Exhibit 99.1
AKERNA CORP.
Unaudited Pro Forma Condensed Consolidated Financial Information
On December 28, 2023, Akerna Corp. (the “Company”) completed the sale of its indirect wholly-owned subsidiary Ample Organics Inc. (“Ample”), pursuant to a Share Purchase Agreement (the “SPA”), dated as of December 28, 2023, by and between the Company, the Company’s indirect wholly-owned subsidiary Akerna Canada Ample Exchange Inc. (“Akerna Exchange”), which owned all the outstanding capital stock of Ample, and Wilcompute Systems Group Inc. (the “Buyer”), for cash in the amount of $638,000, subject to customary post-closing adjustments, if any. Post-closing adjustments are primarily associated with certain adjustments in working capital and indemnification obligations in accordance with the SPA.
The sale of Ample is considered a significant disposition for purposes of Item 2.01 of Form 8-K. Accordingly, the Company has prepared the accompanying unaudited pro forma condensed consolidated financial information in accordance with Article 11 of Regulation S-K.
The accompanying unaudited pro forma condensed consolidated balance sheet gives effect to the sale of Ample as if it had occurred on September 30, 2023, the date of the Company’s most recently filed balance sheet. The accompanying unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2022 and the nine months ended September 30, 2023 gives effect to the sale of Ample as if it had occurred on January 1, 2022.
The unaudited pro forma condensed consolidated financial information should be read in conjunction with: (i) the audited consolidated financial statements and notes as of and for the year ended December 31, 2022 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on March 21, 2023 and (ii) the Company’s unaudited condensed consolidated financial statements and notes as of and for the period ended September 30, 2023 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Form 10-Q for the quarterly period ended September 30, 2023 filed with the SEC on November 14, 2023.
The unaudited pro forma condensed consolidated financial information is presented based on assumptions, adjustments and currently available information described in the accompanying notes and is intended for informational purposes only. The unaudited pro forma condensed consolidated financial information is not necessarily indicative of what the Company’s results of operations or financial condition would have been had the sale of Ample occurred on the dates assumed. In addition, it is not necessarily indicative of the Company’s future results of operations or financial condition.
AKERNA CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended September 30, 2023
(Unaudited)
| | | | | | Pro Forma | | | | | | |
| | | As Reported | | | Adjustments | | | | | Pro Forma | |
| Assets | | | | | | | | | | | |
| Current assets | | | | | | | | | | | |
| Cash | | $ | 209,577 | | | $ | 637,648 | | (a)(b) | | | $ | 847,225 | |
| Restricted cash | | | - | | | | - | | (b) | | | | - | |
| Accounts receivable, net | | | 252,951 | | | | (124,723 | ) | (b) | | | | 128,228 | |
| Prepaid expenses & other current assets | | | 780,618 | | | | (62,284 | ) | (b) | | | | 718,334 | |
| Total current assets | | | 1,243,146 | | | | 450,641 | | (b) | | | | 1,693,787 | |
| Fixed assets, net | | | 27,425 | | | | - | | (b) | | | | 27,425 | |
| Capitalized software, net | | | 213,766 | | | | (213,766 | ) | (b) | | | | - | |
| Intangible assets, net | | | 1,880,000 | | | | (1,880,000 | ) | (b) | | | | - | |
| Goodwill | | | 816,200 | | | | (816,200 | ) | (b) | | | | - | |
| Deposits - net of current portion | | | - | | | | - | | (b) | | | | - | |
| Total assets | | $ | 4,180,537 | | | $ | (2,459,325 | ) | | | | $ | 1,721,212 | |
| | | | | | | | | | | | | | | |
| Liabilities and stockholders’ equity (deficit) | | | | | | | | | | | | | | |
| Current liabilities | | | | | | | | | | | | | | |
| Accounts payable, accrued expenses and other current liabilities | | $ | 4,326,727 | | | $ | (245,844 | ) | (b) | | | $ | 4,080,883 | |
| Deferred revenue | | | 469,874 | | | | - | | (b) | | | | 469,874 | |
| Current portion of long-term debt | | | 7,733,271 | | | | - | | (b) | | | | 7,733,271 | |
| Total current liabilities | | | 12,529,872 | | | | (245,844 | ) | (b) | | | | 12,284,028 | |
| Long-term debt, noncurrent | | | 849,729 | | | | - | | (b) | | | | 849,729 | |
| Total liabilities | | | 13,379,601 | | | | (245,844 | ) | | | | | 13,133,757 | |
| Stockholders’ equity (deficit) | | | | | | | | | | | | | | |
| Series C preferred stock | | | - | | | | | | (b) | | | | - | |
| Series seed preferred stock | | | - | | | | | | (b) | | | | - | |
| Series seed II preferred stock | | | - | | | | | | (b) | | | | - | |
| Special voting preferred stock | | | 1,907,941 | | | | (1,907,941 | ) | (b) | | | | - | |
| Common stock | | | 1,000 | | | | - | | (b) | | | | 1,000 | |
| Additional paid-in capital | | | 164,314,083 | | | | (26,731,798 | ) | (b) | | | | 137,582,285 | |
| Subscription receivable | | | - | | | | - | | (b) | | | | - | |
| Accumulated other comprehensive income | | | 295,274 | | | | 99,254 | | (b) | | | | 394,528 | |
| Accumulated deficit | | | (175,717,362 | ) | | | 26,327,004 | | (b) | | | | (149,390,358 | ) |
| Total stockholders’ equity (deficit) | | | (9,199,064 | ) | | | (2,213,481 | ) | | | | | (11,412,545 | ) |
| Total liabilities and stockholders’ equity (deficit) | | $ | 4,180,537 | | | $ | (2,459,325 | ) | | | | $ | 1,721,212 | |
See accompanying notes
AKERNA CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended September 30, 2023
(Unaudited)
| | | | | | Pro Forma | | | | |
| | | As Reported | | | Adjustments (c) | | | Pro Forma | |
| Revenue | | | | | | | | | |
| Software | | $ | 6,909,399 | | | $ | (1,657,449 | ) | | $ | 5,251,950 | |
| Consulting | | | 46,000 | | | | - | | | | 46,000 | |
| Other revenue | | | 17,710 | | | | (9,957 | ) | | | 7,753 | |
| Total revenue | | | 6,973,109 | | | | (1,667,406 | ) | | | 5,305,703 | |
| Cost of revenue | | | 2,988,688 | | | | (449,119 | ) | | | 2,539,569 | |
| Gross profit | | | 3,984,421 | | | | (1,218,287 | ) | | | 2,766,134 | |
| Operating expenses | | | | | | | | | | | | |
| Product development | | | 2,153,834 | | | | (307,418 | ) | | | 1,846,416 | |
| Sales and marketing | | | 1,997,996 | | | | (193,853 | ) | | | 1,804,143 | |
| General and administrative | | | 4,458,949 | | | | (147,424 | ) | | | 4,311,525 | |
| Depreciation and amortization | | | 746,966 | | | | (725,512 | ) | | | 21,454 | |
| Impairment of long-lived assets | | | 892,103 | | | | (892,103 | ) | | | - | |
| Total operating expenses | | | 10,249,848 | | | | (2,266,311 | ) | | | 7,983,537 | |
| Loss from operations | | | (6,265,427 | ) | | | 1,048,023 | | | | (5,217,404 | ) |
| Other income (expense) | | | | | | | | | | | | |
| Interest expense, net | | | (917,015 | ) | | | - | | | | (917,015 | ) |
| Change in fair value of debt | | | (863,457 | ) | | | - | | | | (863,457 | ) |
| Loss on asset disposal | | | - | | | | - | | | | - | |
| Other income (expense) | | | 9,781 | | | | - | | | | 9,781 | |
| Total other income (expense) | | | (1,770,691 | ) | | | - | | | | (1,770,691 | ) |
| | | | | | | | | | | | | |
| Net loss before income taxes and equity in losses of investee | | | (8,036,118 | ) | | | 1,048,023 | | | | (6,988,095 | ) |
| Income tax (expense) benefit | | | - | | | | - | | | | - | |
| Equity in losses of investee | | | | | | | | | | | | |
| Net loss | | $ | (8,036,118 | ) | | $ | 1,048,023 | | | $ | (6,988,095 | ) |
| | | | | | | | | | | | | |
| Diluted weighted average common stock outstanding | | | 6,486,669 | | | | | | | | 6,486,669 | |
| Diluted net loss per share | | $ | (1.24 | ) | | | | | | $ | (1.08 | ) |
See accompanying notes
AKERNA CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2022
(Unaudited)
| | | | | | Pro Forma | | | | |
| | | As Reported | | | Adjustments (c) | | | Pro Forma | |
| Revenue | | | | | | | | | |
| Software | | $ | 12,920,647 | | | $ | (3,172,380 | ) | | $ | 9,748,267 | |
| Consulting | | | 682,309 | | | | - | | | | 682,309 | |
| Other revenue | | | 42,074 | | | | (14,481 | ) | | | 27,593 | |
| Total revenue | | | 13,645,030 | | | | (3,186,861 | ) | | | 10,458,169 | |
| Cost of revenue | | | 5,412,388 | | | | (500,885 | ) | | | 4,911,503 | |
| Gross profit | | | 8,232,642 | | | | (2,685,976 | ) | | | 5,546,666 | |
| Operating expenses | | | | | | | | | | | | |
| Product development | | | 4,690,967 | | | | (602,672 | ) | | | 4,088,295 | |
| Sales and marketing | | | 6,053,172 | | | | (480,452 | ) | | | 5,572,720 | |
| General and administrative | | | 8,344,612 | | | | (326,357 | ) | | | 8,018,255 | |
| Depreciation and amortization | | | 5,622,274 | | | | (1,200,278 | ) | | | 4,421,996 | |
| Impairment of long-lived assets | | | 38,967,296 | | | | (12,438,666 | ) | | | 26,528,630 | |
| Total operating expenses | | | 63,678,321 | | | | (15,048,425 | ) | | | 48,629,896 | |
| Loss from operations | | | (55,445,679 | ) | | | 12,362,449 | | | | (43,083,230 | ) |
| Other income (expense) | | | | | | | | | | | | |
| Interest expense, net | | | (853,716 | ) | | | (151 | ) | | | (853,867 | ) |
| Change in fair value of debt | | | (2,884,273 | ) | | | - | | | | (2,884,273 | ) |
| Change in fair value of warrant liability | | | 63,178 | | | | - | | | | 63,178 | |
| Other income (expense) | | | (221,101 | ) | | | - | | | | (221,101 | ) |
| Total other income (expense) | | | (3,895,912 | ) | | | (151 | ) | | | (3,896,063 | ) |
| | | | | | | | | | | | | |
| Net loss before income taxes and equity in losses of investee | | | (59,341,591 | ) | | | 12,362,298 | | | | (46,979,293 | ) |
| Income tax (expense) benefit | | | 113,273 | | | | 15,036 | | | | 128,309 | |
| Equity in losses of investee | | | - | | | | - | | | | - | |
| Net loss | | $ | (59,228,318 | ) | | $ | 12,377,334 | | | $ | (46,850,984 | ) |
| | | | | | | | | | | | | |
| Diluted weighted average common stock outstanding | | | 2,927,853 | | | | | | | | 2,927,853 | |
| Diluted net loss per share | | $ | (20.23 | ) | | | | | | $ | (16.00 | ) |
See accompanying notes
AKERNA CORP.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following describes the pro forma adjustments reflected in the presentation of the accompanying pro forma condensed consolidated balance sheet and pro forma condensed consolidated statements of operations:
| | (a) | – | Adjustment reflects the cash consideration received including restricted cash as if the closing date of the sale occurred on September 30, 2023. |
| | (b) | – | Adjustment reflects the disposition of the assets and liabilities of Ample and the impact of the sale to equity. |
| | (c) | – | Adjustments reflect the historical operating results of Ample for the year ended December 31, 2022 and the nine months ended September 30, 2023. |
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