Business Context and Reporting Period
This Form 8-K was filed by Akerna Corp. on November 17, 2023, reporting events dated November 15, 2023. The provided metadata identifies American Bitcoin Corp., but the filing registrant is Akerna Corp. (NASDAQ: KERN; KERNW). The filing concerns amendments to Akerna’s proposed sale of MJ Freeway, LLC and Ample Organics Inc. to MJ Acquisition Corp. (MJA).
Material Financial and Capital Structure Developments
- The cash consideration payable at closing under the securities purchase agreement was reduced from $2.0 million to $1.85 million.
- MJA provided Akerna with an additional $150,000 working-capital loan.
- Akerna issued a second amended and restated convertible secured promissory note to MJA with principal increased from $1.5 million to $1.65 million.
- Immediately before closing of the proposed sale transaction, the $1.65 million note is expected to convert into Akerna common stock based on the five-trading-day volume-weighted average price preceding closing.
- The conversion is capped so that MJA’s aggregate ownership and shares issued under the transaction do not exceed 19.99% of Akerna’s applicable outstanding shares without stockholder approval under Nasdaq rules.
- The note is secured by a second amended and restated security and pledge agreement and guaranteed by certain Akerna subsidiaries.
- Akerna’s senior secured noteholders waived specified restrictions on additional indebtedness and liens to permit the new financing documents.
- The MJA obligations are subordinated to Akerna’s obligations to its senior creditors.
The filing does not provide revenue, profit, cash flow, margin, liquidity-balance, or operating-performance figures for the reporting period.
Changes Versus Prior Disclosures
- The November 15, 2023 Second Amendment modified the SPA previously amended on September 28, 2023.
- Cash payable at closing decreased by $150,000, matching the additional working-capital loan from MJA.
- The related convertible secured note increased from $1.5 million to $1.65 million and was updated to provide for conversion immediately before transaction closing.
- Related security, guaranty, waiver, and intercreditor documents were amended and restated to reflect the increased note and financing structure.
Outlook, Risks, and Unusual Items
Closing of the proposed transactions remains subject to conditions, including stockholder approval and required governmental or quasi-governmental approvals. The filing states that transaction timing and completion are uncertain.
- Akerna may require additional capital to continue its business plan.
- Akerna faces risks related to operating expenses and transaction expenses pending closing.
- The exchange ratio and Akerna’s market price may affect ownership outcomes.
- The proposed transactions may result in unexpected costs, charges, or adverse changes in business relationships.
- Akerna may fail to realize anticipated transaction benefits.
- The Nasdaq Hearings Panel may not grant additional time for Akerna to regain listing compliance, creating suspension or delisting risk.
- If Ample is sold to a third party before closing, Akerna must promptly remit the proceeds to MJA, up to $700,000 less $20,000 for Akerna’s legal expenses.
Investor Verification Checklist
- Verify the identity of the registrant: the filing is for Akerna Corp., not American Bitcoin Corp.
- Review the full SPA amendments and transaction documents for closing conditions, collateral, covenants, and remedies.
- Confirm whether the proposed sale transaction closes and whether the $1.65 million note converts into equity.
- Assess potential dilution from the note conversion and any other shares issued under the transaction, including the 19.99% Nasdaq limitation.
- Review Akerna’s senior debt, liquidity position, and ability to fund operations and transaction expenses.
- Monitor stockholder, regulatory, and Nasdaq listing approvals and any resulting changes to transaction timing.