Amesite Inc. — Form 10-K Summary
Reporting period: Fiscal year ended June 30, 2022. This is an annual report, not a report for calendar-year Q4. Filed September 28, 2022.
Business context
Amesite provides a cloud-based, white-label online learning platform and related content and implementation services to businesses and educational institutions. Revenue comes primarily from platform licensing and related fees. The company remains early-stage and operates in one segment.
Financial performance and position
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $697,001 | $674,580 |
| Operating expenses | $9,753,519 | $8,648,592 |
| Operating loss | $(9,056,518) | $(7,974,012) |
| Net loss | $(9,059,923) | $(11,586,292) |
| Net loss per share | $(0.39) | $(0.59) |
| Net cash used in operations | $(6,715,652) | $(5,334,686) |
| Cash and cash equivalents, year-end | $7,155,367 | $10,713,091 |
Revenue increased about 3.3%; net loss was approximately 13 times revenue. Gross margin is not separately presented. Cash used in operations increased despite the lower net loss. Year-end current assets were $7.73 million against current liabilities of $748,108, a current ratio of about 10.3x. The balance sheet reports no borrowings; the earlier convertible notes had been converted to equity. No off-balance-sheet arrangements were reported.
Material changes versus FY2021
- Revenue rose $22,421, primarily from annual licenses and implementation and customization services.
- Operating expenses increased $1.10 million: general and administrative costs rose $563,432, and technology and content development costs rose $783,407; sales and marketing costs declined $241,912.
- Net loss narrowed by $2.53 million, mainly because FY2021 included substantial interest expense related to the discount and conversion of convertible notes. FY2022 interest expense was $12,635 versus $3,613,873 in FY2021.
- Cash declined $3.56 million during FY2022. Financing provided $3.87 million net, including the February 2022 equity offering; investing used $711,622.
- Shares outstanding increased to 25,993,484 at June 30, 2022 from 21,063,954 one year earlier. Three customers accounted for about 69% of FY2022 revenue, versus two customers accounting for 76% in FY2021.
Outlook, risks and unusual items
- Going concern: Management and the auditor report substantial doubt about the company’s ability to continue as a going concern. Management forecast cash sufficient for planned operations for 12 months after issuance, but said the forecast was uncertain; planned financing was not considered probable and did not alleviate the doubt. The auditor’s opinion on the financial statements was unqualified and included a going-concern discussion.
- Financing and dilution: The company received approximately $1.85 million net from a September 1, 2022 stock offering, after year-end. It also had a Lincoln Park agreement allowing up to $16.5 million in stock sales subject to conditions; no additional shares were sold to Lincoln Park during FY2022. Further financing may dilute shareholders.
- Outlook: No formal financial guidance is provided. The filing says the company did not expect more than nominal revenue until at least some point in FY2023. Profitability and sufficient operating revenue remain uncertain.
- Customer and execution risks: Revenue is highly concentrated, and growth depends on attracting customers, enrollment and renewals, and adoption of the platform. Competition, customer marketing, and the company’s ability to deliver and improve its technology may affect results.
- Subsequent agreement: A three-year MSA with NAFEO contemplated programs for HBCUs, but depended on fundraising; no funding commitments had been secured, and no payments had been made by either party at the time described.
- Nasdaq: The company was not meeting the $1 minimum bid-price requirement. Nasdaq granted an additional compliance period through March 6, 2023; failure to regain compliance could result in delisting.
- Controls and other items: Management found material weaknesses in risk assessment, control activities and monitoring, and concluded disclosure controls were ineffective at June 30, 2022. The company recorded a $229,076 vendor early-termination settlement in technology and content development expense. Three customers represented approximately 69% of revenue.
Important facts for investors to verify
- Current cash, operating cash burn and funding runway, including the use of September 2022 offering proceeds and any later financing.
- Whether revenue growth and customer adoption accelerated beyond the filing’s stated expectation of nominal revenue through at least part of FY2023; also monitor customer concentration and renewals.
- Whether Nasdaq bid-price compliance was regained and the stock remained listed.
- Progress in remediating the disclosed internal-control weaknesses and whether controls were later assessed as effective.
- Whether NAFEO secured funding and proceeded with the proposed HBCU programs.