POSaBIT, the cannabis point-of-sale (POS) and payments software company, this morning announced its planned acquisition of  MJ Platform (MJ Freeway), Leaf Data Systems, and Ample Organics from embattled software company Akerna Corp. for US$4 million in an all-cash transaction. The deal is expected to close in Q2 2023.

The move “now gives us a true seed-to-sale [solution], meaning we’ll have the software that the state will use, we’ll have full cultivation and grow software, we’ll have all the software that a retailer will need with integrated payments,” POSaBIT CEO Ryan Hamlin told Cannabis Business Executive in an interview. “So we have the stack end-to-end.”

In a press release, POSaBIT noted its purchase price of the assets was 0.4 times the estimated 2022 revenue of US$11 million (US$6.8 million in gross profit) for the three properties, “an attractive valuation,” Hamlin noted in a press release. The acquisition brings the number of merchant locations POSaBIT serves up to nearly 900 and positions the company to bring its payments solution to the wholesale market. “We’ve built this great payments infrastructure and there’s no reason why we shouldn’t be taking it … into cultivation and growing production and manufacturing,” Hamlin told CBE.

Despite the lawsuit Dutchie filed against Akerna in Pennsylvania court on January 23 for allegedly unfairly refusing to open software integrations to its state traceability system, Leaf Data Systems is included in the acquisition deal. POSaBIT did not have a comment about the pending litigation, but that it is moving forward with the acquisition is a sign that it either is confident in the outcome, or that it won’t impact asset valuation.

Adding Ample Organics expands POSaBIT’s operations into the Canadian market, where the company is listed on the Canadian Securities Exchange (CSE).

On the purchase price, Hamlin noted his company’s strong cash position and positive cash flow as primary factors allowing it to make this kind of acquisition. “Akerna put together a lot of companies in a fast amount of time and whatever the reason may be, it didn’t necessarily work out for them,” Hamlin told CBE.

“It’s almost like the perfect storm now: companies that have a proven business model and have been able to generate capital have been able to make their way through this last six to nine months–and frankly the next 12 months–as we all kind of struggle with the cannabis industry, as well as the economy.”

Akerna Shedding Assets, Bleeding Cash

The transaction is an apparent clear gain for POSaBIT, especially if it can better monetize those assets. 

On the flip side, the sale of MJ Platform, which Akerna dubbed its “cornerstone technology” in a recent press release, is another apparent sign that the former industry darling is fighting to bolster its cash holdings and defend its stock price to keep its Nasdaq listing. Its stock price spiked to $1,300 a few days after its listing on June 17, 2019. The stock price closed at $1.78 on 1/26/2023.

On January 11, Akerna announced the sale of its 365 Cannabis platform to a holding company for $500,000 in cash and the termination of a nearly $2.3 million earn-out payment to the holding company’s principals. Akerna purchased 365 Cannabis in October 2021 for $17 million, meaning the sale to the holding company comes at a steep loss on Akerna’s financial records. According to Akerna’s press release, 365 Cannabis had approximately 85 customers using its platform when it first acquired the asset.

In November 2022, Akerna executed a 20-1 reverse stock split to bring itself into compliance with the minimum bid price requirement for maintaining its listing on the Nasdaq Capital Market. This move followed a July 2022 stock issuance that saw Akerna raise approximately $10 million from more than 29 million shares sold.

CBE reached out to Akerna for comment on this sale and the company’s plans, and received this statement from CEO Jessica Billingsley: “We believe this strategic combination will make MJ Platform, Ample Organics, and Leaf Data Systems even more powerful when combined with the complementary offerings of POSaBIT, giving our clients the ability to benefit from a comprehensive suite of best-in-class solutions.”

In its most recent financial filings (Q3 2022), Akerna noted it had a comprehensive loss of more than $2.2 million that quarter, bringing its total losses to more than $53.5 million for the nine months ending on Sept. 30, 2022. This compares to a loss of $1.4 million in the same quarter in 2021 and $14 million in the same nine-month period in 2021. The company also has shed nearly $50 million of assets on its balance sheet between the end of 2021 and Sept. 30, 2022, with $38M of that loss coming from goodwll impairment.

Despite Akerna’s difficulties in maintaining and monetizing the assets it is selling to POSaBIT, and the lawsuit filed against Leaf data Systems, Hamlin believes his company’s approach will yield better results.

“We are excited to work with the current teams that we’re acquiring because we now can take everything we’ve learned, and the capital we have, [to] ensure that MJ Freeway and Leaf Data Systems and Ample Organics are very successful moving forward,” Hamlin told CBE.

POSaBIT will hold an investor call on Monday, January 30 at 4:30 p.m. ET to offer details on this acquisition and financing.