Item 1.01. Entry into a Material Definitive Agreement.
Securities Purchase Agreement
On January 27, 2023, Akerna Corp., a Delware corporation ("Akerna"), entered
into a securities purchase agreement (the "SPA") with Akerna Canada Ample
Exchange Inc. ("Akerna Exchange") and POSaBIT Systems Corporation ("POSaBIT").
Upon the terms and subject to the satisfaction of the conditions described in
the SPA, including approval of the transaction by Akerna's stockholders, Akerna
will sell to POSaBIT (or a subsidiary of POSaBIT) all of the membership
interests in MJ Freeway, LLC ("MJF") and Akerna Exchange will sell to POSaBIT
all of the outstanding capital stock of Ample Organics Inc. ("Ample") (jointly,
such sales, the "Sale Transaction") for a purchase price of $4,000,000 in cash.
The purchase price is subject to adjustment at closing of the Sale Transaction
based on the amount by which estimated closing working capital varies from
target working captial (as set forth in the SPA), reduction for closing
indebtedness, reduction closing transaction expenses and reduction for credit
referral payments under certain commercial agreements entered into by and
between Akerna and POSaBIT contemporaneously with the signing of the SPA. The
purchase price is subject to further adjustment post-closing upon delivery of
the post-closing statement by POSaBIT within 75 days after the closing pursuant
to the same adjustment provisions subject to a $500,000 cap on any post-closing
working capital adjustments.
The SPA contains customary representations, warranties and covenants of Akerna
and POSaBIT, including covenants relating to the conduct of the business of MJF
and Ample from the date of signing the SPA through closing of the Sale
Transaction and obtaining the requisite approval of the stockholders of Akerna.
Under the terms of the SPA, Akerna has also agreed not to solicit from any
person an acquisition proposal (as defined in the SPA) for either MJW and Ample
or for Akerna.
In connection with the Sale Transaction, Akerna has agreed to hold a meeting of
its stockholders to approve the SPA and the Sale Transaction under Delaware law
(along with certain matters related to the merger transaction as described
below). The board of directors of Akerna (the "Board") has agreed to recommend
the approval of the SPA and the Sale Transaction to the stockholders and to
solicit proxies in support of the approval of the matters at the meeting of the
stockholders. The SPA contains a limited contractual ability for the Board, in
accordance with its fiduciary duties to the stockholders, to change its
recommendation to the stockholders upon receipt of a superior offer subject to
certain terms and conditions therein, including providing POSaBIT notice of the
superior offer and time to make a counter-proposal to amend the terms of the
SPA.
Under the SPA, Akerna and POSaBIT have agreed to provide limited indemnification
to each other with respect to certain tax matters, in each case capped at a
maximum amount of $500,000.
The closing of the Sale Transaction is subject to customary closing conditions,
including, among other things, (i) the required approval of the stockholders of
Akerna, (ii) the accuracy of the representations and warranties of the parties
made in the SPA, subject to materiality qualifiers, and (iii) compliance by the
parties with their respective covenants under the SPA. Further, closing of the
Sale Transaction is conditioned on the simultaneous closing of the merger
transaction, as described below. The obligation of POSaBIT to close on the Sale
Transaction is also subject to satisfaction of certain additional conditions,
including, among other things, (i) retention of certain key employees and 80% of
other designated employees, (ii) MJF's contracts with the State of Pennsylvania
and the State of Utah remaining in effect, (iii) material contracts constituting
no more than 50% of MJF and Ample's recurring subscription revenue that is up
for renewal between the date of the SPA and the closing shall have terminated,
otherwise ceased to be in full force and effect, or been subject to a notice of
termination or non-renewal, (iv) the State of Pennsylvania shall not have issued
a change order to provide expanded software access to third parties, and (v) as
an additional closing condition solely with respect to the sale of Ample,
completion of certain limited due diligence on Ample.
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The parties may terminate the SPA upon mutual consent. POSaBIT may terminate the
SPA for (i) a material breach, inaccuracy in or failure to perform any
representations, warranty, covenant or agreement made by Akerna that would give
rise to a failure of the closing conditions, (ii) impossibility of closing
conditions, (iii) failure to obtain the approval of the Akerna stockholders,
(iv) a change in the Board's recommendation of the Sale Transaction to the
stockholders or failure to hold the stockholders meeting, (v) the Board changing
its recommendation and accepting a superior offer, and (vi) failure to close.
Akerna may terminate the SPA for (i) a material breach, inaccuracy in or failure
to perform any representations, warranty, covenant or agreement made by POSaBIT
that would give rise to a failure of the closing conditions, (ii) impossibility
of closing conditions, and (iii) acceptance of a superior offer.
In the event that POSaBIT or Akerna terminates the SPA pursuant to certain of
the sections set forth above, Akerna will be required to pay POSaBIT a
termination fee of $140,000 and reimburse POSaBIT for its reasonable fees and
expenses up to $60,000.
Merger Agreement
Concurrently with the execution of the SPA, on January 27, 2023, Akerna entered
into an Agreement and Plan of Merger (the "Merger Agreement") with Gryphon
Digital Mining, Inc. ("Gryphon") and Akerna Merger Co. ("Akerna Merger"). Upon
the terms and subject to the satisfaction of the conditions described in the
Merger Agreement, including approval of the transaction by the stockholders of
Akerna and Gryphon, Akerna Merger will be merged with and into Gryphon (the
"Merger"), with Gryphon surviving the Merger as a wholly-owned subsidiary of
Akerna. The Merger is intended to qualify as a tax-free reorganization for U.S.
federal income tax purposes.
Subject to the terms and conditions of the Merger Agreement, at the effective
time of the Merger (the "Effective Time"): (i) each share of Gryphon capital
stock issued and outstanding immediately prior to the Effective Time shall
automatically be converted into and become the right to receive the applicable
per share portion of the "merger consideration" as set forth in the allocation
statement to be delivered pursuant to the Merger Agreement ("merger
consideration" is defined in the Merger Agreement to mean a number of shares of
common stock of Akerna equal to (a) the quotient obtained by dividing (i) the
number of shares of Akerna capital stock on a fully diluted basis (the "Akerna
Fully Diluted Share Number") by (ii) 0.075, minus (b) the Akerna Fully Diluted
Share Number minus (c) the number of shares of common stock of Akerna the
warrants of Gryphon will become exercisable for upon closing of the Merger);
. . .
Item 3.03. Material Modifications to Rights of Security Holders.
The information in Item 1.01 is incorporated by reference into this Item 3.03.
As a result of the adjustment to the conversion price of the Notes, pursuant to
the terms of Akerna's common stock purchase warrants issued on July 5, 2022 (the
"Warrants"), the exercise price of the Warrants was automatically adjusted in
the same proportion as the adjustment to the conversion price of the Notes from
$3.518 to $0.88. The Warrants may only currently be exercised on a cashless
basis.
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Item 7.01. Regulation FD Disclosure.
On January 27, 2023, Akerna, POSaBIT and Gryphon issued a joint press release
announcing the SPA and the Merger Agreement. A copy of this press release is
filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by
reference herein.
The information in this Item 7.01, and Exhibit 99.1 attached hereto, is being
furnished and shall not be deemed "filed" for the purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by reference in
any filing under the Securities Act of 1933, as amended, regardless of any
general incorporation language in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are filed as part of this report:
Exhibit
Number Description
2.1* Securities Purchase Agreement, dated January 27, 2023, by and among
Akerna and POSaBIT
2.2* Agreement and Plan of Merger, dated January 27, 2023, by and among
Akerna, Akerna Merger Co and Gryphon
2.3 Form of Support Agreement, dated January 27, 2023, by and among
POSaBIT and each of the parties named therein
2.4 Form of Support Agreement, dated January 27, 2023, by and among
Gryphon and each of the parties named therein
2.5 Form of Support Letter, dated January 27, 2023, by and among Akerna
and certain lenders in relation to the Sale Transaction
2.6 Form of Support Letter, dated January 27, 2023, by and among Akerna
and certain lenders in relation to the Merger
10.1* Exchange Agreement, dated January 27, 2023, by and among Akerna and
certain lenders
10.2 Form of Repricing Letter, dated January 27, 2023, by and among Akerna
and certain lenders
99.1 Joint Press Release of Akerna, Gryphon and POSaBIT dated January 27,
2023
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
*Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished
to the SEC upon request.
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Additional Information and Where to Find It
This Current Report on Form 8-K may be deemed to be solicitation material with
respect to the proposed transactions between Akerna and Gryphon and between
Akerna and POSaBIT. In connection with the proposed transactions, Akerna intends
to file relevant materials with the United States Securities and Exchange
Commission, or the SEC, including a registration statement on Form S-4 that will
contain a prospectus and a proxy statement. Akerna will mail the proxy
statement/prospectus to the Akerna stockholders, and the securities to be issued
pursuant to the prospectus may not be sold or exchanged until the registration
statement becomes effective. Investors and securityholders of Akerna and Gryphon
are urged to read these materials when they become available because they will
contain important information about Akerna, Gryphon and the proposed
transactions. This Current Report on Form 8-K is not a substitute for the
registration statement, definitive proxy statement/prospectus or any other
documents that Akerna may file with the SEC or send to securityholders in
connection with the proposed transactions. Investors and securityholders may
obtain free copies of the documents filed with the SEC, once available, on
Akerna's website at www.akerna.com, on the SEC's website at www.sec.gov or by
directing a request to Akerna's Investor Relations at (516) 419-9915.
This Current Report on Form 8-K is not a proxy statement or a solicitation of a
proxy, consent or authorization with respect to any securities or in respect of
the proposed transactions, and shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to buy any
securities, nor shall there be any sale of securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such jurisdiction. No offering
of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended.
Participants in the Solicitation
Each of Akerna, Gryphon, POSaBIT and their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies from
the stockholders of Akerna in connection with the proposed transactions.
Information about the executive officers and directors of Akerna are set forth
in Akerna's Definitive Proxy Statement on Schedule 14A relating to the 2022
Annual Meeting of Stockholders, filed with the SEC on April 19, 2022. Other
information regarding the interests of such individuals, who may be deemed to be
participants in the solicitation of proxies from the stockholders of Akerna,
will be set forth in the proxy statement/prospectus, which will be included in
Akerna's registration statement on Form S-4 when it is filed with the SEC. You
may obtain free copies of these documents as described above.
Cautionary Statements Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements based upon
the current expectations of Akerna. Forward-looking statements involve risks and
uncertainties and include, but are not limited to, statements about the
structure, timing and completion of the proposed transactions; the listing of
the combined company on Nasdaq after the closing of the proposed merger;
expectations regarding the ownership structure of the combined company after the
closing of the proposed merger; the expected executive officers and directors of
the combined company; the expected cash position of each of Akerna and Gryphon
and the combined company at the closing of the proposed merger; the future
operations of the combined company; and other statements that are not historical
fact. Actual results and the timing of events could differ materially from those
anticipated in such forward-looking statements as a result of these risks and
uncertainties, which include, without limitation: (i) the risk that the
conditions to the closing of the proposed transactions are not satisfied,
including the failure to timely obtain stockholder approval for the
transactions, if at all; (ii) uncertainties as to the timing of the consummation
of the proposed transactions and the ability of each of Akerna, Gryphon and
POSaBIT to consummate the proposed merger or sale transaction, as applicable;
(iii) risks related to Akerna's ability to manage its operating expenses and its
expenses associated with the proposed transactions pending closing; (iv) risks
related to the failure or delay in obtaining required approvals from any
governmental or quasi-governmental entity necessary to consummate the proposed
transactions; (v) the risk that as a result of adjustments to the exchange
ratio, Akerna stockholders and Gryphon stockholders could own more or less of
the combined company than is currently anticipated; (vi) risks related to the
market price of Akerna's common stock relative to the exchange ratio; (vii)
unexpected costs, charges or expenses resulting from either or both of the
proposed transactions; (viii) potential adverse reactions or changes to business
relationships resulting from the announcement or completion of the proposed
transactions; (ix) risks related to the inability of the combined company to
obtain sufficient additional capital to continue to advance its business plan;
and (x) risks associated with the possible failure to realize certain
anticipated benefits of the proposed transactions, including with respect to
future financial and operating results. Actual results and the timing of events
could differ materially from those anticipated in such forward-looking
statements as a result of these risks and uncertainties. These and other risks
and uncertainties are more fully described in periodic filings with the SEC,
including the factors described in the section titled "Risk Factors" in Akerna's
Annual Report on Form 10-K for the year ended December 31, 2021 and Quarterly
Report on Form 10-Q for the quarter ended September 30, 2022 filed with the SEC,
and in other filings that Akerna makes and will make with the SEC in connection
with the proposed transactions, including the proxy statement/prospectus
described under "Additional Information and Where to Find It." You should not
place undue reliance on these forward-looking statements, which are made only as
of the date hereof or as of the dates indicated in the forward-looking
statements. Except as required by law, Akerna expressly disclaims any obligation
or undertaking to update or revise any forward-looking statements contained
herein to reflect any change in its expectations with regard thereto or any
change in events, conditions or circumstances on which any such statements are
based.
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