ShiftPixy, Inc., a Miami-based employment agency company, has filed for Chapter 11 bankruptcy protection, according to a recent filing with the U.S. Securities and Exchange Commission. The filing, submitted on October 29, 2024, indicates that the company sought relief under Chapter 11 on Sunday, October 27, 2024, in the United States Bankruptcy Court for the Southern District of Florida.
The company, which is listed on the Nasdaq Stock Market under the ticker NASDAQ:PIXY, also disclosed the departure of three directors. Whitney White, Christopher Sebes, and Martin Scott resigned from their positions on Monday, October 27, 2024, just a day before the bankruptcy filing. The reasons for their resignations were not provided in the filing.
As a result of the bankruptcy filing, ShiftPixy, Inc. will be undergoing restructuring efforts under the guidance of Jonathan Feldman, who has been appointed as the Chief Restructuring Officer. The move to file for bankruptcy protection is a significant step for the company as it aims to reorganize its debts and business operations to become financially stable.
In other recent news, ShiftPixy, a Miami-based employment agency, has announced its intention to acquire AI technology company TurboScale for $150 million. This strategic move is set to enhance ShiftPixy's platform with advanced AI capabilities.
The payment for this acquisition will be divided equally between stock and debt. However, ShiftPixy is also grappling with potential delisting from Nasdaq due to non-compliance with the exchange's listing requirements.
ShiftPixy's stockholders have approved proposals to amend the company's warrant agreement and increase its authorized shares. The company also declared a reverse stock split aimed at consolidating the company's shares. Scott Absher, ShiftPixy's CEO, has been granted a conditional option to acquire over 5 million shares of Preferred Class A Stock, contingent upon the reverse stock split.
In addition, ShiftPixy announced a securities offering facilitated by A.G.P./Alliance Global Partners (NYSE:GLP), which could potentially raise about $2.5 million. The offering includes over 2.4 million common shares and series A and B warrants. These are the recent developments within the company.
InvestingPro Insights
ShiftPixy's recent bankruptcy filing comes amid significant financial challenges, as evidenced by real-time data from InvestingPro. The company's market capitalization has dwindled to just $3.27 million, reflecting severe investor concerns. ShiftPixy's revenue for the last twelve months as of Q3 2024 stood at $15.02 million, with a troubling revenue decline of 27.85% over the same period.
InvestingPro Tips highlight the company's precarious financial position. ShiftPixy is "quickly burning through cash," which aligns with the need for bankruptcy protection. The tip that "short-term obligations exceed liquid assets" further explains the company's decision to seek Chapter 11 protection to restructure its debts.
The stock's performance has been abysmal, with InvestingPro data showing a staggering 92.03% year-to-date price decline. This poor stock performance is consistent with the InvestingPro Tip noting that the "stock has taken a big hit over the last week" and has "fared poorly over the last month."
For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips on ShiftPixy, providing deeper insights into the company's financial health and market position during this critical restructuring period.
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