Financial Performance - Total mining revenue in Q1 2024 was $7.5 million, a 56.3% increase from $4.8 million in Q1 2023[4] - The company reported a net loss of $11.7 million in Q1 2024, compared to a net loss of $6.9 million in Q1 2023[4] - Adjusted EBITDA for Q1 2024 was $1.9 million, down from $4.2 million in Q1 2023[4] - Total revenues for Q1 2024 were $7,490,000, a 47.5% increase from $5,076,000 in Q1 2023[21] - The net loss for Q1 2024 was $11,744,000, compared to a net loss of $6,910,000 in Q1 2023, indicating a 70.5% increase in losses[21] - Net loss per share for Q1 2024 was $(0.36), compared to $(0.28) in Q1 2023[21] Mining Operations - Breakeven cost per bitcoin in Q1 2024 was $34,063, significantly higher than $12,910 in Q1 2023[4] - The company mined approximately 142 Bitcoin in Q1 2024, down from 212 Bitcoin in Q1 2023[4] - Mining activities generated $7,490,000 in revenue, compared to $4,840,000 in the same period last year, reflecting a 54.1% growth[21] Expenses and Liabilities - Total operating expenses increased to $9,050,000 in Q1 2024 from $6,764,000 in Q1 2023, representing a 33.5% rise[21] - As of March 31, 2024, total assets were $17.8 million, while total liabilities were $30.2 million[9] Cash Flow and Stock - Cash and cash equivalents at the end of Q1 2024 were $1,737,000, down from $2,016,000 at the end of Q1 2023[24] - The company reported a net cash used in operating activities of $(983,000) for Q1 2024, compared to $1,807,000 provided in Q1 2023[24] - Proceeds from the issuance of common stock amounted to $1,395,000 in Q1 2024, with no proceeds reported in Q1 2023[24] Asset Valuation - The unrealized gain on digital assets was $(1,703,000) in Q1 2024, while there was no unrealized gain reported in Q1 2023[24] - The company experienced a change in fair value of notes payable, resulting in a loss of $9,638,000 in Q1 2024, compared to a loss of $8,189,000 in Q1 2023[21] Strategic Initiatives - Gryphon completed its miner upgrade program ahead of schedule, adding approximately 23 PH/s to hashing power and improving average fleet efficiency to 28.5 J/T[4] - The self-mining hash rate capacity reached approximately 0.94 EH/s following the upgrades[4] - The company has authorized a stock repurchase program of up to $5 million to enhance shareholder value[4] - Based on a projected average Bitcoin price of $70,000, the company expects a gross profit of approximately $16.6 million from current mining operations in 2024[7]

Mining Performance - For Q1 2024, Gryphon mined approximately 142 bitcoins, a decrease of 33% from 212 bitcoins mined in Q1 2023[164] - Mining revenues for 2023 totaled $21,052,000, with Q1 2024 revenues at $7,490,000, reflecting a 55% increase from Q1 2023's $4,840,000[165] - The cost to mine one bitcoin increased significantly from $12,910 in Q1 2023 to $34,063 in Q1 2024, indicating a rise of 164%[165] - Gryphon's breakeven cost for total Bitcoin Equivalent Coins generated was $34,063 in Q1 2024, compared to $12,385 in Q1 2023, marking a 175% increase[166] - The average value of one mined bitcoin rose from $22,830 in Q1 2023 to $52,746 in Q1 2024, an increase of 131%[165] Financial Overview - Total revenues for the three months ended March 31, 2024, were $7,490,000, up 47.6% from $5,076,000 in the same period of 2023[176] - Cost of revenues increased to $4,837,000 for the three months ended March 31, 2024, from $2,737,000 in 2023, a rise of 76.7%[180] - General and administrative expenses rose to $2,461,000 for the three months ended March 31, 2024, compared to $1,354,000 in 2023, an increase of 81.8%[181] - The company reported a loss from operations of $1,560,000 for the three months ended March 31, 2024, a slight improvement from a loss of $1,688,000 in the same period of 2023[176] - Other expenses increased significantly to $10,184,000 for the three months ended March 31, 2024, compared to $5,222,000 in 2023, marking a 95.0% increase[176] - The company reported a net loss of $11,744,000 for Q1 2024, compared to a net loss of $6,910,000 in Q1 2023[217] Cash Flow and Capital Resources - The company had cash and cash equivalents of $1,737,000 as of March 31, 2024, up from $915,000 as of December 31, 2023[199] - The accumulated deficit increased to approximately $58,180,000 as of March 31, 2024, from $47,175,000 as of December 31, 2023[199] - The company anticipates needing additional capital resources to fund operations and may consider selling additional equity or debt securities[200] - Net cash used in operating activities for Q1 2024 was approximately $983,000, compared to a net cash provided of $1,807,000 in Q1 2023[202][203][204] - Cash proceeds from the sale of digital currency in Q1 2024 were approximately $6,106,000, with operating expenditures of approximately $7,089,000[203] - Net cash provided by financing activities in Q1 2024 was approximately $1,805,000, primarily from cash proceeds of $1,395,000 from the issuance of common stock[202][206] Operational Strategy - Gryphon has deployed approximately 8,800 S19j Pro Antminers, with a focus on using net carbon neutral energy in its operations[160][162] - Gryphon's strategy includes working with power hosting partners committed to climate science, utilizing approximately 28 megawatts of renewable hydro energy[163] - The Coinmint Agreement involves hosting services for 7,200 S19j Pro Antminer machines at a hydro-powered facility[207] Market and Asset Valuation - The average value of Bitcoin rose to approximately $53,000 for the three months ended March 31, 2024, compared to $23,000 for the same period in 2023, an increase of approximately 130%[178] - Gryphon's electricity costs increased from $0.059 per kilowatt hour in Q1 2023 to $0.082 per kilowatt hour in Q1 2024, reflecting a 39% rise[168] - The global hashrate of the Bitcoin network increased sequentially by 18.9%, 9.1%, 21.6%, and 19.0% over the last four quarters ending March 31, 2024[168] Future Offerings - The company has initiated a new At The Market offering program with an aggregate offering price of up to $70,000,000, having sold 32,032 shares for total net proceeds of $44,958 as of May 9, 2024[175] - The company filed a prospectus supplement for an offering of up to $70.0 million of common stock under an at-the-market issuance sales agreement[201] - The company has a remaining capacity of $69,955,042 under the ATM as of May 9, 2024[201] Accounting and Financial Adjustments - Adjusted EBITDA for Q1 2024 was approximately $1,895,000, down from $4,235,000 in Q1 2023[217] - The adoption of ASU 2023-08 resulted in a $739,000 increase in digital assets as of January 1, 2024[218] - The company has no off-balance sheet arrangements that could materially affect its financial condition[209]

Merger and Acquisition Details - The merger between Akerna Corp. and Gryphon Digital Mining, Inc. will be accounted for as a reverse acquisition, with Gryphon as the accounting acquirer[1]. - Gryphon will retain a majority voting and equity interest in the combined company, and its executive management team will lead the new organization[2]. - The merger is expected to create synergies that could lead to improved operational efficiencies and market expansion opportunities[4]. - The merger with Gryphon Digital Mining is expected to result in Akerna stockholders owning approximately 7.5% of the combined company[12]. - The estimated purchase price for the merger with Gryphon is approximately $16.3 million, based on Akerna's equity to be acquired, utilizing a closing stock price of $0.2855 per share as of February 9, 2024[27]. - The merger is expected to be accounted for as a "reverse acquisition," with Gryphon considered the accounting acquirer[25]. Financial Performance - Revenue reported at $6.836 billion, with a gross profit of $3.435 billion, resulting in a gross margin of approximately 50.3%[10]. - Operating expenses totaled $10.334 billion, leading to a loss from operations of $6.899 billion[10]. - Net loss from continuing operations was $8.603 billion, with a diluted net loss per share of $1.56[10]. - The total operating expenses included $5.677 billion in general and administrative costs, significantly impacting overall profitability[10]. Asset and Liability Overview - The unaudited pro forma condensed combined balance sheet as of December 31, 2023, reflects total assets of $18,834,000 and total liabilities of $19,482,000[6]. - Total current assets for the combined entity are projected to be $4,983,000, while total current liabilities are estimated at $19,933,000[7]. - The combined entity's financial information is for illustrative purposes and may not reflect actual future performance[4]. Accounting and Financial Adjustments - The combined company anticipates a significant adjustment in accounting policies post-merger, which may materially affect financial statements[5]. - Management will conduct a final review of Akerna's accounting policies to ensure conformity with Gryphon's standards post-acquisition[5]. - The pro forma statement of operations for the year ended December 31, 2023, is being prepared to illustrate the financial impact of the merger[9]. - The pro forma adjustments for the year ended December 31, 2023 include the conversion of $3.1 million in Senior Convertible Notes and $3.4 million in Series C Preferred Stock into 16,499,513 and 15,134,896 shares of common stock, respectively[28]. - The company anticipates recognizing goodwill of $20.2 million in connection with the merger, classified as a business combination[28]. - The pro forma adjustments reflect an estimated transaction cost of $2.0 million for advisory, legal, and accounting fees incurred by Akerna prior to the merger[28]. Business Unit Sales and Transactions - The sale of MJ Freeway LLC and Ample Organics Inc. to MJ Acquisition for $5 million is contingent upon the closing of the merger[15]. - The additional cash payment in the sale transaction was reduced from $4 million to $1.85 million[16]. - Akerna completed the sale of 365 Cannabis for $0.5 million, with an earn-out obligation valued at $2.3 million[18]. - The sale of Last Call Analytics was completed for $0.1 million, with results classified as discontinued operations[19]. - The company has completed the wind down of its remaining business units, including Veridian, Trellis, and Solo, in the fourth quarter of 2023, following the abandonment of software service and support for these units[20]. - The conversion price of Senior Convertible Notes was reduced to $0.50 per share to facilitate the merger[17]. Shareholder Information - Akerna's common shares outstanding as of December 31, 2023, total 10,352,069, with an estimated total of 57,172,921 shares outstanding immediately prior to the merger[29]. - The weighted average shares outstanding for the year ended December 31, 2023, have been calculated as if the merger occurred on January 1, 2023, reflecting various conversions and issuances[30]. - The company has eliminated revenues and direct expenses associated with MJ Freeway, which will not continue as a result of the sale transaction[30]. - The historical financial information of Akerna has been adjusted to eliminate results from abandoned business units and certain corporate activities that will not continue post-merger[21].

Bitcoin Mining Operations - Gryphon operates approximately 7,400 bitcoin ASIC mining computers, generating revenue measured on a dollar per megawatt-hour (MWh) basis, which is variable based on Bitcoin price, difficulty, transaction volume, and global hash rates[38]. - Gryphon has deployed a total of approximately 9,000 S19 series Antminers from Bitmain, with operations launched in September 2021[35]. - Gryphon's hosted capacity at Core Scientific represented approximately 1% of its overall fleet, which has been relocated without material impact on operations[69]. - Gryphon contributes 100% of its Bitcoin hashing power to Foundry USA Pool, which has a total hashing power of approximately 172 EH/S, with Gryphon providing about 0.5% of that[86]. - Gryphon's miner fleet consists of 7,128 S19j Pro Antminers, 229 S19k Pro Antminers, 309 S19 Pro Antminers, and 876 S19j Pro + Antminers, with a total hashrate capacity of approximately 100 TH/s to 120 TH/s per miner[81]. - Gryphon's operations include preventative maintenance and efficiency measures to enhance profitability and competitiveness[122]. - Gryphon's mining operations are heavily dependent on electricity costs, which are expected to account for a significant portion of overall costs[154]. - Gryphon's ability to compete is tied to its hash rate growth, which must keep pace with the increasing global network hash rate[138]. - Gryphon's mining operations depend on third-party mining pools, exposing it to risks if the pool operator experiences downtime or other issues[176]. - Gryphon's reliance on a small number of digital asset mining equipment suppliers poses risks, as demand for mining machines may outpace supply, impacting growth expectations and financial condition[170]. Financial Performance and Revenue Model - Gryphon's revenue model involves mining and holding Bitcoin, selling only the necessary amount to cover operating expenses and reinvest in operational expansion[89]. - Gryphon's revenues from bitcoin mining are dependent on the number of bitcoin rewards mined and the value of Bitcoin, which has historically been volatile, with a price range in fiscal 2023 between approximately $16,600 and $44,000[103]. - Gryphon's operational strategy focuses on low-cost hosting and partnerships with providers for net carbon neutral power[79]. - Gryphon's bitcoin mining reward will halve from 6.25 to 3.125 in 2024, impacting revenue if Bitcoin prices do not adjust accordingly[119]. - Gryphon aims to maintain a breakeven profitability floor significantly below the network average to mitigate halving impacts[121]. - Gryphon's ability to achieve profitability is contingent on the bitcoin reward for solving blocks being sufficiently high[151]. - Gryphon's average holding period for Bitcoin was 25 days, an increase from under 7 days prior to December 31, 2022[89]. - Gryphon's operations will continue to expand as it acquires additional miners when opportunities arise[81]. Regulatory Environment and Compliance - The regulatory environment for cryptocurrency is evolving, with potential impacts on Gryphon's business from new laws and regulations[95]. - Gryphon recognizes the risks posed by the evolving regulatory environment and potential disruptions in the crypto asset markets, which could impact its operations[104]. - Regulatory changes in jurisdictions where Gryphon operates could impact its ability to conduct business, necessitating potential costly relocations[183]. - The U.S. regulatory environment for cryptocurrencies is evolving, with potential new laws and regulations expected to impact Gryphon's operations[206]. - Regulatory scrutiny has increased significantly, particularly following the collapse of FTX, with investigations from multiple U.S. agencies[206]. - Future regulatory changes could impose additional compliance burdens on Gryphon, potentially leading to increased operational costs[208]. - Gryphon's activities may necessitate compliance with anti-money laundering regulations, leading to extraordinary expenses and operational challenges[198]. - Gryphon's ability to continue as a going concern may be adversely affected by regulatory actions in countries that restrict cryptocurrency use[215]. Risks and Challenges - Gryphon faces significant competition from larger companies with greater resources and experience, which may hinder its ability to expand and improve its network[184]. - Gryphon may struggle to access sufficient capital for operations and growth initiatives, which could hinder competitiveness and financial condition[140]. - Gryphon's independent accounting firm's report expresses substantial doubt about its ability to continue as a going concern[144]. - Gryphon may incur additional losses and negative cash flows, necessitating potential future debt or equity financing[146]. - Gryphon's business may be negatively impacted by the development of competing blockchain technologies, making it difficult to adapt and realize anticipated profits[187]. - Gryphon's reliance on a single model of miner increases operational risks, as any design flaws could adversely affect Gryphon's entire mining system[173]. - Gryphon's stock price may be volatile and subject to fluctuations based on various external factors, including market performance and regulatory developments[218]. - Gryphon's future growth depends on attracting and retaining qualified personnel in a competitive market[149]. Environmental and Sustainability Commitments - Gryphon's primary hosting facility in New York utilizes 28 megawatts of space powered by renewable hydro energy, aligning with its mission for carbon neutrality[36]. - Gryphon has entered into agreements to purchase 74,075 carbon credits to offset its carbon footprint from bitcoin mining activities, maintaining its commitment to carbon-free energy sources[99]. - Gryphon's commitment to ESG principles includes avoiding bitcoin mining at facilities using carbon-based electricity sources, reinforcing its focus on sustainability[99]. - Climate change may impose additional costs and risks on Gryphon's operations, potentially impacting its financial condition[192]. Legal and Litigation Matters - Gryphon is currently engaged in litigation, including the Sphere 3D Litigation, which may result in significant liabilities or damages affecting its financial condition[225]. - The Company has a PPP Loan of $2.2 million obtained under the CARES Act, which was initially forgiven by the SBA, but is now under review for potential reversal[228]. - The SBA is considering a full denial of the previously forgiven amount based on the Company's eligibility for the PPP Loan, which could negatively impact its financial position[229]. - There exists a risk that the SBA or DOJ could determine the Company does not qualify for forgiveness of the PPP Loan, leading to potential repayment obligations and penalties[231].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from / to Commission file number 001-39096 AKERNA CORP. (Exact name of registrant as specified in its charter) | Delaware | 83-2242651 | | --- | --- | | (State or other j ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from / to Commission file number 001-39096 Washington, D.C. 20549 AKERNA CORP. FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR (Exact name of registrant as specified in its charter) | Delaware | 83-2242651 | | --- | --- | | (State or other jurisd ...

For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from / to Commission file number 001-39096 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 AKERNA CORP. (Exact name of registrant as specified in its charter) | Delaware | 83-2242651 | | --- | --- | | (State or other juris ...

Financial Performance - The company reported net losses of $79.1 million and $31.3 million for the years ended December 31, 2022, and 2021, respectively, due to substantial investments in developing monitoring and compliance platforms [146]. - The company has substantial doubt about its ability to continue as a going concern, which could limit its ability to raise additional funds through equity or debt securities [144]. - The company anticipates continuing to incur losses in the near term and may not achieve profitability in the future [146]. - The company generated 22% of its revenue from government contracts for Leaf Data Systems® in Pennsylvania and 18% in Utah for the years ended December 31, 2022, and 2021, respectively [170]. - As of December 31, 2022, the company had gross federal and state NOL carryforwards totaling $58.9 million, with the majority of state NOL carryforwards beginning to expire in 2039 [218]. Strategic Initiatives - Akerna plans to sell its membership interests in MJ Freeway and Ample Organics for a total purchase price of $4.0 million [48]. - The company is committed to a Sale Transaction to exit the SaaS industry and pursue a Merger as a strategic alternative for stockholders [144]. - The company has engaged JMP Securities as a financial advisor to explore strategic alternatives for enhancing shareholder value [43]. - Akerna is currently pursuing a merger with Gryphon, which is subject to various closing conditions, including stockholder approval [111]. - If the merger does not complete, Akerna's board will evaluate other strategic alternatives, which may not be as favorable to stockholders [112]. Market and Industry Trends - The U.S. legal cannabis sales surpassed $25 billion in 2021, marking a 40% increase from $18 billion in 2020, with forecasts predicting sales to reach $46 billion by 2026, representing a CAGR of 14% from 2021 [61]. - Global cannabis sales reached nearly $29 billion in 2021, a 45% increase over 2020, with projections estimating growth to $61 billion by 2026, reflecting a CAGR of over 16% [61]. - The cannabis industry is characterized by rapid growth and increasing complexity, necessitating compliance with a wide range of regulatory schemes [65]. - The global CBD market was valued at USD 2.8 billion in 2020, with expectations of a CAGR of 21.2% from 2021 to 2028 [63]. Compliance and Regulatory Environment - Akerna's platforms provide real-time compliance monitoring and inventory management for licensed cannabis businesses [39]. - The company has worked with clients globally, allowing cannabis businesses to comply with various regulatory frameworks [42]. - Akerna has secured exclusivity in the Pennsylvania and Utah markets due to government contracts mandating the use of its MJ Platform® [72]. - The cannabis industry could face opposition from established businesses in other sectors, which may attempt to impede legislative progress beneficial to the cannabis market [162]. - The company faces risks related to federal racketeering laws due to receipt of funds from clients engaged in cannabis operations, which could lead to significant fines and penalties [158]. Operational Challenges - The company faces risks related to the cannabis industry, including the potential for changes in federal enforcement policies that could impact demand for its products [152][154]. - The company’s access to banking services may be limited due to federal laws, which could hinder operations and increase reliance on cash transactions [159]. - Cybersecurity threats pose a significant risk to the company’s IT systems, potentially leading to data breaches and operational disruptions [174]. - The company may face challenges in maintaining existing government contracts or obtaining new ones due to the competitive bidding process and compliance requirements [173]. - The company relies on its clients obtaining various licenses from municipalities and state agencies, with no assurance that these licenses will be retained or renewed [166]. Financial Instruments and Capital Structure - The company has $14.7 million in Senior Convertible Notes convertible at $4.75 per share, potentially resulting in the issuance of 3,086,890 shares upon full conversion [197]. - Up to 26,562,911 shares of Common Stock could be issued upon conversion of Senior Convertible Notes at the floor price, leading to significant dilution for stockholders [198]. - Obligations under the Senior Convertible Notes are secured by a security interest in substantially all assets, risking foreclosure if obligations are defaulted [199]. - The Senior Convertible Notes bear interest at a rate of 15% per annum, and holders can demand redemption at 115% of the outstanding principal plus accrued interest [201]. Corporate Governance and Management - Certain officers and directors have interests in the Merger that differ from stockholders, potentially influencing their support for the Merger [122]. - The company is classified as an "emerging growth company" under the JOBS Act, remaining so until certain financial thresholds are met [108]. - The company identified material weaknesses in internal controls over financial reporting as of December 31, 2022, which could result in material misstatements in financial statements if not remediated [214]. - The company is subject to increased legal and financial compliance costs due to being a public company, which may divert management's attention from business operations [215]. Market Risks - The market price of the company's Common Stock may decline post-Merger if expected strategic and financial benefits are not realized [125]. - The trading price of the Common Stock could decline due to market conditions, changes in operating results, or sales of securities by the company or in the open market [210]. - The company may face additional risks due to material weaknesses in internal control over financial reporting, potentially leading to regulatory actions and negative impacts on stock price [208]. - The occurrence of any event of default could substantially harm the company's financial condition and may force it to cease operations [202].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from / to Commission file number 001-39096 AKERNA CORP. (Exact name of registrant as specified in its charter) | Delaware | 83-2242651 | | --- | --- | | (State or other j ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from / to Commission file number 001-39096 AKERNA CORP. (Exact name of registrant as specified in its charter) | Delaware | 83-2242651 | | --- | --- | | (State or other jurisd ...