Amesite Inc. — Form 10-Q Summary
Reporting period: Three months ended September 30, 2022, the first quarter of Amesite’s fiscal 2023 year; filed November 10, 2022. The filing describes an AI-driven online learning platform serving businesses, colleges and universities, and K-12 schools.
Financial performance and position
| Metric | Quarter ended Sep. 30, 2022 | Quarter ended Sep. 30, 2021 |
|---|---|---|
| Revenue | $280,282 | $140,691 |
| Operating expenses | $1,862,540 | $2,519,110 |
| Net loss | $1,577,338 | $2,378,157 |
| Basic and diluted loss per share | $0.06 | $0.11 |
| Cash used in operating activities | $809,766 | $1,209,372 |
- Revenue increased about 99% year over year. Four customers accounted for approximately 73% of quarterly revenue, versus three customers at 86% a year earlier.
- Operating expenses declined about 26%; the company attributed the reduction to lower professional fees and stock compensation, reduced technology development and amortization, and lower sales and marketing payroll.
- Cash and cash equivalents were $8.08 million at September 30, 2022, up from $7.16 million at June 30, 2022. The increase included $1.85 million of net proceeds from a September stock sale.
- Total assets were $9.39 million and current liabilities were $744,000 at September 30. No debt is reported on the balance sheet. Deferred revenue was $342,000, expected to be recognized within 12 months.
- Gross margin is not separately reported. The company had a $30.85 million accumulated deficit. Net loss narrowed year over year, but operations remained loss-making.
Material changes and financing
- On September 1, 2022, Amesite sold 4,181,821 common shares for approximately $1.85 million net and issued warrants to purchase an additional 4,181,821 shares at $0.82 per share. It also issued underwriter warrants for 209,091 shares at $1.025 per share.
- Common shares issued and outstanding rose from 25,993,484 at June 30 to 30,300,305 at September 30. The filing reported 30,300,305 shares outstanding as of November 10.
- The company reported no legal proceedings and no material changes to previously disclosed risk factors other than the going-concern risk described below.
Outlook, risks and unusual matters
- Going concern: Management said its forecast indicates cash may support planned operations for 12 months after issuance of the financial statements, but it could not conclude that this outcome is probable. The company concluded substantial doubt about its ability to continue as a going concern remains. Planned financing, potentially including common-stock offerings, is subject to market conditions and does not alleviate that doubt.
- Nasdaq listing: The company was not in compliance with the $1 minimum bid-price requirement. The filing states that failure to regain compliance by March 6, 2023 could result in delisting, potentially impairing access to financing and trading in its shares.
- Controls: Management concluded disclosure controls were ineffective because of unremediated material weaknesses involving risk assessment, control activities, and monitoring. Remediation efforts include documenting processes and controls and obtaining support from a third-party finance and accounting provider; the company cautioned that remediation is not assured.
- Customer and execution risks: Revenue is concentrated among a small number of customers, and the company has not established a stable revenue base sufficient to cover expenses. It expects continued losses and operating cash use. The filing provides no quantified revenue or earnings guidance.
- Management cited continued monitoring of potential COVID-19 effects but said operations had not been significantly affected to date. No material subsequent events were identified through filing.
Investor verification priorities
- Track cash burn, actual operating runway, and whether additional financing is needed and obtainable.
- Check progress toward Nasdaq minimum-bid compliance and any resulting listing action.
- Review the terms, potential dilution, and exercise of the September offering warrants, as well as future equity issuance.
- Monitor customer concentration, new customer wins, and conversion of deferred revenue into recognized revenue and cash receipts.
- Verify whether the identified control weaknesses are remediated and whether management reports effective controls in later filings.