Description of Business, Liquidity and Capital Resources
|12 Months Ended|
Jun. 30, 2019
|Organization, Consolidation and Presentation of Financial Statements [Abstract]|
|Description of Business, Liquidity and Capital Resources||
Note 1 - Description of Business, Liquidity and Capital Resources
Description of Business
Akerna Corp. (the "Company" or "Akerna"), through its wholly-owned subsidiary MJ Freeway, LLC ("MJF") is a regulatory compliance and inventory management technology company. The Company's proprietary software platform is adaptable for industries in which interfacing with government regulatory agencies for compliance purposes is required, or where the tracking of organic materials from seed or plant to end products is desired. The Company developed products intended to assist states in monitoring licensed businesses' compliance with state regulations, and to help state-licensed businesses operate in compliance with such law. The Company provides its regulatory software platform, Leaf Data Systems®, to state government regulatory agencies, and its commercial software platform, MJ Platform®, to state-licensed businesses.
On October 10, 2018 (as amended on April 17, 2019), MJF entered into a definitive merger agreement (the "Merger Agreement") with MTech Acquisition Corp. ("MTech"), the Company (f/k/a MTech Acquisition Holdings Inc.), MTech Purchaser Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Akerna ("Purchaser Merger Sub"), MTech Company Merger Sub LLC, a Colorado limited liability company and a wholly-owned subsidiary of Akerna ("Company Merger Sub" and, together with Purchaser Merger Sub, the "Merger Subs", and the Merger Subs collectively with MTech and Akerna, the "Purchaser Parties"), MTech Sponsor LLC, a Florida limited liability company, in the capacity as the representative for the equity holders of Akerna (other than the Sellers) thereunder (the "Purchaser Representative"), and Harold Handelsman, in the capacity as the representative for the Sellers thereunder (the "Seller Representative"). MTech, collectively with Akerna, Purchaser Merger Sub and MTech Company Merger Sub, shall be referred to as "MTech". The Merger Agreement provided for two mergers: (i) the merger of Purchaser Merger Sub with and into MTech, with MTech continuing as the surviving entity (the "Purchaser Merger"), and (ii) the merger of MTech Company Merger Sub with and into the Company, with the Company continuing as the surviving entity (the "Company Merger", and together with the Purchaser Merger, the "Mergers").
On June 17, 2019, the Mergers contemplated by the Merger Agreement were consummated. In connection with the closing of the Mergers, the registrant changed its name from MTech Acquisition Holdings Inc. to Akerna Corp.
Upon the closing of the Mergers (Note 4), the outstanding Common Units, Preferred Units, and Profit Interest Units of MJF were exchanged for shares of common stock of Akerna at an exchange ratio of one Unit of MJF to 0.26716 shares of Akerna common stock (the "Exchange Ratio). Except as otherwise noted, all common share amounts and per share amounts have been adjusted to reflect this Exchange Ratio, which was effected upon the Merger.
The Mergers have been accounted for as a reverse merger in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The owners and management of MJF have actual or effective voting and operating control of the combined company. In the Merger transaction, MTech is the accounting acquiree and MJF is the accounting acquirer. A reverse recapitalization is equivalent to the issuance of stock by the private operating company for the net monetary assets of the accounting acquiree accompanied by a recapitalization with accounting similar to that resulting from a reverse acquisition, except that no goodwill or intangible assets are recorded.
The accompanying financial statements and related notes reflect the historical results of MJF prior to the merger and of the combined company following the Mergers, and do not include the historical results of MTech prior to the completion of the Mergers.
Liquidity and Capital Resources
Since its inception, the Company has incurred recurring operating losses, used cash from operations, and relied on capital raising transactions to continue ongoing operations. However, based on the funds the Company has available as of the date these financial statements are issued primarily as a result of the business combination (Note 4), the Company believes that it has sufficient capital to fund its anticipated operating expenses for at least next twelve months from the date these financial statements are issued. Management will continue to evaluate the impact of this standard on the Company's consolidated financial statements.
The entire disclosure for the nature of an entity's business, major products or services, principal markets including location, and the relative importance of its operations in each business and the basis for the determination, including but not limited to, assets, revenues, or earnings. For an entity that has not commenced principal operations, disclosures about the risks and uncertainties related to the activities in which the entity is currently engaged and an understanding of what those activities are being directed toward.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef