Item 13. Certain Relationships
and Related Transactions, and Director Independence.
The following is a summary of transactions
since September 1, 2018 to which we have been a participant in which the amount involved exceeded or will exceed $120,000, and
in which any of our then directors, executive officers or holders of more than 5% of any class of our capital stock at the time
of such transaction, or any members of their immediate family, had or will have a direct or indirect material interest, other than
compensation arrangements which are described in Item 11. Executive Compensation. For purposes of this Item 13, “Fiscal 2020”
refers to the fiscal year ended August 31, 2020 and “Fiscal 2019” refers to the fiscal year ended August 31, 2019.
Director
Compensation
On August 9, 2018, Kenneth Weaver,
our Audit Committee chair and independent director, was granted 12,296 shares of our common stock at a fair value at the time of
issuance of $37,500 or $3.05 per share. The shares in connection with such issuance were deemed to have been purchased and immediately
vested on August 9, 2018, as a consequence of Mr. Weaver’s continued service as director through that date. An additional
12,296 shares were also committed on August 9, 2018, to issue through the 2017 Plan to Mr. Weaver, at a fair value of $37,500 or
$3.05 per share, and deemed to have been purchased and immediately vested on November 30, 2018, as a consequence of Mr. Weaver’s
continued service as director through that date.
On April 16, 2019, Whitney White,
one of our independent directors, was issued 16,448 shares of our common stock for services rendered valued at $37,500 at a fair
value at the time of issuance of $2.28 per share.
On August 19, 2019, Mr. Weaver was
issued 79,788 shares of our common stock for services rendered valued at $37,500 at a fair value of $0.47 per share.
On December 23, 2019, pursuant to the terms
of his director agreement, we issued to Mr. White 428 shares of our common stock, valued at $37,500 or $87.62 per share.
On February 10, 2020, Amanda Murphy was
appointed to our Board of Directors. Ms. Murphy is our Director of Operations and received approximately $240,000 and $218,000
in salaried compensation in Fiscal 2020 and Fiscal 2019, respectively. During the first quarter of Fiscal 2021, in connection with
her relocation to Miami, Florida as part of the relocation of our principal executive offices, Ms. Murphy received a one-time incentive
payment of approximately $80,000 in addition to reimbursement of her expenses associated with her relocation.
During the first quarter of Fiscal 2021,
Scott Absher, our CEO and Board Chair, received a one-time incentive payment of approximately $160,000 in connection with his relocation
to Miami, Florida as part of the relocation of our principal executive offices, in addition to reimbursement of his expenses associated
with his relocation.
J. Stephen Holmes
On
June 6, 2019, J. Stephen Holmes, our non-employee Sales Manager and one of our founders and a significant shareholder (after
giving effect to unexercised Preferred Options, as defined below), was advanced $325,000 in cash. On July 18, 2019, Mr. Holmes
repaid the advance by returning 558,132 shares of common stock to the Company at a fair value of $0.58 per share. We classified
these shares as treasury stock, which were retired in Fiscal 2020. In addition, we incurred $750,000 in professional fees for services
provided by Mr. Holmes in each of Fiscal 2020 and Fiscal 2019.
Preferred Options
On
January 3, 2020, effective January 1, 2020, we entered into an asset purchase agreement with Shiftable HR Acquisition, LLC,
part of Vensure Employer Services, Inc. (the “Vensure Asset Sale”). Upon the consummation of the Vensure Asset Sale,
the holders of our options to acquire our preferred stock (the “Preferred Options”) obtained the right to exercise
each Preferred Option to purchase one share of our preferred stock for $0.0001 per share. Each share of preferred stock is
convertible into common stock on a one-for-one basis. As of the date of this Amendment, there are outstanding Preferred Options
exercisable to purchase up to 11,840,070 shares of preferred stock which are convertible into an equal number of shares
of common stock. Scott W. Absher, our Chief Executive Officer and director, exercised all of his 12,500,000 Preferred Options on
June 4, 2020. Mr. Holmes owns 11,790,000 Preferred Options which are outstanding as of the date of this Amendment. The Preferred
Options held by Mr. Holmes became exercisable to purchase preferred stock upon the occurrence of the Vensure Asset Sale. Additionally,
at some point in the future we intend to adopt a second grant of options granting an additional 12,500,000 Preferred Options to
each of Messrs. Absher and Holmes whereby each option will permit the holder to acquire one share of our preferred stock for $0.0001
per share.
Related Persons to Scott Absher
Mark Absher, the brother of Scott Absher,
was previously employed as our Registered In-House Counsel, Director and Secretary. Mr. Absher resigned from his positions with
the Company on February 6, 2019 and received compensation of $276,951 in Fiscal 2019.
David May, a member of our business development team, is the
son-in-law of Scott Absher. Mr. May received compensation, including sales commissions, of approximately $132,000 and $107,728
in Fiscal 2020 and Fiscal 2019, respectively. Mr. May’s compensation package for Fiscal 2021 is $125,000 in salary plus commissions
earned. In addition, in connection with his relocation to Miami, Florida, as part of the relocation of our principal executive
offices, Mr. May received a one-time incentive payment of approximately $80,000 during the first quarter of Fiscal 2021, in addition
to reimbursement for expenses associated with his relocation.
Phil Eastvold, the Executive Producer of
ShiftPixy Labs, is the son-in-law of Scott Absher. Mr. Eastvold was hired on September 1, 2020 and therefore did not receive any
compensation in Fiscal 2020 or Fiscal 2019. Mr. Eastvold’s salary for Fiscal 2021 is $200,000. In addition, in connection
with his relocation to Miami, Florida as part of the relocation of our principal executive offices, Mr. Eastvold received a one-time
incentive payment of approximately $88,000 during the first quarter of Fiscal 2021, in addition to reimbursement for expenses associated
with his relocation.
Connie Absher, (the spouse of Scott Absher),
Elizabeth Eastvold, (the daughter of Scott Absher and spouse of Mr. Eastvold), and Hannah Absher, (the daughter of Scott Absher),
are also employed by the Company. Andrew Absher, the nephew of Scott Absher and the son of Mark Absher, was employed by the Company
through May 29, 2019. These individuals, as a group, received aggregate compensation of $182,500 and $185,744 in Fiscal 2020 and
Fiscal 2019, respectively. In addition, in connection with her relocation to Miami, Florida as part of the relocation of our principal
executive offices, Hannah Absher received a one-time incentive payment of approximately $18,000 during the first quarter of Fiscal
2021, in addition to reimbursement for expenses associated with her relocation.
Director Independence
Our board of directors has determined that three of our board
members, Kenneth Weaver, Whitney White, and Christopher Sebes, qualify as “independent” as the term is used in Item
7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(15) of the
NASDAQ Marketplace Rules.