Amesite Inc. — Form 10-Q Summary
Reporting period: The filing covers the quarter and nine months ended March 31, 2021 (fiscal third quarter of 2021). This differs from the request metadata, which says “2020 Q3.” Amesite provides AI-enabled online learning platforms and course-design services to businesses, universities and K-12 schools.
Financial performance
| Metric | Three months ended March 31 | Nine months ended March 31 |
|---|---|---|
| Revenue, 2021 | $201,394 | $418,315 |
| Revenue, 2020 | $20,937 | $61,244 |
| Operating expenses, 2021 | $2,524,847 | $6,502,395 |
| Net loss, 2021 | $2,322,750 | $9,696,588 |
| Net loss, 2020 | $876,685 | $2,789,428 |
| Operating cash used, 2021 | Not provided for the quarter | $4,093,910 |
Quarterly revenue was nearly ten times the prior-year quarter and nearly twice the December 2020 quarter’s $106,812. Nine-month revenue growth reflected annual licenses, implementation and customization services, and variable user fees. Enterprise customers contributed $349,745, or most of nine-month revenue; K-12 contributed $45,166 and universities $23,404. No gross margin is reported.
Quarterly operating expenses included $1,049,128 general and administrative, $615,157 technology and content development, and $860,562 sales and marketing. Nine-month interest expense was $3,613,831, primarily related to conversion of convertible notes and amortization of debt issuance costs; there was no interest expense in the March 2021 quarter.
Financial position and liquidity
- At March 31, 2021, cash and cash equivalents were $12,121,692, versus $4,093,874 at June 30, 2020. Current assets were $12,754,278 and current liabilities were $1,034,918.
- Current liabilities included $544,615 of deferred revenue. No notes payable remained on the balance sheet; the convertible notes were converted to common stock in connection with the IPO.
- Nine-month investing cash outflow was $674,502, including $607,236 invested in capitalized software. Net cash from financing was $12,796,230, principally IPO proceeds. Cash increased by $8,027,818 over the period.
- Stockholders’ equity was $13,179,155; accumulated deficit was $18,327,389. The company reported 20,565,566 common shares issued and outstanding at May 10, 2021.
Changes, outlook and risks
- Compared with the prior-year periods, revenue increased substantially, while operating expenses also rose, driven by hiring, technical contract services, and increased digital marketing and sales efforts. Net losses widened.
- The IPO closed in September 2020, raising approximately $12.8 million net. Notes with principal and accrued interest were converted into 1,127,872 shares; the conversion discount and remaining issuance costs contributed significantly to nine-month interest expense.
- Management said cash should fund anticipated operating and investing needs for more than 12 months, but warned that faster growth plans could require additional financing, which may be unavailable or dilutive. It cited the IPO proceeds as sufficient operating capital and reported no current conditions raising substantial doubt about going concern.
- Management described the March 2021 implementation of an enterprise solution for The Henry Ford and reported learner retention above 95% for that customer, in line with the company average. It targeted Gen 4 platform availability by the end of Q1 2022, and global dashboards, expanded analytics and enterprise integrations in Q4 2021. These are targets, not guarantees.
- Key risks include the company’s early-stage operating losses and ability to secure funding, customer and sales execution, reliance on third parties and key personnel, technology and intellectual-property risks, competition and regulation. Management said COVID-19 had not significantly affected operations to date but that future effects could not be reasonably estimated. No material legal proceedings or material changes to previously disclosed risk factors were reported.
Important facts for investors to verify
- Whether revenue growth converts into recurring customer demand and reduced reliance on enterprise customers.
- Whether cash burn remains consistent with management’s stated runway, especially as sales, marketing and product-development spending increase.
- The timing and commercial impact of the Gen 4 platform and other stated product targets.
- Potential dilution from outstanding options, warrants, consultant share commitments and future financing needs.
- Capitalized software balances, amortization assumptions and the unusually large note-conversion-related interest expense.