Business Context and Reporting Period
This Form 8-K was filed by Akerna Corp. on May 1, 2023, reporting events occurring on April 5 and April 28, 2023. The provided filing identifies the registrant as Akerna Corp., not American Bitcoin Corp. Akerna reported transactions involving the sale of its MJ Freeway and Ample Organics businesses and a related merger transaction with Gryphon Digital Mining Inc.
Key Financial and Transaction Metrics
- Sale consideration: $5.0 million, consisting of $4.0 million in cash at closing and a $1.0 million secured promissory note from MJ Acquisition Corp. to Akerna.
- Promissory note: Principal of $1.0 million, bearing simple interest at 10% annually and scheduled to mature on April 28, 2024. The note is deemed paid in full upon consummation of the sale transactions.
- Security and guarantees: The note is secured by substantially all personal property of Akerna and certain subsidiaries. Certain subsidiaries also provided guarantees.
- Purchase-price adjustments: Consideration is subject to adjustments for working capital, closing indebtedness, transaction expenses and certain credit referral payments. Post-closing working-capital adjustments are capped at $500,000.
- Termination payment to POSaBIT: Akerna owes POSaBIT a $140,000 termination fee and up to $60,000 of documented reasonable fees and expenses.
- Operating financial metrics: The filing does not provide revenue, profit, cash flow, margin, cash balance, liquidity, or total debt figures for the reporting period.
Material Changes Versus the Prior Comparable Period
- Akerna terminated its January 27, 2023 securities purchase agreement with POSaBIT on April 5, 2023, citing a competing offer that the Board determined was or was likely to be a superior offer.
- On April 28, 2023, Akerna entered into a new securities purchase agreement with MJ Acquisition Corp. for the sale of MJ Freeway, LLC and Ample Organics Inc.
- Akerna incurred a new $1.0 million secured, subordinated debt obligation, subject to repayment or deemed repayment upon closing of the sale transactions.
- Holders of Akerna’s 2021 senior secured convertible notes waived specified restrictions on additional indebtedness and liens to permit the new note transaction.
- The existing merger agreement with Gryphon was amended to identify MJ Acquisition Corp. as the MJF purchaser and to permit the new sale transaction.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
The transaction remains subject to conditions including Akerna stockholder approval, accuracy of representations and warranties, compliance with covenants, and simultaneous closing of the Gryphon merger. Additional conditions include retention of certain employees, continuation of specified Pennsylvania and Utah contracts, contract-renewal requirements, no specified Pennsylvania software-access change order, and limited due diligence concerning Ample.
The parties may terminate the agreement under specified circumstances. In certain termination scenarios, Akerna must pay MJ Acquisition Corp. a $290,000 termination fee and reimburse up to $60,000 of reasonable fees and expenses. The POSaBIT termination also exposes Akerna to the stated $140,000 fee and up to $60,000 of expenses.
Key disclosed risks include failure to obtain stockholder or governmental approvals, inability to close the proposed transactions, transaction-related costs, potential litigation concerning the POSaBIT termination, difficulty managing operating and transaction expenses, inability to obtain additional capital, changes in business relationships, stock-price and exchange-ratio fluctuations, and failure to realize anticipated benefits.
Akerna’s directors, executive officers and certain 2021 noteholders entered into voting and support agreements supporting the transaction and opposing competing proposals. The filing states that a registration statement on Form S-4 and related proxy materials are expected to provide additional information.
Important Facts for Investors to Verify
- Confirm the registrant and issuer identity, because the supplied metadata names American Bitcoin Corp., while the filing names Akerna Corp. and uses the ticker symbols KERN and KERNW.
- Verify the actual filing date and event chronology: the report references April 5 termination activity, April 28 transaction documents, and a May 1 signature date.
- Review the full securities purchase agreement for closing conditions, working-capital and other purchase-price adjustments, indemnification limits, and termination rights.
- Assess whether Akerna obtained stockholder approval and whether the sale and related Gryphon merger ultimately closed.
- Review the secured note, security agreement, guaranties and intercreditor agreement for collateral coverage, priority, default remedies and the effect on existing senior noteholders.
- Monitor potential POSaBIT claims or litigation and the final amount of reimbursable fees and expenses.
- Obtain the subsequent Form S-4, proxy materials and later periodic filings for updated financial statements, liquidity information and transaction status.