EX-99.1 2 ea138212ex99-1_akerna.htm PRESS RELEASE OF AKERNA CORP., DATED MARCH 22, 2021

Exhibit 99.1

 

Akerna_Logo

 

Akerna Announces Financial Results for the Quarter Ended December 31, 2020

 

Software revenue up 38%, total revenue up 24% year-over-year

 

DENVER, March 22, 2021 -- Akerna (Nasdaq: KERN), an enterprise software, leading compliance technology provider and developer of the cannabis industry's first seed-to-sale enterprise resource planning (ERP) software technology (MJ Platform®), today reported its unaudited financial results for the quarter ended December 31, 2020.

 

“In the December quarter we delivered strong financial results, with 38 percent software growth year over year and 36 percent sequential improvement in adjusted EBITDA,” said Jessica Billingsley, CEO of Akerna. “With the recent announced plans to acquire Viridian, we continue to bolster the strength of our channel connections with existing ERP providers. As we prepare for a post-legalization landscape and the industry continues to consolidate and mature, we firmly believe enterprise capabilities, including comprehensive compliance solutions and financial reporting integrations, will become increasingly important to the future leaders of the cannabis industry.”

 

Quarter Ended December 31, 2020 Financial Highlights

 

·Software revenue was $3.4 million, up 38% year over year
·Total revenue was $4.1 million, up 24% year over year
·Gross profit was $2.7 million, up 60% year over year
·Net loss was $12.2 million compared to a net loss of $3.8 million for the quarter ended December 31, 2019
·Adjusted EBITDA was ($1.9 million) compared to ($2.7 million) for the quarter ended December 31, 2019
·Cash was $17.8 million as of December 31, 2020

See "Explanation of Non-GAAP Financial Measures" below

 

Quarter Ended December 31, 2020 Key Metrics

 

·Total SaaS ARR of $13.8 million, up 42% year over year
·Average new MJ Platform order up 52% year over year
·MJ Platform transaction volume up 63% year over year
·Retail order volume up 56% year over year
·Retail order value up 105% year over year
·New Bookings ARR of $0.8 million

 

 

 

  

Quarter Ended December 31, 2020 Operational Highlights

 

·Akerna Launches MJ Retail Point of Sale Solution
·November elections open five new markets for Akerna products and services
·Transitioned to fully remote workforce, closed offices and lowered operating costs
·Closed $12 million public offering of common stock
·Transitioned fiscal year-end to December 31

 

Conference Call Details

 

Akerna will host a conference call tomorrow, Tuesday, March 23, 2021, at 8:30 a.m. Eastern Time to discuss its financial results and business highlights. A question-and-answer session will follow prepared remarks.

Interested parties may listen to the call by dialing:

 

Toll-Free: 1-877-407-3982

Toll / International: 1-201-493-6780

Conference ID: 13717601

 

The conference call will also be available via a live, listen-only webcast and can be accessed through the Investor Relations section of Akerna's website, https://ir.akerna.com/

 

To be included on the Company's email distribution list, please sign up at https://ir.akerna.com/news-events/email-alerts

 

About Akerna

Akerna (Nasdaq: KERN) is an enterprise software company focused on compliantly serving the cannabis, hemp, and CBD industry. First launched in 2010, Akerna has tracked more than $20 billion in cannabis sales to date and is the first cannabis software company listed on Nasdaq. The company's cornerstone technology, MJ Platform, the world's leading infrastructure as a service platform, powers retailers, manufacturers, brands, distributors, and cultivators.

 

For more information, visit https://www.akerna.com/.

 

Investor Contacts

Sapphire Investor Relations, LLC

Erica Mannion or Michael Funari

(617) 542-6180

IR@akerna.com

 

 

 

  

Forward Looking Statements

 

Certain statements made in this release are "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. Such forward-looking statements include but are not limited to statements regarding our preparation for a potential post-legalization landscape, our believe enterprise capabilities, including comprehensive compliance solutions and financial reporting integrations, will become increasingly important to the future leaders of the cannabis industry and the timing for management's conference call in relation to our quarterly results. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of significant known and unknown risks, uncertainties, assumptions, and other important factors, many of which are outside Akerna's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others that may affect actual results or outcomes, include (i) Akerna's ability to maintain relationships with customers and suppliers and retain its management and key employees, (ii) changes in applicable laws or regulations, (iii) changes in the market place due to the coronavirus pandemic or other market factors, (iv) and other risks and uncertainties disclosed from time to time in Akerna's filings with the U.S. Securities and Exchange Commission, including those under "Risk Factors" therein. You are cautioned not to place undue reliance on forward-looking statements. All information herein speaks only as of the date hereof, in the case of information about Akerna, or the date of such information, in the case of information from persons other than Akerna. Akerna undertakes no duty to update or revise the information contained herein. Forecasts and estimates regarding Akerna's industry and end markets are based on sources believed to be reliable; however, there can be no assurance these forecasts and estimates will prove accurate in whole or in part.

 

Explanation of Non-GAAP Financial Measures:

 

In addition to our results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.

 

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 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 that are required to be expensed as incurred in accordance with GAAP, because business combination 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

 

Costs incurred in connection with debt issuance when we elect the fair value option to account for the debt instrument because if we had not elected the fair value option such costs would be recognized as an adjustment to the effective interest and excluded from EBITDA

 

Restructuring costs because we believe these costs are not representative of operating performance;

 

Equity in earnings (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; and

 

Other non-operating expenses which includes a one-time gain on asset sale, which effects the comparability of results of operations and liquidity;

 

Related Non-GAAP Expense Measure

 

We reference in our earnings call non-GAAP Operating Expenses. We believe that this non-GAAP financial measure, when considered with the financial statements determined in accordance with GAAP, is helpful to management and investors in understanding our performance quarter over quarter and to the comparable quarter in our prior fiscal year by excluding the same items we exclude from EBITDA to derive Adjusted EBITDA that are included in GAAP operating expenses, as set forth above (impairment of long-lived assets, stock-based compensation expense, costs incurred with business combinations, costs incurred in connection with debt issuance, restructuring costs and certain other non-operating expenses, as described above) for the same reasons stated above-- principally, that these expenses are not, in management’s opinion, easily comparable across reporting periods, are not reflective of ongoing operations and/or are not representative of our operating performance.

 

We define non-GAAP Operating Expenses, as GAAP Operating Expenses, excluding impairment of long-lived assets, stock-based compensation expense, costs incurred with business combinations, costs incurred in connection with debt issuance and restructuring costs.

 

This non-GAAP expense measure should not be considered an alternative to the corresponding GAAP financial measure as determined in accordance with GAAP as an indicator of our performance or liquidity. Please review the tables provided below, for a reconciliation of this non-GAAP expense measure to the corresponding GAAP financial measure.

 

 

 

  

Akerna Corp.

Consolidated Balance Sheet

As of December 31, 2020, June 30, 2020 and 2019

 

   December 31   June 30   June 30 
   2020   2020   2019 
   (unaudited)         
   Assets               
     Current assets               
       Cash  $17,840,640   $24,155,828   $21,867,289 
       Restricted cash   500,000    500,000    500,000 
       Accounts receivable, net   1,753,547    1,861,534    1,257,274 
       Prepaid expenses & other current assets   2,458,727    1,215,341    577,674 
     Total current assets   22,552,914    27,732,703    24,202,237 
                
     Fixed assets, net   1,193,433    131,095    - 
     Investment, net   233,665    246,308    - 
     Capitalized software, net   3,925,738    2,629,304    - 
     Intangible assets, net   7,388,795    7,493,975    - 
     Goodwill   41,874,527    20,254,309    - 
     Other noncurrent assets   -    41,925    - 
   Total assets  $77,169,072   $58,529,619   $24,202,237 
                
   Liabilities and stockholders' equity               
     Current liabilities               
       Accounts Payable, accrued expenses and other current liabilities  $3,188,575   $4,861,928   $1,818,116 
       Contingent consideration payable   -    389,000    - 
       Deferred revenue   843,900    368,685    624,387 
       Current portion of long-term debt   11,707,363    6,135,364    - 
     Total current liabilities   15,739,838    11,754,977    2,442,503 
                
     Long-term debt, noncurrent   3,895,237    10,200,236    - 
   Total liabilities  $19,635,075   $21,955,213   $2,442,503 
                
                
     Stockholders' equity               
       Preferred stock   -    -    - 
       Exchangeable preferred stock   20,405,219    -    - 
       Common stock   1,990    1,321    1,059 
       Additional paid-in capital   95,090,883    72,906,924    47,325,421 
       Accumulated other comprehensive (loss) income   (91,496)   63,000    - 
       Accumulated deficit   (57,872,599)   (41,101,091)   (25,566,746)
     Total stockholders' equity  $57,533,997   $31,870,154   $21,759,734 
     Noncontrolling interests in consolidated subsidiary   -    4,704,252    - 
   Total stockholders’ equity   57,533,997    36,574,406    21,759,734 
   Liabilities and stockholders' equity  $77,169,072   $58,529,619   $24,202,237 

 

 

 

  

Akerna Corp.

Consolidated Statement of Operations

For the three months and six months ended December 31, 2020 and 2019, and years ended June 30, 2020 and 2019

 

 

   Three Months Ended December 31   Six Months Ended December 31   Year Ended June 30 
   2020   2019   2020   2019   2020   2019 
   (unaudited)   (unaudited)   (unaudited)   (unaudited)         
Revenue                        
    Software  $3,443,392   $2,498,174   $6,766,985   $4,802,654   $9,976,580   $8,256,492 
    Consulting   583,512    725,000    916,099    1,556,363    2,379,947    2,307,129 
    Other revenue   83,876    83,029    141,700    140,076    216,749    259,496 
  Total Revenue   4,110,780    3,306,203    7,824,784    6,499,093    12,573,276    10,823,117 
                               
  Cost of revenue   1,401,103    1,615,239    3,141,041    2,994,940    6,209,724    4,633,844 
  Gross profit   2,709,677    1,690,964    4,683,743    3,504,153    6,363,552    6,189,273 
                               
  Total Operating expenses                              
    Product development   1,407,262    623,501    3,166,088    1,234,403    3,206,310    5,565,097 
    Sales and marketing   1,830,526    2,132,004    3,928,028    3,725,012    7,792,480    7,498,114 
    General and administrative   1,964,880    2,664,400    4,435,067    4,655,207    11,320,715    5,638,408 
    Depreciation and amortization   836,215    86,768    2,007,237    104,667    1,315,898    - 
    Impairment of long-lived assets   6,887,000    -    6,887,000    -    -    - 
  Total operating expenses   12,925,883    5,506,673    20,423,420    9,719,289    23,635,403    18,701,619 
                               
  Loss from operations   (10,216,206)   (3,815,709)   (15,739,677)   (6,215,136)   (17,271,851)   (12,512,346)
                               
  Other income (expense)                              
    Interest income (expense)   (189,397)   51,857    (193,084)   125,239    156,678    91,239 
    Change in fair value of convertible notes   (1,739,273)   -    (961,273)   -    766,000    - 
    Other expense   (59,272)   157    (59,272)   (130)   (254)   17,892 
  Total other income (expense)   (1,987,942)   52,014    (1,213,629)   125,109    922,424    109,131 
                               
  Net loss before income tax expense   (12,204,148)   (3,763,695)   (16,953,306)   (6,090,027)   (16,349,427)   (12,403,215)
                               
  Income tax expense   (200)   -    (200)   -    (30,985)   - 
  Equity in losses of investee   (11,109)   -    (12,643)   -    (3,692)   - 
  Net Loss   (12,215,457)   (3,763,695)   (16,966,149)   (6,090,027)   (16,384,104)   (12,403,215)
                               
Net loss attributable to noncontrolling interest in consolidated subsidiary   -    -    8,815    -    849,759    - 
  Net loss attributable to Akerna shareholders  $(12,215,457)  $(3,763,695)  $(16,957,333)  $(6,090,027)  $(15,534,345)  $(12,403,215)
                               
Basic and diluted weighted average common shares outstanding   18,138,921    10,958,772    16,056,030    10,918,942    11,860,212    6,045,382 
   $(0.67)  $(0.34)  $(1.06)  $(0.56)  $(1.31)  $(2.05)

 

 

 

 

Akerna Corp.

Consolidated Statement of Cash Flows

For the six months ended December 31, 2020, and year ended June 30, 2020 and 2019

 

   Six Months Ended
December 31
   Year Ended June 30 
   2020   2020   2019 
   (unaudited)         
 Cash flows from operating activities               
 Net Loss  $(16,966,149)  $(16,384,104)  $(12,403,215)
 Adjustment to reconcile net loss to net cash used in operating activities               
 Bad debt expense   72,832    1,094,507    345,941 
 Stock-based compensation expense   1,197,589    1,166,130    3,884,111 
 Depreciation and amortization   2,007,237    1,315,898    - 
 Impairment of long-lived asset   6,887,000    -    - 
 Non-cash interest expense   32,732    -    - 
 Equity in losses of investee   12,643    3,692    - 
 Gain on sale of fixed asset   84,835    -    - 
 Debt issuance costs classified as financing   -    1,177,390    - 
 Change in fair value of convertible notes   961,272    (766,000)   - 
 Change in fair value of contingent consideration   (993,000)   (998,000)   - 
 Changes in operating assets and liabilities:               
 Accounts receivable   1,008,775    (1,621,262)   (1,572,889)
 Prepaid expenses and other current assets   (460,964)   (592,807)   (351,144)
 Other assets   81,924    (58,925)   - 
 Accounts payable and accrued liabilities   (2,749,766)   1,602,751    893,845 
 Deferred revenue   (94,088)   (286,922)   154,756 
 Net cash used in operating activities   (8,917,128)   (14,347,652)   (9,048,595)
                
 Cash flows from investing activities               
 Developed software additions   (1,847,710)   (3,102,728)   - 
 Furniture, fixtures and equipment additions   (12,203)   (156,636)   - 
 Cash paid for business combinations, net of cash acquired   (5,067,740)   (88,720)   - 
 Investment in equity method investee   -    (250,000)   - 
 Cash received in connection with reverse merger   -    -    18,843,483 
 Net Cash provided by investing activities   (6,927,653)   (3,598,084)   18,843,483 
                
 Cash flows from financing activities               
 Proceeds from the issuance of long-term debt   -    17,164,600    - 
 Payments on debt   (1,500,000)   -    - 
 Cash paid for debt issuance costs   -    (1,177,390)   - 
 Proceeds from the exercise of warrants   -    4,247,065    - 
 Proceeds from the issuance of common stock   11,032,380    -    10,000,000 
 Net cash provided by financing activities   9,532,380    20,234,275    10,000,000 
                
 Effect of exchange rate changes on cash and restricted cash   (2,787)   -    - 
 Net (decrease) increase in cash and restricted cash  $(6,315,188)  $2,288,539   $19,794,888 
                
 Cash and restricted cash, beginning of period   24,655,828    22,367,289    2,572,401 
                
 Cash and restricted cash, end of period  $18,340,640   $24,655,828   $22,367,289 
                
 Cash paid for taxes  $-   $-   $- 
 Cash paid for interest  $150,000   $-   $- 

 

 

 

  

Akerna Corp.

Earnings Before Interest, Taxes, Depreciation and Amortization, and Adjusted EBITDA

For the three months and six months ended December 31, 2020 and 2019, and years ended June 30, 2020 and 2019

The reconciliation of net income to EBITDA and Adjusted EBITDA is as follows:

(unaudited)

 

   Three Months Ended December 31   Six Months Ended December 31   Year Ended June 30 
   2020   2019   2020   2019   2020   2019 
                         
Net Loss  $(12,215,457)  $(3,763,695)  $(16,966,149)  $(6,090,027)  $(16,384,104)  $(12,403,215)
                               
Interest (income) expense and change in fair value of convertible notes   1,928,670    (51,857)   1,154,356    (125,239)   (922,678)   (91,239)
Depreciation and amortization   836,215    86,768    2,007,237    104,667    1,315,898    - 
Income tax provision   200    -    200    -    30,985    - 
EBITDA  $(9,450,372)  $(3,728,784)  $(13,804,355)  $(6,110,599)  $(15,959,899)  $(12,494,454)
                               
Impairment of long-lived assets   6,887,000    -    6,887,000    -    -    - 
Stock-based compensation expense   516,170    331,485    1,197,589    492,650    1,166,130    3,884,110 
Business combination and merger related costs   142,639    733,867    1,094,503    733,867    2,979,228    1,080,870 
Debt issuance costs related to fair value option debt instruments   96,427    -    139,594    -    1,177,390    - 
Restructuring charges   421,957    -    490,146    -    -    - 
Changes in fair value of contingent consideration   (604,000)   -    (993,000)   -    (998,000)   - 
Equity in losses of investee   11,109    -    12,643    -    3,692    - 
Other non-operating expenses   59,272    (157)   59,272    130    -    - 
Adjusted EBITDA  $(1,919,798)  $(2,663,589)  $(4,916,607)  $(4,883,952)  $(11,631,459)  $(7,529,474)

 

 

 

  

Akerna Corp.

The reconciliation of operating expenses to non-GAAP operating expenses is as follows:

(unaudited)

 

 

   Three Months Ended December 31   Six Months Ended December 31   Year Ended June 30 
   2020   2019   2020   2019   2020   2019 
                         
Operating expenses  $12,925,883   $5,506,673   $20,423,420   $9,719,289   $23,635,403   $18,701,619 
                               
Adjustments:                              
Depreciation and amortization   836,215    86,768    2,007,237    104,667    1,315,898    - 
Impairment of long-lived assets   6,887,000    -    6,887,000    -    -    - 
Stock-based compensation expense   474,196    331,485    1,137,905    492,650    1,166,130    3,884,110 
Business combination and merger related costs   142,639    733,867    1,094,503    733,867    2,979,228    1,080,870 
Debt issuance costs related to fair value option debt instruments   96,427    -    139,594    -    1,177,390    - 
Restructuring charges   421,957    -    490,146    -    -    - 
Changes in fair value of contingent consideration   (604,000)   -    (993,000)   -    (998,000)   - 
Non-GAAP operating expenses  $4,671,449   $4,354,553   $9,660,035   $8,388,105   $17,994,757   $13,736,639