Exhibit 99.1

 

Title: Akerna Corp. Reports Quarter Ended September 2020 Results

 

Sub header: Total software ARR up 44%, software revenue up 40%, revenue up 16%, compared to the quarter ended September 2019.

 

DENVER, Nov. 12, 2020 /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 announced financial results for its quarter ended September 30, 2020.

 

“I’m thrilled to report we achieved 40% year over year software revenue growth in this quarter and have increased our total SaaS ARR by 44% over this same time last year,” said Jessica Billingsley, CEO of Akerna. “Looking forward, we are entering a period of massive market expansion. Five new states have approved cannabis via ballot measure in the recent election potentially representing approximately $18M in new TAM for our software and services offerings, and many more states and countries have legislative initiatives proposed over the coming months. Our scaled ecosystem is uniquely positioned to capture these opportunities, with the most robust cannabis technology suite available.”

 

September Quarter 2020 Financial Highlights

 

Software revenue was $3.2 million, an increase of 40% year over year
Total revenue was $3.7 million, an increase of 16% year over year
Gross Profit was $2.0 million, an increase of 9% year over year
Net Loss was $4.7 million compared to a net loss of $2.3 million for the period ended September 30, 2019
Adjusted EBITDA was ($3.0 million), compared to ($2.2 million) for the period ended September 30, 2019
oSee “Explanation of Non-GAAP Financial Measures” below
Cash was $14.3 million as of September 30, 2020

 

September Quarter 2020 Key Metrics

 

Total SaaS ARR of $14.1 million, up 44% year over year
Average new MJ Platform order up 94% year over year
MJ Platform transaction volume up 181% year over year
Retail order volume up 68% year over year
Retail order value up 127% year over year
New Bookings ARR of $1.2 million

 

September Quarter 2020 Operational Highlights

 

Close the acquisition of Ample Organics
Signed an agreement with Priority Technology Holdings, Inc. (NASDAQ: PRTH) to provide CBD and Hemp retailers that use Akerna’s Point of Sale products with a credit card payment processing solution
Launched MJ Retail, a first-of-its-kind proprietary software technology designed to provide merchants and consumers with a flexible and mobile-friendly experience offering a clean and lightweight Point of Sale solution that connects to the Akerna eco-system and which can leverage our Priority payments partnership
Announced the release of MJ Analytics, a next generation cannabis data analytics platform made possible through a partnership with the Business Intelligence firm Domo (NASDAQ: DOMO)
Akerna consulting clients won 100% of the medical cannabis dispensary licenses awarded in Iowa
Closed a $12 million follow on offering

 

 

 

 

Conference Call Details

 

The Company will host a conference call Thursday November 12, 2020 at 8:30am ET to discuss its financial results and business highlights. A question and answer session will follow prepared remarks.

 

To participate in the conference call, please dial 877-407-3982 (domestic) or 201-493-6780 (international). Participants should request the Akerna Corp. Earnings Call or provide confirmation code 13713080. Please dial into the call at least five minutes before the scheduled start time.

 

A replay of the call will be available through November 26, 2020, at (844) 512-2921 (domestic) or (412) 317-6671 (international). The passcode for the call and replay is 13713080.

 

About Akerna

 

Akerna is a global regulatory compliance technology company. Akerna’s service offerings include MJ Platform®, Leaf Data Systems®, solo sciences tech platform and Ample Organics. Since its establishment in 2010, Akerna has tracked more than $20 billion in cannabis sales. Akerna is based in Denver. For more information, please visit www.akerna.com and follow us on Twitter @AkernaCorp.

 

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 belief that recently passed ballot measures potentially represent approximately $18M in new TAM for our software and services offerings, having a scaled ecosystem gives us more opportunities to leverage these new markets and 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.

 

2

 

 

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, and change in fair value of convertible notes. We calculate Adjusted EBITDA as EBITDA further adjusted to exclude the effects of the following items for the reasons set forth below:

 

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; and

 

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.

 

3

 

 

Related Non-GAAP Expense Measures

 

We reference in our earnings call certain non-GAAP expense measures, including non-GAAP Operating Expenses, non-GAAP Operating Expenses excluding Ample, non-GAAP Product Development Expense, non-GAAP Sales and Marketing Expenses, non-GAAP Sales and Marketing Expenses excluding Ample, non-GAAP General and Administrative Expenses and non-GAAP General and Administrative Expenses excluding Ample. We believe that these non-GAAP financial measures, when considered with the financial statements determined in accordance with GAAP, are 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, as set forth above (stock-based compensation expense, costs incurred with business combinations, costs incurred in connection with debt issuance, and restructuring costs) 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—and excluding the operational results of Ample, which we acquired in July 2020.

 

We define non-GAAP Operating Expenses, non-GAAP Product Development Expense, non-GAAP Total Sales and Marketing Expenses and non-GAAP General and Administrative Expenses as, in each case, the corresponding GAAP financial measure (Operating Expenses, Product Development Expense, Sales and Marketing Expenses and General and Administrative Expenses) excluding that portion of stock-based compensation expense, costs incurred with business combinations, costs incurred in connection with debt issuance, and restructuring costs that is attributable to that specific GAAP financial measure.

 

We define non-GAAP Operating Expenses excluding Ample, non-GAAP Product Development Expense excluding Ample, non-GAAP Total Sales and Marketing Expenses excluding Ample and non-GAAP General and Administrative Expenses excluding Ample as, in each case, the relevant non-GAAP expense measure as calculated above with the additional exclusion of expenses contained in the expense measure attributable to our recently acquire subsidiary Ample Organics Inc.

 

None of these non-GAAP expense measures should not be considered alternatives to the corresponding GAAP financial measures as determined in accordance with GAAP as indicators of our performance or liquidity. Please review the tables provided below, for a reconciliation of each of these non-GAAP expense measures to the corresponding GAAP financial measure.

 

4

 

 

AKERNA CORP.

Condensed Consolidated Balance Sheets

(unaudited)

 

   September 30,   June 30, 
   2020   2020 
Assets        
         
Current assets:        
Cash  $14,257,858   $24,155,828 
Restricted cash   500,000    500,000 
Accounts receivable, net   2,799,225    1,861,534 
Prepaid expenses and other current assets   1,475,613    1,215,341 
Total current assets   19,032,696    27,732,703 
           
Non-current assets:          
Fixed assets, net   1,395,690    131,095 
Investment, net   244,774    246,308 
Capitalized software, net   3,389,646    2,629,304 
Intangible assets, net   10,730,021    7,493,975 
Goodwill   46,500,030    20,254,309 
Other non-current assets   41,925    41,925 
           
Total Assets  $81,334,782   $58,529,619 
           
Liabilities and Equity          
           
Current liabilities          
Accounts payable and accrued liabilities  $5,998,001   $4,861,928 
Contingent consideration payable   817,000    389,000 
Deferred revenue   1,170,625    368,685 
Current portion of long-term debt   10,146,001    6,135,364 
Total current liabilities   18,131,627    11,754,977 
           
Long-term debt, less current portion   5,481,599    10,200,236 
           
Total liabilities   23,613,226    21,955,213 
           
Equity:          
Preferred stock, par value $0.0001; 4,999,999 shares authorized, none are issued and outstanding at September 30, 2020 and 5,000,000 shares authorized and none are issued and outstanding at June 30, 2020        
Special voting preferred stock, par value $0.0001; 1 share authorized, issued and outstanding at September 30, 2020 with $1.00 preference in liquidation and none authorized, issued and outstanding at June 30, 2020   20,405,219     
Common stock, par value $0.0001; 75,000,000 shares authorized, 14,685,932 issued and outstanding at September 30, 2020, and 13,258,707 shares issued and outstanding at June 30, 2020   1,464    1,321 
Additional paid-in capital   83,164,840    72,906,924 
Accumulated other comprehensive (loss) income   (7,000)   63,000 
Accumulated deficit   (45,842,967)   (41,101,091)
Total stockholders’ equity  $57,721,556   $31,870,154 
Noncontrolling interests in consolidated subsidiary       4,704,252 
Total equity   57,721,556    36,574,406 
Total liabilities and equity  $81,334,782   $58,529,619 

 

5

 

 

AKERNA CORP.

Condensed Consolidated Statements of Operations

(unaudited)

 

   For the Three Months Ended 
   September 30, 
   2020   2019 
Revenues        
Software  $3,154,442   $2,254,480 
Consulting   331,080    831,363 
Other   228,482    107,047 
Total revenues   3,714,004    3,192,890 
Cost of revenues   1,739,937    1,379,701 
           
Gross profit   1,974,067    1,813,189 
           
Operating expenses          
Product development   1,758,826    610,902 
Sales and marketing   2,097,502    1,841,514 
General and administrative   2,470,187    1,742,301 
Depreciation and amortization   1,171,022    17,899 
Total operating expenses   7,497,537    4,212,616 
           
Loss from operations   (5,523,470)   (2,399,427)
           
Other income (expense)          
Interest (expense), net   (3,687)   73,382 
Change in fair value of Convertible Notes   778,000     
Other       (287)
Total other income (expense)   774,313    73,095 
           
Net loss before income tax expense   (4,749,157)   (2,326,332)
           
Equity in losses of investee   (1,534)    
           
Net loss   (4,750,691)   (2,326,332)
           
Net loss attributable to noncontrolling interest in consolidated subsidiary   8,815     
           
Net loss attributable to Akerna shareholders  $(4,741,876)  $(2,326,332)
           
Basic and diluted weighted average common stock outstanding   14,058,412    10,879,112 
Basic and diluted net loss per common share  $(0.34)  $(0.21)

 

6

 

 

AKERNA CORP.

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

   For the Three Months Ended 
   September 30, 
   2020   2019 
Cash flows from operating activities        
Net loss  $(4,750,691)  $(2,326,332)
Adjustment to reconcile net loss to net cash used in operating activities:          
Equity in losses of investment   1,534     
Bad debt   12,450    252,809 
Stock-based compensation expense   681,419    161,165 
Depreciation and amortization   1,171,022    17,899 
Foreign currency loss   4,901     
Change in fair value of convertible notes   (778,000)    
Change in fair value of contingent consideration   (389,000)    
Changes in operating assets and liabilities:          
Accounts receivable   (9,298)   (1,508,217)
Prepaid expenses and other current assets   (74,023)   (292,272)
Accounts payable and accrued liabilities   (296,802)   274,566 
Deferred revenue   245,329    278,208 
Net cash used in operating activities   (4,181,159)   (3,142,174)
           
Cash flows from investing activities          
Developed software additions   (624,863)   (519,739)
FF&E additions   (12,203)    
Cash paid for business combination, net of cash acquired   (5,067,740)    
Net cash used in investing activities   (5,704,806)   (519,739)
           
Cash flows from financing activities          
Cash paid for deferred stock offering costs   (12,668)    
Cash received in connection with exercise of warrants       4,242,454 
Net cash (used in) provided by financing activities   (12,668)   4,242,454 
Effect of exchange rate changes on cash and restricted cash   663     
           
Net change in cash and restricted cash   (9,897,970)   580,541 
           
Cash and restricted cash - beginning of period   24,655,828    22,367,289 
           
Cash and restricted cash - end of period  $14,757,858   $22,947,830 

 

7

 

 

AKERNA CORP.

Non-GAAP Measures

For the Three Months Ended September 30, 2020 and 2019

 

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

 

   2020   2019 
Net loss  $(4,750,691)  $(2,326,332)
Adjustments:          
Interest (income) expense and change in fair value of convertible notes   (774,313)   (73,382)
Depreciation and amortization   1,171,022    17,899 
EBITDA  $(4,353,982)  $(2,381,815)
           
Stock-based compensation expense   681,419    161,165 
Business combination and merger related costs   951,865     
Debt issuance costs related to fair value option debt instruments   43,167     
Restructuring charges   68,190     
Changes in fair value of contingent consideration   (389,000)    
Equity in losses of investee   1,534     
Adjusted EBITDA  $(2,996,807)  $(2,220,650)

 

Non-GAAP Operating Expense

 

   2020   2019 
Operating expenses  $7,497,537   $4,212,616 
Adjustments:          
Depreciation and amortization   1,171,022    17,899 
Stock-based compensation expense   663,708    148,652 
Business combination and merger related costs   951,865    - 
Debt issuance costs   43,167    - 
Restructuring charges   68,190    - 
Changes in fair value of contingent consideration   (389,000)   - 
Non-GAAP operating expenses   4,988,585    4,046,065 
Ample Organics total operating expense   1,319,850    - 
Total operating expenses non-GAAP excluding Ample  $3,668,735   $4,046,065 

 

Non-GAAP Product Development Expense

 

   2020   2019 
Product development expenses  $1,758,826   $610,902 
Adjustments:          
Stock-based compensation expense   183,214    45,046 
Non-GAAP product development expenses   1,575,612    565,856 
Ample Organics product development expense   592,740    - 
Total product development expenses non-GAAP excluding Ample  $982,872   $565,856 

 

8

 

 

AKERNA CORP.

Non-GAAP Measures

For the Three Months Ended September 30, 2020 and 2019

 

Non-GAAP Sales and Marketing Expense

 

   2020   2019 
Sales and marketing expenses  $2,097,502   $1,841,514 
Adjustments:          
Stock-based compensation expense   134,435    62,064 
Non-GAAP sales and marketing expenses   1,963,067    1,779,450 
Ample Organics sales and marketing expenses   396,572    - 
Total sales and marketing expenses non-GAAP excluding Ample  $1,566,495   $1,779,450 

 

Non-GAAP General and Administrative Expense

 

   2020   2019 
General and administrative expenses  $2,470,187   $1,742,301 
Adjustments:          
Stock-based compensation expense   346,059    41,542 
Business combination and merger related costs   951,865    - 
Debt issuance costs   43,167    - 
Restructuring charges   68,190    - 
Changes in fair value of contingent consideration   (389,000)   - 
Non-GAAP General and administrative expenses   1,449,906    1,700,759 
Ample Organics general and administrative expenses   330,538    - 
Total general and administrative non-GAAP excluding Ample  $1,119,368   $1,700,759 

 

 

9

 

 


The following information was filed by Akerna Corp. (KERN) on Thursday, November 12, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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