Amesite Inc. — Form 10-Q Summary
Reporting period: Fiscal quarter and six months ended December 31, 2022 (fiscal Q2 2023). Amesite provides AI-driven online learning platforms and related services to businesses, colleges and universities, and K-12 schools.
Financial performance and position
| Metric | Three months ended Dec. 31, 2022 | Six months ended Dec. 31, 2022 | Prior-year comparable period |
|---|---|---|---|
| Revenue | $237,139 | $517,421 | $189,174 and $329,865 |
| Operating expenses | $949,131 | $2,811,670 | $2,517,024 and $5,036,134 |
| Operating loss | $711,992 | $2,294,249 | $2,327,850 and $4,706,269 |
| Net loss | $699,484 | $2,276,821 | $2,322,239 and $4,700,396 |
| Basic loss per share | $0.02 | $0.08 | $0.11 and $0.22 |
Revenue increased approximately 25% for the quarter and 57% for the six-month period, which management attributed primarily to contract renewals. Operating costs and net losses fell substantially, reflecting headcount and other cost reductions, completion of certain platform features and learning programs, and more targeted sales and marketing. The filing does not provide a clear gross margin measure.
For the six months, operating cash use was $1.84 million, investing cash use was $178,070, and financing provided $1.85 million, principally from a stock offering. Cash declined $164,131 from June 30 to $6.99 million. At December 31, current assets were $7.36 million and current liabilities were $447,788. Total liabilities consisted of current liabilities; the balance sheet reports no long-term debt. Cash and equivalents were the largest asset.
Shares outstanding increased from 25.99 million at June 30 to 30.34 million at December 31. The company reported $1.85 million net proceeds from its September 2022 stock offering and concurrent warrant placement.
Outlook, risks, and notable developments
- Going concern: Amesite disclosed substantial doubt about its ability to continue as a going concern. Management forecast cash sufficient for planned operations for 12 months after issuance, but stated the forecast was uncertain and did not conclude that the financing plans were probable. Additional financing, potentially including equity sales, may be needed.
- Nasdaq listing: The company was out of compliance with Nasdaq’s $1 minimum bid-price requirement and faced a March 6, 2023 deadline to regain compliance. Stockholders approved a discretionary reverse-stock-split proposal, with a ratio range of 1-for-5 to 1-for-50, at a February 15, 2023 meeting. Approval does not ensure the share price will meet or maintain listing requirements.
- Revenue concentration: Five customers generated approximately 70% of six-month revenue. Most customers have annual payment terms; deferred revenue was $276,740 and expected to be recognized over the following 12 months.
- Controls: Management concluded disclosure controls were effective. The company also reported previously identified material weaknesses in internal control over financial reporting and described ongoing remediation measures.
- Other risks: The company remains unprofitable, has a history of operating losses and negative operating cash flow, and depends on its ability to grow revenue and secure financing. It also cited technology, personnel, third-party, intellectual-property, regulatory, and market risks. No legal proceedings were reported.
Important facts for investors to verify
- Whether actual cash use and new revenue support management’s 12-month operating forecast, and what financing is available on acceptable terms.
- Whether Amesite regained Nasdaq bid-price compliance by the stated deadline and whether any reverse split was implemented.
- Customer concentration, renewals, collections, and the conversion of deferred revenue into recognized revenue and cash.
- Share-count dilution from equity offerings, warrants, and any future capital raises.
- Reported figures differ between the financial statements and MD&A for several items, including six-month general and administrative expense, technology expense, sales and marketing expense, and net loss. Investors should consult the filed statements and any subsequent clarification for the controlling amounts.