MIAMI, FL - ShiftPixy, Inc., a staffing agency operating under the industrial classification of employment agencies, has made public through an SEC filing its plans to acquire Turboscale LLC, an AI technology company. The announcement, dated Thursday, October 17, 2024, details a non-binding letter of intent (LOI) indicating ShiftPixy's intention to purchase the assets of Turboscale for a total of $150 million.
According to the filing, the payment structure for the acquisition is set to be divided equally between stock and debt, with $75 million to be paid in ShiftPixy common stock and the remaining $75 million through a debt instrument. Turboscale is recognized for its innovative work in scalable GPU cloud infrastructure and AI model deployment, which could signal ShiftPixy's strategic move towards integrating advanced technology solutions into its service offerings.
The completion of this acquisition is contingent upon the negotiation of definitive agreements and the satisfaction of customary closing conditions as will be outlined in the final agreements. The company has cautioned that there is no guarantee that the acquisition will be finalized on the terms set forth in the LOI, or at all.
In other recent news, ShiftPixy has made significant strides with the acquisition of AI technology company TurboScale for $150 million, a move set to enhance its platform with advanced AI capabilities. The company also faces potential delisting from Nasdaq due to non-compliance with the minimum publicly held shares requirement and a market value shortfall, but has been granted the opportunity to present its case at a Nasdaq Hearings Panel. In response to a potential delisting, ShiftPixy has approved a reverse stock split of its common stock, a maneuver aimed at consolidating the company's shares.
The company has also received a Letter of Reprimand from Nasdaq for a violation of shareholder approval requirements in its July 2023 Offering. In response, ShiftPixy held a special meeting where shareholders ratified the offering, avoiding delisting of the company's securities. These are recent developments.
ShiftPixy's stockholders have approved proposals to amend the company's warrant agreement and increase its authorized shares. CEO Scott Absher has been granted a conditional option to acquire over 5 million shares of Preferred Class A Stock, contingent upon the reverse stock split. The company also 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.
InvestingPro Insights
As ShiftPixy (NASDAQ:PIXY) pursues this ambitious $150 million acquisition of Turboscale LLC, recent financial data from InvestingPro paints a challenging picture for the company. ShiftPixy's market capitalization stands at a modest $3.97 million, which is significantly lower than the proposed acquisition price. This disparity raises questions about the company's ability to finance such a large purchase, especially considering that InvestingPro Tips indicate the company is "quickly burning through cash" and its "short term obligations exceed liquid assets."
The company's financial health appears precarious, with InvestingPro data showing a negative operating income margin of -195.43% for the last twelve months as of Q3 2024. This is coupled with a revenue decline of 27.85% over the same period. These figures suggest that ShiftPixy may face significant hurdles in executing and integrating such a large acquisition.
InvestingPro Tips also highlight that the stock "has taken a big hit over the last week" and "generally trades with high price volatility." This volatility is evident in the stock's performance, with a one-year price total return of -95.22% as of the latest data. Such market performance could complicate the stock-based portion of the proposed acquisition payment.
For investors seeking a more comprehensive analysis, InvestingPro offers 15 additional tips for ShiftPixy, providing deeper insights into the company's financial situation and market position.
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