Akerna Corp. Announces Anticipated Closing of the Merger with Gryphon Digital Mining, Inc. and Reverse Stock Split
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Insights
The anticipated merger between Akerna Corp and Gryphon Digital Mining, Inc. represents a significant restructuring of the companies involved, with substantial implications for shareholders. The reverse stock split, set at a ratio of 1-for-20, will immediately affect the valuation of existing shares. This corporate action typically aims to boost the stock's market price, making it more attractive to institutional investors and potentially reducing volatility. However, such a move can also be perceived as a cosmetic improvement, especially if the underlying fundamentals of the company do not support sustainable growth.
From a financial perspective, the exchange ratio of shares and the conversion terms for outstanding debt and equity instruments are critical. These terms will determine the final ownership percentages post-merger and impact the future earnings per share. The merger consideration, based on the closing price of Akerna's stock, suggests a valuation metric that investors will scrutinize closely. The ownership distribution, with Akerna equityholders expected to own approximately 7.5% and Gryphon equityholders about 92.5%, indicates a significant shift in control and potential strategic redirection for the combined entity.
The merger's completion and the subsequent listing of the combined company under the new ticker 'GRYP' on Nasdaq signal a strategic pivot towards the digital mining sector. This move could attract attention from investors interested in cryptocurrency and blockchain technology, sectors with volatile market sentiments. The timing of the listing and the market's reception will be influenced by the prevailing conditions in the cryptocurrency market, which is known for rapid shifts in investor confidence and regulatory scrutiny.
Furthermore, the sale of Akerna's subsidiary, MJ Freeway LLC, to MJ Acquisition Corp. for approximately $1.22 million in cash and the conversion of notes, introduces a capital influx and potential balance sheet restructuring. This sale could be interpreted as a divestiture of non-core assets to focus on the newly formed company's core competencies in digital mining. The impact on Akerna's service offering and market positioning must be evaluated to understand the long-term strategic implications of this asset sale.
The legal ramifications of the merger, reverse stock split and asset sale are multifaceted. Akerna's stockholders' approval and the board of directors' subsequent actions underscore the procedural adherence to corporate governance standards. The adjustments to outstanding securities, including options, warrants and convertible notes, are governed by the terms set forth in each security's agreement, necessitating a careful review to ensure equitable treatment of all stakeholders.
Moreover, the issuance of new CUSIP numbers post-merger and name change to 'Gryphon Digital Mining, Inc.' is a standard procedure in such corporate events, facilitating the tracking and trading of the new entity's securities. The role of Continental as the exchange agent is crucial for a smooth transition, especially in converting electronic and paper-based securities into the new post-split, post-merger format. This process must be seamless to maintain shareholder confidence and market stability.
- Anticipated closing of all-stock transaction prior to markets opening on Friday, February 9, 2024
- The combined company under the name “Gryphon Digital Mining, Inc.” is expected to begin trading on Nasdaq under the symbol “GRYP” when markets open on Friday, February 9, 2024
- In connection with the closing of the Merger, Akerna anticipates completing a reverse stock split at a ratio of 1-for-20
DENVER, Feb. 07, 2024 (GLOBE NEWSWIRE) -- Akerna Corp. (Nasdaq: KERN) (“Akerna”), today announced that the closing of its previously announced merger with Gryphon Digital Mining, Inc. (“Gryphon”) (the “Merger”) is expected to take place before markets open on Friday, February 9, 2024. Prior to closing the Merger, Akerna anticipates completing a reverse stock split of its common stock at a ratio of one share for twenty shares. Following completion of the Merger, the combined company is expected to begin trading at market open on February 9, 2024, on The Nasdaq Capital Market on a reverse stock split basis, under the new name “Gryphon Digital Mining, Inc.” and under the symbol “GRYP”.
The estimated exchange ratio of shares of Akerna’s common stock for Gryphon common stock and Gryphon preferred stock will be approximately 1.5561 shares of Akerna common stock for each one share of Gryphon Common Stock and Preferred Stock based on estimated aggregate merger consideration of 31,539,011 shares of Akerna common stock, on a post-reverse stock split basis. The actual exchange ratio and merger consideration will depend upon the number of shares of Akerna common stock outstanding as of the closing of the Merger. The number of shares of Akerna common stock outstanding at the closing of the Merger will depend upon the price at which Akerna’s outstanding convertible senior secured notes, subordinated secured notes, shares of Series C preferred stock and outstanding amounts due and payable to certain service providers and officers of Akerna are converted into shares of Akerna common stock based on the closing price of Akerna’s common stock on the trading day immediately prior to closing and/or the 5-day volume weighted average price of Akerna’s common stock immediately prior to closing.
Immediately after the consummation of the Merger, Akerna equityholders as of immediately prior to the Merger are expected to own approximately
At closing, each warrant to purchase common stock of Gryphon will be assumed by Akerna and become a warrant to purchase an adjusted number of shares of Akerna common stock, at an adjusted exercise price per share but subject to the same terms and conditions as the warrants of Gryphon.
Concurrently with the closing of the Merger, Akerna anticipates closing the sale of all of the membership interests of its wholly-owned subsidiary, MJ Freeway LLC to MJ Acquisition Corp. pursuant to that certain Securities Purchase Agreement by and between Akerna and MJ Acquisition Corp. dated April 28, 2023 (the “Sale Transaction”) for gross aggregate cash proceeds of approximately
At Akerna’s special meeting of stockholders held on January 29, 2024, Akerna’s stockholders approved the Merger, the Sale Transaction, the reverse stock split and a name change. Subsequently, Akerna’s board of directors approved a 1-for-20 reverse stock split of its shares of Akerna common stock,
The reverse stock split will affect all issued and outstanding shares of Akerna common stock. In relation to the reverse stock split, all outstanding options, restricted stock awards, warrants, preferred stock and convertible notes and other securities entitling their holders to purchase or otherwise receive shares of Akerna common stock will be adjusted as a result of the reverse stock split, as required by the terms of each security. The number of shares of Akerna common stock available to be awarded under Akerna’s equity incentive plans will also be appropriately adjusted.
No fractional shares will be issued in connection with the reverse stock split. All fractional shares will be rounded up to the nearest whole share. The reverse stock split will affect all stockholders uniformly and will not alter any stockholder’s percentage interest in Akerna’s equity (other than as a result of the rounding up of shares to the nearest whole share in lieu of issuing fractional shares).
The reverse stock split will not reduce the authorized number of shares of Akerna common stock. The reverse stock split did not alter the par value of Akerna common stock or modify any voting rights or other terms of our shares of Akerna common stock.
The new CUSIP number for the shares of common stock of the combined company following the reverse stock split and the name change to “Gryphon Digital Mining, Inc.” upon the closing of the Merger will be 400510103.
Akerna’s transfer agent, Continental Stock Transfer & Trust Company (“Continental”), will serve as exchange agent for the reverse stock split and will provide instructions to stockholders of record regarding the reverse stock split. Unless otherwise requested by the stockholder, Continental will be issuing all of the post-split shares in paperless, “book-entry” form, and unless otherwise requested by the stockholder, Continental will hold the shares in an account set up for the stockholder. All book-entry or other electronic positions representing issued and outstanding shares of Akerna common stock will be automatically adjusted. Those stockholders holding Akerna common stock in “street name” will receive instructions from their brokers.
For stockholders of Gryphon, Continental will be sending Gryphon shareholders DRS statements via email.
About Gryphon Digital Mining
Gryphon Digital Mining, Inc. is an innovative venture in the bitcoin space dedicated to helping bring digital assets onto the clean energy grid. With a talented leadership team coming from globally recognized brands, Gryphon is assembling thought leaders to improve digital asset network infrastructure. Its Bitcoin mining operation has a net carbon-negative strategy.
About Akerna
Akerna (Nasdaq: KERN) is an emerging technology firm focused on innovative technology.
Cautionary Statements Regarding Forward-Looking Statements
This press release contains forward-looking statements based upon the current expectations of Gryphon and Akerna. 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; (ii) uncertainties as to the timing of the consummation of the proposed transactions and the ability of each of Akerna, Gryphon and MJ Acquisition Co. to consummate the proposed merger or asset sale, 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 of outstanding securities of Akerna at closing; (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 under the heading “Risk Factors” in the proxy statement/prospectus included in the Form S-4 and the 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, 2022 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, each filed with the SEC, and in other filings that Akerna makes and will make with the SEC in connection with the proposed transactions. 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 and Gryphon expressly disclaim 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.
FAQ
When is the anticipated closing of the merger between Akerna and Gryphon Digital Mining, Inc.?
Under what symbol is the combined company expected to begin trading on Nasdaq?
What is the estimated exchange ratio of shares of Akerna’s common stock for Gryphon common stock and Gryphon preferred stock?
What percentage of the outstanding equity interests of the combined company are expected to be owned by Akerna equityholders and former Gryphon equityholders?
