Amesite Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended March 31, 2022. This is Amesite’s fiscal third quarter, notwithstanding the request metadata referring to “2021 Q3.” Filed May 13, 2022. Amesite provides an AI-driven online learning platform and related services to businesses, educational institutions, and nonprofits.
Financial results and position
| Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | Nine months ended March 31, 2022 | Nine months ended March 31, 2021 |
|---|---|---|---|---|
| Revenue | $209,518 | $201,394 | $539,383 | $418,315 |
| Operating expenses | $2,421,787 | $2,524,847 | $7,457,921 | $6,502,395 |
| Net loss | $2,216,111 | $2,322,750 | $6,916,507 | $9,696,588 |
| Basic loss per share | $0.09 | $0.11 | $0.32 | $0.51 |
| Cash used in operating activities | Not separately provided for the quarter | $5,088,820 | $4,093,910 |
- Revenue increased 4% year over year for the quarter and 29% for the nine-month period. Management attributed nine-month growth mainly to annual licenses and implementation and customization services.
- Quarterly operating expenses declined about 4%, while nine-month expenses rose about 15%. Technology and content development costs increased; sales and marketing costs declined.
- The nine-month net loss improved year over year largely because the prior-year period included substantial interest expense related to conversion of notes in the 2020 offering. The filing says operating loss increased over the comparable nine-month period.
- Gross profit and gross margin are not separately reported in the filing text; a clear gross-margin value is not provided.
- At March 31, 2022, cash and cash equivalents were $8.91 million, current assets $9.48 million, current liabilities $838,813, and total assets $10.78 million. Stockholders’ equity was $9.94 million. No outstanding borrowing balance is listed on the balance sheet.
- Cash decreased $1.81 million from June 30, 2021. Financing provided $3.87 million net, including the February stock offering; investing used $588,390. Operating and investing activities together used approximately $5.68 million over nine months.
- In February 2022, Amesite sold 3.75 million shares at $0.80 per share, receiving approximately $2.51 million net. Shares outstanding were 25,739,679 at March 31 and 25,743,484 at May 13, 2022.
Material changes and notable items
- Technology and content development expense rose to $2.38 million for the nine months, partly due to a $335,756 vendor early-termination settlement, increased contract-service payments, and higher payroll.
- General and administrative expense rose to $3.93 million for the nine months, primarily reflecting increased stock-based compensation. Sales and marketing expense fell to $1.15 million, after higher prior-year spending to expand digital presence and lead generation.
- Five customers accounted for approximately 86% of revenue in both the three- and nine-month periods ended March 31, 2022, indicating significant customer concentration.
- Deferred revenue was $219,190 at March 31, 2022, down from $333,200 at June 30, 2021; the filing expected the March balance to be recognized within 12 months.
Outlook, risks, and contingencies
- Going concern: Management stated that available cash and liquidity were not sufficient to fund operations for at least 12 months from issuance of the financial statements. The filing concludes that substantial doubt exists about Amesite’s ability to continue as a going concern and that management’s financing plans do not alleviate that doubt.
- Management’s plans include raising equity, including potential sales under its Lincoln Park agreement, which permits up to $16.5 million of stock sales through August 2, 2023, subject to terms and market conditions. There is no assurance that financing will be available or sufficient.
- Nasdaq listing: Amesite received a March 8, 2022 notice for failing the $1 minimum bid-price requirement. It had until September 5, 2022 to regain compliance, potentially with a second compliance period if eligible. The company said it might seek stockholder approval for a reverse split; compliance and continued listing were not assured.
- The company is early-stage, unprofitable, and dependent on establishing revenue sufficient to cover costs. Other stated risks include technology and product execution, competition, reliance on third parties, intellectual property, personnel, and the uncertain effects of COVID-19.
- The filing provides no specific revenue, earnings, or cash-flow guidance. No material subsequent events or legal proceedings were reported. Management judged disclosure controls effective and reported no material change in internal control over financial reporting.
Important facts for investors to verify
- Cash runway, operating cash burn, and the assumptions behind management’s assessment of funding needs and going-concern uncertainty.
- Whether Amesite can raise additional capital, including through Lincoln Park, and the potential cost and dilution of further share issuance.
- Progress toward Nasdaq’s bid-price compliance deadline and any subsequent listing notices or reverse-split action.
- Revenue growth, customer retention, and the effect of the reported 86% revenue concentration among five customers.
- Execution of the platform’s commercialization plans and whether revenue can scale enough to cover operating expenses.