Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 14, 2023 | |
Document Information Line Items | ||
Entity Registrant Name | AKERNA CORP. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 10,252,018 | |
Amendment Flag | false | |
Entity Central Index Key | 0001755953 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Sep. 30, 2023 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Entity Ex Transition Period | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-39096 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-2242651 | |
Entity Address, Address Line One | 1550 Larimer Street | |
Entity Address, Address Line Two | #246 | |
Entity Address, City or Town | Denver | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80202 | |
City Area Code | (888) | |
Local Phone Number | 492-3540 | |
Entity Interactive Data Current | Yes | |
Common Stock, $0.0001 par value per share | ||
Document Information Line Items | ||
Trading Symbol | KERN | |
Title of 12(b) Security | Common Stock, $0.0001 par value per share | |
Security Exchange Name | NASDAQ | |
Warrants to purchase one share of common stock | ||
Document Information Line Items | ||
Trading Symbol | KERNW | |
Title of 12(b) Security | Warrants to purchase one share of common stock | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash | $ 209,577 | $ 877,755 |
Restricted cash | 7,000,000 | |
Accounts receivable, net | 252,951 | 674,626 |
Prepaid expenses and other current assets | 780,618 | 1,209,623 |
Assets held for sale | 5,130,028 | |
Total current assets | 1,243,146 | 14,892,032 |
Fixed assets, net | 27,425 | 48,879 |
Capitalized software, net | 213,766 | 654,556 |
Intangible assets, net | 1,880,000 | 2,164,722 |
Goodwill | 816,200 | 1,708,303 |
Total assets | 4,180,537 | 19,468,492 |
Current liabilities | ||
Accounts payable, accrued expenses and other accrued liabilities | 4,326,727 | 4,426,419 |
Contingent consideration payable | 2,283,806 | |
Current portion of deferred revenue | 469,874 | 568,771 |
Current portion of long-term debt | 7,733,271 | 13,200,000 |
Liabilities held for sale | 2,246,222 | |
Total current liabilities | 12,529,872 | 22,725,218 |
Deferred revenue, noncurrent | 161,802 | |
Long-term debt, less current portion | 849,729 | 1,407,000 |
Total liabilities | 13,379,601 | 24,294,020 |
Commitments and contingencies (Note 8) | ||
Stockholders’ deficit | ||
Preferred stock, value | ||
Common stock, par value $0.0001; 150,000,000 shares authorized, 10,002,018 and 4,602,780 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | 1,000 | 460 |
Additional paid-in capital | 164,314,084 | 160,207,367 |
Accumulated other comprehensive income | 295,274 | 347,100 |
Accumulated deficit | (175,717,363) | (167,565,846) |
Total stockholders’ deficit | (9,199,064) | (4,825,528) |
Total liabilities and stockholders’ deficit | 4,180,537 | 19,468,492 |
Special Voting Preferred Stock | ||
Stockholders’ deficit | ||
Preferred stock, value | $ 1,907,941 | $ 2,185,391 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Preferred stock, par value (in dollars per share) (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 1 | 1 |
Preferred stock, shares outstanding (in shares) | 1 | 1 |
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares outstanding (in shares) | 10,002,018 | 4,602,780 |
Common stock, shares issued (in shares) | 10,002,018 | 4,602,780 |
Special Voting Preferred Stock | ||
Preferred stock, par value (in dollars per share) (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 1 | 1 |
Preferred stock, shares issued (in shares) | 1 | 1 |
Preferred stock, shares outstanding (in shares) | 1 | 1 |
Preferred stock, liquidation preference (in dollars per share) (in Dollars per share) | $ 1 | $ 1 |
Exchangeable Shares | ||
Preferred stock, shares issued (in shares) | 249,504 | 285,672 |
Preferred stock, shares outstanding (in shares) | 249,504 | 285,672 |
Preferred stock, no par value (in dollars per share) (in Dollars per share) |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue | ||||
Total revenue | $ 2,082,553 | $ 3,064,379 | $ 6,973,109 | $ 10,799,135 |
Cost of revenue | 974,711 | 1,476,787 | 2,988,688 | 4,175,056 |
Gross profit | 1,107,842 | 1,587,592 | 3,984,421 | 6,624,079 |
Operating expenses | ||||
Product development | 649,070 | 959,186 | 2,153,834 | 3,950,305 |
Sales and marketing | 566,147 | 954,759 | 1,977,996 | 4,984,983 |
General and administrative | 1,401,101 | 1,830,663 | 4,458,949 | 6,409,564 |
Depreciation and amortization | 176,715 | 1,551,480 | 746,966 | 4,475,485 |
Impairment of long-lived assets | 892,103 | 892,103 | 30,562,944 | |
Total operating expenses | 3,685,136 | 5,296,088 | 10,249,849 | 50,383,281 |
Loss from operations | (2,577,294) | (3,708,496) | (6,265,427) | (43,759,202) |
Other (expense) income | ||||
Interest (expense) income, net | (202,644) | (395,422) | (917,015) | (609,150) |
Change in fair value of convertible notes | 185,000 | (1.113000) | (863,457) | (2,840,000) |
Change in fair value of derivative liability | 2,256 | 54,153 | ||
Other expense, net | 9,781 | |||
Total other (expense) income | (17,644) | (1,506,166) | (1,770,691) | (3,394,997) |
Net loss from continuing operations before income taxes | (2,594,938) | (5,214,662) | (8,036,118) | (47,154,199) |
Income tax benefit on continuing operations | 40,666 | 268,152 | ||
Net loss from continuing operations | (2,594,938) | (5,173,996) | (8,036,118) | (46,886,047) |
Net gain (loss) from discontinued operations | 2,869,908 | (115,398) | (6,936,881) | |
Net loss | $ (2,594,938) | $ (2,304,088) | $ (8,151,516) | $ (53,822,928) |
Basic weighted average common shares outstanding (in Shares) | 8,195,393 | 3,883,847 | 6,486,669 | 2,421,262 |
Basic loss per common share from continuing operations (in Dollars per share) | $ (0.32) | $ (1.33) | $ (1.24) | $ (19.36) |
Basic earnings (loss) per common share from discontinued operations (in Dollars per share) | 0.74 | (0.02) | (2.87) | |
Basic loss per common share (in Dollars per share) | $ (0.32) | $ (0.59) | $ (1.26) | $ (22.23) |
Software | ||||
Revenue | ||||
Total revenue | $ 2,069,845 | $ 2,980,926 | $ 6,909,399 | $ 10,150,011 |
Consulting | ||||
Revenue | ||||
Total revenue | 6,200 | 76,500 | 46,000 | 618,809 |
Other revenue | ||||
Revenue | ||||
Total revenue | $ 6,508 | $ 6,953 | $ 17,710 | $ 30,315 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Unaudited) (Parentheticals) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Diluted weighted average common shares outstanding (in Shares) (in Shares) | 8,195,393 | 3,883,847 | 6,486,669 | 2,421,262 |
Diluted loss per common share from continuing operations (in Dollars per share) | $ (0.32) | $ (1.33) | $ (1.24) | $ (19.36) |
Diluted earnings (loss) per common share from discontinued operations (in Dollars per share) | 0.74 | (0.02) | (2.87) | |
Diluted loss per common share (in Dollars per share) | $ (0.32) | $ (0.59) | $ (1.26) | $ (22.23) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (2,594,938) | $ (2,304,088) | $ (8,151,516) | $ (53,822,928) |
Other comprehensive (loss) income | ||||
Foreign currency translation | (38,829) | 27,676 | (9,826) | 4,505 |
Unrealized (loss) gain on convertible notes | (3,000) | 26,000 | (42,000) | 290,000 |
Comprehensive loss | $ (2,636,767) | $ (2,250,412) | $ (8,203,342) | $ (53,528,423) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited) - USD ($) | Special Voting Preferred Stock | Common | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total |
Balance at Dec. 31, 2021 | $ 2,366,038 | $ 155 | $ 146,030,203 | $ 61,523 | $ (88,508,236) | $ 59,949,683 |
Balance (in Shares) at Dec. 31, 2021 | 309,286 | 1,550,094 | ||||
Conversion of exchangeable shares to common stock | $ (18,620) | 18,620 | ||||
Conversion of exchangeable shares to common stock (in Shares) | (2,434) | 122 | ||||
Settlement of convertible notes | $ 17 | 3,299,983 | 3,300,000 | |||
Settlement of convertible notes (in Shares) | 169,843 | |||||
Shares withheld for withholding taxes | (5,615) | (5,615) | ||||
Shares withheld for withholding taxes (in Shares) | (222) | |||||
Shares returned in connection with acquisition | $ (1) | (939,999) | (940,000) | |||
Shares returned in connection with acquisition (in Shares) | (13,988) | |||||
Stock-based compensation | 316,855 | 316,855 | ||||
Issuance of common stock upon vesting of restricted stock units | ||||||
Issuance of common stock upon vesting of restricted stock units (in Shares) | 2,174 | |||||
Liabilities with shares | 45,066 | 45,066 | ||||
Liabilities with shares (in Shares) | 732 | |||||
Foreign currency translation adjustments | (33,800) | (33,800) | ||||
Unrealized gain loss on convertible notes | 101,000 | 101,000 | ||||
Net loss | (21,952,893) | (21,952,893) | ||||
Balance at Mar. 31, 2022 | $ 2,347,418 | $ 171 | 148,765,113 | 128,723 | (110,461,129) | 40,780,296 |
Balance (in Shares) at Mar. 31, 2022 | 306,852 | 1,708,755 | ||||
Balance at Dec. 31, 2021 | $ 2,366,038 | $ 155 | 146,030,203 | 61,523 | (88,508,236) | 59,949,683 |
Balance (in Shares) at Dec. 31, 2021 | 309,286 | 1,550,094 | ||||
Net loss | (53,822,928) | |||||
Balance at Sep. 30, 2022 | $ 2,227,619 | $ 402 | 159,841,800 | 356,028 | (142,331,164) | 20,094,685 |
Balance (in Shares) at Sep. 30, 2022 | 291,192 | 4,023,294 | ||||
Balance at Mar. 31, 2022 | $ 2,347,418 | $ 171 | 148,765,113 | 128,723 | (110,461,129) | 40,780,296 |
Balance (in Shares) at Mar. 31, 2022 | 306,852 | 1,708,755 | ||||
Conversion of exchangeable shares to common stock | $ (119,799) | 119,799 | ||||
Conversion of exchangeable shares to common stock (in Shares) | (15,660) | 783 | ||||
Shares returned in connection with the ATM offering program | $ 9 | 761,169 | 761,178 | |||
Shares returned in connection with the ATM offering program (in Shares) | 90,809 | |||||
Settlement of convertible notes | $ 4 | 625,496 | 625,500 | |||
Settlement of convertible notes (in Shares) | 37,584 | |||||
Shares withheld for withholding taxes | (7,552) | (7,552) | ||||
Shares withheld for withholding taxes (in Shares) | (337) | |||||
Stock-based compensation | 148,444 | 148,444 | ||||
Issuance of common stock upon vesting of restricted stock units | 25,000 | 25,000 | ||||
Issuance of common stock upon vesting of restricted stock units (in Shares) | 3,011 | |||||
Liabilities with shares | 4,464 | 4,464 | ||||
Liabilities with shares (in Shares) | 732 | |||||
Foreign currency translation adjustments | 10,629 | 10,629 | ||||
Unrealized gain loss on convertible notes | 163,000 | 163,000 | ||||
Net loss | (29,565,947) | (29,565,947) | ||||
Balance at Jun. 30, 2022 | $ 2,227,619 | $ 184 | 150,441,933 | 302,352 | (140,027,076) | 12,945,012 |
Balance (in Shares) at Jun. 30, 2022 | 291,192 | 1,841,337 | ||||
Common shares and warrants issued in connection with unit offering | $ 217 | 9,178,744 | 9,178,961 | |||
Common shares and warrants issued in connection with unit offering (in Shares) | 217,913 | |||||
Stock-based compensation | 196,124 | 196,124 | ||||
Issuance of common stock upon vesting of restricted stock units | $ 1 | 24,999 | 25,000 | |||
Issuance of common stock upon vesting of restricted stock units (in Shares) | 8,045 | |||||
Foreign currency translation adjustments | 27,676 | 27,676 | ||||
Unrealized gain loss on convertible notes | 26,000 | 26,000 | ||||
Net loss | (2,304,088) | (2,304,088) | ||||
Balance at Sep. 30, 2022 | $ 2,227,619 | $ 402 | 159,841,800 | 356,028 | (142,331,164) | 20,094,685 |
Balance (in Shares) at Sep. 30, 2022 | 291,192 | 4,023,294 | ||||
Balance at Dec. 31, 2022 | $ 2,185,391 | $ 460 | 160,207,367 | 347,100 | (167,565,846) | (4,825,528) |
Balance (in Shares) at Dec. 31, 2022 | 285,672 | 4,602,780 | ||||
Conversion of exchangeable shares to common stock | $ (4,896) | 4,896 | ||||
Conversion of exchangeable shares to common stock (in Shares) | (640) | 32 | ||||
Settlement of convertible notes | $ 116 | 1,396,985 | 1,397,101 | |||
Settlement of convertible notes (in Shares) | 1,164,251 | |||||
Stock-based compensation | 109,133 | 109,133 | ||||
Issuance of common stock upon vesting of restricted stock units | ||||||
Issuance of common stock upon vesting of restricted stock units (in Shares) | 587 | |||||
Foreign currency translation adjustments | 20,429 | 20,429 | ||||
Unrealized gain loss on convertible notes | (14,000) | (14,000) | ||||
Net loss | (2,474,628) | (2,474,628) | ||||
Balance at Mar. 31, 2023 | $ 2,180,495 | $ 576 | 161,718,381 | 353,529 | (170,040,474) | (5,787,493) |
Balance (in Shares) at Mar. 31, 2023 | 285,032 | 5,767,650 | ||||
Balance at Dec. 31, 2022 | $ 2,185,391 | $ 460 | 160,207,367 | 347,100 | (167,565,846) | (4,825,528) |
Balance (in Shares) at Dec. 31, 2022 | 285,672 | 4,602,780 | ||||
Net loss | (8,151,516) | |||||
Balance at Sep. 30, 2023 | $ 1,907,941 | $ 1,000 | 164,314,084 | 295,274 | (175,717,363) | (9,199,064) |
Balance (in Shares) at Sep. 30, 2023 | 249,504 | 10,002,018 | ||||
Balance at Mar. 31, 2023 | $ 2,180,495 | $ 576 | 161,718,381 | 353,529 | (170,040,474) | (5,787,493) |
Balance (in Shares) at Mar. 31, 2023 | 285,032 | 5,767,650 | ||||
Conversion of exchangeable shares to common stock | $ (250,981) | $ 1 | 250,980 | |||
Conversion of exchangeable shares to common stock (in Shares) | (32,808) | 1,640 | ||||
Shares issued in a private placement offering | $ 100 | 499,900 | 500,000 | |||
Shares issued in a private placement offering (in Shares) | 1,000,000 | |||||
Settlement of convertible notes | $ 23 | 114,977 | 115,000 | |||
Settlement of convertible notes (in Shares) | 230,000 | |||||
Stock-based compensation | 108,477 | 108,477 | ||||
Foreign currency translation adjustments | 8,574 | 8,574 | ||||
Unrealized gain loss on convertible notes | (25,000) | (25,000) | ||||
Net loss | (3,081,951) | (3,081,951) | ||||
Balance at Jun. 30, 2023 | $ 1,929,514 | $ 700 | 162,692,715 | 337,103 | (173,122,425) | (8,162,393) |
Balance (in Shares) at Jun. 30, 2023 | 252,224 | 6,999,290 | ||||
Conversion of exchangeable shares to common stock | $ (2,157) | 21,573 | ||||
Conversion of exchangeable shares to common stock (in Shares) | (2,720) | 141 | ||||
Settlement of convertible notes | $ 300 | 1,499,700 | 1,500,000 | |||
Settlement of convertible notes (in Shares) | 3,000,000 | |||||
Stock-based compensation | 100,096 | 100,096 | ||||
Issuance of common stock upon vesting of restricted stock units | ||||||
Issuance of common stock upon vesting of restricted stock units (in Shares) | 2,587 | |||||
Foreign currency translation adjustments | (38,829) | (38,829) | ||||
Unrealized gain loss on convertible notes | (3,000) | (3,000) | ||||
Net loss | (2,594,938) | (2,594,938) | ||||
Balance at Sep. 30, 2023 | $ 1,907,941 | $ 1,000 | $ 164,314,084 | $ 295,274 | $ (175,717,363) | $ (9,199,064) |
Balance (in Shares) at Sep. 30, 2023 | 249,504 | 10,002,018 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities | ||
Net loss | $ (8,151,516) | $ (53,822,928) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Gain on sale of discontinued operations, net | (212,601) | |
Credit loss expense | 24,194 | 254,029 |
Stock-based compensation expense | 317,706 | 697,377 |
Impairment of long-lived assets | 892,103 | 39,600,587 |
Amortization of deferred contract cost | 39,285 | 275,949 |
Non-cash interest expense | 183,723 | |
Depreciation and amortization | 771,473 | 6,094,963 |
Foreign currency (gain) loss | (22,139) | 4,718 |
Change in fair value of convertible notes | 863,457 | 2,840,000 |
Change in fair value of derivative liability | (54,153) | |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 113,797 | (313,176) |
Prepaid expenses and other current assets | 388,312 | (215,228) |
Accounts payable, accrued expenses and other current liabilities | 109,687 | 1,356,709 |
Deferred income tax liabilities | (243,838) | |
Deferred revenue | (340,130) | (1,413,665) |
Net cash used in operating activities | (5,206,372) | (10,450,906) |
Cash flows from investing activities | ||
Developed software additions | (3,324,029) | |
Fixed asset additions | (27,383) | |
Cash returned from business combination working capital settlement | 400,000 | |
Proceeds from sale of discontinued operations | 600,000 | |
Net cash provided by (used in) investing activities | 600,000 | (2,951,412) |
Cash flows from financing activities | ||
Value of shares withheld related to tax withholdings | (49) | (13,167) |
Proceeds from unit and pre-funded unit offerings and warrants, net | 9,178,961 | |
Proceeds from secured loan | 1,000,000 | |
Principal payments of convertible notes | (4,917,356) | (1,432,273) |
Proceeds received from private placement offering | 500,000 | |
Proceeds received from the ATM offering program, net | 761,178 | |
Net cash used in financing activities | (3,417,405) | (8,494,699) |
Effect of exchange rate changes on cash and restricted cash | 50,099 | (35,984) |
Net change in cash and restricted cash | (7,973,678) | (4,943,603) |
Cash and restricted cash of continuing operations - beginning of period | 7,877,755 | 13,087,627 |
Cash and restricted cash of discontinued operations - beginning of period | 305,500 | 1,354,899 |
Cash and restricted cash - beginning of period | 8,183,255 | 14,442,526 |
Cash and restricted cash of continuing operations - end of period | 209,577 | 9,012,075 |
Cash and restricted cash of discontinued operations - end of period | 486,848 | |
Cash and restricted cash - end of period | 209,577 | 9,498,923 |
Cash paid for interest | 787,187 | 234,227 |
Cash paid for income taxes, net of refunds received | 12,200 | |
Supplemental disclosures of non-cash investing and financing activities: | ||
Settlement of convertible notes in common stock | 3,012,101 | 3,925,500 |
Conversion of exchangeable shares to common stock | 277,450 | 138,419 |
Settlement of other liabilities in common stock | 49,530 | |
Stock-based compensation capitalized as software development | 14,046 | |
Vesting of restricted stock units | 50,000 | |
Capitalized software additions included in accounts payable | 32,473 | |
Termination of contingent consideration obligation in connection with sale of discontinued operations | 2,283,806 | |
Shares of common stock returned in connection with acquisition | 940,000 | |
Reduction to accrued expenses from an acquisition-related working capital settlement | $ 160,000 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 2023 | |
Business Description [Abstract] | |
Description of Business | Note 1 – Description of Business Akerna Corp., herein referred to as we, us, our, the Company or Akerna was formed upon completion of the mergers between MTech Acquisition Corp. (“MTech”) and MJ Freeway, LLC (“MJF”) on June 17, 2019 as contemplated by the Merger Agreement dated October 10, 2018, as amended (the “Mergers”). Akerna provides software as a service (“SaaS”) solutions within the cannabis industry that enable regulatory compliance and inventory management through our wholly-owned subsidiaries MJF, Ample Organics, Inc., or Ample, Trellis Solutions, Inc., or Trellis, solo sciences, inc., or Solo and Viridian Sciences, Inc., or Viridian. Our proprietary 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 also 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 platforms, MJ Platform®, Trellis®, Ample and Viridian to state-licensed businesses, and our regulatory software platform, Leaf Data Systems®, to state government regulatory agencies. Our solutions are considered non-enterprise offerings (“Non-Enterprise”) that meet the needs of our small and medium business (“SMB”) and government regulatory agency customers and our Viridian solutions are considered enterprise offerings (“Enterprise”). 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. Strategic Shift in Business Strategy During the fourth quarter of 2022, we committed to a number of significant actions described below that collectively represent a strategic shift in our business strategy for 2023 and beyond. Exiting the Enterprise Software Business The development of our Enterprise software business, which began with the acquisitions of Viridian and The NAV People Inc. d.b.a. 365 Cannabis (“365 Cannabis”) in 2021, did not achieve a sustainable scale in a timely manner consistent with our original plans. Accordingly, we committed to an effort to market this business unit and on January 11, 2023, we completed the sale of 365 Cannabis to 365 Holdco - LLC (the “Buyers”) pursuant to a stock purchase agreement (the “365 SPA”) for (i) cash in the amount of $0.5 million and the (ii) the termination and release of our obligation to the Buyers for contingent consideration in connection with our original acquisition of 365 Cannabis from the Buyers in 2021 (the “Earn-out Obligation”). In accordance with the 365 SPA, we and the Buyers agreed that the value of the Earn-out Obligation was $2.3 million for purposes of the sale of 365 Cannabis and was reflected as Contingent consideration payable on our condensed consolidated balance sheets as of December 31, 2022. In connection with the sale of 365 Cannabis, we terminated certain employees that were not requested to transfer with the business by the Buyers or whose positions were no longer necessary to support our reduced level of operations. We incurred and paid restructuring charges associated with this action for less that $0.1 million, primarily in the form of severance and related employee benefits, during the first quarter of 2023. The charges were included as a component of Cost of revenues in our condensed consolidated statements of operations. While we explored similar sale options for Viridian, we were unable to commit to any definitive transaction. Accordingly, we informed Viridian’s customers that we do not plan to continue software and support services beyond the date of existing contracts, most of which expired during the first half of 2023. With the sale of 365 Cannabis and our commitment to wind down the operations of Viridian, we have effectively exited the Enterprise software business. Accordingly, we have suspended efforts to seek any new revenue generating opportunities and will only service the existing customers of Viridian in connection with our contractual commitments. We have terminated this business during the third quarter of 2023 in connection with our exit strategy (see below). Disposal of Non-Core SMB Software Products and Brands In addition to the exit from the Enterprise software business, we initiated efforts to explore a sales process for the non-core components and brands of our SMB/Non-Enterprise business unit, including Trellis, a cultivation and compliance software platform, Solo, a seed-to-sale tagging and tracking software platform and Last Call Analytics (“LCA”), a retail analytics platform. On January 31, 2023, we completed the sale of LCA for cash in the amount of $0.1 million. While we pursued sale opportunities for Trellis and Solo, we were ultimately unable to commit to any definitive transactions. Accordingly, we have communicated with the remaining customers of those businesses that we will discontinue software service and support upon the expiration of existing contracts, most of which occurred during the first half of 2023. Similar to Viridian, as discussed above, we have suspended efforts to seek any new revenue generating opportunities and will only service the existing customers of Solo and Trellis in connection with our contractual commitments. We have terminated these businesses during the third quarter of 2023 in connection with our exit strategy (see below). Exit Strategy With the completion of the sales of 365 Cannabis and LCA and the commitment to effectively discontinue and wind down the operations and service associated with Viridian, Solo and Trellis, our remaining core SMB and governmental business unit is comprised of MJF and Ample. Concurrent with the actions described above, we entered into letters of intent with two unrelated parties in the fourth quarter of 2022 to (i) explore the sale of our remaining core SMB and governmental business unit and (ii) realize the potential value of our publicly-held holding company through a merger or similar transaction. Collectively, pursuit of these transactions reflects our intention to fully exit the SaaS industry. On January 27, 2023, we entered into a securities purchase agreement (“MJF-Ample SPA”) with POSaBIT Systems Corp (“POSaBIT”) to sell MJF and Ample for $4.0 million in cash. Subsequently, we received a superior offer from Alleaves Inc. (“Alleaves”), as described below, which was presented to POSaBIT for an opportunity to match or exceed Alleaves’ offer in accordance with the MJF-Ample SPA. POSaBIT ultimately declined to present a counter-offer and on April 5, 2023, we terminated the MJF-Ample SPA. As a result of the termination, Akerna paid POSaBIT a termination fee and reimbursement for expenses of $0.2 million in June 2023. These costs were included as Other expense, net in our condensed consolidated statements of operations. On January 27, 2023, we entered into an agreement and plan of merger (the “Merger Agreement”) with Gryphon Digital Mining, Inc. (“Gryphon”) and Akerna Merger Co. (“Akerna Merger”). Upon the terms and subject to the satisfaction of the conditions provided in the Merger Agreement, including the approval of the transaction by Akerna’s and Gryphon’s stockholders, Akerna Merger will be merged with and into Gryphon (the “Merger”), with Gryphon surviving the Merger as a wholly-owned subsidiary of Akerna. Following the closing of the Merger, the former Gryphon and Akerna stockholders immediately before the Merger are expected to own approximately 92.5 percent and 7.5 percent, respectively, of the outstanding capital stock on a fully diluted basis. Upon completion of the Merger, Akerna will change its name to Gryphon Digital Mining, Inc. The closing of the Merger is subject to customary closing conditions including the required approval of the stockholders of Akerna and Gryphon, the approval of the Nasdaq Capital Market (the “Nasdaq Market”) of the continued listing of Gryphon after the closing of the Merger and the simultaneous closing of the sale of MJF and Ample (see below, the “Sale Transaction”), among others. We and Gryphon may terminate the Merger upon mutual consent and either party may terminate the Merger unilaterally under certain conditions. In the event either party terminates the Merger pursuant to certain conditions, we will be required to pay Gryphon a termination fee of $275,000 less any reimbursed expenses. The Merger is expected to be treated by Akerna as a reverse merger, or a change of control, whereby the stockholders of Gryphon will have majority ownership and control of Akerna after the transaction is complete. On April 28, 2023, we entered into a securities purchase agreement (the “SPA”) with MJ Freeway Acquisition Co (“MJ Acquisition”), an affiliate of Alleaves. Upon the terms and subject to the satisfaction of the conditions described in the SPA, including approval of the transaction by Akerna’s stockholders, Akerna will sell MJF and Ample to MJ Acquisition for a purchase price of $5.0 million, consisting of $4.0 million in cash at closing and a loan by MJ Acquisition to Akerna in the principal amount of $1.0 million evidenced by a note and security documents (as described in detail below) with such note to be deemed paid in full upon closing. The purchase price is subject to adjustment at closing of the Sale Transaction attributable to variances from target working capital (as set forth in the SPA) and further adjustment post- closing upon delivery of a post-closing statement by MJ Acquisition within 75 days after the closing subject to a $0.5 million cap on any post- closing working capital adjustments. The closing of the Sale Transaction is subject to customary closing conditions as well as the required approval of the stockholders of Akerna and the closing of the Merger. The obligation of MJ Acquisition to close on the Sale Transaction is also subject to satisfaction of certain additional conditions regarding employee retention and contractual matters associated with MJF’s and Ample’s customers, among others. Under the SPA, Akerna and MJ Acquisition have agreed to provide limited indemnification to each other with respect to certain tax matters, in each case capped at a maximum amount of $0.5 million. We or MJ Acquisition may terminate the SPA upon mutual consent and either party may terminate the SPA unilaterally under certain conditions as described in the SPA. In the event that MJ Acquisition or Akerna terminates the SPA pursuant to certain of the sections set forth above, Akerna will be required to pay MJ Acquisition a termination fee of $290,000 and reimburse MJ Acquisition for its reasonable fees and expenses up to $60,000. On June 14, 2023, the Merger Agreement was amended to add the defined term “Closing Acquiror Share Price” and amend and restate the definition of “Merger Consideration.” The term "Closing Acquiror Share Price” means the last reported sale price per share of Akerna Common Stock on Nasdaq on the second business day prior to the closing date of the Merger and the term “Merger Consideration” means the greater of (a) a number of shares of Akerna Common Stock equal to (i) the quotient obtained by dividing (A) Akerna's fully diluted share number, as defined in the Merger Agreement, by (B) 0.075, minus (ii) the Akerna's fully diluted share number minus (iii) the adjusted warrant share reserve number, as defined in the Merger Agreement, and (b) a number of shares of Akerna's Common Stock equal to the quotient obtained by dividing (i) $115,625,000 by (ii) the Closing Acquiror Share Price. The amendment effectively sets a floor of $115.6 million for the value attributable to Gryphon in the determination of post-Merger ownership. Concurrent with the signing and in support of the Sale Transaction and the Merger, we and each of the holders of the 2021 Senior Secured Convertible Notes (the “Senior Convertible Notes”) entered into exchange agreements (the “Exchange Agreements”) whereby the holders would ultimately convert the principal amounts of each of their note holdings to a level that would represent 19.9 percent of the outstanding shares of our common stock, $0.0001 par value (“Common Stock”) prior to the closing of the Sale Transaction and the Merger. Immediately prior to the stockholder vote required for the closing of those transaction, the remaining Senior Convertible Notes outstanding would be converted into a special class of exchangeable preferred stock to facilitate the required stockholder vote and then be converted into shares of our Common Stock subject to the Merger. For a limited period, the conversion price of the Senior Convertible Notes was lowered to $1.20 per share from $4.75 per share. In accordance with the Exchange Agreements and upon the occurrence of an any additional capital raising transaction, the conversion price would be adjusted accordingly. In connection with an equity offering in June 2023 (see Note 9), the conversion price was further reduced to $0.50 per share. We anticipate scheduling a meeting of stockholders during the fourth quarter of 2023 to approve the Merger and the Sale Transaction and we expect these transactions to close shortly thereafter. First Amendment to Securities Purchase Agreement As previously reported, on April 28, 2023, Akerna entered into a securities purchase agreement (the “SPA”) with Akerna Canada Ample Exchange Inc. (“Akerna Exchange”) and MJ Acquisition Corp. (“MJA”). Upon the terms and subject to the satisfaction of the conditions described in the SPA, including approval of the transaction by Akerna’s stockholders, Akerna will sell to MJA (or a subsidiary of MJA) all of the membership interests in MJ Freeway, LLC (“MJF”) and Akerna Exchange will sell to MJA all of the outstanding capital stock of Ample Organics Inc. (“Ample”) (jointly, such sales, the “Sale Transaction”). On September 28, 2023, Akerna, Akerna Exchange and MJA entered into a first amendment to the SPA (the “Amendment”) which amends certain of the terms of the SPA. Principally, the Amendment: (i) amends Article I of the SPA to add certain definitions regarding the Amended and Restated Note (as defined below); (ii) amends Article I to change the “Outside Date” as defined therein from September 29, 2023 to December 31, 2023; (iii) amends Section 2.2 of the SPA to reduce the amount of cash to be paid at closing from $4 million to $2 million; (iv) amends Section 5.14 of the SPA to add to the items of business in relation to which Akerna will seek stockholder approval at a special meeting of the stockholders the issuance of shares of common stock of Akerna to MJA under the Amended and Restated Note; (v) adds a new Section 5.19 which provides that prior to closing under the SPA, MJA will work in good faith on a best efforts basis across multiple interested parties on behalf of and with the express approval of Akerna to secure for Akerna the highest purchase price possible for the shares of Ample. Akerna shall cause the proceeds from such sale to be included in the assets of MJF effective as of the closing. Notwithstanding the foregoing, in the event that the shares of Ample are sold to a third-party for a net purchase price above $700,000, Akerna shall be entitled to retain all net proceeds in excess of $700,000; (vi) provides that, within 3 business days of the Amendment, MJA will loan Akerna an additional $500,000 to fund Akerna’s working capital requirements; and (vii) provides that concurrently with the funding of the additional $500,000 loan to Akerna, Akerna will issue and amended and restated convertible secured promissory note (“Amended and Restated Note”) to MJA which amends and restates the Secured Promissory Note dated April 28, 2023 by and between Akerna and MJA (the ‘Original Note”) to (A) increase the principal amount of the Original Note from $1,000,000 to $1,500,000, (B) provide for the forfeiture by MJA of the accrued and unpaid interest at the consummation of the transaction under the SPA and (C) provide that contemporaneous with and immediately prior to the consummation of the transactions under the SPA provide that contemporaneous with and immediately prior to the consummation of the transactions under the SPA, the principal amount of the shall convert into such quantity of shares of common stock of the Company as equals (1) $1,500,000, multiplied by (2) the 5-day volume weighted average price of the common stock of the Company as quoted on The Nasdaq Capital Market for the 5 trading days immediately preceding the date of the consummation of the transactions under the SPA; provided however, that in no case shall Akerna be required to issue to MJA such number of shares of common stock as would in the aggregate with all shares issued pursuant to the SPA and/or held or controlled by MJA exceed 19.99% of the number of issued and outstanding shares of common stock of the Seller on the date hereof without first obtaining the approval of stockholders of Akerna as required pursuant to the rules of the Nasdaq Stock Exchange. Amended and Restated Convertible Secured Promissory Note In relation to the first amendment to the Securities Purchase Agreement dated September 28, 2023 by and between Akerna, Akerna Exchange and MJA, Akerna issued an amended and restated convertible secured promissory note (“Amended and Restated Note”) on October 11, 2023 to MJA which amends and restates the Secured Promissory Note dated April 28, 2023 by and between Akerna and MJA (the ‘Original Note”), whereby Akerna promises to pay to the order of MJA or its registered assigns the amount of $1,500,000. The Amended and Restated Note amended the Original Note to (i) increase the principal amount of the Original Note from $1,000,000 to $1,500,000; (ii) provide for the forfeiture by MJA of the accrued and unpaid interest at the consummation of the transaction under the SPA; and (iii) provide that contemporaneous with and immediately prior to the consummation of the transactions under the SPA provide that contemporaneous with and immediately prior to the consummation of the transactions under the SPA, the principal amount of the shall convert into such quantity of shares of common stock of the Company as equals (1) $1,500,000, multiplied by (2) the 5-day volume weighted average price of the common stock of the Company as quoted on The Nasdaq Capital Market for the 5 trading days immediately preceding the date of the consummation of the transactions under the SPA; provided however, that in no case shall Akerna be required to issue to MJA such number of shares of common stock as would in the aggregate with all shares issued pursuant to the SPA and/or held or controlled by MJA exceed 19.99% of the number of issued and outstanding shares of common stock of the Seller on the date hereof without first obtaining the approval of stockholders of Akerna as required pursuant to the rules of the Nasdaq Stock Exchange. Except as set forth above, no other amendments, revisions or additions were made to the Original Note and all terms, conditions, covenants, representations and warranties contained in the Original Note shall remain in full force and effect. Amended and Restated Security Agreement Pursuant to the Amended and Restated Note, Akerna’s obligations under the Amended and Restated Note are to be secured pursuant to an Amended and Restated Security and Pledge Agreement entered into by and among Akerna, MJA and the other parties thereto dated October 11, 2023 (the “Amended and Restated Security Agreement”). The Amended and Restated Security Agreement amended and restated the Security Agreement entered into by and among Akerna, MJA and other parties thereto dated April 28, 2023 (the “Original Security Agreement”) to reflect the entry into the Amended and Restated Note and change reference therein from the Original Note to the Amended and Restated Note. Except as set forth above, no other amendments, revisions or additions were made to the Original Security Agreement and all terms, conditions, covenants, representations and warranties contained in the Original Security Agreement shall remain in full force and effect. Amended and Restated Guaranty In connection to the Amended and Restated Note, certain subsidiaries of Akerna entered into an amended and restated guaranty agreement with MJA on October 11, 2023 (the “Amended and Restated Guaranty Agreement”) under which they will guarantee the obligations of the Company under the Amended and Restated Note. Waiver In connection to the Amended and Restated Note, the Amended and Restated Security Agreement, and the Amended and Restated Guaranty Agreement (collectively, “Amended and Restated New Note Transaction Documents”) and solely to permit Akerna to issue the Amended and Restated Note and execute and perform its obligations under the Amended and Restated New Note Transaction Documents and the Amended and Restated Subordination Agreement (as defined below), on October 11, 2023, each of the holders (each, a “Holder”) of Akerna’s senior secured convertible notes (the “2021 Notes”) issued pursuant to a Securities Purchase Agreement dated October 5, 2021 (“2021 SPA”) agreed to waive the prohibition on issuing indebtedness other than Permitted Indebtedness (as defined in the 2021 Notes) pursuant to Section 14(b) of the 2021 Notes and the prohibition permitting Liens (as defined in the 2021 Notes) to exist other than Permitted Liens (as defined in the 2021 Notes) pursuant to Section 14(c) of the 2021 Notes and Section 5(g)(v) of the 2021 SPA (the “Waiver”). Amended and Restated Subordination and Intercreditor Agreement In connection to the Amended and Restated New Note Transaction Documents, MJA, Akerna, and HT Investments MA LLC (the “Senior Agent”, together with the Holders, the “Senior Creditors”), as collateral agent under the 2021 SPA, each on behalf of the respective Holders, entered into an amended and restated subordination and intercreditor agreement dated October 11, 2023 (the “Amended and Restated Subordination Agreement”), whereby the parties agreed that the payment of any and all obligations, liabilities and indebtedness of every nature of Akerna, its applicable subsidiary and/or affiliates from time to time owed to MJA under Amended and Restated Subordinated Debt Documents (as defined in the Amended and Restated Subordination Agreement) will be subordinate and subject in right and time of payment, to the prior payment in full of all obligations, liabilities and indebtedness of every nature of Akerna, its applicable subsidiary and/or affiliates from time to time owed to any Senior Creditor under the Senior Debt Documents (as defined in the Amended and Restated Subordination Agreement). Restructuring In May 2022, we implemented a corporate restructuring initiative (the “Restructuring”) that resulted in a charge of $0.5 million associated with a reduction of our workforce by 59 employees, or approximately 33 percent of our headcount at that time. The charge associated with the Restructuring, all of which was settled in cash during the second quarter of 2022, was comprised primarily of severance benefits and related costs and was fully attributable to our continuing operations. Of the total amount incurred, $0.3 million was included in Sales and marketing costs, approximately $0.2 million was included in Product development costs and less than $0.1 million was included in each of Cost of revenue and General and administrative expenses in our condensed consolidated statements of operations, respectively. Financial Reporting and Classification As a result of the corporate actions described above, 365 Cannabis and LCA (together, the “Discontinued Group”) met the criteria to be considered “held for sale” as that term is defined in accounting principles generally accepted in the United States (“GAAP”). Accordingly. the assets and liabilities of these entities are classified and reflected on our condensed consolidated balance sheets as “held for sale” as of December 31, 2022 and their results of operations and the effect of their sales have been classified as “discontinued operations” in the condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022, respectively. Certain financial disclosures including major components of the assets and liabilities and results of operations of the Discontinued Group are provided in Note 12. Our core SMB and governmental business unit (MJF and Ample), the businesses for which we have committed to terminate operations (Viridian, Solo and Trellis) and our publicly-held parent holding company (Akerna Corp.) comprise our continuing operations. Collectively, these entities are presented as continuing operations for all periods presented herein and until such time that stockholder approval is received for the Sale Transaction and the Merger. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Basis of Presentation and Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 2 – Basis of Presentation and Summary of Significant Accounting Policies Going Concern and Management ’ In accordance with the Financial Accounting Standards Board’s (“FASB”) standard on going concern, Accounting Standard Update (“ASU”) No. 2014-15, Disclosure of Uncertainties about an Entity s Ability to Continue as Going Concern 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 in 2019 we have incurred recurring losses from operations, used cash from operating activities, and relied on capital raising transactions to continue ongoing operations. As of September 30, 2023, we had a working capital deficit of $11.2 million with $0.2 million in cash available to fund future operations. We anticipate continuing to generate losses from operations and using cash from operating activities for the foreseeable future, although at lower than historical levels as a result of Restructuring during the second quarter of 2022 and the curtailment of activities associated with our discontinued operations as well as those business that we have terminated. Furthermore, on March 22 and March 23, 2023, respectively, we received notices (the “Notices”) from The Nasdaq Stock Market LLC (the “Nasdaq”) indicating that (i) the bid price of the Company’s Common Stock is not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share (the “Bid Price Notice”) and (ii) the Company’s stockholders’ equity is below the minimum listing standard requirement of $2.5 million for continued listing on the Nasdaq (the “Stockholders Equity Notice”). The Notices have no immediate effect on the continued listing status of our Common Stock on the Nasdaq, and, therefore, our listing remains fully effective. We are provided a compliance period of 180 calendar days from the date of the Bid Price Notice, or until September 18, 2023, to regain compliance with the minimum closing bid requirement. Regarding the Stockholders Equity Notice, we submitted the required compliance plan to the listings staff of the Nasdaq on May 8, 2023 which was conditioned upon the successful completion of the Merger. On June 15, 2023, we received a letter from Nasdaq granting an extension through September 19, 2023 to complete the Merger. On September 19, 2023, the Company received a determination letter (the “Determination Letter”) from the Staff stating that it had not regained compliance with the minimum bid price requirement or the minimum listing standard requirement of $2.5 million and is not eligible for an additional 180-day period to regain compliance. Further, the Determination Letter indicates that unless the Company requests an appeal of this determination the trading of the Company’s common stock will be suspended at the opening of business on September 28, 2023, and a Form 25-NSE will be filed with the Securities and Exchange Commission (the “SEC”), which will remove the Company’s securities from listing and registration on The Nasdaq Capital Market. The Company had a deadline to appeal the Staff’s determination, pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series, no later than 4:00 pm Eastern Time on September 26, 2023. The Company successfully submitted a hearing request on September 25, 2023 and received a hearing date of November 9, 2023. This Hearing will stay any delisting or suspension action by the Staff pending the issuance of the Panel’s decision. The Company’s common stock will remain listed on Nasdaq, pending the outcome of the Hearing. There can be no assurance that the Panel will grant the Company’s request for continued listing, however on November 2, 2023 the Company received a document from the Nasdaq Staff indicating, based on their review it appears the that the post-transaction (referring to the Akerna Merger) entity will demonstrate compliance with the initial listing requirements, only in the event that the transaction successfully closes. As described in Note 1, we have committed to the Sale Transaction to complete our intended exit from the SaaS industry and to the Merger as the most favorable strategic alternative for our stockholders. There can be no assurance that we will be successful in executing and completing the Sale Transaction and the Merger and obtaining sufficient funding, if necessary, on terms acceptable to us to fund continuing operations through the anticipated closing of the aforementioned transactions, if at all. Our ability to continue as a going concern is dependent upon our ability to successfully execute the aforementioned transactions. Despite the comprehensive scope of our collective plans, the inherent risks associated with their successful execution are not sufficient to overcome substantial doubt about our ability to continue as a going concern for one year from the date of issuance of our consolidated financial statements. Accordingly, if we are unable to execute our plans within the timeframe described above, we may have to reduce or otherwise curtail our continuing operations which could significantly and adversely affect our results of operations or we may determine to dissolve and liquidate our assets. 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 the Senior Convertible Notes, such Holders may declare a default on the debt which could subject our assets to seizure and sale, negatively impacting our business. The accompanying condensed 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 we be unable to continue as a going concern. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with 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 and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023. The condensed consolidated balance sheet as of December 31, 2022, 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, 2022, which were included in our report on Form 10-K filed on March 20, 2023. Principles of Consolidation Our accompanying condensed consolidated financial statements include the accounts of Akerna and our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the condensed 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, credit loss reserves, impairment assessments, loss contingencies, valuation allowance associated with deferred tax assets, stock based compensation expense, 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 credit losses equal to the estimated uncollectible amounts based on historical information, current conditions, and reasonable and supportable forecasts. Receivables are written-off and charged against the recorded allowance when we have exhausted collection efforts without success. The allowance for credit losses was less than $0.1 million and $0.4 million as of September 30, 2023 and December 31, 2022, respectively. Concentrations of Credit Risk We grant credit in the normal course of business to customers in the United States and Canada. We periodically perform credit analysis and monitor the financial condition of our customers to reduce credit risk. During the nine months ended September 30, 2023 and 2022, two government clients accounted for 27 percent and 26 percent of total revenues, respectively. As of September 30, 2023, and December 31, 2022 two government clients accounted for none Warrants We evaluate warrants that we may issue from time to time under a two-step process provided in GAAP. The first step is intended to distinguish liabilities from equity. Warrants that could require cash settlement are generally classified as liabilities. For warrants that are considered outside of the scope of liability classification, a second step evaluates warrants as either a derivative subject to derivative accounting and disclosures or as equity instruments based upon the specific terms of the underlying warrant agreement and certain other factors associated with the our capital structure. Warrants that are indexed to the Company’s Common Stock while we meet certain other conditions with respect to our capital structure, including the ability to satisfy the warrant settlement obligations with a sufficient number of registered shares, do not qualify as derivatives and are classified as components of equity. Certain of the warrants sold by MTech in its initial public offering that were converted to Akerna warrants in connection with the Mergers (the “Private Warrants”) are not indexed to our common stock in the manner contemplated as described herein. As a result, the Private 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. We will continue to adjust this derivative liability for changes in the fair value until the earlier of (a) the exercise or expiration of the Private Warrants or (b) the redemption of the Private Warrants, at which time they will be reclassified to Additional paid-in capital. As of September 30, 2023, all of our other outstanding warrants, including certain other MTech warrants that were converted to Akerna warrants upon our formation (the “2019 Public Warrants”), are classified within stockholders’ equity. Segment Reporting We operate our 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 (“CODM”), our Chief Executive Officer, in deciding how to allocate resources and assess performance. Our CODM 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: As of As of Long-lived assets: United States $ 27,425 $ 48,879 Canada 2,909,966 4,527,581 Total $ 2,937,391 $ 4,576,460 Adoption of Recent Accounting Pronouncements The FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments Subsequent Events Management has evaluated all of our activities through the issuance date of our condensed consolidated financial statements and has concluded that, with the exception of incremental issuances of Common Stock as described below, no other subsequent events have occurred that would require recognition in our condensed consolidated financial statements or disclosure in the notes thereto. From October 1, 2023 through November 14, 2023, a total of $0.125 million of principal under the Senior Convertible Notes was converted into 250,000 shares of our Common Stock at a conversion price of $0.50 per share. |
Revenue and Contracts with Cust
Revenue and Contracts with Customers | 9 Months Ended |
Sep. 30, 2023 | |
Revenue and Contract with Customers [Abstract] | |
Revenue and Contracts with Customers | Note 3 – Revenue and Contracts with Customers Disaggregation of Revenue We derive the majority of our revenue from subscription fees paid for access to and usage of our 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. Our 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 our software at any time. The following tables summarizes our revenue disaggregation by customer type and geographic region for the following periods: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Government $ 627,803 $ 638,641 $ 1,943,195 $ 2,636,263 Non-government 1,454,750 2,425,738 5,029,914 8,162,872 $ 2,082,553 $ 3,064,379 $ 6,973,109 $ 10,799,135 Three Months Ended Nine Months Ended 2023 2022 2023 2022 United States $ 1,595,271 $ 2,295,362 $ 5,305,703 $ 267,468 Canada 487,282 769,017 1,667,406 2,531,667 $ 2,082,553 $ 3,064,379 $ 6,973,109 $ 10,799,135 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 GAAP 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 September 30, 2023 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 $3.0 million as of September 30, 2023, of which $2.9 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 current liabilities, net of any long-term portion that is included in noncurrent liabilities. The following table summarizes deferred revenue activity for the nine months ended September 30, 2023: As of Net additions Revenue As of Deferred revenue $ 730,573 4,719,118 (4,979,817 ) $ 469,874 Of the $5.0 million of revenue recognized in the nine months ended September 30, 2023, $0.7 million was included in deferred revenue at December 31, 2022. Costs to Obtain Contracts 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 a component of 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 nine months ended September 30, 2023: As of Additions Amortized As of Deferred contract costs $ 36,465 — (36,465 ) — |
Intangible Assets, net and Good
Intangible Assets, net and Goodwill | 9 Months Ended |
Sep. 30, 2023 | |
Intangible Assets Net And Goodwill Abstract | |
Intangible Assets, net and Goodwill | Note 4 – Intangible Assets, net and Goodwill Finite-lived Intangible Assets All of our finite-lived intangible assets, including capitalized software, as of September 30, 2023 and December 31, 2022 are attributable to Ample. We did not capitalize any software development costs during the three and nine months ended September 30, 2023; however, we capitalized $0.3 million and $2.5 million during the three and nine months ended September 30, 2022, respectively. We performed a two step impairment test for the asset groups that had indicators of impairment during the nine months ended September 30, 2023 and 2022 and while we did not record any impairments during the 2023 periods, we recorded impairments of intangible assets of $2.2 million and capitalized software of $1.0 million during the nine months ended September 30, 2022. Each of these impairments were attributable to the Solo platform. Goodwill Non-Enterprise Reporting Unit For the three and nine months ended September 30, 2023, $0.9M impairment to goodwill was recorded for our Non-Enterprise business unit as the fair value did not exceed the carrying value as of September 30, 2023 due to declines in market valuation during the current quarter. All of the goodwill as of September 30, 2023 and December 31, 2022 is attributable to Ample. For the three and nine months ended September 30, 2022, due primarily to declines in market valuation from December 31, 2021, we recorded impairment charges of $0 million and $23.5 million, respectively, of which $10.7 million was attributable to Ample, $11.2 million was attributable to Solo and $1.6 million was attributable to Trellis. Enterprise Reporting Unit For the three and nine months ended September 30, 2023, no |
Long Term Debt
Long Term Debt | 9 Months Ended |
Sep. 30, 2023 | |
Long Term Debt [Abstract] | |
Long Term Debt | Note 5 – Long Term Debt Long-term debt consisted of the following as of the dates presented: September 30, December 31, Total long-term debt $ 7,733,271 $ 14,607,000 Less: Current portion (7,733,271 ) (13,200,000 ) Noncurrent portion — $ 1,407,000 Senior Convertible Notes In October 2021, we entered into a Securities Purchase Agreement dated October 5, 2021 (“2021 SPA”) resulting in the issuance of the Senior Convertible Notes to two institutional investors in a private placement transaction. The Senior Convertible Notes were issued for an aggregate principal amount of $20.0 million for $18.0 million reflecting an original issue discount of 10 percent or $2.0 million. The net proceeds from the issuance of the Senior Convertible Notes were used to payoff and retire convertible notes that were issued in 2020 and fund acquisitions and continued investment in our technology infrastructure. The Senior Convertible Notes rank senior to all of our other and future indebtedness. The Senior Convertible Notes mature on October 4, 2024 and can be repaid in shares of Common Stock or cash. The Senior Convertible Notes are convertible into shares of Common Stock of Akerna at a conversion price of $4.75 per share effective October 4, 2022 which represents an adjustment, as required by the 2021 SPA, from $6.21 per share as a result of the offering of convertible preferred stock on that date. The Senior Convertible Notes are to be repaid in monthly installments. In connection with the 2021 SPA and the Senior Convertible Notes, we and certain of our subsidiaries entered into an amended Security and Pledge Agreement (the “Security and Pledge Agreement”) with the lead investor, in its capacity as collateral agent (in such capacity, the “Collateral Agent”) for all holders of the Senior Convertible Notes. The Security and Pledge 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”). Upon the occurrence of an “Event of Default” under the Security and Pledge Agreement, the Collateral Agent will have certain rights under the Security and Pledge Agreement including taking control of the Collateral and, in certain circumstances, selling the Collateral to cover obligations owed to the holders of the Senior Convertible Notes pursuant to its terms. An “Event of Default” under the Security and Pledge Agreement means (i) any defined event of default under any one or more of the transaction documents (including the Senior Convertible 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 Senior Convertible Notes or any other transaction document, or (iii) the breach of any representation, warranty or covenant by the Company under the Security and Pledge Agreement. 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 (“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 Common Stock for each of the two trading days with the lowest VWAP of the Common Stock during the ten 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 $10.80 per share. In connection with the Exchange Agreements that were entered into in January 2023, the conversion price of the Senior Convertible Notes was lowered to $1.20 per share from $4.75 per share through June 14, 2023 at which time it was further reduced to $0.50 per share for a limited period due to the offering of common shares in connection with private placement transaction (see Note 9). During the nine months ended September 30, 2023, the holders of the Senior Convertible Notes converted a total of $3.0 million of principal for 4,394,251 shares of Common Stock at the lowered prices. Method of Accounting and Activity During the Periods Upon the date that they were issued, we made an irrevocable election to apply the fair value option to account for the Senior Convertible Notes. Disclosures, including the assumptions used to determine the fair value of the Senior Convertible Notes, are provided in Note 10. During the nine months ended September 30, 2023, we made $7.9 million in principal payments on the Senior Convertible Notes, of which $4.9 million was settled in cash and the remaining $3.0 million was settled in Common Stock. During the nine months ended September 30, 2023, the fair value of the Senior Convertible Notes increased by $0.9 million. Of the adjustment, an increase of less than $0.1 million resulted from instrument- specific credit risk and was recognized as other comprehensive loss and accumulated in equity and an increase of $0.9 million was recognized in our consolidated statement of operations as a change in fair value of convertible notes. As of September 30, 2023, the fair value of the Senior Convertible Notes on our consolidated balance sheet was $7.6 million. During the nine months ended September 30, 2022, we made $5.4 million in principal payments on the Senior Convertible Notes, of which $1.5 million was settled in cash and the remaining $3.9 million was settled in Common Stock. During the nine months ended September 30, 2022, the fair value of the Senior Convertible Notes increased by $2.5 million. Of the adjustment, a decrease of $0.3 million resulted from instrument-specific credit risk and was recognized as other comprehensive income and accumulated in equity and an increase of $2.8 million was recognized in our consolidated statement of operations as a change in fair value of convertible notes. Secured Note and Ancillary Agreements On May 3, 2023, we received proceeds from a loan in the amount of $1.0 million from MJ Acquisition in connection with the Sale Transaction. Accordingly, we and MJ Acquisition entered into a $1.0 million secured promissory note (the “MJA Note”). The MJA Note bears simple interest at the rate of ten percent (10%) per annum from the date of issuance until repayment of the MJA Note which will be due and payable on April 28, 2024, or, upon completion of the Sale Transaction, in which case the MJA Note shall be deemed paid in full. Akerna’s obligations under the MJA Note have been secured pursuant to a Security and Pledge Agreement (the “Security Agreement”). The Security Agreement creates a security interest in all of the personal property of Akerna and certain of its subsidiaries. In addition, certain subsidiaries of Akerna entered into a guaranty agreement with MJ Acquisition (the “Guaranty Agreement”) under which they will guarantee the obligations of the Company under the Security Agreement and the MJA Note. On September 28, 2023 Akerna, Akerna Exchange and MJA entered into a first amendment to the SPA (the “Amendment”) which amends certain of the terms of the SPA. Principally, the Amendment amends the “Outside Date” as defined therein from September 29, 2023 to December 31, 2023; amends the SPA to reduce the amount of cash to be paid at closing from $4 million to $2 million; amends the SPA to add to the items of business in relation to which Akerna will seek stockholder approval at a special meeting of the stockholders the issuance of shares of common stock of Akerna to MJA under the Amended and Restated Note; adds a new Section which provides that prior to closing under the SPA, MJA will work in good faith on a best efforts basis across multiple interested parties on behalf of and with the express approval of Akerna to secure for Akerna the highest purchase price possible for the shares of Ample. Akerna shall cause the proceeds from such sale to be included in the assets of MJF effective as of the closing. Notwithstanding the foregoing, in the event that the shares of Ample are sold to a third-party for a net purchase price above $700,000, Akerna shall be entitled to retain all net proceeds in excess of $700,000; provides that, within 3 business days of the Amendment, MJA will loan Akerna an additional $500,000 to fund Akerna’s working capital requirements; and provides that concurrently with the funding of the additional $500,000 loan to Akerna, Akerna will issue and amended and restated convertible secured promissory note (“Amended and Restated Note”) to MJA which amends and restates the Secured Promissory Note dated April 28, 2023 by and between Akerna and MJA (the ‘Original Note”) to (A) increase the principal amount of the Original Note from $1,000,000 to $1,500,000, (B) provide for the forfeiture by MJA of the accrued and unpaid interest at the consummation of the transaction under the SPA and (C) provide that contemporaneous with and immediately prior to the consummation of the transactions under the SPA provide that contemporaneous with and immediately prior to the consummation of the transactions under the SPA, the principal amount of the shall convert into such quantity of shares of common stock of the Company as equals (1) $1,500,000, multiplied by (2) the 5-day volume weighted average price of the common stock of the Company as quoted on The Nasdaq Capital Market for the 5 trading days immediately preceding the date of the consummation of the transactions under the SPA; provided however, that in no case shall Akerna be required to issue to MJA such number of shares of common stock as would in the aggregate with all shares issued pursuant to the SPA and/or held or controlled by MJA exceed 19.99% of the number of issued and outstanding shares of common stock of the Seller on the date hereof without first obtaining the approval of stockholders of Akerna as required pursuant to the rules of the Nasdaq Stock Exchange. On October 11, 2023, Akerna issued an amended and restated convertible secured promissory note (“Amended and Restated Note”) to MJA which amends and restates the Secured Promissory Note dated April 28, 2023 by and between Akerna and MJA (the ‘Original Note”), whereby Akerna promises to pay to the order of MJA or its registered assigns the amount of $1,500,000. The Amended and Restated Note amended the Original Note to increase the principal amount of the Original Note from $1,000,000 to $1,500,000. In connection to the MJA Note, the Security Agreement, and the Guaranty Agreement (collectively, “New Note Transaction Documents”) and solely to permit Akerna to issue the MJA Note and execute and perform its obligations under the New Note Transaction Documents and a Subordination Agreement (as defined below), each of the Holders of the Senior Convertible Notes issued pursuant to the 2021 SPA agreed to waive the prohibition on issuing indebtedness other than Permitted Indebtedness (as defined in the Senior Convertible Notes) pursuant to Section 14(b) of the Senior Convertible Notes and the prohibition permitting Liens (as defined in the Senior Convertible Notes) to exist other than Permitted Liens (as defined in the Senior Convertible Notes) pursuant to Section 14(c) of the Senior Convertible Notes and Section 5(g)(v) of the 2021 SPA (the “Waiver”). In connection to the New Note Transaction Documents, MJ Acquisition, Akerna, and HT Investments MA LLC (the “Senior Agent”, together with the Holders, the “Senior Creditors”), as collateral agent under the 2021 SPA, each on behalf of the respective Holders, entered into a subordination and intercreditor agreement (the “Subordination Agreement”), whereby the parties agreed that the payment of any and all obligations, liabilities and indebtedness of every nature of Akerna, its applicable subsidiary and/or affiliates from time to time owed to MJ Acquisition under the Subordinated Debt Documents (as defined in the Subordination Agreement) will be subordinate and subject in right and time of payment, to the prior payment in full of all obligations under the Senior Convertible Notes. Pursuant to the Amended and Restated Note, Akerna’s obligations under the Amended and Restated Note are to be secured pursuant to an Amended and Restated Security and Pledge Agreement entered into by and among Akerna, MJA and the other parties thereto dated October 11, 2023 (the “Amended and Restated Security Agreement”). The Amended and Restated Security Agreement amends and restated the Security Agreement entered into by and among Akerna, MJA and other parties thereto dated April 28, 2023 (the “Original Security Agreement”) to reflect the entry into the Amended and Restated Note and change reference therein from the Original Note to the Amended and Restated Note. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes [Abstract] | |
Income Taxes | Note 6 – Income Taxes Our effective tax rate was 0.00% and 0.50% for the nine months ended September 30, 2023 and 2022, respectively. Differences between the statutory rate and our effective tax rate resulted from changes in valuation allowance and permanent differences for tax purposes in the treatment of certain nondeductible expenses. Our effective tax rate was impacted by indefinite-lived deferred tax liabilities in the 2022 period, resulting primarily from the acquisition of 365 Cannabis in 2021, 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 U.S. tax law. While there were none in the 2023 period, we paid nominal amounts for income taxes, net of refunds received, in certain state and national jurisdictions during the nine months ended September 30, 2022. Uncertain tax positions of less than $0.1 million were reversed during the nine months ended September 30, 2022 as a result of the Internal Revenue Service’s dismissal of potential penalties. |
Supplemental Balance Sheet Disc
Supplemental Balance Sheet Disclosures | 9 Months Ended |
Sep. 30, 2023 | |
Supplemental Balance Sheet Disclosures [Abstract] | |
Supplemental Balance Sheet Disclosures | Note 7 – Supplemental Balance Sheet Disclosures Prepaid expenses and other current assets consisted of the following as of the dates presented: September 30, 2023 December 31, 2022 Unbilled receivables $ 503,029 $ 544,212 Software and technology 58,254 168,792 Insurance 85,323 224,785 Professional services, dues and subscriptions 39,069 183,614 Deferred contract costs -- 36,465 Other 83,874 51,755 Total $ 769,549 $ 1,209,623 Accounts payable, accrued expenses, and other accrued liabilities consisted of the following as of the dates presented: September 30, December 31, 2022 Accounts payable $ 1,704,762 $ 1,510,287 Settlements and legal 928,715 950,213 Contractors 434,289 562,993 Compensation 439,617 368,440 Sales taxes 164,473 219,285 Professional fees 185,077 155,161 Interest and other 469,884 660,040 Total $ 4,326,727 $ 4,426,419 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 8 – Commitments and Contingencies Litigation On May 15 and May 23, 2023, Akerna and all its directors were named in two derivative lawsuits (McCaffrey v. Akerna et al. and Caller v. Akerna et al., Nos. 1:23-cv-01213-PAB and 1:23-cv-01300-KLM, respectively) filed in the United States District Court for the District of Colorado by stockholders Albert McCaffrey and Israel Caller, respectively, alleging that the disclosures made regarding the pending transactions with Gryphon and MJ Acquisition violate Sections 14(a) and 20(a) of the Securities and Exchange Act of 1934. The lawsuits contend that the disclosures omit material information regarding the transactions and seek injunctive relief and attorneys’ fees. The two actions have both been dismissed without prejudice on October 3, 2023 (Caller) and October 11, 2023 (McCaffrey). On January 13, 2023, Courier Plus Inc. d/b/a Dutchie (“Dutchie”) filed a complaint in the Court of Common Pleas, Dauphin County, Commonwealth of Pennsylvania against Akerna and MJF alleging unfair competition, tortious interference, and unjust enrichment with respect to MJF’s exclusive government contract with the Commonwealth of Pennsylvania. We filed a preliminary objection alleging serious defects, such as jurisdiction. The parties attended a hearing in July 2023. In October 2023, the courts dismissed the case but left some items available in the complaint for an appeal. Duthie has amended its complaint and filed again. We filed another preliminary objection to their amended complaint. Before and throughout this dispute, we have worked with the Commonwealth of Pennsylvania to ensure continued compliance with our contract. We intend to continue to defend our position vigorously and, at this time, do not believe an estimate of potential loss, if any, is appropriate. On April 2, 2021, TreCom Systems Group, Inc. (“TreCom”) filed suit against Akerna and MJF in the federal District Court for the Eastern District of Pennsylvania, seeking recovery of up to approximately $2.0 million for services allegedly provided pursuant to a Subcontractor Agreement between MJF and TreCom. MJF provided a notice of termination of the operative Subcontractor Agreement on August 4, 2020. MJF disputes the validity of TreCom’s claims 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 the court denied. Akerna intends to vigorously defend against TreCom’s claims and pursue its own claims. With respect to the TreCom matter, we established a loss contingency of $0.2 million in 2021 which remains outstanding as of September 30, 2023. As of September 30, 2023, and through the date these condensed consolidated financial statements were issued, there were no other legal proceedings requiring recognition or disclosure in the condensed consolidated financial statements. Other In connection with the Sale Transaction and the Merger, we have a commitment to compensate our financial advisor for up to three percent of the transaction value in success fees, subject to a minimum of $1.5 million, should the transactions be completed. In addition, we are party to arrangements with our executive officers and certain other administrative employees pursuant to their employment, retention and transaction success agreements that may result in the receipt by such executive officers and employees of cash severance payments and other transaction success bonuses and benefits with a total value of approximately $1.2 million (collectively and not individually), but not including the accelerated vesting of any equity awards held by those officers. Operating Leases During the first half of 2022, we began negotiations to terminate the 365 Cannabis office lease in Las Vegas, Nevada. We established an obligation of $0.5 million which is management’s best estimate of the costs to exit the lease. As of September 30, 2023, the lease termination matter remains unresolved. |
Stockholders' Deficit
Stockholders' Deficit | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Deficit [Abstract] | |
Stockholders' Deficit | Note 9 – Stockholders’ Deficit Common and Preferred Stock We have one single class of Common Stock of which 150,000,000 shares are authorized with a par value of $0.0001 per share. 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 our creditors 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. We also have 5,000,000 authorized shares of preferred stock, $0.0001 par value per share, of which one share of special voting preferred stock (the “Special Voting Preferred Stock”) is issued and outstanding (see below). On June 14, 2023, we entered into a transaction for a private investment in our public equity (the “PIPE Investment”) whereby 1 million shares of Common Stock were issued to the investor at $0.50 per share for total cash proceeds of $0.5 million. The proceeds from the PIPE Investment were used to pay a termination fee and related expenses of $0.2 million to POSaBIT in connection with the termination of the MJF- Ample SPA and the remainder was used for ongoing operating expenses. Special Voting Preferred Stock and Exchangeable Shares In connection with a prior transaction in which we acquired Ample in exchange for 3,294,574 shares of exchangeable shares (the “Exchangeable Shares”), we issued of a single share of our special voting preferred stock (the “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 that each Exchangeable Share is exchangeable on a 20-for-one basis for a share of Akerna Common Stock, subject to certain limitations and adjustments. Each holder of Exchangeable Shares effectively has the ability to cast votes along with holders of Akerna Common Stock. The Exchangeable Shares do not have a par value. 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 vote 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. During the nine months ended September 30, 2023, certain Ample shareholders exchanged a total of 36,168 Exchangeable Shares with a value of $277,450 for 1,813 shares of Akerna Common Stock. The exchanges were accounted for as equity transactions and we did not recognize a gain or loss on these transactions. As of September 30, 2023, there were a total of 249,504 exchangeable shares remaining as issued and outstanding which could be exchanged for 12,470 shares of Akerna Common Stock. ATM Program In 2021, we entered into an Equity Distribution Agreement with Oppenheimer & Co. Inc. (“Oppenheimer”) and A.G.P./Alliance Global Partners (“AGP”) pursuant to which we could offer and sell from time to time, up to $25 million of shares of our Common Stock through an “at the market” equity offering program (the “2021 ATM Program”). From its inception through September 23, 2022, a total of 118,629 shares of Common Stock with an aggregate gross purchase price of $2.7 million, including 90,809 shares with an aggregate gross purchase price of $0.8 million sold during 2022, were sold under the 2021 ATM Program. On September 23, 2022, we, Oppenheimer and AGP mutually agreed to terminate the 2021 ATM Program. On September 28, 2022, we entered into a new agreement with AGP pursuant to which we may offer and sell up to $20.0 million of shares of our Common Stock (the “2022 ATM Program”) from time to time through AGP as the sales agent for which they will receive a commission of 3.0% of the gross proceeds. The 2022 ATM Program is currently limited to less than $0.4 million due to certain restrictions imposed by the registration statement underlying the offering (the “Baby Shelf Limitation”). Under the Baby Shelf Limitation, we may not offer Common Stock under the registration statement with a value of more than one-third of the aggregate market value of our Common Stock held by non-affiliates in any twelve-month period, so long as the aggregate market value of our Common Stock held by non-affiliates is less than $75.0 million. Net proceeds from the sale of Common Stock under the 2022 ATM Program have been and may continue to be used for general corporate purposes including working capital, marketing, product development and capital expenditures. Through December 31, 2022, we sold a total of 552,148 shares of Common Stock with an aggregate gross purchase price of $1.1 million under the 2022 ATM Program. There were no offerings of Common Stock under the 2022 ATM program during the nine months ended September 30, 2023. 2022 Unit Offering On July 5, 2022, we completed the 2022 Unit Offering which was comprised of an aggregate of (i) 29,382,861 units consisting of 1,469,143 shares of Common Stock together with Common Stock warrants (the “Common Warrants”) to purchase up to 1,469,143 shares of Common Stock (together, the “Units”) and (ii) 14,095,400 pre-funded units, consisting of 14,095,400 pre-funded warrants (“Pre-funded Warrants”) to purchase 704,770 shares of Common Stock, together with Common Warrants to purchase up to 704,770 shares of Common Stock (together, the “Pre- funded Units”). The Units were sold at a public offering price of $0.23 per unit and the Pre-funded Units were sold at a public offering price of $0.2299 per pre-funded unit. The Pre-Funded Warrants were exercised immediately thereafter at their nominal exercise price of $0.002 per share. The Common Warrants accompanying each of the Units and Pre-funded Units were issued separately and are immediately tradeable separately upon issuance. The Common Warrants had an original exercise price of $4.60 per share subject to certain adjustments, are immediately exercisable and will expire five In addition, we issued to the Underwriter warrants to purchase additional shares of Common Stock (the “Underwriter Warrants”). The Underwriter Warrants provided for the purchase of up to 108,696 shares of Common Stock. The Underwriter Warrants are exercisable at any time and from time to time, in whole or in part, commencing from six months after June 29, 2022 (the “Effective Date”) and ending five As of September 30, 2023, a total of 45,652,174 warrants exercisable for 2,282,609 shares of Common Stock remain outstanding from the 2022 Unit Offering including 43,478,261 Common Warrants exercisable for 2,173,913 shares of Common Stock and 2,173,913 Underwriter Warrants exercisable for 108,696 shares of Common Stock. In accordance with our policy, we assessed the warrants issued in connection with the 2022 Unit Offering and determined that there are no instances outside of the Company’s control that could require cash settlement. In addition, we determined that the warrants issued in connection with the 2022 Unit Offering do not meet the definition of a derivative as they are indexed to the Company’s Common Stock and they satisfy all of the additional qualifications to be classified within equity. Through September 30, 2023, the Common Warrants and Underwriter Warrants remain classified within equity. 2019 Warrants In connection with MTech’s initial public offering, MTech sold units consisting 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. Concurrently with MTech’s initial public offering, MTech sold additional units on a private offering basis. Each of these units 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. Upon completion of the Mergers between MTech and MJF on June 17, 2019, the MTech Public Warrants and the MTech Private Warrants were converted to the 2019 Public Warrants and Private Warrants, 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. Concurrent with our 20-for-1 reverse stock split during the fourth quarter of 2022, the exchange ratio of the 2019 Public Warrants and the Private Warrants was changed to 20 warrants for one share of Common Stock. The Private Warrants have contingent exercise provisions such that when the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company. Accordingly, the requirements for accounting for the Private Warrants as equity are not satisfied and the Private Warrants have been reflected on our consolidated balance sheets as a derivative liability and are not included the summary of outstanding warrants presented below. Outstanding Warrants The following table summarizes our warrants outstanding as of the dates presented: Exercise Expiration Balance Issued Exercised Expired Balance September 30, 2023 2019 Public Warrants (1) $ 230.00 6/19/2024 5,813,804 — — — 5,813,804 2022 Unit Offering Common Warrants (2) $ 0.37 6/29/2027 43,478,261 — — — 43,478,261 Underwriter Warrants (2) $ 0.37 6/29/2027 2,173,913 — — — 2,173,913 51,465,978 — — — 51,465,978 (1) The 2019 Public Warrants are exercisable for 290,690 shares of Common Stock at $230.00 per share or a ratio of 20 warrants for one share of Common Stock. (2) In connection with the PIPE Investment, the exercise price of the Common Warrants and Underwriter Warrants was reduced from $0.88 per shares to $0.37 per share and are exercisable for a combined amount of 2,282,609 shares of Common Stock at $0.37 per share or a ratio of 20 warrants for one share of Common Stock. |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value [Abstract] | |
Fair Value | Note 10 – Fair Value Fair Value Option Election – Convertible Notes We elected to account for the Senior Convertible Notes by applying 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 loss 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 statements of operations under the caption, Change in fair value of convertible notes. For the Senior Convertible Notes, which are measured at fair value categorized within Level 3 of the fair value hierarchy, the following represents a reconciliation of the fair values for the three and nine months ended September 30, 2023 and September 30, 2022: Three Months Nine Months Ended September 30, Ended September 30, 2023 2022 2023 2022 Fair value balance at beginning of period $ 9,265,000 $ 13,388,000 $ 14,607,000 $ 17,305,000 Principal payments in cash and Common Stock (1,500,000 ) --- (7,929,457 ) (5,380,000 ) Change in fair value reported in the statements of operations (185,000 ) 1,113,000 863,457 2,840,000 Change in fair value reported in other comprehensive loss 3,000 (26,000 ) 42,000 (290,000 ) Fair value balance at end of period $ 7,583,000 $ 14,475,000 $ 7,583,000 $ 14,475,000 The estimated fair value of the Senior Convertible Notes was computed using Monte Carlo simulations, 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 Senior Convertible Notes reflect our assumptions about the assumptions that market participants would use in valuing the Senior Convertible Notes as of its issuance date and subsequent reporting periods. We estimated the fair value by using the following key inputs to the Monte Carlo Simulation Models: Fair Value Assumptions - Convertible Notes September 30, December 31, Face value principal payable $ 6,733,271 $ 14,662,727 Original conversion price $ 4.75 $ 4.75 Value of Common Stock $ 0.22 $ 0.69 Expected term (years) 1.0 1.8 Volatility 102 % 77 % Market yield 41.2 % 44.3 to 43.9 % Risk free rate 4.7 % 4.4 % Issue date October 5, 2021 October 5, 2021 Maturity date October 5, 2024 October 5, 2024 Fair Value Measurement – Private Warrants For the Private Warrants, which are classified as derivative liabilities on our condensed consolidated balance sheets and are measured at fair value categorized within Level 3 of the fair value hierarchy, the following represents a reconciliation of the fair values for the three and nine months ended September 30, 2023 and September 30, 2022: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Fair value balance at beginning of period $ — $ 45,127 $ — $ 63,178 Change in fair value reported in the statements of operations — (33,845 ) — (51,896 ) Fair value balance at end of period $ — $ 11,282 $ — $ 11,282 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 recognize changes to the derivative 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. The value of the private warrants was assessed to be zero as of September 30, 2023. We estimated the fair value by using the following key inputs: Fair Value Assumptions - Private Warrants September 30, December 30, Number of Private Warrants 225,635 225,635 Original conversion price $ 230 $ 230.00 Value of Common Stock $ 0.605 $ 0.69 Expected term (years) 0.96 1.46 Volatility NM NM Risk free rate NM NM NM - Not meaningful. Fair Value Measurement – 2022 Unit Offering Common and Underwriter Warrants The fair value of the Common Warrants and Underwriter Warrants issued in connection with our 2022 Unit Offering represent a measurement within Level 3 of the fair value hierarchy and were estimated based on the following key inputs as of the date of the 2022 Unit Offering: Fair Value Assumptions - 2022 Common and Underwriter Warrants July 5, Exercise price $ 4.60 Expected term (years) 5.0 Volatility 136.9 % We utilized a Black-Scholes-Merton option pricing 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 Common and Underwriter Warrants reflect our estimates regarding the assumptions that market participants would have used in valuing the Warrants as of the date of the 2022 Unit Offering or July 5, 2022. The fair value of the Common Warrants and Underwriter Warrants was recorded in equity as a component of the net proceeds received from the 2022 Unit Offering (see Note 9). |
Earning per share
Earning per share | 9 Months Ended |
Sep. 30, 2023 | |
Earning per share [Abstract] | |
Earning per share | Note 11 – Earning per Share During the three and nine months ended September 30, 2023 and 2022, we used the two-class method to compute net loss per share because we issued securities other than common stock that are 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 our acquired ownership interest in Ample. The two-class method requires earnings for the period to be allocated between the 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 equivalents, including warrants, restricted stock, restricted stock units, and shares of common stock issuable upon conversion of our Senior 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 the Senior 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 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 for the periods presented: Nine Months Ended 2023 2022 Shares issuable upon exchange of Exchangeable Shares 12,476 14,284 Shares of common stock issuable upon conversion of convertible notes 13,466,543 2,354,268 Warrants 2019 Public Warrants 290,690 290,690 2022 Unit Offering - Common Warrants 2,173,913 2,173,913 2022 Unit Offering - Underwriter Warrants 108,696 108,696 Unvested restricted stock units 6,498 730 Unvested restricted stock awards — 334 Total 16,058,816 4,942,916 |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations [Abstract] | |
Discontinued Operations | Note 12 – Discontinued Operations During the quarter ended December 31, 2022, we committed to a strategic shift in our business strategy for 2023 and beyond including the sale of 365 Cannabis and LCA, or the Discontinued Group. Subsequent to the sales of 365 Cannabis and LCA that were completed in January 2023, we have no future involvement or relationships with these businesses. As a result of these actions, the assets and liabilities and results of operations of the Discontinued Group have been classified as held for sale and discontinued operations, respectively, for all periods presented. The following table presents the major classes of assets and liabilities of the Discontinued Group: As of As of 2023 2022 Cash and restricted cash $ — $ 305,500 Accounts receivable, net — 112,444 Prepaid expenses & other current assets — 578,393 Fixed assets — 63,764 Capitalized software, net — 828,555 Intangible assets, net — 3,241,372 Total assets held for sale $ — $ 5,130,028 Accounts payable, accrued expenses and other current liabilities $ — $ 1,034,426 Deferred revenue — 994,713 Deferred revenue, noncurrent — 217,083 Total liabilities held for sale $ — $ 2,246,222 The following table summarizes the results of operations of the Discontinued Group: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Revenue $ — $ 2,348,423 $ 214,346 $ 7,650,389 Cost of revenue — 575,076 10,119 1,916,454 Gross profit — 1,773,347 204,227 5,733,935 Product development — 414,948 117,500 1,290,618 Sales and marketing — 928,221 171,753 3,319428 General and administrative — (3,006,140 ) 4,032 (2,596,946 ) Depreciation and amortization — 567,259 24,507 1,619,478 Impairment of long-lived assets — — — 9,037,642 Other expense (income), net — 849 1,833 (304,526 ) Gain (loss) from discontinued operations before income taxes — 2,869,908 (115,398 ) (7,240,811 ) Income tax benefit — — — — Gain (loss) from discontinued operations, net of tax — 2,869,908 (115,398 ) (7,240,811 ) Gain on sale of discontinued operations, net of tax — — 212,601 — Net gain (loss) from discontinued operations, net of tax $ — $ 2,869,908 $ 97,203 $ (7,720,811 ) The impairment of long-lived assets for the nine months ended September 30, 2023 is attributable to goodwill associated with 365 Cannabis ($9.0 million) and LCA (less than $0.1 million). Other expense (income), net includes a reversal of bad debt expense of $0.3 million during the 2022 periods. We recognized a gain on the disposition of the Discontinued Group as the sum of the cash proceeds received, or $0.6 million, and the termination and release of the Earn-out Obligation, or $2.3 million, exceeded the carrying values of $2.7 million attributable to the net assets of the Discontinued Group upon their dispositions in January 2023. While there were none during the nine months ended September 30, 2023, the Discontinued Group incurred capital expenditures for capitalized software assets of $0.9 million for the nine months ended September 30, 2022. There were no material non-cash investing and financing activities attributable to the Discontinued Group for the nine months ended September 30, 2023 and 2022, respectively. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Basis of Presentation and Summary of Significant Accounting Policies [Abstract] | |
Going Concern and Management’s Liquidity Plans | Going Concern and Management ’ In accordance with the Financial Accounting Standards Board’s (“FASB”) standard on going concern, Accounting Standard Update (“ASU”) No. 2014-15, Disclosure of Uncertainties about an Entity s Ability to Continue as Going Concern 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 in 2019 we have incurred recurring losses from operations, used cash from operating activities, and relied on capital raising transactions to continue ongoing operations. As of September 30, 2023, we had a working capital deficit of $11.2 million with $0.2 million in cash available to fund future operations. We anticipate continuing to generate losses from operations and using cash from operating activities for the foreseeable future, although at lower than historical levels as a result of Restructuring during the second quarter of 2022 and the curtailment of activities associated with our discontinued operations as well as those business that we have terminated. Furthermore, on March 22 and March 23, 2023, respectively, we received notices (the “Notices”) from The Nasdaq Stock Market LLC (the “Nasdaq”) indicating that (i) the bid price of the Company’s Common Stock is not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share (the “Bid Price Notice”) and (ii) the Company’s stockholders’ equity is below the minimum listing standard requirement of $2.5 million for continued listing on the Nasdaq (the “Stockholders Equity Notice”). The Notices have no immediate effect on the continued listing status of our Common Stock on the Nasdaq, and, therefore, our listing remains fully effective. We are provided a compliance period of 180 calendar days from the date of the Bid Price Notice, or until September 18, 2023, to regain compliance with the minimum closing bid requirement. Regarding the Stockholders Equity Notice, we submitted the required compliance plan to the listings staff of the Nasdaq on May 8, 2023 which was conditioned upon the successful completion of the Merger. On June 15, 2023, we received a letter from Nasdaq granting an extension through September 19, 2023 to complete the Merger. On September 19, 2023, the Company received a determination letter (the “Determination Letter”) from the Staff stating that it had not regained compliance with the minimum bid price requirement or the minimum listing standard requirement of $2.5 million and is not eligible for an additional 180-day period to regain compliance. Further, the Determination Letter indicates that unless the Company requests an appeal of this determination the trading of the Company’s common stock will be suspended at the opening of business on September 28, 2023, and a Form 25-NSE will be filed with the Securities and Exchange Commission (the “SEC”), which will remove the Company’s securities from listing and registration on The Nasdaq Capital Market. The Company had a deadline to appeal the Staff’s determination, pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series, no later than 4:00 pm Eastern Time on September 26, 2023. The Company successfully submitted a hearing request on September 25, 2023 and received a hearing date of November 9, 2023. This Hearing will stay any delisting or suspension action by the Staff pending the issuance of the Panel’s decision. The Company’s common stock will remain listed on Nasdaq, pending the outcome of the Hearing. There can be no assurance that the Panel will grant the Company’s request for continued listing, however on November 2, 2023 the Company received a document from the Nasdaq Staff indicating, based on their review it appears the that the post-transaction (referring to the Akerna Merger) entity will demonstrate compliance with the initial listing requirements, only in the event that the transaction successfully closes. As described in Note 1, we have committed to the Sale Transaction to complete our intended exit from the SaaS industry and to the Merger as the most favorable strategic alternative for our stockholders. There can be no assurance that we will be successful in executing and completing the Sale Transaction and the Merger and obtaining sufficient funding, if necessary, on terms acceptable to us to fund continuing operations through the anticipated closing of the aforementioned transactions, if at all. Our ability to continue as a going concern is dependent upon our ability to successfully execute the aforementioned transactions. Despite the comprehensive scope of our collective plans, the inherent risks associated with their successful execution are not sufficient to overcome substantial doubt about our ability to continue as a going concern for one year from the date of issuance of our consolidated financial statements. Accordingly, if we are unable to execute our plans within the timeframe described above, we may have to reduce or otherwise curtail our continuing operations which could significantly and adversely affect our results of operations or we may determine to dissolve and liquidate our assets. 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 the Senior Convertible Notes, such Holders may declare a default on the debt which could subject our assets to seizure and sale, negatively impacting our business. The accompanying condensed 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 we be unable to continue as a going concern. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with 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 and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023. The condensed consolidated balance sheet as of December 31, 2022, 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, 2022, which were included in our report on Form 10-K filed on March 20, 2023. |
Principles of Consolidation | Principles of Consolidation Our accompanying condensed consolidated financial statements include the accounts of Akerna and our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the condensed 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, credit loss reserves, impairment assessments, loss contingencies, valuation allowance associated with deferred tax assets, stock based compensation expense, 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 credit losses equal to the estimated uncollectible amounts based on historical information, current conditions, and reasonable and supportable forecasts. Receivables are written-off and charged against the recorded allowance when we have exhausted collection efforts without success. The allowance for credit losses was less than $0.1 million and $0.4 million as of September 30, 2023 and December 31, 2022, respectively. |
Concentrations of Credit Risk | Concentrations of Credit Risk We grant credit in the normal course of business to customers in the United States and Canada. We periodically perform credit analysis and monitor the financial condition of our customers to reduce credit risk. During the nine months ended September 30, 2023 and 2022, two government clients accounted for 27 percent and 26 percent of total revenues, respectively. As of September 30, 2023, and December 31, 2022 two government clients accounted for none |
Warrants | Warrants We evaluate warrants that we may issue from time to time under a two-step process provided in GAAP. The first step is intended to distinguish liabilities from equity. Warrants that could require cash settlement are generally classified as liabilities. For warrants that are considered outside of the scope of liability classification, a second step evaluates warrants as either a derivative subject to derivative accounting and disclosures or as equity instruments based upon the specific terms of the underlying warrant agreement and certain other factors associated with the our capital structure. Warrants that are indexed to the Company’s Common Stock while we meet certain other conditions with respect to our capital structure, including the ability to satisfy the warrant settlement obligations with a sufficient number of registered shares, do not qualify as derivatives and are classified as components of equity. Certain of the warrants sold by MTech in its initial public offering that were converted to Akerna warrants in connection with the Mergers (the “Private Warrants”) are not indexed to our common stock in the manner contemplated as described herein. As a result, the Private 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. We will continue to adjust this derivative liability for changes in the fair value until the earlier of (a) the exercise or expiration of the Private Warrants or (b) the redemption of the Private Warrants, at which time they will be reclassified to Additional paid-in capital. As of September 30, 2023, all of our other outstanding warrants, including certain other MTech warrants that were converted to Akerna warrants upon our formation (the “2019 Public Warrants”), are classified within stockholders’ equity. |
Segment Reporting | Segment Reporting We operate our 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 (“CODM”), our Chief Executive Officer, in deciding how to allocate resources and assess performance. Our CODM 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: As of As of Long-lived assets: United States $ 27,425 $ 48,879 Canada 2,909,966 4,527,581 Total $ 2,937,391 $ 4,576,460 |
Adoption of Recent Accounting Pronouncements | Adoption of Recent Accounting Pronouncements The FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments |
Subsequent Events | Subsequent Events Management has evaluated all of our activities through the issuance date of our condensed consolidated financial statements and has concluded that, with the exception of incremental issuances of Common Stock as described below, no other subsequent events have occurred that would require recognition in our condensed consolidated financial statements or disclosure in the notes thereto. From October 1, 2023 through November 14, 2023, a total of $0.125 million of principal under the Senior Convertible Notes was converted into 250,000 shares of our Common Stock at a conversion price of $0.50 per share. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Basis of Presentation and Summary of Significant Accounting Policies [Abstract] | |
Schedule of Intangible Assets by Geographical Location | In the following table, we disclose the combined gross balance of our fixed assets, capitalized software, and intangible assets by geographical location: As of As of Long-lived assets: United States $ 27,425 $ 48,879 Canada 2,909,966 4,527,581 Total $ 2,937,391 $ 4,576,460 |
Revenue and Contracts with Cu_2
Revenue and Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue and Contract with Customers [Abstract] | |
Schedule of Revenue Disaggregation by Customer Type and Geographic Region | The following tables summarizes our revenue disaggregation by customer type and geographic region for the following periods: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Government $ 627,803 $ 638,641 $ 1,943,195 $ 2,636,263 Non-government 1,454,750 2,425,738 5,029,914 8,162,872 $ 2,082,553 $ 3,064,379 $ 6,973,109 $ 10,799,135 Three Months Ended Nine Months Ended 2023 2022 2023 2022 United States $ 1,595,271 $ 2,295,362 $ 5,305,703 $ 267,468 Canada 487,282 769,017 1,667,406 2,531,667 $ 2,082,553 $ 3,064,379 $ 6,973,109 $ 10,799,135 |
Schedule of Deferred Revenue Activity | The following table summarizes deferred revenue activity for the nine months ended September 30, 2023: As of Net additions Revenue As of Deferred revenue $ 730,573 4,719,118 (4,979,817 ) $ 469,874 |
Schedule of Deferred Contract Cost Activity | The following table summarizes deferred contract cost activity for the nine months ended September 30, 2023: As of Additions Amortized As of Deferred contract costs $ 36,465 — (36,465 ) — |
Long Term Debt (Tables)
Long Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Long Term Debt [Abstract] | |
Schedule of Long Term Debt | Long-term debt consisted of the following as of the dates presented: September 30, December 31, Total long-term debt $ 7,733,271 $ 14,607,000 Less: Current portion (7,733,271 ) (13,200,000 ) Noncurrent portion — $ 1,407,000 |
Supplemental Balance Sheet Di_2
Supplemental Balance Sheet Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Supplemental Balance Sheet Disclosures [Abstract] | |
Schedule of Supplemental Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following as of the dates presented: September 30, 2023 December 31, 2022 Unbilled receivables $ 503,029 $ 544,212 Software and technology 58,254 168,792 Insurance 85,323 224,785 Professional services, dues and subscriptions 39,069 183,614 Deferred contract costs -- 36,465 Other 83,874 51,755 Total $ 769,549 $ 1,209,623 |
Schedule of Accounts Payable, Accrued Expenses, and Other Accrued Liabilities | Accounts payable, accrued expenses, and other accrued liabilities consisted of the following as of the dates presented: September 30, December 31, 2022 Accounts payable $ 1,704,762 $ 1,510,287 Settlements and legal 928,715 950,213 Contractors 434,289 562,993 Compensation 439,617 368,440 Sales taxes 164,473 219,285 Professional fees 185,077 155,161 Interest and other 469,884 660,040 Total $ 4,326,727 $ 4,426,419 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Deficit [Abstract] | |
Schedule of Warrants Outstanding | The following table summarizes our warrants outstanding as of the dates presented: Exercise Expiration Balance Issued Exercised Expired Balance September 30, 2023 2019 Public Warrants (1) $ 230.00 6/19/2024 5,813,804 — — — 5,813,804 2022 Unit Offering Common Warrants (2) $ 0.37 6/29/2027 43,478,261 — — — 43,478,261 Underwriter Warrants (2) $ 0.37 6/29/2027 2,173,913 — — — 2,173,913 51,465,978 — — — 51,465,978 (1) The 2019 Public Warrants are exercisable for 290,690 shares of Common Stock at $230.00 per share or a ratio of 20 warrants for one share of Common Stock. (2) In connection with the PIPE Investment, the exercise price of the Common Warrants and Underwriter Warrants was reduced from $0.88 per shares to $0.37 per share and are exercisable for a combined amount of 2,282,609 shares of Common Stock at $0.37 per share or a ratio of 20 warrants for one share of Common Stock. |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value (Tables) [Line Items] | |
Schedule of Reconciliation of Fair Values | For the Senior Convertible Notes, which are measured at fair value categorized within Level 3 of the fair value hierarchy, the following represents a reconciliation of the fair values for the three and nine months ended September 30, 2023 and September 30, 2022: Three Months Nine Months Ended September 30, Ended September 30, 2023 2022 2023 2022 Fair value balance at beginning of period $ 9,265,000 $ 13,388,000 $ 14,607,000 $ 17,305,000 Principal payments in cash and Common Stock (1,500,000 ) --- (7,929,457 ) (5,380,000 ) Change in fair value reported in the statements of operations (185,000 ) 1,113,000 863,457 2,840,000 Change in fair value reported in other comprehensive loss 3,000 (26,000 ) 42,000 (290,000 ) Fair value balance at end of period $ 7,583,000 $ 14,475,000 $ 7,583,000 $ 14,475,000 |
Schedule of Fair Value by Using Key Inputs | For the Private Warrants, which are classified as derivative liabilities on our condensed consolidated balance sheets and are measured at fair value categorized within Level 3 of the fair value hierarchy, the following represents a reconciliation of the fair values for the three and nine months ended September 30, 2023 and September 30, 2022: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Fair value balance at beginning of period $ — $ 45,127 $ — $ 63,178 Change in fair value reported in the statements of operations — (33,845 ) — (51,896 ) Fair value balance at end of period $ — $ 11,282 $ — $ 11,282 |
Convertible Debt [Member] | |
Fair Value (Tables) [Line Items] | |
Schedule of Fair Value by Using Key Inputs | We estimated the fair value by using the following key inputs to the Monte Carlo Simulation Models: Fair Value Assumptions - Convertible Notes September 30, December 31, Face value principal payable $ 6,733,271 $ 14,662,727 Original conversion price $ 4.75 $ 4.75 Value of Common Stock $ 0.22 $ 0.69 Expected term (years) 1.0 1.8 Volatility 102 % 77 % Market yield 41.2 % 44.3 to 43.9 % Risk free rate 4.7 % 4.4 % Issue date October 5, 2021 October 5, 2021 Maturity date October 5, 2024 October 5, 2024 |
Private warrant [Member] | |
Fair Value (Tables) [Line Items] | |
Schedule of Fair Value by Using Key Inputs | We estimated the fair value by using the following key inputs: Fair Value Assumptions - Private Warrants September 30, December 30, Number of Private Warrants 225,635 225,635 Original conversion price $ 230 $ 230.00 Value of Common Stock $ 0.605 $ 0.69 Expected term (years) 0.96 1.46 Volatility NM NM Risk free rate NM NM |
Common Warrants and Underwriter Warrants [Member] | |
Fair Value (Tables) [Line Items] | |
Schedule of Fair Value Measurement Unit Offering Common and Underwriter Warrants | The fair value of the Common Warrants and Underwriter Warrants issued in connection with our 2022 Unit Offering represent a measurement within Level 3 of the fair value hierarchy and were estimated based on the following key inputs as of the date of the 2022 Unit Offering: Fair Value Assumptions - 2022 Common and Underwriter Warrants July 5, Exercise price $ 4.60 Expected term (years) 5.0 Volatility 136.9 % |
Earning per share (Tables)
Earning per share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earning per share [Abstract] | |
Schedule of Diluted Earnings Per Share | The table below details potentially outstanding shares on a fully diluted basis that were not included in the calculation of diluted earnings per share for the periods presented: Nine Months Ended 2023 2022 Shares issuable upon exchange of Exchangeable Shares 12,476 14,284 Shares of common stock issuable upon conversion of convertible notes 13,466,543 2,354,268 Warrants 2019 Public Warrants 290,690 290,690 2022 Unit Offering - Common Warrants 2,173,913 2,173,913 2022 Unit Offering - Underwriter Warrants 108,696 108,696 Unvested restricted stock units 6,498 730 Unvested restricted stock awards — 334 Total 16,058,816 4,942,916 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations [Abstract] | |
Schedule of Assets and Liabilities of the Discontinued Group | The following table presents the major classes of assets and liabilities of the Discontinued Group: As of As of 2023 2022 Cash and restricted cash $ — $ 305,500 Accounts receivable, net — 112,444 Prepaid expenses & other current assets — 578,393 Fixed assets — 63,764 Capitalized software, net — 828,555 Intangible assets, net — 3,241,372 Total assets held for sale $ — $ 5,130,028 Accounts payable, accrued expenses and other current liabilities $ — $ 1,034,426 Deferred revenue — 994,713 Deferred revenue, noncurrent — 217,083 Total liabilities held for sale $ — $ 2,246,222 |
Schedule of Operations of the Discontinued Group | The following table summarizes the results of operations of the Discontinued Group: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Revenue $ — $ 2,348,423 $ 214,346 $ 7,650,389 Cost of revenue — 575,076 10,119 1,916,454 Gross profit — 1,773,347 204,227 5,733,935 Product development — 414,948 117,500 1,290,618 Sales and marketing — 928,221 171,753 3,319428 General and administrative — (3,006,140 ) 4,032 (2,596,946 ) Depreciation and amortization — 567,259 24,507 1,619,478 Impairment of long-lived assets — — — 9,037,642 Other expense (income), net — 849 1,833 (304,526 ) Gain (loss) from discontinued operations before income taxes — 2,869,908 (115,398 ) (7,240,811 ) Income tax benefit — — — — Gain (loss) from discontinued operations, net of tax — 2,869,908 (115,398 ) (7,240,811 ) Gain on sale of discontinued operations, net of tax — — 212,601 — Net gain (loss) from discontinued operations, net of tax $ — $ 2,869,908 $ 97,203 $ (7,720,811 ) |
Description of Business (Detail
Description of Business (Details) - USD ($) | 6 Months Ended | 9 Months Ended | |||||||||
Sep. 28, 2023 | Jun. 14, 2023 | Apr. 28, 2023 | Jan. 27, 2023 | May 31, 2022 | Jun. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Jan. 31, 2023 | Jan. 11, 2023 | Dec. 31, 2022 | |
Description of Business [Line Items] | |||||||||||
Cash | $ 100,000 | $ 0.5 | |||||||||
Earnout obligation | $ 2,300,000 | ||||||||||
Restructuring charges | $ 500,000 | ||||||||||
Purchase price value | $ 700,000 | ||||||||||
Termination fees | $ 290,000 | ||||||||||
Merger acquisition term | 75 days | ||||||||||
Maximum amount of closing working capital | $ 500,000 | ||||||||||
Expenses | 60,000 | ||||||||||
Common stock par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | |||||||||
Cash paid | $ (400,000) | ||||||||||
Net proceeds | 700,000 | ||||||||||
Additional Loan | 500,000 | 500,000 | |||||||||
Common stock value | 1,500,000 | $ 1,000 | $ 460 | ||||||||
Number of employees head counted | 33% | ||||||||||
Sales and marketing costs | $ 300,000 | ||||||||||
Product and development costs | 200,000 | ||||||||||
Cost of revenue and general and administrative expenses | $ 100,000 | ||||||||||
Minimum [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Cash paid | 2,000,000 | ||||||||||
Maximum [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Cash paid | 4,000,000 | ||||||||||
Posabit Systems Corporation [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Purchase price value | $ 4,000,000 | ||||||||||
Reimbursement for expenses | $ 200,000 | $ 200,000 | |||||||||
Gryphon Digital Mining Inc [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Termination fees | $ 275,000 | ||||||||||
Description of merger agreement | (a) a number of shares of Akerna Common Stock equal to (i) the quotient obtained by dividing (A) Akerna's fully diluted share number, as defined in the Merger Agreement, by (B) 0.075, minus (ii) the Akerna's fully diluted share number minus (iii) the adjusted warrant share reserve number, as defined in the Merger Agreement, and (b) a number of shares of Akerna's Common Stock equal to the quotient obtained by dividing (i) $115,625,000 by (ii) the Closing Acquiror Share Price. The amendment effectively sets a floor of $115.6 million for the value attributable to Gryphon in the determination of post-Merger ownership. | ||||||||||
Facility Closing [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Restructuring charges | $ 100,000 | ||||||||||
Senior Convertible Notes [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Convertible notes price per share (in Dollars per share) | $ 0.5 | ||||||||||
Senior Convertible Notes [Member] | Minimum [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Convertible notes price per share (in Dollars per share) | 1.2 | $ 1.2 | |||||||||
Senior Convertible Notes [Member] | Maximum [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Convertible notes price per share (in Dollars per share) | $ 4.75 | $ 4.75 | |||||||||
Exchange Agreements [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Percentage of outstanding shares | 19.90% | ||||||||||
Common stock par value (in Dollars per share) | $ 0.0001 | ||||||||||
Gryphon Digital Mining Inc [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Expected merger ownership percentage | 92.50% | ||||||||||
Akerna Merger Co. [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Expected merger ownership percentage | 7.50% | ||||||||||
Akerna Canada Ample Exchange Inc [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Purchase price value | 5,000,000 | ||||||||||
Purchase price in cash | 4,000,000 | ||||||||||
Principal amount of loan | 1,000,000 | ||||||||||
MJA [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Maximum amount of closing working capital | 500,000 | ||||||||||
Additional Loan | 500,000 | ||||||||||
Common stock value | $ 1,500,000 | ||||||||||
Share percentage | 19.99% | ||||||||||
Amount of note payable | $ 1,500,000 | ||||||||||
MJA [Member] | Minimum [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Principle amount of loan secured | 1,000,000 | ||||||||||
Amount of note payable | 1,000,000 | ||||||||||
MJA [Member] | Maximum [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Principle amount of loan secured | $ 1,500,000 | ||||||||||
Amount of note payable | 1,500,000 | ||||||||||
SPA [Member] | |||||||||||
Description of Business [Line Items] | |||||||||||
Common stock value | $ 1,500,000 | ||||||||||
Share percentage | 19.99% |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 18, 2023 | Nov. 14, 2023 USD ($) $ / shares | Sep. 30, 2023 USD ($) $ / shares | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Sep. 19, 2023 USD ($) | Mar. 23, 2023 USD ($) | Mar. 22, 2023 USD ($) | Dec. 31, 2021 USD ($) | |
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Working capital deficit (in Dollars) | $ 11,200,000 | ||||||||
Fund future operations (in Dollars) | $ 209,577 | $ 9,498,923 | $ 8,183,255 | $ 14,442,526 | |||||
Bid price (in Dollars per share) | $ / shares | $ 1 | ||||||||
Minimum listing (in Dollars) | $ 2,500,000 | $ 2,500,000 | $ 2,500,000 | ||||||
Compliance period | 180 days | ||||||||
Allowance for credit losses (in Dollars) | $ 100,000 | $ 400,000 | |||||||
Total Revenues [Member] | Revenue from Rights Concentration Risk [Member] | One Other Government Customer [Member] | |||||||||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Government clients | 2 | 2 | |||||||
Total Revenues [Member] | Revenue from Rights Concentration Risk [Member] | One Government Client [Member] | |||||||||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Total revenues | 27% | ||||||||
Total Revenues [Member] | Revenue from Rights Concentration Risk [Member] | Two Government Client [Member] | |||||||||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Total revenues | 26% | ||||||||
Account Receivable [Member] | Revenue from Rights Concentration Risk [Member] | Two Government Client [Member] | |||||||||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Government clients | 2 | 2 | |||||||
Total revenues | 33% | ||||||||
Subsequent Event [Member] | Senior Notes [Member] | |||||||||
Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Convertible notes (in Dollars) | $ 125,000 | ||||||||
Shares of common stock | 250,000 | ||||||||
Conversion price per share (in Dollars per share) | $ / shares | $ 0.5 |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Intangible Assets by Geographical Location - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 2,937,391 | $ 4,576,460 |
United States [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 27,425 | 48,879 |
Canada [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 2,909,966 | $ 4,527,581 |
Revenue and Contracts with Cu_3
Revenue and Contracts with Customers (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Revenue and Contracts with Customers (Details) [Line Items] | ||
Period of time | 12 months | |
Term of Contract Payment | 30 days | |
Unsatisfied performance obligations | $ 3 | |
Revenue Expected to be Recognized | 2.9 | |
Deferred Income | $ 5 | $ 0.7 |
Minimum [Member] | ||
Revenue and Contracts with Customers (Details) [Line Items] | ||
Finite-Lived Intangible Assets, Remaining Amortization Period | 1 year | |
Maximum [Member] | ||
Revenue and Contracts with Customers (Details) [Line Items] | ||
Finite-Lived Intangible Assets, Remaining Amortization Period | 3 years | |
Subscription Fees [Member] | Minimum [Member] | SaaS solutions [Member] | ||
Revenue and Contracts with Customers (Details) [Line Items] | ||
Period of time | 1 year | |
Subscription Fees [Member] | Maximum [Member] | SaaS solutions [Member] | ||
Revenue and Contracts with Customers (Details) [Line Items] | ||
Period of time | 3 years |
Revenue and Contracts with Cu_4
Revenue and Contracts with Customers (Details) - Schedule of Revenue Disaggregation by Customer Type and Geographic Region - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total | $ 2,082,553 | $ 3,064,379 | $ 6,973,109 | $ 10,799,135 |
Total | 2,082,553 | 3,064,379 | 6,973,109 | 10,799,135 |
United States [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 1,595,271 | 2,295,362 | 5,305,703 | 267,468 |
Canada [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 487,282 | 769,017 | 1,667,406 | 2,531,667 |
Government [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 627,803 | 638,641 | 1,943,195 | 2,636,263 |
Non-government [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | $ 1,454,750 | $ 2,425,738 | $ 5,029,914 | $ 8,162,872 |
Revenue and Contracts with Cu_5
Revenue and Contracts with Customers (Details) - Schedule of Deferred Revenue Activity - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Schedule Of Deferred Revenue Activity Abstract | ||
Deferred revenue | $ 469,874 | $ 730,573 |
Deferred revenue, Net additions | 4,719,118 | |
Deferred revenue, Revenue recognized | $ (4,979,817) |
Revenue and Contracts with Cu_6
Revenue and Contracts with Customers (Details) - Schedule of Deferred Contract Cost Activity - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Schedule Of Deferred Contract Cost Activity Abstract | ||
Deferred contract costs | $ 36,465 | |
Deferred contract costs, Additions | ||
Deferred contract costs, Amortized costs | $ (36,465) |
Intangible Assets, net and Go_2
Intangible Assets, net and Goodwill (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Intangible Assets, net and Goodwill (Details) [Line Items] | |||||
Finite-lived intangible assets | $ 300,000 | $ 300,000 | $ 2,500,000 | $ 2,500,000 | |
Impairment to goodwill | 0.9 | $ 0 | 0.9 | 23,500,000 | |
Goodwill | 816,200 | 816,200 | $ 1,708,303 | ||
Ample Reporting Unit [Member] | |||||
Intangible Assets, net and Goodwill (Details) [Line Items] | |||||
Impairment to goodwill | 10,700,000 | ||||
Enterprise Reporting Unit [Member] | |||||
Intangible Assets, net and Goodwill (Details) [Line Items] | |||||
Impairment to goodwill | |||||
Goodwill | |||||
Solo Sciences, Inc. [Member] | |||||
Intangible Assets, net and Goodwill (Details) [Line Items] | |||||
Impairments of intangible assets | 2,200,000 | ||||
Capitalized software | 1,000,000 | ||||
Impairment to goodwill | 11,200,000 | ||||
Trellis Solutions, Inc [Member] | |||||
Intangible Assets, net and Goodwill (Details) [Line Items] | |||||
Impairment to goodwill | $ 1,600,000 | ||||
Viridian Sciences Inc. [Member] | |||||
Intangible Assets, net and Goodwill (Details) [Line Items] | |||||
Impairment to goodwill | $ 3,900,000 |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) | 9 Months Ended | |||||||||||||
Dec. 31, 2023 | Sep. 29, 2023 | Sep. 28, 2023 | May 03, 2023 | Apr. 28, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Oct. 11, 2023 | Jun. 14, 2023 | Jan. 31, 2023 | Jan. 11, 2023 | Dec. 31, 2022 | Oct. 04, 2022 | Oct. 05, 2021 | |
Long term debt [Line items] | ||||||||||||||
Conversion price percentage | 80% | |||||||||||||
Trading share (in Dollars per share) | $ 10.8 | |||||||||||||
Convertible notes | $ 3,000,000 | |||||||||||||
Principal payments | $ 100,000 | $ 0.5 | ||||||||||||
Convertible notes | 7,600,000 | |||||||||||||
Loan the amount | 1,000,000 | |||||||||||||
Purchase price | $ 700,000 | |||||||||||||
Net proceeds | 700,000 | |||||||||||||
Additional loans | 500,000 | $ 500,000 | ||||||||||||
Common stock value | $ 1,500,000 | 1,000 | $ 460 | |||||||||||
Percentage of shares issued and outstanding (in Shares) | 19.99 | |||||||||||||
Principal amount original notes | $ 1,500,000 | |||||||||||||
Minimum [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Principle amount of note | $ 1,000,000 | |||||||||||||
Principal amount original notes | $ 1,000,000 | |||||||||||||
Maximum [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Principle amount of note | 1,500,000 | |||||||||||||
Principal amount original notes | $ 1,500,000 | |||||||||||||
Senior Notes [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Reflecting principal amount | 7,900,000 | |||||||||||||
Convertible notes | $ 2,500,000 | |||||||||||||
Accumulated in equity | 900,000 | |||||||||||||
Senior Notes [Member] | Minimum [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Principal payments | 1,500,000 | |||||||||||||
Cash | 3,000,000 | |||||||||||||
Note Receivable | 100,000 | |||||||||||||
Senior Notes [Member] | Maximum [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Principal payments | 4,900,000 | |||||||||||||
Cash | 3,900,000 | |||||||||||||
Convertible notes | 900,000 | |||||||||||||
Note Receivable | 300,000 | |||||||||||||
Accumulated in equity | 2,800,000 | |||||||||||||
Notes [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Reflecting principal amount | $ 5,400,000 | |||||||||||||
Securities Purchase Agreement [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Conversion price per share (in Dollars per share) | $ 6.21 | |||||||||||||
Securities Purchase Agreement [Member] | Senior Notes [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Aggregate principal amount | $ 20,000,000 | |||||||||||||
Reflecting principal amount | $ 18,000,000 | |||||||||||||
Percentage of principal amount | 10% | |||||||||||||
Maturity date | Oct. 04, 2024 | |||||||||||||
Conversion price per share (in Dollars per share) | $ 4.75 | |||||||||||||
Senior Convertible Notes [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Conversion price per share (in Dollars per share) | $ 0.5 | |||||||||||||
Senior Convertible Notes [Member] | Minimum [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Conversion price per share (in Dollars per share) | 1.2 | $ 1.2 | ||||||||||||
Senior Convertible Notes [Member] | Maximum [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Conversion price per share (in Dollars per share) | $ 4.75 | $ 4.75 | ||||||||||||
Exchange Agreement [Member] | Senior Notes [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Conversion price per share (in Dollars per share) | $ 0.5 | |||||||||||||
Shares of common stock | 4,394,251 | |||||||||||||
Securities Purchase Agreement [Member] | Senior Convertible Notes [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Principal | $ 2,000,000 | |||||||||||||
Secured Debt [Member] | Securities Purchase Agreement [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Maturity date | Apr. 28, 2024 | |||||||||||||
Loan the amount | $ 1,000,000 | |||||||||||||
Secured promissory note | $ 1,000,000 | |||||||||||||
Issuance of repayment | 10% | |||||||||||||
SPA [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Cash paid | $ 2,000,000 | $ 4,000,000 | ||||||||||||
Common stock value | 1,500,000 | |||||||||||||
MJA [Member] | ||||||||||||||
Long term debt [Line items] | ||||||||||||||
Additional fund | 500,000 | |||||||||||||
Additional loans | 500,000 | |||||||||||||
Common stock value | $ 1,500,000 |
Long Term Debt (Details) - Sche
Long Term Debt (Details) - Schedule of Long Term Debt - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Schedule Of Long Term Debt Abstract | ||
Total long-term debt | $ 7,733,271 | $ 14,607,000 |
Less: Current portion | (7,733,271) | (13,200,000) |
Noncurrent portion | $ 1,407,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Income Taxes (Details) [Line Items] | ||
Effective tax rate | 0% | 0.50% |
Deferred tax percentage | 80% | |
Domestic Tax Authority [Member] | Internal Revenue Service (IRS) [Member] | Maximum [Member] | ||
Income Taxes (Details) [Line Items] | ||
Tax positions (in Dollars) | $ 0.1 |
Supplemental Balance Sheet Di_3
Supplemental Balance Sheet Disclosures (Details) - Schedule of Supplemental Prepaid Expenses and Other Current Assets - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Schedule of Supplemental Prepaid Expenses and Other Current Assets [Abstract] | ||
Unbilled receivables | $ 503,029 | $ 544,212 |
Software and technology | 58,254 | 168,792 |
Insurance | 85,323 | 224,785 |
Professional services, dues and subscriptions | 39,069 | 183,614 |
Deferred contract costs | 36,465 | |
Other | 83,874 | 51,755 |
Total | $ 769,549 | $ 1,209,623 |
Supplemental Balance Sheet Di_4
Supplemental Balance Sheet Disclosures (Details) - Schedule of Accounts Payable, Accrued Expenses, and Other Accrued Liabilities - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Schedule of Accounts Payable Accrued Expenses and Other Accrued Liabilities [Abstract] | ||
Accounts payable | $ 1,704,762 | $ 1,510,287 |
Settlements and legal | 928,715 | 950,213 |
Contractors | 434,289 | 562,993 |
Compensation | 439,617 | 368,440 |
Sales taxes | 164,473 | 219,285 |
Professional fees | 185,077 | 155,161 |
Interest and other | 469,884 | 660,040 |
Total | $ 4,326,727 | $ 4,426,419 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Apr. 02, 2021 | |
Commitments and Contingencies (Details) [Line Items] | ||
Transaction percentage | 3% | |
Estimated costs | $ 0.5 | |
TreCom Systems Group Inc [Member] | ||
Commitments and Contingencies (Details) [Line Items] | ||
Litigation reserve | $ 2 | |
Loss contingency | 0.2 | |
Sale Transaction and Merger [Member] | ||
Commitments and Contingencies (Details) [Line Items] | ||
Value of success fees | 1.5 | |
Total value | $ 1.2 |
Stockholders' Deficit (Details)
Stockholders' Deficit (Details) | 1 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Jun. 14, 2023 USD ($) $ / shares shares | Sep. 23, 2022 USD ($) shares | Sep. 28, 2022 USD ($) | Jun. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) | Jan. 27, 2023 $ / shares | Jan. 05, 2023 $ / shares | Oct. 05, 2022 $ / shares | Jul. 05, 2022 $ / shares shares | Dec. 31, 2019 $ / shares shares | |
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Common Stock, shares authorized | 150,000,000 | 150,000,000 | ||||||||||
Common stock, par value per share (in Dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||||||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||||||||||
Preferred stock, par value per share (in Dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||||||||
Shares issued | 2,282,609 | |||||||||||
Exchanged shares | 12,470 | |||||||||||
Exercise price (in Dollars per share) | $ / shares | $ 0.88 | $ 4.6 | ||||||||||
Warrants outstanding | 45,652,174 | |||||||||||
Warrants shares | 43,478,261 | |||||||||||
Warrants description | In connection with MTech’s initial public offering, MTech sold units consisting 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. Concurrently with MTech’s initial public offering, MTech sold additional units on a private offering basis. Each of these units consisted of one share of MTech’s common stock and one warrant of MTech (“MTech Private Warrant”). | |||||||||||
2022 Unit Offering | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Unit offering description | (i) 29,382,861 units consisting of 1,469,143 shares of Common Stock together with Common Stock warrants (the “Common Warrants”) to purchase up to 1,469,143 shares of Common Stock (together, the “Units”) and (ii) 14,095,400 pre-funded units, consisting of 14,095,400 pre-funded warrants (“Pre-funded Warrants”) to purchase 704,770 shares of Common Stock, together with Common Warrants to purchase up to 704,770 shares of Common Stock (together, the “Pre- funded Units”). The Units were sold at a public offering price of $0.23 per unit and the Pre-funded Units were sold at a public offering price of $0.2299 per pre-funded unit. | |||||||||||
Common Stock [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Warrants shares | 1 | |||||||||||
Posabit Systems Corporation [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Termination fee and related expenses (in Dollars) | $ | $ 200,000 | $ 200,000 | ||||||||||
Pre Funded Warrants [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Exercise price (in Dollars per share) | $ / shares | $ 0.002 | |||||||||||
Common Warrant [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Exercise price (in Dollars per share) | $ / shares | $ 0.37 | $ 0.88 | ||||||||||
Warrants shares | 2,173,913 | |||||||||||
Underwriter Warrants [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Exchange shares | 108,696 | |||||||||||
Exercise price (in Dollars per share) | $ / shares | $ 0.37 | $ 0.88 | ||||||||||
Exercisable expire | 5 years | |||||||||||
Effective date | Jun. 29, 2022 | |||||||||||
Number of shares issued | 2,282,609 | |||||||||||
Underwriter Warrants [Member] | Minimum [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Exercise price (in Dollars per share) | $ / shares | $ 0.37 | |||||||||||
Warrants purchase shares | 108,696 | |||||||||||
Underwriter Warrants [Member] | Maximum [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Exercise price (in Dollars per share) | $ / shares | $ 0.88 | |||||||||||
Public Warrants And Private Warrants 2019 [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Exchange ratio | one-for-one | |||||||||||
Warrant [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Warrants outstanding | 20 | |||||||||||
Private Placement [Member] | Common Stock [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Shares issued | 1,000,000 | |||||||||||
Investor per share (in Dollars per share) | $ / shares | $ 0.5 | |||||||||||
Total cash proceeds (in Dollars) | $ | $ 500,000 | |||||||||||
A T M Program [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Shares issued | 90,809 | |||||||||||
Pursuant offer sell (in Dollars) | $ | $ 20,000,000 | $ 25,000,000 | ||||||||||
Gross purchase price (in Dollars) | $ | $ 800,000 | $ 1,100,000 | ||||||||||
Gross proceeds percentage | 3% | |||||||||||
Underlying offering (in Dollars) | $ | $ 400,000 | |||||||||||
Common stock held by non-affiliate (in Dollars) | $ | $ 75,000,000 | |||||||||||
Total shares of common stock | 552,148 | |||||||||||
A T M Program [Member] | Common Stock [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Shares issued | 118,629 | |||||||||||
Pursuant offer sell (in Dollars) | $ | $ 2,700,000 | |||||||||||
Warrant [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Exercisable expire | 5 years | |||||||||||
Warrants per share (in Dollars per share) | $ / shares | $ 3.518 | |||||||||||
Warrants outstanding | 20 | |||||||||||
IPO [Member] | Underwriter Warrants [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Exercise price (in Dollars per share) | $ / shares | $ 3.518 | |||||||||||
Warrants [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Exercise price (in Dollars per share) | $ / shares | $ 0.88 | |||||||||||
Common Stock [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Class of common stock | 1 | |||||||||||
Common Stock, shares authorized | 150,000,000 | |||||||||||
Common stock, par value per share (in Dollars per share) | $ / shares | $ 0.0001 | |||||||||||
Vote per share | one | |||||||||||
Investor per share (in Dollars per share) | $ / shares | $ 230 | |||||||||||
Exercise price (in Dollars per share) | $ / shares | $ 0.37 | |||||||||||
Warrants purchase shares | 2,173,913 | |||||||||||
Warrants shares | 1 | |||||||||||
Common Stock [Member] | Underwriter Warrants [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Exercise price (in Dollars per share) | $ / shares | $ 4.6 | |||||||||||
Preferred Stock [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Preferred stock, shares authorized | 5,000,000 | |||||||||||
Preferred stock, par value per share (in Dollars per share) | $ / shares | $ 0.0001 | |||||||||||
Special Voting Preferred Stock | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Preferred stock, shares authorized | 1 | 1 | ||||||||||
Preferred stock, par value per share (in Dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||||||||
Special voting preferred stock | one | |||||||||||
Exchange shares | 36,168 | |||||||||||
Exchangeable Share | 20-for-one | |||||||||||
Preference liquidation (in Dollars per share) | $ / shares | $ 1 | $ 1 | ||||||||||
Exchangeable shares value (in Dollars) | $ | $ 277,450 | |||||||||||
Exchangeable Shares | 1,813 | |||||||||||
Total exchangeable shares | 249,504 | |||||||||||
Redeemable Preferred Stock [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Exchange shares | 3,294,574 | |||||||||||
Common Class A [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Warrants shares | 1 | |||||||||||
Public Warrants [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Exchange shares | 290,690 | |||||||||||
Mtech [Member] | Mtech Private Warrant [Member] | Common Stock [Member] | ||||||||||||
Stockholders' Deficit (Details) [Line Items] | ||||||||||||
Purchase share | 1 |
Stockholders' Deficit (Detail_2
Stockholders' Deficit (Details) - Schedule of Warrants Outstanding - $ / shares | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | ||
Class of Warrant or Right [Line Items] | |||
Beginning balance, outstanding | 51,465,978 | ||
Issued | |||
Exercised (in Dollars per share) | |||
Expired (in Dollars per share) | |||
Ending balance, outstanding | 51,465,978 | 51,465,978 | |
2019 Public Warrants [Member] | |||
Class of Warrant or Right [Line Items] | |||
Exercise Price (in Dollars per share) | [1] | $ 230 | |
Expiration Date | [1] | Jun. 19, 2024 | |
Beginning balance, outstanding | [1] | 5,813,804 | |
Issued | [1] | ||
Exercised (in Dollars per share) | [1] | ||
Expired (in Dollars per share) | [1] | ||
Ending balance, outstanding | [1] | 5,813,804 | 5,813,804 |
Common Warrants [Member] | |||
Class of Warrant or Right [Line Items] | |||
Exercise Price (in Dollars per share) | [2] | $ 0.37 | |
Expiration Date | [2] | Jun. 29, 2027 | |
Beginning balance, outstanding | [2] | 43,478,261 | |
Issued | [2] | ||
Exercised (in Dollars per share) | [2] | ||
Expired (in Dollars per share) | [2] | ||
Ending balance, outstanding | [2] | 43,478,261 | 43,478,261 |
Underwriter Warrants [Member] | |||
Class of Warrant or Right [Line Items] | |||
Exercise Price (in Dollars per share) | [2] | $ 0.37 | |
Expiration Date | [2] | Jun. 29, 2027 | |
Beginning balance, outstanding | [2] | 2,173,913 | |
Issued | [2] | ||
Exercised (in Dollars per share) | [2] | ||
Expired (in Dollars per share) | [2] | ||
Ending balance, outstanding | [2] | 2,173,913 | 2,173,913 |
[1]The 2019 Public Warrants are exercisable for 290,690 shares of Common Stock at $230.00 per share or a ratio of 20 warrants for one share of Common Stock.[2]In connection with the PIPE Investment, the exercise price of the Common Warrants and Underwriter Warrants was reduced from $0.88 per shares to $0.37 per share and are exercisable for a combined amount of 2,282,609 shares of Common Stock at $0.37 per share or a ratio of 20 warrants for one share of Common Stock. |
Fair Value (Details) - Schedule
Fair Value (Details) - Schedule of Reconciliation of Fair Values - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Schedule Of Reconciliation Of Fair Values Abstract | ||||
Fair value balance at beginning of period | $ 9,265,000 | $ 13,388,000 | $ 14,607,000 | $ 17,305,000 |
Principal payments in cash and Common Stock | (1,500,000) | (7,929,457) | (5,380,000) | |
Change in fair value reported in the statements of operations | (185,000) | 1,113,000 | 863,457 | 2,840,000 |
Change in fair value reported in other comprehensive loss | 3,000 | (26,000) | 42,000 | (290,000) |
Fair value balance at end of period | $ 7,583,000 | $ 14,475,000 | $ 7,583,000 | $ 14,475,000 |
Fair Value (Details) - Schedu_2
Fair Value (Details) - Schedule of Reconciliation of Fair Values - Convertible Debt Securities [Member] - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Fair Value (Details) - Schedule of Reconciliation of Fair Values [Line Items] | ||
Debt Instrument, Face Amount (in Dollars) | $ 6,733,271 | $ 14,662,727 |
Debt Instrument, Convertible, Conversion Price (in Dollars per share) | $ 4.75 | $ 4.75 |
Value of Common Stock (in Dollars per share) | $ 0.22 | $ 0.69 |
Expected term (years) | 1 year | 1 year 9 months 18 days |
Volatility | 102% | 77% |
Market yield (range) | 41.20% | |
Risk free rate | 4.70% | 4.40% |
Issue date | Oct. 05, 2021 | Oct. 05, 2021 |
Maturity date | Oct. 05, 2024 | Oct. 05, 2024 |
Minimum [Member] | ||
Fair Value (Details) - Schedule of Reconciliation of Fair Values [Line Items] | ||
Market yield (range) | 44.30% | |
Maximum [Member] | ||
Fair Value (Details) - Schedule of Reconciliation of Fair Values [Line Items] | ||
Market yield (range) | 43.90% |
Fair Value (Details) - Schedu_3
Fair Value (Details) - Schedule of Fair Value by Using Key Inputs - Private warrant [Member] - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Fair value balance at beginning of period | $ 45,127 | $ 63,178 | ||
Change in fair value reported in the statements of operations | (33,845) | (51,896) | ||
Fair value balance at end of period | $ 11,282 | $ 11,282 |
Fair Value (Details) - Schedu_4
Fair Value (Details) - Schedule of Reconciliation of Fair Values - Private Warrants [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Number of Private Warrants | 225,635 | 225,635 |
Original conversion price | $ 230 | $ 230 |
Value of Common Stock | $ 0.605 | $ 0.69 |
Expected term (years) | 11 months 15 days | 1 year 5 months 15 days |
Volatility | ||
Risk free rate |
Fair Value (Details) - Schedu_5
Fair Value (Details) - Schedule of Fair Value Measurement Unit Offering Common and Underwriter Warrants - Fair Value, Inputs, Level 3 [Member] | Jul. 05, 2022 $ / shares |
Fair Value (Details) - Schedule of Fair Value Measurement Unit Offering Common and Underwriter Warrants [Line Items] | |
Exercise price | $ 4.6 |
Expected term (years) | 5 years |
Volatility | 136.90% |
Earning per share (Details) - S
Earning per share (Details) - Schedule of Diluted Earnings Per Share - shares | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Schedule of Diluted Earnings Per Share [Line Items] | ||
Total | 16,058,816 | 4,942,916 |
Shares Issuable Upon Exchange of Exchangeable Shares [Member] | ||
Schedule of Diluted Earnings Per Share [Line Items] | ||
Total | 12,476 | 14,284 |
Shares of Common Stock Issuable Upon Conversion of Convertible Notes [Member] | ||
Schedule of Diluted Earnings Per Share [Line Items] | ||
Total | 13,466,543 | 2,354,268 |
2019 Public Warrants [Member] | ||
Schedule of Diluted Earnings Per Share [Line Items] | ||
Total | 290,690 | 290,690 |
2022 Unit Offering - Common Warrants [Member] | ||
Schedule of Diluted Earnings Per Share [Line Items] | ||
Total | 2,173,913 | 2,173,913 |
2022 Unit Offering - Underwriter Warrants [Member] | ||
Schedule of Diluted Earnings Per Share [Line Items] | ||
Total | 108,696 | 108,696 |
Unvested Restricted Stock Units [Member] | ||
Schedule of Diluted Earnings Per Share [Line Items] | ||
Total | 6,498 | 730 |
Unvested Restricted Stock Awards [Member] | ||
Schedule of Diluted Earnings Per Share [Line Items] | ||
Total | 334 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |
Jan. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Discontinued Operations (Details) [Line Items] | ||||
Debt expense | $ 300,000 | |||
Cash proceeds received | $ 600,000 | $ 600,000 | ||
Earn-out obligation | 2,300,000 | 2,283,806 | ||
Net asset | $ 2,700,000 | |||
Capitalized computer software asset | 213,766 | $ 654,556 | ||
365 Cannabis [Member] | ||||
Discontinued Operations (Details) [Line Items] | ||||
Goodwill | 9,000,000 | |||
LCA [Member] | ||||
Discontinued Operations (Details) [Line Items] | ||||
Goodwill | $ 100,000 | |||
Capitalized computer software asset | $ 900,000 |
Discontinued Operations (Deta_2
Discontinued Operations (Details) - Schedule of Assets and Liabilities of the Discontinued Group - Discontinued Operations [Member] - 365 Cannabis [Member] - USD ($) | Sep. 30, 2023 | Dec. 30, 2022 |
Discontinued Operations (Details) - Schedule of Assets and Liabilities of the Discontinued Group [Line Items] | ||
Cash and restricted cash | $ 305,500 | |
Accounts receivable, net | 112,444 | |
Prepaid expenses & other current assets | 578,393 | |
Fixed assets | 63,764 | |
Capitalized software, net | 828,555 | |
Intangible assets, net | 3,241,372 | |
Total assets held for sale | 5,130,028 | |
Accounts payable, accrued expenses and other current liabilities | 1,034,426 | |
Deferred revenue | 994,713 | |
Deferred revenue, noncurrent | 217,083 | |
Total liabilities held for sale | $ 2,246,222 |
Discontinued Operations (Deta_3
Discontinued Operations (Details) - Schedule of Operations of the Discontinued Group - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Schedule Of Operations Of The Discontinued Group Abstract | ||||
Revenue | $ 2,348,423 | $ 214,346 | $ 7,650,389 | |
Cost of revenue | 575,076 | 10,119 | 1,916,454 | |
Gross profit | 1,773,347 | 204,227 | 5,733,935 | |
Product development | 414,948 | 117,500 | 1,290,618 | |
Sales and marketing | 928,221 | 171,753 | 3,319,428 | |
General and administrative | (3,006,140) | 4,032 | (2,596,946) | |
Depreciation and amortization | 567,259 | 24,507 | 1,619,478 | |
Impairment of long-lived assets | 9,037,642 | |||
Other expense (income), net | 849 | 1,833 | (304,526) | |
Gain (loss) from discontinued operations before income taxes | 2,869,908 | (115,398) | (7,240,811) | |
Income tax benefit | ||||
Gain (loss) from discontinued operations, net of tax | 2,869,908 | (115,398) | (7,240,811) | |
Gain on sale of discontinued operations, net of tax | 212,601 | |||
Net gain (loss) from discontinued operations, net of tax | $ 2,869,908 | $ 97,203 | $ (7,720,811) |