Related Parties

6 Months Ended

Feb. 29, 2024

Related Parties

Related Parties

Note 9: Related Parties

Management and Directors Compensation

Scott Absher – Chief Executive Officer and Chairman of the Board

The Company paid an aggregate amount of $0.1 million and $0.2 million of gross compensation for the three and six months ended February 29, 2024, respectively. The Company paid an aggregate amount of $0.03 million and $0.2 million of gross compensation for the three and six months ended February 28, 2023, respectively. Such compensation is reported under salaries, taxes and benefits in the condensed consolidated statements of operations. Scott Absher does not have any compensation for his position of Chairman of the Board.

The Company has accrued unpaid compensation for an aggregate amount of $0.6 million and $0.4 million as of February 29, 2024, and August 31, 2023, respectively. The unpaid compensation is presented under payroll related liabilities as of February 29, 2024, and August 31, 2023

During the fiscal year 2023, the Company granted its Chief Executive Officer a conditional right to receive 4,744,234 shares of the Company’s preferred stock Series A. Such a grant was also approved by the shareholders. The Chief Executive Officer exercised the option agreement on October 17, 2023, and converted 4,744,234 shares of preferred stock Series A to an equivalent number of shares of common stock. Upon the conversion of the preferred stock Series A to common stock, the Company recorded a preferential dividend on the preferred Series A of $67.4 million. This was based on the incremental value of the stock that was held prior to the reverse split and the date of preferred stock conversion to common stock.

Amanda Murphy - Former Chief Operating Officer and a former Director

The Company paid an aggregate amount of $0.07 million and $0.13 million of gross compensation for the three and six months ended February 29, 2024, respectively. Such compensation is reported under salaries, taxes and benefits in the condensed consolidated statements of operations. The Company paid an aggregate amount of $0.07 million and $0.13 million of gross compensation for the three and six months ended February 28, 2023, respectively. Amanda Murphy does not collect any compensation for her position as a director of the board. The Company has accrued her salary and paid time off as of February 29, 2024, and August 31, 2023, which was $0.5 million. Refer to note 12 subsequent events for further disclosure.

Other Directors

Pursuant to executed agreements, each director is entitled to a monthly cash retainer and $75,000 worth of the Company’s common stock each year. During the three and six months ended February 29, 2024, the Company incurred $0.1 million and $0.2 million of fees, respectively. Accrued monthly retainers were $0.3 million and $0.2 million as of February 29, 2024, and August 31, 2023, respectively, and is reported in accounts payable and other accrued liabilities.

The Company accrued directors’ fees related to shares of common stock to be issued for services provided to three of the Company’s directors. The Company incurred $0.04 million and $0.08 million of expenses related to the fair value of the shares to be issued to the directors in the three and six months ended February 29, 2024. The balance owed was $0.8 million as of February 29, 2024, and August 31, 2023, and is reported in accounts payable and other accrued liabilities.

No shares of common stock have been issued as of February 29, 2024, and August 31, 2023, respectively. As of February 29, 2024, and August 31, 2023, there are 21,137 and 1,208 shares of common stock to be issued to directors, respectively. The Chair of the Audit Committee resigned in July 2023, and was replaced in January 2024.

Related Persons to Scott Absher

Mark Absher, the brother of Scott Absher, was hired by the Company as Deputy General Counsel – Special Projects, but Mark Absher resigned from his position with the Company on October 5, 2023. Mark Absher’s salary for the three and six months ended February 29, 2024, was $0.00 million and $0.07 million, respectively. Mark Absher’s salary for the three and six months ended February 28, 2023, was $0.06 million and $0.12 million, respectively.

David May, a member of our business development team, is the son-in-law of Mr. Absher. Mr. May’s salary was for the three and six months ended February 29, 2024, $0.04 million and $0.07 million, respectively. Mr. May’s salary was for the three and six months ended February 29, 2024, $0.04 million and $0.08 million, respectively.

Phil Eastvold, the Executive Producer of ShiftPixy Productions, Inc., is the son-in-law of Mr. Absher. Mr. Eastvold salary for the three and six months ended February 29, 2024, was $0.05 million and $0.1 million. Mr. Eastvold salary for the three and six months ended February 29, 2024, was $0.06 million and $0.1 million,

Jason Absher, a member of the Company’s business development team, is the nephew of Scott Absher and the son of Mark Absher. Mr. Absher’s salary was for the three and six months ended February 29, 2024, $0.03 million and $0.06 million, respectively. Mr. Absher’s salary was for the three and six months ended February 29, 2024, $0.03 million and $0.06 million, respectively.

Connie Absher, (the spouse of Scott Absher), Elizabeth Eastvold, (the daughter of Scott and Connie Absher and spouse of Mr. Eastvold), and Hannah Woods, (the daughter of Scott and Connie Absher), are also employed by the Company. These individuals, as a group, salaries were for the three and six months ended February 29, 2024, $0.04 million and $0.08 million, respectively. These individuals, as a group, salaries were for the three and six months ended February 23, 2023, $0.04 million and $0.09 million, respectively.

Quelliv, Inc (Scott Absher is the co-founder, acting Chief Financial Officer)

Scott Absher, the Company’s Chief Executive Officer, is a founding shareholder and Chief Financial Officer in Quelliv, Inc. (“Quelliv”). Quelliv seeks to provide a non-invasive, alternative approach to wellness using laser biomodulation / LLLT, activating the body’s restorative and regenerative processes. 

The Company functions as a payroll administrative service only (“ASO”) service provider providing payroll and related employment tax processing, human resources and employment compliance, employment related insurance and employment administrative services. The Company earns a three percent (3%) administrative fee for processing the payroll on behalf of Quelliv.

The Company billed an aggregate amount of approximately $10,000 and $4,000 of administrative fees for the three and six months ended February 29, 2024, respectively. As of February 29, 2024, and August 31, 2023, the Company has a gross receivable balance of approximately $0.4 million and $0.2 million, respectively, for the payroll processed by the Company but not funded by Quelliv. The balance has been fully reserved as of February 29, 2024. The Company recognized $0.2 million of allowance for credit losses in the three and six months ended February 29, 2024.