Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2019 | Feb. 12, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Akerna Corp. | |
Entity Central Index Key | 0001755953 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2019 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Shell Company | false | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Interactive Data Current | Yes | |
Entity File Number | 001-39096 | |
Entity Incorporation State Country Code | DE | |
Entity Common Stock, Shares Outstanding | 12,871,485 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Jun. 30, 2019 |
Current assets | ||
Cash | $ 18,780,897 | $ 21,867,289 |
Restricted cash | 500,000 | 500,000 |
Accounts receivable, net | 1,753,935 | 1,257,274 |
Prepaid expenses and other assets | 1,108,917 | 577,674 |
Total current assets | 22,143,749 | 24,202,237 |
Investment | 250,000 | |
Total assets | 22,393,749 | 24,202,237 |
Current liabilities | ||
Accounts payable | 1,670,005 | 1,317,566 |
Accrued liabilities | 564,348 | 500,550 |
Deferred revenue | 844,554 | 624,387 |
Total current liabilities | 3,078,907 | 2,442,503 |
Commitments and contingencies (Note 6) | ||
Stockholders' equity: | ||
Preferred stock, par value $0.0001; 5,000,000 shares authorized, none are issued and outstanding at December 31, 2019 and June 30, 2019 | ||
Common stock, par value $0.0001; 75,000,000 shares authorized, 10,921,485 issued and outstanding at December 31, 2019, and 10,589,746 shares authorized, issued and outstanding at June 30, 2019 | 1,093 | 1,059 |
Additional paid-in capital | 52,065,102 | 47,325,421 |
Accumulated deficit | (32,751,353) | (25,566,746) |
Total stockholders' equity | 19,314,842 | 21,759,734 |
Total liabilities and stockholders' equity | $ 22,393,749 | $ 24,202,237 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2019 | Jun. 30, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 75,000,000 | 10,589,746 |
Common stock, shares issued | 10,921,485 | 10,589,746 |
Common stock, shares outstanding | 10,921,485 | 10,589,746 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues | ||||
Software | $ 2,498,174 | $ 2,269,924 | $ 4,802,654 | $ 4,149,186 |
Consulting | 725,000 | 239,797 | 1,556,363 | 609,880 |
Other | 83,029 | 64,191 | 140,076 | 114,245 |
Total revenues | 3,306,203 | 2,573,912 | 6,499,093 | 4,873,311 |
Cost of revenues | 1,638,840 | 1,320,995 | 3,036,201 | 2,384,130 |
Gross profit | 1,667,363 | 1,252,917 | 3,462,892 | 2,489,181 |
Operating expenses | ||||
Product development | 1,261,509 | 1,075,003 | 2,392,389 | 1,876,475 |
Selling, general, and administrative | 4,796,404 | 2,629,452 | 8,380,219 | 4,776,944 |
Total operating expenses | 6,057,913 | 3,704,455 | 10,772,608 | 6,653,419 |
Loss from operations | (4,390,550) | (2,451,538) | (7,309,716) | (4,164,238) |
Other income (expense) | ||||
Interest | 51,857 | 30,723 | 125,239 | 48,351 |
Other | 157 | 26,444 | (130) | 25,833 |
Total other income | 52,014 | 57,167 | 125,109 | 74,184 |
Net loss | $ (4,338,536) | $ (2,394,371) | $ (7,184,607) | $ (4,090,054) |
Basic and diluted weighted average common stock outstanding | 10,958,772 | 6,022,026 | 10,918,942 | 5,755,931 |
Basic and diluted net loss per common share | $ (0.40) | $ (0.40) | $ (0.66) | $ (0.71) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Jun. 30, 2018 | $ 492 | $ 14,563,102 | $ (13,163,531) | $ 1,400,063 |
Balance shares at Jun. 30, 2018 | 4,922,650 | |||
Issuance of shares in exchange for cash | $ 110 | 9,999,890 | 10,000,000 | |
Issuance of shares in exchange for cash, shares | 1,099,376 | |||
Net loss | (1,695,683) | (1,695,683) | ||
Balance at Sep. 30, 2018 | $ 602 | 24,562,992 | (14,859,214) | 9,704,380 |
Balance shares at Sep. 30, 2018 | 6,022,026 | |||
Balance at Jun. 30, 2018 | $ 492 | 14,563,102 | (13,163,531) | 1,400,063 |
Balance shares at Jun. 30, 2018 | 4,922,650 | |||
Net loss | (4,090,054) | |||
Balance at Dec. 31, 2018 | $ 602 | 24,562,992 | (17,253,585) | 7,310,009 |
Balance shares at Dec. 31, 2018 | 6,022,026 | |||
Balance at Sep. 30, 2018 | $ 602 | 24,562,992 | (14,859,214) | 9,704,380 |
Balance shares at Sep. 30, 2018 | 6,022,026 | |||
Net loss | (2,394,371) | (2,394,371) | ||
Balance at Dec. 31, 2018 | $ 602 | 24,562,992 | (17,253,585) | 7,310,009 |
Balance shares at Dec. 31, 2018 | 6,022,026 | |||
Balance at Jun. 30, 2019 | $ 1,059 | 47,325,421 | (25,566,746) | 21,759,734 |
Balance shares at Jun. 30, 2019 | 10,589,746 | |||
Stock-based compensation | 161,165 | 161,165 | ||
Cash received in connection with exercise of warrants | $ 37 | 4,242,417 | 4,242,454 | |
Cash received in connection with exercise of warrants, shares | 368,910 | |||
Net loss | (2,846,071) | (2,846,071) | ||
Balance at Sep. 30, 2019 | $ 1,096 | 51,729,003 | (28,412,817) | 23,317,282 |
Balance shares at Sep. 30, 2019 | 10,958,656 | |||
Balance at Jun. 30, 2019 | $ 1,059 | 47,325,421 | (25,566,746) | 21,759,734 |
Balance shares at Jun. 30, 2019 | 10,589,746 | |||
Net loss | (7,184,607) | |||
Balance at Dec. 31, 2019 | $ 1,093 | 52,065,102 | (32,751,353) | (19,314,842) |
Balance shares at Dec. 31, 2019 | 10,921,485 | |||
Balance at Sep. 30, 2019 | $ 1,096 | 51,729,003 | (28,412,817) | 23,317,282 |
Balance shares at Sep. 30, 2019 | 10,958,656 | |||
Stock-based compensation | 331,485 | 331,485 | ||
Forfeitures of restricted shares | $ (3) | 3 | ||
Forfeitures of restricted shares, shares | (37,572) | |||
Cash received in connection with exercise of warrants | 4,611 | 4,611 | ||
Cash received in connection with exercise of warrants, shares | 401 | |||
Net loss | (4,338,536) | (4,338,536) | ||
Balance at Dec. 31, 2019 | $ 1,093 | $ 52,065,102 | $ (32,751,353) | $ (19,314,842) |
Balance shares at Dec. 31, 2019 | 10,921,485 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities | ||
Net loss | $ (7,184,607) | $ (4,090,054) |
Adjustment to reconcile net loss to net cash used in operating activities | ||
Bad debt expense | 724,350 | 101,446 |
Stock-based compensation expense | 492,650 | |
Changes in operating assets and liabilities | ||
Accounts receivable | (1,221,011) | (240,351) |
Prepaid expenses and other current assets | (531,243) | (72,063) |
Accounts payable | 352,439 | 603,652 |
Accrued liabilities | 63,798 | 336,758 |
Deferred revenue | 220,167 | (128,577) |
Net cash used in operating activities | (7,083,457) | (3,489,189) |
Cash flows from investing activities | ||
Investment acquired in Zol Solutions | (250,000) | |
Net cash used in investing activities | (250,000) | |
Cash flows from financing activities | ||
Cash received in connection with exercise of warrants | 4,247,065 | |
Cash received in connection with issuance of shares | 10,000,000 | |
Net cash provided by financing activities | 4,247,065 | 10,000,000 |
Net change in cash and restricted cash | (3,086,392) | 6,510,811 |
Cash and restricted cash - beginning of period | 22,367,289 | 2,572,401 |
Cash and restricted cash - end of period | 19,280,897 | 9,083,212 |
Cash paid for taxes | ||
Cash paid for interest | $ 2,355 | $ 987 |
Supplemental disclosure of non-cash investing and financing activity: | ||
Forfeiture of Restricted Shares included in outstanding common stock | (3) |
Description of Business, Liquid
Description of Business, Liquidity and Capital Resources | 6 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business, Liquidity and Capital Resources | Note 1 - Description of Business, Liquidity and Capital Resources Description of Business Akerna Corp. (the "Company", "We", "Our" or "Akerna"), through its wholly-owned subsidiary MJ Freeway, LLC ("MJF") provides enterprise software solutions that enable regulatory compliance and inventory management. The Company's proprietary, broad and growing suite of solutions are adaptable for industries in which interfacing with government regulatory agencies for compliance purposes is required, or where the tracking of organic materials from seed or plant to end products is desired. The Company developed products intended to assist states in monitoring licensed businesses' compliance with state regulations, and to help state-licensed businesses operate in compliance with such law. The Company provides its regulatory software platform, Leaf Data Systems®, to state government regulatory agencies, and its commercial software platform, MJ Platform®, to state-licensed businesses. We consult with clients on a wide range of areas to help them maintain compliance with state law. Our project-focused consulting services help clients initiate or expand business operations. Our advisory engagements include service offerings focused on compliance requirement assessments, readiness and best practices, compliance monitoring systems, application processes, inspection readiness and business plan and compliance reviews. We typically provide our consulting services to clients in emerging markets that are seeking consultation on newly introduced licensing regimes and assistance with the regulatory compliant build-out of operations. The accompanying financial statements and related notes reflect the historical results of MJF prior to the mergers completed in June 2019 ("the Mergers") with MTech Acquisition Corp. ("MTech") and other related entities, which resulted in the combined company, and do not include the historical results of MTech prior to the completion of the Mergers. Liquidity and Capital Resources Since its inception, the Company has incurred recurring operating losses, used cash from operations, and relied on capital raising transactions to continue ongoing operations. Although we have continuing negative cash flow from operations, the Company anticipates that its current cash will be sufficient to meet the working capital requirements for the next twelve months. From time to time, we may pursue various strategic business opportunities. These opportunities may include investment in or ownership of additional technology companies through direct investments, acquisitions, joint ventures and other arrangements. We can provide no assurance that we will successfully identify such opportunities or that, if we identify and pursue any of these opportunities, any of them will be consummated. Consequently, the Company may raise additional equity or debt capital or enter into arrangements to secure necessary financing to fund the completion of such strategic business opportunities, although no assurance can be provided that we will be successful in completing a future capital raise. The sale of additional equity could result in additional dilution to the Company's existing stockholders, and financing arrangements may not be available to us, or may not be available in sufficient amounts or on acceptable terms. Our future operating performance will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. See "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019 for a discussion of the risks related to our liquidity and capital structure. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Since the date of the Annual Report, there have been no material changes to the Company’s significant accounting policies, except as disclosed below. Basis of Presentation These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission (“SEC”), for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) can be condensed or omitted. The condensed consolidated balance sheet for the year ended June 30, 2019 was derived from the Company’s audited financial statements, but does not include all disclosures required by U.S. GAAP. The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto of the Company for the year ended June 30, 2019 which were included in the annual report on Form 10-K filed by the Company on September 23, 2019. In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and notes thereto of the Company and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of the Company’s financial position and operating results. The results for the three and six months ended December 31, 2019 are not necessarily indicative of the operating results for the year ending June 30, 2020, or any other interim or future periods. Accounts Receivable, Net The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change and that losses ultimately incurred could differ materially from the amounts estimated in determining the allowance. The allowance for doubtful accounts was $417,028 as December 31, 2019 and $190,088 as of June 30, 2019. Concentrations of Credit Risk The Company grants credit in the normal course of business to its customers. The Company periodically performs credit analysis and monitors the financial condition of its customers to reduce credit risk. During the three months ended December 31, 2019, two customers accounted for 23% and 14% of total revenues, respectively. At December 31, 2019, the same two customers accounted for 50% and 24% of net accounts receivable, respectively. During the three months ended December 31, 2018, two customers accounted for 38% and 14% of total revenues, respectively. At December 31, 2018, one customer accounted for 61% of net accounts receivable. During the six months ended December 31, 2019, two customers accounted for 23% and 13% of total revenues, respectively. During the six months ended December 31, 2018, two customers accounted for 36% and 12% of total revenues, respectively. Investments The Company makes strategic investments comprised of non-marketable equity securities. Non-marketable equity securities are recorded within Other assets Revenue Recognition The Company derives its revenues from the following two primary sources: (1) subscription revenues, which are comprised of subscription fees from government and commercial customers accessing the Company’s enterprise cloud computing services and from customers paying for additional support beyond the standard support that is included in the basic subscription fees; and (2) consulting services, which include service offerings focused on compliance requirement assessments, readiness and best practices, compliance monitoring systems, application processes, inspection readiness and business plan and compliance reviews to operators interested in integrating our platform into their respective operations. The Company commences revenue recognition when all of the following conditions are satisfied: • There is persuasive evidence of an arrangement • The service has been or is being provided to the customer • The collection of the fees is reasonably assured • The amount of fees to be paid by the customer is fixed or determinable Subscription Revenue Subscription revenue is recognized ratably, beginning when access to the applicable software is provided to the customer, over the contractual period. The Company typically invoices customers at the beginning of the term, in multi-year, annual, quarterly or monthly installments. In instances where collection of fees occurs in advance of service delivery, revenue recognition is deferred until such services are delivered. Revenue for implementation fees is recognized ratably over the expected term of the agreement, including expected renewals. The Company includes service level commitments to customers warranting certain levels of uptime reliability and performance and permitting those customers to receive credits in the event that those levels are not met. In addition, customer contracts often include (i) specific obligations that require the Company to maintain the availability of the customer’s data through the service and that customer content is secured against unauthorized access or loss, and (ii) indemnity provisions whereby the Company indemnifies customers from third-party claims asserted against them that result from the Company’s failure to maintain the availability of their content or securing the same from unauthorized access or loss. To date, the Company has not incurred any material costs as a result of such commitments. Any such credits or payments made to customers under these arrangements are recorded as a reduction of revenue. Consulting Services and Other Revenues Consulting services revenue consists of contracts with fixed terms and fee structures based upon the volume and activity, or fixed price contracts for consulting and strategic services. When these services are not combined with subscription revenues as a single unit of accounting, as discussed below, these revenues are recognized as services are rendered and accepted by the customer. From time to time, the Company purchases equipment for resale to customers. Such equipment is generally drop-shipped to the Company’s customers. The Company recognizes revenue as the services are performed or products are delivered. Cost of Revenue Cost of revenue consists primarily of costs related to providing the subscription and other services to the Company’s customers, including employee compensation and related expenses for datacenter operations, customer support and professional services personnel, payments to outside technology service providers, security services and other tools. Deferred Revenue Deferred revenue primarily consists of payments received in advance of revenue recognition from subscription services described above and is recognized as the revenue recognition criteria are met. The deferred revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing, size and new business within the year. Deferred revenue that will be recognized during the succeeding twelve-month period is recorded as Deferred revenue, which is a current liability in the accompany Consolidated Balance Sheets. Reclassifications Certain prior year financial statement amounts have been reclassified for consistency with the current year presentation. Recently Issued Accounting Pronouncements ASU 2014-09, Revenue from Contracts with Customers (Topic 606), Revenue Recognition (Topic 605) In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, and also issued subsequent amendments to the initial guidance, ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2019-11 (collectively, Topic 326), to introduce a new impairment model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses (CECL). Under Topic 326, an entity is required to estimate CECL on available-for-sale (AFS) debt securities only when the fair value is below the amortized cost of the asset and is no longer based on an impairment being “other-than-temporary”. Topic 326 also requires the impairment calculation on an individual security level and requires an entity use present value of cash flows when estimating the CECL. The credit-related losses are required to be recognized through earnings and non-credit related losses are reported in other comprehensive income. In April 2019, the FASB further clarified the scope of Topic 326 and addressed issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayment. Topic 326 will be effective for the Company in fiscal years beginning after July 1, 2023, with early adoption permitted. The Company is evaluating the impact of adoption of the new standard on its consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation- Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In August 2018, the FASB issued ASU No. 2018-15 , Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract In November 2019, the FASB issued ASU 2019-10, “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)” (“ASU 2019-10”). ASU 2019-10 (i) provides a framework to stagger effective dates for future major accounting standards and (ii) amends the effective dates for certain major new accounting standards to give implementation relief to certain types of entities. Specifically, ASU 2019-10 changes some effective dates for certain new standards on the following topics in the FASB Accounting Standards Codification (ASC): (a) Derivatives and Hedging (ASC 815) – now effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021; (b) Leases (ASC 842) - now effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021; (c) Financial Instruments — Credit Losses (ASC 326) - now effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years; and (d) Intangibles — Goodwill and Other (ASC 350) - now effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2019-10 and its adoption did not have a material impact on the Company’s financial statements and financial statement disclosures. In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topics 321, 323 and 815. The new standard addresses accounting for the transition into and out of the equity method and measurement of certain purchased options and forward contracts to acquire investments. The standard is effective for the Company for annual and interim periods beginning after July 1, 2022, with early adoption permitted. Adoption of the standard requires changes to be made prospectively. The Company is evaluating the impact of adoption of the new standard on its consolidated financial statements. |
Balance Sheet Disclosures
Balance Sheet Disclosures | 6 Months Ended |
Dec. 31, 2019 | |
Balance Sheet Disclosures [Abstract] | |
Balance Sheet Disclosures | Note 3 - Balance Sheet Disclosures Prepaid expenses and other current assets consist of the following: December 31, June 30, 2019 2019 Software and technology $ 675,306 $ 237,930 Professional services 292,484 169,804 Insurance 89,202 159,940 Deposit 51,925 10,000 $ 1,108,917 $ 577,674 At December 31, 2019, approximately $277,000 of software and technology prepaid expenses was related to a contract with a cloud software company specializing in business intelligence. The balance will be amortized over one year. As of December 31, 2019, approximately $181,000 of professional services prepaid expenses related to the contract with the State of Utah. These costs will be deferred and recognized at the same time as the related revenue is recognized, under the matching principle. Accrued liabilities consist of the following: December 31, June 30, 2019 2019 Professional fees $ - $ 49,205 Accrued acquisition-related costs 500,000 - Sales taxes 2,390 36,358 Compensation 61,958 354,724 Leaf Data Systems contractors - 19,557 Other - 40,706 $ 564,348 $ 500,550 The accrued compensation as of June 30, 2019 includes approximately $215,000 of accrued bonus earned by the Company's Chief Executive Officer with respect to fiscal year 2019. The balance was paid in October, 2019. At December 31, 2019, the Company accrued $500,000 in fees related to deal costs for the Solo acquisition (Note 8). |
Loss Per Share
Loss Per Share | 6 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Loss Per Share | Note 4 - Loss Per Share Basic net loss per share is calculated based on the weighted-average number of shares of common stock outstanding in accordance with ASC Topic 260, Earnings per Share. Diluted net loss per common share is calculated based on the weighted-average number of shares of common stock outstanding plus the effect of potentially dilutive issuances of common stock. When the Company reports a net loss, the calculation of diluted net loss per common stock excludes issuances of common stock as the effect would be anti-dilutive. For the six months ended December 31, 2019, 6,183,594 potentially dilutive issuances of shares of common stock have been excluded from the computation of diluted weighted average shares outstanding because the effect would be anti-dilutive. Of the total securities excluded, 5,813,804 shares of common stock are underlying outstanding warrants to purchase common stock and 369,790 were related to the unvested shares of restricted common stock. For the six months ended December 31, 2018, 5,993,750 potentially dilutive issuances of shares of common stock all related to warrants to purchase shares of common stock have been excluded from the computation of diluted weighted average shares of common stock outstanding because the effect would be anti-dilutive. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | Note 5 - Stockholders’ Equity Issuances for Cash In August 2018, MJF issued 4,115,042 Series C Preferred Units (1,099,376 shares of common stock after retroactively applying the exchange ratio) for cash consideration of $10,000,000. Following the Mergers, all the Units were converted into Akerna’s common stock. Restricted Shares Prior to the Mergers, MJF had in place a Profit Interest Incentive Plan (the “Profits Interest Plan”) whereby it could grant profit interest units (“PIUs”) to employees or consultants and other independent advisors of the Company. PIUs granted under the Profits Interest Plan would generally vest once a year over four years commencing on the date granted, or based on specified performance targets. MJF had the right, but not the obligation, to repurchase vested PIUs from holders upon their termination of employment. Unvested PIUs were to be forfeited upon termination of employment. If the holder was terminated for cause, as defined, all vested and unvested units would be forfeited. PIUs repurchased or canceled or forfeited by the award recipient were available for reissuance. Upon completion of the Mergers in June 2019, the non-vested PIUs were exchanged for restricted shares of common stock (“Restricted Shares”) subject to restricted stock agreements with varying vesting terms that reflect the vesting conditions applicable to PIUs of the applicable MJF equity holders at the time of the Mergers. During the six months ended December 31, 2018, 285,324 PIUs were granted (which were exchanged for 76,239 Restricted Shares in the Mergers) and 92,500 PIUs (which would equate to 24,716 Restricted Shares after applying the exchange ratio) were forfeited. A summary of the Company’s unvested Restricted Shares and Restricted Stock Units (“RSUs”) activity in the six months ended December 31, 2019 is presented here: Restricted Shares Restricted Stock Units Weighted Average Grant Date Fair Total Nonvested at July 1, 2019 215,063 - $ 11.99 215,063 Vested (7,347 ) - 11.99 (7,347 ) Granted - 199,646 7.97 199,646 Forfeited (37,572 ) - 11.99 (37,572 ) Nonvested at December 31, 2019 170,144 199,646 $ 9.82 369,790 For the six months ended December 31, 2019, stock-based compensation expense related to the ratable amortization of the unvested Restricted Shares and RSUs was $492,650, and approximately $2.9 million of total unrecognized costs related to Restricted Shares and RSUs will be ratably recognized over an estimated weighted average remaining vesting period of 2.9 years Warrants A summary of the status of outstanding warrants to purchase common stock at December 31, 2019 and the changes during the six months then ended, is presented in the following table: Shares issuable upon exercise of warrants Weighted average exercise price Weighted average remaining life Outstanding at July 1, 2019 6,183,115 $ 11.50 3.72 Issued - - - Exercised (369,311 ) 11.50 - Expired/cancelled - - - Outstanding at December 31, 2019 5,813,804 $ 11.50 3.15 There was no aggregate intrinsic value for the warrants outstanding as of December 31, 2019. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 6 - Commitments and Contingencies Operating Leases The Company leases facilities, equipment, and vehicles under non-cancelable operating leases. Rent expense for the three months ended December 31, 2019 and 2018, was $40,000 and $35,475, respectively. Rent expense for the six months ended December 31, 2019 and 2018, was $76,000 and $78,950, respectively. On September 30, 2019, t he Company entered into an office service agreement (the “Office Lease”) effective and commencing February 1, 2020 and expiring January 31, 2022, unless earlier terminated by either party in accordance with the terms of the Office Lease. The Office Lease relates to new office space located at 1630 Welton Street, Denver, Colorado, 80202. In October 2019, the Company paid a security deposit equal to a one-month payment and initial set-up fees of $43,925. The monthly payments will be in the amount of $41,925 subject to a 4% annual indexation increase at each anniversary of the commencement date during the term of the Office Lease Future minimum lease payments to be made pursuant to the Office Lease and the current leases are approximately $241,000 for the remainder of the year ended June 30, 2020, approximately $530,000 for the year ended June 30, 2021, and approximately $316,000 for the year ended June 30, 2022. Compensation Agreement with Jessica Billingsley On November 11, 2019, the Compensation Committee of the Board of Directors of the Company established the terms on which Ms. Billingsley, the Company’s Chief Executive Officer, may earn a bonus for the fiscal year ended June 30, 2020. The Compensation Committee determined that Ms. Billingsley will be eligible for a bonus derived from the same targets with respect to her bonuses in fiscal year 2019, which were as follows: The annual bonus was determined based upon the following four (4) budget components, platform recurring revenue, government recurring revenue, services revenue and net income. Each scales linearly between achieving 75% to 100%, and greater than 100% with respect to platform recurring revenue and government recurring revenue budget components respectively, of the applicable fiscal year’s budget for each such component (with 50% of the target bonus payable upon achievement of 75% of budget, 100% of the target bonus payable upon achievement of budget (and, with respect to the platform recurring revenue and government recurring revenue budget components, with 200% of each weighted portion of the target bonus payable upon achievement of 125% of the corresponding component of budget (the “Accelerator”), with linear interpolation between points)). However, during fiscal year 2020 the Accelerator may be paid at the sole discretion of the Compensation Committee in cash, stock, or a combination thereof. In addition, the Compensation Committee determined that, during fiscal year 2020, Ms. Billingsley is eligible to earn a performance based incentive of $250,000, payable in stock, whereby (a) 50% of the bonus is automatically granted if the Company’s stock price/shareholder return increases by 15% (measuring point starts at $10 per share) with respect to the consecutive 20-day volume weighted average price prior to and including June 30, 2020, and (b) the remaining 50% of the bonus may be paid at the sole discretion of the Compensation Committee. Letter-of-Credit As of December 31, 2019, the Company had a standby letter-of-credit with a bank in the amount of $500,000, which was classified as restricted cash on the balance sheets. The beneficiary of the letter-of-credit is an insurance company. The letter-of-credit will expire on June 22, 2020. Litigation From time to time, the Company may be involved in litigation relating to claims arising out of its operations in the normal course of business. The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred. As of December 31, 2019, and through the date these financial statements were issued, there were no legal proceedings requiring recognition or disclosure in the financial statements. |
Long-term Investments
Long-term Investments | 6 Months Ended |
Dec. 31, 2019 | |
Long-term Investments [Abstract] | |
Long-term Investments | Note 7 – Long-term Investments License Agreement with Zol Solutions, Inc. On October 7, 2019, the Company participated in an offering of preferred stock of Zol Solutions, Inc. (“ZolTrain”) along with other investors in which the Company purchased approximately 203,000 shares of Series Seed Peferred Stock (the “ZolTrain Preferred”) for a purchase price of $250,000, which represents a minority interest in ZolTrain. The ZolTrain Preferred is convertible into shares of common stock of ZolTrain at a price of $1.232 per share at the option of the holder and contains certain anti-dilution protection in the event of certain future issuances of securities by ZolTrain. The Company is entitled to vote the number of common shares in which the ZolTrain Preferred is convertible into at any meeting of the ZolTrain stockholders. Holders of the Zoltrain Preferred are entitled to preference in liquidation of Zoltrain and maintain the right to put the ZolTrain Preferred back to Zoltrain for cash in the event of the occurrence of certain liquidating events, as defined in the agreement. The definitive agreement also provides the Company with rights of first refusal with respect to newly issued securities of ZolTrain as well as issued and outstanding securities of ZolTrain that are offered to third parties. In connection with the agreement, Nina Simosko, our Chief Revenue Officer, was appointed as a member of ZolTrain’s board of directors. In the event that Ms. Simosko or any other representative of the Company is not a member of ZolTrain’s board of directors, the Company is entitled to consult with and advise ZolTrain’s management on significant business issues. Subsequent to the investment, the Company entered into a license/reseller agreement with ZolTrain, effective October 24, 2019, to provide ZolTrain’s online cannabis training platform as a co-branded integration option into the Company’s MJ Platform and Leaf Data Systems. The Company and ZolTrain will share subscription-based revenue generated from the Company’s customers. The amount of the share of revenue for each of the Company and ZolTrain will be depend on both (a) the number of training modules accessed by a customer and (b) which party created the accessed content. In addition to the revenue sharing arrangement, the license/reseller agreement provides the Company with the right to receive additional consideration from ZolTrain in the form of an equity earnout if certain revenue milestones are achieved during 2020, 2021, and 2022. The Company’s ability to recognize revenue from the additional earnout consideration in the future will mainly depend on whether or not it becomes probable that such revenue milestones will be achieved. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 8 - Subsequent Events On January 15, 2020, the Company closed on a Stock Purchase Agreement (the “Agreement”) previously entered into with substantially all of the shareholders of Solo Sciences, Inc. (“Solo”), pursuant to which the Company acquired all right, title and interest in 80.40% of the issued and outstanding capital stock of Solo (calculated on a fully diluted basis), free and clear of all liens. Solo offers a tagging technology, the solo*TAG (“Solo Tag”), as an alternative to expensive RFID technology required by states in which Metrc is used for the state tracking system. Solo Tag is less expensive and more secure than RFID technology, leveraging Solo’s patented cryptographically secure technology. Additionally, Solo offers manufacturers to use its proprietary graphic trust mark, the solo*CODE™ (“Solo Code”), on their product packaging to enable consumers to scan products with the help of Solo proprietary phone application and learn if a product is real or fake as well get real-time notifications. The purchase price was $18.0 million, which will be adjusted for final working capital acquired. There were $500,000 of costs directly related to the acquisition included in the condensed consolidated statements of operations for the three and six months ended December 31, 2019 as well. The remaining portion of the purchase price, $15.6 million, is payable in 1,950,000 shares of the Company’s common stock, issued without registration under the Securities Act in reliance on Regulation D thereunder, of which 570,000 shares of the Company’s common stock will be held in escrow subject to the satisfaction of certain conditions stipulated in the Agreement. This initial consideration is subject to an adjustment no later than 120 days following the closing date. The Company has an option to acquire the remaining minority stake in Solo during the 12 months following the close in either cash or shares (the “Company Option”). Beginning the expiration of the Company Option, Solo has a 3-month option to acquire between 40% and 55% of Solo back from the Company in cash. The Company also agreed to pay fees to the legacy Solo shareholders equal to the lesser of (i) $0.01 per Solo Tag and Solo Code sold or (ii) 7% of net revenue. The fees will be paid annually until the earlier of: (1) the Company’s shares trading above $12 per share for consecutive 20 days in a 30-day period; (b) the Company no longer owning a majority stake in Solo; or (c) the expiration of the patents related to Solo Tag and Solo Code, which is December 1, 2029. Since the acquisition occurred subsequent to December 31, 2019, no results from operations of Solo are included in our consolidated statement of operations for the three and nine months ended December 31, 2019. It is currently impractical to disclose a preliminary purchase price allocation of Solo or pro forma financial information combining both companies as of the earliest period presented in these financial statements as Solo is currently in the process of closing its books and records. In accordance with ASC 855-10, the Company has analyzed events and transactions that occurred subsequent to December 31, 2019, through the date these financial statements were issued and have determined that other than as discussed above, there are no material subsequent events to disclose or recognize in these financial statements. |
Revisions of Previously Issued
Revisions of Previously Issued Financial Statements | 6 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Revisions of Previously Issued Financial Statements | Note 9 – Revisions of Previously Issued Financial Statements During the course of preparing the Quarterly Report on Form 10-Q for the three months ended September 30, 2019, the Company identified certain previously duplicated revenues, which resulted in the overstatement of total assets and revenue during the periods outlined below, and the understatement of net losses for the periods outlined below. Additionally, during the course of preparing its Annual Report on Form 10-K for the fiscal year ended June 30, 2019, the Company identified certain costs of revenue related to consulting services previously being recorded in operating expenses, which resulted in the overstatement of the gross profit for each of the quarters during the fiscal year ended June 30, 2019. See Item. 4 of Part I, Controls and Procedures. Year ended June 30, 2018 As reported Adjustment As revised Consolidated Balance Sheet Total assets $ 3,017,731 $ (223,766 ) $ 2,793,965 Total liabilities 1,393,902 - 1,393,902 Total stockholders’ equity 1,623,829 (223,766 ) 1,400,063 Net loss (1,623,182 ) (72,501 ) (1,695,683 ) Net loss per share (0.30 ) (0.31 ) Three months ended September 30, 2018 As reported Adjustment As revised Condensed Consolidated Balance Sheet Total assets 12,090,810 (296,267 ) 11,794,543 Total liabilities 2,090,163 - 2,090,163 Total stockholders’ equity 10,000,647 (296,267 ) 9,704,380 Condensed Consolidated Statements of Operations Total revenue 2,371,900 (72,501 ) 2,299,399 Cost of revenue 956,123 107,012 1,063,135 Gross profit 1,415,777 (179,513 ) 1,236,264 Operating expenses 3,055,976 (107,012 ) 2,948,964 Net loss (1,623,182 ) (72,501 ) (1,695,683 ) Net loss per share (0.30 ) (0.31 ) Three months ended December 31, 2018 As reported Adjustment As revised Condensed Consolidated Balance Sheet Total assets 9,836,178 (320,434 ) 9,515,744 Total liabilities 2,205,735 - 2,205,735 Total stockholders’ equity 7,630,443 (320,434 ) 7,310,009 Condensed Consolidated Statements of Operations Total revenue 2,598,079 (24,167 ) 2,573,912 Cost of revenue 1,198,911 122,084 1,320,995 Gross profit 1,399,168 (146,251 ) 1,252,917 Operating expenses 3,826,539 (122,084 ) 3,704,455 Net loss (2,370,204 ) (24,167 ) (2,394,371 ) Net loss per share (0.39 ) (0.40 ) Three months ended March 31, 2019 As reported Adjustment As revised Condensed Consolidated Balance Sheet Total assets 8,199,718 (320,434 ) 7,879,284 Total liabilities 3,059,378 - 3,059,378 Total stockholders’ equity 5,140,340 (320,434 ) 4,819,906 Condensed Consolidated Statements of Operations Total revenue 2,327,880 - 2,327,880 Cost of revenue 1,042,403 124,079 1,166,482 Gross profit 1,285,477 (124,079 ) 1,161,398 Operating expenses 3,788,644 (124,079 ) 3,664,565 Net loss (2,490,103 ) - (2,490,103 ) Net loss per share (0.41 ) (0.41 ) Three months ended June 30, 2019 As reported Adjustment As revised Consolidated Balance Sheet Total assets 24,522,671 (320,434 ) 24,202,237 Total liabilities 2,442,503 - 2,442,503 Total stockholders’ equity 22,080,168 (320,434 ) 21,759,734 Consolidated Statements of Operations Total revenue 10,919,785 (96,668 ) 10,823,117 Cost of revenue 4,633,844 - 4,633,844 Gross profit 6,285,941 (96,668 ) 6,189,273 Operating expenses 18,701,619 - 18,701,619 Net loss (12,306,547 ) (96,668 ) (12,403,215 ) Net loss per share (2.04 ) (2.05 ) In accordance with SEC Staff Accounting Bulletin No 108, the Company has evaluated these errors, based on an analysis of quantitative and qualitative factors, as to whether it was material to the condensed consolidated statements of operations for the three months ended September 30, 2018, December 31, 2018, and March 31, 2019, and consolidated statements of operations for the year ended June 30, 2019, as well as to the consolidated balance sheets as of June 30, 2019 and 2018, condensed consolidated balance sheets as of September 30, 2018, December 31, 2018, and March 30, 2019, and as to whether amendments of previously filed financial statements with the SEC are required. The Company has determined that quantitatively and qualitatively, the errors have no material impact to the above mentioned financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission ("SEC"), for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States of America ("U.S. GAAP") can be condensed or omitted. The condensed consolidated balance sheet for the year ended June 30, 2019 was derived from the Company's audited financial statements, but does not include all disclosures required by U.S. GAAP. The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto of the Company for the year ended June 30, 2019 which were included in the annual report on Form 10-K filed by the Company on September 23, 2019. In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and notes thereto of the Company and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of the Company's financial position and operating results. The results for the three and six months ended December 31, 2019 are not necessarily indicative of the operating results for the year ending June 30, 2020, or any other interim or future periods. |
Accounts Receivable, Net | Accounts Receivable, Net The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company's estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company's estimate of the allowance for doubtful accounts will change and that losses ultimately incurred could differ materially from the amounts estimated in determining the allowance. The allowance for doubtful accounts was $417,028 as December 31, 2019 and $190,088 as of June 30, 2019. |
Concentrations of Credit Risk | Concentrations of Credit Risk The Company grants credit in the normal course of business to its customers. The Company periodically performs credit analysis and monitors the financial condition of its customers to reduce credit risk. During the three months ended December 31, 2019, two customers accounted for 23% and 14% of total revenues, respectively. At December 31, 2019, the same two customers accounted for 50% and 24% of net accounts receivable, respectively. During the three months ended December 31, 2018, two customers accounted for 38% and 14% of total revenues, respectively. At December 31, 2018, one customer accounted for 61% of net accounts receivable. During the six months ended December 31, 2019, two customers accounted for 23% and 13% of total revenues, respectively. During the six months ended December 31, 2018, two customers accounted for 36% and 12% of total revenues, respectively. |
Investments | Investments The Company makes strategic investments comprised of non-marketable equity securities. Non-marketable equity securities are recorded within Other assets |
Revenue Recognition | Revenue Recognition The Company derives its revenues from the following two primary sources: (1) subscription revenues, which are comprised of subscription fees from government and commercial customers accessing the Company’s enterprise cloud computing services and from customers paying for additional support beyond the standard support that is included in the basic subscription fees; and (2) consulting services, which include service offerings focused on compliance requirement assessments, readiness and best practices, compliance monitoring systems, application processes, inspection readiness and business plan and compliance reviews to operators interested in integrating our platform into their respective operations. The Company commences revenue recognition when all of the following conditions are satisfied: • There is persuasive evidence of an arrangement • The service has been or is being provided to the customer • The collection of the fees is reasonably assured • The amount of fees to be paid by the customer is fixed or determinable Subscription Revenue Subscription revenue is recognized ratably, beginning when access to the applicable software is provided to the customer, over the contractual period. The Company typically invoices customers at the beginning of the term, in multi-year, annual, quarterly or monthly installments. In instances where collection of fees occurs in advance of service delivery, revenue recognition is deferred until such services are delivered. Revenue for implementation fees is recognized ratably over the expected term of the agreement, including expected renewals. The Company includes service level commitments to customers warranting certain levels of uptime reliability and performance and permitting those customers to receive credits in the event that those levels are not met. In addition, customer contracts often include (i) specific obligations that require the Company to maintain the availability of the customer’s data through the service and that customer content is secured against unauthorized access or loss, and (ii) indemnity provisions whereby the Company indemnifies customers from third-party claims asserted against them that result from the Company’s failure to maintain the availability of their content or securing the same from unauthorized access or loss. To date, the Company has not incurred any material costs as a result of such commitments. Any such credits or payments made to customers under these arrangements are recorded as a reduction of revenue. Consulting Services and Other Revenues Consulting services revenue consists of contracts with fixed terms and fee structures based upon the volume and activity, or fixed price contracts for consulting and strategic services. When these services are not combined with subscription revenues as a single unit of accounting, as discussed below, these revenues are recognized as services are rendered and accepted by the customer. From time to time, the Company purchases equipment for resale to customers. Such equipment is generally drop-shipped to the Company’s customers. The Company recognizes revenue as the services are performed or products are delivered. Cost of Revenue Cost of revenue consists primarily of costs related to providing the subscription and other services to the Company’s customers, including employee compensation and related expenses for datacenter operations, customer support and professional services personnel, payments to outside technology service providers, security services and other tools. Deferred Revenue Deferred revenue primarily consists of payments received in advance of revenue recognition from subscription services described above and is recognized as the revenue recognition criteria are met. The deferred revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing, size and new business within the year. Deferred revenue that will be recognized during the succeeding twelve-month period is recorded as Deferred revenue, which is a current liability in the accompany Consolidated Balance Sheets. |
Reclassifications | Reclassifications Certain prior year financial statement amounts have been reclassified for consistency with the current year presentation. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements ASU 2014-09, Revenue from Contracts with Customers (Topic 606), Revenue Recognition (Topic 605) In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, and also issued subsequent amendments to the initial guidance, ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2019-11 (collectively, Topic 326), to introduce a new impairment model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses (CECL). Under Topic 326, an entity is required to estimate CECL on available-for-sale (AFS) debt securities only when the fair value is below the amortized cost of the asset and is no longer based on an impairment being “other-than-temporary”. Topic 326 also requires the impairment calculation on an individual security level and requires an entity use present value of cash flows when estimating the CECL. The credit-related losses are required to be recognized through earnings and non-credit related losses are reported in other comprehensive income. In April 2019, the FASB further clarified the scope of Topic 326 and addressed issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayment. Topic 326 will be effective for the Company in fiscal years beginning after July 1, 2023, with early adoption permitted. The Company is evaluating the impact of adoption of the new standard on its consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation- Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In August 2018, the FASB issued ASU No. 2018-15 , Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract In November 2019, the FASB issued ASU 2019-10, “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)” (“ASU 2019-10”). ASU 2019-10 (i) provides a framework to stagger effective dates for future major accounting standards and (ii) amends the effective dates for certain major new accounting standards to give implementation relief to certain types of entities. Specifically, ASU 2019-10 changes some effective dates for certain new standards on the following topics in the FASB Accounting Standards Codification (ASC): (a) Derivatives and Hedging (ASC 815) – now effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021; (b) Leases (ASC 842) - now effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021; (c) Financial Instruments — Credit Losses (ASC 326) - now effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years; and (d) Intangibles — Goodwill and Other (ASC 350) - now effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2019-10 and its adoption did not have a material impact on the Company’s financial statements and financial statement disclosures. In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topics 321, 323 and 815. The new standard addresses accounting for the transition into and out of the equity method and measurement of certain purchased options and forward contracts to acquire investments. The standard is effective for the Company for annual and interim periods beginning after July 1, 2022, with early adoption permitted. Adoption of the standard requires changes to be made prospectively. The Company is evaluating the impact of adoption of the new standard on its consolidated financial statements. |
Balance Sheet Disclosures (Tabl
Balance Sheet Disclosures (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Balance Sheet Disclosures [Abstract] | |
Schedule of prepaid expenses and other current assets | December 31, June 30, 2019 2019 Software and technology $ 675,306 $ 237,930 Professional services 292,484 169,804 Insurance 89,202 159,940 Deposit 51,925 10,000 $ 1,108,917 $ 577,674 |
Schedule of accrued liabilities | December 31, June 30, 2019 2019 Professional fees $ - $ 49,205 Accrued acquisition-related costs 500,000 - Sales taxes 2,390 36,358 Compensation 61,958 354,724 Leaf Data Systems contractors - 19,557 Other - 40,706 $ 564,348 $ 500,550 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Schedule of nonvested restricted stock units activity | Restricted Shares Restricted Stock Units Weighted Average Grant Date Fair Total Nonvested at July 1, 2019 215,063 - $ 11.99 215,063 Vested (7,347 ) - 11.99 (7,347 ) Granted - 199,646 7.97 199,646 Forfeited (37,572 ) - 11.99 (37,572 ) Nonvested at December 31, 2019 170,144 199,646 $ 9.82 369,790 |
Schedule of stock warrants | Shares Weighted Weighted Outstanding at July 1, 2019 6,183,115 $ 11.50 3.72 Issued - - - Exercised (369,311 ) 11.50 - Expired/cancelled - - - Outstanding at December 31, 2019 5,813,804 $ 11.50 3.15 |
Revisions of Previously Issue_2
Revisions of Previously Issued Financial Statements (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of reclassifications | Year ended June 30, 2018 As reported Adjustment As revised Consolidated Balance Sheet Total assets $ 3,017,731 $ (223,766 ) $ 2,793,965 Total liabilities 1,393,902 - 1,393,902 Total stockholders' equity 1,623,829 (223,766 ) 1,400,063 Net loss (1,623,182 ) (72,501 ) (1,695,683 ) Net loss per share (0.30 ) (0.31 ) Three months ended September 30, 2018 As reported Adjustment As revised Condensed Consolidated Balance Sheet Total assets 12,090,810 (296,267 ) 11,794,543 Total liabilities 2,090,163 - 2,090,163 Total stockholders' equity 10,000,647 (296,267 ) 9,704,380 Condensed Consolidated Statements of Operations Total revenue 2,371,900 (72,501 ) 2,299,399 Cost of revenue 956,123 107,012 1,063,135 Gross profit 1,415,777 (179,513 ) 1,236,264 Operating expenses 3,055,976 (107,012 ) 2,948,964 Net loss (1,623,182 ) (72,501 ) (1,695,683 ) Net loss per share (0.30 ) (0.31 ) Three months ended December 31, 2018 As reported Adjustment As revised Condensed Consolidated Balance Sheet Total assets 9,836,178 (320,434 ) 9,515,744 Total liabilities 2,205,735 - 2,205,735 Total stockholders' equity 7,630,443 (320,434 ) 7,310,009 Condensed Consolidated Statements of Operations Total revenue 2,598,079 (24,167 ) 2,573,912 Cost of revenue 1,198,911 122,084 1,320,995 Gross profit 1,399,168 (146,251 ) 1,252,917 Operating expenses 3,826,539 (122,084 ) 3,704,455 Net loss (2,370,204 ) (24,167 ) (2,394,371 ) Net loss per share (0.39 ) (0.40 ) Three months ended March 31, 2019 As reported Adjustment As revised Condensed Consolidated Balance Sheet Total assets 8,199,718 (320,434 ) 7,879,284 Total liabilities 3,059,378 - 3,059,378 Total stockholders' equity 5,140,340 (320,434 ) 4,819,906 Condensed Consolidated Statements of Operations Total revenue 2,327,880 - 2,327,880 Cost of revenue 1,042,403 124,079 1,166,482 Gross profit 1,285,477 (124,079 ) 1,161,398 Operating expenses 3,788,644 (124,079 ) 3,664,565 Net loss (2,490,103 ) - (2,490,103 ) Net loss per share (0.41 ) (0.41 ) Three months ended June 30, 2019 As reported Adjustment As revised Consolidated Balance Sheet Total assets 24,522,671 (320,434 ) 24,202,237 Total liabilities 2,442,503 - 2,442,503 Total stockholders' equity 22,080,168 (320,434 ) 21,759,734 Consolidated Statements of Operations Total revenue 10,919,785 (96,668 ) 10,823,117 Cost of revenue 4,633,844 - 4,633,844 Gross profit 6,285,941 (96,668 ) 6,189,273 Operating expenses 18,701,619 - 18,701,619 Net loss (12,306,547 ) (96,668 ) (12,403,215 ) Net loss per share (2.04 ) (2.05 ) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2019USD ($)Customers | Dec. 31, 2018Customers | Dec. 31, 2019USD ($)Customers | Dec. 31, 2018Customers | Jun. 30, 2019USD ($) | |
Summary of Significant Accounting Policies (Textual) | |||||
Allowance for doubtful accounts | $ | $ 417,028 | $ 417,028 | $ 190,088 | ||
Cash balances | $ | $ 18,780,897 | $ 18,780,897 | $ 21,867,289 | ||
Customer one [Member] | Total revenues [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Concentration risk percentage | 23.00% | 38.00% | 23.00% | 36.00% | |
Number of customer | 2 | 2 | 2 | 2 | |
Customer one [Member] | Net accounts receivable [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Concentration risk percentage | 50.00% | 61.00% | |||
Number of customer | 2 | 1 | |||
Customer two [Member] | Total revenues [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Concentration risk percentage | 14.00% | 14.00% | 13.00% | 12.00% | |
Number of customer | 2 | 2 | 2 | 2 | |
Customer two [Member] | Net accounts receivable [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Concentration risk percentage | 24.00% | ||||
Number of customer | 2 |
Balance Sheet Disclosures (Deta
Balance Sheet Disclosures (Details) - USD ($) | Dec. 31, 2019 | Jun. 30, 2019 |
Total | $ 1,108,917 | $ 577,674 |
Software and technology [Member] | ||
Total | 675,306 | 237,930 |
Professional services [Member] | ||
Total | 292,484 | 169,804 |
Insurance [Member] | ||
Total | 89,202 | 159,940 |
Deposit [Member] | ||
Total | $ 51,925 | $ 10,000 |
Balance Sheet Disclosures (De_2
Balance Sheet Disclosures (Details 1) - USD ($) | Dec. 31, 2019 | Jun. 30, 2019 |
Balance Sheet Disclosures [Abstract] | ||
Professional fees | $ 49,205 | |
Accrued acquisition-related costs | 500,000 | |
Sales taxes | 2,390 | 36,358 |
Compensation | 61,958 | 354,724 |
Leaf Data Systems contractors | 19,557 | |
Other | 40,706 | |
Total | $ 564,348 | $ 500,550 |
Balance Sheet Disclosures (De_3
Balance Sheet Disclosures (Details Textual) - USD ($) | Dec. 31, 2019 | Jun. 30, 2019 |
Balance Sheet Disclosures (Textual) | ||
Accrued acquisition-related costs | $ 500,000 | |
Chief executive officer [Member] | ||
Balance Sheet Disclosures (Textual) | ||
Accrued compensation | $ 215,000 | |
Software and technology [Member] | ||
Balance Sheet Disclosures (Textual) | ||
Prepaid expenses | 277,000 | |
Professional services [Member] | ||
Balance Sheet Disclosures (Textual) | ||
Prepaid expenses | $ 181,000 |
Loss Per Share (Details)
Loss Per Share (Details) - shares | 6 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Loss Per Share (Textual) | ||
Potentially dilutive securities to warrants issued | 6,183,594 | 5,993,750 |
Total securities related to warrants | 5,813,804 | |
Unvested restricted shares | 369,790 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Restricted Shares [Member] | 6 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Beginning balance, nonvested | 21,563 |
Vested | (7,347) |
Granted | 199,646 |
Forfeited | (37,572) |
Ending balance, nonvested | 369,790 |
Beginning balance, nonvested | 215,063 |
Vested | (7,347) |
Granted | |
Forfeited | (37,572) |
Ending balance, nonvested | 170,144 |
Restricted Stock Units | |
Beginning balance, nonvested | |
Vested | |
Granted | 199,646 |
Forfeited | |
Ending balance, nonvested | 199,646 |
Weighted Average Grant Date Fair | |
Beginning balance | $ / shares | $ 11.99 |
Vested | $ / shares | 11.99 |
Granted | $ / shares | 7.97 |
Forfeited | $ / shares | 11.99 |
Ending balance | $ / shares | $ 9.82 |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) | 6 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Shares issuable upon exercise of warrants | |
Beginning balance, outstanding | 6,183,115 |
Issued | |
Exercised | (369,311) |
Expired/cancelled | |
Ending balance, outstanding | 5,813,804 |
Weighted average exercise price | |
Beginning balance | $ / shares | $ 11.50 |
Exercised | $ / shares | 11.50 |
Ending balance | $ / shares | $ 11.50 |
Weighted average remaining life | |
Beginning balance, outstanding | 3 years 8 months 19 days |
Ending balance, outstanding | 3 years 1 month 24 days |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - USD ($) | 1 Months Ended | 6 Months Ended | ||
Aug. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2019 | |
Stockholders' Equity (Textual) | ||||
Issuance of preferred shares | ||||
Common stock issued for cash consideration | 1,099,376 | |||
Cash consideration | $ 10,000,000 | $ 10,000,000 | ||
Restricted Shares [Member] | ||||
Stockholders' Equity (Textual) | ||||
Restricted shares issued | $ 76,239 | |||
Restricted shares forfeited | 24,716 | |||
Sale of stock, description | 285,324 PIUs were granted (which were exchanged for 76,239 Restricted Shares in the Mergers) and 92,500 PIUs (which would equate to 24,716 Restricted Shares after applying the exchange ratio) were forfeited. | |||
Stock-based compensation expenses related to unvested Restricted Shares | 492,650 | |||
Total unrecognized costs | $ 2,900,000 | |||
Estimated remaining vesting period | 2 years 10 months 25 days | |||
Series C Preferred Stock [Member] | ||||
Stockholders' Equity (Textual) | ||||
Issuance of preferred shares | 4,115,042 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Nov. 11, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2019 |
Commitments and Contingencies (Textual) | ||||||
Rent expense | $ 40,000 | $ 35,475 | $ 76,000 | $ 78,950 | ||
Restricted cash | 500,000 | 500,000 | $ 500,000 | |||
Annual rent payments | $ 500,000 | |||||
Annual rent payments, percentage | 4.00% | |||||
Future minimum lease payments remainder of fiscal year ended June 30, 2020 | 241,000 | $ 241,000 | ||||
Future minimum lease payments of fiscal year ended June 30, 2021 | 530,000 | 530,000 | ||||
Future minimum lease payments of fiscal year ended June 30, 2022 | 316,000 | 316,000 | ||||
Security deposit | 43,925 | 43,925 | ||||
Annual indexation increases | $ 41,925 | $ 41,925 | ||||
Letter-of-credit, description | The letter-of-credit will expire on June 22, 2020. | |||||
Jessica Billingsley [Member] | ||||||
Commitments and Contingencies (Textual) | ||||||
Annual bonus, description | The annual bonus was determined based upon the following four (4) budget components, platform recurring revenue, government recurring revenue, services revenue and net income. Each scales linearly between achieving 75% to 100%, and greater than 100% with respect to platform recurring revenue and government recurring revenue budget components respectively, of the applicable fiscal year’s budget for each such component (with 50% of the target bonus payable upon achievement of 75% of budget, 100% of the target bonus payable upon achievement of budget (and, with respect to the platform recurring revenue and government recurring revenue budget components, with 200% of each weighted portion of the target bonus payable upon achievement of 125% of the corresponding component of budget (the “Accelerator”), with linear interpolation between points)). | |||||
Performance based incentive, description | (a) 50% of the bonus is automatically granted if the Company’s stock price/shareholder return increases by 15% (measuring point starts at $10 per share) with respect to the consecutive 20-day volume weighted average price prior to and including June 30, 2020, and (b) the remaining 50% of the bonus may be paid at the sole discretion of the Compensation Committee. | |||||
Annual salary | $ 250,000 |
Long-term Investments (Details)
Long-term Investments (Details) - Zol Solutions, Inc. [Member] | Oct. 07, 2019USD ($)$ / sharesshares |
Long-term Investments (Textual) | |
Preferred stock purchased shares | shares | 203,000 |
Preferred stock purchased share value | $ | $ 250,000 |
Convertible into shares of common stock per share | $ / shares | $ 1.232 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Jan. 15, 2020 | Dec. 31, 2019 | Dec. 31, 2019 |
Subsequent Events (Textual) | |||
Acquisition related costs | $ 500,000 | $ 500,000 | |
Subsequent Event [Member] | |||
Subsequent Events (Textual) | |||
Purchase price adjusted for final working capital acquired | $ 18,000,000 | ||
Remaining portion of purchase price | $ 15,600,000 | ||
Payable in shares of common stock, issued | 1,950,000 | ||
Common stock held in escrow subject to satisfaction | 570,000 | ||
Agreed to pay shareholders fees, description | (i) $0.01 per Solo Tag and Solo Code sold or (ii) 7% of net revenue. The fees will be paid annually until the earlier of: (1) the Company’s shares trading above $12 per share for consecutive 20 days in a 30-day period; (b) the Company no longer owning a majority stake in Solo; or (c) the expiration of the patents related to Solo Tag and Solo Code, which is December 1, 2029. | ||
Subsequent Event [Member] | Maximum [Member] | |||
Subsequent Events (Textual) | |||
Acquire the remaining minority interest | 55.00% | ||
Subsequent Event [Member] | Minimum [Member] | |||
Subsequent Events (Textual) | |||
Acquire the remaining minority interest | 40.00% | ||
Subsequent Event [Member] | Stock Purchase Agreement [Member] | |||
Subsequent Events (Textual) | |||
Issued and outstanding capital interest | 80.40% |
Revisions of Previously Issue_3
Revisions of Previously Issued Financial Statements (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Sep. 30, 2019 | |
Total assets | $ 22,143,749 | $ 24,202,237 | $ 7,879,284 | $ 9,515,744 | $ 11,794,543 | $ 22,143,749 | $ 9,515,744 | $ 2,793,965 | |
Total liabilities | 3,078,907 | 2,442,503 | 3,059,378 | 2,205,735 | 2,090,163 | 3,078,907 | 2,205,735 | 1,393,902 | |
Total stockholders’ equity | (19,314,842) | 21,759,734 | 4,819,906 | 7,310,009 | 9,704,380 | (19,314,842) | 7,310,009 | 1,400,063 | $ 23,317,282 |
Total revenue | 3,306,203 | 10,823,117 | 2,327,880 | 2,573,912 | 2,299,399 | 6,499,093 | 4,873,311 | ||
Cost of revenues | 1,638,840 | 4,633,844 | 1,166,482 | 1,320,995 | 1,063,135 | 3,036,201 | 2,384,130 | ||
Gross profit | 1,667,363 | 6,189,273 | 1,161,398 | 1,252,917 | 1,236,264 | 3,462,892 | 2,489,181 | ||
Operating expenses | $ 6,057,913 | 18,701,619 | 3,664,565 | 3,704,455 | 2,948,964 | $ 10,772,608 | $ 6,653,419 | ||
Net loss | $ (12,403,215) | $ (2,490,103) | $ (2,394,371) | $ (1,695,683) | $ (1,695,683) | ||||
Net loss per share | $ (0.40) | $ (2.05) | $ (0.41) | $ (0.40) | $ (0.31) | $ (0.66) | $ (0.71) | $ (0.31) | |
As reported [Member] | |||||||||
Total assets | $ 24,522,671 | $ 8,199,718 | $ 9,836,178 | $ 12,090,810 | $ 9,836,178 | $ 3,017,731 | |||
Total liabilities | 2,442,503 | 3,059,378 | 2,205,735 | 2,090,163 | 2,205,735 | 1,393,902 | |||
Total stockholders’ equity | 22,080,168 | 5,140,340 | 7,630,443 | 10,000,647 | 7,630,443 | 1,623,829 | |||
Total revenue | 10,919,785 | 2,327,880 | 2,598,079 | 2,371,900 | |||||
Cost of revenues | 4,633,844 | 1,042,403 | 1,198,911 | 956,123 | |||||
Gross profit | 6,285,941 | 1,285,477 | 1,399,168 | 1,415,777 | |||||
Operating expenses | 18,701,619 | 3,788,644 | 3,826,539 | 3,055,976 | |||||
Net loss | $ (12,306,547) | $ (2,490,103) | $ (2,370,204) | $ (1,623,182) | $ (1,623,182) | ||||
Net loss per share | $ (2.04) | $ (0.41) | $ (0.39) | $ (0.30) | $ (0.30) | ||||
Adjustment [Member] | |||||||||
Total assets | $ (320,434) | $ (320,434) | $ (320,434) | $ (296,267) | (320,434) | $ (223,766) | |||
Total liabilities | |||||||||
Total stockholders’ equity | (320,434) | (320,434) | (320,434) | (296,267) | $ (320,434) | (223,766) | |||
Total revenue | (96,668) | (24,167) | (72,501) | ||||||
Cost of revenues | 124,079 | 122,084 | 107,012 | ||||||
Gross profit | (96,668) | (124,079) | (146,251) | (179,513) | |||||
Operating expenses | $ (124,079) | (122,084) | (107,012) | ||||||
Net loss | $ (96,668) | $ (24,167) | $ (72,501) | $ (72,501) |