UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K/A

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): January 3, 2020

 

SHIFTPIXY, INC.
(Exact name of registrant as specified in its charter)

 

Wyoming   47-4211438
(State of incorporation or organization)   (I.R.S. Employer Identification No.)
     
1 Venture, Suite 150, Irvine CA   92618
(Address of principal executive offices)   (Zip Code)

 

(888) 798-9100

(Registrant's telephone number, including area code)

 

Commission File No. 001-37954

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered under Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock   PIXY   The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

Explanatory Note

 

On January 8, 2020, ShiftPixy, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Original Form 8-K”) with the U.S. Securities and Exchange Commission announcing that the Company executed an Asset Purchase Agreement (the “Agreement”) with Shift Human Capital Management Acquisitions, LLC, part of Vensure Employer Services, Inc. (“Vensure”). This Amendment No. 1 to the Original Form 8-K (“Amendment”) is being filed to (i) amend and restate in its entirety Item 1.01 of the Original Form 8-K, in the manner set forth immediately following this paragraph, and (ii) file as Exhibit 99.1 hereto the Company’s unaudited pro forma combined consolidated balance sheet as of November 30, 2019 and unaudited pro forma combined consolidated statements of operations for the three months ended November 30, 2019 and the years ended August 31, 2019 and 2018, and the notes related thereto. No other changes are made to the Original Form 8-K by this Amendment.

 

Item 1.01.Entry into a Material Definitive Agreement.

 

On January 3, 2020, ShiftPixy, Inc. (the “Company”) executed an Asset Purchase Agreement (“Agreement”) with Shift Human Capital Management Acquisitions, LLC, part of Vensure Employer Services, Inc. (“Vensure”).

 

The Agreement is attached as an exhibit but as a summary of the Agreement, the Company assigned all rights and interests in its existing Professional Employer Organization (PEO) business to Vensure. The Company will continue to focus on its staffing/technology model serving the Quick Service Restaurant and staffing industries.

 

Under the Agreement, the Company assigned approximately eighty-eight percent (88%) of its overall business based on revenues reported for the quarter ended November 30, 2019, including 100% of its existing PEO business and agreed to sell certain operating assets associated with the assigned client contracts to Vensure for up to approximately $19.2 million of which $9.7 million was received at closing and $9.5 million is receivable over the next four years. The Agreement is effective January 1, 2020.

 

Item 9.01.Financial Statements and Exhibits.

  

(b) Pro forma financial information.

 

The Company’s unaudited pro forma combined consolidated balance sheet as of November 30, 2019 and unaudited pro forma combined consolidated statements of operations for the three months ended November 30, 2019 and the years ended August 31, 2019 and 2018, and the notes related thereto are attached hereto as Exhibit 99.1 and incorporated herein by reference.

 

(d) Exhibits.

 

Exhibit No.   Description
     
99.1   The Company’s unaudited pro forma combined consolidated balance sheet as of November 30, 2019 and unaudited pro forma combined consolidated statements of operations for the three months ended November 30, 2019 and the years ended August 31, 2019 and 2018.

  

 

 

  

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

 

  SHIFTPIXY, INC.  
       
Date: February 14, 2020 By: /s/ Scott W. Absher  
    Scott W. Absher  
    Chief Executive Officer and Director  

 

 

 

 

 

Exhibit 99.1

 

On January 3, 2020, ShiftPixy, Inc. (the “Company”) completed the transfer of approximately 70% of its billable clients who represented approximately 88% of the Company’s quarterly revenue as of November 30, 2019, to Shift Human Capital Management Acquisitions, LLC, part of Vensure Employer Services, Inc. (“Vensure”) and is filing pro forma financial information for this significant disposition in the Company’s Current Report on Form 8-K/A. The consideration received by the Company at closing consisted of $9.6 million of cash and a long-term receivable for $9.5 million payable in equal monthly installments over four years, subject to adjustment as described in the asset sale agreement. The Company provides the following pro forma financial information for the unaudited pro forma condensed consolidated statement of operations for the three months ended November 30, 2019 and for the fiscal years ended August 31, 2019 and August 31, 2018 and the unaudited pro forma condensed consolidated balance sheet as of November 30, 2019. All per share and shares outstanding are adjusted to reflect the Company’s 1 for 40 reverse stock split effective on December 13, 2019.

 

Unaudited Pro Forma Consolidated Financial Statements

 

Table of Contents 

 

  Page
   
Unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended September 30, 2019 PF-1
   
Unaudited Pro Forma Condensed Consolidated Statements of Operations for the years ended August 31, 2019 and 2018 PF-2
   
Unaudited Pro Forma Condensed Consolidated Balance Sheets as of November 30, 2019 PF-3
   

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

PF-4

 

 

 

 

Unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months ended:

 

  

11/30/2019

As Reported

(unaudited)

  

11/30/2019

Discontinued Operations (unaudited)

   

11/30/2019

Pro forma

(unaudited)

 
Revenues  $15,866,000   $13,887,000 (1)  $1,979,000 
Cost of revenue   12,552,000    10,865,000 (1)   1,687,000 
Gross profit   3,314,000    3,022,000      292,000 
Operating expenses:                 
Salaries, wages, and payroll taxes   2,283,000    506,000 (2)   1,777,000 
Commissions   774,000    696,000 (3)   78,000 
Professional fees   840,000    -      840,000 
External software development   353,000    -      353,000 
General and administrative   1,401,000    -      1,401,000 
Total operating expenses   5,651,000    1,202,000      4,449,000 
Operating Income (Loss)   (2,337,000)   1,820,000      (4,157,000)
                  
Other expense   (219,000)   -      (219,000)
                  
Total other income (expense)   (219,000)   -      (219,000)
                  
Net Loss  $(2,556,000)  $1,820,000     $(4,376,000)
                  
Loss per Share  $(2.86)         $(4.90)
                  
Weighted Average shares outstanding   893,904           893,904 

 

See also the Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

PF-1

 

 

Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended:

 

  

08/31/2019

As Reported

  

08/31/2019

Discontinued Operations

   

08/31/2019

Pro forma

(Unaudited)

 
Revenues  $53,436,000   $48,013,000 (1)  $5,423,000 
Cost of revenue   41,046,000    36,452,000 (1)   4,594,000 
Gross profit   12,390,000    11,561,000      829,000 
Operating expenses:                 
Salaries, wages, and payroll taxes   7,702,000    3,032,000 (2)   4,670,000 
Commissions   2,732,000    2,532,000 (3)   200,000 
Professional fees   3,918,000    -      3,918,000 
External software development   1,209,000    -      1,209,000 
General and administrative   6,502,000    -      6,502,000 
Total operating expenses   22,063,000    5,564,000      16,499,000 
Operating Income (Loss)   (9,673,000)   5,997,000      (15,670,000)
                  
Other income (expense)   (9,054,000)   -      (9,054,000)
                  
Net (Loss) Income  $(18,727,000)  $5,997,000     $(24,724,000)
                  
Loss per Share  $(22.90)         $(30.24)
                  
Weighted Average shares outstanding   817,720           817,720 

 

  

08/31/2018

As Reported

  

08/31/2018

Discontinued Operations

   

08/31/2018

Pro forma

(Unaudited)

 
Revenues  $34,959,000   $33,139,000 (1)  $1,819,000 
Cost of revenue   29,459,000    27,970,000 (1)   1,488,000 
Gross profit   5,500,000    5,169,000      331,000 
Operating expenses:                 
Salaries, wages, and payroll taxes   5,383,000    2,442,000 (2)   2,941,000 
Commissions   1,594,000    1,501,000 (3)   93,000 
Professional fees   2,078,000    -      2,078,000 
External software development   3,828,000    -      3,828,000 
General and administrative   4,189,000    -      4,189,000 
Total operating expenses   17,072,000    3,943,000      13,129,000 
Operating Income (Loss)   (11,572,000)   1,226,000      (12,798,000)
                  
Other income (expense)   (5,251,000)   -      (9,054,000)
                  
Net (Loss) Income  $(16,823,000)  $1,226,000     $(18,049,000)
                  
Loss per Share  $(23.36)         $(25.06)
                  
Weighted Average shares outstanding   720,253           720,253 

 

See also the Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

 

PF-2

 

 

Unaudited Pro Forma Condensed Consolidated Balance Sheet as of:

 

  

11/30/2019

As Reported

(Unaudited)

  

11/30/2019

Discontinued Operations

     

11/30/2019

Pro forma

(Unaudited)

 
                
ASSETS 
Current assets                  
   $49,000   $9,575,000  (5)  $9,624,000 
Accounts receivable   1,822,000    (1,518,000) (6)   304,000 
Unbilled accounts receivable   11,347,000    (9,594,000) (6)   1,753,000 
Deposit – workers’ compensation   1,987,000            1,987,000 
Prepaid expenses   371,000    (164,000) (6)   207,000 
Other current assets   164,000            164,000 
Other receivables – transaction related   -    1,583,000  (7)   1,583,000 
Total current assets   15,740,000    (118,000)      15,622,000 
                   
Fixed assets   3,136,000    -       3,136,000 
Deposits – workers’ compensation   6,167,000    -       6,167,000 
Deposits and other assets   124,000    -       124,000 
Other receivables – transaction related   -    6,099,000  (7)   6,099,000 
                   
Total assets  $25,167,000   $5,981,000      $31,148,000 
                   
LIABILITIES AND STOCKHOLDERS’ DEFICIT 
                   
Current liabilities                  

Accounts payable and other current liabilities

  $5,911,000   $(378,000) (6)  $5,533,000 
Payroll related liabilities   17,469,000    (9,323,000) (6)   8,146,000 
Convertible notes, net   3,426,000    -       3,426,000 
Accrued workers’ compensation costs   1,987,000    -       1,987,000 
Default penalties accrual   1,800,000    -       1,800,000 
Derivative liabilities   2,814,000    -       2,814,000 
Total current liabilities   33,407,000    (9,701,000)      23,706,000 
Non-current liabilities                  
Accrued workers’ compensation costs   6,194,000    -       6,194,000 
Convertible notes, net   778,000    -       778,000 
Total liabilities   40,379,000    (9,701,000)      30,678,000 
                   
Commitments and contingencies                  
Stockholders’ equity (deficit)                  
Preferred stock   -    -       - 
Common stock   -    -       - 
Additional paid-in capital   32,619,000    -       32,619,000 
Treasury stock   (325,000)   -       (325,000)
Accumulated deficit   (47,506,000)   15,682,000  (4)   (31,824,000)
Total stockholders’ equity (deficit)   (15,212,000)   15,682,000       470,000 
Total liabilities and stockholders’ equity (deficit)  $25,167,000   $5,981,000      $31,148,000 
                   

 

See also the Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

 

PF-3

 

 

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

 

(1)This adjustment reflects the elimination of revenues and costs of revenues associated with the clients transferred.
(2)This adjustment reflects the elimination of wages, employer taxes, and benefits associated with the employees transferred under the terms of the transaction.
(3)This adjustment represents the elimination of commissions paid and associated with the client business transferred.
(4)This adjustment represents the addition for the expected gain on the transaction consisting of $9.6 million of cash received at closing and $9.5 million the total proceeds received or receivable, discounted at a 10% annual interest rate to $7.7 million and as reduced by the $1.5 million of working capital required to be transferred under the terms of the asset transfer agreement. The Company expects to utilize tax net operating losses to offset any tax due as a result of the transaction.
(5)This adjustment represents the net effect of cash received at closing representing $9,500,000 of deal proceeds and net reimbursement of $75,000 of additional cash paid for working capital transferred in excess of the $1,500,000 required to be transferred.
(6)This adjustment represents the elimination of a working capital assets or liabilities transferred or assumed under the terms of the transfer agreement. Total net assets transferred are subject to an additional true up 90 days subsequent to the closing date of the transaction. The initial transfer was based on November 30, 2019 balances.
(7)This adjustment represents the addition of $9.5 million of payments receivable over four years of which $1.6 million is expected to be collected within one year of November 30, 2019 and $6.1 million is expected to be collected subsequent to November 30, 2020. The balance expected to be collected subsequent to November 30, 2020 is shown at the present value of the expected cash flows using a 10% annual discount rate, representing a $1.8 million discount to expected gross future cash flows.

 

PF-4