Akerna Corp. Reports Fiscal Year 2020 Results
DENVER, Sept. 23, 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 fourth quarter and year ended June 30, 2020.
"We saw continued execution in the fourth quarter and made meaningful progress on our key initiatives focused on building scale and developing our software ecosystem. Despite COVID-related delays in consulting revenue that has since recovered, software revenue increased 36% in the quarter," said Jessica Billingsley, CEO of Akerna. "We are heading into a busy election season that is expected to see 12 state ballot measures related to cannabis legalization for either medical or adult-use. Our scaled ecosystem is uniquely positioned to capture those opportunities, with the most robust cannabis technology suite available."
Fiscal Fourth Quarter Financial Results
-- Software revenue was $2.8 million, an increase of 36% year-over-year
-- Software revenue represented 94% of total revenue
-- Total revenue was $3 million, a decrease of 17% year-over-year, due to
COVID-related delays in consulting revenue during the fiscal fourth
quarter
-- GAAP loss from operations was $6.2 million, compared to a GAAP loss from
operations of $5.9 million in the fourth quarter of fiscal 2019
-- Adjusted EBITDA was $3.6 million, compared to Adjusted EBITDA of $1.5
million in the fourth quarter of fiscal 2019
-- See "Explanation of Non-GAAP Financial Measures" below
-- Cash was $24.2 million as of June 30, 2020
Fourth Quarter Platform Usage Highlights
-- Platform transaction volume up 50% year-over-year
-- Retail order volume up 53% year-over-year
-- Retail order value up 90% year-over-year
Full Year Fiscal 2020 Financial Results
-- Software revenue was $10.0 million, an increase of 21% year-over-year
-- Software revenue represented 79% of total revenue
-- Total revenue was $ 12.6 million, an increase of 16% year-over-year
-- GAAP loss from operations was $17.3 million, compared to a GAAP loss
from operations of $12.5 million during fiscal 2019
-- Adjusted EBITDA was $11.5 million, compared to Adjusted EBITDA of $7.4
million during fiscal 2019
-- See "Explanation of Non-GAAP Financial Measures" below
Full Year Platform Usage Highlights
-- Platform transaction volume up 70% year-over-year
-- Retail order volume up 125% year-over-year
-- Retail order value up 128% year-over-year
Recent Highlights
We believe the following highlights from the last year and in the months that followed are indicators of what's to come in our business through our commitment to product innovation, go-to-market initiatives and customer success:
-- integrated into leading ERP systems to provide enterprise class tax
planning and financial services to our business clients;
-- announced the release of MJ Analytics, a next generation cannabis data
analytics platform made possible through a partnership with the Business
Intelligence firm Domo;
-- signed an agreement with Priority Technology Holdings, Inc. to provide
CBD and Hemp retailers that use Akerna's MJ Platform with a credit card
payment processing solution;
-- completed the acquisitions of Ample Organics, Trellis Solutions, and
solo sciences;
-- announced an agreement with PAX Labs, an award-winning consumer
technology brand, to provide market intelligence information to help the
company better understand its customers and derive actionable insights
to improve the customer experience;
-- made a strategic investment in ZolTrain, a mobile training platform
built for cannabis brand training; and
-- announced a strategic partnership with Isolocity to provide the first
GMP-compliant, global cannabis export technology solution.
Conference Call Details
The Company will host a conference call Thursday September 24, 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 13710535. Please dial into the call at least five minutes before the scheduled start time.
A replay of the call will be available through October 8, 2020, at (844) 512-2921 (domestic) or (412) 317-6671 (international). The passcode for the call and replay is 13710535.
Financial results reported in this document are preliminary. Final financial results and other disclosures will be reported in our Annual Report on Form 10-K for the year ended June 30, 2020, and may differ materially from the results and disclosures in this document due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information."
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 $18 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 having a scaled ecosystem gives us more opportunities to leverage our footprint and increase wallet share by providing more value to our clients and management's conference call in relation thereto. 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. Please see the schedule titled, Earnings Before Interest, Taxes, Depreciation and Amortization and Adjusted EBITDA attached to this release for a reconciliation of GAAP net loss to Adjusted EBITDA.
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 income and expense and changes in fair value of convertible notes, 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:
-- Share-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.
AKERNA CORP.
Consolidated Balance Sheets
---
As of June 30, 2020 and 2019
(unaudited)
2020 2019
Assets
Current assets:
Cash $
24,155,828 $
21,867,289
Restricted cash 500,000 500,000
Accounts receivable, net 1,861,534 1,257,274
Prepaid expenses and other assets 1,215,341 577,674
Total current assets 27,732,703 24,202,237
Non-current assets:
Fixed assets, net 131,095
Investment, net 246,308
Capitalized software, net 2,629,304
Intangible assets, net 7,493,975
Goodwill 20,254,309
Other non-current assets 41,925
Total non-current assets 30,796,916
Total Assets $
58,529,619 $
24,202,237
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities $
4,861,928 $
1,818,116
Current contingent consideration 389,000
Deferred revenue 368,685 624,387
Current portion of long-term debt 6,135,364
Total current liabilities 11,754,977 2,442,503
Long-term debt 10,200,236
Total liabilities 21,955,213 2,442,503
Commitments and contingencies
Equity:
Preferred stock, par value $0.0001;
5,000,000 shares authorized, none are
issued and outstanding at June 30, 2020
and 2019
$
$
Common stock, par value $0.0001;
75,000,000 shares authorized,
13,258,707 issued and outstanding at
June 30, 2020, and 10,589,746 shares
authorized, issued and outstanding at
June 30, 2019 1,321 1,059
Additional paid-in capital 72,906,924 47,325,421
Accumulated other comprehensive income 63,000
Accumulated deficit (41,101,091) (25,566,746)
Total stockholders' equity 31,870,154 21,759,734
Noncontrolling interests in consolidated
subsidiary 4,704,252
Total equity 36,574,406 21,759,734
Total liabilities and equity $
58,529,619 $
24,202,237
AKERNA CORP.
Consolidated Statements of Operations
---
For the Three Months and Years Ended June 30, 2020 and 2019
(unaudited)
Three Months
Full Year
2020 2019 2020 2019
Revenues
Software $
2,827,616 $
2,082,390 $
9,976,580 $
8,256,492
Consulting 131,000 1,480,352 2,379,947 2,307,129
Other 45,022 59,184 216,749 259,496
Total revenues 3,003,638 3,621,926 12,573,276 10,823,117
Cost of revenues 1,818,565 1,083,232 6,209,724 4,633,844
Gross profit 1,185,073 2,538,694 6,363,552 6,189,273
Operating expenses
Product development 1,088,938 2,518,072 3,206,310 5,565,097
Sales and marketing 2,117,118 3,263,092 7,792,480 7,498,114
General and administrative 3,126,027 2,602,470 11,320,715 5,638,408
Depreciation and amortization 1,036,378 1,315,898
Total operating expenses 7,368,461 8,383,634 23,635,403 18,701,619
Loss from operations (6,183,388) (5,844,940) (17,271,851) (12,512,346)
Other income (expense)
Interest (expense) income, net (2,084) 21,974 156,678 91,239
Change in fair value of Convertible
Notes 766,000 766,000
Other (91) (254) 17,892
Total other income 763,916 21,883 922,424 109,131
Net loss before income tax expense (5,419,472) (5,823,057) (16,349,427) (12,403,215)
Income tax expense (30,985) (30,985)
Equity in losses of investee (3,692) (3,692)
Net loss (5,454,149) (5,823,057) (16,384,104) (12,403,215)
Net loss attributable to
noncontrolling interests in
consolidated subsidiary 748,584 849,759
Net loss attributable to Akerna
stockholders $
(4,705,565) $
(5,823,057) $
(15,534,345) $
(12,403,215)
Basic and diluted weighted average
common stock outstanding 13,098,468 6,623,787 11,860,212 6,045,382
Basic and diluted net loss per common
share $
(0.36) $
(0.88) $
(1.31) $
(2.05)
AKERNA CORP.
Consolidated Statements of Cash Flows
---
For the Years Ended June 30, 2020 and 2019
(unaudited)
2020 2019
Cash flows from operating activities
Net loss $
(16,384,104) $
(12,403,215)
Adjustment to reconcile net loss to net
cash used in operating activities
Bad debt expense 1,094,507 345,941
Stock-based compensation expense 1,166,130 3,884,111
Depreciation and amortization 1,315,898
Equity in losses of investee 3,692
Debt issuance costs classified as
financing 1,177,390
Change in fair value of convertible
notes (766,000)
Change in fair value of contingent
consideration (998,000)
Changes in operating assets and
liabilities:
Accounts receivable (1,621,262) (1,572,889)
Prepaid expenses and other current
assets (592,807) (351,144)
Other assets (58,925)
Accounts payable and accrued liabilities 1,602,751 893,845
Deferred revenue (286,922) 154,756
Net cash used in operating activities (14,347,652) (9,048,595)
Cash flows from investing activities
Developed software additions (3,102,728)
Furniture, fixtures, and equipment
additions (156,636)
Cash paid for business combinations, net
of cash acquired (88,720)
Investment in equity method investee (250,000)
Cash received in connection with the
reverse merger 18,843,483
Net cash provided by investing
activities (3,598,084) 18,843,483
Cash flows from financing activities
Proceeds from the issuance of long-term
debt 17,164,600
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 10,000,000
Net cash provided by financing
activities 20,234,275 10,000,000
Net increase (decrease) in cash and
restricted cash 2,288,539 19,794,888
Cash and restricted cash -beginning of
period 22,367,289 2,572,401
Cash and restricted cash -end of period $
24,655,828 $
22,367,289
AKERNA CORP.
Earnings
Before Interest, Taxes, Depreciation and Amortization, and Adjusted EBITDA
---
For the Three Months and Years Ended June 30, 2020 and 2019
The reconciliation of net income to EBITDA and Adjusted EBITDA for the three months and years ended June 30, 2020 and 2019 is as follows:
Three Months
Full Year
2020 2019 2020 2019
Net loss $
(5,454,149) $
(5,823,057) $
(16,384,104) $
(12,403,215)
Adjustments:
Interest income (expense) and change
in fair value of convertible notes (768,084) 21,974 (609,322) 91,239
Income tax provision 30,985 30,985
Depreciation and amortization 1,036,378 1,315,898
EBITDA (5,154,870) (5,801,083) (15,646,543) (12,311,976)
Stock-based compensation expense 371,532 3,884,110 1,166,130 3,884,110
Business combination and merger
related costs 1,026,929 432,500 2,829,228 1,080,870
Debt issuance costs related to fair
value option debt instruments 1,177,390 1,177,390
Changes in fair value of contingent
of consideration (998,000) (998,000)
Equity in losses of investee 3,692 3,692
Adjusted EBITDA $
(3,573,327) $
(1,484,473) $
(11,468,103) $
(7,346,996)
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SOURCE Akerna
