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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 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 jurisdiction ...

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 ...

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 March 31, 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 juris ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 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 jurisdiction ...