ShiftPixy, Inc. Reports Fiscal 2020 Results
2020 Financial Highlights
- Improved balance sheet compared to the fiscal year ended
August 31, 2019(“2019”):
- Eliminated debt with full-ratchet anti-dilution price protection during 2020
- Raised over
$25 millionin equity from May 2020to October 2020
- Sold 85% of lower growth business which generated
$9.5 millionof cash
- Quarterly gross billings improved to
$18.7 millionfor Q4 2020, a sequential increase of $4.3 millionor 30% from Q3 2020, due to new customer additions and COVID-19 recovery for existing customers. For the entire fiscal year, gross billings from continuing operations were $66 million, compared to $73 millionfor 2019, due primarily to COVID-19 impacts in 2020, as well as client cancellations primarily in the early part of 2020, during calendar 2019.
- Quarterly revenues improved to
$2.4 millionfor Q4 2020, a sequential increase of 20% from Q3 2020. Revenues for the entire fiscal year decreased 17% to $8.6 million, compared to $10.5 millionfor 2019, primarily as a result of our strategic decision to shift our client focus during 2019, as well as the negative impact of COVID-19 growth headwinds.
- Gross profit for 2020 was
$1.0 million, decreasing 50% from 2019 gross profit of $1.9 million, due to workers’ compensation cost increases.
- Loss from Operations for 2020 increased
$6.0 millionto $21.6 millionfrom $15.6 millionin 2019, of which $3.5 millionwas a non-cash asset impairment charge related to previously capitalized software, along with a $1.0 millionincrease in stock-based compensation.
- EBITDAS Loss (Operating Loss excluding asset impairment, interest expense, depreciation, amortization and share-based compensation) increased to
$16.2 millionfor 2020 from $14.7 millionfor 2019 due to $1.0 millionof reduced margins and increased spending on our mobile application development, offset by decreased operations costs.
- Investment in our mobile application and technology solution deployment increased to
$4.2 millionin 2020 from $3.1 millionin 2019. Total Human Resource Information System (“HRIS”) and mobile application investment is $20.7 millionto date.
2020 Operational Highlights
- The number of employees retained in our employee HRIS exceeded 35,000.
- Relocated corporate headquarters to
Miami, Floridato expand sales and marketing reach to better serve Eastern United Statesand Latin America(move substantially completed in September 2020).
- Experienced billings and worksite employee growth during 2020 despite COVID-19 pandemic due to new client additions and Q4 COVID-19 recovery.
- New partnership established in Q4 2020 that has the potential to bring over 200,000 new restaurant employees onto our HRIS platform, with the added potential to generate gross wage billings of
- New nationwide nurse staffing client signed in Q4 2020 with over 8,000 employees that has the potential to generate gross billings of approximately
$50,000per employee, which we expect to drive significant revenue and gross profit growth.
- Full suite of mobile application and HRIS platform functionality nearing completion and full commercial launch, which we expect to add additional revenue streams.
“2020 was a key transition year for
ShiftPixy Cautionary Statement
The information provided in this release includes forward-looking statements, the achievement or success of which involves risks, uncertainties, and assumptions. These forward-looking statements are made pursuant to the safe harbor provisions within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Although such forward-looking statements are based upon what our management believes are reasonable assumptions, there can be no assurance that forward-looking statements will prove to be accurate. If any of the risks or uncertainties, including those set forth below, materialize or if any of the assumptions proves incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. The risks and uncertainties include, but are not limited to, risks associated with the nature of our business model; our ability to execute our vision and growth strategy; our ability to attract and retain clients; our ability to assess and manage risks; changes in the law that affect our business and our ability to respond to such changes and incorporate them into our business model, as necessary; our ability to insure against and otherwise effectively manage risks that affect our business; risks arising from the COVID-19 pandemic or any other events that could cause wide-scale business disruptions; competition; reliance on third-party systems and software; our ability to protect and maintain our intellectual property; and general developments in the economy and financial markets. These and other risks are discussed in our filings with the Securities and Exchange Commission (the “SEC”), including, without limitation, our Annual Report on Form 10-K, filed on November 30, 2020, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. These documents, including the sections therein entitled “Risk Factors,” identify important factors that could cause actual results to differ materially from those contained in forward-looking statements. All of our forward-looking statements are expressly qualified by all such risk factors and other cautionary statements. Statements made in connection with any guidance may refer to financial statements that have not been reviewed or audited. We undertake no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change, except as required by applicable securities laws. The information in this press release shall not be deemed to be "filed" for the purpose of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and will not be deemed an admission as to the materiality of any information that is required to be disclosed solely by Regulation FD. Further information on these and other factors that could affect our financial results is included in the filings we make with the SEC from time to time. These documents are available on the "SEC Filings" subsection of the "Investor Information" section of our website at https://ir.shiftpixy.com/financial-information/sec-filings, or directly from the SEC’s website at https://www.sec.gov.
Consistent with the SEC’s April 2013 guidance on using social media outlets like Facebook and Twitter to make corporate disclosures and announce key information in compliance with Regulation FD, we are alerting investors and other members of the general public that we will provide updates on operations and progress required to be disclosed under Regulation FD through the Company’s social media on Facebook, Twitter, LinkedIn and YouTube. Investors, potential investors, shareholders and individuals interested in us are encouraged to keep informed by following us on Facebook, Twitter, LinkedIn and YouTube.
Consolidated Balance Sheets
|Accounts receivable, net||308,000||85,000|
|Unbilled accounts receivable||2,303,000||1,418,000|
|Deposit – workers’ compensation||293,000||235,000|
|Other current assets||73,000||244,000|
|Current assets of discontinued operations||1,030,000||10,139,000|
|Total current assets||9,033,000||14,031,000|
|Fixed assets, net||575,000||4,155,000|
|Note receivable, net||4,045,000||-|
|Deposits – workers’ compensation||736,000||754,000|
|Deposits and other assets||449,000||124,000|
|Non-current assets of discontinued operations||2,582,000||5,567,000|
|LIABILITIES AND STOCKHOLDERS’ DEFICIT|
|Accounts payable and other accrued liabilities||$||3,831,000||$||4,454,000|
|Payroll related liabilities||5,752,000||2,559,000|
|Convertible notes, net||-||3,351,000|
|Accrued workers’ compensation costs||497,000||235,000|
|Default penalties accrual||-||1,800,000|
|Current liabilities of discontinued operations||1,746,000||16,033,000|
|Total current liabilities||11,826,000||32,188,000|
|Accrued workers’ compensation costs||1,247,000||525,000|
|Non-current liabilities of discontinued operations||4,377,000||3,853,000|
|Commitments and contingencies|
|Preferred stock, 50,000,000 authorized shares;
|Common stock, 750,000,000 authorized shares;
|Additional paid-in capital||119,431,000||32,505,000|
|Total stockholders’ deficit||(30,000||)||(11,935,000||)|
|Total liabilities and stockholders’ deficit||$||17,420,000||$||24,631,000|
Consolidated Statements of Operations
|For the year ended|
|Revenues (gross billings of
|Cost of revenue||7,685,000||8,538,000|
|Salaries, wages, and payroll taxes||7,227,000||6,283,000|
|Stock-based compensation – general and administrative||1,526,000||632,000|
|Software development - external||2,240,000||1,209,000|
|Depreciation and amortization||272,000||194,000|
|Impaired asset expense||3,543,000||-|
|General and administrative||4,180,000||5,032,000|
|Total operating expenses||22,535,000||17,469,000|
|Other (expense) income:|
|Change in fair value of note receivable||(1,074,000||)||-|
|Expense related to Preferred Options||(62,091,000||)||-|
|Expense related to modification of warrants||(21,000||)||-|
|Loss from debt conversion||(3,500,000||)||-|
|Loss on debt extinguishment||(1,592,000||)||-|
|Change in fair value derivative and warrant liability||1,777,000||2,569,000|
|Loss on convertible note settlement||-||811,000|
|Gain on convertible note penalties accrual||760,000||-|
|Total other (expense) income||(68,890,000||)||(9,054,000||)|
|Loss from continuing operations||(90,468,000||)||(24,610,000||)|
|(Loss) Income from discontinued operations|
|(Loss) Income from discontinued operations||(561,000||)||6,528,000|
|Gain from asset sale||15,682,000||-|
|Total Income (Loss) from discontinued operations, net of tax||15,121,000||6,528,000|
|Net Loss per share, Basic and diluted|
|Operating (loss) income||(0.03||)||7.98|
|Gain on sale of assets||0.86||-|
|Total discontinued operations||0.83||7.98|
|Net Loss per share of common stock – Basic and diluted||$||(4.13||)||$||(22.11||)|
|Weighted average common stock outstanding – Basic and diluted||18,222,661||817,720|
Source: ShiftPixy, Inc.