UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
(Amendment
No. ______ )
Filed
by the Registrant x
Filed
by a Party other than the Registrant ¨
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the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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SHIFTPIXY, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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ShiftPixy,
Inc.
1
Venture, Suite 150
Irvine,
CA 92618
Notice of Annual Meeting of Stockholders
To be held April 10, 2020
To the holders of common stock of ShiftPixy, Inc.:
Notice is hereby given that the annual
meeting of stockholders of ShiftPixy, Inc., a Wyoming corporation, will be held at the Company’s principal executive office,
1 Venture, Suite 150, Irvine, CA 92618, on Friday April 10, 2020, at 9:00 a.m. local time, for the following purposes:
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(1)
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To elect five directors to serve until the next annual meeting of stockholders and until their successors have been elected and qualified;
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(2)
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To ratify the selection of Marcum LLP as the independent registered public accounting firm for the fiscal year ending August 31, 2020;
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(3)
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To conduct such other business as may properly come before the meeting or any adjournments or postponements thereof.
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These items of business are more fully described in
the proxy statement accompanying this notice.
Only stockholders of record as of the close
of business on February 3, 2020, will be entitled to notice of and to vote at the annual meeting of stockholders or any adjournment
or postponement thereof.
Important Notice Regarding
the Availability of Proxy Materials for the Shareholder
Meeting to be Held on April
3, 2020
The Proxy Statement and our 2020
Annual Report are available
at http://xbrlfinancialwidget.com/?CIKNum=0001675634.
Your vote is important. Whether or not you plan to attend
the meeting in person, you are urged to vote as promptly as possible by the Internet. If you request a printed copy of the proxy
materials, you may complete and mail the proxy you will receive in response to your request, or you may vote by the Internet. If
you attend the meeting and wish to change your vote, you may do so by voting in person at the meeting.
TABLE OF CONTENTS
ShiftPixy, Inc.
1 Venture, Suite 150
Irvine, CA 92618
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
APRIL 10, 2020
PROXY STATEMENT
Unless the context indicates otherwise,
all references in this proxy statement to “we,” “us,” “our” and “the Company” refer
to ShiftPixy, Inc. and its subsidiaries.
INFORMATION ABOUT THE ANNUAL MEETING
This proxy statement, which is first being
mailed to stockholders on or about February 18, 2020, is furnished in connection with the solicitation of proxies by and on behalf
of our board of directors for use at the annual meeting of stockholders to be held at the Company’s principal executive office,
1 Venture, Suite 150, Irvine, CA 92618, on April 10, 2020, at 9:00 a.m. local time, and at any or all adjournments or postponements
thereof. To receive directions to the annual meeting, please call (949) 207-7184. The address of our principal executive offices
is 1 Venture, Suite 150, Irvine, CA 92618, and our telephone number is (949) 207-7184.
Stockholders of record can vote on the Internet,
by mail or by attending the annual meeting and voting by ballot as described below. On or about February 18, 2020, we will mail
a Notice of Internet Availability of Proxy Materials to our stockholders advising them that they can access this proxy statement,
the 2020 Annual Report and voting instructions over the Internet at http://xbrlfinancialwidget.com/?CIKNum=0001675634. You
may then access these materials and vote your shares over the Internet. Please keep the notice for your reference through the meeting
date.
Alternatively, you may request that a printed
copy of the proxy materials be mailed to you for this meeting. If you want to receive a paper copy of the proxy materials, you
may request one by calling the Company’s transfer agent, VStock Transfer, LLC, toll-free at 1-855-987-8625, or by sending
an email to vote@vstocktransfer.com with “Proxy Materials Order” in the subject line and in the body of the message
include your full name, address, company name, and request. There is no charge to you for requesting a copy. Please make your request
for a copy on or before February 24, 2020, to facilitate timely delivery. If you request a paper copy of the proxy materials, you
may vote by mail by completing and returning the proxy card you will receive in response to your request, or you may vote by the
Internet.
We encourage you to vote your shares through
our Internet voting option. You can vote on the Internet by following the instructions in the notice that was mailed to you. Easy-to-follow
prompts allow you to vote your shares and confirm that your instructions have been properly recorded. The Internet voting procedures
are designed to authenticate stockholders by use of a control number and to allow you to confirm that your instructions have been
properly recorded. Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59
p.m. EST on April 9, 2020. If you vote on the Internet, you do not need to return your proxy card.
Please note: If you are a beneficial
owner of shares held in the name of a bank, broker or other holder, please refer to the Notice of Internet Availability of Proxy
Materials that was mailed to you by your bank, broker or other holder of record to see which voting options are available to you
and for instructions on how to vote your shares and how to request a printed copy of the proxy materials.
If you request a paper copy of the proxy
materials and choose to vote by mail, please complete, sign, date and promptly return the accompanying proxy card in the enclosed
addressed envelope that will be provided to you in response to your request, even if you plan to attend the annual meeting. Postage
need not be affixed to the envelope if mailed within the United States. The immediate return of your proxy card will be of great
assistance in preparing for the annual meeting and is, therefore, urgently requested. If you attend the annual meeting and vote
in person, your proxy card will not be used.
If you plan to attend the annual meeting,
we would appreciate it if you would notify our Secretary by telephone at 949-245-7306 or by e-mail at kirk.flagg@shiftpixy.com.
This will assist us with meeting preparations. We note that our offices are small, and seating is very limited. You also can obtain
directions to the meeting by calling this number. Please bring the Notice of Internet Availability of Proxy Materials with you
for admission to the meeting.
Any person giving a proxy pursuant to this
proxy statement may revoke it at any time before it is exercised at the annual meeting of stockholders by notifying, in writing,
our Secretary at the address above prior to the annual meeting date. In addition, if the person executing the proxy is present
at the annual meeting, he or she may, but need not, revoke the proxy by notice of such revocation to our Secretary at the annual
meeting, and vote his or her shares in person. Proxies in the form provided, if duly signed or authenticated electronically and
received in time for voting, and not so revoked, will be voted at the annual meeting in accordance with the instructions specified
thereon. Where no choice is specified, proxies will be voted “FOR” the election of the nominees for director named
in the proxy statement; “FOR” the resolution approving the Company’s compensation of its named executive officers;
“FOR” the ratification of the selection of Marcum LLP as our independent registered public accounting firm; and, on
any other matters presented for a vote, in accordance with the judgment of the persons acting under the proxies.
Only stockholders of record at the close
of business on February 3, 2020, will be entitled to notice of and to vote at the annual meeting and any adjournments or postponements
thereof. Each share of our common stock issued and outstanding on such record date is entitled to one vote. As of December 31,
2019, we had 931,828 shares of common stock outstanding.
The presence at the annual meeting of the
holders of a majority of the shares of our common stock issued and outstanding and entitled to vote as of the record date is necessary
to constitute a quorum. Stockholders will be counted as present at the annual meeting if they are present in person at the annual
meeting or if they have properly submitted a proxy card. In accordance with the bylaws of the Company, each director shall be elected
by a plurality of the votes cast with respect to that director at the annual meeting. We note that the number of nominees
is equal to the number of directors to be elected for purposes of this election. The proposals regarding the advisory
vote to approve the Company’s executive compensation and the ratification of Marcum LLP as our independent registered public
accounting firm require the affirmative vote of the holders of a majority of the shares entitled to vote on, and that vote for
or against or expressly abstain with respect to, the proposals.
Any abstaining votes and broker “non-votes”
will be counted as present and entitled to vote, and therefore will be included for purposes of determining whether a quorum is
present at the annual meeting. For the election of directors, abstentions and broker “non-votes” will not be deemed
to be “votes cast.” For each other proposal, abstentions will be treated as “votes cast,” but broker “non-votes”
will not be deemed to be “votes cast.” As a result, broker “non-votes” will not be included in the tabulation
of the voting results on the election of directors and the other proposals presented in this proxy statement, and therefore will
not have any effect on such votes. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner
does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and
has not received voting instructions from the beneficial owner. Abstentions will not be included in the tabulation of the voting
results on the election of directors, and therefore will not have any effect on such vote but will have the same effect as a vote
against the proposals regarding the advisory vote on executive compensation and the ratification of Marcum LLP as our independent
registered public accounting firm.
The Dodd-Frank Wall Street Reform and Consumer
Protection Act, referred to in this proxy statement as the Dodd-Frank Act, directed national securities exchanges to prohibit broker
discretionary voting of uninstructed shares held in “street name” (through a broker or nominee) for the election of
directors, executive compensation and certain other matters. Under current stock exchange rules, broker discretionary voting is
not permitted for the election of directors and executive compensation matters. Therefore, if you hold shares through
a broker or other nominee and you do not give your broker or nominee specific instructions, including regarding the election of
directors and the advisory votes on our executive compensation and the frequency of future advisory votes on our executive compensation,
your shares may not be voted on those matters and will not be counted in determining the number of shares necessary for approval .
We will bear the entire cost of the proxy
solicitation, including preparation, assembly, printing and mailing of this proxy statement, the proxy card and any additional
materials furnished to stockholders. Individual stockholders of record will receive copies of the proxy solicitation materials
even if they share the same mailing address. Copies of proxy solicitation materials will be furnished to brokerage houses, fiduciaries
and custodians holding shares in their names that are beneficially owned by others to forward to such beneficial owners. In addition,
we may reimburse such persons for their cost of forwarding the solicitation materials to such beneficial owners. Solicitation of
proxies by mail may be supplemented by one or more of telephone, e-mail, facsimile or personal solicitation by our directors, officers
or regular employees. No additional compensation will be paid for such services. We have not engaged, and do not plan to engage,
the services of a professional proxy solicitation firm to aid in the solicitation of proxies from certain brokers, bank nominees
and other institutional owners. Our costs for such services, if any, will not be material.
Voting results will be announced by the
filing of a Current Report on Form 8-K within four business days after the annual meeting. If final voting results are unavailable
at that time, we will file an amended Current Report on Form 8-K within four business days of the day the final results are available.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information
as of January 1, 2020, with respect to ownership of our outstanding common stock by (i) all persons known to us to beneficially
own more than 5% of our outstanding common stock, (ii) each of our directors and nominees for director, (iii) each of our
named executive officers, and (iv) all directors and executive officers as a group.
Name of Beneficial Owner
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Shares
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Options
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Number of
Shares
Beneficially
owned (1)
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Percent of
Shares
Outstanding
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Scott W. Absher
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312,500
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1,250
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313,750
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(2)
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28.4
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%
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J. Stephen Holmes
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294,750
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1,250
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296,000
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(3)
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25.6
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%
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Kenneth W. Weaver
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5,062
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5,062
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(4)
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*
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%
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Whitney J. White
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1,498
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1,498
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(5)
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*
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%
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Sean C. Higgins
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1,498
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1,498
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*
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%
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Domonic J. Carney
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0
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0
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*
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%
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All directors and executive officers as a group (six persons)
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615,308
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2,500
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617,808
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(6)
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55.0
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%
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Total shares outstanding
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1,103,593
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* Less than 1% of outstanding shares.
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(1)
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“Beneficial ownership”
includes shares for which an individual, directly or indirectly, has or shares voting or investment power, or both, and also includes
options that are exercisable within 60 days of January 1, 2020. Unless otherwise indicated, all of the listed persons have sole
voting and investment power over the shares listed opposite their names. Beneficial ownership as reported in the above table has
been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, referred to in this proxy
statement as the Exchange Act. Pursuant to the rules of the Securities and Exchange Commission, referred to in this proxy statement
as the SEC, certain shares of our common stock that a beneficial owner has the right to acquire within 60 days pursuant to the
exercise of stock options are deemed to be outstanding for the purpose of computing the percentage ownership of such owner, but
are not deemed outstanding for the purpose of computing the percentage ownership of any other person. Applicable percentages are
based on 931,828 shares of the Company’s common stock outstanding on February 3, 2020, adjusted as required by rules promulgated
by the SEC.
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(2)
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Includes 1,250 shares which Mr. Absher
has the right to acquire within 60 days of January 1, 2020, upon exercise of outstanding stock options, issued pursuant to the
Company’s 2017 Stock Option and Stock Issuance Plan.
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(3)
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Includes 1,250 shares which Mr. Holmes
has the right to acquire within 60 days of January 1, 2020, upon exercise of outstanding stock options, issued pursuant to the
Company’s 2017 Stock Option and Stock Issuance Plan. Mr. Holmes is an independent contractor and not an employee, officer
or director of the Company.
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(4)
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Excludes approximately $75,000 worth of
shares that will be, but have not yet been, awarded to Mr. Weaver in calendar year 2020, pursuant to the terms of his Director
Agreement.
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(5)
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Excludes approximately $75,000 worth of
shares that will be, but have not yet been, awarded to Mr. White in calendar year 2020, pursuant to the terms of his Director Agreement
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(6)
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Includes 2,500 shares that all current executive officers and directors in the aggregate have the right to acquire within 60 days of January 1, 2020, upon exercise of outstanding options, and excludes shares awards for current fiscal year to be awarded to the three independent directors.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Pursuant to our bylaws, and resolutions
adopted by our board of directors, our board of directors has set the number of directors for the ensuing year at five, all of
whom are proposed to be elected at the annual meeting of stockholders. Because the board of directors has named only five nominees
in this proxy statement, proxies cannot be voted for greater than five director candidates at the 2020 annual meeting.
In the event any nominee is unable or declines
to serve as a director at the time of the annual meeting, the persons named as proxies therein will have discretionary authority
to vote the proxies for the election of such person or persons as may be nominated in substitution by the present board of directors,
upon the recommendation of the nominating committee of the board of directors. Management knows of no current circumstances that
would render any nominee named herein unable to accept nomination for election.
In accordance with the bylaws of the
Company, each director shall be elected by a plurality of the votes cast with respect to that director at the annual meeting. We
note that the number of nominees is equal to the number of directors to be elected for purposes of this election.
Members of our board of directors are elected
annually to serve until the next annual meeting and until their successors are elected and qualified. The following persons have
been nominated for election to our board of directors:
Scott W. Absher, age 59, joined ShiftPixy
as Chief Executive Officer (CEO), Chief Financial Officer (CFO), Director and Founder upon formation in June 2015. Since February
2010, he has also been President of Struxurety, a business insurance advisory company. As a founder and member of the board, Mr.
Absher contributes significant industry-specific experience, providing guidance and direction with regard to all aspects of our
business, service offering, markets, corporate strategy, responding to emerging industry trends, and business operations. He has
held several high-level business development, sales and marketing and management positions with various companies, building and
launching a number of successful product lines and businesses focused on B2B products and services. Mr. Absher has been a significant
player is the staffing and employment services sector since 1994. He built and trained many national sales organizations and independent
agent forces to deliver predictable growth in the business service industry. Mr. Absher has also advised venture and investment
banking firms in technology and business service-related ventures in matters of capital formation, liquidity, and growth strategy.
In addition, he has been actively involved in many early stage fundraising, business strategy and development efforts of startup
ventures throughout his career. He is a graduate of The Moody Bible Institute of Chicago.
Kenneth W. Weaver, age 65, became
ShiftPixy’s first independent director on December 5, 2016. Mr. Weaver’s substantial financial background qualifies
him as an audit committee financial expert under applicable rules. Mr. Weaver serves as the chairman and independent director of
the Audit Committee, and he also serves on the Compensation Committee and Nominations Committee as an independent director. Since
April 2012 to date, Mr. Weaver has been the sole proprietor of Ken Weaver Consulting, providing operations consulting for TVV Capital,
a Nashville private equity firm. Before his service with TVV, Mr. Weaver spent over 30 years with Bridgestone Corporation, having
served in various responsible leadership roles, including as President, Bridgestone North American Tire Commercial Sales, Chief
Financial Officer, Bridgestone Americas and Chairman, CEO and President, Firestone Diversified Products. Mr. Weaver earned both
his bachelor’s degree in business and his Master of Business Administration degree from Pennsylvania State University.
Whitney J. White, age 43, became
one of our independent directors on September 28, 2017. From April 2017 to date, Mr. White has been Chief Operating Officer &
Chief Technology Officer of Prime Trust, LLC, a Nevada chartered trust company. Before his service with Prime Trust, Mr. White
spent 17 years with W.R. Hambrecht + Co., LLC., an investment banking, advisory and brokerage firm that was the Underwriter of
the Company’s recently completed Regulation A offering, having served in various executive roles, including Chief Technology
Officer and more recently as Managing Director, Equity Capital Markets. Mr. White earned a bachelor’s degree in computer
science & psychology from Hamilton College, a Master of Business Administration degree in finance and accounting from Columbia
University’s Graduate School of Business, and a Master of Business Administration degree in technology and entrepreneurship
from the University of California Berkeley’s Hass School of Business. Mr. White holds a Series 79 license as an Investment
Banking Representative, a Series 24 license as a General Securities Principal, and a Series 7 license as a General Securities Representative.
As a member of the board, Mr. White contributes the benefits of decades of leadership and management experience building and advising
early stage, technology-driven companies. Based on his investment banking experience, Mr. White brings to the board the benefits
of corporate finance and governance expertise. As an experienced senior technologist, Mr. White brings to ShiftPixy years of experience
applying technology to enhance traditional business processes. Mr. White has served as chairman of the Compensation Committee and
the Nominations Committee, and he also serves on the Audit Committee as an independent director.
Christopher Sebes, age
65, has been appointed to stand for election to fill one of the vacancies on our Board. Mr. Sebes will be an independent director.
Mr. Sebes brings to the Board innovative thought leadership and extensive knowledge of restaurant industry technology both in the
United States and abroad. Since month August 2019, Mr. Sebes has been a partner and member of the board of directors of Results
Thru Strategy, Inc., a strategic advisory firm specializing on restaurants, hotels, and technology companies serving those industries.
Since September 2019, he has also served as a member of the board of advisors of Valyant AI which has developed a proprietary conversational
AI platform that integrates with existing mobile, web, call ahead, kiosk and drive through platforms. From November 2014 to July
2019, Mr. Sebes served as the President of Xenial, Inc., a cloud-based restaurant and retail management platform. From August 2004
to July 2014, he served as the CEO of XPIENT Solutions, a full-service, global provider of solutions for food ordering, digital
menus, drive-thru management, kitchen management, inventory, labor and scheduling analytics. Mr. Sebes received his degree in Hotel
and Restaurant Management from the University of Portsmouth (Hampshire, United Kingdom) in 1975.
Amanda Murphy, age 36, has been appointed
to stand for election to fill one of the vacancies on our board. Ms. Murphy brings to our Board a wealth of experience in human
resources and staffing. Since January 2016, Ms. Murphy has served as the Company’s Director of Operations and has been vital
to the Company’s success and growth. Ms. Murphy has been active as in the operations side of the staffing industry at a senior
level since 2007. Ms. Murphy received her degree in HR Management from California State University – Long Beach in 2007.
Ms. Murphy Also studied law at Taylor University in Selango, Malaysia.
Legal Matters
None of our directors (a) are named in
any material proceedings to which any director is a party adverse our Company or any of its subsidiaries or (b) have a material
interest adverse to our Company or any of its subsidiaries. In addition, except for their individual director agreements, there
have been no transactions since the beginning of our Company’s last fiscal year, or any currently proposed transaction, in
which our Company was or is to be a participant and the amount involved exceeds $120,000, and in which any director had or will
have a direct or indirect material interest.
Vote Required
Directors will be elected by a plurality
of the votes cast by the holders of the Company’s common stock voting in person or by proxy at the annual meeting. Abstentions
and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will have
no effect on the vote for election of directors.
The board of directors recommends a
vote “FOR” each of the five nominees to our board of directors.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee has appointed Marcum
LLP as our Company’s independent registered public accounting firm to audit the consolidated financial statements of our
Company for the fiscal year ending August 31, 2019. Marcum was retained by us on December 15, 2017, as announced in our Form 8-K,
filed on December 21, 2017. Marcum LLP was the Company’s Independent Registered Public Accounting Firm and audited the consolidated
financial statements of our Company for the fiscal year ending August 31, 2019 as noted in the Form 10-K filed with the SEC on
December 13, 2019.
A representative of Marcum LLP is expected
to attend the annual meeting by phone and will be available to make a statement, if so desired, or to respond to questions.
Principal Accountant Fees and Services
The following table shows the fees paid or reasonably
expected to be incurred by us for the audit and other services provided by our auditor for fiscal years ended August 31, 2019 and
2018.
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2019
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2018
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Audit Fees (Marcum LLP)
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$
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275,000
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$
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259,000
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Audit-Related Fees. This category consists
of assurance and related services that are reasonably related to the performance of the audit or review of our financial statements
and are not reported under “Audit Fees.” The services for the fees under this category primarily consultation concerning
financial accounting and reporting standards that are not part of the performance of the audit or review of our financial statements.
Tax Fees. This category consists of professional
services rendered primarily in connection with our tax compliance activities, including consultation on tax matters, tax advice
relating to transactions and other tax planning and advice.
All Other Fees. This category includes
fees for services provided that are not included in the other fee categories reported above.
Policy on Audit Committee Pre-Approval of Services of Independent
Auditors
Our audit committee has established policies
and procedures regarding pre-approval of all services provided by our independent auditor. Our audit committee will annually review
and pre-approve the services that may be provided by our independent auditor without obtaining specific pre-approval from the audit
committee. Unless a type of service has received general pre-approval, it requires specific pre-approval by our audit committee
if it is to be provided by our independent auditor.
Ratification of the Independent Registered Public Accounting
Firm
Although stockholder ratification is not
required by our bylaws or otherwise, the appointment of Marcum LLP as our Company’s independent registered public accounting
firm to audit the consolidated financial statements for the fiscal year ending August 31, 2020, is being submitted to our stockholders
for ratification because we believe it is a matter of good corporate governance. In the event our stockholders do not ratify the
appointment of Marcum LLP as the independent registered public accounting firm for the fiscal year ending August 31, 2020, the
adverse vote will be considered as a recommendation to the audit committee to select other auditors for the following fiscal year.
However, due to the difficulty in making any substitution of auditors after the beginning of the fiscal year, it is contemplated
that the appointment of Marcum LLP for the fiscal year ending August 31, 2020, will be permitted to stand unless the audit committee
finds other good reason for making a change. The audit committee may terminate Marcum LLP’s engagement as our company’s
independent registered public accounting firm without the approval of our stockholders if it deems termination appropriate and
in our best interest and the best interests of our stockholders.
Vote Required
The affirmative vote of a majority of
the votes cast at the meeting at which a quorum representing a majority of all outstanding shares of the Company’s common
stock is present and voting, either in person or by proxy, is required for the ratification of the Company’s independent
registered public accounting firm.
The board of directors recommends
a vote “FOR” the ratification of Marcum LLP as our independent registered public accounting firm for the fiscal year
ending August 31, 2020.
PROPOSAL NO. 3
SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING
We do not know of any other matters to be
voted on at the meeting. If, however, other matters are properly presented for a vote at the meeting, the persons named as proxies
will vote your properly submitted proxy according to their judgment on those matters.
CORPORATE GOVERNANCE AND BOARD MATTERS
Meetings of the Board of Directors
During our last fiscal year, our Company
was a public company, and our board of directors held four meetings, including one executive session. Each incumbent director attended
100% of the aggregate number of meetings held by the board of directors and by the committees of the board of directors on which
such director served, except that during the executive session, only the independent directors attended the meeting.
It is the policy of our board of directors
that all directors should attend the annual meeting of stockholders unless unavoidably prevented from doing so by unforeseen circumstances.
Board Independence
Our board of directors currently consists
of five members. Our board of directors has determined that Kenneth W. Weaver, Whitney J. White and Sean C. Higgins are “independent”
as defined by the listing standards of NASDAQ. Our independent directors meet separately at least twice each year.
Board Leadership Structure
Mr. Scott W. Absher serves as Chief Executive
Officer and as the Chairman of the Board. The board of directors does not have a policy that prohibits the Chief Executive Officer
from serving as the chairman of the board because it desires the flexibility to determine in the future that one person should
hold both positions if such leadership structure would be in our best interests and the best interests of our stockholders. We
believe this arrangement is appropriate at the present time due our early stage of development and Mr. Absher’s unique knowledge
of our history and goals, which will complement both the officer and director positions.
The Board’s Role in Risk Oversight
The audit committee reviews and discusses
with management our processes and policies with respect to risk assessment and risk management. In addition, our risk oversight
process involves the board receiving information from management on a variety of matters, including operations, legal, regulatory,
finance, reputation and strategy, as well as information regarding any material risks associated with each matter. The full board
(or the appropriate board committee, if the board committee is responsible for the oversight of the matter) receives this information
through updates from the appropriate members of management to enable it to understand and monitor the Company’s risk management
practices. When a board committee receives an update, the chairperson of the relevant board committee reports on the discussion
to the full board during the next board meeting. This enables the board and the board committees to coordinate the risk oversight
role.
Stockholder Communications with the Board of Directors
Our board of directors has implemented a
process for stockholders to send communications to our board of directors. Any stockholder desiring to communicate with our board
of directors, or with specific individual directors, may do so by writing to our Secretary at 1 Venture, Suite 150, Irvine, CA
92618. Our Secretary has been instructed by our board of directors to promptly forward all such communications to our board of
directors or such individual directors. Proposals regarding matters to be addressed in the Company’s proxy statement must
comply with the applicable requirements of Rule 14A-8 of the Exchange Act regarding the inclusion of stockholder proposals
in company-sponsored proxy materials and other applicable laws.
Committees of the Board of Directors
Our board of directors presently has three
standing committees: audit committee, compensation committee, and nominating committee. Each of these committees is described below.
Audit Committee
Our audit committee assists our board of
directors in overseeing our accounting and financial reporting process and audits for our financial statements. It is directly
responsible for the appointment, compensation, retention and oversight of the work of our independent registered public accounting
firm. Our audit committee reviews the auditing accountant’s audit of our financial statements and its report thereon, management’s
report on our system of internal controls over financial reporting, various other accounting and auditing matters and the independence
of the auditing accountants. The committee reviews and pre-approves all audit and non-audit services performed by our auditing
accountants, or other accounting firms, other than as may be allowed by applicable law. Our audit committee has established procedures
for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters,
and the confidential, anonymous submission by employees of concerns regarding questionable accounting and auditing matters. Our
audit committee meets with management to review any issues related to matters within the scope of the audit committee’s duties.
The committee operates pursuant to a written charter adopted by our board of directors, which may be found on our website at www.shiftpixy.com.
Our audit committee presently consists of
Kenneth W. Weaver, Chairman, and Whitney J. White and Sean C. Higgins, each of whom is “independent,” as such term
is defined by the NASDAQ listing standards and Rule 10A-3 of the Exchange Act. In addition, the board has determined that each
audit committee member is able to read and understand fundamental financial statements and, other than strictly in his capacity
as a member of our board of directors or a committee of our board of directors, has not participated in preparing our financial
statements in any of the past three years. Our board of directors has determined that Kenneth W. Weaver is an “audit committee
financial expert,” as defined by the rules of the SEC. Our audit committee held six meetings during the last fiscal year.
Compensation Committee
Our compensation committee presently consists
of Kenneth W. Weaver, Whitney J. White, Chairman, and Sean C. Higgins, each of whom the board of directors has determined to be
“independent” as defined by the NASDAQ listing standards. In addition, all compensation committee members are “outside
directors” within the meaning of Section 162(m) of the Code, and also “non-employee directors” within the meaning
of Rule 16b-3 under the Exchange Act. Our compensation committee assists our board of directors with respect to our compensation
programs and compensation of our executive officers and is authorized to administer our equity and non-equity incentive plans.
Our compensation committee operates pursuant to a written charter adopted by our board of directors, which may be found on our
website at www.shiftpixy.com. Our compensation committee held four meetings during the last fiscal year.
Nominating Committee
Our nominating committee presently consists
of our current independent board members, Kenneth W. Weaver, Whitney J. White, Chairman, and Sean C. Higgins. Our nominating committee
operates pursuant to a written charter adopted by our board of directors, which may be found on our website at www.shiftpixy.com.
Nominees for election to our board of directors are considered and recommended by our nominating committee. Our full board of directors
considers the recommendations of the nominating committee and recommends the nominees to our stockholders. Our nominating committee’s
process for identifying and evaluating potential nominees includes soliciting recommendations from our directors and officers and
considering nominations from our stockholders. Absent special circumstances, our nominating committee will continue to nominate
qualified incumbent directors whom the nominating committee believes will continue to make important contributions to our board
of directors. While there are no minimum qualifications for nomination, our nominating committee generally requires that nominees
be persons of sound ethical character, be able to represent all stockholders fairly, have no material conflicts of interest, have
demonstrated professional achievement, have meaningful experience and have a general appreciation of the major issues facing us.
In addition, the board of directors believes that it, as a whole, should possess a combination of skills, professional experience
and diversity of backgrounds necessary to oversee our business. In seeking a diversity of background, the nominating committee
seeks a variety of occupational and personal backgrounds in order to obtain a range of viewpoints and perspectives. Accordingly,
the nominating committee considers the qualifications of directors and director candidates individually and in the broader context
of the board’s overall composition and our current and future needs. In evaluating nominees, and considering incumbent directors
for nomination, the nominating committee has considered all of the criteria described above and believes that all of the five director
nominees listed above are highly qualified and have the skills and experience required for service on our board of directors. The
biographies above contain specific information regarding the experiences, qualifications and skills of each of our director nominees.
Stockholder Nominations
Our nominating committee will consider persons
recommended by our stockholders in selecting nominees for election. Our nominating committee does not have a formal policy with
regard to the consideration of any director candidates recommended by stockholders because it believes that it can adequately evaluate
any such nominee on a case-by-case basis. However, our nominating committee would consider for possible nomination qualified nominees
recommended by stockholders. Stockholders who wish to propose a qualified nominee for consideration should submit complete information
as to the identity and qualifications of that person to our Secretary at 1 Venture, Suite 150, Irvine, CA 92618.
Compensation Committee Interlocks and Insider Participation
None of the members of our compensation
committee is or has been one of our officers or employees or has had any related party relationship that is required to be disclosed
in this proxy statement. In addition, none of our executive officers served on the board of directors or compensation committee
of any entity that has one or more executive officers who serve on our board of directors or compensation committee.
Code of Conduct
We have adopted a Code of Conduct that applies
to all employees, including executive officers and directors. A copy of our code was filed as Exhibit 6.14 to our Regulation A
Offering Statement on Form 1A/A filed on October 18, 2016. In the event that we make any amendments to, or grant any waiver from,
a provision of the code that requires disclosure under applicable SEC or NASDAQ rules, we will disclose such amendment or waiver
and the reasons for such amendment or waiver as required.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires
our directors, executive officers and persons who own more than 10% of our outstanding common stock to file with the SEC reports
of changes in ownership of our common stock held by such persons. The directors, executive officers and persons who own more than
10% of our outstanding common stock are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. SEC regulations require us to identify in our Annual Report on Form 10-K anyone who failed to file, on a timely basis,
reports that were due during the most recent fiscal year or, in certain cases, prior years. To the Company’s knowledge, based
solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were
required, all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were
complied with during fiscal year 2019.
Director Compensation Table
The following table provides certain information
concerning compensation for each director during the fiscal year ended August 31, 2019.
Name 1
|
|
Fees
Earned or
Paid in
Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($) 2
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
Kenneth W. Weaver
|
|
$
|
91,000
|
|
|
$
|
75,000
|
(3)
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
166,000
|
|
Whitney J. White
|
|
$
|
90,500
|
|
|
$
|
37,500
|
(4)
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
128,000
|
|
Sean C. Higgins
|
|
$
|
79,000
|
|
|
$
|
37,500
|
(5)
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
122,500
|
|
(1)
|
Directors, Scott W. Absher, our CEO, is not included in this table, because he receives no separate compensation as directors of the Company.
|
|
|
(2)
|
The following are the aggregate number of option awards outstanding held by each of the directors as of August 31, 2019: Mr. Scott Absher - 50,000; Mr. Weaver – 0; Mr. White – 0; Mr. Higgins – 0. The awards to Mr. Scott Absher were received in connection with his status as employee of the Company.
|
|
|
(3)
|
Pursuant to the terms of Mr Weaver’s Director Agreement, we issued two tranches of stock for fiscal 2019 valued at $37,500 each and consisting of 48,077 shares on May 15, 2019 at $0.78 per share and 79,788 shares issued on August 19, 2019 at $$0.47 per share.
|
|
|
(4)
|
Reflects the award, pursuant to the terms of Mr. White’s Director Agreement, of 16,448 shares issued on April 16, 2019 valued at $37,500 or $2.28 per share.
|
|
|
(5)
|
Reflects the award, pursuant to the terms of Mr. Higgins’s Director Agreement, of 16,448 shares issued on April 16, 2019 valued at $37,500 or $2.28 per share.
|
The compensation of the Directors and Executive Officers is
subject to future adjustments, as determined by the Compensation Committee pursuant to the terms of its charter.
Discussion of Director Compensation
Pursuant to the terms of our Director Agreements
for our independent directors, each non-employee director receives a $5,000 monthly retainer, plus a monthly retainer of $2,000
for committee participation, and the chairman of our Audit Committee receives an additional monthly retainer of $500, the chairman
of our Compensation Committee receives an additional monthly retainer of $250, and the chairman of our Nominations Committee also
receives an additional monthly retainer of $250. Independent directors also receive a stock award having a value of approximately
$75,000 at the Company’s Annual Meeting of Shareholders pursuant to ShiftPixy, Inc. Stock Option and Stock Issuance Grant
Policy (Effective as of September 28, 2017). Directors who are also our employees do not receive separate compensation for their
services as a director. Mr. Scott Absher was not paid any compensation as director for the year ended August 31, 2019, and we have
no agreement to pay Mr. Scott Absher any separate compensation for acting as a director. Non-Director Compensation to Mr. Scott
Absher is set forth in the “Summary Compensation Table for Fiscal Years 2019 and 2018” on page [ ], below. The compensation
of the Directors and Executive Officers is subject to future adjustments, as determined by the Compensation Committee pursuant
to the terms of its charter.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Compensation Philosophy
Our compensation philosophy endeavors to
align the interests of our executive officers with those of our stockholders and induce our executive officers to remain in our
employ. We believe that this is best accomplished by the following:
|
·
|
paying executives a base salary commensurate with their backgrounds, industry knowledge, special skill sets and responsibilities; and
|
|
·
|
making periodic grants of restricted stock and/or stock options.
|
Our overall goal is to ensure that our executive
compensation program and policies are consistent with our strategic business objectives and that we provide incentives for the
attainment of those objectives. We strive to accomplish this goal in the context of a compensation program that includes annual
base salary, annual cash incentives and stock ownership.
Role of Compensation Committee
Our compensation committee retains broad
flexibility in the administration of our executive compensation program. We believe this flexibility is critical to retaining key
executives.
Our compensation committee operates under
a written charter adopted by our board of directors. Our compensation committee has several duties and responsibilities, including
the following:
|
·
|
reviewing and approving corporate goals and objectives with respect to Chief Executive Officer compensation;
|
|
|
|
|
·
|
making recommendations to our board with respect to the compensation of our Chief Executive Officer and our other executive officers;
|
|
|
|
|
·
|
overseeing evaluations of our senior executives;
|
|
|
|
|
·
|
reviewing and assessing the independence of compensation advisers;
|
|
|
|
|
·
|
overseeing and administering our equity incentive plans;
|
|
|
|
|
·
|
reviewing and making recommendations to our board with respect to director compensation;
|
|
|
|
|
·
|
reviewing and discussing with management our “Compensation Discussion and Analysis” disclosure; and
|
|
|
|
|
·
|
preparing the compensation committee reports required by SEC rules.
|
For additional information on the duties
and responsibilities of our compensation committee, see our compensation committee charter available on our website at www.shiftpixy.com.
Compensation Process
Our compensation committee reviews and administers
our compensation program for each of our “named executive officers.” Our named executive officers for fiscal year 2019
consisted of our Chief Executive Officer, Mr. Scott W. Absher, and our Chief Financial Officer. For the period from September 1,
2018 through July 30, 2019 Mr. Patrice Launay served as our Chief Financial Officer. On July 30, 2019, Mr. Launay tendered his
resignation from the company, taking effect July 30, 2019. Mr. Domonic Carney was named our Chief Financial Officer as of August
1, 2019, and his service has continued to the date of this Proxy Statement.
Total Compensation and Elements of Compensation
Our principal focus is on total compensation.
Although we do informally review what other companies within our industry or other companies of comparable size, growth, performance
and complexity are offering to their executives, we believe the appropriate level of compensation is determined through careful
consideration of the individual employee and our business goals. We consider a variety of factors in determining the total compensation
for our named executive officers, including their backgrounds, industry knowledge, special skill sets and responsibilities.
Our executive compensation program primarily
consists of base salary and long-term incentives in the form of restricted stock and/or stock options. We also provide our named
executive officers with minimal perquisites and personal benefits. In addition, we provide our named executive officers with the
ability to contribute a portion of their earnings to our 401(k) plan. Our 401(k) plan is available generally to all of our employees.
Base Salary
We offer what we believe to be competitive
base salaries to our named executive officers. The base salary must be sufficient to attract talented executives and provide a
secure base of cash compensation. Due to the relatively small size of our industry and the limited number of public competitors,
we have not yet engaged in any formal compensation benchmarking studies; however, our base salary levels for our named executive
officers are generally believed to be competitive in relation to salary levels of executive officers in other companies within
our industry or other companies of comparable size, growth, performance and complexity, while also taking into consideration the
executive officer’s position, responsibility and special expertise, and we have retained a compensation consulting firm to
assist us in review and development of compensation of our executive officers.
Long-Term Incentive Compensation
Our compensation objective of inducing executives
to remain in our employ as well as aligning their interests with those of our stockholders leads us to make periodic equity awards.
These awards provide incentives for our named executive officers to remain with us over the long term and gives the compensation
committee additional flexibility to reward superior performance by our named executive officers. We believe that dependence on
equity for a significant portion of a named executive officer’s compensation more closely aligns such executive’s interests
with those of our stockholders, since the ultimate value of such compensation is linked directly to our stock price.
We utilize a single equity incentive plan
for our long-term incentive compensation, the ShiftPixy, Inc. 2017 Stock Option and Stock Issuance Plan. One of the goals of the
issuance of stock options under the Plan is to incentivize efforts to increase the Company’s stock price over the long-term.
Under the named executive officer’s
employment agreement, the named executive was granted stock options in accordance with our Company’s Stock Option Grant Policy,
which awards stock options to employees, based on their salary level, on the first of the month following 60 days of employment.
Unless the Plan Administrator otherwise provides, each option is immediately exercisable, but the shares subject to such option
will vest over a period of time as follows: 25% vest after a 12-month service period following the award, and the balance vest
in equal monthly installments over the next 36 months of service.
The compensation committee does not have
any current plans to make additional specific grants of stock options or restricted stock to our named executive officers, except
as is consistent with our Stock Option Grant Policy. However, the compensation committee may in the future grant additional equity
awards to our named executives as part of our strategy of providing meaningful long-term performance-based incentives for our management
team in order to more closely align management’s interest with the interests of our stockholders, and, although not part
of the Stock Option Grant Policy, it is anticipated that the compensation committee will recommend that awards be made to employees
(including executive officers) each year on the anniversary of their initial grant in amounts comparable to their initial grants.
Perquisites and Personal Benefits
Our named executive officers receive additional
compensation consistent with our philosophy of hiring and retaining key personnel. Such perquisites include executive health and
dental insurance.
Equity Ownership Guidelines
We have an ownership philosophy, rather
than a formal policy, regarding equity ownership by our named executive officers. The objectives of our philosophy are to instill
an ownership mindset among our senior management and to align the interests of our named executive officers with the interests
of our stockholders. The long-term incentive compensation arrangement discussed above is intended to align the beneficial ownership
interests of our named executive officers with our compensation committee’s ownership level expectations.
Accounting for Stock-Based Compensation
Stock-based compensation expense is computed
in accordance with accounting rules that are a part of GAAP as set forth in Financial Accounting Standards Board’s Accounting
Standards Codification Topic 718. The expense related to equity compensation has been and will continue to be a material consideration
in our overall compensation program.
Risk Considerations in our Compensation Program
The compensation committee is responsible
for reviewing and overseeing the compensation and other benefits structure applicable to our employees generally. We do not believe
that our compensation policies and practices for our employees give rise to risks that are reasonably likely to have a material
adverse effect on our company. In reaching this conclusion, we considered the following factors:
|
·
|
Our compensation program is designed to provide a combination of both fixed (salary) and variable (stock options) incentive compensation.
|
|
·
|
The variable portions of compensation
are designed to reward longer term performance. We believe this lessens any incentive for short-term risk taking that could be
detrimental to our company’s long-term best interests.
|
Summary Compensation Table for Fiscal Years 2019 and 2018
The table below summarizes all compensation
awarded to, earned by, or paid to our named executive officers, which consists of our Principal Executive Officer and our Principal
Financial Officer for the years ended August 31, 2019 and August 31, 2018:
Name
|
|
Title
|
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
awards
|
|
|
Option
awards
|
|
|
Non-equity
incentive
plan
compensation
|
|
|
All
other
compensation
|
|
|
Total
compensation
|
|
Scott W. Absher
|
|
CEO
|
|
2019
|
|
$
|
750,000
|
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
750,000
|
|
|
|
CEO
|
|
2018
|
|
$
|
750,000
|
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domonic J. Carney
|
|
CFO
|
|
2019
|
|
$
|
12,115
|
(2)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
12,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrice H. Launay
|
|
CFO
|
|
2019
|
|
$
|
285,558
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
50,875
|
(4,6)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
336,433
|
|
|
|
CFO
|
|
2018
|
|
$
|
180,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
50,875
|
(4,6)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
230,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen P. DeSantis
|
|
CFO
|
|
2018
|
|
$
|
62,826
|
(5)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
62,826
|
|
(1)
|
Mr. Absher’s annual salary was increased to $750,000 per year, beginning in December of 2016 and continuing through August 31, 2019.
|
|
|
(2)
|
Mr. Carney joined ShiftPixy on August 4,
2019 at an annual salary of $350,000.
|
(3)
|
Awarded a salary of $240,000 per year, initiated in January 24, 2018 and increased to $350,000 per year on February 1, 2019. Mr. Launay resigned on July 30, 2019.
|
|
|
(4)
|
Awarded as an employee under the ShiftPixy, Inc. 2017 Stock Option / Stock Issuance Plan. 1,250 options were issued at an exercise price of $51.20 per share on April 1, 2019; 1,250 options were issued at an exercise price of $118.00 per share on February 1, 2018; and 157 were issued at an exercise price of $100.00 per share on May 10, 2018, estimated to have been the fair market value price per share at the time of the award.
|
|
|
(5)
|
Reflects a salary of $250,000 per year.
Mr. Stephen DeSantis tendered his resignation as Chief Financial Officer of ShiftPixy, Inc., which took effect on October 20, 2017.
|
(6)
|
The amount shown for option awards represent the grant date fair value of such awards granted to the Named Executive Officers as computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation-Stock Compensation. For each award, the grant date fair value is calculated using the closing price of our common stock on the grant date. This amount does not correspond to the actual value that may be realized by the Named Executive Officers upon vesting or exercise of such award.
|
Our named executive officers are entitled
to all benefits generally made available to our employees, including the eligibility to participate in our 401(k) plan. Our 401(k)
plan is intended to be a tax-qualified defined contribution plan under Section 401(k) of the Internal Revenue Code of 1986, as
amended, referred to in this proxy statement as the Code. In general, all of our employees who are at least 21 years of age are
eligible to participate in our 401(k) plan immediately upon hire. Our 401(k) plan includes a salary deferral arrangement pursuant
to which the participants may contribute up to the maximum amount permitted by the Code. We may make both matching and additional
contributions, subject to certain Code limitations, at the discretion of our board of directors; however, we do not anticipate
making any matching contributions. A separate account is maintained for each participant in our 401(k) plan. The portion of a participant’s
account attributable to his or her own contributions is 100% vested. Distributions from our 401(k) plan may be made in the form
of a lump sum cash payment or, for required minimum distribution, in installment payments.
Grants of Plan-Based Awards during Fiscal Year 2019
The following table sets forth information
with respect to grants of plan-based awards in fiscal 2019, including cash awards and equity awards.
Name
|
|
Grant
Date
|
|
Estimated
future
payouts
under
non-equity
incentive
plan
|
|
|
Estimate
future
payouts
under
equity
incentive
awards
|
|
|
All other
stock
awards:
Number of
shares of
stock or
units
(#)
|
|
|
All other
option
awards:
Number of
shares of
stock or
units
(#)
|
|
|
Exercise
of
base price
of
option
awards
($/Share)
|
|
|
Grant date
fair value
of stock
option
awards
(1)
|
|
Patrice Launay
|
|
April 1, 2019
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
|
1,250
|
|
|
$
|
51.20
|
|
|
$
|
12.00
|
|
(1)
|
The weighted average fair value of stock option awards for the executive officers at grant date, using the assumptions noted below, is $0.90 per share.
|
The Company granted options to purchase
an aggregate total of 36,073 shares of common stock during the year ended August 31, 2019, of which 1,250 shares were granted to
executive officers.
The weighted average estimated fair value
of all stock options granted in FY 2019 was $43.86 per share at grant date. Such fair values were estimated using the Black-Scholes
stock option pricing model and the following weighted average assumptions.
|
|
2019
|
|
Expected life
|
|
4.0 years
|
|
Estimated volatility
|
|
119
|
%
|
Risk-free interest rate
|
|
1.70% - 2.90
|
%
|
Dividends
|
|
|
-
|
|
Stock option activity during the year
ended August 31, 2019, is summarized as follows:
|
|
Options
Outstanding
|
|
|
Weighted
Average
Exercise
Price
|
|
Options outstanding at August 31, 2018
|
|
|
33,719
|
|
|
$
|
138.00
|
|
Exercised
|
|
|
-
|
|
|
$
|
-
|
|
Granted
|
|
|
36,073
|
|
|
|
63.60
|
|
Forfeited
|
|
|
19,043
|
)
|
|
$
|
111.20
|
|
Expired
|
|
|
|
|
|
|
|
|
Options outstanding at August 31, 2019
|
|
|
50,749
|
|
|
$
|
95.2
|
|
Options vested and exercisable at August 31, 2019
|
|
|
10,291
|
|
|
$
|
152.80
|
|
Stock Plans
Stock Option / Stock Issuance Plan. In March
2017, the Company adopted the 2017 Stock Option / Stock Issuance Plan (the “Plan”). The Plan provides incentives to
eligible employees, officers, directors and consultants in the form of incentive stock options, non-qualified stock options and
stock. The Company has reserved a total of 250,000 shares of common stock for issuance under the Plan. Of these shares, as of August
31, 2019, approximately 82,500 options and 7,500 shares have been designated by the Board of Directors for issuance and approximately
32,500 of the options have been forfeited and returned to the option pool under the Plan as a consequence of employment terminations.
Unless the Plan Administrator otherwise provides, each option is immediately exercisable, but the shares subject to such option
will vest over a period of time as follows: 25% vest after a 12-month service period following the award, and the balance vest
in equal monthly installments over the next 36 months of service. Accordingly, no persons awarded options has vested ownership
of shares underlying the options for at least 60 days from the date of this Report. The issuance of shares under the Plan vest
according to terms established for such issuance by the Plan Administrator.
Outstanding Equity Awards at 2018 Fiscal Year-End
Stock Options
The following table provide certain information
concerning the outstanding equity awards for each named executive officer as of August 31, 2019:
OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR-END AUGUST 31, 2019
|
|
Number of
Securities
Underlying
Unexercised
Options
(#) Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units
of
Stock
that
have
not
Vested
(#)
|
|
|
Market
Value
of
Shares
or
Units
of
Stock
that
have
not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
that
have
not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value of
Unearned
Shares, Units
or
Other
Rights
that
Have
not
Vested
($)
|
|
Scott Absher, CEO
|
|
|
1,250
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
160.0
|
|
|
3/15/2027
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Stock Plans
Stock Option / Stock Issuance Plan. In March
2017, the Company adopted the 2017 Stock Option / Stock Issuance Plan (the “Plan”). The Plan provides incentives to
eligible employees, officers, directors and consultants in the form of incentive stock options, non-qualified stock options and
stock. The Company has reserved a total of 10,000,000 shares of common stock for issuance under the Plan. Of these shares, as of
August 31, 2018, approximately 1,868,745 options and 177,224 shares have been designated by the Board of Directors for issuance
and approximately 520,000 of the options have been forfeited and returned to the option pool under the Plan as a consequence of
employment terminations. Unless the Plan Administrator otherwise provides, each option is immediately exercisable, but the shares
subject to such option will vest over a period of time as follows: 25% vest after a 12-month service period following the award,
and the balance vest in equal monthly installments over the next 36 months of service. Accordingly, no persons awarded options
has vested ownership of shares underlying the options for at least 60 days from the date of this Report. The issuance of shares
under the Plan vest according to terms established for such issuance by the Plan Administrator.
Outstanding Equity Awards at 2019 Fiscal Year-End
Stock Options
The following table provide certain information
concerning the outstanding equity awards for each named executive officer as of August 31, 2019:
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END AUGUST 31, 2019
|
|
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expir-
ation
Date
|
|
Number
of
Shares
or
Units
of
Stock that
have
not
Vested
(#)
|
|
|
Market
Value
of
Shares
or
Units
of
Stock
that
have
not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
that
have
not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value of
Unearned
Shares,
Units
or
Other
Rights that
Have
not
Vested
($)
|
|
Scott Absher,
CEO
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
4.0
|
|
|
3/15/2027
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrice Launay,
CFO
|
|
|
56,250
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.50-$2.95
|
|
|
2/1/2028 to 5/10/2028
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Preferred Stock
In September 2016, the Company issued
options to purchase preferred stock at $0.0001 per share. The number of options is equal to the lesser of (a) the number of shares
of common stock held by such Shareholder on September 28, 2016, or (b) the number of shares of common stock held by such Shareholder
on date of the Shareholder’s exercise of the aforesaid Option. Preferred Stockholders can elect a majority of the directors
on the board of directors of the Company, but the preferred stock does not include any rights to dividends, or preference upon
liquidation of the Company. The Option is exercisable only upon the acquisition of a 20% or greater voting interest in the Company
by a party other than the founding shareholders, or prior to any proposed merger, consolidation (in which the Company common
stock is changed or exchanged) or sale of at least 50% of the Company’s assets or earning power (other than a reincorporation).
The right to exercise the Option terminates on December 31, 2023.
OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR-END AUGUST 31, 2019
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(1)(2)
|
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
|
|
|
Equity
Incentive
Plan
Awards:
Number
Of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
($)
|
|
Scott W. Absher
|
|
|
12,500,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.0001
|
|
|
December 31, 2023
|
|
|
0
|
|
|
$
|
0.00(
|
1)
|
|
|
0
|
|
|
|
0
|
|
(1)
|
Amended and restated option granted effective prior to end of fiscal year 2016 provided an option for voting rights, was totally illiquid and was not convertible into common stock of the Company. Accordingly, the option was recorded in this table as having zero fair market value.
|
Option Exercises and Stock Vested during Fiscal Year 2019
There were no option exercises or stock
awards vested for any named executive officer during the fiscal year ended August 31, 2019:
Change in Control Agreements
None.
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS
AND CERTAIN CONTROL PERSONS
In accordance with our audit committee
charter, our audit committee is responsible for reviewing and approving, or rejecting, any transactions with “related persons”
as defined by SEC rules and any potential conflicts of interest between us and any third party. The audit committee reviews and
considers such transactions on a case-by-case basis in light of all facts and circumstances and does not use any prescribed criteria
for approving or rejecting any proposed transaction or relationship.
For the fiscal year ended August 31, 2019,
there were no transactions with related persons required to be disclosed in this proxy statement, except as noted below.
Scott W. Absher. We made an oral
agreement with Mr. Absher, our CEO, director and principal shareholder, effective May 1, 2016, to pay Mr. Absher $31,250 per month,
payable biweekly. This agreement was in effect for Mr. Absher until March 2017, at which time Mr. Absher’s salary was increased
to $750,000 per year.
J. Stephen Holmes. In December 2016, we entered
into a Business Consulting Agreement with Mr. J. Stephen Holmes, a principal shareholder, whereunder he agreed to develop sales
channels and sales networks for ShiftPixy, Inc., and to provide consulting regarding sales, sales training, sales materials, sales
processes, Affordable Care Act compliance and worker’s compensation insurance coverage. For his compensation under the agreement,
Mr. Holmes is to receive $12,000 per month, and in addition thereto, an override equal to 20% of the Administrative Fees, in excess
of $720,000, charged to and collected from clients and specifically denominated as such (and then annualized), and such override
shall be payable monthly. Provided, however, that, except as otherwise agreed by the parties, at no time shall Mr. Holmes’
total compensation payable under the Agreement either (a) exceed an amount equal to the salary paid to ShiftPixy’s CEO, or
(b) be less than $40,000 per month. Mr. Holmes’ sales activities under the agreement have caused his compensation to attain
the level of $720,000 for the fiscal year ended August 31, 2019. Prior to December of 2016, Mr. Holmes was an employee of the Company
and paid a salary. For fiscal year ending August 31, 2019, and through the period ending January 8, 2020, Mr. Holmes has been paid
the sum of $1,110,000 under the agreement.
Our officers are entitled to all benefits
generally made available to our employees, including the eligibility to participate in our medical and dental benefits plans and
our 401(k) plan. Features of our 401(k) plan are detailed above in the section entitled “Summary Compensation Table for Fiscal
Years 2019 and 2018.”
AUDIT COMMITTEE REPORT
In accordance with the written charter
adopted by our board of directors, a copy of which is available on our website, the audit committee assists the board of directors
in fulfilling its responsibility for oversight of the quality and integrity of our accounting, auditing and financial reporting
practices. During the fiscal year ended August 31, 2019, the audit committee met three times and discussed internal control, accounting,
auditing and our financial reporting practices with our Chief Financial Officer and our independent auditors and accountants, Marcum
LLP. In discharging its oversight responsibility as to the audit process, each member of our audit committee has reviewed our audited
financial statements as of and for the fiscal year ended August 31, 2019, and the audit committee members conducted various conferences
with management and Marcum LLP to discuss the audited financial statements prior to filing our annual report on Form 10-K. Our
audit committee also met with Marcum LLP to discuss the matters required to be discussed by Auditing Standard No. 16, Communications
with Audit Committees, issued by the Public Company Accounting Oversight Board, prior to filing our annual report on Form 10-K.
In addition, the audit committee has received
from Marcum LLP the written disclosures and the letter required by the applicable requirements of the Public Company Accounting
Oversight Board regarding Marcum LLP’s communications with the audit committee concerning independence and has discussed
with Marcum LLP its independence in connection with its audit of our financial statements for the fiscal year ended August 31,
2019. Since we did not use any non-audit services of Marcum LLP during the fiscal year ended August 31, 2019, our audit committee
was not required to consider whether Marcum LLP’s provision of non-audit services to us would be compatible with maintaining
such firm’s independence with respect to us or whether the provision of certain non-audit services would be consistent with
and compatible with Marcum LLP’s maintaining its independence.
Kenneth W. Weaver, Chairman
COMPENSATION COMMITTEE REPORT
The compensation committee has reviewed
and discussed the Compensation Discussion and Analysis section of this proxy statement with management. Based upon such review
and discussion, the compensation committee recommended to our board of directors that the Compensation Discussion and Analysis
be included in this proxy statement.
Whitney J. White, Chairman (since September 28, 2017)
ANNUAL REPORT ON FORM 10-K
Our Annual Report on Form 10-K for the fiscal
year ended August 31, 2019, filed with the SEC on December 13, 2019, is available to stockholders who make a written request for
such report to our Secretary at our offices, 1 Venture, Suite 150, Irvine, CA 92618. Copies of exhibits filed with that report
or referenced therein will be furnished to stockholders of record upon request and payment of our expenses in furnishing such documents.
Our Annual Report on Form 10-K (including exhibits thereto) and this proxy statement are also available by the following link on
our website at www.shiftpixy.com under the “SEC Filings” section, which is under the “Financial Information”
section, which is in the “Investor Information” section.
STOCKHOLDER PROPOSALS
A stockholder’s proposal for matters
to be addressed at the 2020 Annual Meeting shall be timely if the same was delivered to the Secretary at our offices, 1 Venture,
Suite 150, Irvine, CA 92618, not later than the close of business on November 1, 2019.
To be considered for inclusion in next year’s
proxy materials, your proposal must be submitted in writing by September 25, 2020, to our Secretary at our offices, 1 Venture,
Suite 150, Irvine, CA 92618. In order for a stockholder to present a proposal at the annual meeting, other than proposals to be
included in the proxy statement as described above, or to nominate a director, you must give timely notice thereof in writing to
the Secretary. The proposal must be received at the Company’s principal executive offices not less than 120 calendar days
before the date of the Company’s proxy statement released to shareholders in connection with the previous year’s annual
meeting. However, if the company did not hold an annual meeting the previous year, or if the date of this year’s annual meeting
has been changed by more than 30 days from the date of the previous year’s meeting, then the deadline is a reasonable time
before the company begins to print and mail its proxy materials.
OTHER MATTERS
Management does not know of any matter to
be brought before the meeting other than those referred to above. If any other matter properly comes before the meeting, the persons
designated as proxies will vote on each such matter in accordance with their best judgment.
VStock Transfer, LLC
18 Lafayette Place
Woodmere, New York 11598
* SPECIMEN *
1 MAIN STREET
ANYWHERE PA 99999-9999
ShiftPixy, Inc.
1 Venture
Suite 150
Irvine, California 92618
Important Notice Regarding the Availability
of Proxy Materials for the
2019 Annual Meeting to be Held April
10, 2020
This communication presents only an overview of the more complete
proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information
contained in the proxy materials before voting.
If you would like to receive a paper or e-mail copy of these
documents, you must request one. There is no charge for such documents to be mailed to you. Please make your request for a copy
as instructed below on or before March 19, 2020, to facilitate a timely delivery.
ACCESSING YOUR PROXY MATERIALS ONLINE
The following Proxy Materials are available to you to review
at: http://xbrlfinancialwidget.com/?CIKNum=0001675634:
|
·
|
The Company’s 2020 Proxy Statement (including all attachments thereto)
|
|
·
|
The Company’s 2019 Annual Report
|
|
·
|
Proxy Card
|
ONLINE VOTING
To vote your proxy electronically, please
go to www.vstocktransfer.com/proxy.
You must reference your
12-digit control number listed below.
REQUESTING A PAPER COPY OF THE PROXY
MATERIALS
Have this notice available when you request
a paper copy of the proxy materials:
By telephone please call (toll free) 1-855-987-8625,
or
By email at: vote@vstocktransfer.com
Please include the company name and your
account number in the subject line.
Control # ______________________
|
|
VOTE ON INTERNET
|
|
|
|
|
|
Go to http://www.vstocktransfer.com/proxy and log-on using the below control number. Voting will be open until 11:59 pm (ET) on April 9, 2020.
|
|
|
|
|
|
CONTROL #: ________________________
|
|
|
|
* SPECIMEN *
|
|
|
1 MAIN STREET
|
|
|
ANYWHERE PA 99999-9999
|
|
|
|
|
|
|
|
VOTE BY MAIL
|
|
|
|
|
|
Mark, sign and date your proxy and return it in the envelope we have provided to 18 Lafayette Place, Woodmere, NY 11598.
|
|
|
|
|
|
VOTE IN PERSON
|
|
|
|
|
|
If you would like to vote in person, please attend the Annual Meeting to be held on April 10, 2020 at 9:00 a.m. local time.
|
Please Vote, Sign, Date and Return Promptly
in the Enclosed Envelope.
Annual Meeting of Stockholders - ShiftPixy,
Inc.
DETACH CARD HERE TO VOTE BY MAIL
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL
DIRECTOR NOMINEES, “FOR” PROPOSAL 2 AND “FOR” PROPOSAL 3.
(1)
|
Election of Directors:
|
|
¨
|
VOTE FOR ALL NOMINEES LISTED BELOW (except as marked to the contrary below)
|
|
¨
|
WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED BELOW
|
INSTRUCTION:TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE INDIVIDUAL
NOMINEES STRIKE A LINE THROUGH THE NOMINEES’ NAMES BELOW:
|
01
|
Scott W. Absher
|
02
|
Kenneth W. Weaver
|
03
|
Whitney J. Higgins
|
|
04
|
Amanda Murphy
|
05
|
Christopher Sebes
|
|
|
(2)
|
To ratify the selection of Marcum LLP as the independent registered public accounting firm for the fiscal year ending August 31, 2020.
|
|
¨
|
VOTE FOR
|
¨
|
VOTE AGAINST
|
¨
|
ABSTAIN
|
Date:
|
|
Signature:
|
|
Signature, if held jointly
|
|
|
|
|
|
__________________________
|
|
____________________________
|
|
___________________________
|
To change the address on your account, please check the box at right and indicate your new address.
|
¨
|
* SPECIMEN *
Annual Meeting of Stockholders
April 10, 2020
Important Notice Regarding the Availability
of Proxy Materials for the Annual Meeting of Stockholders To Be Held on April 10, 2020
The 2020 Annual Report, the Proxy Statement
and proxy card of ShiftPixy, Inc. are available at http://xbrlfinancialwidget.com/?CIKNum=0001675634
SHIFTPIXY, INC.
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
For the Annual Meeting
of Stockholders called for Friday, April 10, 2020
The undersigned stockholder(s) of ShiftPixy,
Inc., a Wyoming corporation, hereby appoint Scott W. Absher proxy and attorney-in-fact, with full power to each of substitution,
on behalf and in name of the undersigned, to represent the undersigned at the Annual Meeting of the Stockholders of ShiftPixy,
Inc., to be held on April 10, 2020, at 9:00 a.m. local time at the Company’s principal executive office, 1 Venture, Suite
150, Irvine, CA 92618, to vote the shares of common stock which the undersigned would be entitled to vote if then and there personally
present.
This proxy, when properly executed, will
be voted as directed. If no direction is made, the proxy shall be voted “FOR” all the director nominees, “FOR”
the advisory vote to approve executive compensation, and “FOR” the ratification of Marcum LLP as the independent registered
public accounting firm for the fiscal year ending August 31, 2020.
Please check here if you plan to attend
the Annual Meeting of Stockholders on April 10, 2020 at 9:00 a.m. local time.
(Continued and to be signed on Reverse
Side)
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