Document and Entity Information
Document and Entity Information | 12 Months Ended |
Jun. 30, 2020 | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | Akerna Corp. |
Entity Central Index Key | 0001755953 |
Amendment Flag | false |
Document Type | S-1 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Incorporation, State or Country Code | DE |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2020 | Jun. 30, 2019 |
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 current 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 Assets | 58,529,619 | 24,202,237 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 4,861,928 | 1,818,116 |
Contingent consideration payable | 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, less current portion | 10,200,236 | |
Total liabilities | 21,955,213 | 2,442,503 |
Commitments and contingencies (Note 12) | ||
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 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2020 | Jun. 30, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 13,258,707 | 10,589,746 |
Common stock, shares outstanding | 13,258,707 | 10,589,746 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues | ||
Software | $ 9,976,580 | $ 8,256,492 |
Consulting | 2,379,947 | 2,307,129 |
Other | 216,749 | 259,496 |
Total revenues | 12,573,276 | 10,823,117 |
Cost of revenues | 6,209,724 | 4,633,844 |
Gross profit | 6,363,552 | 6,189,273 |
Operating expenses | ||
Product development | 3,206,310 | 5,565,097 |
Sales and marketing | 7,792,480 | 7,498,114 |
General and administrative | 11,320,715 | 5,638,408 |
Depreciation and amortization | 1,315,898 | |
Total operating expenses | 23,635,403 | 18,701,619 |
Loss from operations | (17,271,851) | (12,512,346) |
Other income (expense) | ||
Interest income (expense) net | 156,678 | 91,239 |
Change in fair value of Convertible Notes | 766,000 | |
Other | (254) | 17,892 |
Total other income (expense) | 922,424 | 109,131 |
Net loss before income tax expense | (16,349,427) | (12,403,215) |
Income tax expense | (30,985) | |
Equity in losses of investee | (3,692) | |
Net loss | (16,384,104) | (12,403,215) |
Net loss attributable to noncontrolling interest in consolidated subsidiary | 849,759 | |
Net Loss attributable to Akerna shareholders | $ (15,534,345) | $ (12,403,215) |
Basic and diluted weighted average common shares outstanding | 11,860,212 | 6,045,382 |
Basic and diluted net loss per common share | $ (1.31) | $ (2.05) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (16,384,104) | $ (12,403,215) |
Other comprehensive (loss) income: | ||
Unrealized gains on Convertible Notes | 63,000 | |
Comprehensive loss | (16,321,104) | (12,403,215) |
Comprehensive loss attributable to the noncontrolling interest | 849,759 | |
Comprehensive loss attributable to Akerna shareholders | $ (15,471,345) | $ (12,403,215) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) | Common | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholder's Equity | Noncontrolling Interest in Consolidated Subsidiary | Total |
Balance at Jun. 30, 2018 | $ 492 | $ 14,563,102 | $ (13,163,531) | $ 1,400,063 | $ 1,400,063 | ||
Balance, shares at Jun. 30, 2018 | 4,922,650 | ||||||
Issuance of common stock | $ 110 | 9,999,890 | 10,000,000 | 10,000,000 | |||
Issuance of common stock, shares | 1,099,376 | ||||||
Issuance of common stock in connection with reverse merger | $ 388 | 18,878,387 | 18,878,775 | 18,878,775 | |||
Issuance of common stock in connection with reverse merger, shares | 3,880,282 | ||||||
Issuance of common stock for compensation in connection with reverse merger | $ 50 | 3,393,231 | 3,393,281 | 3,393,281 | |||
Issuance of common stock for compensation in connection with reverse merger, shares | 498,073 | ||||||
Stock-based compensation amortization | 490,830 | 490,830 | 490,830 | ||||
Common stock issued upon cashless exercise of options | $ 19 | (19) | |||||
Common stock issued upon cashless exercise of options, shares | 189,365 | ||||||
Net loss | (12,403,215) | (12,403,215) | (12,403,215) | ||||
Balance at Jun. 30, 2019 | $ 1,059 | 47,325,421 | (25,566,746) | 21,759,734 | 21,759,734 | ||
Balance, shares at Jun. 30, 2019 | 10,589,746 | ||||||
Stock-based compensation amortization | 1,253,234 | 1,253,234 | 1,253,234 | ||||
Common stock issued upon warrant exercise | $ 37 | 4,247,028 | 4,247,065 | 4,247,065 | |||
Common stock issued upon warrant exercise, shares | 369,311 | ||||||
Common stock issued in business combinations | $ 230 | 20,081,236 | 20,081,466 | 20,081,466 | |||
Common stock issued in business combinations, shares | 2,299,650 | ||||||
Noncontrolling interest in acquired subsidiary | 5,554,011 | 5,554,011 | |||||
Forfeitures of restricted shares | $ (5) | 5 | |||||
Forfeitures of restricted shares, shares | (54,901) | ||||||
Change in fair value of Convertible Notes | 63,000 | 63,000 | 63,000 | ||||
Net loss | (15,534,345) | (15,534,345) | (849,759) | (16,384,104) | |||
Balance at Jun. 30, 2020 | $ 1,321 | $ 72,906,924 | $ 63,000 | $ (41,101,091) | $ 31,870,154 | $ 4,704,252 | $ 31,870,154 |
Balance, shares at Jun. 30, 2020 | 13,203,806 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 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 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 |
Cash paid for taxes | ||
Cash paid for interest | ||
Supplemental disclosure of non-cash investing and financing activity: | ||
Cashless exercise of options | 19 | |
Stock-based compensation capitalized as software development | 87,104 | |
Assets acquired and liabilities assumed in business combinations and reverse merger: | ||
Accounts receivable | 77,505 | |
Prepaid expenses and other current assets | 27,860 | 35,292 |
Fixed assets | 2,410 | |
Intangible assets | 8,010,000 | |
Goodwill | 20,254,309 | |
Accounts payable and accrued liabilities | 1,441,062 | |
Deferred revenue | 31,220 | |
Contingent consideration | $ 1,387,000 |
Description of Business, Liquid
Description of Business, Liquidity, and Capital Resources | 12 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business, Liquidity, and Capital Resources | Note 1 - Description of Business, Liquidity, and Capital Resources Description of Business Akerna Corp., herein referred to as we, us, our or Akerna, through our wholly-owned subsidiaries MJ Freeway, LLC, or MJF, Trellis Solutions, Inc., or Trellis, and solo sciences, inc., or Solo provides enterprise software solutions that enable regulatory compliance and inventory management. Our proprietary, broad and growing 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 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 platform, MJ Platform®, and Trellis®, to state-licensed businesses, and our regulatory software platform, Leaf Data Systems®, to state government regulatory agencies. Through our controlled subsidiary, solo sciences inc., we provide an innovative, next-generation solution for state and national governments to securely track product and waste throughout the supply chain with solo*TAG ™ ™ 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. Liquidity and Capital Resources Since our inception, we have incurred recurring operating losses, used cash in operations, and relied on capital raising transactions to continue ongoing operations. Although we have continuing negative cash flow from operations, the cash outflow since the Mergers is partially attributable to approximately $4.1 million in costs incurred in connection with specific transactions, including the Mergers, acquisitions completed or expected to close within the next twelve months and the issuance of debt. We implemented a cost reduction initiative and achieved a reduction in cash used in operations in excess of $1.0 million between the third and fourth quarters of fiscal year 2020. Subsequent to year end we implemented phase two of that initiative, the cost-cutting measures included reduction in headcount, as our business has matured we have been able to streamline our operations, we also determined to forego certain costs, which have not historically yielded sufficient returns. On June 8, 2020, we authorized a new series of senior secured convertible notes with net proceeds of $13.8 million after debt issuance costs. We anticipate our current cash balances will be sufficient to meet the working capital requirements for the next twelve months. From time to time, we may pursue various strategic business opportunities. These opportunities may include investment in or ownership of additional technology companies through direct investments, acquisitions, joint ventures, and other arrangements. We can provide no assurance that we will successfully identify such opportunities or that, if we identify and pursue any of these opportunities, any of them will be consummated. Consequently, we may raise additional equity or debt capital or enter into arrangements to secure the necessary financing to fund the completion of such strategic business opportunities, although no assurance can be provided that we will be successful in completing a future capital raise. The sale of additional equity could result in additional dilution to our existing stockholders, and financing arrangements may not be available to us, or may not be available in sufficient amounts or on acceptable terms. Our future operating performance will be subject to future economic conditions and to financial, business, and other factors, many of which are beyond our control. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements and related notes reflect the historical results of MJF prior to the mergers completed in June 2019, or the Mergers, with MTech Acquisition Corp., or MTech, and other related entities, which resulted in the combined company and do not include the historical results of MTech prior to the completion of the Mergers. The consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States, or GAAP, and our reporting currency is the United States Dollar. Principles of Consolidation Our accompanying consolidated financial statements include the accounts of Akerna, our wholly-owned subsidiaries, and those entities in which we otherwise have a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation. We evaluate our ownership interests, contractual rights, and other interests in entities to determine if the entities are variable interest entities or VIEs when we have a variable interest in those entities. Generally, a VIE is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. These evaluations can be complex and involve judgment and the use of estimates and assumptions based on available historical information. If we determine that we hold a variable interest in a VIE and we are the primary beneficiary of the VIE, we must consolidate the VIE in our financial statements. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE's economic performance and which party controls such activities; the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; and the similarity with and significance to our business activities and the business activities of the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of these VIE's operations and general market conditions. We determine whether we are the primary beneficiary of a VIE upon our initial involvement with the VIE and reassess our status on an ongoing basis. Use of Estimates The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes thereto. We base our estimates on assumptions that we believe to be reasonable under the circumstances, the results of which form a basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. Actual results could differ from those estimates under different assumptions or conditions; however, we believe that our estimates are reasonable. Cash and Cash Equivalents We consider liquid instruments purchased with an original maturity of three months or less to be cash equivalents. There were no cash equivalents as of June 30, 2020 and 2019. We continually monitor our positions with, and the credit quality of, the financial institutions with which we invest. As of the balance sheet date, and periodically throughout the year, we have maintained balances in various operating accounts in excess of federally insured limits. As of June 30, 2020, approximately $23.5 million of our cash balances were uninsured. We have not experienced any losses on such accounts. Restricted Cash Restricted cash consists of funds that are contractually or legally restricted as to usage or withdrawal and is presented separately from cash and cash equivalents on our consolidated balance sheets. Our restricted cash serves as collateral for a letter of credit. Accounts Receivable, Net We maintain an allowance for doubtful accounts equal to the estimated uncollectible amounts based on our historical collection experience and review of the current status of trade accounts receivable. Receivables are written-off and charged against the recorded allowance when we have exhausted collection efforts without success. The allowance for doubtful accounts was $0.2 million as of June 30, 2020, and 2019. The allowance for doubtful accounts consists of the following activity for the years ended June 30, 2020 and 2019: 2020 2019 Allowance for doubtful accounts, beginning balance $ 190,088 $ 39,571 Additions: Bad debt expense 1,094,507 345,941 Deductions: Write-off uncollectable accounts (1,076,173 ) (195,424 ) Allowance for doubtful accounts, ending balance $ 208,422 $ 190,088 Concentrations of Credit Risk We grant credit in the normal course of business to customers in the United States. We periodically perform credit analysis and monitor the financial condition of our customers to reduce credit risk. During the year ended June 30, 2020 and 2019, government client accounted for % and 30% of total revenues, respectively. As of June 30, 2020, and 2019 government clients accounted for a total of 36% and 18%, and 34% and 24% of net accounts receivable, respectively. Equity Method Investments We make strategic investments in privately held equity securities of companies that provide technology solutions that are complementary to ours. When we can exert significant influence over, but do not control, the investee's operations, through voting rights or representation on the investee's board of directors, we account for the investment using the equity method of accounting. We record our share in the investee's earnings and losses in the consolidated statement of operations. We assess our investment for other-than-temporary impairment when events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable and recognize an impairment loss to adjust the investment to its then-current fair value. Intangible Assets Acquired through Business Combinations Intangible assets are amortized over their estimated useful lives. We evaluate the estimated remaining useful life of our intangible assets when events or changes in circumstances indicate an adjustment to the remaining amortization may be needed. We similarly evaluate the recoverability of these assets upon events or changes in circumstances indicate a potential impairment. Recoverability of these assets is measured by comparing the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value. There were no impairments of intangible assets during the year ended June 30, 2020, or 2019. Goodwill Impairment Assessment We evaluate and test the recoverability of our goodwill for impairment at least annually during October of each year or more often if circumstances indicate that goodwill may not be recoverable. Software Development Costs Costs incurred during the application development stage of a newly developed application and costs we incur to enhance our existing platforms that meet certain criteria are subject to capitalization and subsequent amortization. Product development stage costs were approximately $3.2 million during the year ended June 30, 2020. Product development costs are primarily comprised of personnel costs such as payroll and benefits, vendor costs, and other costs directly attributable to the project. We capitalize costs only during the development phase. Any costs in connection to planning, design, and maintenance subsequent to release are expensed as incurred. We amortize software development costs over the expected useful life of the specific application, generally 2-5 years. We evaluate capitalized software development costs for impairment when there is an indication that the unamortized cost may not be recoverable. Fair Value of Financial Instruments GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, we are required to classify certain assets and liabilities based on the fair value hierarchy, which groups fair value-measured assets and liabilities based upon the following levels of inputs: ● Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; ● Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; ● Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity). The fair value of financial instruments is the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying values of financial instruments such as accounts receivable accounts payable and accrued liabilities approximate fair value based on their short maturities. Please refer to Note 11 - Fair Value Measurements for additional information regarding the fair value of financial instruments that we measure at fair value, including senior secured convertible notes and contingent consideration. Fair Value Option The fair value option provides an election that allows a company to irrevocably elect to record certain financial assets and liabilities at fair value on an instrument-by-instrument basis at initial recognition. We have elected to apply the fair value option to certain convertible notes due to the complexity of the various conversion and settlement options available to both the Note Holders and Akerna. The convertible notes accounted for under the fair value option election are each a debt host financial instrument containing embedded features that would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements in accordance with GAAP. Notwithstanding, When the fair value option election is applied to financial liabilities, bifurcation of an embedded derivative is no required, and the financial liability is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis as of each reporting period date. The portion of the change in fair value attributed to a change in the instrument-specific credit risk is recognized as a component of other comprehensive income and the remaining amount of the fair value adjustment is recognized as other income (expense) in our consolidated statement of operations. The estimated fair value adjustment is presented in a respective single line item within other income (expense) in the accompanying consolidated statement of operations because the change in fair value of the convertible notes was not attributable to instrument-specific credit risk. Revenue Recognition We derive our revenues primarily from the following sources: software revenues, which are primarily comprised of subscription fees from government and commercial customers accessing our enterprise cloud computing services and from customers paying for additional support beyond the standard support that is included in the basic subscription fees; and consulting services provided to operators interested in integrating our platform into their respective operations, such services include: assessing compliance requirements, monitoring systems and readiness; assisting with the application process; and evaluating the operator's inspection readiness and business plan. We commence revenue recognition when there is persuasive evidence of an arrangement, the service has been or is being provided to the customer, the collection of the fees is reasonably assured, and the amount of fees to be paid by the customer is fixed or determinable. Software Revenue Software revenue primarily consists of subscription revenue that is recognized ratably over the term of the contract, beginning when access to the applicable software is provided to the customer. We typically invoice customers at the beginning of the term, in multi-year, annual, quarterly, or monthly installments. When a collection of fees occurs in advance of service delivery, revenue recognition is deferred until such services commence. Revenue for implementation fees is recognized ratably over the expected term of the contract, including expected renewals. We include service level commitments to customers warranting certain levels of uptime reliability and performance and permitting those customers to receive credits if those levels are not met. In addition, customer contracts often include: specific obligations that require us to maintain the availability of the customer's data through the service and that customer content is secured against unauthorized access or loss, and indemnity provisions whereby we indemnify customers from third-party claims asserted against them that result from our failure to maintain the availability of their content or securing the same from unauthorized access or loss. To date, we have not incurred any material costs as a result of such commitments. Any such credits or payments made to customers under these arrangements are recorded as a reduction of revenue. Consulting Services Revenue Consulting services revenue consists of contracts with fixed terms and fee structures based upon the volume and activity or fixed-price contracts for consulting and strategic services. When these services are not combined with subscription revenues as a single unit of account, as discussed below, these revenues are recognized as services are rendered and accepted by the customer. Other Revenues We sell solo*TAG ™ ™ ™ ™ Cost of Revenue Cost of revenue consists primarily of costs related to providing subscription and other services to our customers, including employee compensation and related expenses for data center operations, customer support and professional services personnel, payments to outside technology service providers, security services, and other tools. Deferred Revenue Deferred revenue consists of payments received in advance of revenue recognition from subscription services. The deferred revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, contract duration, and invoice frequency. Deferred revenue that will be recognized during the succeeding twelve-month period is recorded as deferred revenue, which is a current liability on the accompanying consolidated balance sheets. Reclassifications Certain prior year financial statement amounts have been reclassified for consistency with the current year presentation. Income Taxes Income taxes are accounted for using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of other assets and liabilities. We provide for income taxes at the current and future enacted tax rates and laws applicable in each taxing jurisdiction. We use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return and disclosures regarding uncertainties in income tax positions. We recognize interest and penalties related to income tax matters in selling, general and administrative expenses in the consolidated statement of operations. We recognize deferred tax assets to the extent that its assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of its net recorded amount, we will make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. Stock-Based Compensation We measured stock-based compensation based on the fair value of the share-based awards on the date of grant and recognize the related costs on a straight-line basis over the requisite service period, which is generally the vesting period. Segments Our chief operating decision maker reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance and information for different revenue streams is not evaluated separately. As such, we have a single operating segment. Recently Issued Accounting Pronouncements The Financial Accounting Standards Board, or the FASB, has issued guidance to revise accounting for revenue from contracts with customers, which supersedes the revenue recognition requirements and industry-specific guidance currently in effect for us. The new revenue standard requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. The new revenue standard is effective for our fiscal 2021 annual reporting period and for interim periods thereafter. The new revenue standard allows for either full retrospective or modified retrospective adoption. We will adopt the new standard using the modified retrospective approach and anticipate that the timing of recognition of incremental costs of obtaining contracts will be the most significant change to our results of operations upon adoption. The FASB has issued new guidance related to the accounting for leases. The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. The new standard is effective for us in our fiscal year beginning in 2022. We are evaluating the impact of the adoption of the new standard on our consolidated financial statements and do not anticipate a significant impact on our results of operations. The FASB has issued guidance to introduce a new model for recognizing credit losses on financial instruments based on estimated current expected credit losses, or CECL. Under the new standard, an entity is required to estimate CECL on trade receivables at inception, based on historical information, current conditions, and reasonable and supportable forecasts. The new guidance is effective for us in our fiscal year beginning in 2023. We are evaluating the impact of the adoption of the new standard on our consolidated financial statements. The FASB has issued guidance related to the accounting for share-based compensation to nonemployees, which eliminates the separate accounting model for nonemployee share-based payment awards and generally requires companies to account for share-based payment transactions with nonemployees in the same way as share-based payment transactions with employees. Under the new guidance, nonemployee share-based payment transactions are measured at the grant-date fair value and are no longer remeasured at the then-current fair values at each reporting date until the share options have vested. The amended guidance is effective for our annual financial statements for the fiscal year beginning on July 1, 2020, and for interim periods beginning in the subsequent fiscal year. We do not anticipate the adoption of this guidance to have a significant effect on our results of operations. The FASB has issued guidance regarding when internal-use software development costs should be capitalized or charged to expense. Depending upon the nature of the costs and the project stage in which they are incurred. Capitalized development costs are subject to amortization and impairment guidance consistent with existing internal-use software development cost guidance. The guidance is applicable for us in our fiscal year beginning in 2023 with early adoption permitted, including adoption in an interim period. We are evaluating the impact of the adoption of the new standard on our financial statements. The FASB has issued guidance clarifying the interactions between various standards governing investments in equity securities. The new guidance addresses accounting for the transition into and out of the equity method and measurement of certain purchased options and forward contracts to acquire investments. The standard is effective for us for annual and interim periods in our fiscal year beginning in 2022, with early adoption permitted. Adoption of the standard requires changes to be made prospectively. We are evaluating the impact of adoption of the new standard on our consolidated financial statements. |
Significant Transactions
Significant Transactions | 12 Months Ended |
Jun. 30, 2020 | |
Significant Transactions [Abstract] | |
Significant Transactions | Note 3 – Significant Transactions Business Combinations Trellis Solutions, Inc. On April 8, 2020, we acquired Trellis, a cannabis cultivation management and compliance software company in an all-stock transaction. Our estimated acquisition date fair value of the consideration transferred for Trellis was as follows (in thousands): Common shares issued $ 2,531 Contingent consideration 998 Total estimated fair value of consideration $ 3,529 We incurred $0.1 million We issued 349,650 shares of our common stock valued at $7.24 Our purchase price allocation is preliminary as additional information may come to our attention regarding the acquisition date value of assets acquired and liabilities assumed that could require measurement period adjustments to this allocation. The following table summarizes our preliminary estimated fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands): Cash $ 21 Accounts receivable, net 77 Other assets 6 Acquired technology 210 Acquired trade name 80 Customer relationships 220 Goodwill 3,229 Accounts payable and accrued expenses (283 ) Deferred revenue (31 ) Net assets acquired $ 3,529 The excess of purchase consideration over the fair value of net tangible and intangible assets acquired was recorded as goodwill, which is primarily attributed to the assembled workforce and expanded market opportunities, for which there is no basis for U.S. income tax purposes. The amounts of Trellis's revenue and net loss included in our consolidated statement of operations from the acquisition date of April 10, 2020 to June 30, 2020 were $216,000 and $17,000, respectively. solo sciences, inc. On January 15, 2020, we closed on a stock purchase agreement with substantially all of the shareholders of Solo pursuant to which we acquired all right, title, and interest in 80.4% of the issued and outstanding capital stock of Solo, calculated on a fully diluted basis. As a result of our initial investment, Solo became a controlled subsidiary and we commenced consolidation of Solo on January 15, 2020. The estimated acquisition date fair value of the consideration transferred for Solo was $17.9 million. During the fourth quarter of fiscal 2020, we completed the preliminary valuation of the contingent consideration and recorded a measurement period adjustment to reflect this liability on our balance sheet. The estimated fair value of consideration recorded consisted of the following (in thousands): Common shares issued $ 17,550 Contingent consideration 389 Total estimated fair value of consideration $ 17,939 We incurred $0.3 million of transaction costs directly related to the acquisition, which is reflected in general and administrative expenses in our consolidated statement of operations. We exchanged 1,950,000 shares of our common stock, valued at $9.00 per share, the closing price of a share of our common stock on the date of acquisition. In addition to the stock consideration, we agreed to pay contingent consideration in the form of fees payable to the legacy Solo shareholders equal to the lesser of (i) $0.01 per solo*TAG ™ ™ ™ ™ We also acquired an option to acquire the noncontrolling interests in Solo during the 12 months following the close for either cash or shares. Beginning with the expiration of our option, the noncontrolling interests in Solo have a 3-month option to acquire between 40% and 55% of Solo back from us for cash. On July 31, 2020, we entered into an amendment to the stock purchase agreement to exercise our option to acquire the noncontrolling interests in Solo, for 800,000 shares of our common stock, this transaction will be recorded as an equity transaction, with no effect to the value of the assets acquired or liabilities assumed. In connection with this amendment, the selling shareholders agreed to cancel the contingent consideration in the future and waived a right to any amount that would have been earned prior to the amendment. Because the amendment occurred subsequent to our fiscal year-end, the liability remains recorded as of June 30, 2020, the liability will be written off upon the during our next fiscal quarter. During the fourth quarter 2020, we obtained additional information regarding the valuation of the assets acquired and liabilities assumed. We have recorded a measurement period adjustment to allocate the acquisition price to intangible assets, goodwill, accrued liabilities, and the fair value of noncontrolling interests. As we finalize this valuation, we may have additional adjustments to the allocated values. The following table summarizes the preliminary estimated fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands): Cash $ 101 Prepaid expenses and other assets 22 Furniture, fixtures, and equipment 2 Acquired technology 7,160 Acquired trade name 340 Goodwill 17,025 Accounts payable and accrued liabilities (1,158 ) Fair value of noncontrolling interests (5,554 ) Net assets acquired $ 17,938 The excess of purchase consideration over the fair value of net tangible and intangible assets acquired was recorded as goodwill, which is primarily attributed to expanded market opportunities, for which there is no basis for U.S. income tax purposes. The amounts of Solo's revenue and net loss included in our condensed consolidated statement of operations from the acquisition date of January 15, 2020 to June 30, 2020 were $23,000 and $1,471,000, respectively. Pro Forma Financial Information The following unaudited pro forma financial information summarizes the combined results of operations for Akerna, Trellis, and Solo, as though the companies were combined as of the beginning of our fiscal 2019: June 30, 2020 2019 Revenues $ 13,584 $ 12,220 Net loss (20,589 ) (15,884 ) The pro forma financial information for the periods presented above has been calculated after adjusting the results of Solo and Trellis to reflect the business combination accounting effects resulting from these acquisitions, including the amortization expense from acquired intangible assets as though the acquisitions occurred as of the beginning of our fiscal year 2020. As noted above, the allocation is preliminary and finalization of our valuation could result in changes to the amount of amortization expense from acquired intangible assets included in the pro forma financial information presented above. The Akerna historical consolidated financial statements have been adjusted in the pro forma combined financial statements to give effect to pro forma events that are directly attributable to the business combinations and factually supportable. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of our 2019 fiscal year. Ample Organics On July 7, 2020, we completed the acquisition of Ample Organics ("Ample"), Ample provides a seed-to-sale platform to clients in Canada, which offers tracking, reporting, and compliance tools to cannabis cultivators, processors, sellers, and clinics. We acquired 100% of the stock of Ample Organics for 3.3 million exchangeable shares of one of our wholly-owned subsidiaries. The exchangeable shares may be exchanged, at the option of the holder, for shares of Akerna common stock on a one-for-one basis, therefore the exchangeable shares issued were valued at $7.65 per share, the closing price of an equivalent share of Akerna common stock, $30.7 million was the aggregate value of the exchangeable shares. In addition to the stock consideration, we paid $5.5 million in cash, which was used to settle all of Ample's then outstanding debt. In addition to the stock and cash consideration, the agreement provides for contingent consideration of up to CAD$10,000,000, payable in exchangeable shares, payable if Ample's Recurring Revenue recognized during the 12 months after the acquisition date is CAD$9,000,000 or more. The contingent consideration amount is reduced by an amount equal to the product of CAD$6.67 multiplied by the difference between CAD$9,000,000 and the amount of Recurring Revenue realized during the 12 months following the acquisition. The contingent consideration will be recorded as the estimated fair value on the acquisition date and adjusted to estimated fair value in each subsequent reporting period until settlement. Due to the short period of time since the acquisition date and limitations on access to Ample information prior to the acquisition date, our initial accounting for the business combination is incomplete at this time. As a result, we are unable to provide amounts recognized as of the acquisition date for major classes of assets and liabilities acquired and resulting from the transaction, including the information required for contingencies, intangible assets, and goodwill. This information is expected to be reflected in our interim financial statements included in our quarterly report on Form 10-Q for the three months ending September 30, 2020. Reverse Merger On June 17, 2019, MTech and MJF consummated the Mergers contemplated by the Merger Agreement dated October 10, 2018, as amended. In connection with the closing of the Mergers, we changed our name from MTech Acquisition Holdings Inc. to Akerna Corp. The Merger Consideration was paid through the issuance of 6,520,099 shares of our common stock (the "Consideration Shares") to the former holders of MJF common units, preferred units, and profit interest units at a price equal to $10.16 per share. We allocated 283,010 fully vested shares of Akerna common stock and 215,063 shares of unvested restricted stock were allocated to the former holders of MJF profit interest units, which were accounted for as share-based compensation. As disclosed above, (a) 283,110 fully vested shares of common stock were allocated to the former holders of MJF profit interest units, resulting in the recognition of approximately $3.4 million on June 17, 2019 and approximately $2.1 million of compensation expense related to unvested restricted shares such profit interest units be recognized over the remaining vesting period of 3 years. |
Balance Sheet Disclosures
Balance Sheet Disclosures | 12 Months Ended |
Jun. 30, 2020 | |
Balance Sheet Disclosures [Abstract] | |
Balance Sheet Disclosures | Note 4 - Balance Sheet Disclosures Prepaid expenses and other current assets as of June 30, 2020 and 2019 consisted of the following: 2020 2019 Software and technology $ 571,695 $ 237,930 Professional services, dues, and subscriptions 473,731 169,804 Insurance 105,814 159,940 Rental deposit 38,303 10,000 Other 25,798 — Total Prepaid Expenses and Other Current Assets $ 1,215,341 $ 577,674 Accounts payable and accrued liabilities as of June 30, 2020 and 2019 consisted of the following: 2020 2019 Accounts payable $ 1,443,895 $ 1,317,566 Professional fees 2,273,659 49,205 Sales taxes 59,825 36,358 Compensation 260,042 354,724 Contractors 782,366 19,557 Other 42,141 40,706 Total accounts payable and accrued liabilities $ 4,861,928 $ 1,818,116 The accrued compensation includes accrued executive bonuses of $128,000 and $215,000 as of June 30, 2020, and 2019, respectively. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 12 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Net | Note 5 - Goodwill and Intangible Assets, Net Goodwill The following table reflects the changes in the carrying amount of goodwill during the year ended June 30, 2020: Balance as of June 30, 2019 $ — Additions due to acquisitions 20,254,309 Balance as of June 30, 2020 $ 20,254,309 Finite-lived Intangible Assets, Net Intangible assets as of June 30, 2020 consist of the following: Weighted average remaining amortization period (in years) Gross carrying amount Accumulated amortization Net Acquired developed technology 4.42 $ 7,370,000 $ (679,696 ) $ 6,690,304 Acquired trade names 7.40 420,000 (23,248 ) 396,752 Customer relationships 1.75 220,000 (24,475 ) 195,525 Other intangible assets, not yet placed into service N/A 211,394 — 211,394 Intangible assets $ 8,221,394 $ (727,419 ) $ 7,493,975 Capitalized software - In-service 1.86 2,852,044 (560,528 ) 2,291,516 Capitalized software - Work in Progress N/A 337,788 — 337,788 Total Capitalized Software 3,189,832 (560,528 ) 2,629,304 Total finite-lived intangible assets $ 11,411,226 $ (1,287,947 ) $ 10,123,279 We record amortization expense associated with acquired developed technology, acquired trade names, and customer relationships. The amortization expense of all finite-lived intangible assets, which includes capitalized software was $1.3 million for the year ended June 30, 2020. As of June 30, 2020, expected amortization expense relating to capitalized software and purchased intangible assets for each of the next five years and thereafter is as follows: Acquired Intangible Assets Capitalized Software 2021 $ 1,711,444 $ 1,325,851 2022 1,663,607 806,012 2023 1,490,511 63,838 2024 1,469,778 63,838 2025 813,444 31,977 Thereafter 133,797 — Total $ 7,282,581 $ 2,291,516 |
Equity Method Investment and Re
Equity Method Investment and Related Party Transaction | 12 Months Ended |
Jun. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investment and Related Party Transaction | Note 6 – Equity Method Investment and Related Party Transaction Investment in and License Agreement with Zol Solutions, Inc. On October 7, 2019, we participated in an offering of preferred stock of Zol Solutions, Inc. ("ZolTrain") along with other investors in which we purchased 203,000 shares of Series Seed Preferred Stock (the "ZolTrain Preferred") for a purchase price of $250,000, which represents a noncontrolling interest in ZolTrain. The ZolTrain Preferred is convertible into shares of common stock of ZolTrain at a conversion rate of $1.232 per share at the option of the holder and contains certain anti-dilution protection in the event of certain future issuances of securities by ZolTrain. We are entitled to vote the number of common shares in which the ZolTrain Preferred is convertible into at any meeting of the ZolTrain stockholders. The ZolTrain Preferred also provides us with rights of first refusal with respect to newly issued securities of ZolTrain as well as issued and outstanding securities of ZolTrain that are offered to third parties. In connection with the agreement, Nina Simosko, our Chief Revenue Officer, was appointed as one of three members of ZolTrain's board of directors. Ms. Simosko may only be removed from the ZolTrain board by us and we retain the right to fill the vacancy. We have determined that ZolTrain is a VIE for accounting purposes. However, we are not required to consolidate ZolTrain in our financial statements because we are not ZolTrain's primary beneficiary. As of June 30, 2020, our maximum exposure to loss was equal to the carrying value of our initial investment of $250,000. We have concluded that the ZolTrain Preferred is in-substance common stock because the liquidation preference provided is not substantive, the equity method of accounting is applicable to in-substance common stock. As a result of our representation on the board of directors, we determined that we can exert significant influence over the day to day operations of ZolTrain therefore; we account for this investment using the equity method of accounting, which requires we recognize our share of the ZolTrain operations in our results of operations. For the year ended June 30, 2020 we have recognized equity in loss of investee of $3,692, which represents our share of ZolTrain's losses since our investment. Subsequent to our investment, we entered into a nonexclusive license/reseller agreement with ZolTrain, effective October 24, 2019, to provide ZolTrain's online cannabis training platform as a co-branded integration option into our MJ Platform and Leaf Data Systems, which is a related party transaction. ZolTrain will share subscription-based revenue generated from our customers with us. The amount of the share of the revenue for each of us and ZolTrain will depend on both (a) the number of training modules accessed by a customer and (b) which party created the accessed content. In addition to the revenue sharing arrangement, the license/reseller agreement provides us with the right to receive additional consideration from ZolTrain in the form of an equity earnout if certain revenue milestones are achieved during 2020, 2021, and 2022. Our ability to recognize revenue from the additional earnout consideration in the future will mainly depend on whether it becomes probable that such revenue milestones will be achieved. For the year ended June 30, 2020 we have not recognized any revenue from this agreement. |
Long Term Debt
Long Term Debt | 12 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Long Term Debt | Note 7 - Long Term Debt Long-term debt consisted of the following at June 30, 2020, we had no long-term debt as of June 30, 2019: Convertible Notes (at fair value) $ 14,131,000 PPP loan 2,204,600 Subtotal 16,335,600 Less: current maturities (6,135,364 ) Total long-term debt, less current portion $ 10,200,236 Senior Secured Convertible Notes On June 8, 2020, we entered into a Securities Purchase Agreement, or SPA, with two institutional investors, or the Note Holders, to sell a new series of senior secured convertible notes, or the Convertible Notes, of Akerna in a private placement to the Note Holders, in the aggregate principal amount of $17.0 million having an aggregate original issue discount of 12%, and ranking senior to all outstanding and future indebtedness of Akerna. The Convertible Notes were sold on June 9, 2020, with an original issue discount pursuant to which the Note Holders paid $880 per each $1,000 in principal amount of the Convertible Notes. The Convertible Notes do not bear interest except upon the occurrence of an event of default, in which event the applicable rate will be 15.00% per annum. The Convertible Notes mature on June 1, 2023, are payable in installments beginning on October 1, 2020, and may not be prepaid. The Convertible Notes are convertible at any time, at the election of the Holders and subject to certain limitations, into shares of common stock at a rate equal to the amount of principal, interest, if any, and unpaid late charges, if any, divided by a conversion price of $11.50. Under the terms of the Convertible Notes, the Convertible Notes are convertible at any time, in whole or in part, at the option of the holders thereof, into shares of common stock at a rate equal to the amount of principal, interest (if any) and unpaid late charges (if any), divided by a conversion price of $11.50. In connection with the occurrence of an event of default, the Holders of the Convertible Notes will be entitled to convert all or any portion of the 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, or 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 the common stock for each of the two trading days with the lowest VWAP of the common stock during the ten (10) 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 $1.92. We have elected to use the fair value option to account for the Convertible Notes. The fair value of the Convertible Notes on issuance was recorded as $15.0 million. During the year ended June 30, 2020, the fair value of the Convertible Notes decreased by $0.8 million. Of the adjustment, a decrease of $0.1 million resulted from instrument-specific credit risk and was recognized as other comprehensive income and accumulated in equity and a decrease of $0.8 million was recognized as current period other expense in our consolidated statement of operations. As of June 30, 2020, the fair value of the Convertible Notes on our consolidated balance sheet was $14.1 million. Paycheck Protection Program Loan In April 2020, we were granted a loan, or the PPP Loan, from a lender in the aggregate amount of $2.2 million pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act. The PPP Loan is evidenced by a promissory note dated April 21, 2020, the Note. The PPP Loan bears interest at a fixed rate of 1.0% per annum, with the first six months of interest deferred from the date of the Note, has an initial term of two years from the date of the Note, and is unsecured and guaranteed by the Small Business Administration. We may prepay up to 20% of the PPP Loan amount at any time prior to maturity with no prepayment penalties. We must pay all accrued interest if we prepay greater than 20% of the PPP Loan amount and the PPP Loan has been sold on the secondary market. The Note provides for customary events of default. The PPP Loan may be accelerated upon the occurrence of an event of default. The PPP Loan may be forgiven in accordance with the terms of the CARES Act. The principal amount of the PPP Loan not forgiven and accrued interest is to be repaid in 18 equal monthly installments beginning seven months from the date of the disbursement of the PPP Loan. We applied for the PPP Loan and received the proceeds from the PPP Loan prior to the issuance of the recent guidance from the United States Treasury Department and U.S. Small Business Administration on April 23, 2020. We are currently evaluating the impact this guidance has on Akerna and the PPP Loan. We are accounting for the PPP Loan as a liability and accrue interest expense using the effective interest method. The aggregate scheduled maturities of outstanding long-term debt obligations in subsequent years are as follows: Fiscal Year ending June 30, 2021 $ 6,844,620 2022 12,359,980 Aggregate maturities 19,204,600 Original issue discount on Convertible Notes (2,040,000 ) Unrealized change in fair value of Convertible Notes (829,000 ) Long term debt outstanding as of June 30, 2020 $ 16,335,600 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Note 8 - Stockholders' Equity Common and Preferred Stock Upon the closing of the Merger, our certificate of incorporation was amended and restated to have one single class of common stock and 75,000,000 authorized shares of common stock, par value $0.0001 per share. We also entered into a series of securities purchase agreements with certain investors (the "PIPE Investors"), whereby we issued 901,074 shares of Class A common stock (the "Private Placement Shares") for an aggregate purchase price of $9.2 million (the "Private Placement"), which closed simultaneously with the consummation of the Mergers. Upon the closing of the Mergers, the Private Placement Shares were automatically converted into shares of Akerna common stock on a one-for-one basis. The proceeds received from the Mergers totaled approximately $18 million, which is net of $4.4 million of underwriting discounts and commissions and other expenses related to the Mergers. We also have 5,000,000 authorized shares of preferred stock, $0.0001 par value per share, of which none are issued and outstanding. 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 creditors of the Corporation 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. Warrants In connection with MTech's initial public offering, we sold 5,750,000 units at a purchase price of $10.00 per unit, inclusive of 750,000 units sold to the underwriters on February 8, 2018, upon the underwriters' election to fully exercise their over-allotment option. Each unit consisted of one share of MTech's common stock and one warrant ("Public Warrant"). Each Public Warrant entitled the holder to purchase one share of MTech's common stock at an exercise price of $11.50. Upon the Mergers, the Public Warrants were converted to those of Akerna at the exchange ratio of one-for-one. A summary of the status of common stock warrants as of June 30, 2020 and the changes during the two years then ended, is presented in the following table: Shares Issuable Under Warrants Weighted-average Exercise Price Weighted Average Remaining Life Aggregate Intrinsic Value Outstanding as of July 1, 2018 5,993,750 $ 11.50 — $ — Issued 189,365 11.50 — — Exercised — — — — Expired/canceled — — — — Outstanding at June 30, 2019 6,183,115 $ 11.50 4.97 $ 2,473,000 Issued — — — — Exercised (369,311 ) — — — Expired/canceled — — — — Outstanding at June 30, 2020 5,813,804 $ 11.50 3.97 $ — There was no aggregate intrinsic value for the warrants outstanding as of June 30, 2020. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Note 9 - Stock-Based Compensation Restricted Shares and Restricted Stock Units On June 17, 2019, our stockholders considered and approved the 2019 Long Term Incentive Plan, or the Equity Incentive Plan, and reserved 1,040,038 shares of common stock for issuance thereunder. The Equity Incentive Plan was previously approved, subject to stockholder approval, by the board of directors of Akerna on January 23, 2019. The Equity Incentive Plan became effective immediately upon the Closing of the Mergers. On June 26, 2020, the stockholders approved an amendment to the Equity Incentive Plan and increased the shares authorized for issuance thereunder by 525,000 to 1,565,038. We grant restricted stock units, or RSUs, that are subject to time-based vesting and require continuous employment, typically over a period of four years from the grant date or the first day of the service period. Prior to the Mergers, MJF had Profit Interest Incentive Plan in place whereby it could grant Profits Interest Units, or PIUs, to employees or consultants and other independent advisors of the Company. PIUs granted under the Profits Interest Plan would generally vest once a year over four years commencing on the date granted or based on specified performance targets. MJF had the right, but not the obligation, to repurchase vested PIUs from holders upon their termination of employment. Unvested PIUs were to be forfeited upon termination of employment. If the holder was terminated for cause, as defined, all vested and unvested units would be forfeited. PIUs repurchased or canceled or forfeited by the award recipient were available for reissuance. Upon completion of the Mergers, the non-vested PIUs were exchanged for and became subject to restricted stock agreements, or Restricted Shares, with varying vesting terms that reflect the vesting conditions applicable to the individual PIUs at the time of the merger. We determined the PIUs represented a profit-sharing compensation arrangement that had value only upon a defined liquidating event. Accordingly, no value was accrued for the PIUs prior to the Mergers on June 17, 2019, which met the definition of a liquidating event. As a result, we recorded a one-time charge of approximately $3.4 million, which represented the charge associated with issuing fully vested shares of common stock in exchange for the PIUs. A summary of our unvested Restricted Shares and Restricted Stock Units ("RSUs") activity for the year ended June 30, 2020 is presented in the table below: Restricted Shares Restricted Stock Units Total Weighted Average Grant Date Fair Value Unvested as of June 30, 2019 215,063 — 215,063 $ 11.99 Granted — 571,229 571,229 7.24 Vested (88,659 ) (26,965 ) (115,624 ) 7.25 Forfeited (54,091 ) (78,470 ) (132,561 ) 10.83 Unvested as of June 30, 2020 72,313 465,794 538,107 $ 6.56 For the year ended June 30, 2020, we recognized stock-based compensation expense related to the ratable amortization of the unvested Restricted Shares and RSUs of $1.3 million. stock-based compensation expense is included in operating expenses and cost of sales on our consolidated statements of operations consistent with the allocation of other compensation arrangements. During the year ended June 30, 2020, we capitalized $0.1 million in stock-based compensation costs as software development cost. The $3.9 million of unrecognized costs as of June 30, 2020 related to Restricted Shares and RSUs will be ratably recognized over an estimated weighted average remaining vesting period of 3.1 years. |
Loss Per Share
Loss Per Share | 12 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Loss Per Share | Note 10 - Loss Per Share Basic net loss per share is calculated by dividing net loss attributable to Akerna stockholders by the weighted-average number of shares of common stock outstanding. Diluted net loss per common share is calculated by giving effect to all potentially dilutive common stock, including warrants, restricted stock awards, restricted stock units, and shares issuable upon conversion of debt. The dilutive effect of outstanding awards is reflected in diluted earnings per share by application of the treasury stock method and excludes potential common stock 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 as of June 30, 2020 and 2019 that were not included in the calculation of diluted earnings per share and the weighted average amounts of potentially outstanding shares that would have been dilutive had we reported net income for the years ended June 30, 2020 and 2019. Fully Diluted Weighted Average for the Year Ended 2020 2019 2020 2019 Warrants 5,813,804 6,183,115 5,833,971 6,001,013 Restricted Stock Units 325,121 — 37,709 — Restricted Stock Awards 75,654 215,063 7,656 2,351 Shares of common stock issuable in upon conversion of Convertible Notes 1,936,845 — 111,130 — Total 8,151,424 6,398,178 5,990,466 6,003,364 |
Fair Value
Fair Value | 12 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Note 11 - Fair Value Contingent Consideration Solo In connection with our acquisition of Solo, the Solo selling shareholders have the potential to earn the contingent consideration, which is calculated as the lesser of (i) $0.01 per solo*TAG TM TM TM TM We record the fair value of the liability in the consolidated balance sheets under the caption "current contingent consideration" and recognize changes to the liability against earnings or loss in general and administrative expenses in the consolidated statements of operations. The fair value of the contingent consideration on the date of the acquisition of Solo was $389,000. The carrying amount at fair value of the aggregate liability for the contingent consideration recorded on the consolidated balance sheet at June 30, 2020 is $389,000. As such we have not recorded a change in the fair value of the contingent consideration during the year ended June 30, 2020. As discussed in Note 3, subsequent to year end, we reached an agreement with the Solo selling shareholders to eliminate any future obligation with respect to the contingent consideration and waive any contingent consideration that would have been due prior to amending the agreement. We utilized a Monte Carlo simulation model, which incorporates significant inputs 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 contingent consideration reflect our assumptions about the assumptions that market participants would use in valuing the contingent consideration as of the acquisition date and subsequent reporting period. Trellis In connection with our acquisition of Trellis, the Trellis selling shareholders have the potential to earn contingent consideration, which is calculated as five times the annualized revenue of certain customers generated in September 2020. The fair value of the contingent consideration on the date of acquisition of Trellis was $998,000. The carrying amount at the fair value of the liability for the contingent consideration recorded on our consolidated balance sheet as of June 30, 2020 was $0. We have recorded the change in the fair value of the contingent consideration during the year ended June 30, 2020 in general and administrative expenses in our consolidated statement of operations. We valued the contingent consideration using a probability-weighted discounted cash flow model, which incorporates inputs 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 contingent consideration reflect management's own assumptions about the assumptions that market participants would use in valuing the contingent consideration as of the valuation date, as well as our knowledge of specific transactions that effect the calculation. Fair Value Option Election – Convertible Notes We issued Convertible Notes with a principal amount of $17.0 million at a purchase price of $15.0 million on June 9, 2020. We have elected to account for the Convertible Notes using 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 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 income as a component of equity. The remaining estimated fair value adjustment is presented as a single line item within other income (expense) in our consolidated statement of operations under the caption, change in fair value of convertible notes For the Convertible Notes, which are measured at fair value categorized within Level 3 of the fair value hierarchy, the following is a reconciliation of the fair values from June 9, 2020 (date of issuance) to June 30, 2020: Beginning fair value balance on issue date - June 9, 2020 $ 14,960,000 Change in fair value reported in the statements of operations (766,000 ) Change in fair value reported in other comprehensive income (63,000 ) Ending fair value balance - June 30, 2020 $ 14,131,000 The estimated fair value of the Convertible Notes as of their June 9, 2020 issue date and as of June 30, 2020, was computed using a Monte Carlo simulation, 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 Convertible Notes reflects our assumptions about the assumptions that market participants would use in valuing the Convertible Notes as of the issuance date and subsequent reporting period. We determined the fair value by using the following key inputs to the Monte Carlo Simulation Model: Fair Value Assumptions - Convertible Notes June 30, June 9, Face value principal payable $ 17,000,000 $ 17,000,000 Original conversion price $ 11.50 $ 11.50 Value of Common Stock $ 8.80 $ 10.28 Expected term (years) 2.9 3.0 Volatility 45.0 % 45.0 % Market yield (range) 23.9 % 23.3% to 23.4 Risk free rate 0.2 % 0.2 % |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12 - Commitments and Contingencies Operating Leases We lease facilities and vehicles under non-cancelable operating leases. Rent expense for the years ended June 30, 2020 and 2019 was $299,629 and $151,458, respectively. Future minimum lease payments under these leases are $526,185 for the year ending June 30, 2021 and $305,214 for the year ending June 30, 2022. Letter-of-Credit As of June 30, 2020, and 2019, we had a standby letter-of-credit with a bank in the amount of $500,000. The standby letter of credit is collateralized by $500,000 of cash, which is classified as restricted cash on our consolidated balance sheets. The beneficiary of the letter-of-credit is an insurance company. Litigation From time to time, the Company may be involved in litigation relating to claims arising out of its operations in the normal course of business. The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible losses can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees, and other directly related costs expected to be incurred. As of June 30, 2020 and 2019, respectively, there were no legal proceedings requiring recognition or disclosure in the financial statements. Employee Benefit Plan We have a 401(k) Plan (the "Plan") to provide retirement benefits for its employees. Employees may contribute up to a portion of their annual compensation to the Plan, limited to a maximum annual amount as updated annually by the IRS. We do not offer a match of employee contributions nor any discretionary contributions. |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 13 - Income Taxes We are the sole owner of MJF as of June 17, 2019, which is a disregarded entity for federal income taxes. Prior to June 17, 2019 MJF was treated as a partnership for U.S income tax purposes. Accordingly, prior to the business combination, our taxable income and losses were reported on the income tax returns of MJF's members. Therefore, no income tax is provided prior to June 17, 2019. On March 27, 2020 the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act, was enacted in response to the COVID-19 pandemic. It was determined the CARES Act did not materially impact our tax provision as of June 30, 2020. The accounting for the business combinations of Solo and Trellis reflected in the accompanying financial statements is preliminary and is based upon estimates and assumptions that are subject to change within the measurement period (up to one year from the acquisition date). The measurement period remains open pending the completion of valuation procedures related to the acquired assets and assumed liabilities, intangible assets and income taxes. The following table sets forth the expense or (benefit) for income taxes: June 30, 2020 2019 Income tax expense Current income taxes U.S. federal $ 30,985 $ — U.S. state — — Total current income taxes $ 30,985 $ — June 30, 2020 2019 Deferred income taxes U.S. federal $ — $ — U.S. state — — Total deferred income tax benefit $ — $ — The following table sets forth reconciliations of the income tax expense at the statutory federal income tax rate to actual expense based on income or loss before income taxes: June 30, 2020 2019 Income tax expense attributable to: Federal $ (3,255,706 ) $ (2,509,246 ) State, net of federal benefit (862,690 ) (13,452 ) Foreign tax rate less than federal rate (2,645 ) — Permanent differences 312,525 — Restricted stock awards — 816,505 Changes in valuation allowance 3,884,440 85,455 Provision to return adjustment (45,134 ) — Losses from flow-through entity not subject to tax — 1,640,066 Other adjustments 195 (19,328 ) Effective income tax expense $ 30,985 $ — June 30, 2020 2019 Noncurrent deferred tax assets: Employee compensation $ 378,003 $ — Debt issuance costs 323,183 — Revenue recognition 156,022 22,226 Federal and state net operating loss 4,082,297 63,229 Foreign net operating loss 258,083 — Total deferred tax assets $ 5,197,588 $ 85,455 Noncurrent deferred tax liabilities: Fixed assets (653,819) — Intangibles (1,808,960) — Deferred tax liabilities $ (2,462,779) $ — Valuation allowance (2,734,809 ) (85,455 ) Deferred taxes after valuation allowance $ — $ — During the year ended June 30, 2020, valuation allowances on deferred tax assets that are not anticipated to be realized increased by $2,649,354. Our deferred tax valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits on tax losses. The measurement of deferred tax assets is reduced by a valuation allowance if based upon available evidence, it is more likely than not that the deferred tax assets will not be realized. We have evaluated the realizability of our deferred tax assets in each jurisdiction by assessing the adequacy of expected taxable income, including the reversal of existing temporary differences, historical and projected operating results, and the availability of prudent and feasible tax planning strategies. Based on this analysis, we have determined that the valuation allowances recorded as of June 30, 2020 and 2019 are appropriate. We have deferred tax assets related to U.S. federal tax and state tax carryforwards for net operating losses, which will not expire in the amount of $15,286,374. The U.S. federal net operating loss carryforwards do not expire and the U.S. state net operating loss carryforwards expire at various dates beginning in 2039. We have deferred tax assets related to foreign net operating loss carryforward, which begin to expire in 2028, in the amount of $973,900. We are not currently under examination for any of the major jurisdictions where we conduct business as of June 30, 2020, however, all of our tax years remain subject to examination. Our management does not believe there are significant uncertain tax positions in 2020 and as a result we do not expect any cash payments in the next 12 months, however, an uncertain tax position related to potential penalties in the amount of $50,000 has been recorded in connection with one of the business combinations during the year ended June 30, 2020. There are no interest related to uncertain tax positions in 2020. |
Revisions of Financial Statemen
Revisions of Financial Statements for the Fiscal Quarters during Fiscal Years 2019 and 2018 | 12 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Revisions of Financial Statements for the Fiscal Quarters during Fiscal Year 2020 | Note 14 – Revisions of Financial Statements for the Fiscal Quarters during Fiscal Year 2020 During the course of preparing the annual report on Form 10-K for the year ended June 30, 2020, we determined that costs incurred during the application development phase of certain new software applications and enhancements were not properly capitalized, which resulted in the overstatement of operating expenses and net loss, and an understatement of amortization expense for each of the quarters during the year ended June 30, 2020. We assessed the materiality of these errors on prior periods' financial statements and concluded that the errors were not material to any prior annual or interim periods, but the cumulative adjustments necessary to correct the errors would be material if we recorded the corrections the period in which the errors were identified. In accordance with GAAP, we are revising the prior periods' financial statements when they are next issued. See Item. 4 of Part I, Controls, and Procedures. Three Months Ended As reported Adjustment As revised Condensed Consolidated Statements of Operations Cost of revenue $ 1,397,361 $ (17,660 ) $ 1,379,701 Gross profit 1,795,529 17,660 1,813,189 Product development 1,130,880 (519,978 ) 610,902 Selling, general and administrative 3,583,815 17,899 3,601,714 Net loss (2,846,071 ) 519,739 (2,326,332 ) Net loss per share (0.26 ) (0.21 ) Three Months Ended As reported Adjustment As revised Condensed Consolidated Statements of Operations Cost of revenue 1,638,840 (23,601 ) 1,615,239 Gross profit 1,667,363 23,601 1,690,964 Product development 1,261,509 (638,008 ) 623,501 Selling, general and administrative 4,796,404 86,768 4,883,172 Net loss (4,338,536 ) 574,841 (3,763,695 ) Net loss per share (0.40 ) (0.34 ) Six Months Ended As reported Adjustment As revised Condensed Consolidated Statements of Operations Cost of revenue 3,036,201 (41,261) 2,994,940 Gross profit 3,462,892 41,261 3,504,153 Product development 2,392,389 (1,157,986) 1,234,403 Selling, general and administrative 8,380,219 104,667 8,484,886 Net loss (7,184,607 ) 1,094,580 (6,090,027 ) Net loss per share (0.66 ) (0.56 ) Three Months Ended As reported Adjustment As revised Condensed Consolidated Statement of Operations Cost of revenue 1,420,909 (24,690 ) 1,396,219 Gross profit 1,649,637 24,690 1,674,327 Product development 1,632,353 (757,566 ) 874,787 Selling, general and administrative 5,500,837 177,405 5,678,242 Net loss (5,348,980 ) 604,851 (4,744,129 ) Net loss per share (0.43 ) (0.38 ) Nine Months Ended As reported Adjustment As revised Condensed Consolidated Statements of Operations Cost of revenue 4,457,110 (65,951 ) 4,391,159 Gross profit 5,112,529 65,951 5,178,480 Product development 4,024,742 (1,915,552 ) 2,109,190 Selling, general and administrative 13,881,056 282,072 14,163,128 Net loss (12,533,587 ) 1,699,431 (10,834,156 ) Net loss per share (1.11 ) (0.96 ) |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of Presentation The accompanying financial statements and related notes reflect the historical results of MJF prior to the mergers completed in June 2019, or the Mergers, with MTech Acquisition Corp., or MTech, and other related entities, which resulted in the combined company and do not include the historical results of MTech prior to the completion of the Mergers. The consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States, or GAAP, and our reporting currency is the United States Dollar. |
Principles of Consolidation | Principles of Consolidation Our accompanying consolidated financial statements include the accounts of Akerna, our wholly-owned subsidiaries, and those entities in which we otherwise have a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation. We evaluate our ownership interests, contractual rights, and other interests in entities to determine if the entities are variable interest entities or VIEs when we have a variable interest in those entities. Generally, a VIE is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. These evaluations can be complex and involve judgment and the use of estimates and assumptions based on available historical information. If we determine that we hold a variable interest in a VIE and we are the primary beneficiary of the VIE, we must consolidate the VIE in our financial statements. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE's economic performance and which party controls such activities; the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; and the similarity with and significance to our business activities and the business activities of the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of these VIE's operations and general market conditions. We determine whether we are the primary beneficiary of a VIE upon our initial involvement with the VIE and reassess our status on an ongoing basis. |
Use of estimates | Use of Estimates The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes thereto. We base our estimates on assumptions that we believe to be reasonable under the circumstances, the results of which form a basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. Actual results could differ from those estimates under different assumptions or conditions; however, we believe that our estimates are reasonable. |
Cash and cash equivalents | Cash and Cash Equivalents We consider liquid instruments purchased with an original maturity of three months or less to be cash equivalents. There were no cash equivalents as of June 30, 2020 and 2019. We continually monitor our positions with, and the credit quality of, the financial institutions with which we invest. As of the balance sheet date, and periodically throughout the year, we have maintained balances in various operating accounts in excess of federally insured limits. As of June 30, 2020, approximately $23.5 million of our cash balances were uninsured. We have not experienced any losses on such accounts. |
Restricted Cash | Restricted Cash Restricted cash consists of funds that are contractually or legally restricted as to usage or withdrawal and is presented separately from cash and cash equivalents on our consolidated balance sheets. Our restricted cash serves as collateral for a letter of credit. |
Accounts Receivable, Net | Accounts Receivable, Net We maintain an allowance for doubtful accounts equal to the estimated uncollectible amounts based on our historical collection experience and review of the current status of trade accounts receivable. Receivables are written-off and charged against the recorded allowance when we have exhausted collection efforts without success. The allowance for doubtful accounts was $0.2 million as of June 30, 2020, and 2019. The allowance for doubtful accounts consists of the following activity for the years ended June 30, 2020 and 2019: 2020 2019 Allowance for doubtful accounts, beginning balance $ 190,088 $ 39,571 Additions: Bad debt expense 1,094,507 345,941 Deductions: Write-off uncollectable accounts (1,076,173 ) (195,424 ) Allowance for doubtful accounts, ending balance $ 208,422 $ 190,088 |
Concentrations of Credit Risk | Concentrations of Credit Risk We grant credit in the normal course of business to customers in the United States. We periodically perform credit analysis and monitor the financial condition of our customers to reduce credit risk. During the year ended June 30, 2020 and 2019, government client accounted for % and 30% of total revenues, respectively. As of June 30, 2020, and 2019 government clients accounted for a total of 36% and 18%, and 34% and 24% of net accounts receivable, respectively. |
Equity Method Investments | Equity Method Investments We make strategic investments in privately held equity securities of companies that provide technology solutions that are complementary to ours. When we can exert significant influence over, but do not control, the investee's operations, through voting rights or representation on the investee's board of directors, we account for the investment using the equity method of accounting. We record our share in the investee's earnings and losses in the consolidated statement of operations. We assess our investment for other-than-temporary impairment when events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable and recognize an impairment loss to adjust the investment to its then-current fair value. |
Intangible Assets Acquired through Business Combinations | Intangible Assets Acquired through Business Combinations Intangible assets are amortized over their estimated useful lives. We evaluate the estimated remaining useful life of our intangible assets when events or changes in circumstances indicate an adjustment to the remaining amortization may be needed. We similarly evaluate the recoverability of these assets upon events or changes in circumstances indicate a potential impairment. Recoverability of these assets is measured by comparing the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value. There were no impairments of intangible assets during the year ended June 30, 2020, or 2019. |
Goodwill Impairment Assessment | Goodwill Impairment Assessment We evaluate and test the recoverability of our goodwill for impairment at least annually during October of each year or more often if circumstances indicate that goodwill may not be recoverable. |
Software Development Costs | Software Development Costs Costs incurred during the application development stage of a newly developed application and costs we incur to enhance our existing platforms that meet certain criteria are subject to capitalization and subsequent amortization. Product development stage costs were approximately $3.2 million during the year ended June 30, 2020. Product development costs are primarily comprised of personnel costs such as payroll and benefits, vendor costs, and other costs directly attributable to the project. We capitalize costs only during the development phase. Any costs in connection to planning, design, and maintenance subsequent to release are expensed as incurred. We amortize software development costs over the expected useful life of the specific application, generally 2-5 years. We evaluate capitalized software development costs for impairment when there is an indication that the unamortized cost may not be recoverable. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, we are required to classify certain assets and liabilities based on the fair value hierarchy, which groups fair value-measured assets and liabilities based upon the following levels of inputs: ● Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; ● Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; ● Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity). The fair value of financial instruments is the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying values of financial instruments such as accounts receivable accounts payable and accrued liabilities approximate fair value based on their short maturities. Please refer to Note 11 - Fair Value Measurements for additional information regarding the fair value of financial instruments that we measure at fair value, including senior secured convertible notes and contingent consideration. |
Fair Value Option | Fair Value Option The fair value option provides an election that allows a company to irrevocably elect to record certain financial assets and liabilities at fair value on an instrument-by-instrument basis at initial recognition. We have elected to apply the fair value option to certain convertible notes due to the complexity of the various conversion and settlement options available to both the Note Holders and Akerna. The convertible notes accounted for under the fair value option election are each a debt host financial instrument containing embedded features that would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements in accordance with GAAP. Notwithstanding, When the fair value option election is applied to financial liabilities, bifurcation of an embedded derivative is no required, and the financial liability is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis as of each reporting period date. The portion of the change in fair value attributed to a change in the instrument-specific credit risk is recognized as a component of other comprehensive income and the remaining amount of the fair value adjustment is recognized as other income (expense) in our consolidated statement of operations. The estimated fair value adjustment is presented in a respective single line item within other income (expense) in the accompanying consolidated statement of operations because the change in fair value of the convertible notes was not attributable to instrument-specific credit risk. |
Revenue Recognition | Revenue Recognition We derive our revenues primarily from the following sources: software revenues, which are primarily comprised of subscription fees from government and commercial customers accessing our enterprise cloud computing services and from customers paying for additional support beyond the standard support that is included in the basic subscription fees; and consulting services provided to operators interested in integrating our platform into their respective operations, such services include: assessing compliance requirements, monitoring systems and readiness; assisting with the application process; and evaluating the operator's inspection readiness and business plan. We commence revenue recognition when there is persuasive evidence of an arrangement, the service has been or is being provided to the customer, the collection of the fees is reasonably assured, and the amount of fees to be paid by the customer is fixed or determinable. Software Revenue Software revenue primarily consists of subscription revenue that is recognized ratably over the term of the contract, beginning when access to the applicable software is provided to the customer. We typically invoice customers at the beginning of the term, in multi-year, annual, quarterly, or monthly installments. When a collection of fees occurs in advance of service delivery, revenue recognition is deferred until such services commence. Revenue for implementation fees is recognized ratably over the expected term of the contract, including expected renewals. We include service level commitments to customers warranting certain levels of uptime reliability and performance and permitting those customers to receive credits if those levels are not met. In addition, customer contracts often include: specific obligations that require us to maintain the availability of the customer's data through the service and that customer content is secured against unauthorized access or loss, and indemnity provisions whereby we indemnify customers from third-party claims asserted against them that result from our failure to maintain the availability of their content or securing the same from unauthorized access or loss. To date, we have not incurred any material costs as a result of such commitments. Any such credits or payments made to customers under these arrangements are recorded as a reduction of revenue. Consulting Services Revenue Consulting services revenue consists of contracts with fixed terms and fee structures based upon the volume and activity or fixed-price contracts for consulting and strategic services. When these services are not combined with subscription revenues as a single unit of account, as discussed below, these revenues are recognized as services are rendered and accepted by the customer. Other Revenues We sell solo*TAG ™ ™ ™ ™ Cost of Revenue Cost of revenue consists primarily of costs related to providing subscription and other services to our customers, including employee compensation and related expenses for data center operations, customer support and professional services personnel, payments to outside technology service providers, security services, and other tools. Deferred Revenue Deferred revenue consists of payments received in advance of revenue recognition from subscription services. The deferred revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, contract duration, and invoice frequency. Deferred revenue that will be recognized during the succeeding twelve-month period is recorded as deferred revenue, which is a current liability on the accompanying consolidated balance sheets. |
Reclassifications | Reclassifications Certain prior year financial statement amounts have been reclassified for consistency with the current year presentation. |
Income Taxes | Income Taxes Income taxes are accounted for using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of other assets and liabilities. We provide for income taxes at the current and future enacted tax rates and laws applicable in each taxing jurisdiction. We use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return and disclosures regarding uncertainties in income tax positions. We recognize interest and penalties related to income tax matters in selling, general and administrative expenses in the consolidated statement of operations. We recognize deferred tax assets to the extent that its assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of its net recorded amount, we will make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. |
Stock-Based Compensation | Stock-Based Compensation We measured stock-based compensation based on the fair value of the share-based awards on the date of grant and recognize the related costs on a straight-line basis over the requisite service period, which is generally the vesting period. |
Segments | Segments Our chief operating decision maker reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance and information for different revenue streams is not evaluated separately. As such, we have a single operating segment. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements The Financial Accounting Standards Board, or the FASB, has issued guidance to revise accounting for revenue from contracts with customers, which supersedes the revenue recognition requirements and industry-specific guidance currently in effect for us. The new revenue standard requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. The new revenue standard is effective for our fiscal 2021 annual reporting period and for interim periods thereafter. The new revenue standard allows for either full retrospective or modified retrospective adoption. We will adopt the new standard using the modified retrospective approach and anticipate that the timing of recognition of incremental costs of obtaining contracts will be the most significant change to our results of operations upon adoption. The FASB has issued new guidance related to the accounting for leases. The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. The new standard is effective for us in our fiscal year beginning in 2022. We are evaluating the impact of the adoption of the new standard on our consolidated financial statements and do not anticipate a significant impact on our results of operations. The FASB has issued guidance to introduce a new model for recognizing credit losses on financial instruments based on estimated current expected credit losses, or CECL. Under the new standard, an entity is required to estimate CECL on trade receivables at inception, based on historical information, current conditions, and reasonable and supportable forecasts. The new guidance is effective for us in our fiscal year beginning in 2023. We are evaluating the impact of the adoption of the new standard on our consolidated financial statements. The FASB has issued guidance related to the accounting for share-based compensation to nonemployees, which eliminates the separate accounting model for nonemployee share-based payment awards and generally requires companies to account for share-based payment transactions with nonemployees in the same way as share-based payment transactions with employees. Under the new guidance, nonemployee share-based payment transactions are measured at the grant-date fair value and are no longer remeasured at the then-current fair values at each reporting date until the share options have vested. The amended guidance is effective for our annual financial statements for the fiscal year beginning on July 1, 2020, and for interim periods beginning in the subsequent fiscal year. We do not anticipate the adoption of this guidance to have a significant effect on our results of operations. The FASB has issued guidance regarding when internal-use software development costs should be capitalized or charged to expense. Depending upon the nature of the costs and the project stage in which they are incurred. Capitalized development costs are subject to amortization and impairment guidance consistent with existing internal-use software development cost guidance. The guidance is applicable for us in our fiscal year beginning in 2023 with early adoption permitted, including adoption in an interim period. We are evaluating the impact of the adoption of the new standard on our financial statements. The FASB has issued guidance clarifying the interactions between various standards governing investments in equity securities. The new guidance addresses accounting for the transition into and out of the equity method and measurement of certain purchased options and forward contracts to acquire investments. The standard is effective for us for annual and interim periods in our fiscal year beginning in 2022, with early adoption permitted. Adoption of the standard requires changes to be made prospectively. We are evaluating the impact of adoption of the new standard on our consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of allowance for doubtful accounts | 2020 2019 Allowance for doubtful accounts, beginning balance $ 190,088 $ 39,571 Additions: Bad debt expense 1,094,507 345,941 Deductions: Write-off uncollectable accounts (1,076,173 ) (195,424 ) Allowance for doubtful accounts, ending balance $ 208,422 $ 190,088 |
Significant Transactions (Table
Significant Transactions (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Business Acquisition [Line Items] | |
Schedule of pro forma financial information | June 30, 2020 2019 Revenues $ 13,584 $ 12,220 Net loss (20,589 ) (15,884 ) |
Solo Sciences, Inc. [Member] | |
Business Acquisition [Line Items] | |
Schedule of estimated acquisition date fair value of consideration | Common shares issued $ 17,550 Contingent consideration 389 Total estimated fair value of consideration $ 17,939 |
Schedule of preliminary estimated fair values of assets acquired and liabilities | Cash $ 101 Prepaid expenses and other assets 22 Furniture, fixtures, and equipment 2 Acquired technology 7,160 Acquired trade name 340 Goodwill 17,025 Accounts payable and accrued liabilities (1,158 ) Fair value of noncontrolling interests (5,554 ) Net assets acquired $ 17,938 |
Trellis Solutions, Inc [Member] | |
Business Acquisition [Line Items] | |
Schedule of estimated acquisition date fair value of consideration | Common shares issued $ 2,531 Contingent consideration 998 Total estimated fair value of consideration $ 3,529 |
Schedule of preliminary estimated fair values of assets acquired and liabilities | Cash $ 21 Accounts receivable, net 77 Other assets 6 Acquired technology 210 Acquired trade name 80 Customer relationships 220 Goodwill 3,229 Accounts payable and accrued expenses (283 ) Deferred revenue (31 ) Net assets acquired $ 3,529 |
Balance Sheet Disclosures (Tabl
Balance Sheet Disclosures (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Balance Sheet Disclosures [Abstract] | |
Schedule of prepaid expenses | 2020 2019 Software and technology $ 571,695 $ 237,930 Professional services, dues, and subscriptions 473,731 169,804 Insurance 105,814 159,940 Rental deposit 38,303 10,000 Other 25,798 — Total Prepaid Expenses and Other Current Assets $ 1,215,341 $ 577,674 |
Schedule of Accrued liabilities | 2020 2019 Accounts payable $ 1,443,895 $ 1,317,566 Professional fees 2,273,659 49,205 Sales taxes 59,825 36,358 Compensation 260,042 354,724 Contractors 782,366 19,557 Other 42,141 40,706 Total accounts payable and accrued liabilities $ 4,861,928 $ 1,818,116 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, Net (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in the carrying amount of goodwill | Balance as of June 30, 2019 $ — Additions due to acquisitions 20,254,309 Balance as of June 30, 2020 $ 20,254,309 |
Schedule of intangible assets | Weighted average remaining amortization period (in years) Gross carrying amount Accumulated amortization Net Acquired developed technology 4.42 $ 7,370,000 $ (679,696 ) $ 6,690,304 Acquired trade names 7.40 420,000 (23,248 ) 396,752 Customer relationships 1.75 220,000 (24,475 ) 195,525 Other intangible assets, not yet placed into service N/A 211,394 — 211,394 Intangible assets $ 8,221,394 $ (727,419 ) $ 7,493,975 Capitalized software - In-service 1.86 2,852,044 (560,528 ) 2,291,516 Capitalized software - Work in Progress N/A 337,788 — 337,788 Total Capitalized Software 3,189,832 (560,528 ) 2,629,304 Total finite-lived intangible assets $ 11,411,226 $ (1,287,947 ) $ 10,123,279 |
Schedule of capitalized software and purchased intangible assets | Acquired Intangible Assets Capitalized Software 2021 $ 1,711,444 $ 1,325,851 2022 1,663,607 806,012 2023 1,490,511 63,838 2024 1,469,778 63,838 2025 813,444 31,977 Thereafter 133,797 — Total $ 7,282,581 $ 2,291,516 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Line of Credit Facility [Abstract] | |
Schedule of long-term debt | Convertible Notes (at fair value) $ 14,131,000 PPP loan 2,204,600 Subtotal 16,335,600 Less: current maturities (6,135,364 ) Total long-term debt, less current portion $ 10,200,236 |
Schedule of maturities of outstanding long-term debt obligations in subsequent years | Fiscal Year ending June 30, 2021 $ 6,844,620 2022 12,359,980 Aggregate maturities 19,204,600 Original issue discount on Convertible Notes (2,040,000 ) Unrealized change in fair value of Convertible Notes (829,000 ) Long term debt outstanding as of June 30, 2020 $ 16,335,600 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Schedule of common stock warrants | Shares Issuable Under Warrants Weighted-average Exercise Price Weighted Average Remaining Life Aggregate Intrinsic Value Outstanding as of July 1, 2018 5,993,750 $ 11.50 — $ — Issued 189,365 11.50 — — Exercised — — — — Expired/canceled — — — — Outstanding at June 30, 2019 6,183,115 $ 11.50 4.97 $ 2,473,000 Issued — — — — Exercised (369,311 ) — — — Expired/canceled — — — — Outstanding at June 30, 2020 5,813,804 $ 11.50 3.97 $ — |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of unvested restricted shares and restricted stock units ("RSUs") activity | Restricted Shares Restricted Stock Units Total Weighted Average Grant Date Fair Value Unvested as of June 30, 2019 215,063 — 215,063 $ 11.99 Granted — 571,229 571,229 7.24 Vested (88,659 ) (26,965 ) (115,624 ) 7.25 Forfeited (54,091 ) (78,470 ) (132,561 ) 10.83 Unvested as of June 30, 2020 72,313 465,794 538,107 $ 6.56 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of diluted earnings per share | Fully Diluted Weighted Average for the Year Ended 2020 2019 2020 2019 Warrants 5,813,804 6,183,115 5,833,971 6,001,013 Restricted Stock Units 325,121 — 37,709 — Restricted Stock Awards 75,654 215,063 7,656 2,351 Shares of common stock issuable in upon conversion of Convertible Notes 1,936,845 — 111,130 — Total 8,151,424 6,398,178 5,990,466 6,003,364 |
Fair Value (Tables)
Fair Value (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of reconciliation of fair values | Beginning fair value balance on issue date - June 9, 2020 $ 14,960,000 Change in fair value reported in the statements of operations (766,000 ) Change in fair value reported in other comprehensive income (63,000 ) Ending fair value balance - June 30, 2020 $ 14,131,000 |
Schedule of fair value by using key inputs | Fair Value Assumptions - Convertible Notes June 30, June 9, Face value principal payable $ 17,000,000 $ 17,000,000 Original conversion price $ 11.50 $ 11.50 Value of Common Stock $ 8.80 $ 10.28 Expected term (years) 2.9 3.0 Volatility 45.0 % 45.0 % Market yield (range) 23.9 % 23.3% to 23.4 Risk free rate 0.2 % 0.2 % |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of expense or (benefit) for income taxes | June 30, 2020 2019 Income tax expense Current income taxes U.S. federal $ 30,985 $ — U.S. state — — Total current income taxes $ 30,985 $ — June 30, 2020 2019 Deferred income taxes U.S. federal $ — $ — U.S. state — — Total deferred income tax benefit $ — $ — |
Schedule of statutory federal income tax rate to actual rates based on income or loss before income taxes | June 30, 2020 2019 Income tax expense attributable to: Federal $ (3,255,706 ) $ (2,509,246 ) State, net of federal benefit (862,690 ) (13,452 ) Foreign tax rate less than federal rate (2,645 ) — Permanent differences 312,525 — Restricted stock awards — 816,505 Changes in valuation allowance 3,884,440 85,455 Provision to return adjustment (45,134 ) — Losses from flow-through entity not subject to tax — 1,640,066 Other adjustments 195 (19,328 ) Effective income tax expense $ 30,985 $ — |
Schedule of changes in Noncurrent deferred tax assets and liabilities | June 30, 2020 2019 Noncurrent deferred tax assets: Employee compensation $ 378,003 $ — Debt issuance costs 323,183 — Revenue recognition 156,022 22,226 Federal and state net operating loss 4,082,297 63,229 Foreign net operating loss 258,083 — Total deferred tax assets $ 5,197,588 $ 85,455 Noncurrent deferred tax liabilities: Fixed assets (653,819) — Intangibles (1,808,960) — Deferred tax liabilities $ (2,462,779) $ — Valuation allowance (2,734,809 ) (85,455 ) Deferred taxes after valuation allowance $ — $ — |
Revisions of Financial Statem_2
Revisions of Financial Statements for the Fiscal Quarters during Fiscal Year 2020 (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of reclassifications | Three Months Ended As reported Adjustment As revised Condensed Consolidated Statements of Operations Cost of revenue $ 1,397,361 $ (17,660 ) $ 1,379,701 Gross profit 1,795,529 17,660 1,813,189 Product development 1,130,880 (519,978 ) 610,902 Selling, general and administrative 3,583,815 17,899 3,601,714 Net loss (2,846,071 ) 519,739 (2,326,332 ) Net loss per share (0.26 ) (0.21 ) Three Months Ended As reported Adjustment As revised Condensed Consolidated Statements of Operations Cost of revenue 1,638,840 (23,601 ) 1,615,239 Gross profit 1,667,363 23,601 1,690,964 Product development 1,261,509 (638,008 ) 623,501 Selling, general and administrative 4,796,404 86,768 4,883,172 Net loss (4,338,536 ) 574,841 (3,763,695 ) Net loss per share (0.40 ) (0.34 ) Six Months Ended As reported Adjustment As revised Condensed Consolidated Statements of Operations Cost of revenue 3,036,201 (41,261) 2,994,940 Gross profit 3,462,892 41,261 3,504,153 Product development 2,392,389 (1,157,986) 1,234,403 Selling, general and administrative 8,380,219 104,667 8,484,886 Net loss (7,184,607 ) 1,094,580 (6,090,027 ) Net loss per share (0.66 ) (0.56 ) Three Months Ended As reported Adjustment As revised Condensed Consolidated Statement of Operations Cost of revenue 1,420,909 (24,690 ) 1,396,219 Gross profit 1,649,637 24,690 1,674,327 Product development 1,632,353 (757,566 ) 874,787 Selling, general and administrative 5,500,837 177,405 5,678,242 Net loss (5,348,980 ) 604,851 (4,744,129 ) Net loss per share (0.43 ) (0.38 ) Nine Months Ended As reported Adjustment As revised Condensed Consolidated Statements of Operations Cost of revenue 4,457,110 (65,951 ) 4,391,159 Gross profit 5,112,529 65,951 5,178,480 Product development 4,024,742 (1,915,552 ) 2,109,190 Selling, general and administrative 13,881,056 282,072 14,163,128 Net loss (12,533,587 ) 1,699,431 (10,834,156 ) Net loss per share (1.11 ) (0.96 ) |
Description of Business, Liqu_2
Description of Business, Liquidity, and Capital Resources (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 08, 2020 | |
Description of Business, Liquidity and Capital Resources (Textual) | ||
Description of liquidity and capital resources | Although we have continuing negative cash flow from operations, the cash outflow since the Mergers is partially attributable to approximately $4.1 million in costs incurred in connection with specific transactions, including the Mergers, acquisitions completed or expected to close within the next twelve months and the issuance of debt. We implemented a cost reduction initiative and achieved a reduction in cash used in operations in excess of $1.0 million between the third and fourth quarters of fiscal year 2020. | |
Net proceeds of secured convertible notes | $ 13,800,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Accounting Policies [Abstract] | ||
Allowance for doubtful accounts, beginning balance | $ 190,088 | $ 39,571 |
Additions: | ||
Bad debt expense | 1,094,507 | 345,941 |
Deductions: | ||
Write-off uncollectable accounts | (1,076,173) | (195,424) |
Allowance for doubtful accounts, ending balance | $ 208,422 | $ 190,088 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Textual) | 12 Months Ended | |
Jun. 30, 2020USD ($)Customers | Jun. 30, 2019USD ($)Customers | |
Summary of Significant Accounting Policies (Textual) | ||
Allowance for doubtful accounts | $ | $ 200,000 | $ 200,000 |
Product development stage costs | $ | 3,200,000 | |
Cash balances | $ | $ 24,155,828 | $ 21,867,289 |
Minimum [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Expected useful life | 2 years | |
Maximum [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Expected useful life | 5 years | |
Customer one [Member] | Total revenues [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Concentration risk percentage | 25.00% | 30.00% |
Number of customer | Customers | 1 | 1 |
Customer one [Member] | Net accounts receivable [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Concentration risk percentage | 36.00% | 34.00% |
Number of customer | Customers | 2 | 2 |
Customer two [Member] | Net accounts receivable [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Concentration risk percentage | 18.00% | 24.00% |
Number of customer | Customers | 2 | 2 |
Significant Transactions (Detai
Significant Transactions (Details) - Trellis Solutions, Inc [Member] | Apr. 08, 2020USD ($) |
Business Acquisition [Line Items] | |
Common shares issued | $ 2,531 |
Contingent consideration | 998 |
Total estimated fair value of consideration | $ 3,529 |
Significant Transactions (Det_2
Significant Transactions (Details 1) - Trellis Solutions, Inc [Member] | Jun. 30, 2020USD ($) |
Business Acquisition [Line Items] | |
Cash | $ 21 |
Accounts receivable, net | 77 |
Other assets | 6 |
Acquired technology | 210 |
Acquired trade name | 80 |
Customer relationships | 220 |
Goodwill | 3,229 |
Accounts payable and accrued expenses | (283) |
Deferred revenue | (31) |
Net assets acquired | $ 3,529 |
Significant Transactions (Det_3
Significant Transactions (Details 2) - Solo Sciences, Inc. [Member] | Jan. 15, 2020USD ($) |
Business Acquisition [Line Items] | |
Common shares issued | $ 17,550 |
Contingent consideration | 389 |
Total estimated fair value of consideration | $ 17,939 |
Significant Transactions (Det_4
Significant Transactions (Details 3) - Solo Sciences, Inc. [Member] | Jun. 30, 2020USD ($) |
Business Acquisition [Line Items] | |
Cash | $ 101 |
Prepaid expenses and other assets | 22 |
Furniture, fixtures, and equipment | 2 |
Acquired technology | 7,160 |
Acquired trade name | 340 |
Goodwill | 17,025 |
Accounts payable and accrued liabilities | (1,158) |
Fair value of noncontrolling interests | (5,554) |
Net assets acquired | $ 17,938 |
Significant Transactions (Det_5
Significant Transactions (Details 4) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Significant Transactions [Abstract] | ||
Revenues | $ 13,584 | $ 12,220 |
Net loss | $ (20,589) | $ (15,884) |
Significant Transactions (Det_6
Significant Transactions (Details Textual) - USD ($) | Jul. 07, 2020 | Jan. 15, 2020 | Jul. 31, 2020 | Jun. 17, 2019 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Apr. 08, 2020 |
Significant Transactions (Textual) | |||||||||
Common stock, shares issued | 6,520,099 | 13,258,707 | 13,258,707 | 13,258,707 | 10,589,746 | ||||
Shares of common stock per share | $ 10.16 | ||||||||
Gain on change fair value of contingent consideration | $ 1,000,000 | ||||||||
Description of contingent consideration | (i) $0.01 per solo*TAGTM and solo*CODETM sold or (ii) 7% of net revenue. The fees were to be paid annually until the earlier of: (1) our shares trading above $12 per share for any consecutive 20 trading days in a 30-day period; (b) upon our no longer owning a majority stake in Solo; or (c) upon expiration of the patents related to solo*TAGTM and solo*CODETM, which is December 1, 2029. | ||||||||
Estimated of fair value contingent consideration | $ 0 | ||||||||
Revenues | 12,573,276 | $ 10,823,117 | |||||||
Net loss | $ (15,534,345) | $ (12,403,215) | |||||||
Common stock vested shares | 283,010 | ||||||||
Unvested restricted stock | 215,063 | ||||||||
Description of Merger agreement | (a) 283,110 fully vested shares of common stock were allocated to the former holders of MJF profit interest units, resulting in the recognition of approximately $3.4 million on June 17, 2019 and approximately $2.1 million of compensation expense related to unvested restricted shares such profit interest units be recognized over the remaining vesting period of 3 years. | ||||||||
Solo Sciences, Inc. [Member] | |||||||||
Significant Transactions (Textual) | |||||||||
Transaction costs | $ 300,000 | ||||||||
Common stock, shares issued | 1,950,000 | ||||||||
Shares of common stock per share | $ 9 | ||||||||
Percentage of exchange rate | 80.40% | ||||||||
Description of contingent consideration | (i) $0.01 per solo*TAG™ and solo*CODE™ sold or (ii) 7% of net revenue. The fees were to be paid annually until the earlier of: (1) our shares trading above $12 per share for any consecutive 20 trading days in a 30-day period; (b) upon our no longer owning a majority stake in Solo; or (c) upon expiration of the patents related to solo*TAG™ and solo*CODE™, which is December 1, 2029. This fee represents contingent consideration and was recorded at fair value as of the date of acquisition. Contingent consideration is adjusted to fair value each period with changes in fair value being recognized in earnings at each reporting period. | ||||||||
Estimated of fair value contingent consideration | $ 17,900,000 | ||||||||
Revenues | $ 23,000 | ||||||||
Net loss | $ 1,471,000 | ||||||||
Trellis Solutions, Inc [Member] | |||||||||
Significant Transactions (Textual) | |||||||||
Transaction costs | $ 100,000 | ||||||||
Common stock, shares issued | 349,650 | ||||||||
Shares of common stock per share | $ 7.24 | ||||||||
Percentage of exchange rate | 100.00% | ||||||||
Revenues | $ 216,000 | ||||||||
Net loss | $ 17,000 | ||||||||
Subsequent Event [Member] | |||||||||
Significant Transactions (Textual) | |||||||||
Common stock, shares issued | 800,000 | ||||||||
Description of contingent consideration | We acquired 100% of the stock of Ample Organics for 3.3 million exchangeable shares of one of our wholly-owned subsidiaries. The exchangeable shares may be exchanged, at the option of the holder, for shares of Akerna common stock on a one-for-one basis, therefore the exchangeable shares issued were valued at $7.65 per share, the closing price of an equivalent share of Akerna common stock, $30.7 million was the aggregate value of the exchangeable shares. In addition to the stock consideration, we paid $5.5 million in cash, which was used to settle all of Ample's then outstanding debt. In addition to the stock and cash consideration, the agreement provides for contingent consideration of up to CAD$10,000,000, payable in exchangeable shares, payable if Ample's Recurring Revenue recognized during the 12 months after the acquisition date is CAD$9,000,000 or more. The contingent consideration amount is reduced by an amount equal to the product of CAD$6.67 multiplied by the difference between CAD$9,000,000 and the amount of Recurring Revenue realized during the 12 months following the acquisition. The contingent consideration will be recorded as the estimated fair value on the acquisition date and adjusted to estimated fair value in each subsequent reporting period until settlement. | ||||||||
Description of noncontrolling interests | We entered into an amendment to the stock purchase agreement to exercise our option to acquire the noncontrolling interests in Solo, for 800,000 shares of our common stock, this transaction will be recorded as an equity transaction, with no effect to the value of the assets acquired or liabilities assumed. |
Balance Sheet Disclosures (Deta
Balance Sheet Disclosures (Details) - USD ($) | Jun. 30, 2020 | Jun. 30, 2019 |
Balance Sheet Disclosures [Abstract] | ||
Software and technology | $ 571,695 | $ 237,930 |
Professional services, dues, and subscriptions | 473,731 | 169,804 |
Insurance | 105,814 | 159,940 |
Rental deposit | 38,303 | 10,000 |
Other | 25,798 | |
Total Prepaid Expenses and Other Current Assets | $ 1,215,341 | $ 577,674 |
Balance Sheet Disclosures (De_2
Balance Sheet Disclosures (Details 1) - USD ($) | Jun. 30, 2020 | Jun. 30, 2019 |
Balance Sheet Disclosures [Abstract] | ||
Accounts payable | $ 1,443,895 | $ 1,317,566 |
Professional fees | 2,273,659 | 49,205 |
Sales taxes | 59,825 | 36,358 |
Compensation | 260,042 | 354,724 |
Contractors | 782,366 | 19,557 |
Other | 42,141 | 40,706 |
Total accounts payable and accrued liabilities | $ 4,861,928 | $ 1,818,116 |
Balance Sheet Disclosures (De_3
Balance Sheet Disclosures (Details Textual) - USD ($) | Jun. 30, 2020 | Jun. 30, 2019 |
Balance Sheet Disclosures (Textual) | ||
Accrued compensation | $ 128,000 | $ 215,000 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, Net (Details) | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Balance at beginning of year | |
Additions due to acquisitions | 20,254,309 |
Balance at end of year | $ 20,254,309 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, Net (Details 1) | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Gross carrying amount | $ 8,221,394 |
Accumulated amortization | (727,419) |
Net carrying amount | $ 7,493,975 |
Acquired trade names [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted average remaining amortization period (in years) | 7 years 4 months 24 days |
Gross carrying amount | $ 420,000 |
Accumulated amortization | (23,248) |
Net carrying amount | $ 396,752 |
Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted average remaining amortization period (in years) | 1 year 9 months |
Gross carrying amount | $ 220,000 |
Accumulated amortization | (24,475) |
Net carrying amount | $ 195,525 |
Acquired developed technology [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted average remaining amortization period (in years) | 4 years 5 months 1 day |
Gross carrying amount | $ 7,370,000 |
Accumulated amortization | (679,696) |
Net carrying amount | $ 6,690,304 |
Capitalized software - In-service [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted average remaining amortization period (in years) | 1 year 10 months 10 days |
Net carrying amount | $ 2,291,516 |
Total Capitalized Software [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Gross carrying amount | 3,189,832 |
Accumulated amortization | (560,528) |
Net carrying amount | 2,629,304 |
Capitalized Software Work In Progress [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Gross carrying amount | 337,788 |
Accumulated amortization | |
Net carrying amount | 337,788 |
Other intangible assets, not yet placed into service | |
Finite-Lived Intangible Assets [Line Items] | |
Gross carrying amount | 211,394 |
Accumulated amortization | |
Net carrying amount | 211,394 |
Total finite-lived intangible assets [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Gross carrying amount | 11,411,226 |
Accumulated amortization | (1,287,947) |
Net carrying amount | $ 10,123,279 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets, Net (Details 2) | Jun. 30, 2020USD ($) |
Finite-Lived Intangible Assets [Line Items] | |
Total | $ 7,493,975 |
Acquired Intangible Assets [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
2021 | 1,711,444 |
2022 | 1,663,607 |
2023 | 1,490,511 |
2024 | 1,469,778 |
2025 | 813,444 |
Thereafter | 133,797 |
Total | 7,282,581 |
Capitalized Software [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
2021 | 1,325,851 |
2022 | 806,012 |
2023 | 63,838 |
2024 | 63,838 |
2025 | 31,977 |
Thereafter | |
Total | $ 2,291,516 |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets, Net (Details Textual) | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Amortization expense of intangible assets | $ 1,300,000 |
Equity Method Investment and _2
Equity Method Investment and Related Party Transaction (Details) - Subsidiaries [Member] - USD ($) | Oct. 07, 2019 | Jun. 30, 2020 |
Equity Method Investment and Related Party Transaction (Textual) | ||
Convertible into shares of common stock per share | $ 1.232 | |
Preferred stock purchased shares | 203,000 | |
Preferred stock purchased share value | $ 250,000 | |
Carrying value of our initial investment | $ 250,000 | |
Equity loss of investee | $ 3,692 |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) | Jun. 30, 2020 | Jun. 30, 2019 |
Line of Credit Facility [Abstract] | ||
Convertible Notes (at fair value) | $ 14,131,000 | |
PPP loan | 2,204,600 | |
Subtotal | 16,335,600 | |
Less: current maturities | (6,135,364) | |
Total long-term debt, less current portion | $ 10,200,236 |
Long Term Debt (Details 1)
Long Term Debt (Details 1) | Jun. 30, 2020USD ($) |
Line of Credit Facility [Abstract] | |
2021 | $ 6,844,620 |
2022 | 12,359,980 |
Aggregate maturities | 19,204,600 |
Original issue discount on Convertible Notes | (2,040,000) |
Unrealized change in fair value of Convertible Notes | (829,000) |
Long term debt outstanding as of June 30, 2020 | $ 16,335,600 |
Long Term Debt (Details Textual
Long Term Debt (Details Textuals) - USD ($) | Jun. 09, 2020 | Jun. 08, 2020 | Apr. 30, 2020 | Jun. 30, 2020 |
Long Term Debt (Textual) | ||||
Default interest rate | 15.00% | |||
Principal portion of convertible debt | $ 1,000 | |||
Original issue discount percentage | 12.00% | |||
Convertible notes on issuance amount | $ 15,000,000 | |||
Conversion price percentage | 80.00% | |||
Conversion price | $ 11.50 | |||
Original issue discount on holders | $ 880 | |||
Face value of the notes | $ 1,700,000 | |||
Description of loan | The PPP Loan, from a lender in the aggregate amount of $2.2 million pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act. The PPP Loan is evidenced by a promissory note dated April 21, 2020, the Note. The PPP Loan bears interest at a fixed rate of 1.0% per annum, with the first six months of interest deferred from the date of the Note, has an initial term of two years from the date of the Note, and is unsecured and guaranteed by the Small Business Administration. We may prepay up to 20% of the PPP Loan amount at any time prior to maturity with no prepayment penalties. We must pay all accrued interest if we prepay greater than 20% of the PPP Loan amount and the PPP Loan has been sold on the secondary market. The Note provides for customary events of default. The PPP Loan may be accelerated upon the occurrence of an event of default. The PPP Loan may be forgiven in accordance with the terms of the CARES Act. The principal amount of the PPP Loan not forgiven and accrued interest is to be repaid in 18 equal monthly installments beginning seven months from the date of the disbursement of the PPP Loan. We applied for the PPP Loan and received the proceeds from the PPP Loan prior to the issuance of the recent guidance from the United States Treasury Department and U.S. Small Business Administration on April 23, 2020. We are currently evaluating the impact this guidance has on Akerna and the PPP Loan. | |||
Conversion price floor | 1.92 | |||
Convertible Debt [Member] | ||||
Long Term Debt (Textual) | ||||
Conversion price | $ 11.50 | |||
Description of loan | The fair value of the Convertible Notes on issuance was recorded as $15.0 million. During the year ended June 30, 2020, the fair value of the Convertible Notes decreased by $0.8 million. Of the adjustment, a decrease of $0.1 million resulted from instrument-specific credit risk and was recognized as other comprehensive income and accumulated in equity and a decrease of $0.8 million was recognized as current period other expense in our consolidated statement of operations. As of June 30, 2020, the fair value of the Convertible Notes on our consolidated balance sheet was $14.1 million. |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Shares Issuable Under Warrants | ||
Beginning balance, outstanding | 6,183,115 | 5,993,750 |
Issued | 189,365 | |
Exercised | (369,311) | |
Expired/canceled | ||
Ending balance, outstanding | 5,813,804 | 6,183,115 |
Weighted-average Exercise Price | ||
Beginning balance, outstanding | $ 11.50 | $ 11.50 |
Issued | 11.50 | |
Exercised | ||
Expired/canceled | ||
Ending balance, outstanding | $ 11.50 | $ 11.50 |
Weighted Average Remaining Life | ||
Beginning balance, outstanding | 4 years 11 months 19 days | |
Ending balance, outstanding | 3 years 11 months 19 days | 4 years 11 months 19 days |
Aggregate Intrinsic Value | ||
Ending balance, outstanding | $ 2,473,000 |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Stockholders' Equity (Textual) | ||
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Sale of stock, description | We sold 5,750,000 units at a purchase price of $10.00 per unit, inclusive of 750,000 units sold to the underwriters on February 8, 2018, upon the underwriters' election to fully exercise their over-allotment option. Each unit consisted of one share of MTech's common stock and one warrant ("Public Warrant"). Each Public Warrant entitled the holder to purchase one share of MTech's common stock at an exercise price of $11.50. Upon the Mergers, the Public Warrants were converted to those of Akerna at the exchange ratio of one-for-one. | |
Proceeds from mergers | $ 18,000,000 | |
Merger related expense | $ 4,400,000 | |
Private Placement Shares [Member] | ||
Stockholders' Equity (Textual) | ||
Issue of Class A common stock | 901,074 | |
Aggregate purchase price | $ 9,200,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | 12 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Restricted Shares | |
Beginning balance, Nonvested | 215,063 |
Granted | |
Vested | (88,659) |
Forfeited | (54,091) |
Ending balance, Nonvested | 72,313 |
Restricted Stock Units | |
Beginning balance | |
Granted | 571,229 |
Vested | (26,965) |
Forfeited | (78,470) |
Ending balance | (465,794) |
Total | |
Beginning balance | 215,063 |
Granted | 571,229 |
Vested | (115,624) |
Forfeited | (132,561) |
Ending balance | 538,107 |
Weighted Average Grant Date Fair Value | |
Beginning balance | $ / shares | $ 11.99 |
Granted | $ / shares | 7.24 |
Vested | $ / shares | 7.25 |
Forfeited | $ / shares | 10.83 |
Ending balance | $ / shares | $ 6.56 |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended | |
Jun. 26, 2020 | Jun. 30, 2020 | Jun. 17, 2019 | |
Stock-Based Compensation (Textual) | |||
One-time charge | $ 3,400,000 | ||
Stock based compensation costs as software development cost | 100,000 | ||
Unrecognized costs | 3,900,000 | ||
Equity Incentive Plan [Member] | |||
Stock-Based Compensation (Textual) | |||
Common stock reserved | 1,040,038 | ||
Equity Incentive Plan [Member] | Minimum [Member] | |||
Stock-Based Compensation (Textual) | |||
Shares authorized for issuance | 525,000 | ||
Equity Incentive Plan [Member] | Maximum [Member] | |||
Stock-Based Compensation (Textual) | |||
Shares authorized for issuance | 1,565,038 | ||
Restricted Stock [Member] | |||
Stock-Based Compensation (Textual) | |||
Stock-based compensation expenses related to unvested Restricted Shares and RSUs | $ 1,300,000 | ||
Estimated remaining vesting period | 3 years 1 month 6 days |
Loss Per Share (Details)
Loss Per Share (Details) - shares | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Class of Stock [Line Items] | ||
Fully Diluted | 8,151,424 | 6,398,178 |
Weighted Average | 5,990,466 | 6,003,364 |
Shares of common stock issuable in upon conversion of Convertible Notes [Member] | ||
Class of Stock [Line Items] | ||
Fully Diluted | 1,936,845 | |
Weighted Average | 111,130 | |
Warrants [Member] | ||
Class of Stock [Line Items] | ||
Fully Diluted | 5,813,804 | 6,183,115 |
Weighted Average | 5,833,971 | 6,001,013 |
Restricted Stock Units [Member] | ||
Class of Stock [Line Items] | ||
Fully Diluted | 325,121 | |
Weighted Average | 37,709 | |
Restricted Stock Awards [Member] | ||
Class of Stock [Line Items] | ||
Fully Diluted | 75,654 | 215,063 |
Weighted Average | 7,656 | 2,351 |
Fair Value (Details)
Fair Value (Details) | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Fair Value Disclosures [Abstract] | |
Beginning fair value balance on issue date - June 9, 2020 | $ 14,960,000 |
Change in fair value reported in the statements of operations | 766,000 |
Change in fair value reported in other comprehensive income | (63,000) |
Ending fair value balance - June 30, 2020 | $ 14,131,000 |
Fair Value (Details 1)
Fair Value (Details 1) - USD ($) | Jun. 09, 2020 | Jun. 30, 2020 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Face value principal payable | $ 17,000,000 | $ 17,000,000 |
Original conversion price | $ 11.50 | $ 11.50 |
Value of Common Stock | $ 10.28 | $ 8.80 |
Expected term (years) | 3 years | 2 years 10 months 24 days |
Volatility | 45.00% | 45.00% |
Market yield (range) | 23.90% | |
Risk free rate | 0.20% | 0.20% |
Minimum [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Market yield (range) | 23.30% | |
Maximum [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Market yield (range) | 23.40% |
Fair Value (Details Textual)
Fair Value (Details Textual) - USD ($) | Jan. 15, 2020 | Jun. 30, 2020 | Jun. 09, 2020 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Description of contingent consideration | (i) $0.01 per solo*TAGTM and solo*CODETM sold or (ii) 7% of net revenue. The fees were to be paid annually until the earlier of: (1) our shares trading above $12 per share for any consecutive 20 trading days in a 30-day period; (b) upon our no longer owning a majority stake in Solo; or (c) upon expiration of the patents related to solo*TAGTM and solo*CODETM, which is December 1, 2029. | ||
Principal amount | $ 17 | ||
Purchase price | $ 15 | ||
Solo Sciences, Inc. [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Description of contingent consideration | (i) $0.01 per solo*TAG™ and solo*CODE™ sold or (ii) 7% of net revenue. The fees were to be paid annually until the earlier of: (1) our shares trading above $12 per share for any consecutive 20 trading days in a 30-day period; (b) upon our no longer owning a majority stake in Solo; or (c) upon expiration of the patents related to solo*TAG™ and solo*CODE™, which is December 1, 2029. This fee represents contingent consideration and was recorded at fair value as of the date of acquisition. Contingent consideration is adjusted to fair value each period with changes in fair value being recognized in earnings at each reporting period. | ||
Fair value of the contingent consideration | $ 389,000 | ||
Liability for the contingent consideration | 389,000 | ||
Trellis Solutions, Inc [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of the contingent consideration | 998,000 | ||
Liability for the contingent consideration | $ 0 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Rent expense | $ 299,629 | $ 151,458 |
Future minimum lease payments two years | 305,214 | |
Future minimum lease payments next 12 months | 526,185 | |
Restricted cash | 500,000 | 500,000 |
Line of Credit [Member] | ||
Restricted cash | 500,000 | $ 500,000 |
Letter-of-credit with a bank | $ 500,000 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Current income taxes | ||
U.S. federal | $ 30,985 | |
U.S. state | ||
Total current income taxes | 30,985 | |
Deferred income taxes | ||
U.S. federal | ||
U.S. state | ||
Total deferred income tax benefit |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Income tax expense attributable to: | ||
Federal | $ (3,255,706) | $ (2,509,246) |
State, net of federal benefit | (862,690) | (13,452) |
Foreign tax rate less than federal rate | (2,645) | |
Permanent differences | 312,525 | |
Restricted stock awards | 816,505 | |
Changes in valuation allowance | 3,884,440 | 85,455 |
Provision to return adjustment | (45,134) | |
Losses from flow-through entity not subject to tax | 1,640,066 | |
Other adjustments | 195 | (19,328) |
Effective income tax expense | $ 30,985 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | Jun. 30, 2020 | Jun. 30, 2019 |
Noncurrent deferred tax assets: | ||
Employee compensation | $ 378,003 | |
Debt issuance costs | 323,183 | |
Revenue recognition | 156,022 | 22,226 |
Federal and state net operating loss | 4,082,297 | 63,229 |
Foreign net operating loss | 258,083 | |
Total deferred tax assets | 5,197,588 | 85,455 |
Noncurrent deferred tax liabilities: | ||
Fixed assets | (653,819) | |
Intangibles | (1,808,960) | |
Deferred tax liabilities | (2,462,779) | |
Valuation allowance | (2,734,809) | (85,455) |
Deferred taxes after valuation allowance |
Income Taxes (Details Textual)
Income Taxes (Details Textual) | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Income Tax Disclosure [Abstract] | |
Net operating losses | $ 15,286,374 |
Change in valuation allowance | 2,649,354 |
Uncertain tax position | $ 50,000 |
Income taxes, description | Deferred tax assets related to foreign net operating loss carryforward, which begin to expire in 2028, in the amount of $973,900. |
Revisions of Financial Statem_3
Revisions of Financial Statements for the Fiscal Quarters during Fiscal Year 2020 (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2019 | Mar. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | |
Cost of revenues | $ 1,396,219 | $ 1,615,239 | $ 1,379,701 | $ 2,994,940 | $ 4,391,159 | $ 6,209,724 | $ 4,633,844 |
Gross profit | 1,674,327 | 1,690,964 | 1,813,189 | 3,504,153 | 5,178,480 | 6,363,552 | 6,189,273 |
Product development | 874,787 | 623,501 | 610,902 | 1,234,403 | 2,109,190 | 3,206,310 | 5,565,097 |
Selling, general and administrative | 5,678,242 | 4,883,172 | 3,601,714 | 8,484,886 | 14,163,128 | ||
Net loss | $ (4,744,129) | $ (3,763,695) | $ (2,326,332) | $ (6,090,027) | $ (10,834,156) | $ (16,384,104) | $ (12,403,215) |
Net loss per share | $ (0.38) | $ (0.34) | $ (0.21) | $ (0.56) | $ (0.96) | $ (1.31) | $ (2.05) |
As reported [Member] | |||||||
Cost of revenues | $ 1,420,909 | $ 1,638,840 | $ 1,397,361 | $ 3,036,201 | $ 4,457,110 | ||
Gross profit | 1,649,637 | 1,667,363 | 1,795,529 | 3,462,892 | 5,112,529 | ||
Product development | 1,632,353 | 1,261,509 | 1,130,880 | 2,392,389 | 4,024,742 | ||
Selling, general and administrative | 5,500,837 | 4,796,404 | 3,583,815 | 8,380,219 | 13,881,056 | ||
Net loss | $ (5,348,980) | $ (4,338,536) | $ (2,846,071) | $ (7,184,607) | $ (12,533,587) | ||
Net loss per share | $ (0.43) | $ (0.40) | $ (0.26) | $ (0.66) | $ (1.11) | ||
Adjustment [Member] | |||||||
Cost of revenues | $ (24,690) | $ (23,601) | $ (17,660) | $ (41,261) | $ (65,951) | ||
Gross profit | 24,690 | 23,601 | 17,660 | 41,261 | 65,951 | ||
Product development | (757,566) | (638,008) | (519,978) | (1,157,986) | (1,915,552) | ||
Selling, general and administrative | 177,405 | 86,768 | 17,899 | 104,667 | 282,072 | ||
Net loss | $ 604,851 | $ 574,841 | $ 519,739 | $ 1,094,580 | $ 1,699,431 |