[PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed financial statements for Amesite Inc for the period ended September 30, 2021 [Condensed Balance Sheets (unaudited)](index=7&type=section&id=Condensed%20Balance%20Sheets%20(unaudited)) | Metric | Sep 30, 2021 | Jun 30, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $10,590,572 | $10,713,091 | | Total assets | $12,231,295 | $12,476,833 | | Total current liabilities | $1,125,277 | $741,743 | | Total stockholders' equity | $11,106,018 | $11,735,090 | - The company's **cash and cash equivalents decreased slightly** from $10,713,091 to $10,590,572, while total current liabilities increased[10](index=10&type=chunk)[11](index=11&type=chunk) [Condensed Statements of Operations (unaudited)](index=8&type=section&id=Condensed%20Statements%20of%20Operations%20(unaudited)) | Metric (Three Months Ended Sep 30) | 2021 | 2020 | Change YoY | | :--- | :--- | :--- | :--- | | Net Revenue | $140,691 | $110,109 | +27.77% | | Total Operating Expenses | $2,519,110 | $1,582,555 | +59.19% | | Net Loss | $(2,378,157) | $(5,086,264) | -53.23% | | Basic Earnings per Share | $(0.11) | $(0.31) | -64.52% | - Net revenue **increased by 27.77%** year-over-year, and despite a **59.19% rise in operating expenses**, the **net loss improved by 53.23%**[13](index=13&type=chunk) [Condensed Statements of Stockholders' Equity (unaudited)](index=9&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity%20(unaudited)) | Metric (Three Months Ended Sep 30, 2021) | Amount | | :--- | :--- | | Balance - July 1, 2021 | $11,735,090 | | Net loss | $(2,378,157) | | Issuance of common stock – net | $1,360,000 | | Stock-based compensation expense | $389,085 | | Balance – September 30, 2021 | $11,106,018 | - Total stockholders' equity **decreased from $11.74 million to $11.11 million**, primarily due to the net loss, partially offset by proceeds from common stock issuance[15](index=15&type=chunk) [Condensed Statements of Cash Flows (unaudited)](index=10&type=section&id=Condensed%20Statements%20of%20Cash%20Flows%20(unaudited)) | Cash Flow Activity (Three Months Ended Sep 30) | 2021 | 2020 | Change YoY | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | $(1,209,372) | $(312,890) | +286.49% | | Net cash used in investing activities | $(273,147) | $(222,049) | +23.01% | | Net cash from financing activities | $1,360,000 | $12,796,230 | -89.37% | | Net Increase in Cash and Cash Equivalents | $(122,519) | $12,261,291 | -101.00% | | Cash and Cash Equivalents - End of period | $10,590,572 | $16,355,165 | -35.25% | - **Net cash used in operating activities significantly increased by 286.49%** year-over-year, indicating higher operational cash burn[17](index=17&type=chunk) [Notes to Condensed Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) [Note 1 - Nature of Business](index=11&type=section&id=Note%201%20-%20Nature%20of%20Business) - Amesite Inc is an artificial intelligence-driven platform providing customized online learning products for schools and businesses[19](index=19&type=chunk) - The company completed an **initial public offering (IPO) on September 25, 2020**, raising approximately **$12.8 million in net proceeds**[21](index=21&type=chunk) [Note 2 - Significant Accounting Policies](index=11&type=section&id=Note%202%20-%20Significant%20Accounting%20Policies) - The financial statements are prepared in accordance with GAAP and SEC requirements, with a fiscal year ending June 30[22](index=22&type=chunk)[23](index=23&type=chunk) - Revenue is primarily generated from annual licensing arrangements with two-year terms and is recognized ratably over the contract term[32](index=32&type=chunk)[33](index=33&type=chunk) - Capitalized software costs are amortized over an estimated useful life of three years, with **amortization expense of approximately $208,000** for the quarter[31](index=31&type=chunk) - The company's operations are subject to significant risks, and management is monitoring the potential impact of the COVID-19 pandemic[49](index=49&type=chunk)[50](index=50&type=chunk) Deferred Revenue Changes (Three Months Ended Sep 30) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Opening balance | $333,200 | $380,000 | | Billings | $216,806 | $572,130 | | Revenue recognized | $(140,691) | $(110,109) | | Closing balance | $409,314 | $842,021 | [Note 3 - Stock-Based Compensation](index=17&type=section&id=Note%203%20-%20Stock-Based%20Compensation) - The company's Equity Incentive Plan allows for grants of stock options, restricted stock, and restricted stock units[52](index=52&type=chunk) - **Stock-based compensation expense was $389,085** for the quarter, an increase from $212,413 in the prior year[57](index=57&type=chunk) - As of September 30, 2021, approximately **$1,038,000 of unrecognized compensation cost** remains for nonvested options[57](index=57&type=chunk) - On September 28, 2021, the Board approved stock options ($172,702) and restricted stock ($600,000) for board members[58](index=58&type=chunk) Stock Option Activity (Three Months Ended Sep 30, 2021) | Metric | Number of Shares | Weighted Average Exercise Price | | :--- | :--- | :--- | | Outstanding at July 1, 2021 | 3,222,125 | $1.96 | | Granted | 16,000 | $2.35 | | Cancelled | (51,000) | $2.43 | | Outstanding at September 30, 2021 | 3,187,125 | $1.96 | [Note 4 - Income Taxes](index=18&type=section&id=Note%204%20-%20Income%20Taxes) - The company has not generated taxable income or tax liabilities since inception[59](index=59&type=chunk) - Amesite has approximately **$17,040,000 in net operating loss carryforwards**, with a full valuation allowance recorded against deferred tax assets[59](index=59&type=chunk) [Note 5 - Common Stock](index=18&type=section&id=Note%205%20-%20Common%20Stock) - The company completed an **IPO of 3,000,000 shares at $5.00 per share**, generating approximately **$12.8 million in net proceeds**[60](index=60&type=chunk) - During July 2021, warrant holders exercised 834,544 warrants on a cashless basis, resulting in the issuance of 488,728 shares[61](index=61&type=chunk) - On August 2, 2021, Amesite entered a purchase agreement to sell up to **$16.5 million of common stock** to Lincoln Park Capital Fund, LLC[62](index=62&type=chunk)[64](index=64&type=chunk) [Note 6 - Convertible Notes Payable](index=19&type=section&id=Note%206%20-%20Convertible%20Notes%20Payable) - In 2020, **$2,255,815 in convertible notes and accrued interest were converted** into 1,127,872 shares of common stock in connection with the IPO[66](index=66&type=chunk)[67](index=67&type=chunk) - The conversion resulted in a recognized **interest expense of $3,383,546**, representing the discount provided to note holders[67](index=67&type=chunk) [Note 7 - Subsequent Events](index=19&type=section&id=Note%207%20-%20Subsequent%20Events) - The company determined that no subsequent events arose that require disclosure[68](index=68&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=20&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial conditions and operational results for the quarter, highlighting revenue growth and recent financing activities [Overview](index=20&type=section&id=Overview) - Amesite Inc is an AI software company offering a cloud-based platform for business and university education and upskilling[71](index=71&type=chunk)[72](index=72&type=chunk) - The company continues to monitor the COVID-19 pandemic's impact, acknowledging potential downside risks to pipeline growth and sales[73](index=73&type=chunk) [Basis of Presentation](index=20&type=section&id=Basis%20of%20Presentation) - The discussion is based on unaudited condensed financial statements prepared in accordance with GAAP and SEC requirements[74](index=74&type=chunk)[75](index=75&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=20&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) - Key accounting policies requiring significant judgment include capitalized software, stock-based compensation, and revenue recognition[76](index=76&type=chunk) - Costs for internally-developed software are capitalized and amortized over an estimated useful life of three years[78](index=78&type=chunk) - Revenue is primarily derived from annual licensing arrangements and recognized ratably over the contract term[80](index=80&type=chunk)[81](index=81&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Key Financial Results (Three Months Ended Sep 30) | Metric | 2021 | 2020 | Change YoY | | :--- | :--- | :--- | :--- | | Revenue | $140,691 | $110,109 | +27.77% | | General and Administrative | $1,235,770 | $862,908 | +43.21% | | Technology and Content Dev | $796,108 | $467,763 | +70.21% | | Sales and Marketing | $487,232 | $251,884 | +93.44% | | Interest Expense | $0 | $3,613,831 | -100.00% | | Net Loss | $(2,378,157) | $(5,086,264) | -53.23% | - **Revenue growth** was driven by increased annual license fees and higher variable customer user fees[91](index=91&type=chunk) - **Operating expenses increased across all categories**, with significant rises in G&A, Technology, and Sales and Marketing[92](index=92&type=chunk)[96](index=96&type=chunk)[99](index=99&type=chunk) - The company launched its **fourth-generation (Version 4.0) platform** in October 2021, featuring a guaranteed 24-hour launch[95](index=95&type=chunk) - Amesite secured a contract with **Michigan Works! Southeast** for workforce training, expanding into the Government sector[98](index=98&type=chunk) [Financial Position, Liquidity, and Capital Resources](index=24&type=section&id=Financial%20Position,%20Liquidity,%20and%20Capital%20Resources) - The company is not currently profitable, incurring a **net loss of $2,378,157** and using **$1,209,372 in cash from operations** for the quarter[101](index=101&type=chunk) - As of September 30, 2021, the **cash balance was $10,590,572**, which management believes is sufficient for at least the next 12 months[102](index=102&type=chunk)[103](index=103&type=chunk) [Off-Balance Sheet Arrangements](index=25&type=section&id=Off-Balance%20Sheet%20Arrangements) - The company did not have any off-balance sheet arrangements[104](index=104&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=25&type=section&id=Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) - There were no changes in or disagreements with accountants on accounting and financial disclosure[104](index=104&type=chunk) [ITEM 3. QUALITATIVE AND QUANTITATIVE DISCUSSION ABOUT MARKET RISK](index=25&type=section&id=ITEM%203.%20QUALITATIVE%20AND%20QUANTITATIVE%20DISCUSSION%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Amesite Inc is not required to provide disclosures about market risk - Amesite Inc is **exempt from providing market risk disclosures** due to its status as a 'smaller reporting company'[104](index=104&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=25&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management evaluated disclosure controls and procedures and concluded they were effective as of September 30, 2021 [Evaluation of Disclosure Controls and Procedures](index=25&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management concluded that the company's **disclosure controls and procedures were effective** as of September 30, 2021[105](index=105&type=chunk) [Changes in Internal Controls Over Financial Reporting](index=25&type=section&id=Changes%20in%20Internal%20Controls%20Over%20Financial%20Reporting) - There were **no material changes** in internal control over financial reporting during the period[105](index=105&type=chunk) [Limitations on Effectiveness of Controls and Procedures](index=25&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) - Management acknowledges that no controls can provide absolute assurance of meeting objectives or detecting all fraud[106](index=106&type=chunk) [PART II – OTHER INFORMATION](index=26&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [ITEM 1. LEGAL PROCEEDINGS](index=26&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Amesite Inc is not currently a party to any material legal proceedings - The company is **not currently involved in any material legal proceedings** and is unaware of any pending or threatened legal actions[107](index=107&type=chunk) [ITEM 1A. RISK FACTORS](index=26&type=section&id=ITEM%201A.%20RISK%20FACTORS) As a smaller reporting company, Amesite Inc is not obligated to provide detailed risk factors - Amesite Inc is **not required to provide risk factor information** due to its status as a 'smaller reporting company'[107](index=107&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=26&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the company's unregistered sales of equity securities to consultants [Sales of Unregistered Securities](index=26&type=section&id=Sales%20of%20Unregistered%20Securities) - On September 10, 2021, Amesite agreed to issue **9,901 shares of common stock to consultants** for services rendered[107](index=107&type=chunk)[108](index=108&type=chunk) [Repurchase of Equity Securities](index=26&type=section&id=Repurchase%20of%20Equity%20Securities) - The company did not repurchase any equity securities during the period[108](index=108&type=chunk) [Use of Proceeds](index=26&type=section&id=Use%20of%20Proceeds) - There was no specific use of proceeds to report under this item[108](index=108&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=26&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) Amesite Inc reported no defaults upon senior securities during the period - The company reported **no defaults** upon senior securities[108](index=108&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=26&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to Amesite Inc's operations - Mine safety disclosures are **not applicable** to the company[108](index=108&type=chunk) [ITEM 5. OTHER INFORMATION](index=26&type=section&id=ITEM%205.%20OTHER%20INFORMATION) Amesite Inc reported no other information requiring disclosure under this item - No other information was reported under this item[108](index=108&type=chunk) [ITEM 6. EXHIBITS](index=27&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Quarterly Report on Form 10-Q - The exhibits include organizational documents, CEO and CFO certifications, and various Inline XBRL documents[109](index=109&type=chunk) [SIGNATURES](index=28&type=section&id=SIGNATURES) [SIGNATURES](index=28&type=section&id=SIGNATURES) The report is duly signed on behalf of Amesite Inc by its CEO and CFO on November 15, 2021 - The report was signed by **Ann Marie Sastry, Ph.D., Chief Executive Officer**, and **Matthew Kern, Chief Financial Officer**, on November 15, 2021[111](index=111&type=chunk)[112](index=112&type=chunk)

[PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section provides Amesite Inc.'s unaudited condensed financial statements and management's discussion and analysis for the periods ended December 31, 2020 [ITEM 1. FINANCIAL STATEMENTS](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Amesite Inc.'s unaudited condensed financial statements, including the balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's business, significant accounting policies, and key financial events for the periods ended December 31, 2020 and 2019 [Condensed Balance Sheets (unaudited)](index=7&type=section&id=Condensed%20Balance%20Sheets%20(unaudited)) This table provides a snapshot of Amesite Inc.'s financial position, detailing assets, liabilities, and equity as of December 31, 2020, and June 30, 2020 Condensed Balance Sheets (unaudited) | Metric | Dec 31, 2020 | Jun 30, 2020 | Change ($) | Change (%) | | :---------------------- | :------------ | :------------ | :------------ | :--------- | | Cash and cash equivalents | $13,687,822 | $4,093,874 | $9,593,948 | 234.3% | | Total assets | $16,251,472 | $5,704,673 | $10,546,799 | 184.9% | | Total current liabilities | $970,735 | $2,704,777 | $(1,734,042) | -64.1% | | Total stockholders' equity| $15,280,737 | $2,999,896 | $12,280,841 | 409.4% | [Condensed Statements of Operations (unaudited)](index=8&type=section&id=Condensed%20Statements%20of%20Operations%20(unaudited)) This table outlines Amesite Inc.'s revenues, expenses, and net loss for the three and six months ended December 31, 2020, and 2019 Condensed Statements of Operations (unaudited) | Metric (Unaudited) | 3 Months Ended Dec 31, 2020 | 3 Months Ended Dec 31, 2019 | 6 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2019 | | :------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Revenue | $106,812 | $32,607 | $216,921 | $40,307 | | Total Operating Expenses | $2,394,993 | $997,800 | $3,977,548 | $1,960,964 | | Interest Expense | $- | $- | $(3,613,831) | $- | | 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) | [Condensed Statements of Stockholders' Equity (unaudited)](index=9&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity%20(unaudited)) This table details changes in Amesite Inc.'s stockholders' equity, including net loss and stock issuances, between July 1, 2020, and December 31, 2020 Condensed Statements of Stockholders' Equity (unaudited) | Metric (Unaudited) | July 1, 2020 | Dec 31, 2020 | | :-------------------------- | :------------ | :------------ | | Total Stockholders' Equity | $2,999,896 | $15,280,737 | | Net Loss (6 months) | - | $(5,086,264) | | Issuance of common stock - net | - | $12,796,230 | | Conversion of notes payable | - | $5,639,361 | [Condensed Statements of Cash Flows (unaudited)](index=10&type=section&id=Condensed%20Statements%20of%20Cash%20Flows%20(unaudited)) This table summarizes Amesite Inc.'s cash flows from operating, investing, and financing activities for the six months ended December 31, 2020, and 2019 Condensed Statements of Cash Flows (unaudited) | Cash Flow Activity (Unaudited) | 6 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2019 | | :----------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(2,748,757) | $(1,531,070) | | Net cash used in investing activities | $(453,525) | $(482,282) | | Cash from financing activities | $12,796,230 | $4,770,222 | | Net Increase in Cash | $9,593,948 | $2,756,870 | | Cash and Cash Equivalents - End of period | $13,687,822 | $3,765,772 | [Notes to Condensed Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed financial statements, covering accounting policies and key financial events [Note 1 - Nature of Business](index=11&type=section&id=Note%201%20-%20Nature%20of%20Business) This note describes Amesite Inc.'s core business as an AI-driven platform and course designer and highlights recent corporate restructuring and financing activities - Amesite Inc. is an artificial intelligence-driven platform and course designer providing customized, high-performance, and scalable online products for businesses, universities, colleges, and K-12 schools[18](index=18&type=chunk) - The company completed a reorganizational merger on September 18, 2020, changing its name from "Amesite Operating Company" to "Amesite Inc."[19](index=19&type=chunk) - A stock offering raised approximately **$12.8 million** in net proceeds, which will be utilized for strategic growth plans, including hiring additional sales staff and product engineers, and provides sufficient operating capital to alleviate going concern doubts[20](index=20&type=chunk) [Note 2 - Significant Accounting Policies](index=11&type=section&id=Note%202%20-%20Significant%20Accounting%20Policies) This note details the critical accounting policies and methods used in preparing Amesite Inc.'s financial statements, including revenue recognition and asset valuation [Basis of Presentation](index=11&type=section&id=Basis%20of%20Presentation) This section clarifies that the financial statements adhere to GAAP and SEC requirements, with a fiscal year ending June 30 - The condensed financial statements are prepared in accordance with GAAP and SEC requirements, with a fiscal year ending June 30[21](index=21&type=chunk) [Use of Estimates](index=12&type=section&id=Use%20of%20Estimates) This section explains that financial statement preparation involves management estimates and assumptions, which may differ from actual results - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts, and actual results could differ from these estimates[24](index=24&type=chunk) [Fair Value Measurements](index=12&type=section&id=Fair%20Value%20Measurements) This section outlines the three-level hierarchy used for fair value measurements based on the observability of valuation inputs - Fair value measurements are categorized into a three-level hierarchy (Level 1, 2, 3) based on the observability of inputs, with the lowest level input significant to the valuation determining the overall categorization[25](index=25&type=chunk)[26](index=26&type=chunk) [Cash and Cash Equivalents](index=12&type=section&id=Cash%20and%20Cash%20Equivalents) This section defines cash equivalents and details the FDIC insurance coverage for bank deposits as of December 31, 2020 - Cash equivalents include all investments with an original maturity of three months or less when purchased[27](index=27&type=chunk) - The total amount of bank deposits insured by the FDIC at December 31, 2020, was **$500,000**[27](index=27&type=chunk) [Property and Equipment](index=12&type=section&id=Property%20and%20Equipment) This section describes the accounting policy for property and equipment, including recording at cost and straight-line depreciation over useful lives - Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives, such as computer equipment and software over **5 years**[28](index=28&type=chunk)[29](index=29&type=chunk) [Capitalized Software Costs](index=13&type=section&id=Capitalized%20Software%20Costs) This section details the capitalization and amortization of internal-use software development costs over an estimated three-year useful life - Significant costs incurred in the development of internal-use software are capitalized and amortized over an estimated useful life of **three years**[32](index=32&type=chunk) Amortization Expense | Metric (Unaudited) | 3 Months Ended Dec 31, 2020 | 3 Months Ended Dec 31, 2019 | 6 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2019 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Amortization Expense | $175,000 | $112,000 | $333,000 | $204,000 | [Revenue Recognition](index=13&type=section&id=Revenue%20Recognition) This section explains how Amesite Inc. recognizes revenue from contractual arrangements with educational and business clients over two to five-year terms - Revenue is primarily generated from contractual arrangements with businesses, colleges, universities, and K-12 schools for a comprehensive platform of tightly integrated technology and technology-enabled services[33](index=33&type=chunk) - Contracts generally have **two to five-year terms** with a single performance obligation, which is satisfied ratably over the contract term as partners receive and consume benefits[34](index=34&type=chunk) - The majority of revenue is derived from enterprise customers, and most customers have annual payment terms[35](index=35&type=chunk) Revenue by Customer Type | Customer Type | 2020 | 2019 | | :------------ | :---------- | :--------- | | Enterprise | $189,548 | $- | | K12 | $17,614 | $- | | University | $9,759 | $40,307 | | Total | $216,921 | $40,307 | [Contract Fulfilment Costs](index=14&type=section&id=Contract%20Fulfilment%20Costs) This section outlines the policy for capitalizing and amortizing software design costs related to specific course offerings over the contract length - Costs related to software design of specific course offerings are capitalized and amortized over the length of the contract[38](index=38&type=chunk) - No contract fulfillment costs were capitalized or amortized as of December 31, 2020, or 2019[38](index=38&type=chunk) [Accounts Receivable, Contract Assets and Liabilities](index=14&type=section&id=Accounts%20Receivable%2C%20Contract%20Assets%20and%20Liabilities) This section details the accounting for accounts receivable and contract liabilities, including deferred revenue from upfront license fees - Accounts receivable are stated at net realizable value, with no allowance for doubtful accounts as of December 31, 2020, and June 30, 2020[39](index=39&type=chunk) - Contract liabilities (deferred revenue) represent the excess of amounts billed or received compared to recognized revenue, typically from upfront annual license fees[40](index=40&type=chunk)[41](index=41&type=chunk) Contract Liabilities | Metric | 2020 | 2019 | | :-------------- | :---------- | :--------- | | Opening balance | $380,000 | $- | | Billings | $576,450 | $99,593 | | Revenue recognized | $(216,921) | $- | | Closing balance | $739,529 | $99,593 | [Technology and Content Development](index=14&type=section&id=Technology%20and%20Content%20Development) This section explains that expenditures for technology and content development are expensed as incurred, including personnel and amortization - Technology and content development expenditures, including personnel, contracted services, hosting, licensing, and amortization of capitalized software, are charged to expense as incurred[43](index=43&type=chunk) [Stock-Based Payments](index=14&type=section&id=Stock-Based%20Payments) This section describes the accounting for equity awards, where the cost of services is measured at fair value and expensed over the service period - The cost of employee and nonemployee services received for equity awards is measured at fair value at the grant date and recognized as expense over the service period[44](index=44&type=chunk) [Income Taxes](index=16&type=section&id=Income%20Taxes) This section explains that no income tax benefit has been recognized due to a lack of taxable income and a full valuation allowance against deferred tax assets - The company has not recognized an income tax benefit for the periods presented due to not generating any taxable income or tax liabilities[47](index=47&type=chunk)[64](index=64&type=chunk) - A full valuation allowance has been recorded against the company's deferred tax assets due to approximately **$14,152,000** of net operating loss carryforwards and uncertainty regarding their realization[64](index=64&type=chunk) [Net Loss per Share](index=16&type=section&id=Net%20Loss%20per%20Share) This section defines the calculation of basic net loss per share and the exclusion of anti-dilutive securities from diluted loss per share - Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding[48](index=48&type=chunk) - Potentially dilutive securities (options and warrants) are excluded from diluted loss per share calculations because their effect would be anti-dilutive due to net losses in these periods[48](index=48&type=chunk) [Risks and Uncertainties](index=16&type=section&id=Risks%20and%20Uncertainties) This section highlights the significant financial, operational, and technological risks inherent in an early-stage company, including the COVID-19 pandemic's impact - The company operates in a rapidly changing industry and is subject to significant financial, operational, technological, and other risks associated with an early-stage company, including the potential risk of business failure[49](index=49&type=chunk) - The extent of the impact of the COVID-19 pandemic on the company's operations, cash flows, and financial condition cannot be reasonably estimated at this time[50](index=50&type=chunk) [Note 3 – Prepaid Expenses and Other Assets](index=16&type=section&id=Note%203%20%E2%80%93%20Prepaid%20Expenses%20and%20Other%20Assets) This table details the composition of Amesite Inc.'s prepaid expenses and other assets as of December 31, 2020, and June 30, 2020 Prepaid Expenses and Other Assets | Item | December 31, 2020 | June 30, 2020 | | :------------------------ | :---------------- | :------------ | | Prepaid insurance | $540,093 | $36,102 | | Prepaid consulting services | $533,973 | $- | | Prepaid offering costs | $- | $142,730 | | Other prepaid services | $43,167 | $43,442 | | Total | $1,117,233 | $222,274 | [Note 4 - Stock-Based Compensation](index=16&type=section&id=Note%204%20-%20Stock-Based%20Compensation) This note describes Amesite Inc.'s Equity Incentive Plan, the valuation of stock options using the Black-Scholes Model, and related compensation expenses - The company's Equity Incentive Plan permits the grant of stock options, stock appreciation rights, restricted stock, or restricted stock units to officers, employees, directors, consultants, agents, and independent contractors[53](index=53&type=chunk) - Option awards generally vest over **two years** from the grant date and typically have **ten-year contractual terms**[54](index=54&type=chunk) - The fair value of each option award is estimated using a Black-Scholes Model with assumptions including a **6.00-year expected term**, **0.15% risk-free interest rate** (Dec 31, 2020), and **46.30% expected volatility** (Dec 31, 2020)[57](index=57&type=chunk)[59](index=59&type=chunk) Stock Compensation Expense | Period | 3 Months Ended Dec 31, 2020 | 3 Months Ended Dec 31, 2019 | 6 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2019 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Stock Compensation Expense | $217,075 | $100,375 | $429,488 | $280,245 | - As of December 31, 2020, there was approximately **$1,281,000** of total unrecognized compensation cost for nonvested options, expected to be recognized through June 2025[61](index=61&type=chunk) [Note 5 - Income Taxes](index=19&type=section&id=Note%205%20-%20Income%20Taxes) This note reiterates that Amesite Inc. has not recognized an income tax benefit and has a full valuation allowance against deferred tax assets due to net operating losses - The company has not generated any taxable income or tax liabilities since inception and, therefore, has not recognized an income tax benefit for the periods presented[64](index=64&type=chunk) - The company has approximately **$14,152,000** of net operating loss carryforwards, with a full valuation allowance recorded against deferred tax assets due to limited operating history and operating losses[64](index=64&type=chunk) [Note 6 - Common Stock](index=19&type=section&id=Note%206%20-%20Common%20Stock) This note details recent common stock issuances, including a public offering, warrants, conversion of notes, and shares issued for consulting services - On September 25, 2020, the company completed an offering of **3,000,000 shares** of common stock at **$5.00 per share**, generating approximately **$12.8 million** in net proceeds[65](index=65&type=chunk) - Five-year warrants to purchase **150,000 common shares** were issued to the placement agent at an exercise price of **$6.00**, with a fair value of approximately **$249,000**[65](index=65&type=chunk)[66](index=66&type=chunk) - Outstanding convertible notes payable were converted into **1,127,872 shares** of common stock at **$2.00 per share** in connection with the offering[66](index=66&type=chunk) - The company issued **176,092 shares** of common stock, totaling approximately **$790,000**, to various consulting firms for strategic investor relations services in November and December 2020[67](index=67&type=chunk)[104](index=104&type=chunk) [Note 7 - Convertible Notes Payable](index=19&type=section&id=Note%207%20-%20Convertible%20Notes%20Payable) This note describes the issuance and subsequent conversion of unsecured, 8% convertible notes payable into common stock, resulting in a significant interest expense - In April and May 2020, the company issued unsecured, **8% convertible notes payable** with an aggregate principal amount of **$2,182,500**[68](index=68&type=chunk) - The notes, totaling **$2,255,815** (including accrued interest), were converted into **1,127,872 shares** of common stock at **$2.00 per share** during the offering[69](index=69&type=chunk) - A **$3,383,546 expense** was recognized within interest expense due to the discount provided to note holders upon conversion, along with the full amortization of **$182,900** in unamortized debt issuance costs[69](index=69&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=21&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on Amesite Inc.'s financial condition, results of operations, liquidity, and capital resources for the three and six months ended December 31, 2020. It highlights significant revenue growth, increased operating expenses, and a substantial net loss, while also discussing critical accounting policies and the impact of recent financing activities [Overview](index=21&type=section&id=Overview) This section introduces Amesite Inc.'s business model, acknowledges its current unprofitability, and highlights operational risks, including the need for additional funding - Amesite Inc. is an artificial intelligence-driven platform and course designer that provides customized, high-performance, and scalable online products for schools and businesses[71](index=71&type=chunk) - The company is not currently profitable, incurring a net loss of **$2,287,574** for the three months ended December 31, 2020[73](index=73&type=chunk) - Operations are subject to significant risks and uncertainties, including the failure to secure additional funding to execute the current business plan[72](index=72&type=chunk) [Basis of Presentation](index=21&type=section&id=Basis%20of%20Presentation) This section confirms that the financial statements are prepared in accordance with GAAP and SEC requirements - The financial statements are prepared in accordance with GAAP and the requirements of the Securities and Exchange Commission (SEC)[74](index=74&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=21&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section discusses key accounting policies and the significant judgments and estimates management makes in preparing the financial statements [Internally-Developed Capitalized Software](index=22&type=section&id=Internally-Developed%20Capitalized%20Software) This section outlines the capitalization of direct labor and third-party vendor costs for internal-use software, amortized over three years - The company capitalizes certain costs related to internal-use software, primarily direct labor and third-party vendor costs, during the application development stage[77](index=77&type=chunk) - Capitalized costs are amortized on the straight-line method over the estimated useful life of the software, generally **three years**, once placed in service[77](index=77&type=chunk) [Stock-Based Compensation](index=22&type=section&id=Stock-Based%20Compensation) This section details the fair value measurement of stock-based awards using the Black-Scholes model and their typical two-year vesting period - Stock-based awards (stock options, restricted stock units, and stock warrants) are measured at fair value at each grant date using the Black-Scholes option pricing model[78](index=78&type=chunk) - Stock options generally vest over **two years** from the grant date and have **ten-year contractual terms**[78](index=78&type=chunk) [Revenue Recognition](index=22&type=section&id=Revenue%20Recognition) This section describes the company's revenue generation from contractual arrangements with educational and business clients, recognized ratably over contract terms - Revenue is primarily generated from contractual arrangements with businesses, colleges, universities, and K-12 schools for a comprehensive platform of technology and services[79](index=79&type=chunk) - Contracts generally have **two to five-year terms** with a single performance obligation, satisfied ratably over the contract term[80](index=80&type=chunk) - The majority of revenue is derived from enterprise customers, and most customers have annual payment terms[83](index=83&type=chunk) [Contract Fulfilment Costs](index=23&type=section&id=Contract%20Fulfilment%20Costs) This section explains the capitalization and amortization policy for software design costs related to specific course offerings - Certain fulfillment costs related to software design for specific course offerings are capitalized and amortized over the contract length[84](index=84&type=chunk) - No contract fulfillment costs were capitalized or amortized as of December 31, 2020, or June 30, 2020[84](index=84&type=chunk) [Accounts Receivable, Contract Assets and Liabilities](index=23&type=section&id=Accounts%20Receivable%2C%20Contract%20Assets%20and%20Liabilities) This section covers the accounting treatment for accounts receivable and contract liabilities, including deferred revenue - Accounts receivable are stated at net realizable value, with no allowance for doubtful accounts as of December 31, 2020, and June 30, 2020[84](index=84&type=chunk) - Contract liabilities (deferred revenue) represent the excess of amounts billed or received compared to recognized revenue, typically from upfront annual license fees[85](index=85&type=chunk)[86](index=86&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section analyzes Amesite Inc.'s financial performance, focusing on revenue, operating expenses, and net loss for the reported periods [Revenue](index=23&type=section&id=Revenue) This table presents Amesite Inc.'s net revenue and year-over-year growth for the three and six months ended December 31, 2020, and 2019 Revenue | Period | 3 Months Ended Dec 31, 2020 | 3 Months Ended Dec 31, 2019 | 6 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2019 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $106,812 | $32,607 | $216,921 | $40,307 | | YoY Growth (3 months) | 227.6% | | | | | YoY Growth (6 months) | | | 438.2% | | [Operating Expenses](index=23&type=section&id=Operating%20Expenses) This section details the trends and drivers behind Amesite Inc.'s general and administrative, technology, and sales and marketing expenses [General and Administrative](index=23&type=section&id=General%20and%20Administrative) This section analyzes the increase in general and administrative expenses, primarily attributed to new team member hires General and Administrative Expenses | Period | 3 Months Ended Dec 31, 2020 | 3 Months Ended Dec 31, 2019 | 6 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2019 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | G&A Expenses | $1,611,223 | $472,520 | $2,474,131 | $998,909 | | YoY Growth (3 months) | 241.0% | | | | | YoY Growth (6 months) | | | 147.7% | | - The increases in general and administrative expenses are primarily due to the hiring of new team members[89](index=89&type=chunk) [Technology and Content Development](index=24&type=section&id=Technology%20and%20Content%20Development) This section examines the increase in technology and content development expenses, driven by technical contract services and new feature launches Technology and Content Development Expenses | Period | 3 Months Ended Dec 31, 2020 | 3 Months Ended Dec 31, 2019 | 6 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2019 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Tech & Content Dev Expenses | $511,014 | $317,885 | $978,777 | $579,671 | | YoY Growth (3 months) | 60.8% | | | | | YoY Growth (6 months) | | | 68.9% | | - The increases are primarily due to technical contract services supporting the development of the company's technology, including the launch of a new Course Manage feature in October 2020[90](index=90&type=chunk)[91](index=91&type=chunk) [Sales and Marketing](index=24&type=section&id=Sales%20and%20Marketing) This section discusses the significant increase in sales and marketing expenditures following the IPO, driven by recruitment and intensified marketing efforts Sales and Marketing Expenses | Period | 3 Months Ended Dec 31, 2020 | 3 Months Ended Dec 31, 2019 | 6 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2019 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Sales & Marketing Expenses | $272,756 | $207,295 | $524,640 | $382,384 | | YoY Growth (3 months) | 31.6% | | | | | YoY Growth (6 months) | | | 37.2% | | - Expenditures significantly increased in Q2 following the IPO, driven by the recruitment of key sales personnel for Higher Education and Enterprise groups and increased marketing efforts[92](index=92&type=chunk)[93](index=93&type=chunk) - Sales and marketing expenditure is expected to build more rapidly over the next few quarters with the onboarding of new team members and more intensive marketing efforts[93](index=93&type=chunk) [Interest Income](index=24&type=section&id=Interest%20Income) This table presents Amesite Inc.'s interest income and its year-over-year change for the three and six months ended December 31, 2020, and 2019 Interest Income | Period | 3 Months Ended Dec 31, 2020 | 3 Months Ended Dec 31, 2019 | 6 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2019 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Interest Income | $607 | $5,547 | $620 | $7,914 | | YoY Change (3 months) | -89.0% | | | | | YoY Change (6 months) | | | -92.2% | | [Net Loss](index=24&type=section&id=Net%20Loss) This section analyzes the substantial increase in net loss, primarily due to interest expense from the offering and higher operating expenses Net Loss | Period | 3 Months Ended Dec 31, 2020 | 3 Months Ended Dec 31, 2019 | 6 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2019 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Loss | $(2,287,574) | $(959,646) | $(7,373,838) | $(1,912,743) | | YoY Change (3 months) | 138.4% | | | | | YoY Change (6 months) | | | 285.5% | | - The net loss for the six months ended December 31, 2020, was substantially higher compared to 2019, primarily due to interest expense incurred in connection with the Offering, in addition to increased operational losses from higher operating expenses[95](index=95&type=chunk) [Financial Position, Liquidity, and Capital Resources](index=25&type=section&id=Financial%20Position%2C%20Liquidity%2C%20and%20Capital%20Resources) This section assesses Amesite Inc.'s financial health, liquidity, and capital resources, including cash balances and future funding needs - The company is not currently profitable[97](index=97&type=chunk) Cash Balance | Metric | December 31, 2020 | | :---------- | :---------------- | | Cash Balance| $13,687,822 | - Management believes current cash balances should be sufficient to satisfy anticipated operating and investing needs through June 2022[98](index=98&type=chunk) - Accelerating the plan of operations or altering strategic growth plans may require additional funds, which may not be available when needed, at all, or on terms acceptable to the company[98](index=98&type=chunk) [Off-Balance Sheet Arrangements](index=25&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms that Amesite Inc. had no off-balance sheet arrangements during the reported periods - The company did not have any off-balance sheet arrangements during the periods presented or currently[99](index=99&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=25&type=section&id=Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This section states that there were no changes in or disagreements with accountants regarding accounting and financial disclosure - There were no changes in or disagreements with accountants on accounting and financial disclosure[99](index=99&type=chunk) [ITEM 3. QUALITATIVE AND QUANTITATIVE DISCUSSION ABOUT MARKET RISK](index=25&type=section&id=ITEM%203.%20QUALITATIVE%20AND%20QUANTITATIVE%20DISCUSSION%20ABOUT%20MARKET%20RISK) As a "smaller reporting company," Amesite Inc. is not required to provide the information typically required by this item regarding qualitative and quantitative disclosures about market risk - The company is not required to provide information on market risk as it is a "smaller reporting company"[100](index=100&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=25&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that Amesite Inc.'s disclosure controls and procedures were effective as of December 31, 2020, and reported no material changes in internal controls over financial reporting during the period [Evaluation of Disclosure Controls and Procedures](index=25&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms that management, including the CEO and CFO, deemed the company's disclosure controls effective as of December 31, 2020 - Management, including the Chief Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[100](index=100&type=chunk) [Changes in Internal Controls Over Financial Reporting](index=25&type=section&id=Changes%20in%20Internal%20Controls%20Over%20Financial%20Reporting) This section states that no material changes occurred in internal control over financial reporting during the quarter - There were no material changes in internal control over financial reporting during the period covered by this quarterly report[101](index=101&type=chunk) [PART II – OTHER INFORMATION](index=26&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity sales [ITEM 1. LEGAL PROCEEDINGS](index=26&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Amesite Inc. reported no legal proceedings during the period covered by this quarterly report - There are no legal proceedings to report[103](index=103&type=chunk) [ITEM 1A. RISK FACTORS](index=26&type=section&id=ITEM%201A.%20RISK%20FACTORS) Amesite Inc. stated that there have been no material changes to the risk factors previously disclosed in its Prospectus - There have been no material changes in the company's risk factors from those previously disclosed in its Prospectus[103](index=103&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=26&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details Amesite Inc.'s issuance of unregistered equity securities to consultants and the use of proceeds from its initial public offering (IPO), confirming no material changes to the planned use of IPO funds [Sales of Unregistered Securities](index=26&type=section&id=Sales%20of%20Unregistered%20Securities) This section reports the issuance of common stock to consultants for services, exempt from registration under Section 4(a)(2) - During the quarter ended December 31, 2020, the company issued an aggregate of **176,092 shares** of common stock to consultants for services rendered, exempt from registration under Section 4(a)(2) of the Securities Act[104](index=104&type=chunk) [Use of IPO Proceeds](index=26&type=section&id=Use%20of%20IPO%20Proceeds) This section details the net proceeds from the IPO and confirms no material changes to the planned use of these funds - The company completed its initial public offering (IPO) on September 29, 2020, issuing **3,000,000 shares** of common stock at **$5.00 per share**, resulting in gross proceeds of **$15.0 million** and net proceeds of **$12.8 million**[104](index=104&type=chunk)[105](index=105&type=chunk) - There has been no material change in the planned use of proceeds from the IPO from that described in the final prospectus[105](index=105&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=26&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) Amesite Inc. reported no defaults upon senior securities during the period - There are no defaults upon senior securities[106](index=106&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=26&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to Amesite Inc.'s operations - This item is not applicable to the company[106](index=106&type=chunk) [ITEM 5. OTHER INFORMATION](index=26&type=section&id=ITEM%205.%20OTHER%20INFORMATION) Amesite Inc. reported no other information under this item - No other information is reported under this item[106](index=106&type=chunk) [ITEM 6. EXHIBITS](index=27&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, certifications, and XBRL taxonomy documents - The report includes Exhibit 31.1 (Certification of Principal Executive, Financial and Accounting Officer pursuant to Rules 13a-14(a) and 15d-14(a)), Exhibit 32.1 (Certification of Principal Executive, Financial and Accounting Officer Pursuant to 18 U.S.C. Section 1350), and various XBRL taxonomy extension documents[107](index=107&type=chunk) [SIGNATURES](index=28&type=section&id=SIGNATURES) The report is signed by Ann Marie Sastry, Ph.D., who serves as the Chief Executive Officer, Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer for Amesite Inc - The report was signed by Ann Marie Sastry, Ph.D., in her capacities as Chief Executive Officer, Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer[110](index=110&type=chunk)

[Initial Filing Information](index=1&type=section&id=Initial%20Filing%20Information) This section details the Form 10-Q filing information for Amesite Inc., including its corporate status and shares outstanding [Form 10-Q Details](index=1&type=section&id=Form%2010-Q%20Details) This section provides basic filing details for Amesite Inc.'s Form 10-Q, including incorporation, contact, and company filing status - Amesite Inc. filed its Quarterly Report on Form 10-Q for the period ended September 30, 2020[1](index=1&type=chunk) - The company is incorporated in Delaware with its principal office in Detroit, MI[2](index=2&type=chunk) Company Filing Status | Status | Value | | :-------------------------- | :---- | | Large accelerated filer | ☐ | | Accelerated filer | ☐ | | Non-accelerated filer | ☒ | | Smaller reporting company | ☒ | | Emerging growth company | ☒ | - As of November 13, 2020, there were **20,419,693 shares of common stock** issued and outstanding[4](index=4&type=chunk) [Table of Contents](index=2&type=section&id=TABLE%20OF%20CONTENTS) This section outlines the two main parts of the Form 10-Q: Financial Information and Other Information [Report Structure Overview](index=2&type=section&id=Report%20Structure%20Overview) The Table of Contents outlines the two main parts of the Form 10-Q: Part I - Financial Information, which includes financial statements, management's discussion and analysis, market risk, and controls, and Part II - Other Information, covering legal proceedings, risk factors, equity sales, and exhibits - The report is divided into two main parts: Part I - Financial Information and Part II - Other Information[4](index=4&type=chunk) - Part I includes Financial Statements, Management's Discussion and Analysis, Market Risk, and Controls and Procedures[4](index=4&type=chunk) - Part II covers Legal Proceedings, Risk Factors, Unregistered Sales of Equity Securities, Defaults Upon Senior Securities, Mine Safety Disclosures, Other Information, and Exhibits[4](index=4&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This statement advises that the report contains forward-looking statements subject to substantial risks and uncertainties, which the company does not undertake to update [Forward-Looking Statements Disclaimer](index=4&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section advises readers that the report contains forward-looking statements based on expectations and assumptions, which involve substantial risks and uncertainties - The report contains forward-looking statements identified by terms like 'may,' 'should,' 'expects,' 'intends,' 'plans,' 'anticipates,' 'believes,' 'estimates,' 'predicts,' 'potential,' 'continue'[5](index=5&type=chunk) - Key risks and uncertainties include the AI platform's ability to deliver courses, the online machine learning platform's revenue potential, ability to obtain additional funds, intellectual property protection, reliance on third parties, attracting and retaining personnel, financial performance, and regulatory impacts[5](index=5&type=chunk) - The company does not plan to update or revise forward-looking statements to reflect actual results or changes in circumstances, except as required by law[5](index=5&type=chunk) [PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed financial statements and management's discussion and analysis for the company [ITEM 1. FINANCIAL STATEMENTS](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed financial statements of Amesite Inc. for the period ended September 30, 2020, including the balance sheets, statements of operations, stockholders' equity, cash flows, and comprehensive notes detailing accounting policies, business nature, and specific financial activities - The financial statements are condensed and unaudited, prepared in accordance with GAAP and SEC requirements[7](index=7&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - The company's fiscal year ends on June 30[23](index=23&type=chunk) [Condensed Financial Statements (Internal ToC)](index=6&type=section&id=Condensed%20Financial%20Statements%20(Internal%20ToC)) This section lists the specific unaudited condensed financial statements included in the report - The financial statements include Condensed Balance Sheets, Statements of Operations, Statements of Stockholders' Equity, Statements of Cash Flows, and Notes to Condensed Financial Statements[8](index=8&type=chunk) [Condensed Balance Sheets (unaudited)](index=7&type=section&id=Condensed%20Balance%20Sheets%20(unaudited)) This section presents the unaudited condensed balance sheets, highlighting key asset, liability, and equity figures Condensed Balance Sheet Highlights | Metric | September 30, 2020 ($) | June 30, 2020 ($) | | :-------------------------- | :--------------------- | :---------------- | | Total Assets | $18,160,964 | $5,704,673 | | Total Current Liabilities | $1,599,328 | $2,704,777 | | Total Stockholders' Equity | $16,561,636 | $2,999,896 | | Cash and Cash Equivalents | $16,355,165 | $4,093,874 | | Accounts Receivable | $276,750 | $61,120 | | Deferred Revenue | $842,021 | $380,000 | - Total assets significantly increased from **$5.7 million to $18.1 million**, primarily driven by a substantial increase in cash and cash equivalents[10](index=10&type=chunk) - Total current liabilities decreased, largely due to the conversion of notes payable to common stock[11](index=11&type=chunk) [Condensed Statements of Operations (unaudited)](index=8&type=section&id=Condensed%20Statements%20of%20Operations%20(unaudited)) This section provides the unaudited condensed statements of operations, detailing revenue, expenses, and net loss for the period Condensed Statements of Operations Highlights (Three Months Ended September 30) | Metric | 2020 ($) | 2019 ($) | | :-------------------------- | :------------ | :---------- | | Net Revenue | $110,109 | $7,700 | | Total Operating Expenses | $1,582,555 | $963,164 | | Interest Expense | $(3,613,831) | $(80) | | Net Loss | $(5,086,264) | $(953,097) | | Basic Loss per Share | $(0.31) | $(0.07) | - Net revenue saw a significant increase from **$7,700 in 2019 to $110,109 in 2020**[13](index=13&type=chunk) - Net loss substantially widened from **$(953,097) in 2019 to $(5,086,264) in 2020**, primarily due to a large increase in interest expense related to the conversion of notes payable[13](index=13&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) [Condensed Statements of Stockholders' Equity (unaudited)](index=9&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity%20(unaudited)) This section presents the unaudited condensed statements of stockholders' equity, showing changes in equity components Condensed Statements of Stockholders' Equity Highlights | Metric | September 30, 2020 ($) | July 1, 2020 ($) | | :-------------------------- | :--------------------- | :--------------- | | Total Stockholders' Equity | $16,561,636 | $2,999,896 | | Additional Paid-In Capital | $30,276,705 | $11,629,114 | | Accumulated Deficit | $(13,717,065) | $(8,630,801) | - Total stockholders' equity increased significantly from **$2.9 million to $16.5 million**, driven by the issuance of common stock and conversion of notes payable[15](index=15&type=chunk) - The accumulated deficit increased due to the net loss incurred during the period[15](index=15&type=chunk) [Condensed Statements of Cash Flows (unaudited)](index=10&type=section&id=Condensed%20Statements%20of%20Cash%20Flows%20(unaudited)) This section provides the unaudited condensed statements of cash flows, categorizing cash movements from operating, investing, and financing activities Condensed Statements of Cash Flows Highlights (Three Months Ended September 30) | Cash Flow Activity | 2020 ($) | 2019 ($) | | :-------------------------- | :------------ | :---------- | | Net cash used in operating activities | $(312,890) | $(771,989) | | Net cash used in investing activities | $(222,049) | $(252,838) | | Net cash from financing activities | $12,796,230 | $2,093,679 | | Net Increase in Cash | $12,261,291 | $1,068,852 | | Cash and Cash Equivalents - End of period | $16,355,165 | $2,077,754 | - Net cash used in operating activities decreased significantly from **$(771,989) in 2019 to $(312,890) in 2020**[16](index=16&type=chunk) - A substantial net increase in cash and cash equivalents was driven by financing activities, primarily the issuance of common stock[16](index=16&type=chunk) - Significant noncash transactions included the conversion of convertible notes payable (including accrued interest) into **$2,255,745 of common stock**[16](index=16&type=chunk) [Notes to Condensed Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies and specific financial activities [Note 1 - Nature of Business](index=11&type=section&id=Note%201%20-%20Nature%20of%20Business) This note describes Amesite Inc.'s business as an AI-driven online learning platform and its recent corporate events - Amesite Inc. was incorporated in November 2017 and operates as an artificial intelligence-driven platform and course designer, providing customized online products for businesses, universities, colleges, and K-12 schools[19](index=19&type=chunk) - On September 18, 2020, the company completed a reorganizational merger, changing its name from 'Amesite Operating Company' to 'Amesite Inc.'[20](index=20&type=chunk) - The company completed an initial public offering on September 29, 2020, raising approximately **$12.8 million in net proceeds**, which are deemed sufficient for operating capital and eliminate substantial doubt about its ability to continue as a going concern[22](index=22&type=chunk) [Note 2 - Significant Accounting Policies](index=11&type=section&id=Note%202%20-%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements [Basis of Presentation](index=11&type=section&id=Basis%20of%20Presentation) This sub-note details the framework and standards used for preparing the condensed financial statements - The condensed financial statements are prepared in accordance with GAAP and SEC requirements, with a fiscal year ending June 30[23](index=23&type=chunk) - Interim results are not necessarily indicative of full-year results, and certain disclosures have been condensed or omitted per SEC rules[24](index=24&type=chunk)[25](index=25&type=chunk) [Use of Estimates](index=11&type=section&id=Use%20of%20Estimates) This sub-note explains management's reliance on estimates and assumptions in financial reporting - Financial statement preparation requires management to make estimates and assumptions affecting reported amounts, and actual results may differ[27](index=27&type=chunk) [Fair Value Measurements](index=12&type=section&id=Fair%20Value%20Measurements) This sub-note describes the hierarchy and methods used for fair value measurements of financial instruments - Fair value measurements are categorized into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs based on management's estimates)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) [Cash and Cash Equivalents](index=13&type=section&id=Cash%20and%20Cash%20Equivalents) This sub-note defines what the company considers cash equivalents and details bank deposit insurance - The company considers all investments with an original maturity of three months or less to be cash equivalents[33](index=33&type=chunk) - FDIC-insured bank deposits totaled **$500,000** as of September 30, 2020[33](index=33&type=chunk) [Property and Equipment](index=13&type=section&id=Property%20and%20Equipment) This sub-note explains the accounting treatment for property and equipment, including depreciation methods and useful lives - Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives[34](index=34&type=chunk) Depreciable Life of Property and Equipment | Asset Category | Depreciable Life (Years) | | :---------------------------- | :-------------------------------------------- | | Leasehold improvements | Shorter of estimated lease term or 10 years | | Furniture and fixtures | 7 years | | Computer equipment and software | 5 years | [Capitalized Software Costs](index=13&type=section&id=Capitalized%20Software%20Costs) This sub-note details the capitalization and amortization policies for internally developed software - Significant costs incurred in developing internal-use software are capitalized and amortized over an expected useful life of **three years**[36](index=36&type=chunk) Capitalized Software Amortization Expense | Period (Three Months Ended Sep 30) | Amortization Expense ($) | | :--------------------------------- | :----------------------- | | 2020 | ~$158,000 | | 2019 | ~$91,000 | [Revenue Recognition](index=13&type=section&id=Revenue%20Recognition) This sub-note outlines the company's policies for recognizing revenue from its AI-driven platform and services - Revenue is primarily generated from contractual arrangements with businesses, colleges, universities, and K-12 schools for an AI-driven platform and technology-enabled services[37](index=37&type=chunk) - Contracts typically have **two to five-year terms** with a single performance obligation, satisfied ratably over the contract term as benefits are consumed[38](index=38&type=chunk) - Fixed fees, such as annual license and maintenance charges, are recognized ratably over the service period[40](index=40&type=chunk) Revenue by Customer Type (Three Months Ended September 30) | Customer Type | 2020 ($) | 2019 ($) | | :------------ | :-------- | :------- | | Enterprise | $107,609 | $- | | K12 | $2,500 | $- | | University | $- | $7,700 | | Total | $110,109 | $7,700 | Changes in Contract Liabilities (Deferred Revenue) (Three Months Ended September 30) | Metric | 2020 ($) | 2019 ($) | | :------------------------------------------------------------------ | :-------- | :------- | | Opening balance | $380,000 | $- | | Billings | $572,130 | $- | | Less revenue recognized from continuing operations (net of returns) | $(110,109) | $- | | Closing balance | $842,021 | $- | [Technology and Content Development](index=17&type=section&id=Technology%20and%20Content%20Development) This sub-note describes the accounting treatment for expenditures related to technology and content development - Expenditures primarily include personnel, contracted services for platform maintenance, hosting, licensing, and amortization of capitalized software costs, all expensed as incurred[48](index=48&type=chunk) [Stock-Based Payments](index=17&type=section&id=Stock-Based%20Payments) This sub-note explains the accounting for equity instruments exchanged for employee and nonemployee services - The cost of employee and nonemployee services exchanged for equity instruments is measured at fair value at the grant date and recognized over the service period[49](index=49&type=chunk) [Income Taxes](index=17&type=section&id=Income%20Taxes) This sub-note details the company's approach to interim income tax provision and deferred tax assets - Interim income tax provision is calculated using an estimated annual effective tax rate[50](index=50&type=chunk) - Deferred tax assets are reduced by a valuation allowance if their realization is not more likely than not[51](index=51&type=chunk) [Net Loss per Share](index=18&type=section&id=Net%20Loss%20per%20Share) This sub-note describes the calculation of basic and diluted net loss per share - Basic net loss per share is calculated by dividing net loss by the weighted average common shares outstanding[52](index=52&type=chunk) - Potentially dilutive securities (options and warrants) are excluded from diluted loss per share calculations when their effect would be anti-dilutive due to net losses[52](index=52&type=chunk) [Risks and Uncertainties](index=18&type=section&id=Risks%20and%20Uncertainties) This sub-note highlights the significant financial, operational, and technological risks faced by the early-stage company, including COVID-19 impacts - The company operates in a rapidly changing industry and faces significant financial, operational, and technological risks as an early-stage company[53](index=53&type=chunk) - The COVID-19 pandemic's impact on operations, cash flows, and financial condition cannot be reasonably estimated, though management believes current operations have not been significantly impacted[54](index=54&type=chunk) [Note 3 - Stock-Based Compensation](index=18&type=section&id=Note%203%20-%20Stock-Based%20Compensation) This note details the company's equity incentive plan and the accounting for stock-based awards - The company's Equity Incentive Plan allows for grants of stock options, restricted stock, and restricted stock units to align interests with stockholders[55](index=55&type=chunk) - Fair value of option awards is estimated using a Black-Scholes Model, with assumptions including expected term, risk-free interest rate, expected volatility, and zero dividend yield[58](index=58&type=chunk)[59](index=59&type=chunk) Stock Option Activity (Three Months Ended September 30, 2020) | Options | Number of Shares | Weighted Average Exercise Price ($) | | :-------------------------- | :--------------- | :---------------------------------- | | Outstanding at July 1, 2020 | 2,962,833 | $1.82 | | Granted | 65,000 | $2.00 | | Terminated | (14,000) | $2.00 | | Outstanding at Sep 30, 2020 | 3,013,833 | $1.82 | Stock Compensation Expense (Three Months Ended September 30) | Period | Expense ($) | | :----- | :---------- | | 2020 | $212,413 | | 2019 | $179,870 | - As of September 30, 2020, approximately **$1,339,000 of unrecognized compensation cost** related to nonvested options is expected to be recognized through April 2025[61](index=61&type=chunk) [Note 4 - Income Taxes](index=20&type=section&id=Note%204%20-%20Income%20Taxes) This note explains the company's income tax position, including net operating loss carryforwards and valuation allowances - The company has not recognized an income tax benefit due to not generating taxable income or liabilities since inception[63](index=63&type=chunk) - Approximately **$11,808,000 of net operating loss carryforwards** are available, with a full valuation allowance recorded due to uncertainty of realization[64](index=64&type=chunk) [Note 5 - Common Stock](index=20&type=section&id=Note%205%20-%20Common%20Stock) This note details common stock activities, including the IPO, warrant issuances, and convertible note conversions - On September 29, 2020, the company completed an IPO, issuing **3,000,000 shares at $5.00 per share**, generating approximately **$12.8 million in net proceeds**[65](index=65&type=chunk) - Warrants to purchase up to **150,000 shares** were issued to the underwriter with an exercise price of **$6.00** and a five-year term, valued at approximately **$249,000** using the Black-Scholes Model[65](index=65&type=chunk)[66](index=66&type=chunk) - Outstanding convertible notes payable were converted into **1,127,872 shares of common stock** in connection with the IPO[67](index=67&type=chunk) - **126,532 warrants** previously issued to nonemployees were cancelled, with **6,665 replaced and vested**, resulting in **$15,000 of additional warrant expense**[68](index=68&type=chunk) [Note 6 - Convertible Notes Payable](index=20&type=section&id=Note%206%20-%20Convertible%20Notes%20Payable) This note describes the convertible notes payable, their conversion terms, and the related accounting impact - In April and May 2020, the company issued unsecured, convertible notes payable totaling **$2,182,500**, bearing **8% interest** and maturing in one year[69](index=69&type=chunk)[70](index=70&type=chunk) - The notes were subject to automatic conversion into common stock upon a qualified equity financing or change of control, at the lesser of **$2.00 or 75% of the offering price**[70](index=70&type=chunk) - In connection with the IPO, the notes (totaling **$2,255,815 including interest**) were converted into **1,127,872 shares at $2.00 per share**, resulting in a **$3,383,546 expense** due to the discount provided to note holders[72](index=72&type=chunk) - Remaining unamortized debt issuance costs of **$182,900** were fully amortized and included in interest expense upon IPO completion[72](index=72&type=chunk) [Note 7 – Subsequent Events](index=20&type=section&id=Note%207%20%E2%80%93%20Subsequent%20Events) This note discloses significant events that occurred after the balance sheet date - On October 19, 2020, the company entered agreements with two consulting firms for investor relations services, compensating them with monthly cash payments and common stock (**36,000 and 24,000 shares**, respectively) until March 4, 2021[73](index=73&type=chunk) - On November 5, 2020, another agreement was made with a consulting firm for investor relations, involving monthly cash and **9,709 shares of common stock**, expiring November 5, 2021[74](index=74&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=22&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial condition, results of operations, and liquidity for the three months ended September 30, 2020, compared to the prior year - The discussion analyzes financial condition and results for the three months ended September 30, 2020 and 2019[76](index=76&type=chunk)[79](index=79&type=chunk) - The company is an AI-driven platform and course designer for businesses, universities, and K-12 schools, focused on improving online learning experiences[77](index=77&type=chunk) - The company is not currently profitable and faces risks including the need for additional funding[78](index=78&type=chunk)[110](index=110&type=chunk) [Overview](index=22&type=section&id=Overview) This section provides a general description of Amesite Inc.'s business and its online learning platform - Amesite Inc. was incorporated in November 2017 and provides customized, high-performance, and scalable online learning products using AI and machine learning[77](index=77&type=chunk) - The company serves businesses, universities, colleges, and K-12 schools, aiming to enhance learner experience and outcomes[77](index=77&type=chunk) [Reorganization](index=22&type=section&id=Reorganization) This section details the corporate reorganizational merger completed by Amesite Inc. in September 2020 - On September 18, 2020, Amesite Inc. completed a reorganizational merger, with Amesite Operating Company becoming the surviving entity and changing its name to Amesite Inc.[80](index=80&type=chunk) - All common stock, options, and warrants of the former parent corporation were converted on a one-for-one basis into the surviving entity's equivalents[81](index=81&type=chunk) [Basis of Presentation](index=22&type=section&id=Basis%20of%20Presentation) This section reiterates the accounting standards and requirements used for financial statement preparation - The financial statements are prepared in accordance with U.S. GAAP and SEC requirements[83](index=83&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=23&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section discusses the key accounting policies requiring significant management judgment and estimates [Internally-Developed Capitalized Software](index=23&type=section&id=Internally-Developed%20Capitalized%20Software) This sub-section explains the capitalization and amortization of costs for internal-use software development - Costs related to internal-use software development are capitalized during the application development stage and amortized over an estimated useful life of **three years**[85](index=85&type=chunk) - Judgment is required to determine when a project reaches the application development stage and the proportion of time spent in this stage[85](index=85&type=chunk) [Stock-Based Compensation](index=23&type=section&id=Stock-Based%20Compensation) This sub-section details the valuation and accounting for stock-based awards - Stock-based awards (options, restricted stock units, warrants) are measured at fair value using the Black-Scholes option pricing model[86](index=86&type=chunk) - Expected volatility is based on historical volatilities of peer companies' common stock[86](index=86&type=chunk) [Revenue Recognition](index=23&type=section&id=Revenue%20Recognition) This sub-section elaborates on the company's revenue recognition policies for its licensing and service arrangements - Revenue is derived from annual licensing arrangements, including maintenance, setup, and variable course development fees, with contracts typically **2-5 years**[89](index=89&type=chunk) - Performance obligations are satisfied ratably over the contract term as customers receive and consume benefits[89](index=89&type=chunk)[91](index=91&type=chunk) - Contract liabilities (deferred revenue) represent amounts billed or received in excess of recognized revenue, recorded until services are delivered[95](index=95&type=chunk)[96](index=96&type=chunk) Changes in Contract Liabilities (Deferred Revenue) (Three Months Ended September 30) | Metric | 2020 ($) | 2019 ($) | | :------------------------------------------------------------------ | :-------- | :------- | | Opening balance | $380,000 | $- | | Billings | $572,130 | $- | | Less revenue recognized from continuing operations (net of returns) | $(110,109) | $- | | Closing balance | $842,021 | $- | [Results of Operations](index=25&type=section&id=Results%20of%20Operations) This section provides a comparative analysis of the company's financial performance for the periods presented [Revenue](index=25&type=section&id=Revenue) This sub-section analyzes the company's net revenue performance for the reporting period Net Revenue (Three Months Ended September 30) | Period | Net Revenue ($) | | :----- | :-------------- | | 2020 | $110,109 | | 2019 | $7,700 | - Revenue increased significantly from **$7,700 in 2019 to $110,109 in 2020**[99](index=99&type=chunk) [Operating Expenses](index=25&type=section&id=Operating%20Expenses) This sub-section details the changes and drivers of the company's various operating expenses [General and Administrative](index=25&type=section&id=General%20and%20Administrative) This sub-note analyzes the changes in general and administrative expenses, including personnel and IPO-related bonuses General and Administrative Expenses (Three Months Ended September 30) | Period | Expense ($) | | :----- | :---------- | | 2020 | $862,908 | | 2019 | $526,389 | - General and administrative expenses increased by **$336,519**, primarily due to bonuses awarded to the CEO (**$200,000**) and CFO (**$50,000**) related to the IPO, and personnel hires[100](index=100&type=chunk) [Technology and Content Development](index=25&type=section&id=Technology%20and%20Content%20Development) This sub-note discusses the trends in technology and content development expenses, including contract services and software amortization Technology and Content Development Expenses (Three Months Ended September 30) | Period | Expense ($) | | :----- | :---------- | | 2020 | $467,763 | | 2019 | $261,686 | - Expenses increased by **$206,077**, mainly due to increased contract services for technology platform development and a **$67,000 increase** in amortization of capitalized software costs[102](index=102&type=chunk) [Sales and Marketing](index=25&type=section&id=Sales%20and%20Marketing) This sub-note examines the changes in sales and marketing expenses, driven by personnel and advertising costs Sales and Marketing Expenses (Three Months Ended September 30) | Period | Expense ($) | | :----- | :---------- | | 2020 | $251,884 | | 2019 | $175,089 | - Expenses increased by **$76,795**, primarily due to higher personnel and personnel-related costs (**$20,044**) and increased contracted services for search engine, social media, and advertising[105](index=105&type=chunk) [Interest Income](index=26&type=section&id=Interest%20Income) This sub-section reports on the company's interest income for the period Interest Income (Three Months Ended September 30) | Period | Interest Income ($) | | :----- | :------------------ | | 2020 | $13 | | 2019 | $2,447 | - Interest income decreased significantly from **$2,447 in 2019 to $13 in 2020**[106](index=106&type=chunk) [Interest Expense](index=26&type=section&id=Interest%20Expense) This sub-section analyzes the significant increase in interest expense, primarily due to convertible note conversion Interest Expense (Three Months Ended September 30) | Period | Interest Expense ($) | | :----- | :------------------- | | 2020 | $3,613,831 | | 2019 | $80 | - Interest expense dramatically increased to **$3,613,831 in 2020 from $80 in 2019**[106](index=106&type=chunk) - This increase was primarily due to a **$3,383,546 expense** recognized from the discount provided to convertible note holders upon conversion during the IPO, and the full amortization of **$182,900** in unamortized debt issuance costs[107](index=107&type=chunk) [Net Loss](index=26&type=section&id=Net%20Loss) This sub-section summarizes the overall net loss and its contributing factors for the period Net Loss (Three Months Ended September 30) | Period | Net Loss ($) | | :----- | :----------- | | 2020 | $(5,086,264) | | 2019 | $(953,097) | - The net loss significantly increased due to higher operating expenses and the substantial interest expense incurred in connection with the IPO and convertible note conversion[108](index=108&type=chunk) [Capital Expenditures](index=26&type=section&id=Capital%20Expenditures) This section details the company's investments in capital assets, including technology and equipment Capital Asset Additions (Three Months Ended September 30) | Category | 2020 ($) | 2019 ($) | | :------------------------------------- | :--------- | :--------- | | Total Capital Asset Additions | $222,049 | $252,838 | | Capitalized Technology and Content Dev | $202,076 | $249,360 | | Property and Equipment | $19,343 | $3,478 | - Total capital asset additions decreased slightly, with a shift towards more property and equipment additions in 2020[109](index=109&type=chunk) - The company plans to continue capitalizing significant software development costs as it builds out its technology platforms[109](index=109&type=chunk) [Financial Position, Liquidity, and Capital Resources](index=26&type=section&id=Financial%20Position,%20Liquidity,%20and%20Capital%20Resources) This section assesses the company's financial health, cash position, and ability to fund future operations - The company is not currently profitable, reporting a net loss of **$5,086,264** for the three months ended September 30, 2020[110](index=110&type=chunk) - As of September 30, 2020, the cash balance was **$16,355,165**[110](index=110&type=chunk) - The IPO on September 29, 2020, generated approximately **$12.8 million in net proceeds**, which are believed to be sufficient for anticipated operating and investing needs through June 2022[111](index=111&type=chunk)[113](index=113&type=chunk) - Future funding may be required if the company accelerates its operations or alters strategic growth plans, and such funding may not always be available on acceptable terms[113](index=113&type=chunk) [Off-Balance Sheet Arrangements](index=27&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements - The company did not have any off-balance sheet arrangements during the periods presented or currently[114](index=114&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=27&type=section&id=Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This section states that there were no changes or disagreements with accountants regarding financial disclosures - There were no changes in or disagreements with accountants on accounting and financial disclosure[114](index=114&type=chunk) [ITEM 3. QUALITATIVE AND QUANTITATIVE DISCUSSION ABOUT MARKET RISK](index=27&type=section&id=ITEM%203.%20QUALITATIVE%20AND%20QUANTITATIVE%20DISCUSSION%20ABOUT%20MARKET%20RISK) As a 'smaller reporting company,' Amesite Inc. is not required to provide the information typically required for qualitative and quantitative discussion about market risk - The company is exempt from providing detailed market risk discussion due to its status as a 'smaller reporting company'[115](index=115&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=27&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of September 30, 2020, concluding they were effective - Management concluded that disclosure controls and procedures were effective as of September 30, 2020[116](index=116&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter[117](index=117&type=chunk) [PART II – OTHER INFORMATION](index=28&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity sales, and other miscellaneous information [ITEM 1. LEGAL PROCEEDINGS](index=28&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section states that there are no legal proceedings to report for the period - There are no legal proceedings to report[119](index=119&type=chunk) [ITEM 1A. RISK FACTORS](index=28&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section indicates that there have been no material changes to the risk factors previously disclosed in the company's Prospectus - No material changes have occurred in the company's risk factors from those previously disclosed in its Prospectus[120](index=120&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=28&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the issuance of unregistered equity securities, specifically 65,000 stock options to employees, and provides information on the use of proceeds from the company's initial public offering (IPO), which generated $12.8 million in net proceeds - **65,000 options** to purchase common stock were issued to employees under the 2018 Equity Incentive Plan, exempt from registration under Section 4(a)(2) of the Securities Act[121](index=121&type=chunk) - The IPO on September 29, 2020, involved the issuance of **3,000,000 shares at $5.00 per share**, yielding **$12.8 million in net proceeds** after deducting underwriting discounts and offering expenses[121](index=121&type=chunk)[122](index=122&type=chunk) - There has been no material change in the planned use of IPO proceeds from what was described in the final prospectus[123](index=123&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=28&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section states that there are no defaults upon senior securities to report - There are no defaults upon senior securities[123](index=123&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=28&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[123](index=123&type=chunk) [ITEM 5. OTHER INFORMATION](index=28&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section states that there is no other information to report - There is no other information to report[123](index=123&type=chunk) [ITEM 6. EXHIBITS](index=29&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed as part of the Form 10-Q, including organizational documents, certifications, and XBRL-related documents - Exhibits include the Certificate of Incorporation, Bylaws, Certifications of Principal Executive and Financial Officers (31.1 and 32.1), and various XBRL documents[125](index=125&type=chunk) - Certifications 31.1 and 32.1 are deemed not filed for purposes of Section 18 of the Exchange Act[125](index=125&type=chunk) [SIGNATURES](index=29&type=section&id=SIGNATURES) This section contains the official signatures for the Form 10-Q report [Report Signatures](index=29&type=section&id=Report%20Signatures) The report is signed on behalf of Amesite Inc. by Ann Marie Sastry, Ph.D., in her capacities as Chief Executive Officer, Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer, dated November 16, 2020 - The report was signed on **November 16, 2020**[126](index=126&type=chunk) - Ann Marie Sastry, Ph.D., signed the report as Chief Executive Officer, Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer[127](index=127&type=chunk)