Special Purpose Acquisition Company ("SPAC") Sponsorship
|9 Months Ended|
May 31, 2022
|Investments in and Advances to Affiliates [Abstract]|
|Special Purpose Acquisition Company ("SPAC") Sponsorship||Special Purpose Acquisition Company ("SPAC") Sponsorship
On April 29, 2021, we announced our sponsorship, through our wholly-owned subsidiary, ShiftPixy Investments, Inc. ("Investments"), of four SPACs.
Each SPAC was seeking to raise approximately $150 million in capital investment, through an IPO, to acquire companies in the healthcare and technology segments of the staffing industry, as well as one or more insurance entities. IHC has completed its IPO and is seeking to acquire companies in the light industrial segment of the staffing industry, as described below. We anticipated that, through our wholly-owned subsidiary, we would own approximately 15% of the issued and outstanding stock in each entity upon their IPOs being consummated, and that each would operate as a separately managed, publicly traded entity following the completion of their respective IBCs. We also anticipated entering into service agreements with each of the staffing entities that would allow them to participate in our HRIS platform. We also expected to facilitate the procurement of workers’ compensation, personal liability, and other similar insurance products for these staffing entities through our anticipated relationship with the insurance SPAC after it completed its IBC. For the three and nine month periods ended May 31, 2022, the sponsorship operations for all of these entities, with the exception of IHC, are consolidated in the accompanying financial statements as they were being conducted under a wholly-owned subsidiary. The operations of IHC have been consolidated in the accompanying financial statements for the reasons set forth above in Note 2, Summary of Significant Accounting Policies.
The registration statement and prospectus covering the IPO of IHC was declared effective by the SEC on October 19, 2021, and 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 New York Stock Exchange (“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, we purchased, through our wholly-owned subsidiary, 4,639,102 placement warrants at a price of $1.00 per warrant, for an aggregate purchase price of $4,639,102.
Following the closing of the IPO, the sum of $116,725,000 was placed in a trust account (the “Trust Account”), and has been invested in U.S. government securities within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the "ICA"), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 of the ICA, as determined by the Company, until the earlier of: (i) the completion of the IBC and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below. The $116,725,000 consisted of the $115,000,000 of gross proceeds from the sale of the IHC Units in the IPO and $1,725,000 funded by the Company, as the corporate parent of the Sponsor, representing guaranteed interest for future redemptions and calculated as one year's interest at 1.5%. With the completion of the IPO, the Company recorded approximately $38.0 million of deferred costs in APIC as of May 31, 2022, and $0.3 million of offering costs paid on behalf of IHC. During the nine months ended May 31, 2022, IHC incurred approximately $3.5 million in offering costs. No other offering costs have been incurred during the three month period ended May 31, 2022,
for the other SPACs. The Trust Account generated interest income for the three and nine month period ended May 31, 2022 of approximately $0.02 million and $0.04 million, respectively.
On March 18, 2022, the IPO registration statements related to the three other SPACs we had sponsored, Vital Human Capital, Inc. ("Vital"), TechStackery, Inc. ("TechStackery"), and Firemark Global Capital, Inc. ("Firemark"), were withdrawn.
On May 13, 2022, we announced our board's approval of a special distribution to ShiftPixy shareholders of record on May 17, 2022, of ShiftPixy's interest in IHC. The announcement indicated that the distribution would be subject to certain terms and conditions, including the consummation by IHC of its IBC, the filing of an appropriate registration statement applicable to the stock that is declared effective by the SEC, and a determination by our board that the distribution complies with applicable law.
The entire disclosure for the information summarizing investments in and advances to majority-owned subsidiaries, other controlled companies, and other affiliates. It reflects specified information about ownership, financial results from, and financial position in such entities.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef