Amesite Inc. — Form 10-Q Summary
Reporting period: Three and six months ended December 31, 2020, the second quarter of Amesite’s fiscal year ending June 30, 2021. Financial statements are unaudited. Amesite provides an AI-driven online learning platform and course-design services to businesses, higher-education institutions, and K-12 schools.
Financial performance and position
| Metric | Three months ended Dec. 31, 2020 | Three months ended Dec. 31, 2019 | Six months ended Dec. 31, 2020 | Six months ended Dec. 31, 2019 |
|---|---|---|---|---|
| Revenue | $106,812 | $32,607 | $216,921 | $40,307 |
| Operating expenses | $2,394,993 | $997,800 | $3,977,548 | $1,960,964 |
| Net loss | $2,287,574 | $959,646 | $7,373,838 | $1,912,743 |
| Basic loss per share | $0.11 | $0.07 | $0.40 | $0.13 |
| Cash used in operating activities | Not presented by quarter | $2,748,757 | $1,531,070 |
- At December 31, 2020, cash and cash equivalents were $13.69 million; total assets were $16.25 million and current liabilities were $970,735. Current assets were approximately $14.82 million. The company reported no notes payable at period-end.
- Cash increased by $9.59 million over the six months, principally reflecting $12.80 million of net proceeds from common-stock issuance. Investing cash outflow was $453,525, including $406,776 invested in capitalized software.
- Deferred revenue was $739,529, up from $380,000 at June 30, 2020. Revenue for the six months included $189,548 from enterprise customers, $17,614 from K-12, and $9,759 from universities.
Changes versus prior comparable periods
- Quarterly revenue rose about 228% year over year; six-month revenue rose about 438%, from a small prior-year base.
- Quarterly operating expenses more than doubled. Management attributed higher general and administrative costs mainly to hiring, technology and content development costs mainly to technical contractors, and sales and marketing costs to added sales staff and advertising.
- Six-month net loss increased substantially, including $3.61 million of interest expense related to the convertible-note conversion and debt-issuance costs. The quarter itself had no reported interest expense.
- Common shares outstanding increased from 16,231,820 at June 30 to 20,535,784 at December 31, primarily following the IPO, note conversion, and stock issued for consulting services.
Outlook, commentary, and risks
- Management said the IPO proceeds would fund strategic growth, including additional sales staff and product engineers, and expected current cash to meet anticipated operating and investing needs through June 2022. It cautioned that accelerating operations or changing growth plans could require additional financing, which may not be available on acceptable terms.
- Management expected sales and marketing spending to increase over the next few quarters as new team members joined and marketing efforts intensified. It described work to support repeatable sales and highlighted the Course Manage feature announced in October 2020.
- The company is not profitable and gave no assurance it will become profitable. It cited early-stage operating, financing, technology, competition, intellectual-property, third-party dependency, staffing, and regulatory risks. Management said COVID-19 had not significantly affected operations to date, but future effects could not be reasonably estimated.
- The company recorded a full valuation allowance against deferred tax assets, including approximately $14.15 million of net operating loss carryforwards. No material change to previously disclosed risk factors was reported; no legal proceedings or off-balance-sheet arrangements were reported.
- Management concluded disclosure controls and procedures were effective and reported no material change in internal control over financial reporting during the period.
Investor verification points
- Track revenue growth, customer additions and concentration, deferred-revenue conversion, and whether sales efforts produce repeatable contracts.
- Assess whether spending growth and cash use remain consistent with management’s stated runway through June 2022, and whether additional financing becomes necessary.
- Review dilution from outstanding options and warrants, consulting-share issuances, and any future equity financing.
- Consider the unusual noncash and offering-related charges: $3.38 million conversion discount and $182,900 of remaining debt-issuance costs expensed in the six-month period.
- Note that the filing says $2.26 million of convertible notes, including accrued interest, converted into 1,127,872 shares at $2.00 per share; verify the conversion and related accounting against subsequent disclosures.