Key Developments:
Akerna completed the sales of its 365 Cannabis and Last Call Analytics business units inJanuary 2023 for combined consideration valued at approximately$2.9 million Akerna announced a proposed merger with Gryphon Digital Mining and the simultaneous proposed sale of its non-enterprise software business to POSaBIT onJanuary 27, 2023 - Gryphon, a leading net carbon neutral bitcoin miner, will be merging with
Akerna by way of an Agreement and Plan of Merger to create a leading, ESG-committed, carbon-neutral bitcoin miner, subject to certain conditions of closing including but not limited to approval of the Nasdaq and stockholder approval - POSaBIT will tentatively be acquiring
MJ Freeway , including the MJ Platform and Leaf Data System brands, and Ample Organics in the proposed sale transaction
Fourth Quarter and Full Year 2022 Financial Highlights
- Software revenue was
$2.8 million and$12.9 million , down 24% and 19%, respectively, when compared to the prior year quarter and annual periods - Total revenue was
$2.8 million and$13.6 million , down 30% and 23%, year-over-year respectively, when compared to the prior year quarter and annual periods - Gross profit of
$1.6 million and$8.2 million declined when compared to$1.9 million and$10.2 million in the quarter and annual periods of 2021, respectively, while the gross margin increased to 57% and 60% from 47% and 58%, respectively, in the same periods - Losses from operations of
$11.7 million and$55.4 million compared to a losses of$19.8 million and$33.1 million , respectively in last year’s same periods, reflecting lower overall operating expenses and less significant impairments in the current quarter of 2022 and higher depreciation, amortization and impairments in the full year 2022 - Net loss of
$25.2 million and$79.1 million compared to a loss of$17.2 million and$31.3 million in last years fourth quarter and annual period, respectively. - Adjusted EBITDA* loss was
$1.8 million and$8.9 million compared with a loss of$3.1 million and$8.3 million for the same quarterly and annual periods of 2021 - Cash and restricted cash was
$7.9 million as ofDecember 31, 2022 - The results of operations for 365 Cannabis and Last Call Analytics are presented as “discontinued operations” in our condensed consolidated statements of operations and their respective assets and liabilities are reflected as “held for sale” on our condensed consolidated balance sheets in connection with our sales of those businesses in
January 2023
*See "Explanation of Non-GAAP Financial Measures" below
The foregoing financial results are preliminary in nature. Final financial results and other disclosures will be reported in
About
Akerna (Nasdaq: KERN) is an emerging technology firm focused on innovative technology.
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Additional Information and Where to Find It
This press release may be deemed to be solicitation material with respect to the proposed transactions between
This press release is not a proxy statement or a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed transactions, and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Participants in the Solicitation
Each of
Cautionary Statements Regarding Forward-Looking Statements
This press release contains forward-looking statements based upon the current expectations of
Explanation of Non-GAAP Financial Measures
In addition to our results determined in accordance with
Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. Other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. We attempt to compensate for these limitations by providing specific information regarding the GAAP items excluded from these non-GAAP financial measures.
Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business.
Adjusted EBITDA
We believe that Adjusted EBITDA, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding our performance and allows for comparison of our performance and credit strength to our peers. Adjusted EBITDA should not be considered alternatives to net loss as determined in accordance with GAAP as indicators of our performance or liquidity.
We define EBITDA as net loss before interest expense, provision for income taxes, depreciation and amortization. We calculate Adjusted EBITDA as EBITDA further adjusted to exclude the effects of the following items for the reasons set forth below:
- Impairment of long-lived assets, because it's a non-cash, non-recurring item, which effects the comparability of results of operations and liquidity;
- Stock-based compensation expense, because this represents a non-cash charge and our mix of cash and share-based compensation may differ from other companies, which effects the comparability of results of operations and liquidity;
- Cost incurred in connection with business combinations and mergers that are required to be expensed as incurred in accordance with GAAP, because business combination and merger related costs are specific to the complexity and size of the underlying transactions as well as the frequency of our acquisition activity these costs are not reflective of our ongoing operations;
- Cost incurred in connection with non-recurring financing and related transactions, as well as fees incurred as a direct result of electing the fair value option to account for our debt instruments;
- Restructuring charges, which include severance costs to terminate employees in functions that have been eliminated, costs to terminate leases and the related non-cash write off of leasehold improvements and furniture, as we believe these costs are not representative of operating performance;
- Gain on forgiveness of PPP loan, as this is a one-time forgiveness of debt that is not recurring across all periods and we believe inclusion of the gain is not representative of operating performance;
- Equity in losses of investees because our share of the operations of investees is not representative of our own operating performance and may not be monetized for a number of years;
- Loss on sale of investment that is not recurring across all periods and we believe inclusion of the loss is not representative of operating performance; and
- Other non-operating income and expenses, net which includes items such as a one-time gain on debt extinguishment and a one-time loss on disposal of fixed assets, which effects the comparability of results of operations and liquidity.
The reconciliation of the above non-GAAP financial measure for the quarter ended
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001755953/000121390022071551/ea168506-8k_akernacorp.htm
Investor Contacts
IR@akerna.com
Condensed Consolidated Balance Sheets | |||||||
(unaudited) | |||||||
2022 | 2021 | ||||||
Assets | |||||||
Current assets | |||||||
Cash | $ | 877,755 | $ | 12,579,366 | |||
Restricted cash | 7,000,000 | 508,261 | |||||
Accounts receivable, net | 674,626 | 873,688 | |||||
Prepaid expenses & other current assets | 1,209,623 | 2,125,722 | |||||
Assets held for sale | 5,130,028 | 2,143,027 | |||||
Total current assets | 14,892,032 | 18,230,064 | |||||
Fixed assets, net | 48,879 | 66,028 | |||||
Investment, net | - | 226,101 | |||||
Capitalized software, net | 654,556 | 6,940,653 | |||||
Intangible assets, net | 2,164,722 | 6,553,683 | |||||
1,708,303 | 32,844,297 | ||||||
Noncurrent assets held for sale | - | 29,622,341 | |||||
Total assets | $ | 19,468,492 | $ | 94,483,167 | |||
Liabilities and stockholders' equity (deficit) | |||||||
Accounts Payable, accrued expenses and other current liabilities | $ | 4,426,419 | $ | 5,385,773 | |||
Contingent consideration payable | 2,283,806 | 6,300,000 | |||||
Deferred revenue | 568,771 | 871,800 | |||||
Current portion of long-term debt | 13,200,000 | 13,200,000 | |||||
Derivative liability | - | 63,178 | |||||
Liabilities held for sale | 2,246,222 | 3,349,766 | |||||
Total current liabilities | 22,725,218 | 29,170,517 | |||||
Deferred revenue, noncurrent | 161,802 | 245,903 | |||||
Long-term debt, noncurrent | 1,407,000 | 4,105,000 | |||||
Deferred income taxes | - | 675,291 | |||||
Noncurrent liabilities held for sale | - | 336,773 | |||||
Total liabilities | 24,294,020 | 34,533,484 | |||||
Stockholders' equity (deficit) | |||||||
Preferred stock | - | - | |||||
Special voting preferred stock | 2,185,391 | 2,366,038 | |||||
Common stock | 460 | 155 | |||||
Additional paid-in capital | 160,207,367 | 146,030,203 | |||||
Accumulated other comprehensive income | 347,100 | 61,523 | |||||
Accumulated deficit | (167,565,846 | ) | (88,508,236 | ) | |||
Total stockholders' equity (deficit) | (4,825,528 | ) | 59,949,683 | ||||
Total liabilities and stockholders' equity (deficit) | $ | 19,468,492 | $ | 94,483,167 |
Condensed Consolidated Statements of Operations | |||||||||||||||
(unaudited) | |||||||||||||||
For the Three Months | For the Year | ||||||||||||||
Ended | Ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Revenue | |||||||||||||||
Software | $ | 2,770,636 | $ | 3,649,846 | $ | 12,920,647 | $ | 15,984,376 | |||||||
Consulting | 63,500 | 375,380 | 682,309 | 1,510,413 | |||||||||||
Other revenue | 11,759 | 20,768 | 42,074 | 132,308 | |||||||||||
Total revenue | 2,845,895 | 4,045,994 | 13,645,030 | 17,627,097 | |||||||||||
Cost of revenue | 1,237,332 | 2,155,563 | 5,412,388 | 7,433,884 | |||||||||||
Gross profit | 1,608,563 | 1,890,431 | 8,232,642 | 10,193,213 | |||||||||||
Operating expenses | 57% | 47% | |||||||||||||
Research and development | 740,662 | 1,495,064 | 4,690,967 | 5,892,022 | |||||||||||
Sales and marketing | 1,068,189 | 2,298,913 | 6,053,172 | 7,708,265 | |||||||||||
General and administrative | 1,935,049 | 1,879,164 | 8,344,613 | 10,173,630 | |||||||||||
Depreciation and amortization | 1,146,789 | 1,654,426 | 5,622,274 | 5,174,551 | |||||||||||
Impairment of long-lived assets | 8,404,351 | 14,354,114 | 38,967,295 | 14,354,114 | |||||||||||
Total operating expenses | 13,295,040 | 21,681,681 | 63,678,321 | 43,302,582 | |||||||||||
Loss from operations | (11,686,477 | ) | (19,791,250 | ) | (55,445,679 | ) | (33,109,369 | ) | |||||||
Other income (expense) | |||||||||||||||
Interest income (expense) | (244,566 | ) | (355,708 | ) | (853,716 | ) | (1,530,703 | ) | |||||||
Change in fair value of convertible notes | (44,273 | ) | 665,000 | (2,884,273 | ) | (1,365,904 | ) | ||||||||
Change in fair value of warrant liability | 9,025 | 97,023 | 63,178 | 248,198 | |||||||||||
Gain on forgiveness of PPP Loan | - | - | - | 2,234,730 | |||||||||||
Other expense | (221,101 | ) | 186,177 | (221,101 | ) | 186,420 | |||||||||
Total other income (expense) | (500,915 | ) | 592,492 | (3,895,912 | ) | (227,259 | ) | ||||||||
Net loss from continuing operations before income taxes and equity in loss of investee | (12,187,392 | ) | (19,198,758 | ) | (59,341,591 | ) | (33,336,628 | ) | |||||||
Income tax benefit on continuing operations | 448,003 | 2,274,295 | 716,155 | 2,263,725 | |||||||||||
Equity in losses of investee | - | - | - | (7,564 | ) | ||||||||||
Net loss from continuing operation | (11,739,389 | ) | (16,924,463 | ) | (58,625,436 | ) | (31,080,467 | ) | |||||||
Loss from discontinued operations, net of tax | (13,495,293 | ) | (287,847 | ) | (20,432,174 | ) | (248,244 | ) | |||||||
Net loss | $ | (25,234,682 | ) | $ | (17,212,310 | ) | $ | (79,057,610 | ) | $ | (31,328,711 | ) | |||
Deemed dividends related to convertible redeemable preferred stock | (955,500 | ) | - | (955,500 | ) | - | |||||||||
Net loss attributable to common stockholders | $ | (26,190,182 | ) | $ | (17,212,310 | ) | $ | (80,013,110 | ) | $ | (31,328,711 | ) | |||
Basic and diluted weighted average common stock outstanding | 4,515,021 | 1,537,072 | 2,927,853 | 1,282,098 | |||||||||||
Basic and diluted loss per common share from continuing operations | $ | (2.81 | ) | $ | (11.01 | ) | $ | (20.35 | ) | $ | (24.24 | ) | |||
Basic and diluted loss per common share from discontinued operations | $ | (2.99 | ) | $ | (0.19 | ) | $ | (6.98 | ) | $ | (0.19 | ) | |||
Basic and diluted net loss per share | $ | (5.80 | ) | $ | (11.20 | ) | $ | (27.33 | ) | $ | (24.44 | ) |
Condensed Consolidated Statements of Cash Flows | |||||||
(unaudited) | |||||||
For the Year | |||||||
Ended | |||||||
2022 | 2021 | ||||||
Cash flows from operating activities | |||||||
Net loss | $ | (79,057,610 | ) | $ | (31,328,711 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Equity in losses of investment | - | 7,564 | |||||
Loss on sale of investment | 221,101 | - | |||||
Bad debt expense | 371,364 | 556,890 | |||||
Stock-based compensation expense, net | 873,929 | 2,070,359 | |||||
Loss on write-off of fixed assets | - | 1,045,179 | |||||
Gain on forgiveness of PPP Loan | - | (2,234,730 | ) | ||||
Depreciation and amortization | 7,834,712 | 5,735,150 | |||||
Amortization of deferred contract cost | 337,350 | 492,683 | |||||
Non-cash interest expense | 597,276 | 1,009,331 | |||||
Foreign currency loss (gain) | (14,553 | ) | (3,312 | ) | |||
Impairment of long-lived assets | 61,778,605 | 14,383,310 | |||||
Gain on extinguishment of debt | - | (186,177 | ) | ||||
Change in fair value of convertible notes | 2,884,273 | 1,365,904 | |||||
Change in fair value of derivative liability | (63,178 | ) | (248,198 | ) | |||
Contingent consideration adjustment | (4,016,194 | ) | - | ||||
Change in operating assets and liabilities: | (2,647,804 | ) | (833,146 | ) | |||
Net cash used in operating activities | (10,900,729 | ) | (8,167,904 | ) | |||
Cash flows from investing activities | |||||||
Developed software additions | (4,345,260 | ) | (5,427,230 | ) | |||
Fixed asset additions | (31,884 | ) | (39,263 | ) | |||
Cash returned from business combination working capital settlement | 400,000 | (5,018,592 | ) | ||||
Proceeds from sale of investments | 5,000 | - | |||||
Net cash used in investing activities | (3,972,144 | ) | (10,485,085 | ) | |||
Cash flows from financing activities | |||||||
Value of shares withheld related to tax withholdings | (9,926 | ) | (520,395 | ) | |||
Proceeds from unit and pre-funded unit offering, net | 9,178,961 | - | |||||
Proceeds received from the ATM offering program, net | 1,854,565 | 1,828,119 | |||||
Proceeds from the issuance of convertible notes | - | 18,000,000 | |||||
Principal payments of convertible notes | (1,432,273 | ) | (4,571,472 | ) | |||
Proceeds from issuance of convertible redeemable preferred stock, net | 4,294,500 | - | |||||
Redemption of convertible redeemable preferred stock | (5,250,000 | ) | - | ||||
Net cash provided by financing activities | 8,635,827 | 14,736,252 | |||||
Effect of exchange rate changes on cash and restricted cash | (22,225 | ) | 18,623 | ||||
Net change in cash and restricted cash | (6,259,271 | ) | (3,898,114 | ) | |||
Cash and restricted cash - beginning of period | 14,442,526 | 18,340,640 | |||||
Cash and restricted cash - end of period | $ | 8,183,255 | $ | 14,442,526 |
Condensed Consolidated Statements of EBITDA and Adjusted EBITDA | |||||||||||||||
(unaudited) | |||||||||||||||
For the Three Months | For the Year | ||||||||||||||
Ended | Ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Net loss | $ | (25,234,682 | ) | $ | (17,212,310 | ) | $ | (79,057,610 | ) | $ | (31,328,711 | ) | |||
Adjustments: | |||||||||||||||
Loss from discontinued operations, net of tax | 13,495,293 | 287,847 | 20,432,174 | 248,244 | |||||||||||
Interest expense (income) | 244,566 | 355,708 | 853,716 | 1,530,703 | |||||||||||
Change in fair value of convertible notes | 44,273 | (665,000 | ) | 2,884,273 | 1,365,904 | ||||||||||
Change in fair value of derivative liability | (9,025 | ) | (97,023 | ) | (63,178 | ) | (248,198 | ) | |||||||
Income tax expense (benefit) | (448,003 | ) | (2,274,295 | ) | (716,155 | ) | (2,263,725 | ) | |||||||
Depreciation and amortization | 1,146,789 | 1,654,426 | 5,622,274 | 5,174,551 | |||||||||||
EBITDA | $ | (10,760,789 | ) | $ | (17,950,647 | ) | $ | (50,044,506 | ) | $ | (25,521,232 | ) | |||
Impairment of long-lived assets | 8,404,351 | 14,354,114 | 38,967,295 | 14,354,114 | |||||||||||
Stock-based compensation expense | 162,671 | 464,277 | 808,682 | 1,964,638 | |||||||||||
Business combination and merger related costs | - | 159,583 | 5,081 | 449,940 | |||||||||||
Non-recurring financing fees | 158,961 | 48,329 | 583,482 | 458,691 | |||||||||||
Restructuring charges | - | (33,868 | ) | 552,563 | 2,420,092 | ||||||||||
Gain on forgiveness of PPP Loan | - | - | - | (2,234,730 | ) | ||||||||||
Gain on extinguishment of debt | - | (186,177 | ) | - | (186,177 | ) | |||||||||
Loss on sale of investment | 221,101 | - | 221,101 | - | |||||||||||
Equity in losses of investee | - | - | - | 7,564 | |||||||||||
Other non-operating income, net | - | - | - | (243 | ) | ||||||||||
Adjusted EBITDA | $ | (1,813,705 | ) | $ | (3,144,389 | ) | $ | (8,906,302 | ) | $ | (8,287,343 | ) |
Source:
2023 GlobeNewswire, Inc., source