Document And Entity Information
Document And Entity Information | 3 Months Ended |
Mar. 31, 2022 | |
Document Information Line Items | |
Entity Registrant Name | AKERNA CORP. |
Document Type | S-1 |
Amendment Flag | false |
Entity Central Index Key | 0001755953 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Incorporation, State or Country Code | DE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | |||
Cash | $ 9,687,690 | $ 13,934,265 | $ 17,840,640 |
Restricted cash | 508,261 | 508,261 | 500,000 |
Accounts receivable, net | 2,579,187 | 1,403,774 | 1,753,547 |
Prepaid expenses and other current assets | 2,492,089 | 2,383,764 | 2,458,727 |
Total current assets | 15,267,227 | 18,230,064 | 22,552,914 |
Fixed assets, net | 159,159 | 153,151 | 1,193,433 |
Investment, net | 226,101 | 226,101 | 233,664 |
Capitalized software, net | 8,012,387 | 7,311,676 | 3,925,739 |
Intangible assets, net | 20,708,046 | 21,609,794 | 7,388,795 |
Goodwill | 29,964,160 | 46,942,681 | 41,874,527 |
Other noncurrent assets | 9,700 | 9,700 | |
Total Assets | 74,346,780 | 94,483,167 | 77,169,072 |
Current liabilities: | |||
Accounts payable, accrued expenses and other accrued liabilities | 7,463,341 | 6,063,520 | 3,188,576 |
Contingent consideration payable | 6,300,000 | 6,300,000 | |
Current portion of deferred revenue | 3,369,631 | 3,543,819 | 843,900 |
Current portion of long-term debt | 13,200,000 | 13,200,000 | 11,707,363 |
Derivative liability | 45,127 | 63,178 | 311,376 |
Total current liabilities | 30,378,099 | 29,170,517 | 16,051,215 |
Long-term portion of deferred revenue | 486,201 | 582,676 | |
Long-term debt, less current portion | 2,137,000 | 4,105,000 | 3,895,237 |
Deferred tax liabilities | 565,184 | 675,291 | |
Total liabilities | 33,566,484 | 34,533,484 | 19,946,452 |
Commitments and contingencies (Note 7) | |||
Equity: | |||
Preferred stock, par value $0.0001; 5,000,000 shares authorized, 1 share special voting preferred stock issued and outstanding at March 31, 2022 and December 31, 2021 | |||
Special voting preferred stock, par value $0.0001; 1 share authorized, issued and outstanding as of March 31, 2022 and December 31, 2021, with $1 preference in liquidation; exchangeable shares, no par value, 306,852 and 309,286 shares issued and outstanding as of March 31, 2022 and December 31, 2021 respectively | 2,347,418 | 2,366,038 | 20,405,219 |
Common stock, par value $0.0001; 75,000,000 shares authorized, 34,175,088 and 31,001,884 issued and outstanding at March 31, 2022 and December 31, 2021, respectively | 3,417 | 3,100 | 1,990 |
Additional paid-in capital | 148,761,867 | 146,027,258 | 94,086,433 |
Accumulated other comprehensive loss | 128,723 | 61,523 | (91,497) |
Accumulated deficit | (110,461,129) | (88,508,236) | (57,179,525) |
Total equity | 40,780,296 | 59,949,683 | 57,222,620 |
Total liabilities and equity | $ 74,346,780 | $ 94,483,167 | $ 77,169,072 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (unaudited) (Parentheticals) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 1 | 1 | 1 |
Preferred stock, shares outstanding | 1 | 1 | 1 |
Preferred stock, liquidation preference, value (in Dollars per share) | $ 1 | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 75,000,000 | 75,000,000 | 75,000,000 |
Common stock, shares issued | 34,175,088 | 31,001,884 | 19,901,248 |
Common stock, shares outstanding | 34,175,088 | 31,001,884 | 19,901,248 |
Special Voting Preferred Stock | |||
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1 | 1 | 1 |
Preferred stock, shares issued | 1 | 1 | 1 |
Preferred stock, shares outstanding | 1 | 1 | 1 |
Preferred stock, liquidation preference, value (in Dollars per share) | $ 1 | $ 1 | $ 1 |
Exchangeable Shares | |||
Preferred stock, shares issued | 306,852 | 309,286 | 2,667,349 |
Preferred stock, shares outstanding | 306,852 | 309,286 | 2,667,349 |
Preferred stock, no par value (in Dollars per share) | $ 0 | $ 0 | $ 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | |
Revenue: | |||||
Total revenue | $ 6,950,841 | $ 4,014,024 | $ 7,824,784 | $ 20,684,974 | $ 12,573,276 |
Cost of revenue | 2,203,671 | 1,454,167 | 3,141,041 | 8,119,487 | 6,209,724 |
Gross profit | 4,747,170 | 2,559,857 | 4,683,743 | 12,565,487 | 6,363,552 |
Operating expenses: | |||||
Product development | 2,105,361 | 1,424,100 | 3,166,088 | 6,271,966 | 3,206,310 |
Sales and marketing | 3,236,113 | 1,735,915 | 3,928,028 | 9,108,173 | 7,792,480 |
General and administrative | 2,570,432 | 1,852,962 | 4,435,067 | 10,422,207 | 11,320,715 |
Depreciation and amortization | 1,993,391 | 1,052,883 | 2,007,237 | 5,735,150 | 1,315,898 |
Impairment of long-lived assets | 15,478,521 | 6,887,000 | 14,383,310 | ||
Total operating expenses | 25,383,818 | 6,065,860 | 20,423,420 | 45,920,806 | 23,635,403 |
Loss from operations | (20,636,648) | (3,506,003) | (15,739,677) | (33,355,319) | (17,271,851) |
Other (expense) income: | |||||
Interest (expense) income, net | (740) | (774,380) | (193,084) | (1,531,497) | 156,678 |
Change in fair value of convertible notes | (1,433,000) | (1,991,272) | (961,273) | (1,365,904) | 766,000 |
Change in fair value of derivative liability | 18,051 | (175,996) | 746,852 | 248,198 | 1,962,034 |
Gain on forgiveness of PPP Loan | 2,234,730 | ||||
Other (expense) income | (59,273) | 186,420 | (254) | ||
Total other (expense) income | (1,415,689) | (2,941,648) | (466,778) | (228,053) | 2,884,458 |
Net loss before income taxes and equity in losses of investee | (22,052,337) | (6,447,651) | (16,206,455) | (33,583,372) | (14,387,393) |
Income tax (expense) benefit | 99,444 | (6,270) | (200) | 2,262,225 | (30,985) |
Equity in losses of investee | (3,782) | (12,641) | (7,564) | (3,692) | |
Net loss attributable to noncontrolling interest in consolidated subsidiary | 8,815 | 849,759 | |||
Net loss attributable to Akerna shareholders | (16,210,481) | (31,328,711) | (13,572,311) | ||
Net loss | $ (21,952,893) | $ (6,457,703) | $ (16,219,296) | $ (31,328,711) | $ (14,422,070) |
Basic and diluted weighted average common stock outstanding (in Dollars per share) | $ 31,605,783 | $ 22,209,072 | $ 16,056,030 | $ 25,641,950 | $ 11,860,212 |
Basic and diluted net loss per common share (in Dollars per share) | $ (0.69) | $ (0.29) | $ (1.01) | $ (1.22) | $ (1.14) |
Software [Member] | |||||
Revenue: | |||||
Total revenue | $ 6,508,513 | $ 3,795,153 | $ 6,766,985 | $ 18,998,409 | $ 9,976,580 |
Consulting [Member] | |||||
Revenue: | |||||
Total revenue | 427,009 | 172,747 | 916,099 | 1,510,413 | 2,379,947 |
Other revenue [Member] | |||||
Revenue: | |||||
Total revenue | $ 15,319 | $ 46,124 | $ 141,700 | $ 176,152 | $ 216,749 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss (unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | |
Statement of Comprehensive Income [Abstract] | |||||
Net loss | $ (21,952,893) | $ (6,457,703) | $ (16,219,296) | $ (31,328,711) | $ (14,422,070) |
Other comprehensive (loss) income: | |||||
Foreign currency translation | (33,800) | (230) | (21,497) | 53,020 | |
Unrealized (loss) gain on convertible notes | 101,000 | (13,000) | (133,000) | 100,000 | 63,000 |
Comprehensive loss | $ (21,885,693) | $ (6,470,933) | (16,373,793) | (31,175,691) | (14,359,070) |
Comprehensive loss attributable to the noncontrolling interest | 8,815 | 849,759 | |||
Comprehensive loss attributable to Akerna shareholders | $ (16,364,978) | $ (31,175,691) | $ (13,509,311) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) | Special Voting Preferred Stock | Common | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholder's Equity | Noncontrolling Interest in Consolidated Subsidiary | Total |
Balance at Jun. 30, 2019 | $ 1,059 | $ 46,299,233 | $ (27,582,558) | $ 18,717,734 | $ 18,717,734 | |||
Balance (in Shares) at Jun. 30, 2019 | 10,589,746 | |||||||
Common stock issued upon warrant exercise | $ 37 | 4,247,028 | 4,247,065 | 4,247,065 | ||||
Common stock issued upon warrant exercise (in Shares) | 369,311 | |||||||
Common stock issued in business combinations | $ 230 | 20,081,236 | 20,081,466 | 20,081,466 | ||||
Common stock issued in business combinations (in Shares) | 2,299,650 | |||||||
Non-controlling interest in acquired subsidiary | 5,554,011 | 5,554,011 | ||||||
Stock-based compensation | 1,253,234 | 1,253,234 | 1,253,234 | |||||
Forfeitures of restricted shares | $ (5) | 5 | ||||||
Forfeitures of restricted shares (in Shares) | (54,901) | |||||||
Change in fair value of Convertible Notes | 63,000 | 63,000 | 63,000 | |||||
Warrant Adjustment | 21,738 | 21,738 | 21,738 | |||||
Foreign currency translation adjustments | ||||||||
Unrealized (loss) gains on convertible notes | 63,000 | |||||||
Net loss | (13,572,311) | (13,572,311) | (849,759) | (14,422,070) | ||||
Balance at Jun. 30, 2020 | $ 1,321 | 71,902,474 | 63,000 | (40,969,044) | 30,997,751 | 4,704,252 | 35,702,003 | |
Balance (in Shares) at Jun. 30, 2020 | 13,203,806 | |||||||
Issuance of common stock | $ 500 | 11,031,880 | 11,032,380 | 11,032,380 | ||||
Issuance of common stock (in Shares) | 5,000,000 | |||||||
Special voting preferred stock issued in business combination | $ 25,203,490 | 25,203,490 | 25,203,490 | |||||
Special voting preferred stock issued in business combination (in Shares) | 3,294,574 | |||||||
Conversion of Exchangeable Shares to common stock | $ (4,798,271) | $ 63 | 4,798,208 | |||||
Conversion of Exchangeable Shares to common stock (in Shares) | (627,225) | 627,225 | ||||||
Settlement of convertible debt | $ 11 | 359,989 | 360,000 | 360,000 | ||||
Settlement of convertible debt (in Shares) | 112,867 | |||||||
Non-controlling interest in acquired subsidiary | $ 80 | 4,695,357 | 4,695,437 | (4,695,437) | ||||
Non-controlling interest in acquired subsidiary (in Shares) | 800,000 | |||||||
Stock-based compensation | 1,298,540 | 1,298,540 | 1,298,540 | |||||
Restricted stock vesting | $ 15 | (15) | ||||||
Restricted stock vesting (in Shares) | 157,350 | |||||||
Foreign currency translation adjustments | (21,497) | (21,497) | (21,497) | |||||
Unrealized (loss) gains on convertible notes | (133,000) | (133,000) | (133,000) | |||||
Net loss | (16,210,481) | (16,210,481) | (8,815) | (16,219,296) | ||||
Adoption of ASC 606 Adjustment | 185,825 | 185,825 | 185,825 | |||||
Balance at Dec. 31, 2020 | $ 20,405,219 | $ 1,990 | 94,086,433 | (91,497) | (57,179,525) | 57,222,620 | 57,222,620 | |
Balance (in 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 (in Shares) | (1,020,062) | 1,020,062 | ||||||
Settlement of convertible debt | $ 208 | 8,467,292 | 8,467,500 | |||||
Settlement of convertible debt (in Shares) | 2,080,140 | |||||||
Shares withheld for withholding taxes | $ (5) | (333,842) | (333,847) | |||||
Shares withheld for withholding taxes (in Shares) | (48,948) | |||||||
Stock-based compensation | 503,379 | 503,379 | ||||||
Restricted stock vesting | $ 1 | (1) | ||||||
Restricted stock vesting (in Shares) | 13,978 | |||||||
Forfeitures of restricted shares (in Shares) | (668) | |||||||
Liabilities settled with shares | $ 10 | 377,315 | 377,325 | |||||
Liabilities settled with shares (in Shares) | 101,705 | |||||||
Foreign currency translation adjustments | (230) | (230) | ||||||
Unrealized (loss) gains on convertible notes | (13,000) | (13,000) | ||||||
Net loss | (6,457,703) | (6,457,703) | ||||||
Balance at Mar. 31, 2021 | $ 12,601,744 | $ 2,306 | 110,903,949 | (104,727) | (63,637,228) | 59,766,044 | ||
Balance (in Shares) at Mar. 31, 2021 | 1,647,287 | 23,067,517 | ||||||
Balance at Dec. 31, 2020 | $ 20,405,219 | $ 1,990 | 94,086,433 | (91,497) | (57,179,525) | 57,222,620 | $ 57,222,620 | |
Balance (in Shares) at Dec. 31, 2020 | 2,667,349 | 19,901,248 | ||||||
Issuance of common stock (in Shares) | 556,388 | |||||||
Conversion of Exchangeable Shares to common stock | $ (18,039,181) | $ 237 | 18,038,944 | |||||
Conversion of Exchangeable Shares to common stock (in Shares) | (2,358,063) | 2,358,063 | ||||||
Settlement of convertible debt | $ 309 | 11,610,277 | 11,610,586 | $ 11,610,586 | ||||
Settlement of convertible debt (in Shares) | 3,094,129 | 12,484,395 | ||||||
Shares withheld for withholding taxes | $ (12) | (520,383) | (520,395) | $ (520,395) | ||||
Shares withheld for withholding taxes (in Shares) | (121,786) | |||||||
Shares issued in connection with Viridian Acquisition | $ 103 | 6,187,897 | 6,188,000 | 6,188,000 | ||||
Shares issued in connection with Viridian Acquisition (in Shares) | 1,031,000 | |||||||
Shares issued in connection with Asset Purchase | $ 8 | 299,992 | 300,000 | 300,000 | ||||
Shares issued in connection with Asset Purchase (in Shares) | 83,333 | |||||||
Shares issued in connection with 365 Cannabis Acquisition | $ 357 | 11,995,704 | 11,996,061 | 11,996,061 | ||||
Shares issued in connection with 365 Cannabis Acquisition (in Shares) | 3,571,429 | |||||||
Stock-based compensation | 2,070,358 | 2,070,358 | 2,070,358 | |||||
Shares issued in connection with the ATM program | $ 56 | 1,828,063 | 1,828,119 | 1,828,119 | ||||
Shares issued in connection with the ATM program (in Shares) | 556,388 | |||||||
Restricted stock vesting | $ 42 | (42) | ||||||
Restricted stock vesting (in Shares) | 427,711 | 32,394 | ||||||
Forfeitures of restricted shares (in Shares) | (1,336) | |||||||
Liabilities settled with shares | $ 10 | 430,015 | 430,025 | $ 430,025 | ||||
Liabilities settled with shares (in Shares) | 101,705 | |||||||
Foreign currency translation adjustments | 53,020 | 53,020 | 53,020 | |||||
Unrealized (loss) gains on convertible notes | 100,000 | 100,000 | 100,000 | |||||
Net loss | (31,328,711) | (31,328,711) | (31,328,711) | |||||
Balance at Dec. 31, 2021 | $ 2,366,038 | $ 3,100 | 146,027,258 | 61,523 | (88,508,236) | $ 59,949,683 | 59,949,683 | |
Balance (in Shares) at Dec. 31, 2021 | 309,286 | 31,001,884 | ||||||
Conversion of Exchangeable Shares to common stock | $ (18,620) | 18,620 | ||||||
Conversion of Exchangeable Shares to common stock (in Shares) | (2,434) | 2,434 | ||||||
Settlement of convertible debt | $ 340 | 3,299,660 | 3,300,000 | |||||
Settlement of convertible debt (in Shares) | 3,396,842 | |||||||
Shares withheld for withholding taxes | (5,615) | (5,615) | ||||||
Shares withheld for withholding taxes (in Shares) | (4,421) | |||||||
Shares returned in connection with 365 Cannabis acquisition | $ (28) | (939,972) | (940,000) | |||||
Shares returned in connection with 365 Cannabis acquisition (in Shares) | (279,762) | |||||||
Stock-based compensation | 316,855 | 316,855 | ||||||
Restricted stock vesting | $ 4 | (4) | ||||||
Restricted stock vesting (in Shares) | 43,479 | |||||||
Liabilities settled with shares | $ 1 | 45,065 | 45,066 | |||||
Liabilities settled with shares (in Shares) | 14,632 | |||||||
Foreign currency translation adjustments | (33,800) | (33,800) | ||||||
Unrealized (loss) gains on convertible notes | 101,000 | 101,000 | ||||||
Net loss | (21,952,893) | (21,952,893) | ||||||
Balance at Mar. 31, 2022 | $ 2,347,418 | $ 3,417 | $ 148,761,867 | $ 128,723 | $ (110,461,129) | $ 40,780,296 | ||
Balance (in Shares) at Mar. 31, 2022 | 306,852 | 34,175,088 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | |
Cash flows from operating activities: | |||||
Net loss | $ (21,952,893) | $ (6,457,703) | $ (16,219,296) | $ (31,328,711) | $ (14,422,070) |
Adjustment to reconcile net loss to net cash used in operating activities: | |||||
Equity in losses of investment | 3,782 | 12,643 | 7,564 | 3,692 | |
Bad debt | 174,794 | (10,516) | 72,832 | 556,890 | 1,094,507 |
Stock-based compensation expense | 304,237 | 503,379 | 1,197,589 | 2,070,359 | 1,166,130 |
Loss on write off of fixed assets | 1,045,179 | ||||
Gain on forgiveness of PPP loan | (2,234,730) | ||||
Amortization of deferred contract cost | 113,251 | 118,519 | 228,766 | 492,683 | |
Non-cash interest expense | 769,773 | 32,727 | 1,009,331 | ||
Depreciation and amortization | 1,993,391 | 1,052,882 | 2,007,237 | 5,735,150 | 1,315,898 |
Foreign currency loss (gain) | 5,596 | (18,801) | (3,312) | ||
Impairment of long-lived assets | 15,478,521 | 6,887,000 | 14,383,310 | ||
Gain on debt extinguishment | (186,177) | ||||
Loss on sale of fixed asset | 84,835 | ||||
Debt issuance costs | 1,177,390 | ||||
Change in fair value of convertible notes | 1,433,000 | 1,991,272 | 961,273 | 1,365,904 | (766,000) |
Change in fair value of derivative liability | (18,051) | 175,996 | (746,852) | (248,198) | (1,962,034) |
Change in fair value of contingent consideration | (993,000) | (998,000) | |||
Changes in operating assets and liabilities: | |||||
Accounts receivable | (1,335,939) | (177,832) | 1,008,775 | 849,785 | (1,621,262) |
Prepaid expenses and other current assets | 178,869 | 236,339 | (689,729) | (8,988) | (592,807) |
Other assets | 41,925 | (58,925) | |||
Accounts payable, accrued expenses and other current liabilities | (2,498,375) | 1,610,470 | 1,602,751 | ||
Accounts payable and accrued liabilities | 445,969 | 152,455 | |||
Deferred tax liabilities | (110,107) | (2,274,295) | |||
Deferred revenue | (296,032) | 286,637 | (94,088) | (1,010,118) | (286,922) |
Net cash used in operating activities | (3,585,394) | (1,373,818) | (8,705,738) | (8,167,904) | (14,347,652) |
Cash flows from investing activities: | |||||
Developed software additions | (647,022) | (704,637) | (1,847,710) | (5,427,230) | (3,102,728) |
Net cash used in investing activities | (647,022) | (704,637) | (7,139,047) | (10,485,085) | (3,598,084) |
Furniture, fixtures, and equipment additions | (12,203) | (39,263) | (156,636) | ||
Cash paid for business combinations, net of cash acquired | (5,279,134) | (5,018,592) | (88,720) | ||
Investment in equity method investee | (250,000) | ||||
Cash flows from financing activities: | |||||
Value of shares withheld related to tax withholdings | (5,615) | (333,847) | (520,395) | ||
Net cash used in financing activities | (5,615) | (333,847) | 9,532,380 | 14,736,252 | 20,234,275 |
Proceeds from stock offering, net | 1,828,119 | ||||
Proceeds from the issuance of long term debt | 18,000,000 | 17,164,600 | |||
Payments of principal amounts of debt | |||||
Payments on debt | (1,500,000) | (4,571,472) | |||
Cash paid for debt issuance costs | (1,177,390) | ||||
Proceeds from the exercise of warrants | 4,247,065 | ||||
Proceeds from the issuance of common stock | 12,000,000 | ||||
Offering costs from the issuance of common stock | (967,620) | ||||
Effect of exchange rate changes on cash and restricted cash | (8,544) | (1,579) | (2,783) | 18,623 | |
Net change in cash and restricted cash | (4,246,575) | (2,413,881) | (6,315,188) | (3,898,114) | 2,288,539 |
Cash and restricted cash - beginning of period | 14,442,526 | 18,340,640 | 24,655,828 | 18,340,640 | 22,367,289 |
Cash and restricted cash - end of period | 10,195,951 | 15,926,759 | 18,340,640 | 14,442,526 | 24,655,828 |
Cash paid for interest | 150,000 | 507,941 | |||
Cash paid for taxes | 5,210 | 10,570 | |||
Supplemental Disclosure of non-cash investing and financing activity: | |||||
Settlement of convertible notes in common stock | 3,300,000 | 8,467,292 | 327,273 | 11,610,586 | |
Conversion of exchangeable shares to common stock | 18,620 | 7,803,475 | 4,798,271 | 18,038,944 | |
Adjustment to Trellis purchase price allocation | 14,300 | ||||
Settlement of other liabilities in common stock | 45,065 | 377,325 | 430,015 | ||
Shares issued in connection with an asset purchase | 8 | ||||
Assets acquired and liabilities assumed in business combinations: | |||||
Cash | 445,269 | 527,346 | |||
Accounts receivable | 917,205 | 1,041,912 | 77,505 | ||
Prepaid expenses and other current assets | 596,233 | 408,973 | 27,860 | ||
Fixed assets | 1,326,996 | 93,365 | 2,410 | ||
Intangible assets | 3,795,000 | 16,933,000 | 8,010,000 | ||
Goodwill | 25,805,615 | 19,451,464 | 20,254,309 | ||
Accounts payable and accrued liabilities | 805,114 | 1,174,961 | 1,441,062 | ||
Deferred tax liabilities | 2,949,586 | ||||
Deferred revenue | 549,311 | 4,301,514 | 31,220 | ||
Contingent consideration | 604,000 | 6,300,000 | 1,387,000 | ||
Stock-based compensation capitalized as software development | 12,618 | 100,951 | 36,915 | 87,104 | |
Acquisition of noncontrolling interest | 4,695,437 | ||||
Adjustments due to the adoption of ASC 606 | 185,826 | ||||
Vesting of restricted stock units | 4 | 15 | 42 | ||
Capitalized software included in accrued expenses | 1,114,108 | 189,198 | 554,127 | ||
Special voting preferred stock issued in business combination | $ 25,203,490 | ||||
Fixed asset purchases accrued or in accounts payable | 24,614 | ||||
Shares returned in connection with 365 Cannabis acquisition | 940,000 | ||||
365 Cannabis working capital funds released from accrued expenses | 160,000 | ||||
365 Cannabis working capital adjustment funds recorded in other current assets | $ 400,000 |
Description of Business
Description of Business | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Accounting Policies [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, solo sciences, inc., or Solo, Viridian Sciences Inc., or Viridian, and The NAV People, Inc. d.b.a. 365 Cannabis, or 365 Cannabis, 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®, Trellis®, Ample, Viridian and 365 Cannabis to state-licensed businesses, and our regulatory software platform, Leaf Data Systems®, to state government regulatory agencies. Through Solo, 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® and solo*CODE™ results in technology for consumers and brands that brings a consumer-facing mark designed to highlight the authenticity and signify transparency. Our Viridian and 365 Cannabis offerings are considered enterprise offerings and all other solutions are considered non-enterprise offerings that meet the needs of our small and medium business customers. 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. Going Concern and Management's Liquidity Plans In accordance with the Financial Accounting Standards Board’s (“FASB”) standard on going concern, Accounting Standard Update No. 2014-15, or ASU No. 2014-15, the Company assesses going concern uncertainty in its consolidated financial statements to determine if it has sufficient cash, cash equivalents and working capital on hand, including marketable equity securities, and any available borrowings on loans, to operate for a period of at least one year from the date the consolidated financial statements are issued, which is referred to as the “look-forward period” as defined by ASU No. 2014-15. As part of this assessment, based on conditions that are known and reasonably knowable to the Company, it will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, and its ability to delay or curtail expenditures or programs, if necessary, among other factors. Based on this assessment, as necessary or applicable, the Company makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent The Company deems probable those implementations can be achieved and it has the proper authority to execute them within the look-forward period in accordance with ASU No. 2014-15. The accompanying condensed consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. However, 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 months ended March 31, 2022 and March 31, 2021, we incurred a loss from operations of $20.6 million and $3.5 million, respectively, and used cash in operations of $3.6 million and $1.4 million, respectively. As of March 31, 2022, a working capital deficit of $15.1 million with $9.7 million in cash available to fund future operations. Management’s plan for the Company to continue as a going concern includes raising additional capital from our ATM program, subject to certain effects on the Senior Convertible Notes should we utilize the program, including resetting the conversion price of the Senior Convertible Notes should we raise more than $5 million under the ATM program and an increase of 10% in the amount payable on the monthly installment payments if they are paid in cash and we have used the ATM program in the 12 months prior to the installment date, settling our contingent consideration and Senior Convertible Notes in common stock rather than cash as it comes due, to the extent that this is permissible, and implementing certain cost cutting strategies throughout the organization, while continuing to seek to grow our customer base and realize synergies as we continue to integrate our recent acquisitions. If the Company is unable to raise sufficient additional funds through the ATM Program and make it's convertible debt payments in stock, it will have to develop and implement a plan to extend payables, reduce expenditures (including by laying off employees and reducing or eliminating the funding of certain business units and initiatives of the Company), or scale back our business plan until sufficient additional capital is raised through other equity or debt offerings to support further operations and satisfaction of the debt, and the Company may be subject to additional risks, including retention of key employees. Such offerings may include the issuance of shares of common stock, warrants to purchase common stock, preferred stock, convertible debt or other instruments that may dilute our current stockholders. If we are required to raise additional capital as discussed above and if we cannot timely raise additional funds, we may also be unable to meet the financial covenants of the Senior Convertible Notes, which could result in an event of default under those instruments which could negatively impact the Company. See the risks detailed in our Form 10-K under “Item 1A. Risk Factors – Risks Relating to our Convertible Debt”. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. We will require additional financing in the second quarter of 2022 to meet our ongoing operational working capital requirements and continue to meet the financial covenants of the Senior Convertible Notes. As noted above, we plan to meet those requirements in part through the use of our ATM Facility, but there are no guarantees that the ATM Facility will permit us to raise sufficient cash to meet our ongoing requirements. We also assume that we will be able to pay our convertible debt in common stock rather than cash, however if at any point our stock price is below $2.00(which it is as of the date hereof), the debt holders may request the payments in cash rather than stock. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the consolidated financial statements. If we are unable to raise sufficient capital we may have to reduce operations which could significantly affect our results of operations. If we fail to meet the financial covenants of the Senior Convertible Notes and cannot obtain a waiver from such provisions or otherwise come to an agreement with the holders of our debt, such holders may declare a default on the debt which could subject our assets to seizure and sale, negatively impacting our business. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern. | Note 1 Description of Business, Liquidity, and Capital Resources 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, solo sciences, inc., or Solo, Viridian Sciences Inc., or Viridian, and The NAV People, Inc. d.b.a. 365 Cannabis, or 365 Cannabis, 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®, Trellis®, Ample, Viridian and 365 Cannabis to state-licensed businesses, and our regulatory software platform, Leaf Data Systems®, to state government regulatory agencies. Through Solo, 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 ™ ™ 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. Going Concern and Management's Liquidity Plans In accordance with the Financial Accounting Standards Board’s (“FASB”) standard on going concern, Accounting Standard Update, or ASU No. 2014-15, The Company assesses going concern uncertainty in its consolidated financial statements to determine if it has sufficient cash, cash equivalents and working capital on hand, including marketable equity securities, and any available borrowings on loans, to operate for a period of at least one year from the date the consolidated financial statements are issued, which is referred to as the “look-forward period” as defined by ASU No. 2014-15. As part of this assessment, based on conditions that are known and reasonably knowable to The Company, it will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, and its ability to delay or curtail expenditures or programs, if necessary, among other factors. Based on this assessment, as necessary or applicable, The Company makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent The Company deems probable those implementations can be achieved and it has the proper authority to execute them within the look-forward period in accordance with ASU No. 2014-15. The accompanying consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. However, 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 year ended December 31, 2021, six months ended December 31, 2020, and year ended June 30, 2020, we incurred a loss from operations of $33.4 million, $15.7 million, and $17.3 million, respectively, and used cash in operations of $8.2 million, $8.7 million, and $14.3 million, respectively. At December 31, 2021, the Company had a working capital deficit of $10.9 million with $13.9 million in cash available to fund future operations. These factors raise substantial doubt, as defined by generally accepted accounting principles in the United States of America ("GAAP"), about the ability of the Company to continue to operate as a going concern for the twelve months following the issuance of these consolidated financial statements. These consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. On July 23, 2021, we entered into an Equity Distribution Agreement with Oppenheimer & Co. Inc. and A.G.P./Alliance Global Partners ("ATM Program"). Pursuant to the terms of the ATM Program, we may offer and sell from time to time, up to $25 million of shares of our common stock. As of December 31, 2021, we have raised gross proceeds of $1.9 million through the issuance of 556,388 shares through the ATM program. While no assurance can be provided that we will be able to raise further capital under the 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. On October 5, 2021, we entered into a securities purchase agreement with the two institutional investors that held the Company's convertible notes issued in June of 2020 (the "2020 Notes") to sell senior secured notes in a private placement (the "Senior Convertible Notes"). The Senior Convertible Notes have an aggregate principal amount of $20 million, an aggregate original issue discount of 10%, and rank senior to all our other outstanding and future indebtedness. Approximately $3.3 million of the proceeds from the Senior Convertible Notes were used to payoff the 2020 Notes, which were then to be cancelled. The net proceeds from the issuance of the Senior Convertible Notes was approximately $14.6 million, following the original issue discount and deductions for expenses and paydown of the 2020 Notes. These net proceeds will be used to support Akerna's ongoing growth initiatives and continued investment in current and future technology infrastructure. The Senior Convertible Notes are convertible into shares of common stock of Akerna at a conversion price of $4.05 per share. The Senior Convertible Notes mature on October 5, 2024 and are to be repaid in monthly installments beginning on January 1, 2022. The Senior Convertible Notes can be repaid in common shares or cash. Management’s plan for the Company to continue as a going concern includes raising additional capital from our ATM program, subject to certain effects on the Senior Convertible Notes should we utilize the program, including resetting the conversion price of the Senior Convertible Notes should we raise more than $5 million under the ATM program, settling our contingent consideration and Senior Convertible Notes in common stock rather than cash as it comes due, and implementing certain cost cutting strategies throughout the organization, while continuing to seek to grow our customer base and realize synergies as we continue to integrate our recent acquisitions. If the Company is unable to raise sufficient additional funds through the ATM Program, it will have to develop and implement a plan to extend payables, reduce expenditures, or scale back our business plan until sufficient additional capital is raised through other equity or debt offerings to support further operations. Such offerings may include the issuance of shares of common stock, warrants to purchase common stock, preferred stock, convertible debt or other instruments that may dilute our current stockholders. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. We will require additional financing in the second quarter of 2022 to meet our ongoing operational working capital requirements and continue to meet the financial covenants of the Senior Convertible Notes. As noted above, we plan to meet those requirements in part through the use of our ATM Facility, but there are no guarantees that the ATM Facility will permit us to raise sufficient cash to meet our ongoing requirements. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the consolidated financial statements. If we are unable to raise sufficient capital we may have to reduce operations which could significantly affect our results of operations. If we fail to meet the financial covenants of the Senior Convertible Notes and cannot obtain a waiver from such provisions or otherwise come to an agreement with the holders of our debt, such holders may declare a default on the debt which could subject our assets to seizure and sale, negatively impacting our business. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 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 the Quarterly Report on Form 10-Q and Article 8 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information normally required by GAAP or Securities and Exchange Commission rules and regulations for complete financial statements. In management’s opinion, these condensed consolidated financial statements include all adjustments, consisting of normal recurring items, considered necessary for the fair presentation of the results of operations for the interim periods presented. The operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022. The condensed consolidated balance sheet as of and for the period ended December 31, 2021, 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, 2021, which were included in our report on Form 10-K filed on March 31, 2022. Principles of Consolidation Our accompanying 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. Use of Estimates The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the consolidated financial statements and accompanying notes thereto. Our most significant estimates and assumptions are related to the valuation of acquisition-related assets and liabilities, capitalization of internal costs associated with software development, fair value measurements, impairment assessments, loss contingencies, valuation allowance associated with deferred tax assets, stock based compensation expenses, and useful lives of long-lived intangible assets. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results could differ from those estimates. Accounts Receivable, Net We maintain an allowance for doubtful accounts equal to the estimated uncollectible amounts based on our historical collection experience and review of the current status of trade accounts receivable. Receivables are written-off and charged against the recorded allowance when we have exhausted collection efforts without success. The allowance for doubtful accounts was $0.6 million and $0.3 million as of March 31, 2022 and December 31, 2021, respectively. 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 three months ended March 31, 2022 and 2021, one government client accounted for 12% and 12% of total revenues, respectively. As of March 31, 2022, one government client accounted for 19% of net accounts receivable and as of December 31, 2021 two government clients accounted for 34% of net accounts receivable. 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 the combined gross balance of our fixed assets, capitalized software, and intangible assets by geographical location (in thousands): As of As of Long-lived assets: United States $ 33,793 $ 32,356 Canada 5,590 5,229 Total $ 39,383 $ 37,585 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 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. We have adopted this new standard on January 1, 2022 and due to the immaterial impact of applying this standard to our limited assets subject to operating leases, there was no material 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 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, 2022. We have adopted this new standard on January 1, 2022 and there was no material impact to our results of operations as a result. ASU 2020-06 In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options and Derivative and Hedging - Contracts in Entity’s Own Equity, which simplifies the accounting for convertible instruments. This guidance eliminates certain models that require separate accounting for embedded conversion features, in certain cases. Additionally, among other changes, the guidance eliminates certain of the conditions for equity classification for contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. This guidance is required to be adopted by us in the first quarter of 2023 and must be applied using either a modified or full retrospective approach. We are currently evaluating the impact this guidance will have on our consolidated financial statements. ASU 2021-04 On May 3, 2021, FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. We have adopted this new standard on January 1, 2022 and there was no material impact to our results of operations as a result. ASU 2021-08 In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends the accounting related to contract assets and liabilities acquired in business combinations. Under current GAAP, an entity generally recognizes assets and liabilities acquired in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU 2021-08 requires that entities recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should be applied prospectively to businesses combinations occurring on or after the effective date of the amendment. We are currently evaluating the impact this guidance will have on our consolidated financial statements. | Note 2 - Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with GAAP. In September 2020, the Company changed its fiscal year from June 30 to December 31. As a result, this annual report on Form 10-K includes the consolidated financial statements as of December 31, 2021 and December 31, 2020 and for (i) the calendar year ended December 31, 2021, (ii) the transitional six months ended December 31, 2020; and (iii) the fiscal year ended June 30, 2020. Principles of Consolidation Our accompanying 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. Use of Estimates The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the consolidated financial statements and accompanying notes thereto. Our most significant estimates and assumptions are related to the valuation of acquisition-related assets and liabilities, capitalization of internal costs associated with software development, fair value measurements, impairment assessments, loss contingencies, valuation allowance associated with deferred tax assets, stock based compensation expenses, and useful lives of long-lived intangible assets. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results could differ from those estimates. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. Foreign Currency 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). Cash and Cash Equivalents We consider liquid instruments purchased with an original maturity of three months or less to be cash equivalents. There were no cash equivalents as of December 31, 2021, and 2020. We continually monitor our positions with, and the credit quality of, the financial institutions with which we invest. As of the balance sheet date, and periodically throughout the year, we have maintained balances in various operating accounts in excess of federally insured limits. Restricted Cash Restricted cash consists of funds that are contractually or legally restricted as to usage or withdrawal and is presented separately from cash and cash equivalents on our consolidated balance sheets. Our restricted cash serves as collateral for a letter of credit. Accounts Receivable, Net We maintain an allowance for doubtful accounts equal to the estimated uncollectible amounts based on our historical collection experience and review of the current status of trade accounts receivable. Receivables are written-off and charged against the recorded allowance when we have exhausted collection efforts without success. The allowance for doubtful accounts was $0.3 million and $0.2 million as of December 31, 2021, and 2020, respectively. The allowance for doubtful accounts consists of the following activity: Year Ended Six Months 2021 2020 Allowance for doubtful accounts, balance at beginning of period $ 153,500 $ 208,422 Bad debt expense 556,890 72,832 Write-off uncollectable accounts (393,306 ) (127,754 ) Allowance for doubtful accounts, balance at end of period $ 317,084 $ 153,500 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 year ended December 31, 2021, the six months ended December 31, 2020 and the year ended June 30, 2020, one government client accounted for 11%, 14% and 25% of total revenues, respectively. As of December 31, 2020, two government clients accounted for a total of 36% of net accounts receivable. Property and Equipment Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized. Depreciation and amortization is provided over the estimated useful lives of the related assets using the straight-line method. The estimated useful lives for significant property and equipment categories are generally as follows: Furniture and computer equipment 3 to 7 years Leasehold improvements Lesser of remaining lease term or useful life Repairs and maintenance costs are expensed as incurred. Warrant Liabilities 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 are recorded as derivative 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. Investment We hold an equity security in Zoltrain, Inc. (Zoltrain) for which the fair value is not readily determinable. Accordingly, we measure this investment at cost minus impairment, plus or minus changes resulting from observable price changes. When indicators of impairment exist, we estimate the fair value and record an impairment charge if the carrying value of the investment exceeds its estimated fair value. Any impairment charges are recorded in other (expense) income, net, in our consolidated statements of operations. Prior to the quarter ended September 30, 2021, we had determined we could exert significant influence over Zoltrain's operations through voting rights and representation on the board of directors and we accounted for our investment in Zoltrain using the equity method of accounting, recording our share in the investee’s earnings and losses in the consolidated statement of operations. Intangible Assets Acquired through Business Combinations Intangible assets are amortized over their estimated useful lives. We evaluate the estimated remaining useful life of our intangible assets when events or changes in circumstances indicate an adjustment to the remaining amortization may be needed. We similarly evaluate the recoverability of these assets upon events or changes in circumstances indicate a potential impairment. Recoverability of these assets is measured by comparing the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value. We recorded an impairment of $2.7 million during the six months ended December 31, 2020 related to the intangible assets acquired in the Solo transaction. There were no impairments of intangible assets during the years ended December 31, 2021 or June 30, 2020. See Note 6 – Goodwill and Intangible Assets, Net for further discussion on the impairment. Goodwill Impairment Assessment Goodwill represents the excess purchase consideration of an acquired business over the fair value of the net tangible and identifiable intangible assets. Goodwill is evaluated for impairment annually on October 31, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate or a significant decrease in expected cash flows. An impairment loss is recognized to the extent that the carrying amount exceeds the reporting unit’s fair value, not to exceed the carrying amount of goodwill. The Company has the option to first assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount and determine whether further action is needed. If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the quantitative impairment test is unnecessary. Due to a continued decline in market conditions and declines in the operating results of our non-enterprise reporting unit, we recognized an impairment to goodwil l of $ million Software Development Costs Costs incurred during the application development stage of a newly developed application and costs we incur to enhance our existing platforms that meet certain criteria are subject to capitalization and subsequent amortization. Capitalized software development costs were approximately $5.9 million during the year ended December 31, 2021, $2.1 million during the six months ended December 31, 2020, and $3.1 million during the year ended June 30, 2020. Product development costs are primarily comprised of personnel costs such as payroll and benefits, vendor costs, and other costs directly attributable to the project. We capitalize costs only during the development phase. Any costs in connection to planning, design, and maintenance subsequent to release are expensed as incurred. We amortize software development costs over the expected useful life of the specific application, generally 2-5 years. We evaluate capitalized software development costs for impairment when there is an indication that the unamortized cost may not be recoverable. Fair Value of Financial Instruments GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, we are required to classify certain assets and liabilities based on the fair value hierarchy, which groups fair value-measured assets and liabilities based upon the following levels of inputs: ● Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; ● Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; ● Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity). The fair value of financial instruments is the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying values of financial instruments such as accounts receivable, accounts payable and accrued liabilities approximate fair value based on their short maturities. Please refer to Note 13- Fair Value Measurements for additional information regarding the fair value of financial instruments that we measure at fair value, including senior secured convertible notes and contingent consideration. Fair Value Option The fair value option provides an election that allows a company to irrevocably elect to record certain financial assets and liabilities at fair value on an instrument-by-instrument basis at initial recognition. We have elected to apply the fair value option to certain convertible notes due to the complexity of the various conversion and settlement options available to both the Note Holders and Akerna. The convertible notes accounted for under the fair value option election are each a debt host financial instrument containing embedded features that would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements in accordance with GAAP. Notwithstanding, when the fair value option election is applied to financial liabilities, bifurcation of an embedded derivative is not required, and the financial liability is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis as of each reporting period date. The portion of the change in fair value attributed to a change in the instrument-specific credit risk is recognized as a component of other comprehensive income and the remaining amount of the fair value adjustment is recognized as other income (expense) in our consolidated statement of operations. The estimated fair value adjustment is presented in a respective single line item within other income (expense) in the accompanying consolidated statement of operations because the change in fair value of the convertible notes was not attributable to instrument-specific credit risk. Revenue Recognition See Note 3 for further discussion of our revenue recognition policies. 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. Product Development Product development expenses consist primarily of employee-related costs for the design and development of the Company's platform, contractor costs to supplement staff levels, third-party web services, consulting services, and allocated overhead. Product development expenses, other than software development costs qualifying for capitalization, are expensed as incurred. Sales and Marketing Expenses Sales and marketing expenses consist primarily of personnel and related costs, including salaries, benefits, bonuses, commissions, travel, and stock-based compensation. Other costs included in this expense are marketing and promotional events, online marketing, product marketing, information technology costs, and facility costs. General and Administrative Expenses General and administrative expenses consist primarily of personnel and related costs for our executive, finance, legal, human resources, and administrative personnel, including salaries, benefits, bonuses, and stock-based compensation; legal, accounting, and other professional service fees; other corporate expenses; information technology costs; restructuring charges such as lease termination costs; and facility costs. Legal and Other Contingencies From time to time, the Company may be a party to litigation and subject to claims incident to the ordinary course of business, including intellectual property claims, labor and employment claims, breach of contract claims and other asserted and unasserted claims. The Company investigates these claims as they arise and accrues estimates for resolution of legal and other contingencies when losses are probable and estimable. Stock-Based Compensation We measured stock-based compensation based on the fair value of the share-based awards on the date of grant and recognize the related costs on a straight-line basis over the requisite service period, which is generally the vesting period. Income Taxes Income taxes are accounted for using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of other assets and liabilities. We provide for income taxes at the current and future enacted tax rates and laws applicable in each taxing jurisdiction. We use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return and disclosures regarding uncertainties in income tax positions. We recognize interest and penalties related to income tax matters in selling, general and administrative expenses in the consolidated statement of operations. We recognize deferred tax assets to the extent that its assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of its net recorded amount, we will make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. As of December 31, 2021, management has applied a valuation allowance to deferred tax assets when it is determined that the benefit from the deferred tax asset will not be able to be utilized in a future period. Segments Our chief operating decision maker reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance and information for different revenue streams is not evaluated separately. As such, the Company has one operating segment, and the decision-making group is the senior executive management team. In the following table, we disclose our long-lived assets by geographical location (in thousands): As of December 31, 2021 2020 Long-lived assets: United States $ 32,356 $ 9,994 Canada 5,229 5,074 Total $ 37,585 $ 15,068 Subsequent Events The Company performs a review of events subsequent to the balance sheet date through the date the consolidated financial statements were issued. If we determine there are events requiring recognition or disclosure in the consolidated financial statements., we disclose the subsequent event. Recently Issued 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 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. We have adopted this new standard on January 1, 2022 and due to the immaterial impact of applying this standard to our limited assets subject to operating leases, there was no 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 consolidated financial statements. We have adopted this standard effective December 15, 2021, and there is currently no impact to our consolidated financial statements as a result of this guidance. ASU 2019-12 In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which aims to reduce complexity in accounting standards by improving certain areas of U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) without compromising information provided to users of financial statements. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company has adopted ASU 2019-12 effective December 15, 2021 and the adoption of this guidance did not have a significant effect on our consolidated financial statements. 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, 2022, with early adoption permitted. Adoption of the standard requires changes to be made prospectively. We do not anticipate a significant impact to our consolidated financial statements as a result of this new guidance. ASU 2020-06 In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options and Derivative and Hedging - Contracts in Entity’s Own Equity, which simplifies the accounting for convertible instruments. This guidance eliminates certain models that require separate accounting for embedded conversion features, in certain cases. Additionally, among other changes, the guidance eliminates certain of the conditions for equity classification for contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. This guidance is required to be adopted by us in the first quarter of 2023 and must be applied using either a modified or full retrospective approach. We are currently evaluating the impact this guidance will have on our consolidated financial statements. ASU 2021-04 On May 3, 2021, FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. We are currently evaluating the impact this guidance will have on our consolidated financial statements.. ASU 2021-08 In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends the accounting related to contract assets and liabilities acquired in business combinations. Under current GAAP, an entity generally recognizes assets and liabilities acquired in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU 2021-08 requires that entities recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should be applied prospectively to businesses combinations occurring on or after the effective date of the amendment. We are currently evaluating the impact this guidance will have on our consolidated financial statements. |
Revenue
Revenue | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
Revenue | Note 3 – Revenue 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. Software Revenue. 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 Revenue. Other Revenue. Cost of Revenue. Deferred Revenue. Disaggregation of Revenue 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 to three years. 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 to three 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 our revenue disaggregation of enterprise offerings and non-enterprise offerings for the following periods (in thousands): For the Three Months Ended 2022 2021 Enterprise $ 3,035 $ — Non-enterprise 3,916 4,014 $ 6,951 $ 4,014 For the Three Months Ended 2022 2021 United States $ 4,989 $ 2,659 Canada 1,962 1,355 $ 6,951 $ 4,014 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 many of the contracts the Company has entered into with customers are for a twelve-month subscription term, a significant portion of performance obligations that have not yet been satisfied as of March 31, 2022 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 $15.1 million as of March 31, 2022, of which $8.4 million is expected to be recognized as revenue over the next twelve months. 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 to three years. 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 three months ended March 31, 2022 (in thousands): As of Net additions Revenue recognized As of Deferred revenue $ 4,126 6,069 (6,339 ) $ 3,856 O f the $7.0 million of $ million w Costs to Obtain Contracts In accordance with ASC 606, we 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 to three years based on the estimated customer relationship period. The following table summarizes deferred contract cost activity for the three months ended March 31, 2022 (in thousand): As of Additions Amortized costs (1) As of Deferred contract costs $ 301 112 (113 ) $ 300 (1) Includes contract costs amortized to sales and marketing expense during the period. | 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 December 31, 2021 and December 31, 2020, and for the year ended December 31, 2021 and the six months ended December 31, 2020 in the accompanying consolidated financial statements are presented under ASC 606, while the year ended June 30, 2020 has not been adjusted and is reported in accordance with historical accounting guidance in effect for that period. 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. The adoption of ASC 606 under the modified retrospective transition method resulted in a net adjustment reducing the accumulated deficit by $0.2 million at July 1, 2020 and an increase to capitalized commissions, which are included in prepaid expenses and other current assets on the accompanying balance sheet. The adjustment consisted of $0.2 million related to the deferral of contract costs that were historically expensed as incurred Revenue Recognition Policies for the year ended December 31, 2021 and the six months ended December 31, 2020 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. Software Revenue. 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 Revenue. Other Revenue. ™ ™ ™ ™ Cost of Revenue. Unbilled Receivables. Revenue Recognition Policies for the year 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. 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. Disaggregation of Revenue 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 to three years. 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 to three 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): Year Ended Six Months Year Ended Government $ 3,258 $ 1,939 $ 4,906 Non-government 17,427 5,886 7,667 $ 20,685 $ 7,825 $ 12,573 (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. Year Ended Six Months Year Ended United States $ 15,800 $ 5,212 $ 12,573 Canada 4,885 2,613 — $ 20,685 $ 7,825 $ 12,573 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 Obligations ASC 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 many of the contracts the Company has entered into with customers are for a -month subscription term, a significant portion of performance obligations that have not yet been satisfied as of December 31, 2021 are part of a contract that has an original expected duration of year or less. For contracts with an original expected duration of greater than year, for which the practical expedient does not apply, the aggregate transaction price allocated to the unsatisfied performance obligations was $ million as of December 31, 2021, of which $ million is expected 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 year ended December 31, 2021 (in thousands): As of Net Revenue As of Deferred revenue $ 844 12,657 9,375 $ 4,126 Of the $20.7 million of revenue recognized during the year ended December 31, 2021, $0.7 million was included in deferred revenue as of December 31, 2020. Costs to Obtain Contracts In accordance with ASC 606, we 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 year ended December 31, 2021 (in thousand): As of Additions Amortized As of Deferred contract costs $ 228 512 (479 ) $ 261 (1) Includes contract costs amortized to sales and marketing expense during the period. |
Significant Transactions
Significant Transactions | 3 Months Ended |
Mar. 31, 2022 | |
Business Combinations [Abstract] | |
Significant Transactions | Note 4 – Significant Transactions 2021 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 1.0 million shares of our common stock valued at $6.0 million. 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. We finalized our purchase price accounting during the three months ended March 31, 2022 and there were no changes to the previously disclosed purchase price accounting. 365 Cannabis On October 1, 2021, we acquired all the issued and outstanding shares of 365 Cannabis. Under the terms of the Agreement, the aggregate consideration for the 365 Cannabis shares consisted of an initial purchase price of (1) $5,000,000 in cash, (2) $12,000,000 in stock, which was to be settled by issuing 3.6 million shares of our common stock, and (3) contingent value rights to be issued pursuant to a rights indenture entitling the holders thereof to receive, subject to certain adjustments as set forth in the Agreement, an aggregate of up to $8,000,000 in stock, in the event that 365 Cannabis achieves certain revenue targets as specified in the Agreement. These rights are accounted for as contingent consideration and are currently recorded at preliminary fair value which will be updated upon finalization of purchase accounting. We reached a working capital settlement agreement during the three months ended March 31, 2022 in the amount of $1.5 million. As a result of this post-close adjustment, the 365 Cannabis purchase price was reduced by $1.5 million during the first quarter of 2022. This was recorded as follows: 1) a receivable of $400,000 was booked in other current assets in our condensed consolidated balance sheet as of March 31, 2022 and was received subsequent to March 31, 2022, 2) a reduction of $160,000 was made to the working capital accrual that was booked as of December 31, 2021, and 3) 279,762 shares worth $940,000 that were held in escrow were released back to Akerna to cover the remainder of the working capital adjustment. The updated consideration transferred is reflected in the table below (in thousands): Preliminary Shares issued $ 11,060 Cash 4,982 Contingent consideration 6,300 Total preliminary fair value of consideration transferred $ 22,342 The opening balance sheet presented below reflects our updated purchase price allocation, summarizing the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands): Preliminary Cash $ 527 Accounts receivable 486 Prepaid expenses and other current asset 261 Fixed Assets 93 Non-compete agreement 80 Acquired technology 1,040 Customer relationships 13,810 Acquired trade name 270 Goodwill 12,543 Accounts payable and accrued expenses (826 ) Deferred tax liabilities (2,642 ) Deferred revenue (3,300 ) Net assets acquired $ 22,342 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. We expect to finalize the valuation as soon as practicable, but no later than one year from the acquisition date. Pro Forma Financial Information The following unaudited pro forma consolidated operating results give effect to the Viridian and 365 Cannabis acquisitions, as if they had been completed as of January 1, 2020 (in thousands): Three Months 2021 Revenue $ 7,407 Net loss $ (6,574 ) The pro forma financial information for the period presented above has been calculated after adjusting the results of Viridian and 365 Cannabis to reflect the business combination accounting effects resulting from this acquisition, including the amortization expense from acquired intangible assets as though the acquisition occurred as of the beginning of the periods indicated above as well as direct acquisition costs. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the years indicated above. Special Voting Preferred Stock and Exchangeable Shares In connection with the Ample acquisition, which was completed on July 7, 2020, 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. The special voting preferred stock entitles the holder to an aggregate number of votes equal to the number of the exchangeable shares issued and outstanding from time to time and which we do not own. The holder of the special voting preferred stock and the holders of shares of Akerna common stock will both together as a single class on all matters submitted to a vote of our shareholders. At such time as the special voting preferred stock has no votes attached to it, the share shall be automatically cancelled. The exchangeable shares do not have a par value. During the three months ended March 31, 2022, several Ample shareholders exchanged a total of 2,434 exchangeable shares with a value of $18,620 for the same number of shares of Akerna 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 March 31, 2022, there were a total of 306,852 exchangeable shares issued and outstanding. |
Balance Sheet Disclosures
Balance Sheet Disclosures | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 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 2022 2021 Software and technology $ 723,513 $ 687,740 Professional services, dues and subscriptions 284,333 546,126 Insurance 143,355 264,097 Deferred contract costs 254,771 260,899 Unbilled receivables 547,675 506,984 Other 538,442 117,918 Total prepaid expenses and other current assets $ 2,492,089 $ 2,383,764 Accounts payable, accrued expenses, and other accrued liabilities consisted of the following: As of As of 2022 2021 Accounts payable $ 3,065,862 $ 1,943,457 Professional fees 230,127 319,590 Sales taxes 422,580 360,361 Compensation 1,217,392 1,123,467 Contractors 1,158,447 1,288,730 Settlements and legal 1,189,561 681,045 Other 179,372 346,870 Total accounts payable, accrued expenses, and other accrued liabilities $ 7,463,341 $ 6,063,520 | Note 5 - Balance Sheet Disclosures Prepaid expenses and other current assets consisted of the following: As of December 31, 2021 2020 Software and technology $ 687,740 $ 480,651 Professional services, dues and subscriptions 546,126 826,195 Insurance 264,097 243,222 Deferred contract costs 260,899 227,718 Unbilled receivable 506,984 612,446 Other 117,918 68,495 Total prepaid expenses and other current assets $ 2,383,764 $ 2,458,727 Accounts payable, accrued expenses and other current liabilities consisted of the following: As of December 31, 2021 2020 Accounts payable $ 1,943,457 $ 513,610 Professional fees 319,590 233,667 Sales taxes 360,361 216,367 Compensation 1,123,467 311,379 Contractors 1,288,730 538,618 Settlements and legal 681,045 831,232 Other 346,870 543,703 Total accounts payable, accrued expenses and other current liabilities $ 6,063,520 $ 3,188,576 |
Fair Value
Fair Value | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 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 million at a purchase price of $15.0 million (the "2020 Notes") on June 9, 2020. The 2020 Notes were paid in full on October 5, 2021 and were replaced by convertible notes of $20.0 million at a purchase price of $18.0 million (the "2021 Notes") on the same date. We elected to account for both the 2020 Notes and the 2021 Notes using the fair value option. Under the fair value option, the financial liability is initially measured at its issue-date estimated fair value and subsequently remeasured at its estimated fair value on a recurring basis at each reporting period date. The change in estimated fair value resulting from changes in instrument-specific credit risk is recorded in other comprehensive income as a component of equity. The remaining estimated fair value adjustment is presented as a single line item within other (expense) income in our condensed consolidated statement of operations under the caption, change in fair value of convertible notes . For the 2020 Note and 2021 Notes, 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 months ended March 31, 2022 and three months ended March 31, 2021: Three Months Ended 2022 2021 Fair value balance at beginning of period $ 17,305,000 $ 13,398,000 Payments on Convertible Notes (3,300,000 ) (7,697,727 ) Change in fair value reported in the statements of operations 1,433,000 1,991,272 Change in fair value reported in other comprehensive loss (101,000 ) 13,000 Fair value balance at end of period $ 15,337,000 $ 7,704,545 The estimated fair value of the Convertible Notes as of March 31, 2022 and December 31, 2021, was computed using a Monte Carlo simulation, which incorporates significant inputs that are not observable in the market, and thus represents a Level 3 measurement as defined by GAAP. The unobservable inputs utilized for measuring the fair value of the Convertible Notes reflect our assumptions about the assumptions that market participants would use in valuing the Convertible Notes as of the issuance date and subsequent reporting period. We estimated the fair value by using the following key inputs to the Monte Carlo Simulation Model: Fair Value Assumptions - Convertible Notes March 31, December 31, Face value principal payable $ 16,700,000 $ 20,000,000 Original conversion price $ 4.05 $ 4.05 Value of Common Stock $ 1.14 $ 1.75 Expected term (years) 2.5 2.8 Volatility 79 % 75 % Market yield 40.2 % 37.1 % Risk free rate 2.4 % 1 % Issue date October 5, 2021 October 5, 2021 Maturity date October 5, 2024 October 5, 2024 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. Each unit consisted of one share of MTech’s common stock and one warrant of MTech (“MTech Private Warrant”). Each MTech Private Warrant entitled the holder to purchase one share of MTech’s common stock at an exercise price of $11.50. 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”) In connection with the completion of the Mergers, we also issued 189,365 common stock purchase warrants upon the cashless exercise of a unit purchase option, which warrants have identical terms to the Public Warrants and are included in references to Public Warrants and Warrants herein. 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 months ended March 31, 2022 and March 31, 2021: Three Months Ended 2022 2021 Fair value balance at beginning of period $ 63,178 $ 311,376 Change in fair value reported in the statements of operations (18,051 ) 175,996 Fair value balance at end of period $ 45,127 $ 487,372 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 Warrants in the consolidated balance sheets under the caption “derivative liability” and recognize changes to the liability against earnings or loss each reporting period. Upon exercise of the Private Warrants, holders will receive a delivery of Akerna shares on a net or gross share basis per the terms of the Private Warrants and any exercise will reclassify the Private Warrants, at the time of exercise, to shareholder’s equity to reflect the equity transaction. There are no periodic settlements prior to the holder exercising the Private Warrants. There were no transfers in or out of Level 3 from other levels for the fair value hierarchy. We estimated the fair value by using the following key inputs: Fair Value Assumptions - Private Warrants March 31, December 31, Number of Private Warrants 225,635 225,635 Original conversion price $ 11.50 $ 11.50 Value of Common Stock $ 1.14 $ 1.75 Expected term (years) 2.21 2.46 Volatility 114.4 % 93.9 % Risk free rate 2.3 % 0.8 % | Note 13 - Fair Value Contingent Consideration Solo In connection with our acquisition of Solo, the Solo selling shareholders have the potential to earn the contingent consideration, which is calculated as the lesser of (i) $0.01 per solo*TAGTM and solo*CODETM sold or (ii) 7% of net revenue. The fees were to be paid annually until the earlier of: (1) our shares trading above $12 per share for any consecutive 20 trading days in a 30-day period; (b) upon our no longer owning a majority stake in Solo; or (c) upon expiration of the patents related to solo*TAGTM and solo*CODETM, which is December 1, 2029. We record the fair value of the liability in the consolidated balance sheets under the caption “current contingent consideration” and recognize changes to the liability against earnings or loss each reporting period until settlement. The fair value of the contingent consideration on the date of the acquisition of Solo was $389,000. In connection with our exercise of the option to acquire the remaining interest in Solo, the selling shareholders agreed to retrospectively and prospectively relieve the contingent consideration obligation. Therefore, the settled value of the contingent consideration was $0. We have recorded a gain of $389,000 on settlement of the contingent consideration liability during the six months ended December 31, 2020 in general and administrative expenses in our consolidated statement of operations. Trellis In connection with our acquisition of Trellis, the Trellis selling shareholders have the potential to earn contingent consideration, which is calculated as five times the annualized revenue of certain customers generated in September 2020. The fair value of the contingent consideration on the date of acquisition of Trellis was $998,000. The carrying amount at the fair value of the liability for the contingent consideration recorded on our consolidated balance sheet as of June 30, 2020 was $0. As such, we recorded a gain of $998,000 due the change in the fair value of the contingent consideration during the year ended June 30, 2020 in general and administrative expenses in our consolidated statement of operations. Ample In addition to the stock and cash consideration, the agreement provides for contingent consideration of up to CAD$10,000,000, payable in exchangeable shares, payable if Ample's Recurring Revenue recognized during the 12 months after the acquisition date is CAD$9,000,000 or more. The contingent consideration amount is reduced by an amount equal to the product of CAD$6.67 multiplied by the difference between CAD$9,000,000and the amount of Recurring Revenue realized during the twelve months following the acquisition. We record the fair value of the liability in the consolidated balance sheets as contingent consideration payable and recognize changes to the liability against earnings or loss in general and administrative expenses in the consolidated statements of operations. The fair value of the contingent consideration on the date of the acquisition of Ample was $604,000. The carrying amount at fair value of the aggregate liability for the contingent consideration recorded on the consolidated balance sheet as of December 31, 2020, is $0. We have recorded a gain of $604,000 due the change in the fair value of the contingent consideration during the six months ended December 31, 2020 in general and administrative expenses in our consolidated statement of operations. Viridian In connection with our acquisition of Viridian, the Viridian selling shareholders have the potential to earn contingent consideration payable in common stock if Viridian meets certain revenue criteria. The fair value of the contingent consideration on the date of acquisition of Viridian was $2,000. The carrying amount at the fair value of the liability for the contingent consideration recorded on our consolidated balance sheet as of December 31, 2021 was unchanged at $2,000. 365 Cannabis In connection with our acquisition of 365 Cannabis, the 365 Cannabis selling shareholders have the potential to earn contingent consideration payable in common stock if certain revenue criteria is met. The fair value of the contingent consideration on the date of acquisition of 365 Cannabis was $6,300,000. The carrying amount at the fair value of the liability for the contingent consideration recorded on our consolidated balance sheet as of December 31, 2021 was unchanged at $6,300,000. We valued the contingent consideration using a probability-weighted discounted cash flow model, which incorporates inputs 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 contingent consideration reflect management's own assumptions about the assumptions that market participants would use in valuing the contingent consideration as of the valuation date, as well as our knowledge of specific transactions that effect the calculation. Fair Value Option Election – Convertible Notes We issued Convertible Notes with a principal amount of $17.0 million at a purchase price of $15.0 million on June 9, 2020. We elected to account for the Convertible Notes using the fair value option. Under the fair value option, the financial liability is initially measured at its issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The remaining estimated fair value adjustment is presented as a single line item within other income (expense) in our consolidated statement of operations under the caption, change in fair value of convertible notes. For the 2020 Notes, which are measured at fair value categorized within Level 3 of the fair value hierarchy, the following is a reconciliation of the fair values from June 30, 2020 to October 5, 2021: Beginning fair value balance on June 30, 2020 $ 14,131,000 Payments on Convertible Notes (1,827,273 ) Change in fair value reported in the statements of operations 961,273 Change in fair value reported in other comprehensive income 133,000 Ending fair value balance - December 31, 2020 $ 13,398,000 Payments on Convertible Notes (15,172,727 ) Change in fair value reported in the statements of operations 2,030,904 Change in fair value reported in other comprehensive income (70,000 ) Gain on extinguishment of debt reported on the statement of operations (186,177 ) Ending fair value balance - October 5, 2021 $ — We issued the Senior Secured Notes with a principal amount of $20.0 million at a purchase price of $18.0 million on October 5, 2021. We have elected to account for the Senior Secured Notes using the fair value option. Under the fair value option, the financial liability is initially measured at its issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The change in estimated fair value resulting from changes in instrument specific credit risk is recorded in other comprehensive income as a component of equity. The remaining estimated fair value adjustment is presented as a single line item within other income (expense) in our consolidated statement of operations under the caption, change in fair value of convertible notes. For the Senior Secured Notes, which are measured at fair value categorized within Level 3 of the fair value hierarchy, the following is a reconciliation of the fair values from October 5, 2021 to December 31, 2021: Beginning fair value balance on October 5, 2021 $ 18,000,000 Payments on Convertible Notes — Change in fair value reported in the statements of operations (665,000 ) Change in fair value reported in other comprehensive income (30,000 ) Ending fair value balance - December 31, 2021 $ 17,305,000 The estimated fair value of the Convertible Notes as of December 31, 2021, and December 31, 2020 was computed using a Monte Carlo simulation, which incorporates significant inputs that are not observable in the market, and thus represents a Level 3 measurement as defined by GAAP. The unobservable inputs utilized for measuring the fair value of the Convertible Notes reflects our assumptions about the assumptions that market participants would use in valuing the Convertible Notes as of the issuance date and subsequent reporting period. We determined the fair value by using the following key inputs to the Monte Carlo Simulation Model: Fair Value Assumptions - Convertible Notes December 31, December 31, Face value principal payable $ 20,000,000 $ 15,172,272 Original conversion price $ 4.05 $ 11.5 Value of Common Stock $ 1.75 $ 3.24 Expected term (years) 2.8 2.3 Volatility 75 % 77 % Market yield (range) 37.1 % 27.1 to 27.2 % Risk free rate 1.0 % 0.1 % Issue date October 5, 2021 June 9, 2020 Maturity date October 5, 2024 June 1, 2023 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. Each unit consisted of one share of MTech’s common stock and one warrant of MTech (“MTech Private Warrant”). Each MTech Private Warrant entitled the holder to purchase one share of MTech’s common stock at an exercise price of $11.50. 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”) In connection with the completion of the Mergers, we also issued 189,365 common stock purchase warrants upon the cashless exercise of a unit purchase option, which warrants have identical terms to the Public Warrants and are included in references to Public Warrants and Warrants herein. 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 year ended December 31, 2021 and December 31, 2020: Year Ended December 31, 2021 2020 Fair value balance at beginning of period $ 311,376 $ 688,187 Change in fair value reported in the statements of operations (248,198 ) (376,811 ) Fair value balance at end of period $ 63,178 $ 311,376 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 Warrants in the consolidated balance sheets under the caption “derivative liability” and recognize changes to the liability against earnings or loss each reporting period. Upon exercise of the Private Warrants, holders will receive a delivery of Akerna shares on a net or gross share basis per the terms of the Private Warrants and any exercise will reclassify the Private Warrants, at the time of exercise, to shareholder’s equity to reflect the equity transaction. There are no periodic settlements prior to the holder exercising the Private Warrants. There were no transfers in or out of Level 3 from other levels for the fair value hierarchy. We estimated the fair value by using the following key inputs: Fair Value Assumptions - Private Warrants December 31, December 31, Number of Private Warrants 225,635 225,635 Original conversion price $ 11.50 $ 11.50 Value of Common Stock $ 1.75 $ 3.24 Expected term (years) 2.46 3.46 Volatility 85.8 % 102.3 % Risk free rate 0.8 % 0.2 % |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 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 less than 5% 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 December 31, 2021 and March 31, 2022, we recognized a loss contingency of $0.5 million. 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. TreCom failed to return Akerna’s intellectual property and issued numerous disparaging statements to one of Akerna’s clients. TreCom subsequently filed a motion to dismiss these counterclaims, which was denied by the court. Akerna intends to vigorously defend against TreCom’s claims, and pursue its own claims. As of December 31, 2021 and March 31, 2022, we recognized a loss contingency of $0.2 million. On May 21, 2021, our wholly-owned subsidiary, Solo, filed suit against two of Solo’s former directors, Ashesh Shah and Palle Pedersen. Solo seeks recovery for Mr. Shah’s intentional interference with contractual relations, and the defendants’ breaches of various fiduciary duties owed to Solo. Defendant Shah engaged in improper communications with Solo’s customers with the intent that those customers cease their contractual relations with Solo. The defendants also entered into an improper contract with a contractual counter party that the defendants had a conflict of interest with. The defendants have filed a motion to dismiss, which the court found unpersuasive and denied. Defendants have not asserted any counterclaims, and we therefore have not recognized a loss contingency. 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 March 31, 2022, and through the date these consolidated financial statements were issued, there were no other legal proceedings requiring recognition or disclosure in the consolidated financial statements. Operating Leases During the three months ended March 31, 2022, we began negotiations to terminate the 365 Cannabis office lease in Las Vegas, Nevada. We booked a liability and lease termination expense of $564,234 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. | Note 14 - Commitments and Contingencies Operating Leases As of December 31, 2021, we had one facility under a non-cancelable operating leases in Las Vegas. Rent expense for the year ended December 31, 2021, six months ended December 31, 2020 and the year ended June 30, 2020 was $157,593, $552,861, and $299,629 respectively. Future minimum lease payments under these leases are as follows: 2022 $ 252,525 2023 260,100 2024 110,480 Total $ 623,105 During the third quarter of 2021, we reached an agreement to terminate our office lease in Toronto, Canada for a termination fee of approximately $980,000, which is included within the General and Administrative expense line item on the condensed consolidated statement of operations and was paid in full during the year ended December 31, 2021. In connection with the lease termination, we also wrote off certain assets, primarily leasehold improvements, and the resulting loss of $1,045,209 was also recorded in the General and Administrative expense line item on the condensed consolidated statement of operations. During the four quarter of 2020, we reached an agreement to terminate our office lease in Denver, CO. The lease termination agreement included the forfeiture of our $41,250 security deposit and a termination fee of $402,480. The lease termination fee was settled in the first quarter of 2021 by issuing 113,375 shares of common stock, calculated using a VWAP of $3.55/share. Letter-of-Credit As of December 31, 2021 and December 31, 20 20, we had a standby letter-of-credit with a bank in the amount of $ . The standby letter of credit is collateralized by $ of cash, which is classified as restricted cash on our consolidated balance sheets. The beneficiary of the letter-of-credit is an insurance company. 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 less than 5% 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 December 31, 2021 and December 31, 2020, we recognized a loss contingency of $0.5 million and $0.6 million, respectively. 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. TreCom failed to return Akerna’s intellectual property and issued numerous disparaging statements to one of Akerna’s clients. TreCom subsequently filed a motion to dismiss these counterclaims, which was denied by the court. Akerna intends to vigorously defend against TreCom’s claims, and pursue its own claims. As of December 31, 2021 and December 31, 2020, we recognized a loss contingency of $0.2 million and $0, respectively. On May 21, 2021, our wholly-owned subsidiary, Solo, filed suit against two of Solo’s former directors, Ashesh Shah and Palle Pedersen. Solo seeks recovery for Mr. Shah’s intentional interference with contractual relations, and the defendants’ breaches of various fiduciary duties owed to Solo. Defendant Shah engaged in improper communications with Solo’s customers with the intent that those customers cease their contractual relations with Solo. The defendants also entered into an improper contract with a contractual counter party that the defendants had a conflict of interest with. The defendants have not asserted any counterclaims, and we therefore have not recognized a loss contingency. 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 December 31, 2021, and through the date these consolidated financial statements were issued, there were no other legal proceedings requiring recognition or disclosure in the consolidated financial statements. Employee Benefit Plan We have a 401(k) Plan (the “Plan”) to provide retirement benefits for our employees. Employees may contribute up to a portion of their annual compensation to the Plan, limited to a maximum annual amount as updated annually by the IRS. We do not offer a match of employee contributions nor any discretionary contributions. |
Loss Per Share
Loss Per Share | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Loss Per Share | Note 8 - Loss Per Share During the three months ended March 31, 2022 and 2021, we used the two-class method to compute net loss per share because we issued securities other than common stock that is economically equivalent to a common share in that the class of stock has the right to participate in dividends should a dividend be declared payable to holders of Akerna common stock. These participating securities were the Exchangeable Shares issued by our wholly owned subsidiary in exchange for interest in Ample. The two-class method requires earnings for the period to be allocated between common stock and participating securities based on their respective rights to receive distributed and undistributed earnings. Under the two-class method, for periods with net income, basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of current period earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the period's earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the Exchangeable Shares have no obligation to fund losses. 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. F-20 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 2022 2021 Shares issuable upon exchange of Exchangeable Shares 306,852 1,647,287 Shares of common stock issuable upon conversion of Convertible Notes 12,370,370 612,609 Warrants 5,813,804 5,813,804 Unvested restricted stock units 627,840 664,258 Unvested restricted stock awards 6,679 33,062 Total 19,125,545 8,771,020 | Note 12 - Loss Per Share During the year ended December 31, 2021, we used the two-class method to compute net loss per share because we issued securities other than common stock that is economically equivalent to a common share in that the class of stock has the right to participate in dividends should a dividend be declared payable to holders of Akerna common stock. These participating securities were the Exchangeable Shares issued by our wholly owned subsidiary in exchange for interest in Ample. The two-class method requires earnings for the period to be allocated between common stock and participating securities based on their respective rights to receive distributed and undistributed earnings. Under the two-class method, for periods with net income, basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of current period earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the period's earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the Exchangeable Shares have no obligation to fund losses. 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: December 31, December 31, Shares issuable upon exchange of Exchangeable Shares 309,286 2,667,349 Warrants 5,813,804 5,813,804 Restricted Stock Units 683,767 694,512 Restricted Stock Awards 32,394 64,289 Shares of common stock issuable in upon conversion of Convertible Notes 12,484,395 1,319,368 Total 19,323,646 10,559,322 |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, net | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill and Intangible Assets, net | Note 9 - Goodwill and Intangible Assets, net Impairment Based on our qualitative assessment of goodwill, we determined it was necessary to perform a quantitative valuation of goodwill as of March 31, 2022. Unchanged from the year ended December 31, 2021, we determined there were two reporting units: the enterprise reporting unit which is comprised of the enterprise software offerings and the non-enterprise reporting unit which is comprised of the non-enterprise software offerings. The valuation of our goodwill was determined with the assistance of an independent valuation firm using the income approach (discounted cash flows method) and the market approach (guideline public company method). Our significant assumptions in these analyses include, but are not limited to, future cash flow projections, the weighted average cost of capital, the discount rate, the implied control premium, the terminal growth rate, and the tax rate. The Company’s estimates of future cash flows are based on current regulatory and economic climates, recent operating results, and planned business strategies. These estimates could be negatively affected by changes in federal, state, or local regulations or economic downturns. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from the Company’s estimates. If the Company’s ongoing estimates of future cash flows are not met, the Company may have to record additional impairment charges in future periods. The Company also uses the Guideline Public Company Method, a form of the market approach (utilizing Level 3 unobservable inputs), which is derived from metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses is based on the markets in which the reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services. As such, we believe the current assumptions and estimates utilized are both reasonable and appropriate. Enterprise Reporting Unit For the three months ended March 31, 2022, no impairment to goodwill was recorded for our enterprise reporting unit as the fair value exceeded the carrying value as of March 31, 2022. To perform our analysis, we applied a 50% weighting to the market approach and 50% weighted to the income approach. Non-Enterprise Reporting Unit For the three months ended March 31, 2022, primarily due to a continued decline in market valuation from December 31, 2021, we recorded an impairment expense of $15.5 million related to our non-enterprise reporting unit. To perform our analysis, we applied a 25% weighting to the income approach and a 75% weighting to the market approach. Finite-lived Intangible Assets, Net We performed a two step impairment test for the asset groups that had indicators of impairment during the three months ended March 31, 2022 under ASC 360 and as a result of this analysis we did not identify any impairment. | Note 6 - Goodwill and Intangible Assets, Net Goodwill The following table reflects the changes in the carrying amount of goodwill: Balance as of June 30, 2020 $ 20,254,309 Adjustments to Trellis' goodwill (14,300 ) Additions due to acquisition of Ample 25,806,518 Goodwill impairment (4,172,000 ) Balance as of December 31, 2020 $ 41,874,527 Additions due to acquisition of Viridian 5,408,884 Additions due to acquisition of 365 Cannabis 14,042,580 Goodwill impairment (14,383,310 ) Balance as of December 31, 2021 $ 46,942,681 Impairment Based on our qualitative assessment of goodwill, we determined it was necessary to perform a quantitative valuation of goodwill as of December 31, 2021. We determined there were two reporting units: the enterprise reporting unit which is comprised of the enterprise software offerings and the non-enterprise reporting unit which is comprised of the non-enterprise software offerings. The valuation of our goodwill was determined with the assistance of an independent valuation firm using the income approach (discounted cash flows method) and the market approach (guideline public company method). Our significant assumptions in these analyses include, but are not limited to, future cash flow projections, the weighted average cost of capital, the discount rate, the implied control premium, the terminal growth rate, and the tax rate. The Company’s estimates of future cash flows are based on current regulatory and economic climates, recent operating results, and planned business strategies. These estimates could be negatively affected by changes in federal, state, or local regulations or economic downturns. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from the Company’s estimates. If the Company’s ongoing estimates of future cash flows are not met, the Company may have to record additional impairment charges in future periods. The Company also uses the Guideline Public Company Method, a form of the market approach (utilizing Level 3 unobservable inputs), which is derived from metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses is based on the markets in which the reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services. As such, we believe the current assumptions and estimates utilized are both reasonable and appropriate. During the six months ended December 31, 2020, primarily as a result of delays in executing on strategic initiatives related to acquisitions completed in 2020, we recorded a $4.2 million impairment to goodwill. Enterprise Reporting Unit For the year ended December 31, 2021, no impairment to goodwill was recorded for our enterprise reporting unit as the fair value exceeded the carrying value as of December 31, 2021. To perform our analysis, we applied a 50% weighting to the market approach and 50% weighted to the income approach. Non-Enterprise Reporting Unit For the year ended December 31, 2021, primarily due to a continued decline in market valuation and a flattening in the operating results of our non-enterprise reporting unit compared to acquisition assumption, we recorded an impairment expense of $14.4 million related to our non-enterprise reporting unit. To perform our analysis, we applied a 25% weighting to the income approach and a 75% weighting to the market approach. Finite-lived Intangible Assets, Net We performed a two step impairment test for the asset groups that had indicators of impairment in the current year under ASC 360 and as a result of this analysis we did not identify any impairment. For the six months ended December 31, 2020, we determined that the carrying value of Solo’s developed technology and trade name exceeded it’s fair value, resulting in an impairment of $2.7 million. Intangible assets as of December 31, 2021 consist of the following: Weighted average remaining amortization period Gross carrying amount Accumulated Impairment Net carrying Acquired developed technology 3.35 $ 7,138,080 $ (2,815,158 ) $ — $ 4,322,922 Acquired trade names 3.09 871,920 (286,799 ) — 585,121 Customer relationships 10.18 17,510,000 (878,250 ) — 16,631,750 Non-compete agreement 1.75 80,000 (10,000 ) — 70,000 Total Intangible assets $ 25,600,000 $ (3,990,207 ) $ — $ 21,609,793 Capitalized software - In-service 2.02 8,807,843 (4,423,887 ) — 4,383,956 Capitalized software - Work in Progress N/A 3,224,203 — (296,483 ) 2,927,720 Total Capitalized Software 12,032,046 (4,423,887 ) (296,483 ) 7,311,676 Total finite-lived intangible assets $ 37,632,046 $ (8,414,094 ) $ (296,483 ) $ 28,921,469 Intangible assets as of December 31, 2020 consist of the following: Weighted average Gross carrying amount Accumulated Impairment Net carrying Acquired developed technology 3.77 $ 8,220,000 $ (1,434,155 ) $ (2,591,920 ) $ 4,193,925 Acquired trade names 5.12 705,000 (97,676 ) (123,080 ) 484,244 Customer relationships 13.04 2,880,000 (169,374 ) — 2,710,626 Total Intangible assets $ 11,805,000 $ (1,701,205 ) $ (2,715,000 ) $ 7,388,795 Capitalized software - In-service 1.62 4,593,512 (1,401,953 ) — 3,191,559 Capitalized software - Work in Progress N/A 734,180 — — 734,180 Total Capitalized Software 5,327,692 (1,401,953 ) — 3,925,739 Total finite-lived intangible assets $ 17,132,692 $ (3,103,158 ) $ (2,715,000 ) $ 11,314,534 We record amortization expense associated with acquired developed technology, acquired trade names, and customer relationships. The amortization expense of all finite-lived intangible assets, which includes capitalized software was $5.6 million, $1.8 million, and $1.3 million for the year ended December 31, 2021, six months ended December 31, 2020, and year ended June 30, 2020, respectively. The amortization expense for the year ended December 31, 2021 includes $0.3 million of capitalized software write offs. As of December 31, 2021, expected amortization expense relating to in-service capitalized software and purchased intangible assets for each of the next five years and thereafter is as follows: Acquired Intangible Assets Capitalized Software- In-service 2022 $ 3,445,741 $ 2,722,663 2023 3,131,575 1,144,351 2024 2,801,991 275,884 2025 1,973,934 110,215 2026 1,851,434 59,112 Thereafter 8,405,118 71,731 Total $ 21,609,793 $ 4,383,956 |
Income Taxes
Income Taxes | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Income Taxes | Note 10- Income Taxes The Company's effective tax rate was 0.45% and 0.00% for the three months ended March 31, 2022 and 2021, respectively. Differences between the statutory rate and the Company's effective tax rate resulted from changes in valuation allowance and permanent differences for tax purposes in the treatment of certain nondeductible expenses. The Company's effective tax rate is impacted by activity related to deferred tax liabilities, resulting primarily from the acquisition of 365 Cannabis, which cannot be considered as a source of future taxable income available to utilize recorded deferred tax assets based on the Company's scheduling and the 80% limit on the utilization of net operating loss carry forwards under current US tax law. | Note 15 - Income Taxes Since June 17, 2019, we have been the sole owner of MJF, which is a disregarded entity for federal income taxes. Prior to June 17, 2019 MJF was treated as a partnership for U.S income tax purposes. Accordingly, prior to the business combination, our taxable income and losses were reported on the income tax returns of MJF’s members. Therefore, no income tax is provided prior to June 17, 2019. On March 27, 2020 the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act, was enacted in response to the COVID-19 pandemic. It was determined the CARES Act did not materially impact our tax provision as of December 31, 2021 and December 31, 2020. The accounting for the business combinations of Viridian and 365 Cannabis reflected in the accompanying consolidated financial statements is preliminary and is based upon estimates and assumptions that are subject to change within the measurement period (up to one year from the acquisition date). The measurement period remains open pending the completion of valuation procedures related to the acquired assets and assumed liabilities, intangible assets and income taxes. In April 2020, we were granted a loan, or the PPP Loan, from a lender in the aggregate amount of $2.2 million pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, which we obtained debt forgiveness on during the year ended December 31, 2021. The following table sets forth the expense or benefit for income taxes: Year Ended Six Months Year Ended 2021 2020 2020 Income tax Current income taxes U.S. federal $ — $ — $ 30,985 U.S. state 5,800 200 — Foreign 6,270 — Total current income taxes $ 12,070 $ 200 $ 30,985 Year Ended Six Months Year Ended 2021 2020 2020 Deferred income tax U.S. federal $ (2,274,295 ) $ — $ — U.S. state — — — Total deferred income tax benefit $ (2,274,295 ) $ — $ — The following table sets forth reconciliations of the income tax expense at the statutory federal income tax rate to actual expense based on income or loss before income taxes: Year Ended Six Months June 30, 2021 2020 2020 Income tax expense (benefit) attributable to: Federal $ (6,692,267 ) $ (3,560,998 ) $ (3,255,706 ) State, net of federal benefit (672,148 ) (553,871 ) (862,690 ) Foreign tax rate differential (138,292 ) 29,617 (2,645 ) Permanent differences 2,428,631 1,263,151 312,525 Rate change 54,295 60,220 — Changes in valuation allowance 3,361,603 2,762,081 3,884,440 Provision to return adjustment 273,489 — (45,134 ) Losses from flow-through entity not subject to tax — — — Deferred True-Ups (928,743 ) — — Other adjustments 51,207 — 195 Effective income tax expense (benefit) $ (2,262,225 ) $ 200 $ 30,985 December 31, December 31, 2021 2020 Noncurrent deferred tax assets: Employee compensation $ 820,410 $ 679,106 Debt issuance costs 138,778 343,612 Revenue recognition 105,735 — Settlement accrual 146,604 182,896 Fixed assets 242,006 831,196 Federal and state net operating loss 10,673,908 6,337,897 Foreign net operating loss 4,904,857 2,586,671 Other 225,340 27,410 Total deferred tax assets $ 17,257,638 $ 10,988,788 Noncurrent deferred tax liabilities: Fixed assets — — Intangibles (6,051,459 ) (2,717,717 ) Deferred tax liabilities $ (6,051,459 ) $ (2,717,717 ) Valuation allowance (11,881,470 ) (8,271,071 ) Deferred taxes after valuation allowance $ (675,291 ) $ — During the year ended December 31, 2021, valuation allowances on deferred tax assets that are not anticipated to be realized increased by $3.6 million of which $0.2 million was recorded in purchase accounting and the remainder of $3.4 million was recorded to deferred expense. During the six months ended December 31, 2020, valuation allowances on deferred tax assets that are not anticipated to be realized increased by $5.5 million of which $2.7 million was recorded in purchase accounting and the remainder of $2.8 million was recorded to deferred expense. Our deferred tax valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits on tax losses. The measurement of deferred tax assets is reduced by a valuation allowance if based upon available evidence, it is more likely than not that the deferred tax assets will not be realized. We have evaluated the realizability of our deferred tax assets in each jurisdiction by assessing the adequacy of expected taxable income, including the reversal of existing temporary differences, historical and projected operating results, and the availability of prudent and feasible tax planning strategies. Based on this analysis, we have determined that the valuation allowances recorded as of December 31, 2021 and December 31, 2020 are appropriate. We have deferred tax assets related to U.S. federal tax and state tax carryforwards for net operating losses in the amount of $44.5 million. The majority of U.S. federal net operating loss carryforwards are carried forward indefinitely. Federal net operating losses generated after 2017 have an indefinite carryforward and are only available to offset 80% taxable income beginning in 2021. U.S. state net operating loss carryforwards expire at various dates of which the majority begin to expire in 2039. We have deferred tax assets related to foreign net operating loss carryforward, which begin to expire in 2034, in the amount of $18.5 million. We are not currently under examination for any of the major jurisdictions where we conduct business as of December 31, 2021, however, all of our tax years remain subject to examination. Our management does not believe there are significant uncertain tax positions in 2021 and as a result we do not expect any cash payments in the next 12 months, however, uncertain tax positions related to potential penalties in the amounts of $30,000 and $50,000 have been recorded in connection with business combinations during the years ended December 31, 2021 and June 30, 2020, respectively. There is no interest related to uncertain tax positions in 2021 or 2020. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2021 | |
Acquisitions Disclosure [Abstract] | |
Acquisitions | Note 4 - Acquisitions 2021 Acquisitions Viridian Sciences On April 1, 2021, we completed the acquisition of Viridian, a cannabis business management software provider that is built on SAP Business One. We acquired Viridian in exchange for 1.0 million shares of our common stock valued at approximately $6.0 million. 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 Shares issued $ 6,186 Contingent consideration 2 Total preliminary fair value of consideration transferred $ 6,188 The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands): Preliminary Accounts receivable 556 Prepaid expenses and other current assets 148 Capitalized software 423 Acquired technology 470 Customer relationships 820 Acquired trade name 20 Goodwill 5,408 Accounts payable and accrued expenses (350 ) Deferred tax liabilities (307 ) Deferred revenue (1,000 ) Net assets acquired $ 6,188 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. We expect to finalize the valuation as soon as practicable, but no later than one year from the acquisition date. The amounts of Viridian's revenue and net income included in our consolidated statement of operations from the acquisition date of April 1, 2021, to December 31, 2021 were $2.4 million and $0.3 million, respectively. 365 Cannabis On October 1, 2021, we acquired all the issued and outstanding shares of 365 Cannabis. Under the terms of the Agreement, the aggregate consideration for the 365 Cannabis shares consists of (1) $5,000,000 in cash, (2) $12,000,000 in stock, which was settled by issuing 3.6 million shares of our common stock, and (3) contingent value rights to be issued pursuant to a rights indenture entitling the holders thereof to receive, subject to certain adjustments as set forth in the Agreement, an aggregate of up to $8,000,000 in stock, in the event that NAV achieves certain revenue targets as specified in the Agreement. These rights are accounted for as contingent consideration and are currently recorded at preliminary fair value which will be updated upon finalization of purchase accounting. Preliminary Shares issued $ 12,000 Cash 5,542 Contingent consideration 6,300 Total preliminary fair value of consideration transferred $ 23,842 The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands): Preliminary Cash 527 Accounts receivable 486 Prepaid expenses and other current asset 261 Fixed Assets 93 Non-compete agreement 80 Acquired technology 1,040 Customer relationships 13,810 Acquired trade name 270 Goodwill 14,043 Accounts payable and accrued expenses (826 ) Deferred tax liabilities (2,642 ) Deferred revenue (3,300 ) Net assets acquired $ 23,842 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. We expect to finalize the valuation as soon as practicable, but no later than one year from the acquisition date. The amounts of 365 Cannabis' revenue and net loss included in our consolidated statement of operations from the acquisition date of October 1, 2021, to December 31, 2021 were $2.4 million and $0.4 million, respectively. 2020 Acquisitions Trellis Solutions, Inc. On April 8, 2020, we acquired Trellis, a cannabis cultivation management and compliance software company in an all-stock transaction. Our estimated acquisition date fair value of the consideration transferred for Trellis was as follows (in thousands): Common shares issued $ 2,531 Contingent consideration 998 Total estimated fair value of consideration $ 3,529 We incurred $0.1 million of transaction costs directly related to the acquisition that is reflected in general and administrative expenses in our consolidated statement of operations during the year ended June 30, 2020. We issued 349,650 shares of our common stock valued at $7.24 The following table summarizes our estimated fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands): Cash $ 21 Accounts receivable, net 91 Other assets 6 Acquired technology 210 Acquired trade name 80 Customer relationships 220 Goodwill 3,216 Accounts payable and accrued expenses (284 ) Deferred revenue (31 ) Net assets acquired $ 3,529 The excess of purchase consideration over the fair value of net tangible and intangible assets acquired 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. During the six months ended December 31, 2020, we recorded net adjustments to assets and liabilities acquired of $14.3 thousand. The amounts of Trellis’s revenue and net loss included in our consolidated statement of operations from the acquisition date of April 10, 2020 to June 30, 2020 were $216.0 thousand and $17.0 thousand, respectively. solo sciences, inc. On January 15, 2020, we closed on a stock purchase agreement with substantially all of the shareholders of Solo pursuant to which we acquired all right, title, and interest in 80.4% of the issued and outstanding capital stock of Solo, calculated on a fully diluted basis. A s Common shares issued $ 17,550 Contingent consideration 389 Total estimated fair value of consideration $ 17,939 We incurred $0.3 million of transaction costs directly related to the acquisition, which is reflected in general and administrative expenses in our consolidated statement of operations during the year ended June 30, 2020. We exchanged 1,950,000 shares of our common stock, valued at $9.00 per share, the closing price of a share of our common stock on the date of acquisition. In addition to the stock consideration, we agreed to pay contingent consideration in the form of fees payable to the legacy Solo shareholders equal to the lesser of (i) $0.01 per solo*TAG™ and solo*CODE™ sold or (ii) 7% of net revenue. The fees were to be paid annually until the earlier of: (1) our shares trading above $12 per share for any consecutive 20 trading days in a 30-day period; (b) upon our no longer owning a majority stake in Solo; or (c) upon expiration of the patents related to solo*TAG™ and solo*CODE™, which is December 1, 2029. This fee represents contingent consideration and was recorded at fair value as of the date of acquisition. Contingent consideration is adjusted to fair value each period with changes in fair value being recognized in earnings at each reporting period. We also acquired an option to acquire the noncontrolling interests in Solo during the 12 months following the close for either cash or shares. Beginning with the expiration of our option, the noncontrolling interests in Solo have a 3-month option to acquire between 40% and 55% of Solo back from us for cash. On July 31, 2020, we entered into an amendment to the stock purchase agreement to exercise our option to acquire the noncontrolling interests in Solo, for 800,000 shares of our common stock, this transaction will be recorded as an equity transaction, with no effect to the value of the assets acquired or liabilities assumed. In connection with the amendment, the selling shareholders agreed to cancel the contingent consideration in the future and waived a right to any amount that would have been earned prior to the amendment. We recorded a gain on settlement of the contingent consideration liability during the six months ended December 31, 2020 in general and administrative expenses in our consolidated statement of operations. During the year ended June 30, 2020, we obtained additional information regarding the valuation of the assets acquired and liabilities assumed. We have recorded a measurement period adjustment to allocate the acquisition price to intangible assets, goodwill, accrued liabilities, and the fair value of noncontrolling interests. The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands): Cash $ 101 Prepaid expenses and other assets 22 Furniture, fixtures, and equipment 2 Acquired technology 7,160 Acquired trade name 340 Goodwill 17,025 Accounts payable and accrued liabilities (1,158 ) Fair value of noncontrolling interests (5,553 ) Net assets acquired $ 17,939 The excess of purchase consideration over the fair value of net tangible and intangible assets acquired was recorded as goodwill, which is primarily attributed to expanded market opportunities, for which there is no basis for U.S. income tax purposes. The amounts of Solo’s revenue and net loss included in our consolidated statement of operations from the acquisition date of January 15, 2020 to June 30, 2020 were $23.0 thousand and $1.5 million, respectively. During the six months ended December 31, 2020, the Company recorded an impairment of $2.7 million related to Solo’s developed technology. See Note 6 – Goodwill and Intangible Assets, Net for further discussion of the intangible asset impairment. Ample Organics On July 7, 2020, we completed the acquisition of Ample Organics (“Ample”), Ample provides a seed-to-sale platform to clients in Canada, which offers tracking, reporting, and compliance tools to cannabis cultivators, processors, sellers, and clinics. We acquired 100% of the stock of Ample Organics for 3.3 million exchangeable shares of one of our wholly-owned subsidiaries. The exchangeable shares may be exchanged, at the option of the holder, for shares of Akerna common stock on a one-for-one basis, therefore the exchangeable shares issued were valued at $7.65 per share, the closing price of an equivalent share of Akerna common stock, $30.7 million was the aggregate value of the exchangeable shares. In addition to the stock consideration, we paid $5.5 million in cash, which was used to settle all of Ample's then outstanding debt. In addition to the stock and cash consideration, the agreement provides for contingent consideration of up to CAD$10,000,000, payable in exchangeable shares, payable if Ample's Recurring Revenue recognized during the 12 months after the acquisition date is CAD$9,000,000 or more. The contingent consideration amount is reduced by an amount equal to the product of CAD$6.67 multiplied by the difference between CAD$9,000,000 and the amount of Recurring Revenue realized during the 12 months following the acquisition. 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 Exchangeable shares issued $ 25,203 Cash 5,724 Contingent consideration 604 Total estimated fair value of consideration transferred $ 31,531 We incurred $2.9 million of total transaction costs directly related to the acquisition of Ample that is reflected in general and administrative expenses in our consolidated statements of operations, of which $1.1 million and $1.8 million was recognized during the six months ended December 31, 2020 and the year ended June 30, 2020, respectively. The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands): Preliminary Cash $ 445 Accounts receivable 917 Prepaid expenses and other current assets 595 Acquired technology 850 Customer relationships 2,660 Acquired trade name 285 Goodwill 25,806 Furniture, fixtures and equipment 1,327 Accounts payable and accrued expenses (805 ) Deferred revenue (549 ) Net assets acquired $ 31,531 The excess of purchase consideration over the preliminary 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. During the six months ended December 31, 2020, the Company recorded an impairment to goodwill for $4.2 million related to Ample. See Note 6 – Goodwill and Intangible Assets, Net for further discussion of the goodwill impairment. The amounts of Ample’s revenue and net income included in our consolidated statement of operations from the acquisition date of July 7, 2020, to December 31, 2020 were $2.6 million and $0.1 million, respectively. Pro Forma Financial Information The following unaudited pro forma consolidated operating results give effect to the Viridian and 365 Cannabis acquisitions as if they had been completed as of January 1, 2020 (in thousands): Year Ended December 31, 2021 Revenue $ 28,847 Net loss $ (31,423 ) The following unaudited pro forma consolidated operating results give effect to the Viridian and 365 Cannabis acquisitions, as if they had been completed as of January 1, 2020, and the Trellis, Solo and Ample acquisitions, as if they had been completed as of July 1, 2019 (in thousands): Six Months Year Ended June 30, 2020 2020 Revenue $ 14,026 $ 27,523 Net loss $ (17,650 ) $ (20,250 ) The pro forma financial information for all periods presented above has been calculated after adjusting the results of Solo, Trellis, Ample, Viridian, and 365 Cannabis to reflect the business combination accounting effects resulting from this acquisition, including the amortization expense from acquired intangible assets as though the acquisition occurred as of the beginning of the periods indicated above. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the years indicated above. 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. The special voting preferred stock entitles the holder to an aggregate number of votes equal to the number of the exchangeable shares issued and outstanding from time to time and which we do not own. The holder of the special voting preferred stock and the holders of shares of Akerna common stock will both together as a single class on all matters submitted to a vote of our shareholders. At such time as the special voting preferred stock has not votes attached to it, the share shall be automatically cancelled. The exchangeable shares do not have a par value. On September 1, 2020, several Ample shareholders exchanged a total of 627,225 exchangeable shares with a value of $4,798,271 for the same number of shares of Akerna 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 December 31, 2021, there were a total of 309,286 Exchangeable Shares issued and outstanding. |
Fixed Assets, Net
Fixed Assets, Net | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Fixed assets, net | Note 7 - Fixed assets, net Fixed assets consisted of the following: As of As of 2021 2020 Furniture and computer equipment $ 235,042 $ 131,300 Leasehold improvements 14,064 1,175,556 249,106 1,306,856 Less: accumulated depreciation (95,955 ) (113,423 ) Fixed assets, net $ 153,151 $ 1,193,433 Depreciation expense related to our fixed assets for the year ended December 31, 2021, six months ended December 31, 2020, and year ended June 30, 2020 was $127,731, $240,742, and $27,951, respectively. During the year ended December 31, 2021, we terminated our office lease in Toronto, Canada and wrote off $1.2 million of fixed assets. During the six months ended December 31, 2020, we sold furniture and computer equipment for $ 25,561 191,389 106,555 59,273 |
Investments
Investments | 12 Months Ended |
Dec. 31, 2021 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments | Note 8 - Investments Investment in and License Agreement with Zol Solutions, Inc. On October 7, 2019, we participated in an offering of preferred stock of Zol Solutions, Inc. (“ZolTrain”) along with other investors in which we purchased 203,000 shares of Series Seed Preferred Stock (the “ZolTrain Preferred”) for a purchase price of $250,000, which represents a noncontrolling interest in ZolTrain. The ZolTrain Preferred is convertible into shares of common stock of ZolTrain at a conversion rate of $1.232 per share at the option of the holder and contains certain anti-dilution protection in the event of certain future issuances of securities by ZolTrain. We are entitled to vote the number of common shares in which the ZolTrain Preferred is convertible into at any meeting of the ZolTrain stockholders. The ZolTrain Preferred also provides us with rights of first refusal with respect to newly issued securities of ZolTrain as well as issued and outstanding securities of ZolTrain that are offered to third parties. In connection with the agreement, one of Akerna's executives was appointed as one of three members of ZolTrain’s board of directors. At that time, we had determined that ZolTrain is a VIE for accounting purposes, given we could exercise significant influence, however we were not required to consolidate ZolTrain in our consolidated financial statements because we are not ZolTrain’s primary beneficiary. We had concluded that the ZolTrain Preferred was in-substance common stock because the liquidation preference provided was not substantive, and the equity method of accounting is applicable to in-substance common stock. As a result of our representation on the board of directors, we determined that we can exert significant influence over the day to day operations of ZolTrain and therefore; we account for this investment using the equity method of accounting, which required us to recognize our share of the ZolTrain operations in our results of operations. For year ended December 31, 2021, we recognized equity in loss of investee of $12,641 which represents our share of ZolTrain's losses since our investment During the third quarter of 2021, following the loss of our seat on the Board, we concluded that we should no longer apply the equity method of accounting for the investment in ZolTrain. We determined that we hold an equity security in ZolTrain for which the fair value is not readily determinable. Accordingly, starting in the third quarter we elected to measure the investment at cost minus impairment, plus or minus changes resulting from observable price changes. When indicators of impairment exist, we estimate the fair value and record an impairment charge if the carrying value of the investment exceeds its estimated fair value. Any impairment charges are recorded in other (expense) income, net, in our consolidated statements of operations. The carrying amount of our investment in ZolTrain was $226,101 as of December 31, 2021 and we did not recognize any impairment on the investment during the current year. Subsequent to our initial investment, we entered into a nonexclusive license/reseller agreement with ZolTrain, effective October 24, 2019, to provide ZolTrain’s online cannabis training platform as a co-branded integration option into our MJ Platform and Leaf Data Systems, which was a related party transaction in the prior year. Under the term of the agreement we entered into, ZolTrain will share subscription-based revenue generated from our customers with us. The amount of the share of the revenue for each of us and ZolTrain will depend on both (a) the number of training modules accessed by a customer and (b) which party created the accessed content. In addition to the revenue sharing arrangement, the license/reseller agreement provides us with the right to receive additional consideration from ZolTrain in the form of an equity earnout if certain revenue milestones are achieved during 2020, 2021, and 2022. Our ability to recognize revenue from the additional earnout consideration in the future will mainly depend on whether it becomes probable that such revenue milestones will be achieved. For the year ended December 31, 2021, the six months ended December 31, 2021, and the year ended June 30, 2020, we recognized $25.9 thousand, $0, and $0 of revenue from this agreement. |
Long Term Debt
Long Term Debt | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Long Term Debt | Note 9 - Long Term Debt Long-term debt consisted of the following at December 31, 2021: Convertible notes (at fair value) $ 17,305,000 Less: current maturities 13,200,000 Total long-term debt, less current portion $ 4,105,000 Senior Secured Convertible Notes - 2020 On June 8, 2020, we entered into a Securities Purchase Agreement, or SPA, with two institutional investors (the "2020 Note Holders"), to sell a new series of senior secured convertible notes (the "2020 Notes"), of Akerna in a private placement to the 2020 Note Holders, in the aggregate principal amount of $17.0 million having an aggregate original issue discount of 12%, and ranking senior to all outstanding and future indebtedness of Akerna. The 2020 Notes were sold on June 9, 2020, with an original issue discount pursuant to which the Note Holders paid $880 per each $1,000 in principal amount of the 2020 Notes. The 2020 Notes do not bear interest except upon the occurrence of an event of default, in which event the applicable rate will be 15.00% per annum. Pursuant to the SPA and the 2020 Notes, we and certain of its subsidiaries will enter into a Security and Pledge Agreement (the “Security Agreement”) with the lead investor, in its capacity as collateral agent (in such capacity, the “Collateral Agent”) for all holders of the Notes. The Security Agreement creates a first priority security interest in all of the personal property of the Company and certain of its subsidiaries of every kind and description, tangible or intangible, whether currently owned and existing or created or acquired in the future (the “Collateral”). Under the Security Agreement we agree to certain conditions on its maintenance and use of the Collateral, including but not limited to the location of equipment and inventory, the condition of equipment, the payment of taxes and prevention of liens or encumbrances, the maintenance of insurance, the protection of intellectual property rights, and limitations on transfers and sales. Upon the occurrence of an “Event of Default” under the Security Agreement, the Collateral Agent will have certain rights under the Security Agreement including taking control of the Collateral and, in certain circumstances, selling the Collateral to cover obligations owed to the holders of the 2020 Notes pursuant to its terms. “Event of Default” under the Security Agreement means (i) any defined event of default under any one or more of the transaction documents (including the 2020 Notes), in each instance, after giving effect to any notice, grace, or cure periods provided for in the applicable document, (ii) the failure by us to pay any amounts when due under the 2020 Notes or any other transaction document, or (iii) the breach of any representation, warranty or covenant by the Company under the Security Agreement. The 2020 Notes mature on June 1, 2023, are payable in installments beginning on October 1, 2020, and may not be prepaid. The 2020 Notes are convertible at any time, at the election of the Holders and subject to certain limitations, into shares of common stock at a rate equal to the amount of principal, interest, if any, and unpaid late charges, if any, divided by a conversion price of $11.50. In connection with the occurrence of an event of default, the Holders of the 2020 Notes will be entitled to convert all or any portion of the 2020 Notes at an alternate conversion price equal to the lower of (i) the conversion price then in effect, or (ii) 80% of the lower of (x) the volume-weighted average price, or VWAP, of the common stock as of the trading day immediately preceding the applicable date of determination, or (y) the quotient of (A) the sum of the VWAP of the common stock for each of the two trading days with the lowest VWAP of the common stock during the ten (10) consecutive trading day period ending and including the trading day immediately prior to the applicable date of determination, divided by (B) two, but not less than $1.92. We elected to use the fair value option to account for the 2020 Notes. The fair value of the 2020 Notes on issuance was recorded as $15.0 million. During the year ended June 30, 2020, the fair value of the 2020 Notes decreased by $0.8 million. Of the adjustment, a decrease of $0.1 million resulted from instrument-specific credit risk and was recognized as other comprehensive income and accumulated in equity and a decrease of $0.7 million was recognized as current period other expense in our consolidated statement of operations. During the six months ended December 31, 2020, we made $1.8 million in principal payments on the 2020 Notes, of which $1.5 million was settled in cash and the remaining $0.3 million was settled in common stock. During the six months ended December 31, 2020, the fair value of the 2020 Notes increased by $1.0 million. Of the adjustment, an increase of $0.1 million resulted from instrument-specific credit risk and was recognized as other comprehensive income and accumulated in equity and an increase of $0.9 million was recognized as current period other expense in our consolidated statement of operations. As of December 31, 2020, the fair value of the 2020 Notes on our consolidated balance sheet was $13.4 million. During the year ended December 31, 2021, up until the date the 2020 Notes were paid in full and replaced by the 2021 Senior Convertible Notes, we made $ million in principal payments on our convertible notes, of which $ million was settled in cash and the remaining $ million was settled in common stock. During the year ended December 31, 2021, the fair value of the Convertible Notes increased by $ million. Of the adjustment, an increase of $ million resulted from instrument-specific credit risk and was recognized as other comprehensive income and accumulated in equity and an increase of $ million was recognized as current period other expense in our consolidated statement of operations. On October 5, 2021, we recognized a gain of $0.2 million in connection with the payoff of the 2020 Notes. Amendment On December 23, 2020, we entered into waivers with the Holders of the 2020 Notes, pursuant to which we and the Holders, separately and not jointly, agreed to waive certain terms and conditions of the 2020 Notes as follows: The Holders irrevocably waived the last sentence of Section 8(a) of the Notes requiring that all installment amounts payable under the 2020 Notes prior to April 1, 2021 be paid in cash pursuant to installment redemptions. We may now elect, in its sole discretion, to pay installment amounts under the 2020 Notes prior to April 1, 2021, by issuing shares of common stock pursuant to installment conversions or by paying cash pursuant to installment redemptions, in each case in accordance with the existing terms of the Convertible Notes. We irrevocably waived the prohibition on acceleration of installment amounts in Section 8(e) of the 2020 Notes solely in relation to the Installment Amount for January 4, 2020, to permit the Holders to accelerate the January 4, 2021 installment amount, in whole or in part, to one or more acceleration dates from December 24, 2020 through to and including January 4, 2021, as elected by each Holder. We and the Holders agreed that we may irrevocably waive the installment scheduled principal amount for any installment date by setting forth in the installment notice for that installment date an installment amount greater than the installment scheduled principal amount due and payable on the next installment date. Each Holder may then consent to all or a portion of such increased installment amount for such installment date on the trading day immediately prior to such installment date. Any increased amount for an installment amount above the installment scheduled principal amount for such installment date will reduce the principal amount under the 2020 Notes. In relation to the January 4, 2021 installment amount, the Company delivered installment notices to the Holders increasing the installment amount for January 4, 2021, in the aggregate, by $2,062,500. Senior Secured Convertible Notes - 2021 On October 5, 2021, we entered into a securities purchase agreement with the two institutional investors that held the Company's 2020 Notes to sell senior secured notes in a private placement (the "Senior Convertible Notes"). The Senior Convertible Notes have an aggregate principal amount of $20.0 million, an aggregate original issue discount of 10%, and rank senior to all our other outstanding and future indebtedness. Approximately $3.3 million of the proceeds from the Senior Convertible Notes were used to payoff the 2020 Notes, which were then to be cancelled. The net proceeds from the issuance of the Senior Convertible Notes was approximately $14.6 million, following the original issue discount and deductions for expenses and paydown of the 2020 Notes. These net proceeds will be used to support Akerna's ongoing growth initiatives and continued investment in current and future technology infrastructur e. The Senior Convertible Notes are convertible into shares of common stock of Akerna at a conversion price of $ per share. The Senior Convertible Notes mature on October 5, 2024 and are to be repaid in monthly installments beginning on January 1, 2022. The Senior Convertible Notes can be repaid in common shares or cash. In connection with the occurrence of an event of default, the Holders of the Senior Convertible Notes will be entitled to convert all or any portion of the Senior Convertible Notes at an alternate conversion price equal to the lower of (i) the conversion price then in effect, or (ii) 80% of the lower of (x) the volume-weighted average price, or VWAP, of the common stock as of the trading day immediately preceding the applicable date of determination, or (y) the quotient of (A) the sum of the VWAP of the common stock for each of the two trading days with the lowest VWAP of the common stock during the ( ) consecutive trading day period ending and including the trading day immediately prior to the applicable date of determination, divided by (B) , but not less than $ We have elected to use the fair value option to account for the Senior Convertible Notes Senior Convertible Notes Senior Convertible Notes Senior Convertible Notes During the year ended December 31, 2021, we made no principal payments on our Senior Convertible Notes. Paycheck Protection Program Loan On March 27, 2020, former President Trump signed the Coronavirus Aid, Relief and Economic Security (the “CARES Act”), which, among other things, outlined the provisions of the Paycheck Protection Program (the “PPP”). On April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act, was signed into law increasing funding provided by the CARES Act and on June 5, 2020, the Paycheck Protection Program Flexibility Act extended the program until December 31, 2020. Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all, or a portion of loan granted under the program. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. On April 21, 2020, the Company issued a promissory note to KeyBank National Association (“KeyBank”) in the principal aggregate amount of $2,204,600 (the “PPP Loan”) pursuant to the Paycheck Protection Program under the CARES Act. The PPP Loan had a two-year term bearing interest at a rate of 1% per annum with principal and interest payments of $92,818 to be paid monthly on the 12th of the month beginning 7 months from the date of the PPP Loan. The PPP Loan provides for prepayment of 20% or less of the unpaid principal balance at any time. If more than 20% is prepaid, then all accrued interest must also be paid. In August 2021, the Company submitted its application for 100% loan forgiveness and on September 3, 2021, the loan was 100% forgiven by the Small Business Administration. As a result, the Company recorded a gain on the forgiveness of the loan in the amount of $2,234,730. Maturities of Debt Maturities of our debt as of December 31, 2021 are presented below. Year ending December 31: 2022 $ 13,200,000 2023 6,800,000 Aggregate maturities 20,000,000 Original issue discount on Convertible Notes (2,000,000 ) Unrealized change in fair value of Convertible Notes (695,000 ) Total debt outstanding as of December 31, 2021 $ 17,305,000 Current portion 13,200,000 Noncurrent portion 4,105,000 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Note 10 - Stockholders’ Equity Common and Preferred Stock We have one single class of common stock and 75,000,000 authorized shares of common stock, par value $0.0001 per share. We also have 5,000,000 authorized shares of preferred stock, $0.0001 par value per share, of which none are issued and outstanding. The holders of common stock are entitled to one vote per share on all matters submitted to a vote of stockholders of the Company. Subject to the prior rights of all classes or series of stock at the time outstanding having prior rights as to dividends or other distributions, all stockholders are entitled to share equally in dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available. Subject to the prior rights of creditors of the Corporation and the holders of all classes or series of stock at the time outstanding having prior rights as to distributions upon liquidation, dissolution, or winding up of the Corporation, in the event of liquidation, the holders of Common Stock are entitled to share ratably in all assets remaining after payment of all liabilities. The stockholders do not have cumulative, preemptive rights, or subscription rights. On October 30, 2020, we issued 5,000,000 shares, at a price of $2.40 per share, of Akerna common stock in a public offering for gross proceeds of $12.0 million, offset by offering costs of approximately $1.0 million for net proceeds $11.0 million dollars. 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 DD’ 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. Upon the Mergers, the Public Warrants were converted to those of Akerna at the exchange ratio of one-for-one. A summary of our common stock warrants is presented in the following table: Shares Issuable Weighted-average Weighted Average Aggregate Intrinsic Value Outstanding at June 30, 2020 5,813,804 $ 11.50 3.97 $ — Issued — — — — Exercised — — — — Expired/canceled — — — — Outstanding at December 31, 2020 5,813,804 $ 11.50 3.37 $ — Issued — — — — Exercised — — — — Expired/canceled — — — — Outstanding at December 31, 2021 5,813,804 $ 11.50 2.97 $ — There was no aggregate intrinsic value for the warrants outstanding as of December 31, 2021 and December 31, 2020. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2021 | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | Note 11 - Stock-Based Compensation Restricted Shares and Restricted Stock Units On June 17, 2019, our stockholders considered and approved the 2019 Long Term Incentive Plan, or the Equity Incentive Plan, and reserved 1,040,038 shares of common stock for issuance thereunder. The Equity Incentive Plan was previously approved, subject to stockholder approval, by the board of directors of Akerna on January 23, 2019. The Equity Incentive Plan became effective immediately upon the Closing of the Mergers. On June 26, 2020, the stockholders approved an amendment to the Equity Incentive Plan and increased the shares authorized for issuance thereunder by 525,000 to 1,565,038. We grant restricted stock units, or RSUs, that are subject to time-based vesting and require continuous employment, typically over a period of four Prior to the Mergers, MJF had Profit Interest Incentive Plan in place whereby it could grant Profits Interest Units, or PIUs, to employees or consultants and other independent advisors of the Company. PIUs granted under the Profits Interest Plan would generally vest once a year over four We determined the PIUs represented a profit-sharing compensation arrangement that had value only upon a defined liquidating event. Accordingly, no value was accrued for the PIUs prior to the Mergers on June 17, 2019, which met the definition of a liquidating event. As a result, we recorded a one-time charge of approximately $3.4 million, which represented the charge associated with issuing fully vested shares of common stock in exchange for the PIUs. A summary of our unvested Restricted Shares and RSUs activity is presented in the table below: Restricted Shares Restricted Stock Units Total Weighted Average Grant Date Fair Value Unvested as of June 30, 2020 72,313 534,302 606,615 $ 6.56 Granted — 429,974 429,974 4.88 Vested (8,024 ) (157,350 ) (165,374 ) 5.08 Forfeited — (43,906 ) (43,906 ) 6.83 Unvested as of December 31, 2020 64,289 763,020 827,309 $ 6.77 Granted — 447,642 447,642 4.05 Vested (30,559 ) (427,711 ) (458,270 ) 5.55 Forfeited (1,336 ) (99,184 ) (100,520 ) 4.51 Unvested as of December 31, 2021 32,394 683,767 716,161 5.47 For the year ended December 31, 2021, six months ended December 31, 2020, and year ended June 30, 2020 we recognized stock-based compensation expense related to the ratable amortization of the unvested Restricted Shares and RSUs of $2.0 million, $2.0 million, and $1.3 million, respectively. Stock-based compensation expense is included in operating expenses and cost of sales on our consolidated statements of operations consistent with the allocation of other compensation arrangements. During the year ended December 31, 2021, six months ended December 31, 2020, and year ended June 30, 2020, we capitalized $0.04 million, $0.2 million and $0.1 million, respectively, in stock-based compensation costs as software development cost. The $ million of unrecognized costs as of December 31, 2021 related to Restricted Shares and RSUs will be ratably recognized over an estimated weighted average remaining vesting period of years. |
Revisions of Previously Issued
Revisions of Previously Issued Financial Statements | 12 Months Ended |
Dec. 31, 2021 | |
Condensed Financial Information Disclosure [Abstract] | |
Revisions of Previously Issued Financial Statements | Note 16 - 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 December 31, 2021. We initially 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’ consolidated financial statements and concluded that the errors were not material to any prior annual or interim periods. However, we have revised the prior period financial information included in these consolidated financial statements to reclassify the Private Warrants as derivative liabilities measured at their estimated fair values at the end of each reporting period and recognized changes in the estimated fair value of the derivative instruments from the prior period in the Company’s operating results. 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 consolidated financial statements included in this Annual Report on Form 10-K: 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 Condensed 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 (1.01 ) — (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 95,090,833 (1,004,450 ) 94,086,433 Accumulated deficit (57,872,599 ) 693,074 (57,179,525 ) |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 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 the Quarterly Report on Form 10-Q and Article 8 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information normally required by GAAP or Securities and Exchange Commission rules and regulations for complete financial statements. In management’s opinion, these condensed consolidated financial statements include all adjustments, consisting of normal recurring items, considered necessary for the fair presentation of the results of operations for the interim periods presented. The operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022. The condensed consolidated balance sheet as of and for the period ended December 31, 2021, 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, 2021, which were included in our report on Form 10-K filed on March 31, 2022. | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with GAAP. In September 2020, the Company changed its fiscal year from June 30 to December 31. As a result, this annual report on Form 10-K includes the consolidated financial statements as of December 31, 2021 and December 31, 2020 and for (i) the calendar year ended December 31, 2021, (ii) the transitional six months ended December 31, 2020; and (iii) the fiscal year ended June 30, 2020. |
Principles of Consolidation | Principles of Consolidation Our accompanying 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. | Principles of Consolidation Our accompanying 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. |
Use of Estimates | Use of Estimates The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the consolidated financial statements and accompanying notes thereto. Our most significant estimates and assumptions are related to the valuation of acquisition-related assets and liabilities, capitalization of internal costs associated with software development, fair value measurements, impairment assessments, loss contingencies, valuation allowance associated with deferred tax assets, stock based compensation expenses, and useful lives of long-lived intangible assets. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results could differ from those estimates. | Use of Estimates The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the consolidated financial statements and accompanying notes thereto. Our most significant estimates and assumptions are related to the valuation of acquisition-related assets and liabilities, capitalization of internal costs associated with software development, fair value measurements, impairment assessments, loss contingencies, valuation allowance associated with deferred tax assets, stock based compensation expenses, and useful lives of long-lived intangible assets. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results could differ from those estimates. |
Accounts Receivable, Net | Accounts Receivable, Net We maintain an allowance for doubtful accounts equal to the estimated uncollectible amounts based on our historical collection experience and review of the current status of trade accounts receivable. Receivables are written-off and charged against the recorded allowance when we have exhausted collection efforts without success. The allowance for doubtful accounts was $0.6 million and $0.3 million as of March 31, 2022 and December 31, 2021, respectively. | Accounts Receivable, Net We maintain an allowance for doubtful accounts equal to the estimated uncollectible amounts based on our historical collection experience and review of the current status of trade accounts receivable. Receivables are written-off and charged against the recorded allowance when we have exhausted collection efforts without success. The allowance for doubtful accounts was $0.3 million and $0.2 million as of December 31, 2021, and 2020, respectively. The allowance for doubtful accounts consists of the following activity: Year Ended Six Months 2021 2020 Allowance for doubtful accounts, balance at beginning of period $ 153,500 $ 208,422 Bad debt expense 556,890 72,832 Write-off uncollectable accounts (393,306 ) (127,754 ) Allowance for doubtful accounts, balance at end of period $ 317,084 $ 153,500 |
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 three months ended March 31, 2022 and 2021, one government client accounted for 12% and 12% of total revenues, respectively. As of March 31, 2022, one government client accounted for 19% of net accounts receivable and as of December 31, 2021 two government clients accounted for 34% of net accounts receivable. | 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 year ended December 31, 2021, the six months ended December 31, 2020 and the year ended June 30, 2020, one government client accounted for 11%, 14% and 25% of total revenues, respectively. As of December 31, 2020, two government clients accounted for a total of 36% of net accounts receivable. |
Segments | 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 the combined gross balance of our fixed assets, capitalized software, and intangible assets by geographical location (in thousands): As of As of Long-lived assets: United States $ 33,793 $ 32,356 Canada 5,590 5,229 Total $ 39,383 $ 37,585 | Segments Our chief operating decision maker reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance and information for different revenue streams is not evaluated separately. As such, the Company has one operating segment, and the decision-making group is the senior executive management team. In the following table, we disclose our long-lived assets by geographical location (in thousands): As of December 31, 2021 2020 Long-lived assets: United States $ 32,356 $ 9,994 Canada 5,229 5,074 Total $ 37,585 $ 15,068 |
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 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. We have adopted this new standard on January 1, 2022 and due to the immaterial impact of applying this standard to our limited assets subject to operating leases, there was no material 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 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, 2022. We have adopted this new standard on January 1, 2022 and there was no material impact to our results of operations as a result. ASU 2020-06 In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options and Derivative and Hedging - Contracts in Entity’s Own Equity, which simplifies the accounting for convertible instruments. This guidance eliminates certain models that require separate accounting for embedded conversion features, in certain cases. Additionally, among other changes, the guidance eliminates certain of the conditions for equity classification for contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. This guidance is required to be adopted by us in the first quarter of 2023 and must be applied using either a modified or full retrospective approach. We are currently evaluating the impact this guidance will have on our consolidated financial statements. ASU 2021-04 On May 3, 2021, FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. We have adopted this new standard on January 1, 2022 and there was no material impact to our results of operations as a result. ASU 2021-08 In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends the accounting related to contract assets and liabilities acquired in business combinations. Under current GAAP, an entity generally recognizes assets and liabilities acquired in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU 2021-08 requires that entities recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should be applied prospectively to businesses combinations occurring on or after the effective date of the amendment. We are currently evaluating the impact this guidance will have on our consolidated financial statements. | Recently Issued 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 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. We have adopted this new standard on January 1, 2022 and due to the immaterial impact of applying this standard to our limited assets subject to operating leases, there was no 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 consolidated financial statements. We have adopted this standard effective December 15, 2021, and there is currently no impact to our consolidated financial statements as a result of this guidance. ASU 2019-12 In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which aims to reduce complexity in accounting standards by improving certain areas of U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) without compromising information provided to users of financial statements. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company has adopted ASU 2019-12 effective December 15, 2021 and the adoption of this guidance did not have a significant effect on our consolidated financial statements. 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, 2022, with early adoption permitted. Adoption of the standard requires changes to be made prospectively. We do not anticipate a significant impact to our consolidated financial statements as a result of this new guidance. ASU 2020-06 In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options and Derivative and Hedging - Contracts in Entity’s Own Equity, which simplifies the accounting for convertible instruments. This guidance eliminates certain models that require separate accounting for embedded conversion features, in certain cases. Additionally, among other changes, the guidance eliminates certain of the conditions for equity classification for contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. This guidance is required to be adopted by us in the first quarter of 2023 and must be applied using either a modified or full retrospective approach. We are currently evaluating the impact this guidance will have on our consolidated financial statements. ASU 2021-04 On May 3, 2021, FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. We are currently evaluating the impact this guidance will have on our consolidated financial statements.. ASU 2021-08 In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends the accounting related to contract assets and liabilities acquired in business combinations. Under current GAAP, an entity generally recognizes assets and liabilities acquired in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU 2021-08 requires that entities recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should be applied prospectively to businesses combinations occurring on or after the effective date of the amendment. We are currently evaluating the impact this guidance will have on our consolidated financial statements. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. | |
Foreign Currency | Foreign Currency 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). | |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider liquid instruments purchased with an original maturity of three months or less to be cash equivalents. There were no cash equivalents as of December 31, 2021, and 2020. We continually monitor our positions with, and the credit quality of, the financial institutions with which we invest. As of the balance sheet date, and periodically throughout the year, we have maintained balances in various operating accounts in excess of federally insured limits. | |
Restricted Cash | Restricted Cash Restricted cash consists of funds that are contractually or legally restricted as to usage or withdrawal and is presented separately from cash and cash equivalents on our consolidated balance sheets. Our restricted cash serves as collateral for a letter of credit. | |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized. Depreciation and amortization is provided over the estimated useful lives of the related assets using the straight-line method. The estimated useful lives for significant property and equipment categories are generally as follows: Furniture and computer equipment 3 to 7 years Leasehold improvements Lesser of remaining lease term or useful life Repairs and maintenance costs are expensed as incurred. | |
Warrant Liabilities | Warrant Liabilities 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 are recorded as derivative 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. | |
Investment | Investment We hold an equity security in Zoltrain, Inc. (Zoltrain) for which the fair value is not readily determinable. Accordingly, we measure this investment at cost minus impairment, plus or minus changes resulting from observable price changes. When indicators of impairment exist, we estimate the fair value and record an impairment charge if the carrying value of the investment exceeds its estimated fair value. Any impairment charges are recorded in other (expense) income, net, in our consolidated statements of operations. Prior to the quarter ended September 30, 2021, we had determined we could exert significant influence over Zoltrain's operations through voting rights and representation on the board of directors and we accounted for our investment in Zoltrain using the equity method of accounting, recording our share in the investee’s earnings and losses in the consolidated statement of operations. | |
Intangible Assets Acquired through Business Combinations | Intangible Assets Acquired through Business Combinations Intangible assets are amortized over their estimated useful lives. We evaluate the estimated remaining useful life of our intangible assets when events or changes in circumstances indicate an adjustment to the remaining amortization may be needed. We similarly evaluate the recoverability of these assets upon events or changes in circumstances indicate a potential impairment. Recoverability of these assets is measured by comparing the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value. We recorded an impairment of $2.7 million during the six months ended December 31, 2020 related to the intangible assets acquired in the Solo transaction. There were no impairments of intangible assets during the years ended December 31, 2021 or June 30, 2020. See Note 6 – Goodwill and Intangible Assets, Net for further discussion on the impairment. | |
Goodwill Impairment Assessment | Goodwill Impairment Assessment Goodwill represents the excess purchase consideration of an acquired business over the fair value of the net tangible and identifiable intangible assets. Goodwill is evaluated for impairment annually on October 31, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate or a significant decrease in expected cash flows. An impairment loss is recognized to the extent that the carrying amount exceeds the reporting unit’s fair value, not to exceed the carrying amount of goodwill. The Company has the option to first assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount and determine whether further action is needed. If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the quantitative impairment test is unnecessary. Due to a continued decline in market conditions and declines in the operating results of our non-enterprise reporting unit, we recognized an impairment to goodwil l of $ million | |
Software Development Costs | Software Development Costs Costs incurred during the application development stage of a newly developed application and costs we incur to enhance our existing platforms that meet certain criteria are subject to capitalization and subsequent amortization. Capitalized software development costs were approximately $5.9 million during the year ended December 31, 2021, $2.1 million during the six months ended December 31, 2020, and $3.1 million during the year ended June 30, 2020. Product development costs are primarily comprised of personnel costs such as payroll and benefits, vendor costs, and other costs directly attributable to the project. We capitalize costs only during the development phase. Any costs in connection to planning, design, and maintenance subsequent to release are expensed as incurred. We amortize software development costs over the expected useful life of the specific application, generally 2-5 years. We evaluate capitalized software development costs for impairment when there is an indication that the unamortized cost may not be recoverable. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, we are required to classify certain assets and liabilities based on the fair value hierarchy, which groups fair value-measured assets and liabilities based upon the following levels of inputs: ● Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; ● Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; ● Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity). The fair value of financial instruments is the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying values of financial instruments such as accounts receivable, accounts payable and accrued liabilities approximate fair value based on their short maturities. Please refer to Note 13- Fair Value Measurements for additional information regarding the fair value of financial instruments that we measure at fair value, including senior secured convertible notes and contingent consideration. | |
Fair Value Option | Fair Value Option The fair value option provides an election that allows a company to irrevocably elect to record certain financial assets and liabilities at fair value on an instrument-by-instrument basis at initial recognition. We have elected to apply the fair value option to certain convertible notes due to the complexity of the various conversion and settlement options available to both the Note Holders and Akerna. The convertible notes accounted for under the fair value option election are each a debt host financial instrument containing embedded features that would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements in accordance with GAAP. Notwithstanding, when the fair value option election is applied to financial liabilities, bifurcation of an embedded derivative is not required, and the financial liability is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis as of each reporting period date. The portion of the change in fair value attributed to a change in the instrument-specific credit risk is recognized as a component of other comprehensive income and the remaining amount of the fair value adjustment is recognized as other income (expense) in our consolidated statement of operations. The estimated fair value adjustment is presented in a respective single line item within other income (expense) in the accompanying consolidated statement of operations because the change in fair value of the convertible notes was not attributable to instrument-specific credit risk. | |
Revenue Recognition | Revenue Recognition See Note 3 for further discussion of our revenue recognition policies. | |
Cost of Revenue | 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. | |
Product Development | Product Development Product development expenses consist primarily of employee-related costs for the design and development of the Company's platform, contractor costs to supplement staff levels, third-party web services, consulting services, and allocated overhead. Product development expenses, other than software development costs qualifying for capitalization, are expensed as incurred. | |
Sales and Marketing Expenses | Sales and Marketing Expenses Sales and marketing expenses consist primarily of personnel and related costs, including salaries, benefits, bonuses, commissions, travel, and stock-based compensation. Other costs included in this expense are marketing and promotional events, online marketing, product marketing, information technology costs, and facility costs. | |
General and Administrative Expenses | General and Administrative Expenses General and administrative expenses consist primarily of personnel and related costs for our executive, finance, legal, human resources, and administrative personnel, including salaries, benefits, bonuses, and stock-based compensation; legal, accounting, and other professional service fees; other corporate expenses; information technology costs; restructuring charges such as lease termination costs; and facility costs. | |
Legal and Other Contingencies | Legal and Other Contingencies From time to time, the Company may be a party to litigation and subject to claims incident to the ordinary course of business, including intellectual property claims, labor and employment claims, breach of contract claims and other asserted and unasserted claims. The Company investigates these claims as they arise and accrues estimates for resolution of legal and other contingencies when losses are probable and estimable. | |
Stock-Based Compensation | Stock-Based Compensation We measured stock-based compensation based on the fair value of the share-based awards on the date of grant and recognize the related costs on a straight-line basis over the requisite service period, which is generally the vesting period. | |
Income Taxes | Income Taxes Income taxes are accounted for using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of other assets and liabilities. We provide for income taxes at the current and future enacted tax rates and laws applicable in each taxing jurisdiction. We use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return and disclosures regarding uncertainties in income tax positions. We recognize interest and penalties related to income tax matters in selling, general and administrative expenses in the consolidated statement of operations. We recognize deferred tax assets to the extent that its assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of its net recorded amount, we will make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. As of December 31, 2021, management has applied a valuation allowance to deferred tax assets when it is determined that the benefit from the deferred tax asset will not be able to be utilized in a future period. | |
Subsequent Events | Subsequent Events The Company performs a review of events subsequent to the balance sheet date through the date the consolidated financial statements were issued. If we determine there are events requiring recognition or disclosure in the consolidated financial statements., we disclose the subsequent event. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
Schedule of fixed assets, capitalized software, and intangible assets by geographical location | As of As of Long-lived assets: United States $ 33,793 $ 32,356 Canada 5,590 5,229 Total $ 39,383 $ 37,585 | As of December 31, 2021 2020 Long-lived assets: United States $ 32,356 $ 9,994 Canada 5,229 5,074 Total $ 37,585 $ 15,068 |
Schedule of allowance for doubtful accounts | Year Ended Six Months 2021 2020 Allowance for doubtful accounts, balance at beginning of period $ 153,500 $ 208,422 Bad debt expense 556,890 72,832 Write-off uncollectable accounts (393,306 ) (127,754 ) Allowance for doubtful accounts, balance at end of period $ 317,084 $ 153,500 | |
Schedule of estimated useful lives for significant property and equipment categories | Furniture and computer equipment 3 to 7 years Leasehold improvements Lesser of remaining lease term or useful life |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
Schedule of sales taxes collected from customers and remitted | For the Three Months Ended 2022 2021 Enterprise $ 3,035 $ — Non-enterprise 3,916 4,014 $ 6,951 $ 4,014 | Year Ended Six Months Year Ended Government $ 3,258 $ 1,939 $ 4,906 Non-government 17,427 5,886 7,667 $ 20,685 $ 7,825 $ 12,573 (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. |
Schedule of disaggregation of revenue | For the Three Months Ended 2022 2021 United States $ 4,989 $ 2,659 Canada 1,962 1,355 $ 6,951 $ 4,014 | Year Ended Six Months Year Ended United States $ 15,800 $ 5,212 $ 12,573 Canada 4,885 2,613 — $ 20,685 $ 7,825 $ 12,573 |
Schedule of deferred revenue activity | As of Net additions Revenue recognized As of Deferred revenue $ 4,126 6,069 (6,339 ) $ 3,856 | As of Net Revenue As of Deferred revenue $ 844 12,657 9,375 $ 4,126 |
Schedule of deferred contract cost activity | As of Additions Amortized costs (1) As of Deferred contract costs $ 301 112 (113 ) $ 300 (1) Includes contract costs amortized to sales and marketing expense during the period. | As of Additions Amortized As of Deferred contract costs $ 228 512 (479 ) $ 261 (1) Includes contract costs amortized to sales and marketing expense during the period. |
Significant Transactions (Table
Significant Transactions (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Significant Transactions [Abstract] | ||
Schedule of estimated acquisition date fair value of consideration | Preliminary Shares issued $ 11,060 Cash 4,982 Contingent consideration 6,300 Total preliminary fair value of consideration transferred $ 22,342 | |
Schedule of preliminary fair values of assets acquired and liabilities | Preliminary Cash $ 527 Accounts receivable 486 Prepaid expenses and other current asset 261 Fixed Assets 93 Non-compete agreement 80 Acquired technology 1,040 Customer relationships 13,810 Acquired trade name 270 Goodwill 12,543 Accounts payable and accrued expenses (826 ) Deferred tax liabilities (2,642 ) Deferred revenue (3,300 ) Net assets acquired $ 22,342 | December 31, December 31, 2021 2020 Noncurrent deferred tax assets: Employee compensation $ 820,410 $ 679,106 Debt issuance costs 138,778 343,612 Revenue recognition 105,735 — Settlement accrual 146,604 182,896 Fixed assets 242,006 831,196 Federal and state net operating loss 10,673,908 6,337,897 Foreign net operating loss 4,904,857 2,586,671 Other 225,340 27,410 Total deferred tax assets $ 17,257,638 $ 10,988,788 Noncurrent deferred tax liabilities: Fixed assets — — Intangibles (6,051,459 ) (2,717,717 ) Deferred tax liabilities $ (6,051,459 ) $ (2,717,717 ) Valuation allowance (11,881,470 ) (8,271,071 ) Deferred taxes after valuation allowance $ (675,291 ) $ — |
Schedule of financial information combined results of operations | Three Months 2021 Revenue $ 7,407 Net loss $ (6,574 ) |
Balance Sheet Disclosures (Tabl
Balance Sheet Disclosures (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Disclosure Text Block Supplement [Abstract] | ||
Schedule of prepaid expenses and other current assets | As of As of 2022 2021 Software and technology $ 723,513 $ 687,740 Professional services, dues and subscriptions 284,333 546,126 Insurance 143,355 264,097 Deferred contract costs 254,771 260,899 Unbilled receivables 547,675 506,984 Other 538,442 117,918 Total prepaid expenses and other current assets $ 2,492,089 $ 2,383,764 | As of December 31, 2021 2020 Software and technology $ 687,740 $ 480,651 Professional services, dues and subscriptions 546,126 826,195 Insurance 264,097 243,222 Deferred contract costs 260,899 227,718 Unbilled receivable 506,984 612,446 Other 117,918 68,495 Total prepaid expenses and other current assets $ 2,383,764 $ 2,458,727 |
Schedule of accounts payable, accrued expenses, and other current liabilities | As of As of 2022 2021 Accounts payable $ 3,065,862 $ 1,943,457 Professional fees 230,127 319,590 Sales taxes 422,580 360,361 Compensation 1,217,392 1,123,467 Contractors 1,158,447 1,288,730 Settlements and legal 1,189,561 681,045 Other 179,372 346,870 Total accounts payable, accrued expenses, and other accrued liabilities $ 7,463,341 $ 6,063,520 | As of December 31, 2021 2020 Accounts payable $ 1,943,457 $ 513,610 Professional fees 319,590 233,667 Sales taxes 360,361 216,367 Compensation 1,123,467 311,379 Contractors 1,288,730 538,618 Settlements and legal 681,045 831,232 Other 346,870 543,703 Total accounts payable, accrued expenses and other current liabilities $ 6,063,520 $ 3,188,576 |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Fair Value (Tables) [Line Items] | ||
Schedule of reconciliation of fair values | Three Months Ended 2022 2021 Fair value balance at beginning of period $ 17,305,000 $ 13,398,000 Payments on Convertible Notes (3,300,000 ) (7,697,727 ) Change in fair value reported in the statements of operations 1,433,000 1,991,272 Change in fair value reported in other comprehensive loss (101,000 ) 13,000 Fair value balance at end of period $ 15,337,000 $ 7,704,545 | |
Schedule of fair value by using key inputs | Fair Value Assumptions - Convertible Notes March 31, December 31, Face value principal payable $ 16,700,000 $ 20,000,000 Original conversion price $ 4.05 $ 4.05 Value of Common Stock $ 1.14 $ 1.75 Expected term (years) 2.5 2.8 Volatility 79 % 75 % Market yield 40.2 % 37.1 % Risk free rate 2.4 % 1 % Issue date October 5, 2021 October 5, 2021 Maturity date October 5, 2024 October 5, 2024 | Fair Value Assumptions - Private Warrants December 31, December 31, Number of Private Warrants 225,635 225,635 Original conversion price $ 11.50 $ 11.50 Value of Common Stock $ 1.75 $ 3.24 Expected term (years) 2.46 3.46 Volatility 85.8 % 102.3 % Risk free rate 0.8 % 0.2 % |
Schedule of estimated fair value | Beginning fair value balance on June 30, 2020 $ 14,131,000 Payments on Convertible Notes (1,827,273 ) Change in fair value reported in the statements of operations 961,273 Change in fair value reported in other comprehensive income 133,000 Ending fair value balance - December 31, 2020 $ 13,398,000 Payments on Convertible Notes (15,172,727 ) Change in fair value reported in the statements of operations 2,030,904 Change in fair value reported in other comprehensive income (70,000 ) Gain on extinguishment of debt reported on the statement of operations (186,177 ) Ending fair value balance - October 5, 2021 $ — Beginning fair value balance on October 5, 2021 $ 18,000,000 Payments on Convertible Notes — Change in fair value reported in the statements of operations (665,000 ) Change in fair value reported in other comprehensive income (30,000 ) Ending fair value balance - December 31, 2021 $ 17,305,000 | |
Schedule of fair value by using key inputs to the Monte Carlo Simulation Model | Fair Value Assumptions - Convertible Notes December 31, December 31, Face value principal payable $ 20,000,000 $ 15,172,272 Original conversion price $ 4.05 $ 11.5 Value of Common Stock $ 1.75 $ 3.24 Expected term (years) 2.8 2.3 Volatility 75 % 77 % Market yield (range) 37.1 % 27.1 to 27.2 % Risk free rate 1.0 % 0.1 % Issue date October 5, 2021 June 9, 2020 Maturity date October 5, 2024 June 1, 2023 | |
Schedule of fair value categorized within Level 3 of the fair value hierarchy | Year Ended December 31, 2021 2020 Fair value balance at beginning of period $ 311,376 $ 688,187 Change in fair value reported in the statements of operations (248,198 ) (376,811 ) Fair value balance at end of period $ 63,178 $ 311,376 | |
Private Warrants [Member] | ||
Fair Value (Tables) [Line Items] | ||
Schedule of reconciliation of fair values | Three Months Ended 2022 2021 Fair value balance at beginning of period $ 63,178 $ 311,376 Change in fair value reported in the statements of operations (18,051 ) 175,996 Fair value balance at end of period $ 45,127 $ 487,372 | |
Schedule of fair value by using key inputs | Fair Value Assumptions - Private Warrants March 31, December 31, Number of Private Warrants 225,635 225,635 Original conversion price $ 11.50 $ 11.50 Value of Common Stock $ 1.14 $ 1.75 Expected term (years) 2.21 2.46 Volatility 114.4 % 93.9 % Risk free rate 2.3 % 0.8 % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments | 2022 $ 252,525 2023 260,100 2024 110,480 Total $ 623,105 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Schedule of weighted-average number of shares outstanding | As of 2022 2021 Shares issuable upon exchange of Exchangeable Shares 306,852 1,647,287 Shares of common stock issuable upon conversion of Convertible Notes 12,370,370 612,609 Warrants 5,813,804 5,813,804 Unvested restricted stock units 627,840 664,258 Unvested restricted stock awards 6,679 33,062 Total 19,125,545 8,771,020 | December 31, December 31, Shares issuable upon exchange of Exchangeable Shares 309,286 2,667,349 Warrants 5,813,804 5,813,804 Restricted Stock Units 683,767 694,512 Restricted Stock Awards 32,394 64,289 Shares of common stock issuable in upon conversion of Convertible Notes 12,484,395 1,319,368 Total 19,323,646 10,559,322 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in the carrying amount of goodwill | Balance as of June 30, 2020 $ 20,254,309 Adjustments to Trellis' goodwill (14,300 ) Additions due to acquisition of Ample 25,806,518 Goodwill impairment (4,172,000 ) Balance as of December 31, 2020 $ 41,874,527 Additions due to acquisition of Viridian 5,408,884 Additions due to acquisition of 365 Cannabis 14,042,580 Goodwill impairment (14,383,310 ) Balance as of December 31, 2021 $ 46,942,681 |
Schedule of intangible assets | Weighted average remaining amortization period Gross carrying amount Accumulated Impairment Net carrying Acquired developed technology 3.35 $ 7,138,080 $ (2,815,158 ) $ — $ 4,322,922 Acquired trade names 3.09 871,920 (286,799 ) — 585,121 Customer relationships 10.18 17,510,000 (878,250 ) — 16,631,750 Non-compete agreement 1.75 80,000 (10,000 ) — 70,000 Total Intangible assets $ 25,600,000 $ (3,990,207 ) $ — $ 21,609,793 Capitalized software - In-service 2.02 8,807,843 (4,423,887 ) — 4,383,956 Capitalized software - Work in Progress N/A 3,224,203 — (296,483 ) 2,927,720 Total Capitalized Software 12,032,046 (4,423,887 ) (296,483 ) 7,311,676 Total finite-lived intangible assets $ 37,632,046 $ (8,414,094 ) $ (296,483 ) $ 28,921,469 Weighted average Gross carrying amount Accumulated Impairment Net carrying Acquired developed technology 3.77 $ 8,220,000 $ (1,434,155 ) $ (2,591,920 ) $ 4,193,925 Acquired trade names 5.12 705,000 (97,676 ) (123,080 ) 484,244 Customer relationships 13.04 2,880,000 (169,374 ) — 2,710,626 Total Intangible assets $ 11,805,000 $ (1,701,205 ) $ (2,715,000 ) $ 7,388,795 Capitalized software - In-service 1.62 4,593,512 (1,401,953 ) — 3,191,559 Capitalized software - Work in Progress N/A 734,180 — — 734,180 Total Capitalized Software 5,327,692 (1,401,953 ) — 3,925,739 Total finite-lived intangible assets $ 17,132,692 $ (3,103,158 ) $ (2,715,000 ) $ 11,314,534 |
Schedule of capitalized software and purchased intangible assets | Acquired Intangible Assets Capitalized Software- In-service 2022 $ 3,445,741 $ 2,722,663 2023 3,131,575 1,144,351 2024 2,801,991 275,884 2025 1,973,934 110,215 2026 1,851,434 59,112 Thereafter 8,405,118 71,731 Total $ 21,609,793 $ 4,383,956 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Schedule of expense or (benefit) for income taxes | Year Ended Six Months Year Ended 2021 2020 2020 Income tax Current income taxes U.S. federal $ — $ — $ 30,985 U.S. state 5,800 200 — Foreign 6,270 — Total current income taxes $ 12,070 $ 200 $ 30,985 Year Ended Six Months Year Ended 2021 2020 2020 Deferred income tax U.S. federal $ (2,274,295 ) $ — $ — U.S. state — — — Total deferred income tax benefit $ (2,274,295 ) $ — $ — | |
Schedule of statutory federal income tax rate to actual rates based on income or loss before income taxes | Year Ended Six Months June 30, 2021 2020 2020 Income tax expense (benefit) attributable to: Federal $ (6,692,267 ) $ (3,560,998 ) $ (3,255,706 ) State, net of federal benefit (672,148 ) (553,871 ) (862,690 ) Foreign tax rate differential (138,292 ) 29,617 (2,645 ) Permanent differences 2,428,631 1,263,151 312,525 Rate change 54,295 60,220 — Changes in valuation allowance 3,361,603 2,762,081 3,884,440 Provision to return adjustment 273,489 — (45,134 ) Losses from flow-through entity not subject to tax — — — Deferred True-Ups (928,743 ) — — Other adjustments 51,207 — 195 Effective income tax expense (benefit) $ (2,262,225 ) $ 200 $ 30,985 | |
Schedule of deferred tax assets and liability | Preliminary Cash $ 527 Accounts receivable 486 Prepaid expenses and other current asset 261 Fixed Assets 93 Non-compete agreement 80 Acquired technology 1,040 Customer relationships 13,810 Acquired trade name 270 Goodwill 12,543 Accounts payable and accrued expenses (826 ) Deferred tax liabilities (2,642 ) Deferred revenue (3,300 ) Net assets acquired $ 22,342 | December 31, December 31, 2021 2020 Noncurrent deferred tax assets: Employee compensation $ 820,410 $ 679,106 Debt issuance costs 138,778 343,612 Revenue recognition 105,735 — Settlement accrual 146,604 182,896 Fixed assets 242,006 831,196 Federal and state net operating loss 10,673,908 6,337,897 Foreign net operating loss 4,904,857 2,586,671 Other 225,340 27,410 Total deferred tax assets $ 17,257,638 $ 10,988,788 Noncurrent deferred tax liabilities: Fixed assets — — Intangibles (6,051,459 ) (2,717,717 ) Deferred tax liabilities $ (6,051,459 ) $ (2,717,717 ) Valuation allowance (11,881,470 ) (8,271,071 ) Deferred taxes after valuation allowance $ (675,291 ) $ — |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Acquisitions [Abstract] | |
Schedule of subsequent reporting period until settlement | Preliminary Shares issued $ 6,186 Contingent consideration 2 Total preliminary fair value of consideration transferred $ 6,188 Preliminary Shares issued $ 12,000 Cash 5,542 Contingent consideration 6,300 Total preliminary fair value of consideration transferred $ 23,842 Common shares issued $ 2,531 Contingent consideration 998 Total estimated fair value of consideration $ 3,529 Common shares issued $ 17,550 Contingent consideration 389 Total estimated fair value of consideration $ 17,939 Preliminary Exchangeable shares issued $ 25,203 Cash 5,724 Contingent consideration 604 Total estimated fair value of consideration transferred $ 31,531 |
Schedule of preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition | Preliminary Accounts receivable 556 Prepaid expenses and other current assets 148 Capitalized software 423 Acquired technology 470 Customer relationships 820 Acquired trade name 20 Goodwill 5,408 Accounts payable and accrued expenses (350 ) Deferred tax liabilities (307 ) Deferred revenue (1,000 ) Net assets acquired $ 6,188 Preliminary Cash 527 Accounts receivable 486 Prepaid expenses and other current asset 261 Fixed Assets 93 Non-compete agreement 80 Acquired technology 1,040 Customer relationships 13,810 Acquired trade name 270 Goodwill 14,043 Accounts payable and accrued expenses (826 ) Deferred tax liabilities (2,642 ) Deferred revenue (3,300 ) Net assets acquired $ 23,842 Cash $ 21 Accounts receivable, net 91 Other assets 6 Acquired technology 210 Acquired trade name 80 Customer relationships 220 Goodwill 3,216 Accounts payable and accrued expenses (284 ) Deferred revenue (31 ) Net assets acquired $ 3,529 Cash $ 101 Prepaid expenses and other assets 22 Furniture, fixtures, and equipment 2 Acquired technology 7,160 Acquired trade name 340 Goodwill 17,025 Accounts payable and accrued liabilities (1,158 ) Fair value of noncontrolling interests (5,553 ) Net assets acquired $ 17,939 Preliminary Cash $ 445 Accounts receivable 917 Prepaid expenses and other current assets 595 Acquired technology 850 Customer relationships 2,660 Acquired trade name 285 Goodwill 25,806 Furniture, fixtures and equipment 1,327 Accounts payable and accrued expenses (805 ) Deferred revenue (549 ) Net assets acquired $ 31,531 |
Schedule of consolidated operating results give effect to the Viridian and 365 Cannabis acquisitions | Year Ended December 31, 2021 Revenue $ 28,847 Net loss $ (31,423 ) Six Months Year Ended June 30, 2020 2020 Revenue $ 14,026 $ 27,523 Net loss $ (17,650 ) $ (20,250 ) |
Fixed Assets, Net (Tables)
Fixed Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of fixed assets, net | As of As of 2021 2020 Furniture and computer equipment $ 235,042 $ 131,300 Leasehold improvements 14,064 1,175,556 249,106 1,306,856 Less: accumulated depreciation (95,955 ) (113,423 ) Fixed assets, net $ 153,151 $ 1,193,433 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Convertible notes (at fair value) $ 17,305,000 Less: current maturities 13,200,000 Total long-term debt, less current portion $ 4,105,000 |
Schedule of maturities of our debt | Year ending December 31: 2022 $ 13,200,000 2023 6,800,000 Aggregate maturities 20,000,000 Original issue discount on Convertible Notes (2,000,000 ) Unrealized change in fair value of Convertible Notes (695,000 ) Total debt outstanding as of December 31, 2021 $ 17,305,000 Current portion 13,200,000 Noncurrent portion 4,105,000 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Schedule of common stock warrants | Shares Issuable Weighted-average Weighted Average Aggregate Intrinsic Value Outstanding at June 30, 2020 5,813,804 $ 11.50 3.97 $ — Issued — — — — Exercised — — — — Expired/canceled — — — — Outstanding at December 31, 2020 5,813,804 $ 11.50 3.37 $ — Issued — — — — Exercised — — — — Expired/canceled — — — — Outstanding at December 31, 2021 5,813,804 $ 11.50 2.97 $ — |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of stock warrants | Restricted Shares Restricted Stock Units Total Weighted Average Grant Date Fair Value Unvested as of June 30, 2020 72,313 534,302 606,615 $ 6.56 Granted — 429,974 429,974 4.88 Vested (8,024 ) (157,350 ) (165,374 ) 5.08 Forfeited — (43,906 ) (43,906 ) 6.83 Unvested as of December 31, 2020 64,289 763,020 827,309 $ 6.77 Granted — 447,642 447,642 4.05 Vested (30,559 ) (427,711 ) (458,270 ) 5.55 Forfeited (1,336 ) (99,184 ) (100,520 ) 4.51 Unvested as of December 31, 2021 32,394 683,767 716,161 5.47 |
Revisions of Previously Issue_2
Revisions of Previously Issued Financial Statements (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Condensed Financial Information Disclosure [Abstract] | |
Schedule of consolidated statements of operations | 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 Condensed 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 (1.01 ) — (1.01 ) |
Schedule of consolidated balance sheet | 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 95,090,833 (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 ($) | Oct. 05, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | Jul. 23, 2021 |
Description of Business (Details) [Line Items] | ||||||||
Loss from Operations | $ 20,600,000 | $ 3,500,000 | ||||||
Cash in operations | 3,600,000 | 1,400,000 | ||||||
Working capital | 15,100,000 | |||||||
Cash | 9,700,000 | $ 13,900,000 | ||||||
Conversion of Stock, Amount Converted | $ 18,620 | 7,803,475 | $ 4,798,271 | 18,038,944 | ||||
Amount payable percentage | 10.00% | |||||||
Debt Instrument, Covenant Compliance | We also assume that we will be able to pay our convertible debt in common stock rather than cash, however if at any point our stock price is below $2.00(which it is as of the date hereof), the debt holders may request the payments in cash rather than stock. | |||||||
Loss from operations | $ (20,636,648) | (3,506,003) | (15,739,677) | (33,355,319) | (17,271,851) | |||
Cash used in operation | (3,585,394) | $ (1,373,818) | (8,705,738) | (8,167,904) | $ (14,347,652) | |||
Working capital deficit | 10,900,000 | |||||||
Common stock value issued | $ 25,000,000 | |||||||
Gross proceeds | $ 1,900,000 | |||||||
Issuance of common stock, shares (in Shares) | 556,388 | |||||||
Aggregate principal amount | $ 20,000,000 | |||||||
Aggregate original issue discount rate | 10.00% | |||||||
Proceeds from the senior convertible notes | $ 3,300,000 | |||||||
ConversionPricepershare (in Dollars per share) | $ 4.05 | |||||||
Maturity date, description | The Senior Convertible Notes mature on October 5, 2024 and are to be repaid in monthly installments beginning on January 1, 2022. The Senior Convertible Notes can be repaid in common shares or cash. | |||||||
Senior Debt Obligations [Member] | ||||||||
Description of Business (Details) [Line Items] | ||||||||
Conversion of Stock, Amount Converted | $ 5,000,000 | $ 5,000,000 | ||||||
Proceeds from the senior convertible notes | $ 14,600,000 | |||||||
Operating Expense [Member] | ||||||||
Description of Business (Details) [Line Items] | ||||||||
Loss from operations | 15,700,000 | $ 17,300,000 | 33,400,000 | |||||
Cash used in operation | $ 8,700,000 | $ 14,300,000 | $ 8,200,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2022USD ($) | Mar. 31, 2021 | Dec. 31, 2020USD ($) | Dec. 31, 2021USD ($) | Jun. 30, 2020USD ($) | |
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Allowance for doubtful accounts (in Dollars) | $ 0.6 | $ 0.2 | $ 0.3 | ||
Concentration risk percentage | 19.00% | ||||
Intangible assets impairment charges (in Dollars) | 2.7 | ||||
Impairment to goodwill (in Dollars) | 4.2 | 14.4 | |||
Software development costs (in Dollars) | $ 2.1 | $ 5.9 | $ 3.1 | ||
Total Revenues [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Number of customer | 1 | ||||
Customer One [Member] | Total Revenues [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Number of customer | 1 | 1 | 1 | 1 | 1 |
Concentration risk percentage | 12.00% | 12.00% | 14.00% | 11.00% | 25.00% |
Customer Two [Member] | Net Accounts Receivable [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Number of customer | 2 | 2 | |||
Concentration risk percentage | 36.00% | 34.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of fixed assets, capitalized software, and intangible assets by geographical location - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Long-lived assets: | |||
Long-lived assets, total | $ 39,383 | $ 37,585 | $ 15,068 |
United States [Member] | |||
Long-lived assets: | |||
Long-lived assets, total | 33,793 | 32,356 | 9,994 |
Canada [Member] | |||
Long-lived assets: | |||
Long-lived assets, total | $ 5,590 | $ 5,229 | $ 5,074 |
Revenue (Details)
Revenue (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jul. 01, 2020 | |
Revenue from Contract with Customer [Abstract] | ||||
Unsatisfied performance obligations | $ 15,100,000 | $ 16,600,000 | ||
Revenue expected to be recognized | 8,400,000 | 11,100,000 | ||
Revenue recognized | 7,000,000 | 20,700,000 | ||
Deferred revenue | 2,400,000 | $ 700,000 | ||
Accumulated deficit | $ (110,461,129) | (88,508,236) | $ (57,179,525) | $ 200,000 |
Deferral of contract costs | $ 200,000 |
Revenue (Details) - Schedule of
Revenue (Details) - Schedule of sales taxes collected from customers and remitted - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | [1] | |
Disaggregation of Revenue [Line Items] | ||||||
Revenue disaggregation | $ 6,951 | $ 4,014 | $ 7,825 | $ 20,685 | $ 12,573 | |
Enterprise [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue disaggregation | 3,035 | |||||
Non-enterprise [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue disaggregation | $ 3,916 | $ 4,014 | ||||
[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) - Schedule _2
Revenue (Details) - Schedule of disaggregation of revenue - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | [1] | |
Revenue (Details) - Schedule of disaggregation of revenue [Line Items] | ||||||
Total revenue | $ 6,951 | $ 4,014 | $ 7,825 | $ 20,685 | $ 12,573 | |
United States [Member] | ||||||
Revenue (Details) - Schedule of disaggregation of revenue [Line Items] | ||||||
Total revenue | 4,989 | 2,659 | ||||
Canada [Member] | ||||||
Revenue (Details) - Schedule of disaggregation of revenue [Line Items] | ||||||
Total revenue | $ 1,962 | $ 1,355 | ||||
[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) - Schedule _3
Revenue (Details) - Schedule of deferred revenue activity - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Schedule of deferred revenue activity [Abstract] | ||
Deferred revenue beginning balance | $ 4,126 | |
Net additions | 6,069 | $ 12,657 |
Revenue recognized | (6,339) | (9,375) |
Deferred revenue ending balance | $ 3,856 | $ 4,126 |
Revenue (Details) - Schedule _4
Revenue (Details) - Schedule of deferred contract cost activity - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Dec. 31, 2021 | |||
Schedule of deferred contract cost activity [Abstract] | ||||
Deferred contract costs Beginning Balance | $ 301 | |||
Additions | 112 | $ 512 | ||
Amortized costs | (113) | [1] | (479) | [2] |
Deferred contract costs Ending Balance | $ 300 | $ 301 | ||
[1] | Includes contract costs amortized to sales and marketing expense during the period. | |||
[2] | Includes contract costs amortized to sales and marketing expense during the period. |
Significant Transactions (Detai
Significant Transactions (Details) - USD ($) | Oct. 01, 2021 | Apr. 01, 2021 | Mar. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2020 | Dec. 31, 2020 |
Significant Transactions (Details) [Line Items] | ||||||
Exchange shares (in Shares) | 2,434 | |||||
Cash | $ 527,346 | $ 445,269 | ||||
Stock | $ 20,081,466 | |||||
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Preferred stock, liquidation preference per share (in Dollars per share) | $ 1 | |||||
Exchangeable shares value | $ 18,620 | |||||
Exchangeable shares issued and outstanding (in Shares) | 306,852 | |||||
Viridian Sciences [Member] | ||||||
Significant Transactions (Details) [Line Items] | ||||||
Exchange shares (in Shares) | 1,000,000 | |||||
shares of our common stock | $ 6,000,000 | |||||
Contingent consideration | $ 1,000,000 | |||||
365 Cannabis [Member] | ||||||
Significant Transactions (Details) [Line Items] | ||||||
shares of our common stock | $ 3,600,000 | |||||
Cash | 5,000,000 | |||||
Stock | 12,000,000 | |||||
Aggregate of stock | $ 8,000,000 | |||||
Working capital | $ 1,500,000 | |||||
Purchase price | 1,500,000 | |||||
Receivables booked in other current assets | $ 400,000 | |||||
Reduction of working capital | $ 160,000 | |||||
Shares held in escrow (in Shares) | 279,762 | |||||
Shares held in escrow, value | $ 940,000 |
Significant Transactions (Det_2
Significant Transactions (Details) - Schedule of estimated acquisition date fair value of consideration - 365 Cannabis [Member] $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Business Acquisition, Contingent Consideration [Line Items] | |
Shares issued | $ 11,060 |
Cash | 4,982 |
Contingent consideration | 6,300 |
Total preliminary fair value of consideration transferred | $ 22,342 |
Significant Transactions (Det_3
Significant Transactions (Details) - Schedule of preliminary fair values of assets acquired and liabilities - 365 Cannabis [Member] $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Significant Transactions (Details) - Schedule of preliminary fair values of assets acquired and liabilities [Line Items] | |
Cash | $ 527 |
Accounts receivable | 486 |
Prepaid expenses and other current asset | 261 |
Fixed Assets | 93 |
Non-compete agreement | 80 |
Acquired technology | 1,040 |
Customer relationships | 13,810 |
Acquired trade name | 270 |
Goodwill | 12,543 |
Accounts payable and accrued expenses | (826) |
Deferred tax liabilities | (2,642) |
Deferred revenue | (3,300) |
Net assets acquired | $ 22,342 |
Significant Transactions (Det_4
Significant Transactions (Details) - Schedule of financial information combined results of operations - 365 Cannabis [Member] $ in Thousands | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Significant Transactions (Details) - Schedule of financial information combined results of operations [Line Items] | |
Revenue | $ 7,407 |
Net loss | $ (6,574) |
Balance Sheet Disclosures (Deta
Balance Sheet Disclosures (Details) - Schedule of prepaid expenses and other current assets - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Schedule of prepaid expenses and other current assets [Abstract] | |||
Software and technology | $ 723,513 | $ 687,740 | $ 480,651 |
Professional services, dues and subscriptions | 284,333 | 546,126 | 826,195 |
Insurance | 143,355 | 264,097 | 243,222 |
Deferred contract costs | 254,771 | 260,899 | 227,718 |
Unbilled receivables | 547,675 | 506,984 | |
Other | 538,442 | 117,918 | 68,495 |
Total prepaid expenses and other current assets | $ 2,492,089 | $ 2,383,764 | $ 2,458,727 |
Balance Sheet Disclosures (De_2
Balance Sheet Disclosures (Details) - Schedule of accounts payable, accrued expenses, and other current liabilities - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Schedule of accounts payable, accrued expenses, and other current liabilities [Abstract] | |||
Accounts payable | $ 3,065,862 | $ 1,943,457 | $ 513,610 |
Professional fees | 230,127 | 319,590 | 233,667 |
Sales taxes | 422,580 | 360,361 | 216,367 |
Compensation | 1,217,392 | 1,123,467 | 311,379 |
Contractors | 1,158,447 | 1,288,730 | 538,618 |
Settlements and legal | 1,189,561 | 681,045 | 831,232 |
Other | 179,372 | 346,870 | 543,703 |
Total accounts payable, accrued expenses, and other accrued liabilities | $ 7,463,341 | $ 6,063,520 | $ 3,188,576 |
Fair Value (Details)
Fair Value (Details) | Jun. 09, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2022$ / shares | Dec. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2021CAD ($) | Dec. 31, 2020USD ($) | Oct. 05, 2021USD ($) | Apr. 01, 2021shares | Oct. 30, 2020$ / shares | Jun. 30, 2020CAD ($) | Feb. 08, 2018$ / sharesshares |
Fair Value (Details) [Line Items] | |||||||||||
Convertible Debt | $ | $ 17,000,000 | $ 20,000,000 | |||||||||
Purchase price | $ | $ 15,000,000 | $ 18,000,000 | |||||||||
Maturity date | Oct. 5, 2021 | ||||||||||
Number of shares issued (in Shares) | shares | 5,750,000 | ||||||||||
Purchase price per unit (in Dollars per share) | $ / shares | $ 10 | $ 10 | |||||||||
Shares sold (in Shares) | shares | 243,750 | 750,000 | |||||||||
Exercise price (in Dollars per share) | $ / shares | $ 11.5 | ||||||||||
Exchange ratio of converted warrants upon conversion | 1 | ||||||||||
Description of contingent consideration | i) $0.01 per solo*TAGTM and solo*CODETM sold or (ii) 7% of net revenue. The fees were to be paid annually until the earlier of: (1) our shares trading above $12 per share for any consecutive 20 trading days in a 30-day period; (b) upon our no longer owning a majority stake in Solo; or (c) upon expiration of the patents related to solo*TAGTM and solo*CODETM, which is December 1, 2029. | i) $0.01 per solo*TAGTM and solo*CODETM sold or (ii) 7% of net revenue. The fees were to be paid annually until the earlier of: (1) our shares trading above $12 per share for any consecutive 20 trading days in a 30-day period; (b) upon our no longer owning a majority stake in Solo; or (c) upon expiration of the patents related to solo*TAGTM and solo*CODETM, which is December 1, 2029. | |||||||||
Fair value of the contingent consideration | $ | $ 6,300,000 | ||||||||||
Common Stock [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Number of shares issued (in Shares) | shares | 189,365 | ||||||||||
Purchase price per unit (in Dollars per share) | $ / shares | $ 2.4 | ||||||||||
Common Stock [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Number of shares issued (in Shares) | shares | 189,365 | ||||||||||
Private Warrant [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Exercise price (in Dollars per share) | $ / shares | $ 11.5 | $ 11.5 | |||||||||
Solo Sciences, Inc. [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Fair value of the contingent consideration | $ | $ 389,000 | ||||||||||
Settled value of the contingent consideration | $ | 0 | ||||||||||
Gain on settlement of the contingent consideration liability | $ | 389,000 | ||||||||||
Trellis Solutions, Inc [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Fair value of the contingent consideration | $ | $ 998,000 | $ 998,000 | |||||||||
Settled value of the contingent consideration | $ | $ 0 | ||||||||||
Ample Organics [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Description of contingent consideration | The contingent consideration amount is reduced by an amount equal to the product of CAD$6.67 multiplied by the difference between CAD$9,000,000and the amount of Recurring Revenue realized during the twelve months following the acquisition. | The contingent consideration amount is reduced by an amount equal to the product of CAD$6.67 multiplied by the difference between CAD$9,000,000and the amount of Recurring Revenue realized during the twelve months following the acquisition. | |||||||||
Fair value of the contingent consideration | $ 604,000 | $ 10,000,000 | |||||||||
Settled value of the contingent consideration | $ | $ 0 | ||||||||||
Gain on settlement of the contingent consideration liability | $ | $ 604,000 | ||||||||||
Recurring revenue recognized (in Dollars) | $ | $ 9,000,000 | ||||||||||
Viridian Member | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Fair value of the contingent consideration | $ | 2,000 | ||||||||||
Viridian Sciences [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Shares sold (in Shares) | shares | 1,000,000 | ||||||||||
Fair value of the contingent consideration | $ | 2,000 | ||||||||||
365 Cannabis [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Fair value of the contingent consideration | $ | $ 6,300,000 | ||||||||||
MTech [Member] | Private Placement [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Exercise price (in Dollars per share) | $ / shares | $ 11.5 | ||||||||||
MTech [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Number of shares issued (in Shares) | shares | 5,750,000 | ||||||||||
MTech [Member] | Public Warrant [Member] | IPO [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Purchase price per unit (in Dollars per share) | $ / shares | $ 10 | ||||||||||
Number of securities called by each warrant or right (in Shares) | shares | 1 | ||||||||||
Exercise price (in Dollars per share) | $ / shares | $ 11.5 | ||||||||||
MTech [Member] | Public Warrant [Member] | Over-Allotment Option [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Shares sold (in Shares) | shares | 750,000 | ||||||||||
MTech [Member] | Public Warrant [Member] | Common Stock [Member] | IPO [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Number of securities called by each warrant or right (in Shares) | shares | 1 | ||||||||||
MTech [Member] | Public Warrant [Member] | Warrant [Member] | IPO [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Number of securities called by each warrant or right (in Shares) | shares | 1 | ||||||||||
MTech [Member] | Private Warrant [Member] | Private Placement [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Purchase price per unit (in Dollars per share) | $ / shares | $ 10 | ||||||||||
Shares sold (in Shares) | shares | 243,750 | ||||||||||
Number of securities called by each warrant or right (in Shares) | shares | 1 | ||||||||||
Exercise price (in Dollars per share) | $ / shares | $ 11.5 | ||||||||||
MTech [Member] | Private Warrant [Member] | Common Stock [Member] | Private Placement [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Number of securities called by each warrant or right (in Shares) | shares | 1 | ||||||||||
MTech [Member] | Private Warrant [Member] | Warrant [Member] | Private Placement [Member] | |||||||||||
Fair Value (Details) [Line Items] | |||||||||||
Number of securities called by each warrant or right (in Shares) | shares | 1 |
Fair Value (Details) - Schedule
Fair Value (Details) - Schedule of reconciliation of fair values - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2020 | Oct. 05, 2021 | |
Schedule of reconciliation of fair values [Abstract] | ||||
Fair value balance at beginning of period | $ 17,305,000 | $ 13,398,000 | $ 13,398,000 | |
Payments on Convertible Notes | (3,300,000) | (7,697,727) | $ (1,827,273) | (15,172,727) |
Change in fair value reported in the statements of operations | 1,433,000 | 1,991,272 | 961,273 | 2,030,904 |
Change in fair value reported in other comprehensive loss | (101,000) | 13,000 | 133,000 | $ (70,000) |
Fair value balance at end of period | $ 15,337,000 | $ 7,704,545 | $ 13,398,000 |
Fair Value (Details) - Schedu_2
Fair Value (Details) - Schedule of fair value by using key inputs - Convertible Notes [Member] - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Face value principal payable (in Dollars) | $ 16,700,000 | $ 20,000,000 | $ 15,172,272 |
Original conversion price (in Dollars per share) | $ 4.05 | $ 4.05 | $ 11.5 |
Value of Common Stock (in Dollars per share) | $ 1.14 | $ 1.75 | $ 3.24 |
Expected term (years) | 2 years 6 months | 2 years 9 months 18 days | 2 years 3 months 18 days |
Volatility | 79.00% | 75.00% | 77.00% |
Market yield | 40.20% | 37.10% | |
Risk free rate | 2.40% | 1.00% | 0.10% |
Issue date | Oct. 5, 2021 | Oct. 5, 2021 | |
Maturity date | Oct. 5, 2024 | Oct. 5, 2024 |
Fair Value (Details) - Schedu_3
Fair Value (Details) - Schedule of reconciliation of fair values - Private Warrants [Member] - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair value balance at beginning of period | $ 63,178 | $ 311,376 | $ 311,376 |
Change in fair value reported in the statements of operations | (18,051) | 175,996 | |
Fair value balance at end of period | $ 45,127 | $ 487,372 | $ 63,178 |
Fair Value (Details) - Schedu_4
Fair Value (Details) - Schedule of fair value by using key inputs - Private Warrants [Member] - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Number of Private Warrants | 225,635 | 225,635 | 225,635 |
Original conversion price | $ 11.5 | $ 11.5 | |
Value of Common Stock | $ 1.14 | $ 1.75 | $ 3.24 |
Expected term (years) | 2 years 2 months 15 days | 2 years 5 months 15 days | 3 years 5 months 15 days |
Volatility | 114.40% | 93.90% | |
Risk free rate | 2.30% | 0.80% | 0.20% |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | Dec. 04, 2020 | Dec. 04, 2020 | Mar. 31, 2022 | Dec. 31, 2020 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Apr. 02, 2021 |
Commitments and Contingencies (Details) [Line Items] | |||||||||
Recovery amount | $ 2,000,000 | ||||||||
Issued and outstanding shares percentage | 5.00% | 5.00% | |||||||
Loss contingency | $ 500,000 | $ 500,000 | $ 600,000 | ||||||
Termination fee | 564,234 | $ 980,000 | 402,480 | ||||||
Rent expense | $ 552,861 | 157,593 | $ 299,629 | ||||||
Assets written off | $ 1,045,209 | ||||||||
Security deposit | $ 41,250 | ||||||||
Shares issued (in Shares) | 556,388 | ||||||||
Share price (in Dollars per share) | $ 3.55 | ||||||||
Restricted cash | 508,261 | $ 500,000 | $ 508,261 | 500,000 | |||||
Denver, CO. [Member] | |||||||||
Commitments and Contingencies (Details) [Line Items] | |||||||||
Shares issued (in Shares) | 113,375 | ||||||||
TechMagic USA LLC [Member] | |||||||||
Commitments and Contingencies (Details) [Line Items] | |||||||||
Recovery amount | $ 1,070,000 | $ 1,070,000 | |||||||
Litigation amount | 787,000 | ||||||||
TreCom Systems Group Inc [Member] | |||||||||
Commitments and Contingencies (Details) [Line Items] | |||||||||
Loss contingency | $ 200,000 | $ 0 | |||||||
TechMagic USA LLC [Member] | |||||||||
Commitments and Contingencies (Details) [Line Items] | |||||||||
Recovery amount | $ 1,070,000 | 1,070,000 | $ 2,000,000 | ||||||
Litigation amount | $ 787,000 | ||||||||
Issued and outstanding shares percentage | 5.00% | 5.00% | |||||||
Loss contingency | 500,000 | ||||||||
TreCom Systems Group Inc [Member] | |||||||||
Commitments and Contingencies (Details) [Line Items] | |||||||||
Loss contingency | $ 200,000 | 200,000 | |||||||
Line of Credit [Member] | |||||||||
Commitments and Contingencies (Details) [Line Items] | |||||||||
Letter-of-credit with a bank | 500,000 | ||||||||
Restricted cash | $ 500,000 |
Loss Per Share (Details) - Sche
Loss Per Share (Details) - Schedule of weighted-average number of shares outstanding - shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Loss Per Share (Details) - Schedule of weighted-average number of shares outstanding [Line Items] | ||
Outstanding shares on fully diluted | 19,125,545 | 8,771,020 |
Warrants [Member] | ||
Loss Per Share (Details) - Schedule of weighted-average number of shares outstanding [Line Items] | ||
Outstanding shares on fully diluted | 5,813,804 | 5,813,804 |
Unvested restricted stock units [Member] | ||
Loss Per Share (Details) - Schedule of weighted-average number of shares outstanding [Line Items] | ||
Outstanding shares on fully diluted | 627,840 | 664,258 |
Unvested restricted stock awards [Member] | ||
Loss Per Share (Details) - Schedule of weighted-average number of shares outstanding [Line Items] | ||
Outstanding shares on fully diluted | 6,679 | 33,062 |
Shares issuable upon exchange of Exchangeable Shares [Member] | ||
Loss Per Share (Details) - Schedule of weighted-average number of shares outstanding [Line Items] | ||
Outstanding shares on fully diluted | 306,852 | 1,647,287 |
Shares of common stock issuable upon conversion of Convertible Notes [Member] | ||
Loss Per Share (Details) - Schedule of weighted-average number of shares outstanding [Line Items] | ||
Outstanding shares on fully diluted | 12,370,370 | 612,609 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, net (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | |
Goodwill and Intangible Assets, net (Details) [Line Items] | ||||
Weighting to the market approach, percentage | 50.00% | 25.00% | ||
Weighted to the income approach, percentage | 50.00% | 75.00% | ||
Impairment expense | $ 15.5 | $ 14.4 | ||
Impairment Adjustment | $ 4.2 | |||
Amortization of Intangible Assets | 5.6 | $ 1.8 | $ 1.3 | |
Amortization expense for capitalized software write offs | $ 0.3 | |||
Ample Reporting Unit [Member] | ||||
Goodwill and Intangible Assets, net (Details) [Line Items] | ||||
Weighting to the market approach, percentage | 25.00% | 50.00% | ||
Weighted to the income approach, percentage | 75.00% | 50.00% | ||
Solo [Member] | ||||
Goodwill and Intangible Assets, net (Details) [Line Items] | ||||
Impairment of goodwill | $ 2.7 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | Apr. 30, 2020 | |
Income Tax Disclosure [Abstract] | ||||||
Effective tax rate | 0.45% | 0.00% | ||||
Net operating loss carry forwards | 80% | |||||
Bridge loan | $ 2,200,000 | |||||
Valuation allowances on deferred tax assets | $ 5,500,000 | $ 3,600,000 | ||||
Purchase price value | 2,700,000 | 200,000 | ||||
Deferred expense | 2,800,000 | $ 3,400,000 | ||||
Net operating losses | $ 44,500,000 | |||||
Income taxes, description | We have deferred tax assets related to foreign net operating loss carryforward, which begin to expire in 2034, in the amount of $18.5 million. | |||||
Uncertain tax position | $ 30,000 | $ 50,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of allowance for doubtful accounts - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2020 | Dec. 31, 2021 | |
Schedule of allowance for doubtful accounts [Abstract] | ||
Allowance for doubtful accounts, balance at beginning of period | $ 208,422 | $ 153,500 |
Bad debt expense | 72,832 | 556,890 |
Write-off uncollectable accounts | (127,754) | (393,306) |
Allowance for doubtful accounts, balance at end of period | $ 153,500 | $ 317,084 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives for significant property and equipment categories | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives for significant property and equipment categories [Line Items] | |
Furniture and computer equipment | 7 years |
Minimum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives for significant property and equipment categories [Line Items] | |
Furniture and computer equipment | 3 years |
Maximum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives for significant property and equipment categories [Line Items] | |
Leasehold improvements | Lesser of remaining lease term or useful life |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details) - Schedule of disaggregated by primary geographical markets and revenue - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-Lived assets, total | $ 39,383 | $ 37,585 | $ 15,068 |
United States [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-Lived assets, total | 33,793 | 32,356 | 9,994 |
Canada [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-Lived assets, total | $ 5,590 | $ 5,229 | $ 5,074 |
Revenue (Details) - Schedule _5
Revenue (Details) - Schedule of sales taxes collected from customers and remitted - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | [1] | |
Disaggregation of Revenue [Line Items] | ||||||
Revenue disaggregation | $ 6,951 | $ 4,014 | $ 7,825 | $ 20,685 | $ 12,573 | |
Government [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue disaggregation | 1,939 | 3,258 | 4,906 | |||
Non-government [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue disaggregation | $ 5,886 | $ 17,427 | $ 7,667 | |||
[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) - Schedule _6
Revenue (Details) - Schedule of revenue disaggregation by product - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | |
Revenue (Details) - Schedule of revenue disaggregation by product [Line Items] | |||
Total revenue | $ 7,825 | $ 20,685 | $ 12,573 |
United States [Member] | |||
Revenue (Details) - Schedule of revenue disaggregation by product [Line Items] | |||
Total revenue | 5,212 | 15,800 | 12,573 |
Canada [Member] | |||
Revenue (Details) - Schedule of revenue disaggregation by product [Line Items] | |||
Total revenue | $ 2,613 | $ 4,885 |
Revenue (Details) - Schedule _7
Revenue (Details) - Schedule of deferred revenue activity - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Schedule of deferred revenue activity [Abstract] | ||
Deferred revenue beginning balance | $ 4,126 | $ 844 |
Net additions | 6,069 | 12,657 |
Revenue recognized | $ 6,339 | 9,375 |
Deferred revenue ending balance | $ 4,126 |
Revenue (Details) - Schedule _8
Revenue (Details) - Schedule of deferred contract cost activity - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Dec. 31, 2021 | |||
Schedule of deferred contract cost activity [Abstract] | ||||
Deferred contract costs Beginning Balance | $ 261 | $ 228 | ||
Additions | 112 | 512 | ||
Amortized costs | $ (113) | [1] | (479) | [2] |
Deferred contract costs Ending Balance | $ 261 | |||
[1] | Includes contract costs amortized to sales and marketing expense during the period. | |||
[2] | Includes contract costs amortized to sales and marketing expense during the period. |
Acquisitions (Details)
Acquisitions (Details) - USD ($) | Sep. 01, 2020 | Jun. 30, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2021 | Mar. 31, 2022 | Oct. 01, 2021 | Apr. 01, 2021 | Jul. 07, 2020 | Jan. 15, 2020 |
Viridian Sciences [Member] | |||||||||||||
Acquisitions (Details) [Line Items] | |||||||||||||
Shares issued (in Shares) | 1,000,000 | ||||||||||||
Common stock value | $ 6,000,000 | ||||||||||||
Contingent consideration | $ 1,000,000 | ||||||||||||
Revenue | $ 2,400,000 | ||||||||||||
Net income | 300,000 | ||||||||||||
365 Cannabis [Member] | |||||||||||||
Acquisitions (Details) [Line Items] | |||||||||||||
Revenue | $ 2,400,000 | ||||||||||||
Net income | 400,000 | ||||||||||||
Aggregate consideration description | On October 1, 2021, we acquired all the issued and outstanding shares of 365 Cannabis. Under the terms of the Agreement, the aggregate consideration for the 365 Cannabis shares consists of (1) $5,000,000 in cash, (2) $12,000,000 in stock, which was settled by issuing 3.6 million shares of our common stock, and (3) contingent value rights to be issued pursuant to a rights indenture entitling the holders thereof to receive, subject to certain adjustments as set forth in the Agreement, an aggregate of up to $8,000,000 in stock, in the event that NAV achieves certain revenue targets as specified in the Agreement. | ||||||||||||
Trellis Solutions, Inc [Member] | |||||||||||||
Acquisitions (Details) [Line Items] | |||||||||||||
Revenue | $ 216,000 | ||||||||||||
Net income | 17,000 | ||||||||||||
Transaction costs | $ 100,000 | $ 100,000 | $ 100,000 | ||||||||||
Common stock transaction description | We issued 349,650 shares of our common stock valued at $7.24 per share, the closing price of a share of our common stock on the date of acquisition in exchange for 100% of the outstanding stock of Trellis. We have also agreed to pay additional consideration calculated as annualized revenue derived from previously identified customers for the month of September 2020 multiplied by five. | ||||||||||||
Contingent consideration | $ 0 | ||||||||||||
Recorded gain amount | 1,000,000 | ||||||||||||
Adjustments to assets and liabilities | $ 14,300 | ||||||||||||
solo sciences, inc. [Member] | |||||||||||||
Acquisitions (Details) [Line Items] | |||||||||||||
Revenue | $ 23,000 | ||||||||||||
Net income | 1,500,000 | ||||||||||||
Transaction costs | $ 300,000 | $ 300,000 | 300,000 | ||||||||||
Common stock transaction description | We exchanged 1,950,000 shares of our common stock, valued at $9.00 per share, the closing price of a share of our common stock on the date of acquisition. In addition to the stock consideration, we agreed to pay contingent consideration in the form of fees payable to the legacy Solo shareholders equal to the lesser of (i) $0.01 per solo*TAG™ and solo*CODE™ sold or (ii) 7% of net revenue. The fees were to be paid annually until the earlier of: (1) our shares trading above $12 per share for any consecutive 20 trading days in a 30-day period; (b) upon our no longer owning a majority stake in Solo; or (c) upon expiration of the patents related to solo*TAG™ and solo*CODE™, which is December 1, 2029. | ||||||||||||
Issued and outstanding capital stock | 80.40% | ||||||||||||
consideration transferred | $ 17,900,000 | ||||||||||||
Common stock shares (in Shares) | 800,000 | ||||||||||||
Impairment amount | 2,700,000 | ||||||||||||
solo sciences, inc. [Member] | Minimum [Member] | |||||||||||||
Acquisitions (Details) [Line Items] | |||||||||||||
Option to acquire percentage | 40.00% | ||||||||||||
solo sciences, inc. [Member] | Maximum [Member] | |||||||||||||
Acquisitions (Details) [Line Items] | |||||||||||||
Option to acquire percentage | 55.00% | ||||||||||||
Ample Organics [Member] | |||||||||||||
Acquisitions (Details) [Line Items] | |||||||||||||
Revenue | 2,600,000 | ||||||||||||
Net income | 100,000 | ||||||||||||
Transaction costs | $ 2,900,000 | ||||||||||||
Common stock transaction description | On September 1, 2020, several Ample shareholders exchanged a total of 627,225 exchangeable shares with a value of $4,798,271 for the same number of shares of Akerna common stock. | ||||||||||||
Impairment amount | 4,200,000 | ||||||||||||
Contingent consideration description | We acquired 100% of the stock of Ample Organics for 3.3 million exchangeable shares of one of our wholly-owned subsidiaries. The exchangeable shares may be exchanged, at the option of the holder, for shares of Akerna common stock on a one-for-one basis, therefore the exchangeable shares issued were valued at $7.65 per share, the closing price of an equivalent share of Akerna common stock, $30.7 million was the aggregate value of the exchangeable shares. In addition to the stock consideration, we paid $5.5 million in cash, which was used to settle all of Ample's then outstanding debt. In addition to the stock and cash consideration, the agreement provides for contingent consideration of up to CAD$10,000,000, payable in exchangeable shares, payable if Ample's Recurring Revenue recognized during the 12 months after the acquisition date is CAD$9,000,000 or more. The contingent consideration amount is reduced by an amount equal to the product of CAD$6.67 multiplied by the difference between CAD$9,000,000 and the amount of Recurring Revenue realized during the 12 months following the acquisition. | ||||||||||||
General and administrative expenses | $ 1,100,000 | $ 1,800,000 | |||||||||||
Special voting preferred stock per share (in Dollars per share) | $ 0.0001 | ||||||||||||
Preference in liquidation cost (in Dollars per share) | $ 1 | ||||||||||||
Exchangeable shares issued and outstanding (in Shares) | 309,286 | 309,286 | 309,286 |
Acquisitions (Details) - Schedu
Acquisitions (Details) - Schedule of subsequent reporting period until settlement - Preliminary Fair Value [Member] - USD ($) $ in Thousands | Apr. 08, 2020 | Jan. 15, 2020 | Oct. 01, 2021 | Apr. 01, 2021 | Jul. 07, 2020 |
Viridian Sciences [Member] | |||||
Acquisitions (Details) - Schedule of subsequent reporting period until settlement [Line Items] | |||||
Shares issued | $ 6,186 | ||||
Contingent consideration | 2 | ||||
Total preliminary fair value of consideration transferred | $ 6,188 | ||||
365 Cannabis [Member] | |||||
Acquisitions (Details) - Schedule of subsequent reporting period until settlement [Line Items] | |||||
Shares issued | $ 12,000 | ||||
Cash | 5,542 | ||||
Contingent consideration | 6,300 | ||||
Total preliminary fair value of consideration transferred | $ 23,842 | ||||
Trellis Solutions, Inc [Member] | |||||
Acquisitions (Details) - Schedule of subsequent reporting period until settlement [Line Items] | |||||
Contingent consideration | $ 998 | ||||
Common shares issued | 2,531 | ||||
Total estimated fair value of consideration | $ 3,529 | ||||
solo sciences, inc. [Member] | |||||
Acquisitions (Details) - Schedule of subsequent reporting period until settlement [Line Items] | |||||
Contingent consideration | $ 389 | ||||
Common shares issued | 17,550 | ||||
Total estimated fair value of consideration | $ 17,939 | ||||
Ample Organics [Member] | |||||
Acquisitions (Details) - Schedule of subsequent reporting period until settlement [Line Items] | |||||
Cash | $ 5,724 | ||||
Contingent consideration | 604 | ||||
Exchangeable shares issued | 25,203 | ||||
Total estimated fair value of consideration transferred | $ 31,531 |
Acquisitions (Details) - Sche_2
Acquisitions (Details) - Schedule of preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition - Preliminary Fair Value [Member] - USD ($) $ in Thousands | Oct. 01, 2021 | Apr. 01, 2021 | Jul. 07, 2020 | Apr. 08, 2020 | Jan. 15, 2020 |
Viridian Sciences [Member] | |||||
Acquisitions (Details) - Schedule of preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition [Line Items] | |||||
Accounts receivable | $ 556 | ||||
Prepaid expenses and other current assets | 148 | ||||
Capitalized software | 423 | ||||
Acquired technology | 470 | ||||
Customer relationships | 820 | ||||
Acquired trade name | 20 | ||||
Goodwill | 5,408 | ||||
Accounts payable and accrued expenses | (350) | ||||
Deferred tax liabilities | (307) | ||||
Deferred revenue | (1,000) | ||||
Net assets acquired | $ 6,188 | ||||
365 Cannabis [Member] | |||||
Acquisitions (Details) - Schedule of preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition [Line Items] | |||||
Accounts receivable | $ 486 | ||||
Prepaid expenses and other current assets | 261 | ||||
Fixed Assets | 93 | ||||
Non-compete agreement | 80 | ||||
Acquired technology | 1,040 | ||||
Customer relationships | 13,810 | ||||
Acquired trade name | 270 | ||||
Goodwill | 14,043 | ||||
Accounts payable and accrued expenses | (826) | ||||
Deferred tax liabilities | (2,642) | ||||
Deferred revenue | (3,300) | ||||
Net assets acquired | 23,842 | ||||
Cash | $ 527 | ||||
Trellis Solutions, Inc [Member] | |||||
Acquisitions (Details) - Schedule of preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition [Line Items] | |||||
Accounts receivable | $ 91 | ||||
Other assets | 6 | ||||
Acquired technology | 210 | ||||
Customer relationships | 220 | ||||
Acquired trade name | 80 | ||||
Goodwill | 3,216 | ||||
Accounts payable and accrued expenses | (284) | ||||
Deferred revenue | (31) | ||||
Net assets acquired | 3,529 | ||||
Cash | $ 21 | ||||
solo sciences, inc. [Member] | |||||
Acquisitions (Details) - Schedule of preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition [Line Items] | |||||
Prepaid expenses and other current assets | $ 22 | ||||
Furniture, fixtures, and equipment | 2 | ||||
Acquired technology | 7,160 | ||||
Acquired trade name | 340 | ||||
Goodwill | 17,025 | ||||
Accounts payable and accrued expenses | (1,158) | ||||
Fair value of noncontrolling interests | (5,553) | ||||
Net assets acquired | 17,939 | ||||
Cash | $ 101 | ||||
Ample Organics [Member] | |||||
Acquisitions (Details) - Schedule of preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition [Line Items] | |||||
Accounts receivable | $ 917 | ||||
Prepaid expenses and other current assets | 595 | ||||
Furniture, fixtures, and equipment | 1,327 | ||||
Acquired technology | 850 | ||||
Customer relationships | 2,660 | ||||
Acquired trade name | 285 | ||||
Goodwill | 25,806 | ||||
Accounts payable and accrued expenses | (805) | ||||
Deferred revenue | (549) | ||||
Net assets acquired | 31,531 | ||||
Cash | $ 445 |
Acquisitions (Details) - Sche_3
Acquisitions (Details) - Schedule of consolidated operating results give effect to the Viridian and 365 Cannabis acquisitions - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | |
Schedule of consolidated operating results give effect to the Viridian and 365 Cannabis acquisitions [Abstract] | |||
Revenue | $ 14,026 | $ 28,847 | $ 27,523 |
Net loss | $ (17,650) | $ (31,423) | $ (20,250) |
Balance Sheet Disclosures (De_3
Balance Sheet Disclosures (Details) - Schedule of prepaid expenses and other current assets - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Schedule of prepaid expenses and other current assets [Abstract] | |||
Software and technology | $ 723,513 | $ 687,740 | $ 480,651 |
Professional services, dues and subscriptions | 284,333 | 546,126 | 826,195 |
Insurance | 143,355 | 264,097 | 243,222 |
Deferred contract costs | 254,771 | 260,899 | 227,718 |
Unbilled receivable | 506,984 | 612,446 | |
Other | 538,442 | 117,918 | 68,495 |
Total prepaid expenses and other current assets | $ 2,492,089 | $ 2,383,764 | $ 2,458,727 |
Balance Sheet Disclosures (De_4
Balance Sheet Disclosures (Details) - Schedule of accounts payable, accrued expenses, and other current liabilities - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Schedule of accounts payable, accrued expenses, and other current liabilities [Abstract] | |||
Accounts payable | $ 3,065,862 | $ 1,943,457 | $ 513,610 |
Professional fees | 230,127 | 319,590 | 233,667 |
Sales taxes | 422,580 | 360,361 | 216,367 |
Compensation | 1,217,392 | 1,123,467 | 311,379 |
Contractors | 1,158,447 | 1,288,730 | 538,618 |
Settlements and legal | 1,189,561 | 681,045 | 831,232 |
Other | $ 179,372 | 346,870 | 543,703 |
Total accounts payable, accrued expenses and other current liabilities | $ 6,063,520 | $ 3,188,576 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, Net (Details) - Schedule of changes in the carrying amount of goodwill - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2020 | Dec. 31, 2021 | |
Goodwill [Line Items] | ||
Balance at beginning of year | $ 20,254,309 | $ 41,874,527 |
Adjustments to Trellis' goodwill | (14,300) | |
Goodwill impairment | (4,172,000) | (14,383,310) |
Balance at end of year | 41,874,527 | 46,942,681 |
Ample [Member] | ||
Goodwill [Line Items] | ||
Additions due to acquisition | $ 25,806,518 | |
Viridian [Member] | ||
Goodwill [Line Items] | ||
Additions due to acquisition | 5,408,884 | |
365 Cannabis [Member] | ||
Goodwill [Line Items] | ||
Additions due to acquisition | $ 14,042,580 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets, Net (Details) - Schedule of intangible assets - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets, Net (Details) - Schedule of intangible assets [Line Items] | ||
Gross carrying amount | $ 25,600,000 | $ 11,805,000 |
Accumulated amortization | (3,990,207) | (1,701,205) |
Impairment | (2,715,000) | |
Total | $ 21,609,793 | $ 7,388,795 |
Acquired developed technology [Member] | ||
Goodwill and Intangible Assets, Net (Details) - Schedule of intangible assets [Line Items] | ||
Weighted average remaining amortization period (in years) | 3 years 4 months 6 days | 3 years 9 months 7 days |
Gross carrying amount | $ 7,138,080 | $ 8,220,000 |
Accumulated amortization | (2,815,158) | (1,434,155) |
Impairment | (2,591,920) | |
Total | $ 4,322,922 | $ 4,193,925 |
Acquired trade names [Member] | ||
Goodwill and Intangible Assets, Net (Details) - Schedule of intangible assets [Line Items] | ||
Weighted average remaining amortization period (in years) | 3 years 1 month 2 days | 5 years 1 month 13 days |
Gross carrying amount | $ 871,920 | $ 705,000 |
Accumulated amortization | (286,799) | (97,676) |
Impairment | (123,080) | |
Total | $ 585,121 | $ 484,244 |
Customer relationships [Member] | ||
Goodwill and Intangible Assets, Net (Details) - Schedule of intangible assets [Line Items] | ||
Weighted average remaining amortization period (in years) | 10 years 2 months 4 days | 13 years 14 days |
Gross carrying amount | $ 17,510,000 | $ 2,880,000 |
Accumulated amortization | (878,250) | (169,374) |
Impairment | ||
Total | $ 16,631,750 | $ 2,710,626 |
Non-compete agreement [Member] | ||
Goodwill and Intangible Assets, Net (Details) - Schedule of intangible assets [Line Items] | ||
Weighted average remaining amortization period (in years) | 1 year 9 months | |
Gross carrying amount | $ 80,000 | |
Accumulated amortization | (10,000) | |
Impairment | ||
Total | $ 70,000 | |
Capitalized software - In-service [Member] | ||
Goodwill and Intangible Assets, Net (Details) - Schedule of intangible assets [Line Items] | ||
Weighted average remaining amortization period (in years) | 2 years 7 days | 1 year 7 months 13 days |
Gross carrying amount | $ 8,807,843 | $ 4,593,512 |
Accumulated amortization | (4,423,887) | (1,401,953) |
Impairment | ||
Total | $ 4,383,956 | $ 3,191,559 |
Capitalized software - Work in Progress [Member] | ||
Goodwill and Intangible Assets, Net (Details) - Schedule of intangible assets [Line Items] | ||
Weighted average remaining amortization period (in years) | ||
Gross carrying amount | $ 3,224,203 | $ 734,180 |
Accumulated amortization | ||
Impairment | (296,483) | |
Total | 2,927,720 | 734,180 |
Total Capitalized Software [Member] | ||
Goodwill and Intangible Assets, Net (Details) - Schedule of intangible assets [Line Items] | ||
Gross carrying amount | 12,032,046 | 5,327,692 |
Accumulated amortization | (4,423,887) | (1,401,953) |
Impairment | (296,483) | |
Total | 7,311,676 | 3,925,739 |
Total finite-lived intangible assets [Member] | ||
Goodwill and Intangible Assets, Net (Details) - Schedule of intangible assets [Line Items] | ||
Gross carrying amount | 37,632,046 | 17,132,692 |
Accumulated amortization | (8,414,094) | (3,103,158) |
Impairment | (296,483) | (2,715,000) |
Total | $ 28,921,469 | $ 11,314,534 |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets, Net (Details) - Schedule of capitalized software and purchased intangible assets | Dec. 31, 2021USD ($) |
Acquired Intangibles Assets [Member] | |
Goodwill and Intangible Assets, Net (Details) - Schedule of capitalized software and purchased intangible assets [Line Items] | |
2022 | $ 3,445,741 |
2023 | 3,131,575 |
2024 | 2,801,991 |
2025 | 1,973,934 |
2026 | 1,851,434 |
Thereafter | 8,405,118 |
Total | 21,609,793 |
Computer Software, Intangible Asset [Member] | |
Goodwill and Intangible Assets, Net (Details) - Schedule of capitalized software and purchased intangible assets [Line Items] | |
2022 | 2,722,663 |
2023 | 1,144,351 |
2024 | 275,884 |
2025 | 110,215 |
2026 | 59,112 |
Thereafter | 71,731 |
Total | $ 4,383,956 |
Fixed Assets, Net (Details)
Fixed Assets, Net (Details) - USD ($) | 6 Months Ended | 12 Months Ended | 18 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 240,742 | $ 127,731 | $ 27,951 | |
Fxed assets | 1,200,000 | $ 1,200,000 | ||
Sale of furniture and computer equipment | 25,561 | |||
Cost of furniture and computer equipment | $ 191,389 | $ 191,389 | ||
Accumulated depreciation | 106,555 | |||
Loss on disposals | $ 59,273 |
Fixed Assets, Net (Details) - S
Fixed Assets, Net (Details) - Schedule of fixed assets, net - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | |||
Fixed assets, gross | $ 249,106 | $ 1,306,856 | |
Less: accumulated depreciation | (95,955) | (113,423) | |
Fixed assets, net | $ 159,159 | 153,151 | 1,193,433 |
Furniture and computer equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Fixed assets, gross | 235,042 | 131,300 | |
Leasehold improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Fixed assets, gross | $ 14,064 | $ 1,175,556 |
Investments (Details)
Investments (Details) - USD ($) | Oct. 07, 2019 | Dec. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 |
Investments (Details) [Line Items] | ||||
Conversion rate price per share (in Dollars per share) | $ 1.232 | $ 1.232 | ||
Equity in loss of investee | $ 12,641 | |||
Carrying amount of investment | $ 226,101 | 226,101 | ||
Revenue recognized | $ 0 | $ 25,900 | $ 0 | |
Zol Solutions, Inc [Member] | ||||
Investments (Details) [Line Items] | ||||
Preferred stock purchased shares (in Shares) | 203,000 | |||
Preferred stock purchased price | $ 250,000 |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) | Oct. 05, 2021 | Sep. 03, 2021 | Jan. 04, 2021 | Jun. 08, 2020 | Jun. 07, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | Apr. 21, 2020 | Dec. 31, 2020 | Dec. 31, 2021 | Aug. 31, 2021 |
Long Term Debt (Details) [Line Items] | |||||||||||
Aggregate principal amount | $ 17,000,000 | $ 15,200,000 | $ 1,800,000 | $ 15,200,000 | |||||||
Original issue discount percentage | 10.00% | 12.00% | |||||||||
Original issue discount on holders | $ 880 | ||||||||||
Principal portion of convertible debt | $ 1,000 | ||||||||||
Interest rate per annum | 15.00% | ||||||||||
Conversion price (in Dollars per share) | $ 11.5 | ||||||||||
Conversion price percentage | 80.00% | 80.00% | |||||||||
Conversion price per share (in Dollars per share) | $ 1.92 | ||||||||||
Fair value issuance amount | $ 15,000,000 | $ 15,000,000 | |||||||||
Decrease in convertible debt | $ 800,000 | ||||||||||
Instrument-specific credit risk | 20,000 | 100,000 | 100,000 | ||||||||
Other expenses | $ 700,000 | 900,000 | 2,000,000 | ||||||||
Settled in cash | 1,500,000 | 5,100,000 | |||||||||
Settled in common stock | 300,000 | 10,100,000 | |||||||||
Fair value of convertible amount | 1,000,000 | ||||||||||
Current portion of long-term debt | $ 13,400,000 | ||||||||||
Fair value of convertible notes increased | 2,000,000 | $ 2,000,000 | |||||||||
Unrealized (loss) gain on convertible notes | $ 200,000 | ||||||||||
Installment amount | $ 2,062,500 | ||||||||||
Aggregate principal amount | 20,000,000 | ||||||||||
Principal portion of convertible debt | 3,300,000 | ||||||||||
Net proceeds from the issuance of the senior convertible notes | $ 14,600,000 | ||||||||||
Conversion price per share (in Dollars per share) | $ 4.05 | ||||||||||
Long term debt ,description | the Company issued a promissory note to KeyBank National Association (“KeyBank”) in the principal aggregate amount of $2,204,600 (the “PPP Loan”) pursuant to the Paycheck Protection Program under the CARES Act. The PPP Loan had a two-year term bearing interest at a rate of 1% per annum with principal and interest payments of $92,818 to be paid monthly on the 12th of the month beginning 7 months from the date of the PPP Loan. The PPP Loan provides for prepayment of 20% or less of the unpaid principal balance at any time. If more than 20% is prepaid, then all accrued interest must also be paid. | (i) the conversion price then in effect, or (ii) 80% of the lower of (x) the volume-weighted average price, or VWAP, of the common stock as of the trading day immediately preceding the applicable date of determination, or (y) the quotient of (A) the sum of the VWAP of the common stock for each of the two trading days with the lowest VWAP of the common stock during the ten (10) consecutive trading day period ending and including the trading day immediately prior to the applicable date of determination, divided by (B) two, but not less than $0.54. | |||||||||
Percentage of loan forgiveness | 100.00% | ||||||||||
Percentage of loan forgiven | 100.00% | ||||||||||
Loan amount | $ 2,234,730 | ||||||||||
Senior Convertible Notes [Member] | |||||||||||
Long Term Debt (Details) [Line Items] | |||||||||||
Fair value issuance amount | 18,000,000 | $ 18,000,000 | |||||||||
Decrease in convertible debt | 700,000 | ||||||||||
Instrument-specific credit risk | 30,000 | ||||||||||
Other expenses | 700,000 | ||||||||||
Current portion of long-term debt | $ 17,300,000 | $ 17,300,000 |
Long Term Debt (Details) - Sche
Long Term Debt (Details) - Schedule of long-term debt | Dec. 31, 2021USD ($) |
Schedule of long-term debt [Abstract] | |
Convertible notes (at fair value) | $ 17,305,000 |
Less: current maturities | 13,200,000 |
Total long-term debt, less current portion | $ 4,105,000 |
Long Term Debt (Details) - Sc_2
Long Term Debt (Details) - Schedule of maturities of our debt | Dec. 31, 2021USD ($) |
Schedule of maturities of our debt [Abstract] | |
2022 | $ 13,200,000 |
2023 | 6,800,000 |
Aggregate maturities | 20,000,000 |
Original issue discount on Convertible Notes | (2,000,000) |
Unrealized change in fair value of Convertible Notes | (695,000) |
Total debt outstanding as of December 31, 2021 | 17,305,000 |
Current portion | 13,200,000 |
Noncurrent portion | $ 4,105,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | Feb. 08, 2018 | Oct. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2022 |
Stockholders' Equity (Details) [Line Items] | ||||||
Common stock, shares authorized | 75,000,000 | 75,000,000 | 75,000,000 | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Preferred stock, authorized shares | 5,000,000 | 5,000,000 | 5,000,000 | |||
Preferred stock, par value per share | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Common Stock, Voting Rights | one | |||||
Purchase price per unit | $ 10 | $ 10 | ||||
Offering costs from the issuance of common stock | $ 967,620 | |||||
Exercise price | $ 11.5 | |||||
Common Stock [Member] | ||||||
Stockholders' Equity (Details) [Line Items] | ||||||
Sale of stock | 5,000,000 | |||||
Purchase price per unit | $ 2.4 | |||||
Gross proceeds from public offering | $ 12,000,000 | |||||
Offering costs from the issuance of common stock | 1,000,000 | |||||
Net proceeds from public offering | $ 11,000,000 | |||||
Warrant [Member] | ||||||
Stockholders' Equity (Details) [Line Items] | ||||||
Purchase price per unit | $ 10 | |||||
Sale of stock | 5,750,000 | |||||
Exercise price | $ 11.5 | |||||
Underwriters [Member] | Warrant [Member] | ||||||
Stockholders' Equity (Details) [Line Items] | ||||||
Sale of stock | 750,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Schedule of common stock warrants - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2020 | Dec. 31, 2021 | |
Schedule of common stock warrants [Abstract] | ||
Shares Issuable Under Warrants, Beginning balance | 5,813,804 | 5,813,804 |
Weighted-average Exercise Price, Beginning balance | $ 11.5 | $ 11.5 |
Weighted Average Remaining Life, Beginning balance | 3 years 11 months 19 days | 3 years 4 months 13 days |
Aggregate Intrinsic Value, Beginning balance | ||
Shares Issuable Under Warrants, Issued | ||
Weighted-average Exercise Price, Issued | ||
Weighted Average Remaining Life, Issued | ||
Aggregate Intrinsic Value, Issued | ||
Shares Issuable Under Warrants, Exercised | ||
Weighted-average Exercise Price, Exercised | ||
Weighted Average Remaining Life, Exercised | ||
Aggregate Intrinsic Value, Exercised | ||
Shares Issuable Under Warrants, Expired/canceled | ||
Weighted-average Exercise Price, Expired/canceled | ||
Weighted Average Remaining Life, Expired/canceled | ||
Aggregate Intrinsic Value, Expired/canceled | ||
Shares Issuable Under Warrants, Ending balance | 5,813,804 | 5,813,804 |
Weighted-average Exercise Price, Ending balance | $ 11.5 | $ 11.5 |
Weighted Average Remaining Life, Ending balance | 3 years 4 months 13 days | 2 years 11 months 19 days |
Aggregate Intrinsic Value, Ending balance |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | Jun. 17, 2019 | |
Stock-Based Compensation (Details) [Line Items] | |||||
Stock-based compensation expense recognized | $ 2 | ||||
Compensation cost capitalized | $ 0.2 | ||||
Restricted Shares And Restricted Stock Units [Member] | |||||
Stock-Based Compensation (Details) [Line Items] | |||||
Stock-based compensation expense recognized | $ 2 | $ 1.3 | |||
Compensation cost capitalized | 0.04 | $ 0.1 | |||
Unrecognized compensation costs | $ 3.7 | ||||
Estimated weighted average remaining vesting period | 2 years 4 months 28 days | ||||
Restricted Shares And Restricted Stock Units [Member] | Equity Incentive Plan [Member] | Common Stock [Member] | |||||
Stock-Based Compensation (Details) [Line Items] | |||||
Common stock reserved (in Shares) | 1,040,038 | ||||
Restricted Shares And Restricted Stock Units [Member] | Minimum [Member] | Equity Incentive Plan [Member] | Common Stock [Member] | |||||
Stock-Based Compensation (Details) [Line Items] | |||||
Shares authorized for issuance (in Shares) | 525,000 | ||||
Restricted Shares And Restricted Stock Units [Member] | Maximum [Member] | Equity Incentive Plan [Member] | Common Stock [Member] | |||||
Stock-Based Compensation (Details) [Line Items] | |||||
Shares authorized for issuance (in Shares) | 1,565,038 | ||||
Restricted Stock Units (RSUs) [Member] | Equity Incentive Plan [Member] | |||||
Stock-Based Compensation (Details) [Line Items] | |||||
Vesting period from the grant date or the first day of the service period | 4 years | ||||
Profits Interest Units [Member] | Profits Interest Incentive Plan [Member] | |||||
Stock-Based Compensation (Details) [Line Items] | |||||
Vesting period from the grant date or the first day of the service period | 4 years | ||||
Stock-based compensation expense recognized | $ 3.4 |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details) - Schedule of stock warrants - $ / shares | 6 Months Ended | 12 Months Ended |
Dec. 31, 2020 | Dec. 31, 2021 | |
Schedule of stock warrants [Abstract] | ||
Restricted Shares, beginning balance | 72,313 | 64,289 |
Restricted Stock Units, beginning balance | 534,302 | 763,020 |
Total, beginning balance | 606,615 | 827,309 |
Weighted Average Grant Date Fair Value, beginning balance (in Dollars per share) | $ 6.56 | $ 6.77 |
Restricted Shares, ending balance | 64,289 | 32,394 |
Restricted Stock Units, ending balance | 763,020 | 683,767 |
Total, begining, ending balance | 827,309 | 716,161 |
Weighted Average Grant Date Fair Value, ending balance (in Dollars per share) | $ 6.77 | $ 5.47 |
Restricted Shares, granted | ||
Restricted Stock Units, granted | 429,974 | 447,642 |
Total, granted | 429,974 | 447,642 |
Weighted Average Grant Date Fair Value, granted (in Dollars per share) | $ 4.88 | $ 4.05 |
Restricted Shares, vested | (8,024) | (30,559) |
Restricted Stock Units, vested | (157,350) | (427,711) |
Total, vested | (165,374) | (458,270) |
Weighted Average Grant Date Fair Value, vested (in Dollars per share) | $ 5.08 | $ 5.55 |
Restricted Shares, Forfeited | (1,336) | |
Restricted Stock Units, Forfeited | (43,906) | (99,184) |
Total, Forfeited | (43,906) | (100,520) |
Weighted Average Grant Date Fair Value, Forfeited (in Dollars per share) | $ 6.83 | $ 4.51 |
Loss Per Share (Details) - Sc_2
Loss Per Share (Details) - Schedule of weighted-average number of shares outstanding - shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of weighted-average number of shares outstanding [Abstract] | ||
Shares issuable upon exchange of Exchangeable Shares | 309,286 | 2,667,349 |
Warrants | 5,813,804 | 5,813,804 |
Restricted Stock Units | 683,767 | 694,512 |
Restricted Stock Awards | 32,394 | 64,289 |
Shares of common stock issuable in upon conversion of Convertible Notes | 12,484,395 | 1,319,368 |
Total | 19,323,646 | 10,559,322 |
Fair Value (Details) - Schedu_5
Fair Value (Details) - Schedule of reconciliation of the fair values - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Oct. 05, 2021 | Dec. 31, 2021 | Jun. 30, 2020 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Beginning balance | $ 13,398,000 | $ 14,131,000 | $ 13,398,000 | $ 13,398,000 | |||
Payments on Convertible Notes | $ (3,300,000) | (7,697,727) | (1,827,273) | (15,172,727) | |||
Change in fair value reported in the statements of operations | 1,433,000 | 1,991,272 | 961,273 | 2,030,904 | |||
Change in fair value reported in other comprehensive income | (101,000) | $ 13,000 | 133,000 | (70,000) | |||
Gain on extinguishment of debt reported on the statement of operations | (186,177) | 2,234,730 | |||||
Ending balance | $ 13,398,000 | $ 14,131,000 | |||||
Level 3 [Member] | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Beginning balance | $ 17,305,000 | 18,000,000 | |||||
Payments on Convertible Notes | |||||||
Change in fair value reported in the statements of operations | (665,000) | ||||||
Change in fair value reported in other comprehensive income | (30,000) | ||||||
Ending balance | $ 17,305,000 | $ 18,000,000 | $ 17,305,000 |
Fair Value (Details) - Schedu_6
Fair Value (Details) - Schedule of fair value by using key inputs - Convertible Notes [Member] - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Fair Value (Details) - Schedule of fair value by using key inputs [Line Items] | |||
Face value principal payable (in Dollars) | $ 16,700,000 | $ 20,000,000 | $ 15,172,272 |
Original conversion price (in Dollars per share) | $ 4.05 | $ 4.05 | $ 11.5 |
Value of Common Stock (in Dollars per share) | $ 1.14 | $ 1.75 | $ 3.24 |
Expected term (years) | 2 years 6 months | 2 years 9 months 18 days | 2 years 3 months 18 days |
Volatility | 79.00% | 75.00% | 77.00% |
Market yield (range) | 40.20% | 37.10% | |
Risk free rate | 2.40% | 1.00% | 0.10% |
Issue date | Oct. 5, 2021 | Oct. 5, 2021 | |
Maturity date | Oct. 5, 2024 | Oct. 5, 2024 | |
Minimum [Member] | |||
Fair Value (Details) - Schedule of fair value by using key inputs [Line Items] | |||
Market yield (range) | 27.10% | ||
Issue date | |||
Maturity date | |||
Maximum [Member] | |||
Fair Value (Details) - Schedule of fair value by using key inputs [Line Items] | |||
Market yield (range) | 27.20% | ||
Issue date | |||
Maturity date |
Fair Value (Details) - Schedu_7
Fair Value (Details) - Schedule of fair value categorized within Level 3 of the fair value hierarchy - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of fair value categorized within Level 3 of the fair value hierarchy [Abstract] | ||
Fair value balance at beginning of period | $ 311,376 | $ 688,187 |
Change in fair value reported in the statements of operations | (248,198) | (376,811) |
Fair value balance at end of period | $ 63,178 | $ 311,376 |
Fair Value (Details) - Schedu_8
Fair Value (Details) - Schedule of estimated fair value - Private Warrants [Member] - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Number of Private Warrants | 225,635 | 225,635 | 225,635 |
Original conversion price | $ 11.5 | $ 11.5 | |
Value of Common Stock | $ 1.14 | $ 1.75 | $ 3.24 |
Expected term (years) | 2 years 2 months 15 days | 2 years 5 months 15 days | 3 years 5 months 15 days |
Volatility | 85.80% | 102.30% | |
Risk free rate | 2.30% | 0.80% | 0.20% |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of future minimum lease payments | Dec. 31, 2021USD ($) |
Schedule of future minimum lease payments [Abstract] | |
2022 | $ 252,525 |
2023 | 260,100 |
2024 | 110,480 |
Total | $ 623,105 |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of expense or (benefit) for income taxes - USD ($) | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | |
Current income taxes | |||
U.S. federal | $ 30,985 | ||
U.S. state | 200 | 5,800 | |
Foreign | 6,270 | ||
Total current income taxes | 200 | 12,070 | 30,985 |
Deferred income tax | |||
U.S. federal | (2,274,295) | ||
U.S. state | |||
Total deferred income tax benefit | $ (2,274,295) |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of statutory federal income tax rate to actual rates based on income or loss before income taxes - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Jun. 30, 2020 | |
Income tax expense (benefit) attributable to: | |||||
Federal | $ (3,560,998) | $ (6,692,267) | $ (3,255,706) | ||
State, net of federal benefit | (553,871) | (672,148) | (862,690) | ||
Foreign tax rate differential | 29,617 | (138,292) | (2,645) | ||
Permanent differences | 1,263,151 | 2,428,631 | 312,525 | ||
Rate change | 60,220 | 54,295 | |||
Changes in valuation allowance | 2,762,081 | 3,361,603 | 3,884,440 | ||
Provision to return adjustment | 273,489 | (45,134) | |||
Losses from flow-through entity not subject to tax | |||||
Deferred True-Ups | (928,743) | ||||
Other adjustments | 51,207 | 195 | |||
Effective income tax expense (benefit) | $ (99,444) | $ 6,270 | $ 200 | $ (2,262,225) | $ 30,985 |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of deferred tax assets and liability - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Noncurrent deferred tax assets: | ||
Employee compensation | $ 820,410 | $ 679,106 |
Debt issuance costs | 138,778 | 343,612 |
Revenue recognition | 105,735 | |
Settlement accrual | 146,604 | 182,896 |
Fixed assets | 242,006 | 831,196 |
Federal and state net operating loss | 10,673,908 | 6,337,897 |
Foreign net operating loss | 4,904,857 | 2,586,671 |
Other | 225,340 | 27,410 |
Total deferred tax assets | 17,257,638 | 10,988,788 |
Noncurrent deferred tax liabilities: | ||
Fixed assets | ||
Intangibles | (6,051,459) | (2,717,717) |
Deferred tax liabilities | (6,051,459) | (2,717,717) |
Valuation allowance | (11,881,470) | (8,271,071) |
Deferred taxes after valuation allowance | $ (675,291) |
Revisions of Previously Issue_3
Revisions of Previously Issued Financial Statements (Details) - Schedule of consolidated statements of operations - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2020 | Jun. 30, 2020 | |
As reported [Member] | ||
Condensed Income Statements, Captions [Line Items] | ||
Change in fair value of derivative liability | ||
Net loss attributable to Akerna shareholders | $ (16,957,334) | $ (15,534,345) |
Net loss per share (in Dollars per share) | $ (1.01) | $ (1.31) |
Adjustment [Member] | ||
Condensed Income Statements, Captions [Line Items] | ||
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 (in Dollars per share) | ||
As revised [Member] | ||
Condensed Income Statements, Captions [Line Items] | ||
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 (in Dollars per share) | $ (1.01) | $ (1.14) |
Revisions of Previously Issue_4
Revisions of Previously Issued Financial Statements (Details) - Schedule of consolidated balance sheet | Dec. 31, 2020USD ($) |
As reported [Member] | |
Condensed Balance Sheet Statements, Captions [Line Items] | |
Derivative liability | |
Total liabilities | (19,635,076) |
Additional paid-in capital | 95,090,833 |
Accumulated deficit | (57,872,599) |
Adjustment [Member] | |
Condensed Balance Sheet Statements, Captions [Line Items] | |
Derivative liability | (311,376) |
Total liabilities | (311,376) |
Additional paid-in capital | (1,004,450) |
Accumulated deficit | 693,074 |
As revised [Member] | |
Condensed Balance Sheet Statements, Captions [Line Items] | |
Derivative liability | (311,376) |
Total liabilities | (19,946,452) |
Additional paid-in capital | 94,086,433 |
Accumulated deficit | $ (57,179,525) |