Annual report pursuant to Section 13 and 15(d)

Subsequent Events

Subsequent Events
12 Months Ended
Aug. 31, 2022
Subsequent Events [Abstract]  
Subsequent Events Subsequent Events
The Company has evaluated events that have occurred after the date of these consolidated balance sheets though the date that the consolidated financial statements were issued, and has determined that, other than those listed below, no such reportable subsequent events exist through the date the financial statements were issued in accordance with FASB ASC Topic 855, “Subsequent Events.”

Effective August 31, 2022, the Company filed articles of amendment to the Company’s articles of incorporation to effect a one-for-one hundred (1:100) reverse split of the Company’s issued and outstanding shares of Common Stock. The reverse split became effective on Nasdaq September 1, 2022.

On September 1, 2022, after our reverse stock split had taken effect, our CEO and Director, Scott Absher, converted 8,600,000 of his shares of Preferred Class A Stock to 8,600,000 shares of our common stock.

On September 19, 2022, the Company received a letter from the staff of Nasdaq (the "Staff") notifying the Company that the Staff has determined that for the last 10 consecutive business days, from September 1 to September 16, 2022, the closing bid price of the Company’s common stock had been at $1.00 per share or greater and that accordingly, the Company has regained compliance with Listing Rule 5550(a)(2).

On September 20, 2022, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with a large institutional investor (the “Purchaser”) pursuant to which the Company sold to the Purchaser an aggregate of 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 gross proceeds to the Company from the Offering were approximately $5 million.

In connection with the Purchase Agreement, the Company and the Purchaser entered into amendment No. 1 to warrants (the “Warrant Amendment”). Pursuant to the Warrant Amendment, the exercise price of (i) 25,233 warrants issued on September 3, 2021, and (ii) 98,969 warrants issued on January 28, 2022, was reduced to $0.01.

A.G.P./Alliance Global Partners (the “Placement Agent”) acted as the exclusive placement agent in connection with the Offering pursuant to the terms of a placement agent agreement, dated September 20, 2022, between the Company and the Placement Agent (the “Placement Agent Agreement”). Pursuant to the Placement Agent Agreement, the Company paid the Placement Agent a fee equal to 7.0% of the aggregate gross proceeds from the Offering. In addition to the cash fee, the Company issued to the Placement Agent warrants to purchase up to 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 October 31, 2022, the Company settled the claims filed against it by the plaintiff and one of the Company's former software vendors, Radaro, Inc.

On November 8, 2022, the Chapter 7 trustee of the bankruptcy estate of John Stephen Holmes filed an action against the Company, asserting that the cancellation of Mr. Holmes' preferred options on October 22, 2021, violated the automatic stay applicable to Mr. Holmes' Chapter 7 proceedings. The matter is in the preliminary stages; the Company has not yet filed its response, but it plans to vigorously defend itself against the claim.

On November 14, 2022, the court in the Sunz case granted the plaintiff's motion for partial summary judgment, holding that ShiftPixy waived claims for years 2 and 3 of the applicable policy based upon claims disputes for which it did not serve a "dispute notice" within a six-month period as set forth in the applicable contracts.

On November 23, 2022, in the case filed against the Company by Kadima Ventures, an order was entered by the court, finding in favor of the Company and against Kadima in the amount of $5 million plus costs and fees. The order has not yet been reduced to a final judgment and will be subject to appeal.
Industrial Human Capital
At a special meeting of the stockholders of IHC (the SPAC sponsored by our subsidiary, ShiftPixy Investments, Inc.), held on October 14, 2022 (the “Meeting”), pursuant to a proxy statement, the stockholders by an affirmative vote of 73.70% of the 14,375,000 total shares of the Company’s common stock outstanding on the record date of September 6, 2022, approved IHC's proposed action to file an amended and restated certificate of incorporation (the “Amendment”) 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.

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. As a result, approximately $114,949,913.76 (approximately $10.2165 per Public Share) will be removed from the Trust Account to pay such holders, subject to applicable law. Following the redemption, the Company’s remaining Public Shares outstanding would be 248,653, and the amount left in the Trust Account would be substantially below the $5,000,001 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.

On November 9, 2022, the Company filed a Certificate of Correction with the Secretary of State of Delaware, effectively withdrawing the previously filed Extension Amendment. A Certificate of Dissolution was filed on November 14, 2022.