Gryphon Digital Mining(US:GRYP)2023-11-14 22:20Business Transactions - Akerna completed the sale of 365 Cannabis for $0.5 million and terminated an Earn-out Obligation valued at $2.3 million[140]. - The company exited the Enterprise software business by discontinuing operations of Viridian and selling LCA for $0.1 million[142]. - Akerna entered into a merger agreement with Gryphon Digital Mining, with Gryphon stockholders expected to own approximately 92.5% of the combined entity[145]. - The sale of MJF and Ample to MJ Acquisition is set for $5.0 million, including $4.0 million in cash and a $1.0 million loan[146]. - Akerna paid a termination fee of $0.2 million to POSaBIT after terminating the MJF-Ample SPA[144]. - Akerna's merger agreement was amended to set a minimum value of $115.6 million for Gryphon's post-merger ownership[148]. - The cash payment at closing for the SPA was reduced from $4 million to $2 million, with an additional $500,000 loan provided to Akerna for working capital[151]. - Akerna received a $1.0 million loan from MJ Acquisition, with a 10% annual interest rate, due by April 28, 2024[150]. Financial Performance - Total revenue decreased by 35% to $6.97 million for the nine months ended September 30, 2023, compared to $10.80 million for the same period in 2022[169]. - Software revenue declined by 32% to $6.91 million for the nine months ended September 30, 2023, primarily due to customer churn and the planned exit from certain platforms[170]. - Gross profit decreased by 40% to $3.98 million, with a gross profit margin of 57% for the nine months ended September 30, 2023, down from 61% in the prior year[175]. - Total operating expenses dropped by 80% to $10.25 million for the nine months ended September 30, 2023, compared to $50.38 million in 2022[169]. - Loss from operations improved by 86% to $6.27 million for the nine months ended September 30, 2023, compared to a loss of $43.76 million in the same period last year[169]. - For the three months ended September 30, 2023, total revenue decreased by 32% to $2.08 million from $3.06 million in the same quarter of 2022[181]. - Software revenue for the three months ended September 30, 2023, declined by 31% to $2.07 million, primarily due to customer churn and planned exits from certain platforms[182]. - Gross profit for the three months ended September 30, 2023, was $1.11 million, a decrease of 30% from $1.59 million in the same quarter of 2022[186]. - Adjusted EBITDA for the nine months ended September 30, 2023, improved to $(3,366,375) from $(7,092,597) in the same period of 2022, indicating a reduction in operational losses[197]. Restructuring and Operational Changes - Akerna incurred restructuring charges of less than $0.1 million related to the termination of employees during the sale of 365 Cannabis[140]. - The company plans to discontinue the Solo and Trellis platforms as existing contracts expired in the second quarter of 2023[136]. - Akerna has suspended efforts to seek new revenue opportunities for the discontinued business units[142]. - The company implemented a restructuring initiative in May 2022, resulting in a $0.5 million charge due to a 33% workforce reduction[156]. - Depreciation and amortization expense decreased by 89% to $0.18 million for the three months ended September 30, 2023, from $1.55 million in the prior year[190]. - Impairment charges for goodwill of $0.89 million were recognized in the three months ended September 30, 2023, with no impairment charges in the same period of 2022[191]. Cash Flow and Working Capital - As of September 30, 2023, the company had a working capital deficit of $11.2 million and only $0.2 million in cash available for future operations[199]. - The company reported cash used in operating activities of $(5,206,372) for the nine months ended September 30, 2023, a decrease from $(10,450,906) in the same period of 2022, primarily due to cost reductions from restructuring[201][203]. - Net cash provided by investing activities was $600,000 during the nine months ended September 30, 2023, resulting from the sale of the 365 Cannabis and LCA business units[205]. - The company made principal payments of $4.9 million on the Senior Convertible Notes during the nine months ended September 30, 2023, compared to $1.5 million in the same period of 2022[207]. Compliance and Future Viability - The company received notices from Nasdaq regarding non-compliance with minimum bid price and stockholders' equity requirements, with a compliance period of 180 days granted to regain compliance[199]. - The company is committed to a Sale Transaction to exit the SaaS industry and a Merger as a strategic alternative for stockholders, with no assurance of successful execution[200]. - The company’s ability to continue as a going concern is dependent on successfully executing the Sale Transaction and Merger, amid substantial doubt about its operational viability[200]. - The company’s cash flow from operating activities is primarily impacted by customer subscriptions, employee-related expenditures, and marketing expenses[202]. Revenue Composition - Revenue from software accounted for approximately 99% of total revenue for the nine months ended September 30, 2023[160]. - Consulting services contributed only about 3% of total revenue for the nine months ended September 30, 2022[160]. - General and administrative expenses include salaries and benefits for administrative functions, along with professional fees and corporate expenses[167]. - Akerna's critical accounting policies remain unchanged since the last annual report[168].