Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K/A - ShiftPixy, Inc. | tm208160-1_8ka.htm |
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