Akerna Announces Financial Results for the Quarter Ended December 31, 2020

 

DENVER, March 22, 2021 /PRNewswire/ -- Akerna (Nasdaq: KERN), an enterprise software, leading compliance technology provider and developer of the cannabis industry's first seed-to-sale enterprise resource planning (ERP) software technology (MJ Platform®), today reported its unaudited financial results for the quarter ended December 31, 2020.

"In the December quarter we delivered strong financial results, with 38 percent software growth year over year and 36 percent sequential improvement in adjusted EBITDA," said Jessica Billingsley, CEO of Akerna.  "With the recent announced plans to acquire Viridian, we continue to bolster the strength of our channel connections with existing ERP providers.  As we prepare for a post-legalization landscape and the industry continues to consolidate and mature, we firmly believe enterprise capabilities, including comprehensive compliance solutions and financial reporting integrations, will become increasingly important to the future leaders of the cannabis industry." 

Quarter Ended December 31, 2020 Financial Highlights

  • Software revenue was $3.4 million, up 38% year over year
  • Total revenue was $4.1 million, up 24% year over year
  • Gross profit was $2.7 million, up 60% year over year
  • Net loss was $12.2 million compared to a net loss of $3.8 million for the quarter ended December 31, 2019
  • Adjusted EBITDA was ($1.9 million) compared to ($2.7 million) for the quarter ended December 31, 2019
  • Cash was $17.8 million as of December 31, 2020

See "Explanation of Non-GAAP Financial Measures" below

Quarter Ended December 31, 2020 Key Metrics

  • Total SaaS ARR of $13.8 million, up 42% year over year
  • Average new MJ Platform order up 52% year over year
  • MJ Platform transaction volume up 63% year over year
  • Retail order volume up 56% year over year
  • Retail order value up 105% year over year
  • New Bookings ARR of $0.8 million

Quarter Ended December 31, 2020 Operational Highlights

  • Akerna Launches MJ Retail Point of Sale Solution
  • November elections open five new markets for Akerna products and services
  • Transitioned to fully remote workforce, closed offices and lowered operating costs
  • Closed $12 million public offering of common stock
  • Transitioned fiscal year-end to December 31

Conference Call Details

Akerna will host a conference call tomorrow, Tuesday, March 23, 2021, at 8:30 a.m. Eastern Time to discuss its financial results and business highlights. A question-and-answer session will follow prepared remarks.
Interested parties may listen to the call by dialing:

Toll-Free: 1-877-407-3982
Toll / International: 1-201-493-6780
Conference ID: 13717601

The conference call will also be available via a live, listen-only webcast and can be accessed through the Investor Relations section of Akerna's website, https://ir.akerna.com/

To be included on the Company's email distribution list, please sign up at https://ir.akerna.com/news-events/email-alerts

About Akerna
Akerna (Nasdaq: KERN) is an enterprise software company focused on compliantly serving the cannabis, hemp, and CBD industry. First launched in 2010, Akerna has tracked more than $20 billion in cannabis sales to date and is the first cannabis software company listed on Nasdaq. The company's cornerstone technology, MJ Platform, the world's leading infrastructure as a service platform, powers retailers, manufacturers, brands, distributors, and cultivators.

For more information, visit https://www.akerna.com/.

Forward Looking Statements

Certain statements made in this release are "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. Such forward-looking statements include but are not limited to statements regarding our preparation for a potential post-legalization landscape, our believe enterprise capabilities, including comprehensive compliance solutions and financial reporting integrations, will become increasingly important to the future leaders of the cannabis industry and the timing for management's conference call in relation to our quarterly results. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of significant known and unknown risks, uncertainties, assumptions, and other important factors, many of which are outside Akerna's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others that may affect actual results or outcomes, include (i) Akerna's ability to maintain relationships with customers and suppliers and retain its management and key employees, (ii) changes in applicable laws or regulations, (iii) changes in the market place due to the coronavirus pandemic or other market factors, (iv) and other risks and uncertainties disclosed from time to time in Akerna's filings with the U.S. Securities and Exchange Commission, including those under "Risk Factors" therein.  You are cautioned not to place undue reliance on forward-looking statements. All information herein speaks only as of the date hereof, in the case of information about Akerna, or the date of such information, in the case of information from persons other than Akerna. Akerna undertakes no duty to update or revise the information contained herein. Forecasts and estimates regarding Akerna's industry and end markets are based on sources believed to be reliable; however, there can be no assurance these forecasts and estimates will prove accurate in whole or in part.

Explanation of Non-GAAP Financial Measures:

In addition to our results determined in accordance with U.S. generally accepted accounting principles ("GAAP"), we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.

Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. Other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.  We attempt compensate for these limitations by providing specific information regarding the GAAP items excluded from these non-GAAP financial measures.

Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business.

Adjusted EBITDA

We believe that Adjusted EBITDA, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding our performance and allows for comparison of our performance and credit strength to our peers. Adjusted EBITDA should not be considered alternatives to net loss as determined in accordance with GAAP as indicators of our performance or liquidity.

We define EBITDA as net loss before interest expense, provision for income taxes, depreciation and amortization. We calculate Adjusted EBITDA as EBITDA further adjusted to exclude the effects of the following items for the reasons set forth below:

  • Impairment of long-lived assets, because it's a non-cash, non-recurring item, which effects the comparability of results of operations and liquidity;
  • Stock-based compensation expense, because this represents a non-cash charge and our mix of cash and share-based compensation may differ from other companies, which effects the comparability of results of operations and liquidity;
  • Cost incurred in connection with business combinations that are required to be expensed as incurred in accordance with GAAP, because business combination related costs are specific to the complexity and size of the underlying transactions as well as the frequency of our acquisition activity these costs are not reflective of our ongoing operations
  • Costs incurred in connection with debt issuance when we elect the fair value option to account for the debt instrument because if we had not elected the fair value option such costs would be recognized as an adjustment to the effective interest and excluded from EBITDA
  • Restructuring costs because we believe these costs are not representative of operating performance;
  • Equity in earnings (losses) of investees because our share of the operations of investees is not representative of our own operating performance and may not be monetized for a number of years; and
  • Other non-operating expenses which includes a one-time gain on asset sale, which effects the comparability of results of operations and liquidity;

Related Non-GAAP Expense Measure

We reference in our earnings call non-GAAP Operating Expenses. We believe that this non-GAAP financial measure, when considered with the financial statements determined in accordance with GAAP, is helpful to management and investors in understanding our performance quarter over quarter and to the comparable quarter in our prior fiscal year by excluding the same items we exclude from EBITDA to derive Adjusted EBITDA that are included in GAAP operating expenses, as set forth above (impairment of long-lived assets, stock-based compensation expense, costs incurred with business combinations, costs incurred in connection with debt issuance, restructuring costs and certain other non-operating expenses, as described above) for the same reasons stated above--  principally, that these expenses are not, in management's opinion, easily comparable across reporting periods, are not reflective of ongoing operations and/or are not representative of our operating performance.   

We define non-GAAP Operating Expenses, as GAAP Operating Expenses, excluding impairment of long-lived assets, stock-based compensation expense, costs incurred with business combinations, costs incurred in connection with debt issuance and restructuring costs.

This non-GAAP expense measure should not be considered an alternative to the corresponding GAAP financial measure as determined in accordance with GAAP as an indicator of our performance or liquidity.  Please review the tables provided below, for a reconciliation of this non-GAAP expense measure to the corresponding GAAP financial measure.

Akerna Corp.

Consolidated Balance Sheet

As of December 31, 2020, June 30, 2020 and 2019

 
 

December 31

 

June 30

 

June 30

 

2020

 

2020

 

2019

 

(unaudited)

       

   Assets

         

     Current assets

         

       Cash

$   17,840,640

 

$   24,155,828

 

$   21,867,289

       Restricted cash

500,000

 

500,000

 

500,000

       Accounts receivable, net

1,753,547

 

1,861,534

 

1,257,274

       Prepaid expenses & other current assets

2,458,727

 

1,215,341

 

577,674

     Total current assets

22,552,914

 

27,732,703

 

24,202,237

           

     Fixed assets, net

1,193,433

 

131,095

 

-

     Investment, net

233,665

 

246,308

 

-

     Capitalized software, net

3,925,738

 

2,629,304

 

-

     Intangible assets, net

7,388,795

 

7,493,975

 

-

     Goodwill

41,874,527

 

20,254,309

 

-

     Other noncurrent assets

-

 

41,925

 

-

   Total assets

$   77,169,072

 

$   58,529,619

 

$   24,202,237

           

   Liabilities and stockholders' equity

         

     Current liabilities

         

       Accounts Payable, accrued expenses and other current liabilities

$    3,188,575

 

$    4,861,928

 

$    1,818,116

       Contingent consideration payable

-

 

389,000

 

-

       Deferred revenue

843,900

 

368,685

 

624,387

       Current portion of long-term debt

11,707,363

 

6,135,364

 

-

     Total current liabilities

15,739,838

 

11,754,977

 

2,442,503

           

     Long-term debt, noncurrent

3,895,237

 

10,200,236

 

-

   Total liabilities

$   19,635,075

 

$   21,955,213

 

$    2,442,503

           
           

     Stockholders' equity

         

       Preferred stock

-

 

-

 

-

       Exchangeable preferred stock

20,405,219

 

-

 

-

       Common stock

1,990

 

1,321

 

1,059

       Additional paid-in capital

95,090,883

 

72,906,924

 

47,325,421

       Accumulated other comprehensive (loss) income

(91,496)

 

63,000

 

-

       Accumulated deficit

(57,872,599)

 

(41,101,091)

 

(25,566,746)

     Total stockholders' equity

$   57,533,997

 

$   31,870,154

 

$   21,759,734

     Noncontrolling interests in consolidated subsidiary

-

 

4,704,252

 

-

   Total stockholders' equity

57,533,997

 

36,574,406

 

21,759,734

   Liabilities and stockholders' equity

$   77,169,072

 

$   58,529,619

 

$   24,202,237

           

 

Akerna Corp.

Consolidated Statement of Operations

For the three months and six months ended December 31, 2020 and 2019, and years ended June 30, 2020 and 2019

 
 

Three Months Ended December 31

 

Six Months Ended December 31

 

Year Ended June 30

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019

 

(unaudited) 

 

(unaudited)  

 

(unaudited)  

 

(unaudited)  

       

  Revenue

                     

    Software

$    3,443,392

 

$    2,498,174

 

$    6,766,985

 

$    4,802,654

 

$    9,976,580

 

$    8,256,492

    Consulting

583,512

 

725,000

 

916,099

 

1,556,363

 

2,379,947

 

2,307,129

    Other revenue

83,876

 

83,029

 

141,700

 

140,076

 

216,749

 

259,496

  Total Revenue

4,110,780

 

3,306,203

 

7,824,784

 

6,499,093

 

12,573,276

 

10,823,117

                       

  Cost of revenue

1,401,103

 

1,615,239

 

3,141,041

 

2,994,940

 

6,209,724

 

4,633,844

  Gross profit

2,709,677

 

1,690,964

 

4,683,743

 

3,504,153

 

6,363,552

 

6,189,273

                       

  Total Operating expenses

                     

    Product development

1,407,262

 

623,501

 

3,166,088

 

1,234,403

 

3,206,310

 

5,565,097

    Sales and marketing

1,830,526

 

2,132,004

 

3,928,028

 

3,725,012

 

7,792,480

 

7,498,114

    General and administrative

1,964,880

 

2,664,400

 

4,435,067

 

4,655,207

 

11,320,715

 

5,638,408

    Depreciation and amortization

836,215

 

86,768

 

2,007,237

 

104,667

 

1,315,898

 

-

    Impairment of long-lived assets

6,887,000

 

-

 

6,887,000

 

-

 

-

 

-

  Total operating expenses

12,925,883

 

5,506,673

 

20,423,420

 

9,719,289

 

23,635,403

 

18,701,619

                       

  Loss from operations

(10,216,206)

 

(3,815,709)

 

(15,739,677)

 

(6,215,136)

 

(17,271,851)

 

(12,512,346)

                       

  Other income (expense)

                     

    Interest income (expense)

(189,397)

 

51,857

 

(193,084)

 

125,239

 

156,678

 

91,239

    Change in fair value of
convertible notes

(1,739,273)

 

-

 

(961,273)

 

-

 

766,000

 

-

    Other expense

(59,272)

 

157

 

(59,272)

 

(130)

 

(254)

 

17,892

  Total other income (expense)

(1,987,942)

 

52,014

 

(1,213,629)

 

125,109

 

922,424

 

109,131

                       

  Net loss before income tax
expense

(12,204,148)

 

(3,763,695)

 

(16,953,306)

 

(6,090,027)

 

(16,349,427)

 

(12,403,215)

                       

  Income tax expense

(200)

 

-

 

(200)

 

-

 

(30,985)

 

-

  Equity in losses of investee

(11,109)

 

-

 

(12,643)

 

-

 

(3,692)

 

-

  Net Loss

(12,215,457)

 

(3,763,695)

 

(16,966,149)

 

(6,090,027)

 

(16,384,104)

 

(12,403,215)

                       

Net loss attributable to
noncontrolling interest in
consolidated subsidiary

-

 

-

 

8,815

 

-

 

849,759

 

-

  Net loss attributable to Akerna
shareholders

$(12,215,457)

 

$ (3,763,695)

 

$(16,957,333)

 

$ (6,090,027)

 

$(15,534,345)

 

$(12,403,215)

                       

Basic and diluted weighted average
common shares outstanding

18,138,921

 

10,958,772

 

16,056,030

 

10,918,942

 

11,860,212

 

6,045,382

 

$     (0.67)

 

$           (0.34)

 

$           (1.06)

 

$           (0.56)

 

$           (1.31)

 

$           (2.05)

                       
                                 

 

Akerna Corp.

Consolidated Statement of Cash Flows

For the six months ended December 31, 2020, and year ended June 30, 2020 and 2019

 
 

Six Months
Ended

 

December 31

 

 

 

 Year Ended June 30

 

2020

 

2020

 

2019

 

(unaudited)

       

 Cash flows from operating activities

         

 Net Loss

$ (16,966,149)

 

$  (16,384,104)

 

$  (12,403,215)

 Adjustment to reconcile net loss to net cash used in operating activities

         

 Bad debt expense

72,832

 

1,094,507

 

345,941

 Stock-based compensation expense

1,197,589

 

1,166,130

 

3,884,111

 Depreciation and amortization

2,007,237

 

1,315,898

 

-

 Impairment of long-lived asset

6,887,000

 

-

 

-

 Non-cash interest expense

32,732

 

-

 

-

 Equity in losses of investee

12,643

 

3,692

 

-

 Gain on sale of fixed asset

84,835

 

-

 

-

 Debt issuance costs classified as financing

-

 

1,177,390

 

-

 Change in fair value of convertible notes

961,272

 

(766,000)

 

-

 Change in fair value of contingent consideration

(993,000)

 

(998,000)

 

-

 Changes in operating assets and liabilities:

         

 Accounts receivable

1,008,775

 

(1,621,262)

 

(1,572,889)

 Prepaid expenses and other current assets

(460,964)

 

(592,807)

 

(351,144)

 Other assets

81,924

 

(58,925)

 

-

 Accounts payable and accrued liabilities

(2,749,766)

 

1,602,751

 

893,845

 Deferred revenue

(94,088)

 

(286,922)

 

154,756

 Net cash used in operating activities

(8,917,128)

 

(14,347,652)

 

(9,048,595)

           

 Cash flows from investing activities

         

 Developed software additions

(1,847,710)

 

(3,102,728)

 

-

 Furniture, fixtures and equipment additions

(12,203)

 

(156,636)

 

-

 Cash paid for business combinations, net of cash acquired

(5,067,740)

 

(88,720)

 

-

 Investment in equity method investee

-

 

(250,000)

 

-

 Cash received in connection with reverse merger

-

 

-

 

18,843,483

 Net Cash provided by investing activities

(6,927,653)

 

(3,598,084)

 

18,843,483

           

 Cash flows from financing activities

         

 Proceeds from the issuance of long-term debt

-

 

17,164,600

 

-

 Payments on debt

(1,500,000)

 

-

 

-

 Cash paid for debt issuance costs

-

 

(1,177,390)

 

-

 Proceeds from the exercise of warrants

-

 

4,247,065

 

-

 Proceeds from the issuance of common stock

11,032,380

 

-

 

10,000,000

 Net cash provided by financing activities

9,532,380

 

20,234,275

 

10,000,000

           

 Effect of exchange rate changes on cash and restricted cash

(2,787)

 

-

 

-

 Net (decrease) increase in cash and restricted cash

$ (6,315,188)

 

$     2,288,539

 

$   19,794,888

           

 Cash and restricted cash, beginning of period

24,655,828

 

22,367,289

 

2,572,401

           

 Cash and restricted cash, end of period

$   18,340,640

 

$   24,655,828

 

$   22,367,289

           

 Cash paid for taxes

$                    -

 

$                     -

 

$                     -

 Cash paid for interest

$        150,000

 

$                     -

 

$                     -

           

 

Akerna Corp.

Earnings Before Interest, Taxes, Depreciation and Amortization, and Adjusted EBITDA

For the three months and six months ended December 31, 2020 and 2019, and years ended June 30, 2020 and 2019

The reconciliation of net income to EBITDA and Adjusted EBITDA is as follows:

(unaudited)

 
 

Three Months Ended December 31

 

Six Months Ended December 31

 

Year Ended June 30

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019

                       

Net Loss

$(12,215,457)

 

$ (3,763,695)

 

$(16,966,149)

 

$ (6,090,027)

 

$(16,384,104)

 

$(12,403,215)

                       

Interest (income) expense and
change in fair value of convertible
notes

1,928,670

 

(51,857)

 

1,154,356

 

(125,239)

 

(922,678)

 

(91,239)

Depreciation and amortization

836,215

 

86,768

 

2,007,237

 

104,667

 

1,315,898

 

-

Income tax provision

200

 

-

 

200

 

-

 

30,985

 

-

EBITDA

$ (9,450,372)

 

$ (3,728,784)

 

$(13,804,355)

 

$ (6,110,599)

 

$(15,959,899)

 

$(12,494,454)

                       

Impairment of long-lived assets

6,887,000

 

-

 

6,887,000

 

-

 

-

 

-

Stock-based compensation
expense

516,170

 

331,485

 

1,197,589

 

492,650

 

1,166,130

 

3,884,110

Business combination and merger
related costs

142,639

 

733,867

 

1,094,503

 

733,867

 

2,979,228

 

1,080,870

Debt issuance costs related to fair
value option debt instruments

96,427

 

-

 

139,594

 

-

 

1,177,390

 

-

Restructuring charges

421,957

 

-

 

490,146

 

-

 

-

 

-

Changes in fair value of
contingent consideration

(604,000)

 

-

 

(993,000)

 

-

 

(998,000)

 

-

Equity in losses of investee

11,109

 

-

 

12,643

 

-

 

3,692

 

-

Other non-operating expenses

59,272

 

(157)

 

59,272

 

130

 

-

 

-

Adjusted EBITDA

$ (1,919,798)

 

$ (2,663,589)

 

$ (4,916,607)

 

$ (4,883,952)

 

$(11,631,459)

 

$ (7,529,474)

                       

 

Akerna Corp.

The reconciliation of operating expenses to non-GAAP operating expenses is as follows:

(unaudited)

 
 

Three Months Ended December 31

 

Six Months Ended December 31

 

Year Ended June 30

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019

                       

Operating expenses

$   12,925,883

 

$    5,506,673

 

$  20,423,420

 

$    9,719,289

 

$  23,635,403

 

$  18,701,619

                       

Adjustments:

                     

Depreciation and amortization

836,215

 

86,768

 

2,007,237

 

104,667

 

1,315,898

 

-

Impairment of long-lived assets

6,887,000

 

-

 

6,887,000

 

-

 

-

 

-

Stock-based compensation
expense

474,196

 

331,485

 

1,137,905

 

492,650

 

1,166,130

 

3,884,110

Business combination and
merger related costs

142,639

 

733,867

 

1,094,503

 

733,867

 

2,979,228

 

1,080,870

Debt issuance costs related to
fair value option debt instruments

96,427

 

-

 

139,594

 

-

 

1,177,390

 

-

Restructuring charges

421,957

 

-

 

490,146

 

-

 

-

 

-

Changes in fair value of
contingent consideration

(604,000)

 

-

 

(993,000)

 

-

 

(998,000)

 

-

Non-GAAP operating expenses

$     4,671,449

 

$    4,354,553

 

$    9,660,035

 

$    8,388,105

 

$  17,994,757

 

$  13,736,639

 

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/akerna-announces-financial-results-for-the-quarter-ended-december-31-2020-301253196.html

SOURCE Akerna

 
 
Company Codes: NASDAQ-NMS:KERN
 

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