS clients, as the Company does retain risk and acts as a principal with respect to this aspect of the arrangement. With respect to these fees, the Company is primarily responsible for fulfilling the service and has discretion in establishing price. Disaggregation of Revenue The Company’s primary revenue streams include HCM and staffing services. The Company’s disaggregated revenues for the three and six months ended February 28, 2023 and February 28, 2022, respectively, were as follows: For the Three Months Ended For the Six Months Ended Revenue (in thousands): February 28, February 28, 2022 February 28, February 28, 2022 HCM 1 $ 1,558 $ 1,588 $ 2,970 $ 3,333 Staffing 3,021 8,849 6,874 16,045 $ 4,579 $ 10,437 $ 9,844 $ 19,378 1 HCM revenue is presented net, $12 million and $23.6 million gross billings less WSE payroll costs of $10.4 million and $20.6 million for the three and six months ended February 28, 2023 and $12.6 million and $25.5 million, respectively Gross billings less WSE payroll costs for the three and six months ended February 2022, was $11 million and $22.2 million, respectively. For the three and six months ended February 28, 2023 and February 28, 2022, respectively, the following geographical regions represented more than 10% of total revenues: For the Three Months Ended For the Six Months Ended Region: February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 California 43.6 % 53.5 % 46.3 % 53.9 % Washington 11.1 % 12.5 % 11.7 % 13.1 % New Mexico 12.9 % 8 % 11.7 % 7.2 % Incremental Cost of Obtaining a Contract |
Segment Reporting | Segment Reporting Prior to August 31, 2021, the Company operated as one reportable segment under Accounting Standards Codification "ASC" 280, Segment Reporting |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased as cash equivalents. The Company had no cash equivalent as of February 28, 2023 and August 31, 2022. |
Marketable Securities Held in Trust Account | Marketable Securities Held in Trust Account As of August 31, 2022, substantially 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 are restricted for use and may only be used for purposes of completing an initial business combination ("IBC") or redemption of the public common shares of IHC. On December 1, 2022, the Company distributed $117.6 million to the shareholders of IHC. There were no assets held in the Trust Account as of February 28, 2023. |
Concentration of Credit Risk | Concentration of Credit RiskThe 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. |
Fixed Assets | Fixed Assets Fixed assets are recorded at cost, less accumulated depreciation and amortization. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When fixed assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Leasehold improvements are amortized over the shorter of the useful life or the initial lease term. Fixed assets are recorded at cost and are depreciated over the estimated useful lives of the related assets using the straight-line method. The estimated useful lives of property and equipment for purposes of computing depreciation are as follows: Equipment: 5 years Furniture & Fixtures: 5 - 7 years Leasehold improvements Shorter of useful life or the remaining lease term, typically 5 years |
Computer Software Development | Computer Software Development Software development costs relate primarily to software coding, systems interfaces and testing of the Company’s proprietary employer information systems and are accounted for in accordance with 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 The Company determined that there were no material capitalized internal software development costs for the three and six months ended February 28, 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 |
Lease Recognition | 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 condensed 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 unaudited condensed consolidated statement of operations. |
Impairment and Disposal of Long-Lived Assets | Impairment and Disposal of Long-Lived Assets The Company periodically evaluates its long-lived assets for impairment in accordance with ASC 360-10, Property, Plant, and Equipment |
Workers' Compensation | Workers’ Compensation Everest Program Until July 2018, a portion of the Company’s workers’ compensation risk was covered by a retrospective rated policy 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 funds the policy premium based on standard premium rates on a monthly basis and based on the gross payroll applicable to workers covered by the policy. During the policy term and thereafter, periodic adjustments may involve either a return of previously paid premiums or a payment of additional premiums by the Company or a combination of both. If the Company’s losses under that policy exceed the expected losses under that policy, then the Company could receive a demand for additional premium payments. The Company is currently engaged in litigation regarding such a demand for additional premium payments, which we believe to be without merit, See Note 8, Contingencies, Everest Litigatio n , below. Sunz Program From July 2018 through February 28, 2021, the Company’s workers’ compensation program for its WSEs was provided primarily through an arrangement with United Wisconsin Insurance Company and administered by Sunz Insurance Solutions, LLC (“Sunz”). Under this program, the Company has financial responsibility for the first $0.5 million of claims per occurrence. The Company provides and maintains a loss fund that is earmarked to pay claims and claims related expenses. The workers’ compensation insurance carrier establishes monthly funding requirements comprised of premium costs and funds to be set aside for payment of future claims (“claim loss funds”). The level of claim loss funds is primarily based upon anticipated WSE payroll levels and expected workers’ compensation loss rates, as determined by the insurance carrier. Monies funded into the program for incurred claims expected to be paid within one year are recorded as Deposit - workers’ compensation, a short-term asset, while the remainder of claim funds are included in Deposit - workers’ compensation, a long-term asset in our condensed consolidated balance sheets. The Company is currently engaged in litigation regarding demands by Sunz for additional claims loss funds, which we believe to be without merit, as discussed at Note 8, Contingencies , Sunz Litigation , below. 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 theses programs as of February 28, 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 February 28, 2023 and August 31, 2022, the Company had short term accrued workers’ compensation costs of $0.4 million and $0.6 million, and long-term accrued workers’ compensation costs of $0.9 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 , below. As of February 28, 2023, the retained workers’ compensation assets and liabilities are presented as a discontinued operation net asset or liability. As of February 28, 2023 and August 31, 2022, the Company had $1.6 million and $1.4 million in short-term liabilities, and $3.8 million and $3.3 million in long-term liabilities, respectively. The Company had no related worker's compensation assets as of February 28, 2023 and as of August 31, 2022, respectively. Because the Company bears the financial responsibility for claims up to the level noted above, such claims, which are the primary component of its workers’ compensation costs, are recorded in the period incurred. Workers’ compensation insurance includes ongoing health care and indemnity coverage whereby claims are paid over numerous years following the date of injury. Accordingly, the accrual of related incurred costs in each reporting period includes estimates, which take into account the ongoing development of claims and therefore requires a significant level of judgment. In estimating ultimate loss rates, the Company utilizes historical loss experience, exposure data, and actuarial judgment, together with a range of inputs that are primarily based upon the WSE’s job responsibilities, their location, the historical frequency and severity of workers’ compensation claims, and an estimate of future cost trends. For each reporting period, changes in the actuarial assumptions resulting from changes in actual claims experience and other trends are incorporated into the Company’s workers’ compensation claims cost estimates. The estimated incurred claims are based upon: (i) the level of claims processed during each quarter; (ii) estimated completion rates based upon recent claim development patterns under the plan; and (iii) the number of participants in the plan. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Accounting Standard Codification "ASC" 820, Fair Value Measurement , requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practical to estimate fair value. ASC 820 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of February 28, 2023 and August 31, 2022, the carrying value of certain financial instruments (cash, accounts receivable and payable) approximated fair value due to the short-term nature of the instruments. Notes Receivable is valued at the Company's estimate of expected collections value as described below, See Note 3, Discontinued Operations. 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 condensed 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 |
Advertising Costs | Advertising CostsThe Company expenses all advertising as incurred. |
Income Taxes | Income TaxesThe 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 February 28, 2023 and August 31, 2022, respectively, |
Income (Loss) Per Share | Income (Loss) Per Share Basic net income or net (loss) per common share is computed by dividing net income or net (loss) attributable to common shareholders by the weighted-average number of shares of common stock outstanding during the reporting period. Common stock outstanding for purposes of net income or net (loss) per share calculations include options, warrants, shares of common stock to be issued to directors for services provided and Preferred Option. Diluted net income or and net (loss) per share is computed similar to basic income or net (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 Preferred 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. In periods in which a net loss has been incurred, all potentially dilutive common stock shares are considered anti-dilutive and thus are excluded from the calculation. Securities that are excluded from the calculation of weighted average dilutive common stock, because their inclusion would have been antidilutive, are: For the Three and Six Months Ended February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 Options (See Note 5) 10,003 17,695 10,003 17,695 Warrants (See Note 5) 1,252,749 271,137 1,252,749 224,402 Shares of common stock to be issued to the directors for services provided, (See Note 7) 59,040 — 59,040 — Preferred Option (Note 5) 37,570 — 37,570 — Total potentially dilutive shares 1,359,362 288,832 1,359,362 242,097 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 5, Stock Based Compensation , below. |
Share-Based Compensation | Stock-Based Compensation As of February 28, 2023, the Company has one stock-based compensation plan under which the Company may issue awards, as described in Note 5, Stock Based Compensatio n , below. The Company accounts for the Plan under the recognition and measurement principles of ASC 718, Compensation-Stock Compensation , which requires all stock-based payments to employees, including grants of employee stock options, to be recognized in the unaudited condensed consolidated statements of operations at their fair values. The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model. For all employee stock options, the Company recognizes expense on an accelerated basis over the employee’s requisite service period (generally the vesting period of the equity grant). The Company’s option pricing model requires the input of highly subjective assumptions, including the expected stock price volatility and expected term. The expected volatility is based on the historical volatility of the Company’s common stock since 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. The methods and assumptions used in the determination of the fair value of stock-based awards are consistent with those described in the Company's Annual Report on Form 10-K for the year ending August 31, 2022, filed with the SEC on December 13, 2022, and the amendments thereto on Forms 10-K/A filed with the SEC on December 14, 2022, February 3, 2023 and February 9, 2023, respectively, which include a detailed description of the Company's stock-based compensation awards, including information related to vesting terms, service and performance conditions, payout percentages, and process for estimating the fair value of stock options granted. |
Financial Instruments-Credit Losses and Recent Accounting Standards | Recently Adopted Accounting Standards June 2016, the 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 customer. 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. For the three months ended February 28, 2023, the Company adopted this guidance, and it was not material to the results of operations. Recent Accounting Standards |
Variable Interest Entity | 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. |
Shares Subject to Possible Redemption | Subject to Possible RedemptionThe Company previously accounts for its common stock holdings in its sponsored SPACs (which were consolidated in the Company's unaudited condensed 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 (including shares of common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, shares of common stock are classified as shareholders’ equity. 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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Feb. 28, 2023 | |
Accounting Policies [Abstract] | |
Disaggregation of Revenue | The Company’s disaggregated revenues for the three and six months ended February 28, 2023 and February 28, 2022, respectively, were as follows: For the Three Months Ended For the Six Months Ended Revenue (in thousands): February 28, February 28, 2022 February 28, February 28, 2022 HCM 1 $ 1,558 $ 1,588 $ 2,970 $ 3,333 Staffing 3,021 8,849 6,874 16,045 $ 4,579 $ 10,437 $ 9,844 $ 19,378 |
Revenue from External Customers by Geographic Areas | For the three and six months ended February 28, 2023 and February 28, 2022, respectively, the following geographical regions represented more than 10% of total revenues: For the Three Months Ended For the Six Months Ended Region: February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 California 43.6 % 53.5 % 46.3 % 53.9 % Washington 11.1 % 12.5 % 11.7 % 13.1 % New Mexico 12.9 % 8 % 11.7 % 7.2 % |
Schedules of Concentration of Risk, by Risk Factor | The following represents clients who have ten percent of total accounts receivable as of February 28, 2023 and August 31, 2022, respectively. As of February 28, 2023 August 31, 2022 Clients: (Unaudited) Client 1 71.5 % — % Client 2 15.7 % 39.2 % Client 3 6.3 % 15.4 % Client 4 5.8 % 22.0 % |
Schedule of Estimated Useful Lives of Property and Equipment | The estimated useful lives of property and equipment 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 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Securities that are excluded from the calculation of weighted average dilutive common stock, because their inclusion would have been antidilutive, are: For the Three and Six Months Ended February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 Options (See Note 5) 10,003 17,695 10,003 17,695 Warrants (See Note 5) 1,252,749 271,137 1,252,749 224,402 Shares of common stock to be issued to the directors for services provided, (See Note 7) 59,040 — 59,040 — Preferred Option (Note 5) 37,570 — 37,570 — Total potentially dilutive shares 1,359,362 288,832 1,359,362 242,097 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Feb. 28, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Disposal Groups Including Discontinued Operations, Reconciliation of Gross Proceeds to Net Proceeds as Presented in Cash Flow Statement | The following reconciliation of the gross proceeds to the net proceeds from the Vensure Asset Sale is presented in the condensed consolidated balance sheets as of February 28, 2023 and August 31, 2022. As of February 28, 2023 (Unaudited) August 31, 2022 Gross proceeds $ 19,166,000 $ 19,166,000 Cash received at closing – asset sale (9,500,000) (9,500,000) Cash received at closing – working capital (166,000) (166,000) Gross note receivable $ 9,500,000 $ 9,500,000 Less: Transaction reconciliation – estimated working capital adjustments (2,604,000) (2,604,000) Adjusted Note Receivable 6,896,000 6,896,000 Reserve for estimated potential claims (2,892,000) (2,892,000) Reserve for potential collectability concerns $ (4,004,000) $ (4,004,000) Long-term note receivable, estimated net realizable value $ — $ — |
Disposal Groups, Including Discontinued Operations | The carrying amounts of the classes of assets and liabilities from the Vensure Asset Sale included in discontinued operations are as follows: As of February 28, August 31, (Unaudited) Deposits – workers’ compensation — — Total current assets — — Deposits – workers’ compensation — — Total assets $ — $ — Accrued workers’ compensation cost 1,628,000 1,362,000 Total current liabilities 1,628,000 1,362,000 Accrued workers’ compensation cost 3,810,000 3,269,000 Total liabilities 5,438,000 4,631,000 Net liability $ (5,438,000) $ (4,631,000) |
Schedule of Disposal Groups Including Discontinued Operations Income Statement | Reported results for the discontinued operations by period were as follows: For the Three Months Ended For the Six Months Ended February 28, February 28, 2022 February 28, February 28, 2022 Revenues $ — $ — $ — $ — Cost of revenues 607,000 18,000 807,000 151,000 Gross profit (loss) (607,000) (18,000) (807,000) (151,000) Total operating expenses — — — — Loss from discontinued operations $ (607,000) $ (18,000) $ (807,000) $ (151,000) |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 6 Months Ended |
Feb. 28, 2023 | |
Equity [Abstract] | |
Schedule of Stockholders' Equity Note, Warrants or Rights | The following table summarizes the changes in the Company’s common stock and Prefunded Warrants for the period ended February 28, 2023. Number Weighted Weighted Warrants outstanding, August 31, 2022 522,786 7.2 $ 47.99 Issued 854,166 7.1 12.00 Exercised (124,203) 0 — Warrants outstanding, February 28, 2023 1,252,749 6.6 33.61 Warrants exercisable, February 28, 2023 398,582 6.8 $ 86.38 The following table summarizes the Company’s warrants outstanding as of February 28, 2023 (Unaudited): Warrants Weighted average Exercise September 2022 Common Warrants (1) 833,334 6.6 $ 12.00 September 2022 Underwriter Warrants 20,833 4.3 13.20 July 2022 Common Warrants (2) 348,408 7.4 26.00 Sep 2021Underwriter Warrants 3,762 6.2 175.45 May 2021Underwriter Warrants 2,474 3.2 242.50 October 2020 Common Warrants 23,000 2.6 330.00 October 2020 Underwriter Warrants 2,000 2.6 330.00 May 2020 Common Warrants 12,776 2.2 540.00 May 2020 Underwriter Warrants 1,111 2.2 540.00 March 2020 Exchange Warrants 4,237 2.6 1,017.00 Amended March 2019 Warrants 663 1.0 4,000.00 March 2019 Services Warrants 34 1.0 7,000.00 June 2018 Warrants 63 0.8 9,960.00 June 2018 Services Warrants 54 0.8 9,960.00 1,252,749 6.6 $ 34.78 (1) The September 2022 Common Warrants are exercisable commencing March 23, 2023 (six months from the date of issuance) and will terminate March 23, 2030. |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 6 Months Ended |
Feb. 28, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-based Payment Arrangement, Option, Activity | The following table summarizes option activity for the six months ending February 28, 2023. Options Outstanding and Exercisable Number Weighted Weighted (In years) Balance outstanding as of August 31, 2022 11,753 8.1 $ 733.00 Forfeited (1,750) 8.3 2.70 Balance outstanding expected to be exercisable as of February 28, 2023 10,003 7.5 $ 813.70 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable | Option vesting activity from August 31, 2022, through February 28, 2023 was as follows: Options Vested Number Weighted Weighted (In years) Balance, August 31, 2022 5,269 8.1 $ 1,146.00 Vested 1,560 7.8 434.00 Forfeited (716) 8.1 293.00 Balance, February 28, 2023 6,113 7.4 $ 1,064.00 |
Summarizes of Stock Options Outstanding | The following table summarizes information about stock options outstanding and vested as of February 28, 2023: Options Outstanding Options Vested Exercise Prices Number of Weighted Weighted Number Weighted Weighted (In Years) (In Years) $50.00 - 1,000.00 9,641 7.6 $ 453 5,754 7.5 $ 466 $1,001.00 - $4,000.00 20 6.3 1,895 19 6.7 1,896 $4,001.00 - $8,000.00 121 6.1 5,121 120 6.2 5,120 $8,001.00 - $12,000.00 101 5.2 10,298 101 5.2 10,298 $12,001.00 - $16,000.00 109 4.4 15,584 109 4.4 15,584 $16,001.00 - $39,160.00 11 4.4 39,160 11 4.4 39,160 10,003 7.6 $ 814 6,113 7.4 $ 1,064 |
Commitments (Tables)
Commitments (Tables) | 6 Months Ended |
Feb. 28, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Lease, Cost | The components of lease expense are as follows: Three Months Ended February 28, 2023 Six Months Ended February 28, 2023 Operating Lease Cost $ 307,792 $ 563,753 |
Lessee, Operating Lease, Liability, Maturity | Future minimum lease and licensing payments under non-cancelable operating leases at February 28, 2023, are as follows: Minimum lease commitments 2024 $ 1,039,000 2025 1,073,000 2026 1,032,000 2027 746,000 2028 488,000 Thereafter 256,000 Total minimum payments $ 4,634,000 Less: present value discount 563,000 Lease liability $ 4,071,000 Weighted-average remaining lease term - operating leases (months) 63 Weighted-average discount rate 5.54 % |
Nature of Operations (Details)
Nature of Operations (Details) | Sep. 01, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Stock split conversion ratio | 0.01 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||
Feb. 07, 2023 USD ($) sponsorship creditor | Oct. 22, 2021 USD ($) $ / shares shares | Oct. 21, 2021 shares | Dec. 31, 2022 USD ($) | Sep. 30, 2022 USD ($) | Feb. 28, 2023 USD ($) plan shares | Feb. 28, 2022 USD ($) | Feb. 28, 2023 USD ($) officer plan shares | Feb. 28, 2022 USD ($) | Aug. 31, 2020 segment | Jan. 31, 2023 USD ($) | Nov. 30, 2022 sponsorship | Aug. 31, 2022 USD ($) shares | Apr. 29, 2021 sponsorship | |
Concentration Risk [Line Items] | ||||||||||||||
Cash | $ 800,000 | $ 800,000 | ||||||||||||
Working capital deficit | (35,300,000) | (35,300,000) | ||||||||||||
Net cash used in operating activities, continuing operations | 5,323,000 | $ 10,333,000 | ||||||||||||
Retained earnings (accumulated deficit) | (203,917,000) | $ (203,917,000) | $ (192,725,000) | |||||||||||
Contract with customer, term | 12 months | |||||||||||||
Contract with customer, cancellation period | 30 days | |||||||||||||
Unbilled accounts receivable | 2,172,000 | $ 2,172,000 | 2,105,000 | |||||||||||
Number of reportable segments | segment | 1 | |||||||||||||
Redemption funds distributed to shareholders | 117,574,000 | 0 | ||||||||||||
Cash, uninsured amount | 1,000,000 | 1,000,000 | 600,000 | |||||||||||
Depreciation and amortization | 150,000 | $ 130,000 | 299,000 | 253,000 | ||||||||||
Capitalized computer software, additions | 0 | 0 | 0 | |||||||||||
Research and development expense | 100,000 | 1,100,000 | 200,000 | 2,200,000 | ||||||||||
Workers' compensation, claim responsibility per occurrence | 500,000 | 500,000 | ||||||||||||
Workers' compensation asset, current | 0 | 0 | 0 | |||||||||||
Workers' compensation asset, noncurrent | 0 | 0 | 0 | |||||||||||
Workers' compensation liability, current | 439,000 | 439,000 | 567,000 | |||||||||||
Workers' compensation liability, noncurrent | 913,000 | 913,000 | 1,227,000 | |||||||||||
Disposal group, including discontinued operation, workers' compensation asset, current | 0 | 0 | 0 | |||||||||||
Disposal group, including discontinued operation, workers' compensation asset, noncurrent | 0 | 0 | $ 0 | |||||||||||
Advertising expense | $ 500,000 | 400,000 | $ 900,000 | 900,000 | ||||||||||
Number of stock-based compensation plans | plan | 1 | 1 | ||||||||||||
Other commitments, number of special purpose acquisition company sponsorships | sponsorship | 0 | 1 | 4 | |||||||||||
Class of warrant or right, outstanding (in shares) | shares | 1,252,749 | 1,252,749 | 522,786 | |||||||||||
Common stock, shares, transferred (in shares) | shares | 15,000 | |||||||||||||
Deconsolidation, loss, amount | $ 540,000 | $ 0 | $ 540,000 | $ 0 | ||||||||||
Noncontrolling interest | ||||||||||||||
Concentration Risk [Line Items] | ||||||||||||||
Noncontrolling interest, decrease from deconsolidation | $ 9,400,000 | |||||||||||||
Other Income | ||||||||||||||
Concentration Risk [Line Items] | ||||||||||||||
Deconsolidation, loss, amount | $ 600,000 | |||||||||||||
IHC | ||||||||||||||
Concentration Risk [Line Items] | ||||||||||||||
Variable interest entity, qualitative or quantitative information, ownership percentage | 15% | |||||||||||||
Number of executive officers overlapping with SPAC | officer | 3 | |||||||||||||
Number of creditors filing an involuntary petition for liquidation of SPAC | creditor | 3 | |||||||||||||
Common stock, shares, owned (in shares) | shares | 2,110,000 | 2,125,000 | 2,110,000 | 2,110,000 | ||||||||||
Variable interest entity, net liabilities | $ 600,000 | |||||||||||||
Non-controlling interest | $ 500,000 | |||||||||||||
Variable interest entity, qualitative or quantitative information, non-ownership percentage | 85% | |||||||||||||
Private Placement | ||||||||||||||
Concentration Risk [Line Items] | ||||||||||||||
Sale of stock, consideration received on transaction, gross | $ 5,000,000 | |||||||||||||
Sale of stock, consideration received on transaction | $ 4,400,000 | |||||||||||||
At-The-Market Offering | ||||||||||||||
Concentration Risk [Line Items] | ||||||||||||||
Sale of stock, consideration received on transaction, gross | $ 1,900,000 | |||||||||||||
Sale of stock, consideration received on transaction | $ 1,400,000 | |||||||||||||
Sale of stock, aggregate offering amount, maximum | $ 8,200,000 | |||||||||||||
Sale of stock, number of shares issued in transaction (in shares) | shares | 305,340 | |||||||||||||
Sale of stock, amount remaining available for sale of shares | $ 6,300,000 | $ 6,300,000 | ||||||||||||
IPO | ||||||||||||||
Concentration Risk [Line Items] | ||||||||||||||
Redemption funds distributed to shareholders | $ 117,600,000 | |||||||||||||
IPO | IHC | Placement Warrants | ||||||||||||||
Concentration Risk [Line Items] | ||||||||||||||
Class of warrant or right, outstanding (in shares) | shares | 4,639,102 | |||||||||||||
Sale of warrants, price per share (in dollars per share) | $ / shares | $ 1 | |||||||||||||
Aggregate purchase price | $ 4,639,102 | |||||||||||||
Minimum | ||||||||||||||
Concentration Risk [Line Items] | ||||||||||||||
Capitalized software development, useful life | 3 years | |||||||||||||
Minimum | Software Development | ||||||||||||||
Concentration Risk [Line Items] | ||||||||||||||
Property, plant and equipment, useful life | 3 years | |||||||||||||
Maximum | ||||||||||||||
Concentration Risk [Line Items] | ||||||||||||||
Capitalized software development, useful life | 5 years | |||||||||||||
Maximum | Software Development | ||||||||||||||
Concentration Risk [Line Items] | ||||||||||||||
Property, plant and equipment, useful life | 5 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 4,579 | $ 10,437 | $ 9,844 | $ 19,378 |
Gross billings | 12,000 | 12,600 | 23,600 | 25,500 |
Worksite employee payroll cost | 10,400 | 11,000 | 20,600 | 22,200 |
HCM | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,558 | 1,588 | 2,970 | 3,333 |
Staffing | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 3,021 | $ 8,849 | $ 6,874 | $ 16,045 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Revenue from External Customers by Geographical Areas (Details) - Revenue from Contract with Customer Benchmark - Geographic Concentration Risk | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | |
California | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 43.60% | 53.50% | 46.30% | 53.90% |
Washington | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 11.10% | 12.50% | 11.70% | 13.10% |
New Mexico | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 12.90% | 8% | 11.70% | 7.20% |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Concentration Risk, by Risk Factor (Details) - Accounts Receivable - Customer Concentration Risk | 6 Months Ended | 12 Months Ended |
Feb. 28, 2023 | Aug. 31, 2022 | |
Client 1 | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 71.50% | 0% |
Client 2 | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 15.70% | 39.20% |
Client 3 | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 6.30% | 15.40% |
Client 4 | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 5.80% | 22% |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Schedule of Estimated Useful Lives of Property and Equipment (Details) | 6 Months Ended |
Feb. 28, 2023 | |
Equipment: | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
Furniture & Fixtures: | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
Furniture & Fixtures: | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 7 years |
Leasehold improvements | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Weighted Average Dilutive Common Shares (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | |
Total potentially dilutive shares (in shares) | 1,359,362 | 288,832 | 1,359,362 | 242,097 |
Options (See Note 5) | ||||
Total potentially dilutive shares (in shares) | 10,003 | 17,695 | 10,003 | 17,695 |
Warrants (See Note 5) | ||||
Total potentially dilutive shares (in shares) | 1,252,749 | 271,137 | 1,252,749 | 224,402 |
Shares of common stock to be issued to the directors for services provided, (See Note 7) | ||||
Total potentially dilutive shares (in shares) | 59,040 | 0 | 59,040 | 0 |
Preferred Option (Note 5) | ||||
Total potentially dilutive shares (in shares) | 37,570 | 0 | 37,570 | 0 |
Discontinued Operations - Narra
Discontinued Operations - Narrative (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |||
Jan. 03, 2020 | Feb. 28, 2023 | Aug. 31, 2022 | Aug. 31, 2020 | Mar. 12, 2021 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Reserve on potential collectability | $ 4,004,000 | $ 4,004,000 | |||
Disposal by sale | Overall business | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Period for payment of gross proceeds (in years) | 4 years | ||||
Working capital adjustment | 2,604,000 | 2,604,000 | $ 10,700,000 | ||
Disposal group, including discontinued operations, additional reserve for estimated potential claims | 2,892,000 | 2,892,000 | |||
Gross note receivable | $ 9,500,000 | 9,500,000 | 9,500,000 | ||
Long-term note receivable, estimated net realizable value | 0 | $ 0 | |||
Discontinued operation, gain (Loss) on disposal of discontinued operation, net of tax | $ 15,600,000 | ||||
Disposal group, including discontinued operation, consideration receivable, notes receivable, working capital adjustments | 2,600,000 | ||||
Lower net assets transferred at closing | 88,000 | ||||
Disposal group, including discontinued operations, consideration receivable, notes receivable, working capital adjustments for cash remitted to bank account by former client | $ 2,500,000 | ||||
Disposal group including discontinued operations, estimated lower percentage of gross wages | 90% | ||||
Disposal group including discontinued operations, contingent consideration | $ 1,400,000 | ||||
Disposal by sale | PEO business | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Percentage of business sold | 100% |
Discontinued Operations - Recon
Discontinued Operations - Reconciliation of Gross Proceeds to Net Proceeds From Sale Transaction (Details) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Feb. 28, 2023 | Aug. 31, 2022 | Mar. 12, 2021 | Jan. 03, 2020 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Reserve for potential collectability concerns | $ (4,004,000) | $ (4,004,000) | ||
Overall business | Disposal by sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Gross proceeds | 19,166,000 | 19,166,000 | ||
Cash received at closing – asset sale | (9,500,000) | (9,500,000) | ||
Cash received at closing – working capital | (166,000) | (166,000) | ||
Gross note receivable | 9,500,000 | 9,500,000 | $ 9,500,000 | |
Less: Transaction reconciliation – estimated working capital adjustments | (2,604,000) | (2,604,000) | $ (10,700,000) | |
Adjusted Note Receivable | 6,896,000 | 6,896,000 | ||
Reserve for estimated potential claims | (2,892,000) | (2,892,000) | ||
Long-term note receivable, estimated net realizable value | $ 0 | $ 0 |
Discontinued Operations - Carry
Discontinued Operations - Carrying Amounts of Assets and Liabilities (Details) - USD ($) | Feb. 28, 2023 | Aug. 31, 2022 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Deposits – workers’ compensation | $ 0 | $ 0 |
Deposits – workers’ compensation | 0 | 0 |
Total current liabilities | 1,628,000 | 1,362,000 |
Disposal by sale | Overall business | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Deposits – workers’ compensation | 0 | 0 |
Total current assets | 0 | 0 |
Deposits – workers’ compensation | 0 | 0 |
Total assets | 0 | 0 |
Accrued workers’ compensation cost | 1,628,000 | 1,362,000 |
Total current liabilities | 1,628,000 | 1,362,000 |
Accrued workers’ compensation cost | 3,810,000 | 3,269,000 |
Total liabilities | 5,438,000 | 4,631,000 |
Net liability | $ (5,438,000) | $ (4,631,000) |
Discontinued Operations - Repor
Discontinued Operations - Reported Results for the Discontinued Operations (Details) - Disposal by sale - Overall business - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenues | $ 0 | $ 0 | $ 0 | $ 0 |
Cost of revenues | 607 | 18 | 807 | 151 |
Gross profit (loss) | (607) | (18) | (807) | (151) |
Total operating expenses | 0 | 0 | 0 | 0 |
Loss from discontinued operations | $ (607) | $ (18) | $ (807) | $ (151) |
Special Purpose Acquisition C_2
Special Purpose Acquisition Company ("SPAC") Sponsorship (Details) $ in Millions | 6 Months Ended | |||||
Feb. 07, 2023 USD ($) creditor | Feb. 28, 2023 | Oct. 15, 2022 shares | Oct. 14, 2022 USD ($) shares | Oct. 22, 2021 USD ($) | Apr. 29, 2021 | |
Investments in and Advances to Affiliates [Line Items] | ||||||
Temporary equity, carrying amount, attributable to parent | $ 116.7 | |||||
Other commitments, percentage of outstanding shares, per acquisition company | 15% | |||||
IHC | ||||||
Investments in and Advances to Affiliates [Line Items] | ||||||
Variable interest entity, net liabilities | $ 0.6 | |||||
Non-controlling interest | $ 0.5 | |||||
Variable interest entity, qualitative or quantitative information, non-ownership percentage | 85% | |||||
Number of creditors filing an involuntary petition for liquidation of SPAC | creditor | 3 | |||||
Number of largest creditors of SPAC | creditor | 2 | |||||
IHC | ||||||
Investments in and Advances to Affiliates [Line Items] | ||||||
Assets held-in-trust, net tangible assets threshold | $ 5 | |||||
IHC | Public Shares | ||||||
Investments in and Advances to Affiliates [Line Items] | ||||||
Common stock, shares, outstanding (in shares) | shares | 248,653 | |||||
IHC | Redeeming Shareholders | ||||||
Investments in and Advances to Affiliates [Line Items] | ||||||
Common stock, shares, outstanding (in shares) | shares | 11,251,347 |
Stockholders' Deficit - Additio
Stockholders' Deficit - Additional Information (Details) | 1 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended | ||||||||||||||||||||||
Nov. 08, 2022 shares | Sep. 20, 2022 USD ($) warrant $ / shares shares | Sep. 01, 2022 shares | Aug. 12, 2022 USD ($) $ / shares shares | Jul. 19, 2022 shares | Jul. 14, 2022 USD ($) multiple $ / shares shares | Jan. 26, 2022 USD ($) $ / shares shares | Oct. 22, 2021 shares | Aug. 13, 2021 $ / shares shares | Jun. 05, 2020 shares | Jun. 04, 2020 USD ($) shares | Sep. 30, 2022 USD ($) | Feb. 28, 2023 USD ($) $ / shares shares | Feb. 28, 2022 USD ($) | Nov. 30, 2020 shares | Feb. 28, 2023 USD ($) $ / shares shares | Feb. 28, 2022 USD ($) | Jan. 31, 2023 USD ($) | Aug. 31, 2022 USD ($) $ / shares shares | Jan. 28, 2022 shares | Sep. 03, 2021 shares | May 17, 2021 $ / shares shares | Mar. 31, 2021 shares | Mar. 30, 2021 shares | Jan. 31, 2020 shares | Sep. 30, 2016 $ / shares shares | |
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Preferred stock, par or stated value per share (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||||||||||||
Convertible preferred stock, shares issued upon conversion (in shares) | 1 | |||||||||||||||||||||||||
Number of options available for grant to founder shareholders (in shares) | 30,000 | 2,500 | ||||||||||||||||||||||||
Share-based compensation arrangement by share-based payment award, options, forfeitures in period (in shares) | 1,750 | |||||||||||||||||||||||||
Preferred options outstanding (in shares) | 10,003 | 10,003 | 11,753 | |||||||||||||||||||||||
Share-based compensation arrangement by share-based payment award, expiration period | 10 years | |||||||||||||||||||||||||
Options forfeited (in shares) | 716 | |||||||||||||||||||||||||
Decrease in employee related liabilities | $ | $ (4,871,000) | $ (3,297,000) | ||||||||||||||||||||||||
Preferred stock preferential dividend | $ | $ 0 | $ 0 | $ 127,145,000 | 0 | ||||||||||||||||||||||
Common stock, par or stated value per share (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 33.61 | $ 33.61 | $ 47.99 | |||||||||||||||||||||||
Class of warrant or right, outstanding (in shares) | 1,252,749 | 1,252,749 | 522,786 | |||||||||||||||||||||||
Payments of stock issuance costs | $ | $ 0 | 3,502,000 | ||||||||||||||||||||||||
Change in fair value due to warrant modification | $ | 0 | 13,728,000 | ||||||||||||||||||||||||
Prefunded warrants from private placement, net of offering costs | $ | 6,861,000 | |||||||||||||||||||||||||
Additional paid-in capital | $ | $ 168,193,000 | 168,193,000 | $ 151,731,000 | |||||||||||||||||||||||
Deemed dividend from change in fair value from warrants modification | $ | $ 0 | $ 7,731,000 | $ 0 | $ 7,731,000 | ||||||||||||||||||||||
John Stephen Holmes Bankruptcy Litigation | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Loss contingency, damages sought (in shares) | 12,500,000 | |||||||||||||||||||||||||
Common Stock Warrants | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Class of warrant or right, deemed dividend | $ | $ 106,000 | |||||||||||||||||||||||||
Existing Warrants | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Warrants to acquire shares of common stock (in shares) | 49,484 | |||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 242.50 | |||||||||||||||||||||||||
Change in fair value due to warrant modification | $ | $ 640,000 | |||||||||||||||||||||||||
Investor Warrants | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 120 | |||||||||||||||||||||||||
Jan 2022 Common Warrants | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Warrants to acquire shares of common stock (in shares) | 98,969 | |||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 155 | |||||||||||||||||||||||||
Class of warrant or right, number of securities called by each warrant or right (in shares) | 2 | |||||||||||||||||||||||||
Proceeds from private placement prefunded warrants, net of offering costs | $ | $ 5,900,000 | |||||||||||||||||||||||||
Payments of stock issuance costs | $ | 500,000 | |||||||||||||||||||||||||
Change in fair value due to warrant modification | $ | 12,600,000 | |||||||||||||||||||||||||
Prefunded warrants from private placement, net of offering costs | $ | 5,500,000 | |||||||||||||||||||||||||
Additional paid-in capital | $ | 5,500,000 | |||||||||||||||||||||||||
Deemed dividend from change in fair value from warrants modification | $ | $ 7,700,000 | |||||||||||||||||||||||||
Chief Executive Officer | Scott W Absher | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Preferred stock, par or stated value per share (in dollars per share) | $ / shares | $ 0.0001 | |||||||||||||||||||||||||
Share-based compensation arrangement by share-based payment award, fair value assumptions, exercise price (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||||||||||||
Share-based compensation arrangement by share-based payment award, expiration period | 10 years | 10 years | 24 months | |||||||||||||||||||||||
Share-based compensation arrangement by share-based payment award, assets or earning power threshold for option exercise | 50% | |||||||||||||||||||||||||
Convertible preferred stock, shares issuable upon conversion per preferred share (in shares) | 1 | |||||||||||||||||||||||||
Options forfeited (in shares) | 12,500,000 | |||||||||||||||||||||||||
Price per share (in dollars per share) | $ / shares | $ 0.23 | $ 0.3 | ||||||||||||||||||||||||
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% | ||||||||||||||||||||||||
Decrease in employee related liabilities | $ | $ 820,000 | |||||||||||||||||||||||||
Shares issued for services rendered (in shares) | 4,100,000 | |||||||||||||||||||||||||
Preferred Stock Issued | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Stock options exercised (in shares) | 294,490 | |||||||||||||||||||||||||
Preferred options outstanding (in shares) | 37,570 | 37,570 | ||||||||||||||||||||||||
Conversion of stock, shares converted (in shares) | 8,600,000 | |||||||||||||||||||||||||
Preferred Stock Issued | Chief Executive Officer | Scott W Absher | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Preferred stock, par or stated value per share (in dollars per share) | $ / shares | $ 0.0001 | |||||||||||||||||||||||||
Stock options exercised (in shares) | 12,500,000 | |||||||||||||||||||||||||
Number of options available for grant to founder shareholders (in shares) | 12,500,000 | 12,500,000 | 12,500,000 | 12,500,000 | ||||||||||||||||||||||
Proceeds from issuance of preferred stock | $ | $ 5,000 | $ 1,250 | ||||||||||||||||||||||||
Number option additionally available for grant to founder shareholders (in shares) | 12,500,000 | |||||||||||||||||||||||||
Multiples of par value paid for preferred stock | multiple | 4 | |||||||||||||||||||||||||
Preferred Stock Issued | Founding Shareholder | J Stephen Holmes | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Share-based compensation arrangement by share-based payment award, options, forfeitures in period (in shares) | 11,790,000 | |||||||||||||||||||||||||
Common Stock Issued | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Shares issued upon conversion (in shares) | 8,600,000 | |||||||||||||||||||||||||
Common Stock Issued | Chief Executive Officer | Scott W Absher | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Convertible preferred stock, shares issued upon conversion (in shares) | 8,000,000 | |||||||||||||||||||||||||
Common shares lock up period | 6 months | 6 months | ||||||||||||||||||||||||
Stock Option | Chief Executive Officer | Scott W Absher | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Number of options available for grant to founder shareholders (in shares) | 25,000,000 | 25,000,000 | ||||||||||||||||||||||||
Stock Option | Preferred Stock Issued | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Convertible preferred stock (in shares) | 24,634,560 | |||||||||||||||||||||||||
Common Share Units | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Shares issued upon conversion (in shares) | 294,490 | |||||||||||||||||||||||||
Common Share Units | Chief Executive Officer | Scott W Absher | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Shares issued upon conversion (in shares) | 12,500,000 | |||||||||||||||||||||||||
Common shares lock up period | 24 months | |||||||||||||||||||||||||
Preferred Class A | Preferred Stock Issued | Chief Executive Officer | Scott W Absher | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Number of options available for grant to founder shareholders (in shares) | 12,500,000 | |||||||||||||||||||||||||
Convertible Preferred Stock | Chief Executive Officer | Scott W Absher | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Price per share (in dollars per share) | $ / shares | $ 0.2025 | $ 0.2322 | ||||||||||||||||||||||||
Private Placement | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Sale of stock, number of shares and warrants issued in transaction (in shares) | 416,667 | |||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.01 | |||||||||||||||||||||||||
Sale of stock, consideration received on transaction, gross | $ | $ 5,000,000 | |||||||||||||||||||||||||
Sale of stock, consideration received on transaction | $ | $ 4,400,000 | |||||||||||||||||||||||||
Private Placement | Common Stock Warrants | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
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% | |||||||||||||||||||||||||
Warrants to acquire shares of common stock (in shares) | 833,334 | |||||||||||||||||||||||||
Sale of stock, number of warrants accompanying each common share | warrant | 2 | |||||||||||||||||||||||||
Sale of stock, stock and warrant price per share (in dollars per share) | $ / shares | $ 12 | |||||||||||||||||||||||||
Warrants term | 7 years | |||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 12 | |||||||||||||||||||||||||
Proceeds from issuance of private placement | $ | $ 4,378,000 | |||||||||||||||||||||||||
Share-based compensation arrangement by share-based payment award, fair value assumptions, expected dividend rate | 0% | |||||||||||||||||||||||||
Private Placement | Common Stock Warrants | Minimum | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Share-based compensation arrangement by share-based payment award, fair value assumptions, expected term | 6 years 8 months 12 days | |||||||||||||||||||||||||
Private Placement | Common Stock Warrants | Maximum | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Share-based compensation arrangement by share-based payment award, fair value assumptions, expected term | 6 years 9 months 18 days | |||||||||||||||||||||||||
Private Placement | September 2021 Modified Warrants | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Class of warrant or right, outstanding (in shares) | 25,233 | |||||||||||||||||||||||||
Private Placement | January 2022 Modified Warrants | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Class of warrant or right, outstanding (in shares) | 98,969 | |||||||||||||||||||||||||
Overallotment | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Warrants to acquire shares of common stock (in shares) | 20,833 | |||||||||||||||||||||||||
Warrants term | 4 years | |||||||||||||||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 13.20 | |||||||||||||||||||||||||
Sale of stock, placement fee | 7% | |||||||||||||||||||||||||
Sale of stock, common stock shares as a percent of offering | 5% | |||||||||||||||||||||||||
Warrants and rights outstanding, requisite exercise period | 6 months | |||||||||||||||||||||||||
At-The-Market Offering | ||||||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||||||
Sale of stock, aggregate offering amount, maximum | $ | $ 8,200,000 | |||||||||||||||||||||||||
Sale of stock, consideration received on transaction, gross | $ | $ 1,900,000 | |||||||||||||||||||||||||
Sale of stock, consideration received on transaction | $ | $ 1,400,000 | |||||||||||||||||||||||||
Sale of stock, number of shares issued in transaction (in shares) | 305,340 | |||||||||||||||||||||||||
Sale of stock, amount remaining available for sale of shares | $ | $ 6,300,000 | $ 6,300,000 |
Stockholders' Deficit - Summary
Stockholders' Deficit - Summary of Information About Warrants Outstanding (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Feb. 28, 2023 | Aug. 31, 2022 | |
Number of shares | ||
Number of shares outstanding, beginning balance (in shares) | 522,786 | |
Issued (in shares) | 854,166 | |
Exercised (in shares) | (124,203) | |
Number of shares outstanding, ending balance (in shares) | 1,252,749 | 522,786 |
Number of shares exercisable (in shares) | 398,582 | |
Weighted average remaining life (years) | ||
Weighted average Life of Outstanding Warrants in years | 6 years 7 months 6 days | 7 years 2 months 12 days |
Issued | 7 years 1 month 6 days | |
Weighted remaining life (years) exercisable | 6 years 9 months 18 days | |
Weighted average exercise price | ||
Weighted average exercise price (in dollars per share) | $ 33.61 | $ 47.99 |
Issued (in dollars per share) | 12 | |
Weighted average exercise price exercisable (in dollars per share) | $ 86.38 |
Stockholders' Deficit - Summa_2
Stockholders' Deficit - Summary of Warrants Outstanding (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Feb. 28, 2023 | Aug. 31, 2022 | |
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 1,252,749 | 522,786 |
Weighted average Life of Outstanding Warrants in years | 6 years 7 months 6 days | 7 years 2 months 12 days |
Exercise price of warrants (in dollars per share) | $ 33.61 | $ 47.99 |
Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 1,252,749 | |
Weighted average Life of Outstanding Warrants in years | 6 years 7 months 6 days | |
Exercise price of warrants (in dollars per share) | $ 34.78 | |
September 2022 Common Warrants | ||
Class of Warrant or Right [Line Items] | ||
Warrants and rights outstanding, requisite exercise period | 6 months | |
September 2022 Common Warrants | Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 833,334 | |
Weighted average Life of Outstanding Warrants in years | 6 years 7 months 6 days | |
Exercise price of warrants (in dollars per share) | $ 12 | |
September 2022 Underwriter Warrants | Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 20,833 | |
Weighted average Life of Outstanding Warrants in years | 4 years 3 months 18 days | |
Exercise price of warrants (in dollars per share) | $ 13.20 | |
July 2022 Common Warrants | Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 348,408 | |
Weighted average Life of Outstanding Warrants in years | 7 years 4 months 24 days | |
Exercise price of warrants (in dollars per share) | $ 26 | |
Sep 2021Underwriter Warrants | Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 3,762 | |
Weighted average Life of Outstanding Warrants in years | 6 years 2 months 12 days | |
Exercise price of warrants (in dollars per share) | $ 175.45 | |
May 2021Underwriter Warrants | Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 2,474 | |
Weighted average Life of Outstanding Warrants in years | 3 years 2 months 12 days | |
Exercise price of warrants (in dollars per share) | $ 242.50 | |
October 2020 Common Warrants | Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 23,000 | |
Weighted average Life of Outstanding Warrants in years | 2 years 7 months 6 days | |
Exercise price of warrants (in dollars per share) | $ 330 | |
October 2020 Underwriter Warrants | Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 2,000 | |
Weighted average Life of Outstanding Warrants in years | 2 years 7 months 6 days | |
Exercise price of warrants (in dollars per share) | $ 330 | |
May 2020 Common Warrants | Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 12,776 | |
Weighted average Life of Outstanding Warrants in years | 2 years 2 months 12 days | |
Exercise price of warrants (in dollars per share) | $ 540 | |
May 2020 Underwriter Warrants | Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 1,111 | |
Weighted average Life of Outstanding Warrants in years | 2 years 2 months 12 days | |
Exercise price of warrants (in dollars per share) | $ 540 | |
March 2020 Exchange Warrants | Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 4,237 | |
Weighted average Life of Outstanding Warrants in years | 2 years 7 months 6 days | |
Exercise price of warrants (in dollars per share) | $ 1,017 | |
Amended March 2019 Warrants | Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 663 | |
Weighted average Life of Outstanding Warrants in years | 1 year | |
Exercise price of warrants (in dollars per share) | $ 4,000 | |
March 2019 Services Warrants | Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 34 | |
Weighted average Life of Outstanding Warrants in years | 1 year | |
Exercise price of warrants (in dollars per share) | $ 7,000 | |
June 2018 Warrants | Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 63 | |
Weighted average Life of Outstanding Warrants in years | 9 months 18 days | |
Exercise price of warrants (in dollars per share) | $ 9,960 | |
June 2018 Services Warrants | Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 54 | |
Weighted average Life of Outstanding Warrants in years | 9 months 18 days | |
Exercise price of warrants (in dollars per share) | $ 9,960 |
Stock Based Compensation - Addi
Stock Based Compensation - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | Mar. 06, 2023 | Mar. 31, 2021 | Mar. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based compensation arrangement by share-based payment award, number of shares authorized (in shares) | 30,000 | 2,500 | |||||
Share-based compensation arrangement by share-based payment award, number of shares available for grant (in shares) | 749,997 | 749,997 | |||||
Share-based compensation arrangement by share-based payment award, expiration period | 10 years | ||||||
Compensation expense | $ 200,000 | $ 300,000 | $ 500,000 | $ 700,000 | |||
Share-based payment arrangement, nonvested award, cost not yet recognized, period for recognition | 1 year 8 months 12 days | ||||||
Share-based payment arrangement, nonvested award, cost not yet recognized, amount | 1,153,000 | $ 1,153,000 | |||||
Share-based compensation arrangement by share-based payment award, options, outstanding, intrinsic value | $ 0 | $ 0 | |||||
Subsequent Event | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based compensation arrangement by share-based payment award, number of shares authorized (in shares) | 750,000 | ||||||
Options Granted on or After July 1, 2020 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 4 years | ||||||
Share-based payment arrangement, tranche one | Granted Prior to July 1, 2020 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
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 | ||||||
Share-based payment arrangement, tranche one | Options Granted on or After July 1, 2020 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
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 | 1 year | ||||||
Share-based payment arrangement, tranche two | Granted Prior to July 1, 2020 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 36 months |
Stock Based Compensation - Summ
Stock Based Compensation - Summary of Option Activity (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Feb. 28, 2023 | Aug. 31, 2022 | |
Number of Options | ||
Beginning balance (in shares) | 11,753 | |
Forfeited (in shares) | (1,750) | |
Ending balance (in shares) | 10,003 | 11,753 |
Options exercisable (in shares) | 10,003 | 11,753 |
Weighted Average Remaining Contractual Life | ||
Balance, outstanding | 7 years 6 months | 8 years 1 month 6 days |
Balance, exercisable | 7 years 6 months | 8 years 1 month 6 days |
Forfeited | 8 years 3 months 18 days | |
Weighted Average Exercise Price | ||
Outstanding (in dollars per share) | $ 813.70 | $ 733 |
Exercisable (in dollars per share) | 813.70 | $ 733 |
Forfeited (in dollars per share) | $ 2.70 |
Stock Based Compensation - Sche
Stock Based Compensation - Schedule of Option Vesting Activity (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Feb. 28, 2023 | Aug. 31, 2022 | |
Number of Options | ||
Options vested, beginning balance (in shares) | 5,269 | |
Vested (in shares) | 1,560 | |
Forfeited (in shares) | (716) | |
Options vested, ending balance (in shares) | 6,113 | 5,269 |
Weighted Remaining Contractual Life | ||
Outstanding | 7 years 4 months 24 days | 8 years 1 month 6 days |
Vested | 7 years 9 months 18 days | |
Forfeited | 8 years 1 month 6 days | |
Weighted Average Exercise Price | ||
Outstanding (in dollars per share) | $ 1,064 | $ 1,146 |
Vested (in dollars per share) | 434 | |
Forfeited (in dollars per share) | $ 293 |
Stock Based Compensation - Stoc
Stock Based Compensation - Stock Options Outstanding and Vested (Details) - $ / shares | 6 Months Ended | |
Feb. 28, 2023 | Aug. 31, 2022 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Number of Options Exercisable, Outstanding (in shares) | 10,003 | |
Number of Options Exercisable, Exercisable (in shares) | 10,003 | |
Weighted Average Remaining Contractual Life, Outstanding | 7 years 7 months 6 days | |
Weighted Average Remaining Contractual Life, Exercisable | 7 years 7 months 6 days | |
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 813.70 | $ 733 |
Weighted Average Exercise Price (in dollars per share) | $ 813.70 | $ 733 |
Number of Options Vested (in shares) | 6,113 | 5,269 |
Weighted Average Remaining Contractual Life | 7 years 4 months 24 days | |
Weighted Average Exercise Price (in dollars per share) | $ 1,064 | $ 1,146 |
Exercise Price Range One | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Number of Options Exercisable, Outstanding (in shares) | 9,641 | |
Number of Options Exercisable, Exercisable (in shares) | 9,641 | |
Weighted Average Remaining Contractual Life, Outstanding | 7 years 7 months 6 days | |
Weighted Average Remaining Contractual Life, Exercisable | 7 years 7 months 6 days | |
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 453 | |
Weighted Average Exercise Price (in dollars per share) | $ 453 | |
Number of Options Vested (in shares) | 5,754 | |
Weighted Average Remaining Contractual Life | 7 years 6 months | |
Weighted Average Exercise Price (in dollars per share) | $ 466 | |
Exercise Price Range Two | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Number of Options Exercisable, Outstanding (in shares) | 20 | |
Number of Options Exercisable, Exercisable (in shares) | 20 | |
Weighted Average Remaining Contractual Life, Outstanding | 6 years 3 months 18 days | |
Weighted Average Remaining Contractual Life, Exercisable | 6 years 3 months 18 days | |
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 1,895 | |
Weighted Average Exercise Price (in dollars per share) | $ 1,895 | |
Number of Options Vested (in shares) | 19 | |
Weighted Average Remaining Contractual Life | 6 years 8 months 12 days | |
Weighted Average Exercise Price (in dollars per share) | $ 1,896 | |
Exercise Price Range Three | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Number of Options Exercisable, Outstanding (in shares) | 121 | |
Number of Options Exercisable, Exercisable (in shares) | 121 | |
Weighted Average Remaining Contractual Life, Outstanding | 6 years 1 month 6 days | |
Weighted Average Remaining Contractual Life, Exercisable | 6 years 1 month 6 days | |
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 5,121 | |
Weighted Average Exercise Price (in dollars per share) | $ 5,121 | |
Number of Options Vested (in shares) | 120 | |
Weighted Average Remaining Contractual Life | 6 years 2 months 12 days | |
Weighted Average Exercise Price (in dollars per share) | $ 5,120 | |
Exercise Price Range Four | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Number of Options Exercisable, Outstanding (in shares) | 101 | |
Number of Options Exercisable, Exercisable (in shares) | 101 | |
Weighted Average Remaining Contractual Life, Outstanding | 5 years 2 months 12 days | |
Weighted Average Remaining Contractual Life, Exercisable | 5 years 2 months 12 days | |
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 10,298 | |
Weighted Average Exercise Price (in dollars per share) | $ 10,298 | |
Number of Options Vested (in shares) | 101 | |
Weighted Average Remaining Contractual Life | 5 years 2 months 12 days | |
Weighted Average Exercise Price (in dollars per share) | $ 10,298 | |
Exercise Price Range Five | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Number of Options Exercisable, Outstanding (in shares) | 109 | |
Number of Options Exercisable, Exercisable (in shares) | 109 | |
Weighted Average Remaining Contractual Life, Outstanding | 4 years 4 months 24 days | |
Weighted Average Remaining Contractual Life, Exercisable | 4 years 4 months 24 days | |
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 15,584 | |
Weighted Average Exercise Price (in dollars per share) | $ 15,584 | |
Number of Options Vested (in shares) | 109 | |
Weighted Average Remaining Contractual Life | 4 years 4 months 24 days | |
Weighted Average Exercise Price (in dollars per share) | $ 15,584 | |
Exercise Price Range Six | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Number of Options Exercisable, Outstanding (in shares) | 11 | |
Number of Options Exercisable, Exercisable (in shares) | 11 | |
Weighted Average Remaining Contractual Life, Outstanding | 4 years 4 months 24 days | |
Weighted Average Remaining Contractual Life, Exercisable | 4 years 4 months 24 days | |
Weighted Average Exercise Price, Outstanding (in dollars per share) | $ 39,160 | |
Weighted Average Exercise Price (in dollars per share) | $ 39,160 | |
Number of Options Vested (in shares) | 11 | |
Weighted Average Remaining Contractual Life | 4 years 4 months 24 days | |
Weighted Average Exercise Price (in dollars per share) | $ 39,160 | |
Minimum | Exercise Price Range One | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise Prices (in dollars per share) | 50 | |
Minimum | Exercise Price Range Two | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise Prices (in dollars per share) | 1,001 | |
Minimum | Exercise Price Range Three | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise Prices (in dollars per share) | 4,001 | |
Minimum | Exercise Price Range Four | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise Prices (in dollars per share) | 8,001 | |
Minimum | Exercise Price Range Five | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise Prices (in dollars per share) | 12,001 | |
Minimum | Exercise Price Range Six | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise Prices (in dollars per share) | 16,001 | |
Maximum | Exercise Price Range One | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise Prices (in dollars per share) | 1,000 | |
Maximum | Exercise Price Range Two | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise Prices (in dollars per share) | 4,000 | |
Maximum | Exercise Price Range Three | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise Prices (in dollars per share) | 8,000 | |
Maximum | Exercise Price Range Four | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise Prices (in dollars per share) | 12,000 | |
Maximum | Exercise Price Range Five | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise Prices (in dollars per share) | 16,000 | |
Maximum | Exercise Price Range Six | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise Prices (in dollars per share) | $ 39,160 |
Related Parties and Certain D_2
Related Parties and Certain Directors and Officers (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Aug. 12, 2022 USD ($) shares | Oct. 22, 2021 USD ($) | Mar. 31, 2022 USD ($) | Feb. 28, 2023 USD ($) shares | Feb. 28, 2022 USD ($) | Feb. 28, 2023 USD ($) director shares | Feb. 28, 2022 USD ($) | Aug. 31, 2022 USD ($) shares | Aug. 31, 2021 USD ($) | |
Related Party Transaction [Line Items] | |||||||||
Decrease in employee related liabilities | $ (4,871,000) | $ (3,297,000) | |||||||
Professional fees | $ 870,000 | $ 1,677,000 | 2,065,000 | 3,414,000 | |||||
Compensation expense | $ 200,000 | 300,000 | $ 500,000 | 700,000 | |||||
Share-based compensation arrangement by share-based payment award, number of shares available for grant (in shares) | shares | 749,997 | 749,997 | |||||||
Chief Operating Officer | |||||||||
Related Party Transaction [Line Items] | |||||||||
Payments to employees | $ 300,000 | ||||||||
Salaried compensation, amount | $ 500,000 | ||||||||
Accrued Salaries | $ 200,000 | ||||||||
Chief Executive Officer | |||||||||
Related Party Transaction [Line Items] | |||||||||
Salaried compensation, amount | 1,000,000 | ||||||||
Discretionary bonus, amount | $ 500,000 | ||||||||
Employee compensation, discretionary bonus, percent of tranche one | 50% | ||||||||
Employee compensation, discretionary bonus, percent of tranche two | 50% | ||||||||
Payments of discretionary bonus | $ 300,000 | ||||||||
Decrease in employee related liabilities | $ 800,000 | ||||||||
Shares issued for services rendered (in shares) | shares | 4,100,000 | ||||||||
Director | |||||||||
Related Party Transaction [Line Items] | |||||||||
Shares issued for services rendered (in shares) | shares | 0 | 0 | |||||||
Compensation expense | $ 56,250 | 56,250 | $ 100,000 | 100,000 | |||||
Number of directors with share-based payment arrangement agreements | director | 3 | ||||||||
Share-based payment arrangement, value agreed to be issued per year | 100,000 | $ 100,000 | |||||||
Accrued stock-compensation | $ 700,000 | $ 700,000 | $ 600,000 | ||||||
Share-based compensation arrangement by share-based payment award, number of shares available for grant (in shares) | shares | 59.040 | 59.040 | |||||||
J Stephen Holmes | Affiliated Entity | |||||||||
Related Party Transaction [Line Items] | |||||||||
Professional fees | $ 800,000 | ||||||||
Mark Absher | Affiliated Entity | |||||||||
Related Party Transaction [Line Items] | |||||||||
Payments to employees | $ 60,000 | 0 | $ 120,000 | 58,000 | |||||
Salaried compensation, amount | 200,000 | ||||||||
David May | Affiliated Entity | |||||||||
Related Party Transaction [Line Items] | |||||||||
Payments to employees | 37,000 | 43,000 | 75,000 | 86,000 | |||||
Compensation, including sales commissions | 100,000 | ||||||||
Phil Eastvold | Affiliated Entity | |||||||||
Related Party Transaction [Line Items] | |||||||||
Payments to employees | 56,000 | 56,000 | 100,000 | 100,000 | |||||
Salaried compensation, amount | 200,000 | 200,000 | |||||||
Jason Absher | Affiliated Entity | |||||||||
Related Party Transaction [Line Items] | |||||||||
Payments to employees | 30,000 | 30,000 | 60,000 | 60,000 | |||||
Salaried compensation, amount | 100,000 | ||||||||
Connie Absher, Elizabeth Eastvold, and Hannah Absher | Affiliated Entity | |||||||||
Related Party Transaction [Line Items] | |||||||||
Payments to employees | $ 60,000 | $ 56,000 | $ 100,000 | $ 100,000 | $ 200,000 | ||||
Hannah Absher | Affiliated Entity | |||||||||
Related Party Transaction [Line Items] | |||||||||
One-time incentive payment | $ 18,000 |
Commitments - Narrative (Detail
Commitments - Narrative (Details) $ / shares in Units, ft² in Thousands | 6 Months Ended | 12 Months Ended | 16 Months Ended | ||||||||||
Oct. 22, 2021 USD ($) $ / shares shares | Feb. 28, 2023 USD ($) $ / shares shares | Aug. 31, 2022 USD ($) $ / shares shares | Feb. 28, 2023 USD ($) $ / shares shares | Feb. 07, 2023 sponsorship | Nov. 30, 2022 sponsorship | May 02, 2022 | Oct. 19, 2021 shares | Jun. 21, 2021 | Jun. 07, 2021 ft² | Apr. 29, 2021 USD ($) sponsorship | Oct. 01, 2020 | Aug. 13, 2020 | |
Operating Leased Assets [Line Items] | |||||||||||||
Operating lease, impairment loss | $ 3,900,000 | ||||||||||||
Loss contingency accrual | $ 3,800,000 | $ 3,800,000 | $ 3,800,000 | ||||||||||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Accounts payable and other accrued liabilities | Accounts payable and other accrued liabilities | Accounts payable and other accrued liabilities | ||||||||||
Other commitments, number of special purpose acquisition company sponsorships | sponsorship | 0 | 1 | 4 | ||||||||||
Other commitments, percentage of outstanding shares, per acquisition company | 15% | ||||||||||||
Class of warrant or right, outstanding (in shares) | shares | 1,252,749 | 522,786 | 1,252,749 | ||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 33.61 | $ 47.99 | $ 33.61 | ||||||||||
Outstanding uncollectible loans | $ 700,000 | $ 700,000 | |||||||||||
IPO | IHC | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Sale of stock, number of common shares issued per unit (in shares) | shares | 1 | ||||||||||||
Proceeds from initial public offering of IHC | $ 115,000,000 | ||||||||||||
IPO | IHC | Placement Warrants | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Class of warrant or right, outstanding (in shares) | shares | 4,639,102 | ||||||||||||
Sale of warrants, price per share (in dollars per share) | $ / shares | $ 1 | ||||||||||||
Aggregate purchase price | $ 4,639,102 | ||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 11.50 | ||||||||||||
IPO | IHC | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Class of warrant or right, number of securities called by each warrant or right (in shares) | shares | 1 | ||||||||||||
Shiftpixy Founders | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Other commitments, percentage of outstanding shares, per acquisition company | 15% | ||||||||||||
Special Purpose Acquisition Company, 1 | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Other commitment | $ 25,000 | ||||||||||||
Special Purpose Acquisition Company, 2 | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Other commitment | 25,000 | ||||||||||||
Special Purpose Acquisition Company, 3 | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Other commitment | 25,000 | ||||||||||||
Special Purpose Acquisition Company, 4 | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Other commitment | $ 25,000 | ||||||||||||
Special Purpose Acquisition Company, Maximum Amount Per Individual Loan | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Other commitment | $ 500,000 | ||||||||||||
Special Purpose Acquisition Companies | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Payments for other commitments | $ 900,000 | ||||||||||||
Miami Office Space Facility | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Operating lease term | 7 years | ||||||||||||
Operating lease, monthly expense | 57,000 | ||||||||||||
ShiftPixy Labs Facility | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Operating lease term | 64 months | ||||||||||||
Operating lease, monthly expense | 34,000 | ||||||||||||
Miami Verifone Facility | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Operating lease, monthly expense | 26,000 | ||||||||||||
Area of real estate property | ft² | 8 | ||||||||||||
Sublease term | 3 years | ||||||||||||
Sunrise Facility | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Operating lease term | 77 months | ||||||||||||
Operating lease, monthly expense | 27,000 | ||||||||||||
Second Irvine Facility | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Operating lease term | 60 months | ||||||||||||
Operating lease, monthly expense | $ 24,000 | ||||||||||||
Operating lease, rent abatement percentage | 50% | ||||||||||||
Operating lease, rent abatement period | 4 months |
Commitments - Lease, Cost (Deta
Commitments - Lease, Cost (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Feb. 28, 2023 | Feb. 28, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating Lease Cost | $ 307,792 | $ 563,753 |
Commitments - Lessee, Operating
Commitments - Lessee, Operating Lease, Liability, Maturity (Details) $ in Thousands | Feb. 28, 2023 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2024 | $ 1,039 |
2025 | 1,073 |
2026 | 1,032 |
2027 | 746 |
2028 | 488 |
Thereafter | 256 |
Total minimum payments | 4,634 |
Less: present value discount | 563 |
Lease liability | $ 4,071 |
Weighted-average remaining lease term - operating leases (months) | 63 months |
Weighted-average discount rate | 5.54% |
Contingencies (Details)
Contingencies (Details) $ in Thousands | 1 Months Ended | 5 Months Ended | 6 Months Ended | 82 Months Ended | ||||||||||||
Jan. 04, 2023 USD ($) | Nov. 23, 2022 USD ($) | Nov. 08, 2022 shares | Sep. 01, 2022 | Oct. 22, 2021 shares | Mar. 19, 2021 USD ($) | Mar. 12, 2021 USD ($) | Dec. 18, 2020 USD ($) | Jan. 03, 2020 USD ($) | Apr. 30, 2019 USD ($) | May 31, 2016 USD ($) | Aug. 31, 2021 USD ($) | Feb. 28, 2023 USD ($) shares | Feb. 28, 2023 USD ($) | Aug. 31, 2022 USD ($) | Nov. 04, 2021 USD ($) | |
Loss Contingencies [Line Items] | ||||||||||||||||
Share-based compensation arrangement by share-based payment award, options, forfeitures in period (in shares) | shares | 1,750 | |||||||||||||||
Stock split conversion ratio | 0.01 | |||||||||||||||
J Stephen Holmes | Founding Shareholder | Preferred Stock Issued | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Share-based compensation arrangement by share-based payment award, options, forfeitures in period (in shares) | shares | 11,790,000 | |||||||||||||||
Disposal by sale | Overall business | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Gross proceeds | $ 19,166 | $ 19,166 | $ 19,166 | |||||||||||||
Period for payment of gross proceeds (in years) | 4 years | |||||||||||||||
Kadima Litigation | Pending Litigation | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Litigation settlement, compensatory damages | $ 5,000 | |||||||||||||||
Kadima Litigation | Settled Litigation | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Litigation settlement, compensatory damages | $ 5,000 | |||||||||||||||
Litigation settlement, prejudgement interest | 1,800 | |||||||||||||||
Litigation settlement, expert witness fees | $ 300 | |||||||||||||||
Everest Litigaton | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Loss contingency, damages sought, value | $ 600 | $ 1,600 | ||||||||||||||
Sunz Litigation | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Loss contingency, damages sought, value | $ 10,000 | |||||||||||||||
Loss contingency, damages sought, value as a percentage of incurred and unpaid claims | 200% | |||||||||||||||
Vensure Litigation | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Loss contingency, damages sought, value | $ 1,500 | |||||||||||||||
Discontinued operation, proposed adjustments period | 90 days | |||||||||||||||
Discontinued operation, negotiation period | 30 days | |||||||||||||||
Vensure Litigation | Pending Litigation | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Gain contingency, unrecorded amount | $ 9,500 | |||||||||||||||
Vensure Litigation | Withdrawn Claim | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Loss contingency, damages sought, value | $ 1,500 | |||||||||||||||
Vensure Litigation | Disposal by sale | Overall business | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Gross proceeds | $ 19,000 | |||||||||||||||
Gross note receivable | $ 9,500 | |||||||||||||||
Period for payment of gross proceeds (in years) | 48 months | |||||||||||||||
John Stephen Holmes Bankruptcy Litigation | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Loss contingency, damages sought (in shares) | shares | 12,500,000 | |||||||||||||||
Period of time during which trustee failed to take any action (in years) | 3 years | |||||||||||||||
Software Development | Kadima Litigation | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Software development cost | $ 2,200 | |||||||||||||||
Revised development costs | 7,200 | |||||||||||||||
Software modules cost | $ 11,000 | |||||||||||||||
Additional software modules cost demanded | $ 12,000 | |||||||||||||||
Loss contingency, damages sought, value | $ 11,000 |