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ShiftPixy’s Woes Mount After Default Notices

Irvine-based ShiftPixy Inc., (Nasdaq: PIXY), a tech-based scheduling agency that helps restaurant workers get part-time work, said it is defaulting on its convertible notes and is seeking renegotiation of the instruments.

The company told the Securities and Exchange Commission that the amounts due under last year’s June and December notes and this year’s March notes are approximately $6.8 million, according to a filing dated June 12. The company reported $1.8 million in cash as of Feb. 28.

Trouble has long been brewing for ShiftPixy. Since shares of ShiftPixy went public in 2017 at $6 a share, they have steadily fallen to about 50 cents each. That is about 90% off its 52-week high of $5.37 reached a year ago.

The latest slide can be traced to late April when five shareholders that participated in company offerings of notes and warrants registered to sell most of their holdings. In the subsequent months, the shares haven’t climbed above $1.

ShiftPixy told the SEC that “the conversions demanded and subsequent sales of the company’s common stock by the 2018 holders and 2019 holders has put extraordinary pressure on the company’s stock price.” That in turn led to the “deficiency notices” from the Nasdaq staff, the ShiftPixy filing said.

“The company is pursuing a renegotiation and amendment” of the instruments, ShiftPixy told the SEC, while adding that “there are no assurances that the negotiations will be successful.”

The firm (Nasdaq: PIXY) said that on June 6 it received the two letters from Nasdaq’s Listing Qualification Department because its stock was below the minimum $1 for 30 consecutive business days. The Nasdaq also requires a company to have a minimum $35 million market cap, which is twice its current $18 million cap.

The notice doesn’t have an immediate effect. ShiftPixy can stay on the trading platform if in the next six months its price tops $1 and the market cap is above $35 million for at least 10 consecutive business days.

ShiftPixy is designed to help employers reduce turnover by coordinating their need for employees with the shifts of workers. The company focuses on the restaurant and hospitality industries, which account for about half the workers in the U.S part-time labor market.

ShiftPixy hires the workers itself and manages the many compliance needs. The workers, or “shifters,” are able to more easily move among flexible shifts.

The number of restaurant employees using the site increased from 3,110 a year ago to 9,660. Co-founder and Chief Executive Scott Absher said on an April conference call with investors that it’s on track to hit 50,000 worksite employees by the end of the year.

In April, it reported sales climbed 67% to $13.2 million from the same period a year earlier and it narrowed its loss to $338,531, or 1 cents a share, from $2.7 million, or 9 cents a year earlier.

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Kevin Costelloe
Kevin Costelloe
Tech reporter at Orange County Business Journal
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