ShiftPixy, Inc. Reports Fiscal 2020 Results
November 30 2020 - 4:19PM
ShiftPixy, Inc. (NASDAQ: PIXY), a Florida-based staffing enterprise
that designs, manages, and sells access to a disruptive,
revolutionary platform that facilitates employment in the rapidly
growing Gig Economy, today announced operating results for the year
ended August 31, 2020 (“2020”).
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
million in equity from May 2020 to October 2020
- Sold 85% of
lower growth business which generated $9.5 million of cash
- Quarterly gross
billings improved to $18.7 million for Q4 2020, a sequential
increase of $4.3 million or 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 million for 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 million for 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 million for 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 million to $21.6 million from
$15.6 million in 2019, of which $3.5 million was a non-cash asset
impairment charge related to previously capitalized software, along
with a $1.0 million increase in stock-based
compensation.
- EBITDAS Loss
(Operating Loss excluding asset impairment, interest expense,
depreciation, amortization and share-based compensation) increased
to $16.2 million for 2020 from $14.7 million for 2019 due to $1.0
million of 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 million in 2020 from $3.1 million in 2019. Total Human
Resource Information System (“HRIS”) and mobile application
investment is $20.7 million to date.
2020
Operational
Highlights
- The number of
employees retained in our employee HRIS exceeded 35,000.
- Relocated
corporate headquarters to Miami, Florida to expand sales and
marketing reach to better serve Eastern United States and 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 $20,000 per
employee.
- New nationwide
nurse staffing client signed in Q4 2020 with over 8,000 employees
that has the potential to generate gross billings of approximately
$50,000 per 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.
We completed the client refocus we began in 2019 away from light
industrial clients to quick service restaurants and other new
business opportunities that we believe are better served by our new
technology platform. We significantly improved our balance sheet by
selling assets and raising additional capital which allowed us to
eliminate our convertible debt and continue to invest in our growth
initiatives. Despite setbacks in our May 31, 2020 quarter due to
the COVID-19 pandemic, at year end the combined recovery of our
pre-COVID business combined with our new customer additions
resulted in sequential billing growth that continues into our first
fiscal quarter of 2021,” stated Chief Executive Officer Scott
Absher. “We are starting to see customer on-boarding from sales
wins by our new sales team in our new Miami headquarters and are
very excited about our new partnerships in the State of Washington
and our new nurse staffing client, both of which we believe will
drive revenue and gross profit growth in the first half of Fiscal
2021. We believe that we are well positioned to execute on these
recent wins and expect to see a significant increase in our
business activity levels. We hope to achieve profitability in the
second half of Fiscal 2021 as we continue our focus on creating
long-term shareholder value.”
About ShiftPixy
ShiftPixy is a disruptive human capital services
enterprise, revolutionizing employment in the Gig Economy by
delivering a next-gen platform for workforce management that helps
businesses with shift-based employees navigate regulatory mandates,
minimize administrative burdens and better connect with a
ready-for-hire workforce. With expertise rooted in management’s
nearly 25 years of workers’ compensation and compliance programs
experience, ShiftPixy adds a needed layer for addressing compliance
and continued demands for equitable employment practices in the
growing Gig Economy. ShiftPixy’s complete human capital management
ecosystem is designed to manage regulatory requirements and
compliance in such required areas as paid time off (PTO) laws,
insurance and workers’ compensation, minimum wage increases, and
Affordable Care Act (ACA) compliance.
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.
INVESTOR
CONTACT:InvestorRelations@shiftpixy.com800.475.3655
ShiftPixy,
Inc.Consolidated Balance Sheets
|
|
August 31, 2020 |
|
|
August 31, 2019 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash |
|
$ |
4,303,000 |
|
|
$ |
1,561,000 |
|
Accounts receivable, net |
|
|
308,000 |
|
|
|
85,000 |
|
Unbilled accounts receivable |
|
|
2,303,000 |
|
|
|
1,418,000 |
|
Deposit – workers’ compensation |
|
|
293,000 |
|
|
|
235,000 |
|
Prepaid expenses |
|
|
723,000 |
|
|
|
349,000 |
|
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 |
|
Total assets |
|
$ |
17,420,000 |
|
|
$ |
24,631,000 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
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 |
|
Derivative liability |
|
|
- |
|
|
|
3,756,000 |
|
Current liabilities of discontinued
operations |
|
|
1,746,000 |
|
|
|
16,033,000 |
|
Total current liabilities |
|
|
11,826,000 |
|
|
|
32,188,000 |
|
Non-current liabilities |
|
|
|
|
|
|
|
|
Accrued workers’ compensation costs |
|
|
1,247,000 |
|
|
|
525,000 |
|
Non-current liabilities of discontinued
operations |
|
|
4,377,000 |
|
|
|
3,853,000 |
|
Total liabilities |
|
|
17,450,000 |
|
|
|
36,566,000 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Stockholders’ deficit |
|
|
|
|
|
|
|
|
Preferred stock, 50,000,000 authorized shares; $0.0001 par
value |
|
|
- |
|
|
|
- |
|
Common stock, 750,000,000 authorized shares; $0.0001 par
value; 16,902,146 and 909,222 shares issued as of August 31, 2020
and 2019 |
|
|
1,000 |
|
|
|
- |
|
Additional paid-in capital |
|
|
119,431,000 |
|
|
|
32,505,000 |
|
Treasury stock, at cost-0 and 13,953 shares as of August
31, 2020 and August 31, 2019 |
|
|
- |
|
|
|
(325,000 |
) |
Accumulated deficit |
|
|
(119,462,000 |
) |
|
|
(44,115,000 |
) |
Total stockholders’ deficit |
|
|
(30,000 |
) |
|
|
(11,935,000 |
) |
Total liabilities and stockholders’ deficit |
|
$ |
17,420,000 |
|
|
$ |
24,631,000 |
|
ShiftPixy
Inc.Consolidated Statements of
Operations
|
|
For the year ended |
|
|
|
August 31,2020 |
|
|
August 31,2019 |
|
Revenues (gross billings of
$65.5 million and $73.4 million less worksite employee payroll cost
of $56.9 million and $62.9 million, respectively) |
|
$ |
8,642,000 |
|
|
$ |
10,451,000 |
|
Cost of revenue |
|
|
7,685,000 |
|
|
|
8,538,000 |
|
Gross profit |
|
|
957,000 |
|
|
|
1,913,000 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Salaries, wages, and payroll taxes |
|
|
7,227,000 |
|
|
|
6,283,000 |
|
Stock-based compensation – general and administrative |
|
|
1,526,000 |
|
|
|
632,000 |
|
Commissions |
|
|
181,000 |
|
|
|
201,000 |
|
Professional fees |
|
|
3,366,000 |
|
|
|
3,918,000 |
|
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 |
|
|
|
|
|
|
|
|
|
|
Operating Loss |
|
|
(21,578,000 |
) |
|
|
(15,556,000 |
) |
|
|
|
|
|
|
|
|
|
Other (expense) income: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(2,525,000 |
) |
|
|
(8,507,000 |
) |
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 |
) |
|
|
- |
|
Inducement loss |
|
|
(624,000 |
) |
|
|
(3,927,000 |
) |
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 |
|
$ |
(75,347,000 |
) |
|
$ |
(18,082,000 |
) |
|
|
|
|
|
|
|
|
|
Net Loss per share, Basic and
diluted |
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
(4.96 |
) |
|
$ |
(30.09 |
) |
Discontinued operations |
|
|
|
|
|
|
|
|
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 |
|
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