Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 10, 2021 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Akerna Corp. | |
Entity Central Index Key | 0001755953 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 | |
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 | 25,929,693 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Trading Symbol | KERN | |
Document Period End Date | Jun. 30, 2021 | |
Entity Tax Identification Number | 83-2242651 | |
Entity Address, Address Line One | 1550 Larimer Street | |
Entity Address, Address Line Two | #246 | |
Entity Address, City or Town | Denver | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80202 | |
City Area Code | (888) | |
Local Phone Number | 932-6537 | |
Title of 12(b) Security | Common Stock, $0.0001 par value per share | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 11,778,601 | $ 17,840,640 |
Restricted cash | 508,261 | 500,000 |
Accounts receivable, net | 1,797,708 | 1,753,547 |
Prepaid expenses and other current assets | 2,395,346 | 2,458,727 |
Total current assets | 16,479,916 | 22,552,914 |
Fixed assets, net | 53,354 | 1,193,433 |
Investment, net | 226,101 | 233,664 |
Capitalized software, net | 5,213,267 | 3,925,739 |
Intangible assets, net | 7,772,289 | 7,388,795 |
Goodwill | 46,790,018 | 41,874,527 |
Total Assets | 76,534,945 | 77,169,072 |
Current liabilities | ||
Accounts payable, accrued expenses and other accrued liabilities | 4,681,554 | 3,188,576 |
Deferred revenue | 1,180,181 | 843,900 |
Current portion of long-term debt | 7,155,953 | 11,707,363 |
Derivative liability | 354,247 | 311,376 |
Total current liabilities | 13,371,935 | 16,051,215 |
Long-term debt, less current portion | 1,200,647 | 3,895,237 |
Total liabilities | 14,572,582 | 19,946,452 |
Commitments and contingencies (Note 8) | ||
Equity: | ||
Preferred stock, par value $0.0001; 5,000,000 shares authorized, none are issued and outstanding at June 30, 2021 and December 31, 2020 | ||
Exchangable Preferred Stock | 7,951,203 | 20,405,219 |
Common stock, par value $0.0001; 75,000,000 shares authorized, 25,332,439 and 19,901,248 issued and outstanding at June 30, 2021 and December 31, 2020, respectively | 2,533 | 1,990 |
Additional paid-in capital | 123,856,649 | 94,086,433 |
Accumulated other comprehensive loss | (105,544) | (91,497) |
Accumulated deficit | (69,742,478) | (57,179,525) |
Total equity | 61,962,363 | 57,222,620 |
Total liabilities and equity | $ 76,534,945 | $ 77,169,072 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2021 | Dec. 31, 2020 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common Stock, Shares, Issued | 25,332,439 | 19,901,248 |
Common stock, shares outstanding | 25,332,439 | 19,901,248 |
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | 1 | 1 |
Special Voting Preferred Stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1 | 1 |
Preferred stock, shares issued | 1 | 1 |
Preferred stock, shares outstanding | 1 | 1 |
Preferred stock, liquidation preference per share | $ 1 | $ 1 |
Exchangeable Shares [Member] | ||
Preferred stock, no par value | $ 0 | $ 0 |
Preferred stock, shares issued | 1,039,373 | 2,667,349 |
Preferred stock, shares outstanding | 1,039,373 | 2,667,349 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenues | ||||
Total revenues | $ 4,906,887 | $ 3,003,638 | $ 8,920,911 | $ 6,074,184 |
Cost of revenues | 1,914,380 | 1,818,565 | 3,368,547 | 3,214,784 |
Gross profit | 2,992,507 | 1,185,073 | 5,552,364 | 2,859,400 |
Operating expenses | ||||
Product development | 1,527,258 | 1,088,938 | 2,951,358 | 1,963,725 |
Sales and marketing | 1,826,143 | 2,117,118 | 3,562,058 | 4,157,869 |
General and administrative | 4,375,981 | 3,126,027 | 6,228,943 | 6,583,289 |
Depreciation and amortization | 1,314,132 | 1,036,378 | 2,367,015 | 1,216,607 |
Total operating expenses | 9,043,514 | 7,368,461 | 15,109,374 | 13,921,490 |
Loss from operations | (6,051,007) | (6,183,388) | (9,557,010) | (11,062,090) |
Other (expense) income: | ||||
Interest (expense) income, net | (163,125) | (2,084) | (937,505) | 31,438 |
Change in fair value of convertible notes | (16,405) | 766,000 | (2,007,677) | 766,000 |
Change in fair value of derivative liability | 133,125 | (606,958) | (42,871) | (370,041) |
Other (expense) income, net | 243 | 243 | (124) | |
Total other (expense) income | (46,162) | 156,958 | (2,987,810) | 427,273 |
Net loss before income taxes and equity in losses of investee | (6,097,169) | (6,026,430) | (12,544,820) | (10,634,817) |
Income tax expense | (4,300) | (30,985) | (10,570) | (30,985) |
Equity in losses of investee | (3,782) | (3,692) | (7,564) | (3,692) |
Net loss | (6,105,251) | (6,061,107) | (12,562,954) | (10,669,494) |
Net loss attributable to noncontrolling interest in consolidated subsidiary | 748,584 | 849,759 | ||
Net loss attributable to Akerna shareholders | $ (6,105,251) | $ (5,312,523) | $ (12,562,954) | $ (9,819,735) |
Basic and diluted weighted average common stock outstanding | 24,530,169 | 13,166,444 | 23,375,981 | 12,871,648 |
Basic and diluted net loss per common share | $ (0.25) | $ (0.46) | $ (0.54) | $ (0.83) |
Software | ||||
Revenues | ||||
Total revenues | $ 4,456,728 | $ 2,849,734 | $ 8,251,881 | $ 5,196,043 |
Consulting | ||||
Revenues | ||||
Total revenues | 410,884 | 131,000 | 583,631 | 823,584 |
Other | ||||
Revenues | ||||
Total revenues | $ 39,275 | $ 22,904 | $ 85,399 | $ 54,557 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (6,105,251) | $ (6,061,107) | $ (12,562,954) | $ (10,669,494) |
Other comprehensive (loss) income: | ||||
Foreign currency translation | 2,183 | 1,953 | ||
Unrealized (loss) gain on convertible notes | (3,000) | 63,000 | (16,000) | 63,000 |
Comprehensive loss | $ (6,106,068) | $ (5,998,107) | $ (12,577,001) | $ (10,606,494) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) | Total | Special Voting Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Stockholder's Equity | Noncontrolling Interests in Consolidated Subsidiary |
Balance at Dec. 31, 2019 | $ 19,721,235 | $ 1,093 | $ 51,060,652 | $ (31,340,510) | $ 19,721,235 | |||
Balance, shares at Dec. 31, 2019 | 10,921,485 | |||||||
Common stock issued in business combination | 17,550,000 | $ 195 | 17,549,805 | 17,550,000 | ||||
Common stock issued in business combination, Shares | 1,950,000 | |||||||
Noncontrolling interests in acquired subsidiary | 4,863,433 | 4,863,433 | ||||||
Stock-based compensation | 301,948 | 301,948 | 301,948 | |||||
Forfeitures of restricted shares | $ (2) | 2 | ||||||
Forfeitures of restricted shares, shares | (15,813) | |||||||
Net loss | (4,608,387) | (4,507,212) | (4,507,212) | (101,175) | ||||
Balance at Mar. 31, 2020 | 37,828,229 | $ 1,286 | 68,912,407 | (35,847,722) | 33,065,971 | 4,762,258 | ||
Balance, shares at Mar. 31, 2020 | 12,855,672 | |||||||
Balance at Dec. 31, 2019 | 19,721,235 | $ 1,093 | 51,060,652 | (31,340,510) | 19,721,235 | |||
Balance, shares at Dec. 31, 2019 | 10,921,485 | |||||||
Net loss | (10,669,494) | |||||||
Balance at Jun. 30, 2020 | 35,510,802 | $ 1,321 | 71,902,474 | 63,000 | (41,160,245) | 30,806,550 | 4,704,252 | |
Balance, shares at Jun. 30, 2020 | 13,202,906 | |||||||
Balance at Mar. 31, 2020 | 37,828,229 | $ 1,286 | 68,912,407 | (35,847,722) | 33,065,971 | 4,762,258 | ||
Balance, shares at Mar. 31, 2020 | 12,855,672 | |||||||
Common stock issued in business combination | 2,531,466 | 2,531,431 | 2,531,466 | |||||
Common stock issued in business combination, Shares | 349,650 | |||||||
Noncontrolling interests in acquired subsidiary | 690,578 | 690,578 | ||||||
Stock-based compensation | 458,636 | 458,636 | 458,636 | |||||
Forfeitures of restricted shares | ||||||||
Forfeitures of restricted shares, shares | (2,416) | |||||||
Unrealized loss(gain) on convertible notes | 63,000 | 63,000 | 63,000 | |||||
Net loss | (6,061,107) | (5,312,523) | (5,312,523) | (748,584) | ||||
Balance at Jun. 30, 2020 | 35,510,802 | $ 1,321 | 71,902,474 | 63,000 | (41,160,245) | $ 30,806,550 | $ 4,704,252 | |
Balance, shares at Jun. 30, 2020 | 13,202,906 | |||||||
Balance at Dec. 31, 2020 | 57,222,620 | $ 20,405,219 | $ 1,990 | 94,086,433 | (91,497) | (57,179,525) | ||
Balance, shares at Dec. 31, 2020 | 2,667,349 | 19,901,248 | ||||||
Conversion of Exchangeable Shares to common stock | $ (7,803,475) | $ 102 | 7,803,373 | |||||
Conversion of Exchangeable Shares to common stock, shares | (1,020,062) | 1,020,062 | ||||||
Settlement of convertible debt | 8,467,500 | $ 208 | 8,467,292 | |||||
Settlement of convertible debt, shares | 2,080,140 | |||||||
Shares withheld for withholding taxes | (333,847) | $ (5) | (333,842) | |||||
Shares withheld for withholding taxes, shares | (48,948) | |||||||
Stock-based compensation | 503,379 | 503,379 | ||||||
Settlement of liabilities with shares | 377,325 | $ 10 | 377,315 | |||||
Settlement of liabilities with shares, shares | 101,705 | |||||||
Restricted stock vesting | $ 1 | (1) | ||||||
Restricted stock vesting, shares | 13,978 | |||||||
Forfeitures of restricted shares | ||||||||
Forfeitures of restricted shares, shares | 668 | |||||||
Foreign currency translation adjustments | (230) | (230) | ||||||
Unrealized loss(gain) on convertible notes | (13,000) | (13,000) | ||||||
Net loss | (6,457,702) | (6,457,702) | ||||||
Balance at Mar. 31, 2021 | 59,766,045 | $ 12,601,744 | $ 2,306 | 110,903,949 | (104,727) | (63,637,227) | ||
Balance, shares at Mar. 31, 2021 | 1,647,287 | 23,067,517 | ||||||
Balance at Dec. 31, 2020 | 57,222,620 | $ 20,405,219 | $ 1,990 | 94,086,433 | (91,497) | (57,179,525) | ||
Balance, shares at Dec. 31, 2020 | 2,667,349 | 19,901,248 | ||||||
Net loss | (12,562,954) | |||||||
Balance at Jun. 30, 2021 | (61,962,363) | $ 7,951,203 | $ 2,533 | 123,856,649 | (105,544) | (69,742,478) | ||
Balance, shares at Jun. 30, 2021 | 1,039,373 | 25,332,439 | ||||||
Balance at Mar. 31, 2021 | 59,766,045 | $ 12,601,744 | $ 2,306 | 110,903,949 | (104,727) | (63,637,227) | ||
Balance, shares at Mar. 31, 2021 | 1,647,287 | 23,067,517 | ||||||
Conversion of Exchangeable Shares to common stock | $ (4,650,541) | $ 62 | 4,650,479 | |||||
Conversion of Exchangeable Shares to common stock, shares | (607,914) | 607,914 | ||||||
Settlement of convertible debt | 1,729,144 | $ 54 | 1,729,090 | |||||
Settlement of convertible debt, shares | 543,355 | |||||||
Shares withheld for withholding taxes | ||||||||
Shares issued in connection with Viridian Acquisition | 6,002,000 | $ 100 | 6,001,900 | |||||
Shares issued in connection with Viridian Acquisition, Shares | 1,000,000 | |||||||
Shares withheld for withholding taxes, shares | ||||||||
Stock-based compensation | 571,242 | 571,242 | ||||||
Settlement of liabilities with shares | ||||||||
Settlement of liabilities with shares, shares | ||||||||
Restricted stock vesting | $ 11 | (11) | ||||||
Restricted stock vesting, shares | 114,321 | |||||||
Forfeitures of restricted shares | ||||||||
Forfeitures of restricted shares, shares | 668 | |||||||
Foreign currency translation adjustments | 2,183 | 2,183 | ||||||
Unrealized loss(gain) on convertible notes | (3,000) | (3,000) | ||||||
Net loss | (6,105,251) | (6,105,251) | ||||||
Balance at Jun. 30, 2021 | $ (61,962,363) | $ 7,951,203 | $ 2,533 | $ 123,856,649 | $ (105,544) | $ (69,742,478) | ||
Balance, shares at Jun. 30, 2021 | 1,039,373 | 25,332,439 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash flows from operating activities | ||
Net loss | $ (12,562,954) | $ (10,669,494) |
Adjustment to reconcile net loss to net cash used in operating activities: | ||
Equity in losses of investment | 7,564 | 3,692 |
Bad debt | 150,294 | 370,154 |
Stock-based compensation expense | 1,074,621 | 760,584 |
Loss on write off of fixed assets | 1,045,180 | |
Amortization of deferred contract cost | 242,110 | |
Non-cash interest expense | 926,968 | |
Depreciation and amortization | 2,367,014 | 1,216,607 |
Debt issuance costs | 1,177,390 | |
Foreign currency loss | (17,344) | |
Change in fair value of convertible notes | 2,007,677 | (766,000) |
Change in fair value of derivative liability | 42,871 | 370,041 |
Change in fair value of contingent consideration | (998,000) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 286,118 | (400,251) |
Prepaid expenses and other current assets | (115,934) | (120,489) |
Accounts payable and accrued liabilities | 1,463,669 | 975,121 |
Deferred revenue | (633,052) | (507,089) |
Net cash used in operating activities | (3,715,198) | (8,587,734) |
Cash flows from investing activities | ||
Developed software additions | (2,004,609) | (1,990,584) |
Furniture, fixtures, and equipment additions | (156,636) | |
Cash paid for business combinations, net of cash acquired | 122,675 | |
Net cash used in investing activities | (2,004,609) | (2,024,545) |
Cash flows from financing activities | ||
Value of shares withheld for related to tax withholdings | (333,847) | |
Proceeds from issuance of long term debt | 17,164,600 | |
Cash paid for debt issuance costs | (1,177,390) | |
Net cash (used in) provided by financing activities | (333,847) | 15,987,210 |
Effect of exchange rate changes on cash and restricted cash | (124) | |
Net change in cash and restricted cash | (6,053,778) | 5,374,931 |
Cash and restricted cash - beginning of period | 18,340,640 | 19,280,897 |
Cash and restricted cash - end of period | 12,286,862 | 24,655,828 |
Cash paid for interest | 50,854 | |
Cash paid for taxes | 64,963 | 51,472 |
Supplemental Disclosure of non-cash investing and financing activity: | ||
Settlement of convertible notes in common stock | 10,196,382 | |
Conversion of exchangeable shares to common stock | 12,453,853 | |
Settlement of other liabilities in common stock | $ 377,325 |
Description of Business
Description of Business | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Note 1 - Description of Business Description of Business Akerna Corp., herein referred to as we, us our or Akerna, through our wholly owned subsidiaries MJ Freeway, LLC, or MJF, Trellis Solutions, Inc., or Trellis, Ample Organics, Inc, or Ample, Viridian Sciences, Inc, or Viridian, and solo sciences, inc, or Solo, provides enterprise software solutions that enable regulatory compliance and inventory management. Our 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. We develop 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. We provide our commercial software platform, MJ Platform ® ® ® we provide an innovative, next-generation solution for state and national governments to securely track product and waste throughout the supply chain with solo*TAG™ . The integration of MJ Platform ® results in technology for consumers and brands that brings a consumer-facing mark designed to highlight the authenticity and signify transparency. We consult with clients on a wide range of areas to help them successfully maintain compliance with state laws and regulations. We provide project-focused consulting services to clients who are initiating or expanding their cannabis business operations or are interested in data consulting engagements with respect to the legal cannabis industry. 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. Liquidity and Capital Resources Since our inception, we have incurred recurring operating losses, used cash from operations, and relied on capital raising transactions to continue ongoing operations. During the three and six months ended June 30, 2021, we incurred a loss from operations of $6.1 million and $9.6 million, respectively, and for the six months ended June 30, 2021, we used cash in operations of $3.7 million. As of June 30, 2021, we had cash of $11.8 million, excluding restricted cash, and working capital of $3.1 million. During the six months ended June 30, 2021, the Company incurred a number of one-time, non-recurring expenses of approximately $2.7 million. These expenses include business combination and merger related costs, restructuring charges, and other non-recurring charges. After considering all available evidence, we determined that, due to our current positive working capital, our ability to repay our senior secured convertible note with shares of our common stock, and our initiatives to reduce operating expenditures, that we have sufficient working capital to sustain operations for a period of at least twelve months from the date that our June 30, 2021 financial statements were issued. In the event the Company requires additional liquidity, the Company believes it can further reduce or defer expenses. More specifically, the Company could implement certain discretionary cost reduction initiatives relating to our spending on employee travel and entertainment, consulting costs and marketing expenses, negotiate deferred salary arrangements, furlough employees or reduce headcount or negotiate extensions of payments of rent and utilities. The Company also believes it has access to capital through future debt or equity offerings and could be successful in renegotiating the maturity dates or conversion option relating to its current outstanding notes payable, although no assurance can be provided that we would be successful in these efforts. Further, the potential continues to exist that our $2 million PPP loan could be forgiven. Management will continue to evaluate our liquidity and capital resources. On July 23, 2021, we entered into an Equity Distribution Agreement with Oppenheimer & Co. Inc. and A.G.P./Alliance Global Partners. Pursuant to the terms of the Agreement, we may offer and sell from time to time, up to $25 million of shares of our common stock. While no assurance can be provided that we will be able to raise capital under such program, we intend to use the net proceeds from the sale of our shares of common stock, if any, for general corporate purposes, including working capital, marketing, product development, capital expenditures and merger and acquisition activities. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Certain footnotes and other financial information normally required by GAAP, have been condensed or omitted in accordance with such rules and regulations. June 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021. The condensed consolidated balance sheet as of and for the period ended December 31, 2020, has been derived from our audited financial statements at that date but does not include all disclosures and financial information required by GAAP for complete financial statements. The information included in this quarterly report on Form 10-Q should be read in conjunction with our consolidated financial statements and notes thereto for the period ended December 31, 2020, which were included in our report on Form 10-KT filed on March 31, 2021. Principles of Consolidation Our accompanying condensed consolidated financial statements include the accounts of Akerna, our wholly owned subsidiaries and those entities in which we otherwise have a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation. We evaluate our ownership interests, contractual rights, and other interests in entities to determine if the entities are variable interest entities, or VIEs, when we have a variable interest in those entities. Generally, a VIE is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. These evaluations can be complex and involve judgment and the use of estimates and assumptions based on available historical information. If we determine that we hold a variable interest in a VIE and we are the primary beneficiary of the VIE, we must consolidate the VIE in our financial statements. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; and the similarity with and significance to our business activities and the business activities of the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of these VIE’s operations and general market conditions. We determine whether we are the primary beneficiary of a VIE upon our initial involvement with the VIE and reassess our status on an ongoing basis. Use of Estimates The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes thereto. We base our estimates on assumptions that we believe to be reasonable under the circumstances, the results of which form a basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. under different assumptions or conditions; however, we believe that our estimates are reasonable Concentrations of Credit Risk We grant credit in the normal course of business to customers in the United States. We periodically perform credit analysis and monitor the financial condition of our customers to reduce credit risk. During the six months ended June 30, 2021 and 2020, one government client accounted for 11% and 26% of total revenues, respectively. During the three months ended one 10 % and 28% of total revenues, respectively. As of June 30, 2021 and December 31, 2020, 37 Foreign Currency Translation The functional currency of the Company's non-U.S. operations is the local currency. Monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the balance sheet dates. Non-monetary assets and liabilities are translated at the historical rates in effect when the assets were acquired or obligations incurred. Revenue and expenses are translated into U.S. dollars using the average rates of exchange prevailing during the period. Translation gains or losses are included as a component of accumulated other comprehensive loss in stockholders' equity. Gains and losses resulting from foreign currency transactions are recognized as other income (expense). Reclassifications and Revisions Certain prior year financial statement amounts have been reclassified for consistency with the current year presentation. Segment Reporting The Company operates its business as one operating segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker, the Company’s Chief Executive Officer, in deciding how to allocate resources and assess performance. The Company’s chief operating decision maker allocates resources and assesses performance based upon discrete financial information at the consolidated level. In the following table, we disclose our long-lived assets by geographical location (in thousands): As of June 30, 2021 As of December 31, 2020 Long-lived assets: United States $ 13,845 $ 9,994 Canada 4,633 5,074 Total $ 18,478 $ 15,068 Warrant Liabilities We classify private placement warrants as liabilities. At the end of each reporting period, changes in fair value during the period are recognized within the condensed consolidated statements of operations and comprehensive loss. We will continue to adjust the warrant liability for changes in the fair value until the earlier of a) the exercise or expiration of the warrants or b) the redemption of the warrants, at which time the warrants will be reclassified to additional paid-in capital. Recent Accounting Pronouncements ASU 2016-02 The Financial Accounting Standards Board, or the FASB, has issued new guidance related to the accounting for leases. The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. Following our change in fiscal year effective on December 31, 2020, the new standard is effective for us beginning on January 1, 2022 and interim periods thereafter. We have limited assets subject to operating lease and therefore expect the adoption of the new standard to result in the recognition of right of use assets and lease liabilities for any office or vehicle leases in effect at that date, we do not expect a significant impact to our results of operations. ASU 2016-13 The FASB has issued guidance to introduce a new model for recognizing credit losses on financial instruments based on estimated current expected credit losses, or CECL. Under the new standard, an entity is required to estimate CECL on trade receivables at inception, based on historical information, current conditions, and reasonable and supportable forecasts. Following our change in fiscal year-end effective December 31, 2020, the new guidance is effective for us beginning on January 1, 2023. We are evaluating the impact of adoption of the new standard on our consolidated financial statements. ASU 2018-15 The FASB has issued guidance to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The guidance (i) provides criteria for determining which implementation costs to capitalize as an asset related to the service contract and which costs to expense, (ii) requires an entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement and (iii) clarifies the presentation requirements for reporting such costs in the entity’s financial statements. The guidance is applicable for us for the year ending December 31, 2021. We are evaluating the impact of adoption of the standard on our financial statements, however, do not anticipate a significant impact to our financials as a result of this guidance. ASU 2020-01 The FASB has issued guidance clarifying the interactions between various standards governing investments in equity securities. The new guidance 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 us for annual and interim periods beginning on January 1, , with early adoption permitted. Adoption of the standard requires changes to be made prospectively. We do not anticipate a significant impact to our financial statements as a result of this new guidance. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Note 3 – Revenue Financial Statement Impact of Adopting ASC 606, "Revenue from Contracts with Customers" On July 1, 2020, we adopted ASC 606 using the modified retrospective transition method and applied this method to all contracts that were not complete as of the date of adoption. The reported results as of June 30, 2021 and December 31, 2020, and three and six months ended June 30, 2021 in the accompanying consolidated financial statements are presented under ASC 606, while prior period results have not been adjusted and are reported in accordance with historical accounting guidance in effect for those periods. The most significant impacts of this standard relate to the timing of revenue recognition of fixed fees under our contracts, as well as the accounting for costs to obtain contracts. Under ASC 606, revenue recognition for subscription and implementation fees begins on the launch date and is recognized over time through the term of the contract. We then recognized the remaining balance of the fixed fees ratably over the remaining term of the contract. Additionally, under ASC 606, we now defer recognition of expense for sales commissions ("contract costs"). These contract costs are amortized to expense over the expected period of benefit. Before the adoption of ASC 606, we expensed these contract costs as incurred. Revenue Recognition Policies for the three and six months ended June 30, 2020 We derive our revenues primarily from the following sources: software revenues, which are primarily comprised of subscription fees from government and commercial customers accessing our enterprise cloud computing services and from customers paying for additional support beyond the standard support that is included in the basic subscription fees; and consulting services provided to operators interested in integrating our platform into their respective operations, such services include: assessing compliance requirements, monitoring systems and readiness; assisting with the application process; and evaluating the operator’s inspection readiness and business plan. We commence revenue recognition when 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, and the amount of fees to be paid by the customer is fixed or determinable. Software Revenue Software revenue primarily consists of subscription revenue that is recognized ratably over the term of the contract, beginning when access to the applicable software is provided to the customer. We typically invoice customers at the beginning of the term, in multi-year, annual, quarterly, or monthly installments. When a collection of fees occurs in advance of service delivery, revenue recognition is deferred until such services commence. Revenue for implementation fees is recognized ratably over the expected term of the contract, including expected renewals. We include service level commitments to customers warranting certain levels of uptime reliability and performance and permitting those customers to receive credits if those levels are not met. In addition, customer contracts often include: specific obligations that require us to maintain the availability of the customer’s data through the service and that customer content is secured against unauthorized access or loss, and indemnity provisions whereby we indemnify customers from third-party claims asserted against them that result from our failure to maintain the availability of their content or securing the same from unauthorized access or loss. To date, we have 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 Revenue 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 account, as discussed below, these revenues are recognized as services are rendered and accepted by the customer. Other Revenues We sell solo *TAG’s and solo*CODEs print Cost of Revenue Cost of revenue consists primarily of costs related to providing subscription and other services to our customers, including employee compensation and related expenses for data center operations, customer support and professional services personnel, payments to outside technology service providers, security services, and other tools. Deferred Revenue Deferred revenue consists of payments received in advance of revenue recognition from subscription services. The deferred revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, contract duration, and invoice frequency. Deferred revenue that will be recognized during the succeeding twelve-month period is recorded as deferred revenue, which is a current liability on the accompanying consolidated balance sheets. Revenue Recognition Policies for the three and six months ended June 30, 2021 In accordance with ASC 606, revenue is recognized when a customer obtains the benefit of promised services, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those services. In determining the amount of revenue to be recognized, the Company performs the following steps: (i) identification of the contract with a customer; (ii) identification of the promised services in the contract and determination of whether the promised services are performance obligations, including whether they are distinct in the context of the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. Disagg The Company derives the majority of its revenue from subscription fees paid for access to and usage of its SaaS solutions for a specified period of time, typically one year. In addition to subscription fees, contracts with customers may include implementation fees for launch assistance and training. Fixed subscription and implementation fees are billed in advance of the subscription term and are due in accordance with contract terms, which generally provide for payment within 30 days. The Company's contracts typically have a one-year term. The Company's contractual arrangements include performance, termination and cancellation provisions, but do not provide for refunds. Customers do not have the contractual right to take possession of the Company's software at any time. Sales taxes collected from customers and remitted to government authorities are excluded from revenue. The following table summarizes revenue disaggregation by product for the following periods (in thousands): For the Six Months Ended June 30, 2021 2020 ( 1 Government $ 1,638 $ 2,472 Non-government 7,283 3,602 $ 8,921 $ 6,074 For the Six Months Ended June 30, 2021 2020 ( 1 United States $ 6,267 $ 6,020 Canada 2,654 54 $ 8,921 $ 6,074 (1) As noted above, prior periods have not been adjusted for the adoption of ASC 606 and are presented in accordance with historical accounting guidance in effect for those periods. Software. Our software revenue is generated from subscriptions and services related to the use of our commercial software platforms, MJ Platform, Ample, Viridian, and Trellis, our government regulatory platform, Leaf Data Systems, and the sale of business intelligence, data analytics and other software related services. Software contracts are generally quarterly or annual contracts paid monthly, quarterly, or annually in advance of service and cancellable upon 30 or 90 days’ notice, although we do have some multi-year commercial software contracts. Leaf Data Systems contracts are generally multi-year contracts payable annually or quarterly in advance of service. Commercial software and Leaf Data Systems contracts generally may only be terminated early for breach of contract as defined in the respective agreements. Amounts that have been invoiced are initially recorded as deferred revenue or contract liabilities. Subscription revenue is recognized on a straight-line basis over the service term of the arrangement beginning on the date that our solution is made available to the customer and ending at the expiration of the subscription term. Consulting Services. Consulting services revenue is generated by providing solutions for operators in the pre-application of licensures and pre-operational phases of development. These services include application and business plan preparation as they seek licenses to be granted. Consulting projects completed during the pre-application phase generally solidify us as the software vendor of choice for subsequent operational phases once the operator is granted the license. As a result, our consulting revenue is driven as new emerging states pass legislation, and as our client-operators gain licenses. Accordingly, we expect our consulting services to continue to grow as more states emerge with legalization reforms. Other Revenue. Our other revenue is derived primarily from point-of-sale hardware and other non-recurring revenue. Contracts with Multiple Performance Obligations Customers may elect to purchase a subscription to multiple modules, multiple modules with multiple service levels, or, for certain of the Company's solutions. We evaluate such contracts to determine whether the services to be provided are distinct and accordingly should be accounted for as separate performance obligations. If we determine that a contract has multiple performance obligations, the transaction price, which is the total price of the contract, is allocated to each performance obligation based on a relative standalone selling price method. We estimate standalone selling price based on observable prices in past transactions for which the product offering subject to the performance obligation has been sold separately. As the performance obligations are satisfied, revenue is recognized as discussed above in the product descriptions. Transaction Price Allocated to Future Performance Obligation ASC 606 provides certain practical expedients that limit the required disclosure of the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied. As the Company typically enters into contracts with customers for a twelve-month subscription term, substantially all of its performance obligations that have not yet been satisfied as of June 30, 2021 are part of a contract that has an original expected duration of one year or less. For contracts with an original expected duration of greater than one year, for which the practical expedient does not apply, the aggregate transaction price allocated to the unsatisfied performance obligations was $5.7 million $2.9 million Deferred Revenue Deferred revenue represents the unearned portion of subscription and implementation fees. Deferred revenue is recorded when cash payments are received in advance of performance. Deferred amounts are generally recognized within one year. Deferred revenue is included in the accompanying consolidated balance sheets under Total current liabilities, net of any long-term portion that is included in Other long-term liabilities. The following table summarizes deferred revenue activity for the six months ended June 30, 2020 (in thousands): As of 2020 Net additions Revenue recognized As of June 30, 2021 Deferred revenue $ 844 3,362 (3,026 ) $ 1,180 Of the $8.9 million of revenue recognized in the six months ended June 30, 2021, $0.4 million was included in deferred revenue at December 31, 2020. Costs to Obtain Contracts In accordance with ASC 606, we now capitalize sales commissions that are directly related to obtaining customer contracts and that would not have been incurred if the contract had not been obtained. These costs are included in the accompanying consolidated balance sheets and are classified as Prepaid expenses and other current assets. Deferred contract costs are amortized to sales and marketing expense over the expected period of benefit, which we have determined to be one year based on the estimated customer relationship period. The following table summarizes deferred contract cost activity for the six months ended June 30, 2021 (in thousand): As of 2020 Additions Amortized costs (1) As of June 30, 2021 Deferred contract costs $ 228 217 (242 ) $ 203 (1) Includes contract costs amortized to sales and marketing expense during the period. |
Significant Transactions
Significant Transactions | 6 Months Ended |
Jun. 30, 2021 | |
Significant Transactions [Abstract] | |
Significant Transactions | Note 4 – Significant Transactions Viridian Sciences On April 1, 2021, we completed the acquisition of Viridian Sciences Inc. (“Viridian”), a cannabis business management software provider that is built on SAP Business One. We acquired Viridian in exchange for $6.0 million of our common stock. In addition to the stock consideration, the agreement provides for contingent consideration of up to $1.0 million, payable in additional common stock, if Viridian meets certain revenue criteria. The contingent consideration will be recorded as the estimated fair value on the acquisition date and adjusted to estimated fair value in each subsequent reporting period until settlement. Preliminary Fair Value Shares issued $ 6,000 Contingent co nsidera 2 Total preliminary fair value of consideration transferred $ 6,002 The following table summarizes the fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands): Preliminary Fair Value Accounts receivable 556 Prepaid expenses and other current assets 71 Capitalized software 500 Acquired technology 470 Customer relationships 820 Acquired trade name 20 Goodwill 4,915 Accounts payable and accrued expenses (350 ) Deferred revenue (1,000 ) Net assets acquired $ 6,002 The excess of purchase consideration over the fair value of assets acquired and liabilities assumed was recorded as goodwill, which is primarily attributed to the assembled workforce and expanded market opportunities, for which there is no basis for U.S. income tax purposes. The fair values assigned to identifiable assets acquired and liabilities assumed are based on management’s estimates and assumptions. Pro Forma Financial Information The following unaudited pro forma financial information for the six months ended June 30, 2021 and the three and six months ended June 30, 2020 summarizes the combined results of operations for Akerna, Trellis, Solo, Ample and Viridian as though the companies were combined as of January 1, 2019 (in thousands): Six Months Ended 2021 Revenue $ 9,929 Net loss $ ( 12,561 ) Three Months Ended 2020 Revenue $ 5,506 Net loss $ (7,072 ) Six Months Ended June 30, 2020 Revenue $ 11,362 Net loss $ (13,431 ) The pro forma financial information for all periods presented above has been calculated after adjusting the results of Trellis, Ample and Viridian to reflect the business combination accounting effects resulting from these acquisitions, including the amortization expense from acquired intangible assets as though the acquisition occurred as of the beginning of the Company’s fiscal year 2019. The Akerna historical condensed consolidated financial statements have been adjusted in the pro forma combined financial statements to give effect to pro forma events that are directly attributable to the business combination and factually supportable. The pro forma financial information is for illustrative and informational purposes only and is not intended to represent or be indicative of what the results of operations would have been had the Ample acquisition taken place at the beginning of the Company’s fiscal year 2019. Special Voting Preferred Stock and Exchangeable Shares In connection with the Ample acquisition, we entered into agreements with our wholly-owned subsidiary and the Ample shareholder representative that resulted in the issuance of a single share of our special voting preferred stock, for the purpose of ensuring that each Exchangeable Share is substantially the economic and voting equivalent of a share of Akerna common stock, and, following the registration of the Akerna shares issuable upon exchange of the Exchangeable Shares under the Securities Act of 1933, ensuring that each Exchangeable Share is exchangeable on a one-for-one basis for a share of Akerna common stock, subject to certain limitations. As a result of these agreements and the issuance of the special voting preferred stock, each holder of Exchangeable Shares effectively has the ability to cast votes along with holders of Akerna common stock. Additionally, these agreements grant exchange rights to the holders of exchangeable shares upon the event of our liquidation, dissolution or winding up. The special voting preferred stock has a par value of $0.0001 per share and a preference in liquidation of $ 1.00 During the six months ended June 30, 2021, several Ample shareholders exchanged a total of 607,914 exchangeable shares with a value of $4,650,542 for the same number of shares of common stock. The exchange was accounted for as an equity transaction and we did not recognize a gain or loss on this transaction. As of June 30, 2021, there were a total of 1,039,373 exchangeable shares issued and outstanding. |
Balance Sheet Disclosures
Balance Sheet Disclosures | 6 Months Ended |
Jun. 30, 2021 | |
Balance Sheet Disclosures [Abstract] | |
Balance Sheet Disclosures | Note 5 - Balance Sheet Disclosures Prepaid expenses and other current assets consisted of the following: As of As of June 30, December 31, 2021 2020 Software and technology $ 570,777 $ 480,651 Professional services, dues and subscriptions 741,581 826,195 Insurance 548,023 243,222 Deferred contract costs 202,556 227,718 Unbilled receivables 231,095 612,446 Other 101,313 68,495 Total prepaid expenses and other current assets $ 2,395,345 $ 2,458,727 Accounts payable and accrued liabilities consisted of the following: As of As of June 30, December 31, 2021 2020 Accounts payable $ 1,126,483 $ 513,610 Professional fees 461,594 333,709 Sales taxes 245,759 216,367 Compensation 216,301 311,379 Contractors 596,921 1,281,857 Other 2,034,496 531,654 Total accounts payable and accrued liabilities $ 4,681,554 $ 3,188,576 |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Note 6 - Fair Value Fair Value Option Election – Convertible Notes We issued Convertible Notes with a principal amount of $ 17.0 15.0 For the Convertible Notes, which are measured at fair value categorized within Level 3 June 30, 2021 Three Months Ended June 30, 2021 2020 Fair value balance at beginning of period or issue date (June 9, 2020) $ 7,705,000 $ 14,960,000 Payments on Convertible Notes ( 1,572,405 ) — Change in fair value reported in the statements of operations 16,405 (766,000 ) Change in fair value reported in other comprehensive loss 3,000 (63,000 ) Fair value balance at end of period $ 6,152,000 $ 14,131,000 Six Months Ended June 30, 2021 2020 Fair value balance at beginning of period or issue date (June 9, 2020) $ 13,398,000 $ 14,960,000 Payments on Convertible Notes ( 9,269,677 ) — Change in fair value reported in the statements of operations 2,007,677 (766,000 ) Change in fair value reported in other comprehensive loss 16,000 (63,000 ) Fair value balance at end of period $ 6,152,000 $ 14,131,000 The estimated fair value of the Convertible Notes as of June 30, 2021 and December 31, 2020, was computed using a Monte Carlo 3 We estimated the fair value by using the following key inputs to the Monte Carlo Simulation Model : Fair Value Assumptions - Convertible Notes June 30, 2021 December 31, 2020 Face value principal payable (in thousands) $ 5,903,000 $ 15,172,272 Original conversion price $ 11.50 $ 11.50 Value of Common Stock $ 4.03 $ 3.24 Expected term (years) 1.93 2.3 Volatility 89 % 77 % Market yield 26.1 to 26.3 % 27.1 to 27.2 % Risk free rate 0.2 % 0.1 % Fair Value Measurement – Warrants In connection with MTech Acquisition Corp.'s ("MTech") initial public offering, MTech sold 5,750,000 units at a purchase price of $10.00 per unit, inclusive of 750,000 units sold to the underwriters on February 8, 2018, upon the underwriters’ election to fully exercise their over-allotment option. Each unit consisted of one share of MTech’s common stock and one warrant of MTech (“MTech Public Warrant”). Each MTech Public Warrant entitled the holder to purchase one share of MTech’s common stock at an exercise price of $11.50. Concurrently with MTech’s initial public offering, MTech sold 243,750 units at a purchase price of $10.00 per unit on a private offering basis. Upon completion of the mergers between MTech and MJF on June 17, 2019, as contemplated by the Merger Agreement dated October 10, 2018, as amended ("Mergers"), the MTech Public Warrants and the MTech Private Warrants were converted, respectively, at an exchange ratio of one-for-one to a warrant to purchase one share of Akerna’s common stock with identical terms and conditions as the MTech Public Warrants (“Public Warrant”) and the MTech Private Warrants (“Private Warrant”, collectively with the Public Warrants, “Warrants”) For the Private Warrants classified as derivative liabilities, which are measured at fair value categorized within Level 3 of the fair value hierarchy, the following is a reconciliation of the fair values for the three and six months ended June 30, 2021 and June 30, 2020: Three Months Ended June 30, 2021 2020 Fair value balance at beginning of period $ 487,372 $ 451,270 Change in fair value reported in the statements of operations (133,125 ) 606,958 Fair value balance at end of period $ 354,247 $ 1,058,228 Six Months Ended June 30, 2021 2020 Fair value balance at beginning of period $ 311,376 $ 688,187 Change in fair value reported in the statements of operations 42,871 370,041 Fair value balance at end of period $ 354,247 $ 1,058,228 We utilized a binomial lattice model, which incorporates significant inputs, specifically the expected volatility, that are not observable in the market, and thus represents a Level 3 measurement as defined in GAAP. The unobservable inputs utilized for measuring the fair value of the Private Warrants reflect our estimates regarding the assumptions that market participants would use in valuing the Warrants as of the end of the reporting periods. We record the fair value of the Private Private Private Private Private We estimated the fair value by using the following key inputs: Fair Value Assumptions - Private June 30, 2021 December 31, 2020 Number of Private Warrants 225,635 225,635 Original conversion price $ 11.50 $ 11.50 Value of Common Stock $ 4.03 $ 3.24 Expected term (years) 2.96 3.46 Volatility 98.2 % 102.3 % Risk free rate 0.5 % 0.2 % |
Loss Per Share
Loss Per Share | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share [Abstract] | |
Loss Per Share | Note 9 - Loss Per Share During the three and six months ended June 30, 2021 20 Diluted net loss per common share is calculated under the two-class method by giving effect to all potentially dilutive common stock, including warrants, restricted stock awards, restricted stock units, and shares of common stock issuable upon conversion of our Convertible Notes. We analyzed the potential dilutive effect of any outstanding convertible securities under the "if-converted" method, in which it is assumed that the outstanding Exchangeable Shares and Convertible Notes are converted to shares of common stock at the beginning of the period or date of issuance, if later. We report the more dilutive of the approaches (two-class or "if-converted") as the diluted net loss per share during the period. The dilutive effect of unvested restricted stock awards and restricted stock units is reflected in diluted loss per share by application of the treasury stock method and is excluded when the effect would be anti-dilutive. The weighted-average number of shares outstanding used in the computation of diluted earnings per share does not include the effect of potential outstanding common shares that would have been anti-dilutive for the period. The table below details potentially outstanding shares on a fully diluted basis that were not included in the calculation of diluted earnings per share: As of 2021 2020 Shares issuable upon exchange of Exchangeable Shares 1,039,373 — Shares of common stock issuable in upon conversion of Convertible Notes 1,761,929 1,936,845 Warrants 5,813,804 5,813,804 Unvested restricted stock units 998,104 325,121 Unvested restricted stock awards 32,394 75,654 Total 9,645,604 8,151,424 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 7 - Commitments and Contingencies Litigation On December 4, 2020, TechMagic USA LLC filed suit against our wholly-owned subsidiary, Solo, in Massachusetts Superior Court, Department Business Litigation, seeking recovery of up to approximately $1.07 million for unpaid invoices pursuant to a Master Services Agreement dated February 5, 2018 by and between TechMagic and Solo. The invoices set forth services that TechMagic USA LLC purports to have provided to Solo regarding development of mobile software applications for MJF and Solo between March and November 2020 totaling approximately $787,000. The suit seeks continued fees under the Master Services Agreement through the end of January 2021. Akerna provided a notice of termination of the Master Services Agreement on November 23, 2020 and the parties dispute the effective date of the termination. Solo disputes the validity of the invoices, in whole or in part, and intends to defend the suit vigorously. Mr. Ashesh Shah, formerly the president of Solo and currently the holder of 5 . 1 On April 2, 2021, TreCom Systems Group, Inc. (“TreCom”) filed suit against Akerna and our wholly-owned subsidiary, MJ Freeway, LLC, in federal District Court for the Eastern District of Pennsylvania, seeking recovery of up to approximately $2 million for services allegedly provided pursuant to a Subcontractor Agreement between MJ Freeway and TreCom. MJ Freeway provided a notice of termination of the operative Subcontractor Agreement on August 4, 2020. MJ Freeway disputes the validity of TreCom’s invoices and the enforceability of the alleged agreement that TreCom submitted to the court. Akerna filed counterclaims against TreCom for breach of contract, a declaratory judgment, commercial disparagement, and defamation. On May 21, 2021, our wholly-owned subsidiary, Solo, filed suit against two of Solo’s former directors, Ashesh Shah and Palle Pedersen. From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. We 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 June 30, 2021, and through the date these financial statements were issued, there were no other legal proceedings requiring recognition or disclosure in the financial statements. Operating Leases During the three months ended June 30, 2021, we began negotiations to terminate our office lease in Toronto, Canada. We booked a liability and lease termination expense of $1.3 million which is management’s best estimate of the costs to exit our existing lease. The lease termination expense is included within the General and Administrative expense line item on the condensed consolidated statement of operations. In connection with the lease termination, we also wrote off certain assets, primarily leasehold improvements, the resulting loss of which was also recorded in the General and Administrative expense line item on the condensed consolidated statement of operations. |
Revisions of Previously Issued
Revisions of Previously Issued Financial Statements | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Revisions of Previously Issued Financial Statements | Note 8 – Revisions of Previously Issued Financial Statements On June 17, 2019, we completed the Mergers with MTech. Prior to the Mergers, MTech was a special purpose acquisition company and had completed an initial public offering in October 2018, which included the issuances of the MTech Private Warrants in a simultaneous private placement transaction. The MTech Private Warrants were exchanged for our Private Warrants as part of the Mergers and our Private Warrants remain outstanding as of June 30, 2021. We previously accounted for these outstanding Private Warrants as components of equity rather than as derivative liabilities. In light of the Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) issued by the staff of the SEC on April 12, 2021 (the “SEC Staff Statement”), the Company’s management further evaluated our outstanding warrants under Accounting Standards Codification 815-40, Contracts in Entity’s Own Equity (“ASC 815-40”), which addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s common stock. Based on management’s evaluation and in consultation with the Audit Committee, we concluded that the Company’s Private Warrants are not indexed to the Company’s common stock in the manner contemplated by ASC Section 815-40. As a result, these warrants are precluded from equity classification and should be recorded as derivative liabilities remeasured to fair value at each reporting period. We assessed the materiality of these errors on prior periods’ financial statements and concluded that the errors were not material to any prior annual or interim periods. However, we are revising the prior periods’ financial statements when they are next issued in these condensed consolidated financial statements and we are reclassifying the Private Warrants as derivative liabilities measured at their estimated fair values at the end of each reporting period and recognizing changes in the estimated fair value of the derivative instruments from the prior period in the Company’s operating results for the current period. See Item. 4 of Part I, Controls, and Procedures. The Company's change in accounting for the Private Warrants from components of equity to derivative liabilities has no impact on the Company's current or previously reported cash position. The tables below disclose the effects on the financial statements included in this Quarterly Report on Form 10-Q and the financial statements yet to be reissued: Year Ended June 30, 2020 As reported Adjustment As revised Consolidated Statements of Operations Change in fair value of derivative liability $ — $ 1,962,034 $ 1,962,034 Net loss attributable to Akerna shareholders (15,534,345 ) 1,962,034 (13,572,311 ) Net loss per share (1.31 ) — (1.14 ) Six Months Ended December 31, 2020 As reported Adjustment As revised Consolidated Statements of Operations Change in fair value of derivative liability $ — $ 746,852 $ 746,852 Net loss attributable to Akerna shareholders (16,957,334 ) 746,852 (16,210,482 ) Net loss per share (1.06 ) — (1.01 ) As of December 31, 2020 As reported Adjustment As revised Consolidated Balance Sheet Derivative liability $ — $ 311,376 $ (311,376) Total liabilities (19,635,076) (311,376) (19,946,452) Additional paid-in capital 95,090,883 (1,004,450) 94,086,433 Accumulated deficit (57,872,599) 693,074 (57,179,525) |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 10 - Subsequent Events On July 23, 2021, we entered into an Equity Distribution Agreement with Oppenheimer & Co. Inc. and A.G.P./Alliance Global Partners. Pursuant to the terms of the Agreement, we may offer and sell from time to time, up to $25 million of shares of our common stock. While no assurance can be provided that we will be able to raise capital under such program, we intend to use the net proceeds from the sale of our shares of common stock, if any, for general corporate purposes, including working capital, marketing, product development, capital expenditures and merger and acquisition activities. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Certain footnotes and other financial information normally required by GAAP, have been condensed or omitted in accordance with such rules and regulations. June 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021. The condensed consolidated balance sheet as of and for the period ended December 31, 2020, has been derived from our audited financial statements at that date but does not include all disclosures and financial information required by GAAP for complete financial statements. The information included in this quarterly report on Form 10-Q should be read in conjunction with our consolidated financial statements and notes thereto for the period ended December 31, 2020, which were included in our report on Form 10-KT filed on March 31, 2021. |
Principles of Consolidation | Principles of Consolidation Our accompanying condensed consolidated financial statements include the accounts of Akerna, our wholly owned subsidiaries and those entities in which we otherwise have a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation. We evaluate our ownership interests, contractual rights, and other interests in entities to determine if the entities are variable interest entities, or VIEs, when we have a variable interest in those entities. Generally, a VIE is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. These evaluations can be complex and involve judgment and the use of estimates and assumptions based on available historical information. If we determine that we hold a variable interest in a VIE and we are the primary beneficiary of the VIE, we must consolidate the VIE in our financial statements. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; and the similarity with and significance to our business activities and the business activities of the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of these VIE’s operations and general market conditions. We determine whether we are the primary beneficiary of a VIE upon our initial involvement with the VIE and reassess our status on an ongoing basis. |
Use of Estimates | Use of Estimates The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes thereto. We base our estimates on assumptions that we believe to be reasonable under the circumstances, the results of which form a basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. under different assumptions or conditions; however, we believe that our estimates are reasonable |
Concentrations of Credit Risk | Concentrations of Credit Risk We grant credit in the normal course of business to customers in the United States. We periodically perform credit analysis and monitor the financial condition of our customers to reduce credit risk. During the six months ended June 30, 2021 and 2020, one government client accounted for 11% and 26% of total revenues, respectively. During the three months ended one 10 % and 28% of total revenues, respectively. As of June 30, 2021 and December 31, 2020, 37 |
Foreign Currency Translation | Foreign Currency Translation The functional currency of the Company's non-U.S. operations is the local currency. Monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the balance sheet dates. Non-monetary assets and liabilities are translated at the historical rates in effect when the assets were acquired or obligations incurred. Revenue and expenses are translated into U.S. dollars using the average rates of exchange prevailing during the period. Translation gains or losses are included as a component of accumulated other comprehensive loss in stockholders' equity. Gains and losses resulting from foreign currency transactions are recognized as other income (expense). |
Reclassifications and Revisions | Reclassifications and Revisions Certain prior year financial statement amounts have been reclassified for consistency with the current year presentation. |
Segment Reporting | Segment Reporting The Company operates its business as one operating segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker, the Company’s Chief Executive Officer, in deciding how to allocate resources and assess performance. The Company’s chief operating decision maker allocates resources and assesses performance based upon discrete financial information at the consolidated level. In the following table, we disclose our long-lived assets by geographical location (in thousands): As of June 30, 2021 As of December 31, 2020 Long-lived assets: United States $ 13,845 $ 9,994 Canada 4,633 5,074 Total $ 18,478 $ 15,068 |
Warrant Liabilities | Warrant Liabilities We classify private placement warrants as liabilities. At the end of each reporting period, changes in fair value during the period are recognized within the condensed consolidated statements of operations and comprehensive loss. We will continue to adjust the warrant liability for changes in the fair value until the earlier of a) the exercise or expiration of the warrants or b) the redemption of the warrants, at which time the warrants will be reclassified to additional paid-in capital. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements ASU 2016-02 The Financial Accounting Standards Board, or the FASB, has issued new guidance related to the accounting for leases. The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. Following our change in fiscal year effective on December 31, 2020, the new standard is effective for us beginning on January 1, 2022 and interim periods thereafter. We have limited assets subject to operating lease and therefore expect the adoption of the new standard to result in the recognition of right of use assets and lease liabilities for any office or vehicle leases in effect at that date, we do not expect a significant impact to our results of operations. ASU 2016-13 The FASB has issued guidance to introduce a new model for recognizing credit losses on financial instruments based on estimated current expected credit losses, or CECL. Under the new standard, an entity is required to estimate CECL on trade receivables at inception, based on historical information, current conditions, and reasonable and supportable forecasts. Following our change in fiscal year-end effective December 31, 2020, the new guidance is effective for us beginning on January 1, 2023. We are evaluating the impact of adoption of the new standard on our consolidated financial statements. ASU 2018-15 The FASB has issued guidance to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The guidance (i) provides criteria for determining which implementation costs to capitalize as an asset related to the service contract and which costs to expense, (ii) requires an entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement and (iii) clarifies the presentation requirements for reporting such costs in the entity’s financial statements. The guidance is applicable for us for the year ending December 31, 2021. We are evaluating the impact of adoption of the standard on our financial statements, however, do not anticipate a significant impact to our financials as a result of this guidance. ASU 2020-01 The FASB has issued guidance clarifying the interactions between various standards governing investments in equity securities. The new guidance 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 us for annual and interim periods beginning on January 1, , with early adoption permitted. Adoption of the standard requires changes to be made prospectively. We do not anticipate a significant impact to our financial statements as a result of this new guidance. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Schedule of disaggregated by primary geographical markets and revenue | As of June 30, 2021 As of December 31, 2020 Long-lived assets: United States $ 13,845 $ 9,994 Canada 4,633 5,074 Total $ 18,478 $ 15,068 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Summarizes revenue disaggregation | For the Six Months Ended June 30, 2021 2020 ( 1 Government $ 1,638 $ 2,472 Non-government 7,283 3,602 $ 8,921 $ 6,074 For the Six Months Ended June 30, 2021 2020 ( 1 United States $ 6,267 $ 6,020 Canada 2,654 54 $ 8,921 $ 6,074 |
Summarizes deferred revenue activity | As of 2020 Net additions Revenue recognized As of June 30, 2021 Deferred revenue $ 844 3,362 (3,026 ) $ 1,180 |
Summarizes deferred contract cost activity | As of 2020 Additions Amortized costs (1) As of June 30, 2021 Deferred contract costs $ 228 217 (242 ) $ 203 (1) Includes contract costs amortized to sales and marketing expense during the period. |
Significant Transactions (Table
Significant Transactions (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Business Acquisition [Line Items] | |
Schedule of financial information combined results of operations | Six Months Ended 2021 Revenue $ 9,929 Net loss $ ( 12,561 ) Three Months Ended 2020 Revenue $ 5,506 Net loss $ (7,072 ) Six Months Ended June 30, 2020 Revenue $ 11,362 Net loss $ (13,431 ) |
Viridian Sciences [Member] | |
Business Acquisition [Line Items] | |
Schedule of estimated acquisition date fair value of consideration | Preliminary Fair Value Shares issued $ 6,000 Contingent co nsidera 2 Total preliminary fair value of consideration transferred $ 6,002 |
Schedule of preliminary estimated fair values of assets acquired and liabilities | Preliminary Fair Value Accounts receivable 556 Prepaid expenses and other current assets 71 Capitalized software 500 Acquired technology 470 Customer relationships 820 Acquired trade name 20 Goodwill 4,915 Accounts payable and accrued expenses (350 ) Deferred revenue (1,000 ) Net assets acquired $ 6,002 |
Balance Sheet Disclosures (Tabl
Balance Sheet Disclosures (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Balance Sheet Disclosures [Abstract] | |
Schedule of prepaid expenses and other current assets | As of As of June 30, December 31, 2021 2020 Software and technology $ 570,777 $ 480,651 Professional services, dues and subscriptions 741,581 826,195 Insurance 548,023 243,222 Deferred contract costs 202,556 227,718 Unbilled receivables 231,095 612,446 Other 101,313 68,495 Total prepaid expenses and other current assets $ 2,395,345 $ 2,458,727 |
Schedule of accounts payable and accrued liabilities | As of As of June 30, December 31, 2021 2020 Accounts payable $ 1,126,483 $ 513,610 Professional fees 461,594 333,709 Sales taxes 245,759 216,367 Compensation 216,301 311,379 Contractors 596,921 1,281,857 Other 2,034,496 531,654 Total accounts payable and accrued liabilities $ 4,681,554 $ 3,188,576 |
Fair Value (Tables)
Fair Value (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Convertible Debt [Member] | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Schedule of reconciliation of fair values | Three Months Ended June 30, 2021 2020 Fair value balance at beginning of period or issue date (June 9, 2020) $ 7,705,000 $ 14,960,000 Payments on Convertible Notes ( 1,572,405 ) — Change in fair value reported in the statements of operations 16,405 (766,000 ) Change in fair value reported in other comprehensive loss 3,000 (63,000 ) Fair value balance at end of period $ 6,152,000 $ 14,131,000 Six Months Ended June 30, 2021 2020 Fair value balance at beginning of period or issue date (June 9, 2020) $ 13,398,000 $ 14,960,000 Payments on Convertible Notes ( 9,269,677 ) — Change in fair value reported in the statements of operations 2,007,677 (766,000 ) Change in fair value reported in other comprehensive loss 16,000 (63,000 ) Fair value balance at end of period $ 6,152,000 $ 14,131,000 |
Schedule of fair value by using key inputs | Fair Value Assumptions - Convertible Notes June 30, 2021 December 31, 2020 Face value principal payable (in thousands) $ 5,903,000 $ 15,172,272 Original conversion price $ 11.50 $ 11.50 Value of Common Stock $ 4.03 $ 3.24 Expected term (years) 1.93 2.3 Volatility 89 % 77 % Market yield 26.1 to 26.3 % 27.1 to 27.2 % Risk free rate 0.2 % 0.1 % |
Private Warrant [Member] | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Schedule of reconciliation of fair values | Three Months Ended June 30, 2021 2020 Fair value balance at beginning of period $ 487,372 $ 451,270 Change in fair value reported in the statements of operations (133,125 ) 606,958 Fair value balance at end of period $ 354,247 $ 1,058,228 |
Schedule of fair value by using key inputs | Fair Value Assumptions - Private June 30, 2021 December 31, 2020 Number of Private Warrants 225,635 225,635 Original conversion price $ 11.50 $ 11.50 Value of Common Stock $ 4.03 $ 3.24 Expected term (years) 2.96 3.46 Volatility 98.2 % 102.3 % Risk free rate 0.5 % 0.2 % |
Loss Per Share (Tables)
Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of diluted earnings per share | As of 2021 2020 Shares issuable upon exchange of Exchangeable Shares 1,039,373 — Shares of common stock issuable in upon conversion of Convertible Notes 1,761,929 1,936,845 Warrants 5,813,804 5,813,804 Unvested restricted stock units 998,104 325,121 Unvested restricted stock awards 32,394 75,654 Total 9,645,604 8,151,424 |
Revisions of Previously Issue_2
Revisions of Previously Issued Financial Statements (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of financial statements | Year Ended June 30, 2020 As reported Adjustment As revised Consolidated Statements of Operations Change in fair value of derivative liability $ — $ 1,962,034 $ 1,962,034 Net loss attributable to Akerna shareholders (15,534,345 ) 1,962,034 (13,572,311 ) Net loss per share (1.31 ) — (1.14 ) Six Months Ended December 31, 2020 As reported Adjustment As revised Consolidated Statements of Operations Change in fair value of derivative liability $ — $ 746,852 $ 746,852 Net loss attributable to Akerna shareholders (16,957,334 ) 746,852 (16,210,482 ) Net loss per share (1.06 ) — (1.01 ) As of December 31, 2020 As reported Adjustment As revised Consolidated Balance Sheet Derivative liability $ — $ 311,376 $ (311,376) Total liabilities (19,635,076) (311,376) (19,946,452) Additional paid-in capital 95,090,883 (1,004,450) 94,086,433 Accumulated deficit (57,872,599) 693,074 (57,179,525) |
Description of Business (Detail
Description of Business (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jul. 23, 2021 | Dec. 31, 2020 | |
Description of Business, Liquidity and Capital Resources (Textual) | |||||
Cash in operations | $ (3,715,198) | $ (8,587,734) | |||
Working capital | $ 3,100,000 | 3,100,000 | |||
Non recurring expenses | 2,700,000 | ||||
PPP loan | 2,000,000 | 2,000,000 | |||
Cash | 11,778,601 | 11,778,601 | $ 17,840,640 | ||
Loss from Operations | $ 6,100,000 | 9,600,000 | |||
Cash in operations | $ 3,700,000 | ||||
Subsequent Event [Member] | |||||
Description of Business, Liquidity and Capital Resources (Textual) | |||||
Common stock value issued | $ 25,000,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Primary geographical markets: | |||||
Total | $ 4,906,887 | $ 3,003,638 | $ 8,920,911 | $ 6,074,184 | |
Long-lived assets: | |||||
Long-Lived assets | 18,478,000 | 18,478,000 | $ 15,068 | ||
United States [Member] | |||||
Long-lived assets: | |||||
Long-Lived assets | 13,845,000 | 13,845,000 | 9,994 | ||
Canada | |||||
Long-lived assets: | |||||
Long-Lived assets | $ 4,633,000 | $ 4,633,000 | $ 5,074 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Textual) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021USD ($)Customers | Jun. 30, 2020USD ($)Customers | Dec. 31, 2020Customers | |
Summary of Significant Accounting Policies (Textual) | |||||
Foreign currency transaction related losses | $ | $ 17,344 | ||||
One Government Client [Member] | Total Revenues [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Number of Customer | 1 | 1 | |||
One Government Client [Member] | Total Revenues [Member] | Revenue from Rights Concentration Risk [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Concentration risk percentage | 10.00% | 28.00% | 11.00% | 26.00% | |
Two Government Client [Member] | Account Receivable [Member] | Revenue from Rights Concentration Risk [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Concentration risk percentage | 37.00% | 36.00% | |||
Number of Customer | 2 | 2 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | [1] | |
Disaggregation of Revenue [Line Items] | |||
Revenue disaggregation | $ 8,921 | $ 6,074 | |
Government [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue disaggregation | 1,638 | 2,472 | |
Non-Government [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue disaggregation | $ 7,283 | $ 3,602 | |
[1] | As noted above, prior periods have not been adjusted for the adoption of ASC 606 and are presented in accordance with historical accounting guidance in effect for those periods. |
Revenue (Details 1)
Revenue (Details 1) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | [1] | |
Disaggregation of Revenue [Line Items] | |||
Adjusted for adoption | $ 8,921 | $ 6,074 | |
United States | |||
Disaggregation of Revenue [Line Items] | |||
Adjusted for adoption | 6,267 | 6,020 | |
Canada | |||
Disaggregation of Revenue [Line Items] | |||
Adjusted for adoption | $ 2,654 | $ 54 | |
[1] | As noted above, prior periods have not been adjusted for the adoption of ASC 606 and are presented in accordance with historical accounting guidance in effect for those periods. |
Revenue (Details 2)
Revenue (Details 2) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue Beginning Balance | $ 844 | |
Net additions | 3,362 | |
Revenue recognized | (3,026) | $ (400) |
Deferred revenue Ending Balance | $ 1,180 | $ 844 |
Revenue (Details 3)
Revenue (Details 3) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021USD ($) | ||
Revenue from Contract with Customer [Abstract] | ||
Deferred contract costs Beginning Balance | $ 228 | |
Additions | 217 | |
Amortized costs | 242 | [1] |
Deferred contract costs Ending Balance | $ 203 | |
[1] | Includes contract costs amortized to sales and marketing expense during the period. |
Revenue (Details Textual)
Revenue (Details Textual) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | ||
Unsatisfied performance obligations | $ 5.7 | |
Revenue recognized | 2,900,000 | $ 8,900,000 |
Revenue recognized | 3,026,000 | 400,000 |
Deferred revenue | $ 1,180,000 | $ 844,000 |
Significant Transactions (Detai
Significant Transactions (Details) - USD ($) | Apr. 02, 2021 | Jun. 30, 2021 |
Viridian Sciences [Member] | ||
Business Acquisition [Line Items] | ||
Exchangeable shares issued | $ 6,000 | |
Cash | 2 | |
Contingent consideration | $ 6,002 | |
Ample Organics [Member] | ||
Business Acquisition [Line Items] | ||
Exchangeable shares issued | $ 4,650,542 |
Significant Transactions (Det_2
Significant Transactions (Details 1) - Viridian Sciences [Member] | Apr. 02, 2021USD ($) |
Business Acquisition [Line Items] | |
Accounts receivable | $ 556 |
Prepaid expenses and other assets | 71 |
Capitalized software | 500 |
Acquired technology | 470 |
Customer relationships | 820 |
Acquired trade name | 20 |
Goodwill | 4,915 |
Accounts payable and accrued expenses | (350) |
Deferred revenue | (1,000) |
Net assets acquired | $ 6,002 |
Significant Transactions (Det_3
Significant Transactions (Details 2) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | |
Significant Transactions [Abstract] | |||
Revenue | $ 5,506 | $ 9,929,000 | $ 11,362,000 |
Net loss | $ (7,072) | $ (12,561,000) | $ (13,431,000) |
Significant Transactions (Det_4
Significant Transactions (Details Textual) - USD ($) | Apr. 02, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Business Acquisition [Line Items] | |||
Common stock, shares issued | 25,332,439 | 19,901,248 | |
Voting preferred stock, par value | $ 0.0001 | ||
Preferred stock liquidation, description | special voting preferred stock has a par value of $0.0001 per share and a preference in liquidation of $<span>1.00</span>. | ||
Stock consideration in cash | $ 1,000,000 | ||
Reduction of contingent consideration | $ 6,000,000 | ||
Ample Organics [Member] | |||
Business Acquisition [Line Items] | |||
Exchangeable shares issued | 1,039,373 | ||
Common stock issued in business combination, Shares | 607,914 | ||
Value of shares issued for exchangeable shares | $ 4,650,542 |
Balance Sheet Disclosures (Deta
Balance Sheet Disclosures (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Balance Sheet Disclosures [Abstract] | ||
Software and technology | $ 570,777 | $ 480,651 |
Professional services, dues and subscriptions | 741,581 | 826,195 |
Insurance | 548,023 | 243,222 |
Deferred contract costs | 202,556 | 227,718 |
Unbilled receivables | 231,095 | 612,446 |
Other | 101,313 | 68,495 |
Total prepaid expenses and other current assets | $ 2,395,345 | $ 2,458,727 |
Balance Sheet Disclosures (De_2
Balance Sheet Disclosures (Details 1) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 | Jun. 30, 2020 |
Balance Sheet Disclosures [Abstract] | |||
Accounts payable | $ 1,126,483 | $ 513,610 | |
Professional fees | 461,594 | 333,709 | |
Sales taxes | 245,759 | 216,367 | |
Compensation | 216,301 | 311,379 | |
Contractors | 596,921 | 1,281,857 | |
Other | 2,034,496 | 531,654 | |
Total accounts payable and accrued liabilities | $ 4,681,554 | $ 3,188,576 | $ 3,188,576 |
Fair Value (Details)
Fair Value (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | ||||
Fair value balance at beginning of period or issue date (June 9, 2020) | $ 7,705,000 | $ 14,960,000 | $ 13,398,000 | $ 14,960,000 |
Payments on Convertible Notes | (1,572,405) | (9,269,677) | ||
Change in fair value reported in the statements of operations | 16,405 | (766,000) | 2,007,677 | (766,000) |
Change in fair value reported in other comprehensive loss | 3,000 | (63,000) | 16,000 | (63,000) |
Fair value balance at end of period | $ 6,152,000 | $ 14,131,000 | $ 6,152,000 | $ 14,131,000 |
Fair Value (Details 1)
Fair Value (Details 1) - Convertible Debt [Member] - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Face value principal payable | $ 5,903,000 | $ 15,172,272 |
Original conversion price | $ 11.50 | $ 11.50 |
Value of Common Stock | $ 4.03 | $ 3.24 |
Expected term (years) | 1 year 11 months 4 days | 2 years 3 months 18 days |
Volatility | 89.00% | 77.00% |
Risk free rate | 0.20% | 0.10% |
Minimum [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Market yield | 26.10% | 27.10% |
Maximum [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Market yield | 26.30% | 27.20% |
Fair Value (Details 2)
Fair Value (Details 2) - Private Warrant [Member] - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Fair value balance at beginning of period | $ 487,372 | $ 451,270 | $ 311,376 | $ 688,187 |
Change in fair value reported in the statements of operations | 133,125 | (606,958) | (42,871) | (370,041) |
Fair value balance as of June 30, 2021 | $ 354,247 | $ 1,058,228 | $ 354,247 | $ 1,058,228 |
Fair Value (Details 3)
Fair Value (Details 3) - Private Warrant [Member] - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Number of Private Warrants | 225,635 | 225,635 |
Original conversion price | $ 11.50 | $ 11.50 |
Value of Common Stock | $ 4.03 | $ 3.24 |
Expected term (years) | 2 years 11 months 15 days | 3 years 5 months 15 days |
Volatility | 98.20% | 102.30% |
Risk free rate | 0.50% | 0.20% |
Fair Value (Details Textual)
Fair Value (Details Textual) $ / shares in Units, $ in Millions | Feb. 08, 2018$ / sharesshares | Jun. 30, 2021$ / shares | Dec. 31, 2020$ / shares | Jun. 09, 2020USD ($) |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Principal amount | $ | $ 17 | |||
Purchase price | $ | $ 15 | |||
Common Stock [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Number of shares issued | 189,365 | |||
Private Warrant [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Exercise price (in dollars per share) | $ / shares | $ 11.50 | $ 11.50 | ||
Mtech [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Purchase price per unit (in dollars per share) | $ / shares | $ 5,750,000 | |||
Mtech [Member] | Warrant [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Exchange ratio of converted warrants upon conversion | 1 | |||
Mtech [Member] | Public Warrant [Member] | IPO [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Purchase price per unit (in dollars per share) | $ / shares | $ 10 | |||
Number of securities called by each warrant or right | 1 | |||
Exercise price (in dollars per share) | $ / shares | $ 11.50 | |||
Mtech [Member] | Public Warrant [Member] | IPO [Member] | Common Stock [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Number of securities called by each warrant or right | 1 | |||
Mtech [Member] | Public Warrant [Member] | IPO [Member] | Warrant [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Number of securities called by each warrant or right | 1 | |||
Mtech [Member] | Public Warrant [Member] | Over-Allotment Option [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Shares sold | 750,000 | |||
Mtech [Member] | Private Warrant [Member] | Private Placement [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Shares sold | 243,750 | |||
Purchase price per unit (in dollars per share) | $ / shares | $ 10 | |||
Number of securities called by each warrant or right | 1 | |||
Exercise price (in dollars per share) | $ / shares | $ 11.50 | |||
Mtech [Member] | Private Warrant [Member] | Private Placement [Member] | Common Stock [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Number of securities called by each warrant or right | 1 | |||
Mtech [Member] | Private Warrant [Member] | Private Placement [Member] | Warrant [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Number of securities called by each warrant or right | 1 |
Loss Per Share (Details)
Loss Per Share (Details) - shares | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Outstanding shares on fully diluted | 9,645,604 | 8,151,424 |
Shares issuable upon exchange of Exchangeable Shares [Member] | ||
Outstanding shares on fully diluted | 1,039,373 | |
Shares of common stock issuable in upon conversion of Convertible Notes [Member] | ||
Outstanding shares on fully diluted | 1,761,929 | 1,936,845 |
Warrants [Member] | ||
Outstanding shares on fully diluted | 5,813,804 | 5,813,804 |
Unvested restricted stock units [Member] | ||
Outstanding shares on fully diluted | 998,104 | 325,121 |
Unvested restricted stock awards [Member] | ||
Outstanding shares on fully diluted | 32,394 | 75,654 |
Commitments and Contingencies (
Commitments and Contingencies (Details Textual) - USD ($) | Apr. 02, 2021 | Dec. 04, 2020 | Jun. 30, 2021 | Nov. 30, 2020 |
Business litigation description | <span style="border-left: none; border-right: none;"><span style="border-left: none; border-right: none;"><span style="border-left: none; border-right: none;">5</span></span><span style="border-left: none; border-right: none; line-height: inherit;">.<span style="border-left: none; border-right: none;"><span style="border-left: none; border-right: none;"><span style="border-left: none; border-right: none;">1</span></span></span></span></span></span>% of our issued and outstanding shares of common stock is, to our knowledge, the founder and one of the principal managers of TechMagic USA LLC. As of June 30, 2021 and December 31, 2020, we recognized a loss contingency of $0.6 million." id="sjs-C2">TechMagic USA LLC purports to have provided to Solo regarding development of mobile software applications for MJF and Solo between March and November 2020 totaling approximately $787,000. The suit seeks continued fees under the Master Services Agreement through the end of January 2021. Akerna provided a notice of termination of the Master Services Agreement on November 23, 2020 and the parties dispute the effective date of the termination. Solo disputes the validity of the invoices, in whole or in part, and intends to defend the suit vigorously. Mr. Ashesh Shah, formerly the president of Solo and currently the holder of <span style="border-left: none; border-right: none;"><span style="border-left: none; border-right: none;"><span style="border-left: none; border-right: none;"><span style="border-left: none; border-right: none;">5</span></span><span style="border-left: none; border-right: none; line-height: inherit;">.<span style="border-left: none; border-right: none;"><span style="border-left: none; border-right: none;"><span style="border-left: none; border-right: none;">1</span></span></span></span></span></span>% of our issued and outstanding shares of common stock is, to our knowledge, the founder and one of the principal managers of TechMagic USA LLC. As of June 30, 2021 and December 31, 2020, we recognized a loss contingency of $0.6 million. | |||
Recovery for unpaid invoices | $ 1,070,000 | |||
Development of software application | $ 787,000 | |||
Termination expense | $ 1,300,000 | |||
Pending Litigation [Member] | ||||
Expected maximum recovery amount for services allegedly provided pursuant to a Subcontractor Agreement | $ 2,000,000 | |||
Loss contingency recognized | $ 100,000 |
Revisions of Previously Issue_3
Revisions of Previously Issued Financial Statements (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2020 | |
Net loss per share | $ (0.25) | $ (0.46) | $ (0.54) | $ (0.83) | ||
As reported [Member] | ||||||
Change in fair value of derivative liability | ||||||
Net loss attributable to Akerna shareholders | $ (16,957,334) | $ (15,534,345) | ||||
Net loss per share | $ (1.06) | $ (1.31) | ||||
Adjustment [Member] | ||||||
Change in fair value of derivative liability | $ 746,852 | $ 1,962,034 | ||||
Net loss attributable to Akerna shareholders | $ 746,852 | $ 1,962,034 | ||||
Net loss per share | ||||||
As revised [Member] | ||||||
Change in fair value of derivative liability | $ 746,852 | $ 1,962,034 | ||||
Net loss attributable to Akerna shareholders | $ (16,210,482) | $ (13,572,311) | ||||
Net loss per share | $ (1.01) | $ (1.14) |
Revisions of Previously Issue_4
Revisions of Previously Issued Financial Statements (Details 1) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Derivative liability | $ (354,247) | $ (311,376) |
Total liabilities | (14,572,582) | (19,946,452) |
Additional paid-in capital | 123,856,649 | 94,086,433 |
Accumulated deficit | $ (69,742,478) | (57,179,525) |
As reported [Member] | ||
Derivative liability | ||
Total liabilities | (19,635,076) | |
Additional paid-in capital | 95,090,883 | |
Accumulated deficit | (57,872,599) | |
Adjustment [Member] | ||
Derivative liability | 311,376 | |
Total liabilities | 311,376 | |
Additional paid-in capital | (1,004,450) | |
Accumulated deficit | 693,074 | |
As revised [Member] | ||
Derivative liability | 311,376 | |
Total liabilities | (19,946,452) | |
Additional paid-in capital | 94,086,433 | |
Accumulated deficit | $ (57,179,525) |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | Jul. 23, 2021USD ($) |
Subsequent Event [Member] | |
Common stock value issued | $ 25 |
Equity Method Investment and Re
Equity Method Investment and Related Party Transactions (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Equity Method Investment and Related Party Transaction (Textual) | ||
Carrying value of our initial investment | $ 226,101 | $ 233,664 |