Amesite(AMST) - 2023 Q4 - Annual Report

PART I This section provides an overview of Amesite Inc.'s business, strategy, technology, intellectual property, competitive landscape, and associated risk factors ITEM 1. BUSINESS Amesite Inc. provides AI-driven cloud-based learning platforms and content services, generating revenue from platform licensing and user fees, emphasizing proprietary AI and IP protection - Amesite is a high-tech artificial intelligence software company offering a cloud-based platform and content creation services for business and university-delivered education and upskilling[15] - The company's strategy involves delivering Learning Community Environments (LCEs) to businesses and educational institutions, enabling them to offer branded learning products with ease[17] - Revenue is derived from licensing the platform and user fees associated with its use by customers for their users[16][18] - Amesite utilizes artificial intelligence algorithms to improve learning outcomes by assisting learners with content access, utilization, and engagement, and protects learner data solely for this purpose[21][23] - The company holds two U.S. patents and five pending U.S. patent applications, including one for its AI platform, with patents expected to expire in 2038[27] - As of September 30, 2023, Amesite has 12 full-time employees and 2 consultants, with a management team that is 57% female and 29% racially diverse[42][44] Overview Our Strategy Our Proprietary Technology Our Research and Development Programs Our Intellectual Property Competition Government Regulation and Product Approval Sales and Marketing Board of Advisors Human Capital Management Corporate Information ITEM 1A. RISK FACTORS Amesite faces risks from its short operating history, revenue sustainability, intense competition, key personnel dependence, financial losses, funding needs, operational disruptions, and regulatory compliance - The company has a short operating history and has not generated sustainable revenue since inception, facing substantial risk of failure in commercializing new products and technologies[51][52] - Reliance on customers to drive enrollment and revenue is a key risk, with factors like negative perceptions of online courses, ineffective marketing, and reduced funding potentially impacting business[54][55] - Amesite faces intense competition from OPM firms, LMS technology firms, and learning product aggregators, which could lead to pricing pressures, decreased gross margins, and loss of market share[31][57][58] - The company has a history of losses, incurred a net loss of $(4,153,303) for the year ended June 30, 2023, and will require substantial additional funding to continue operations and achieve profitability[64][65][112] - Security breaches or failures in the company's platform or systems could lead to unauthorized data disclosure, loss of customers, reputational harm, and costly lawsuits[71][72] - As an 'emerging growth company,' Amesite benefits from reduced disclosure requirements, which could make its common stock less attractive to some investors[84][85] Risks Related to Our Business Risks Related to Our Financial Condition Risks Related to Managing Growth Risks Related to Regulatory Requirements Risks Related to Our Common Stock ITEM 1B. UNRESOLVED STAFF COMMENTS There are no unresolved staff comments applicable to the company - Not applicable[101] ITEM 2. PROPERTIES Amesite's corporate headquarters are in Detroit, Michigan, and the company operates remotely after terminating its Ann Arbor lease in May 2020 - Corporate headquarters are located at 607 Shelby Street, Suite 700 PMB 214, Detroit, Michigan 48226[101] - The Ann Arbor Lease for office and laboratory space was terminated in May 2020, and the company now operates remotely[101] ITEM 3. LEGAL PROCEEDINGS Amesite is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - Management assesses claims and makes provisions for loss if probable and estimable, but currently, there are no material adverse legal proceedings[102] ITEM 4. MINE SAFETY DISCLOSURES Mine safety disclosures are not applicable to Amesite Inc - Not applicable[102] PART II This section covers Amesite Inc.'s common stock market, financial condition, results of operations, and audited financial statements, including disclosures on market risk and internal controls ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Amesite's common stock trades on Nasdaq under 'AMST', with approximately 40 stockholders and a $2.55 closing price as of September 21, 2023, and the company has never paid cash dividends, intending to retain earnings for business development - Amesite's common stock trades on the Nasdaq Capital Market under the symbol 'AMST'[105] Common Stock Information (September 21, 2023) | Metric | Value | | :---------------------- | :-------- | | Stockholders of Record | ~40 | | Closing Price | $2.55 | - The company has never paid cash dividends and does not anticipate paying any in the foreseeable future, planning to retain all available funds for business development and expansion[106] - During the year ended June 30, 2023, the company issued 999 options, 10,417 shares of common stock for consulting services (valued at ~$61,250), and warrants to purchase 348,485 shares in a private placement[107][108] Market Information Shareholders Dividends Recent Sales of Unregistered Securities ITEM 6. [RESERVED]. This item is reserved and contains no information ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Amesite Inc. reported a net loss of $(4,153,303) for FY2023, a significant improvement from the prior year, with revenue increasing to $845,009, and management believes recent financing and expense reductions have alleviated going concern doubts - The company is not currently profitable, reporting a net loss of $(4,153,303) for the year ended June 30, 2023, and a cumulative net loss of $(33,449,021) since incorporation[112] - A 1-for-12 reverse stock split was approved by stockholders and became effective on February 21, 2023[110][111] - Management believes that subsequent financing and strategic expense reduction initiatives have alleviated substantial doubt about the company's ability to continue as a going concern[158] - Revenue is primarily generated from contractual arrangements with customers for a comprehensive platform of integrated technology and services, recognized ratably over the contract term[118][119] Key Financial Highlights (Year Ended June 30) | Metric | 2023 | 2022 | Change YoY | | :----------------------------------- | :------------ | :------------ | :------------ | | Net Revenue | $845,009 | $697,001 | +21.23% | | General & Administrative Expenses | $2,492,777 | $5,183,863 | -51.90% | | Technology & Content Dev. Expenses | $1,523,547 | $3,059,962 | -50.21% | | Sales & Marketing Expenses | $1,053,193 | $1,509,694 | -30.24% | | Net Loss | $(4,153,303) | $(9,059,923) | -54.16% | Capital Expenditures (Year Ended June 30) | Category | 2023 | 2022 | | :--------------------------------- | :----------- | :----------- | | Capitalized Technology & Content | $368,909 | $599,660 | | Property & Equipment | $27,124 | $16,575 | | Total Capital Asset Additions | $396,033 | $616,235 | Cash Balance and Financing (June 30) | Metric | 2023 | 2022 | | :----------------------------------- | :------------ | :------------ | | Cash Balance | $5.36 million | $7.16 million | | Net Proceeds from Common Stock Issuance | $1.85 million | $3.87 million | Overview Basis of Presentation Critical Accounting Policies and Significant Judgments and Estimates Results of Operations Capital Expenditures Financial Position, Liquidity, and Capital Resources Off-Balance Sheet Arrangements ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Amesite Inc. is exempt from market risk disclosures as it qualifies as a 'smaller reporting company' - The company is not required to provide market risk disclosures as it is a 'smaller reporting company'[136] ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA This section presents Amesite Inc.'s audited financial statements for FY2023 and FY2022, prepared under GAAP, with notes detailing accounting policies and the alleviation of prior-year going concern doubts - The financial statements for the years ended June 30, 2023, and 2022, have been audited and prepared in accordance with GAAP[140][159] - Management believes that subsequent financing and strategic expense reduction initiatives have alleviated substantial doubt about the company's ability to continue as a going concern, which was disclosed in the prior year's financial statements[157][158] Balance Sheet Summary (June 30) | Asset/Liability/Equity | 2023 | 2022 | | :--------------------------- | :------------ | :------------ | | Total Current Assets | $5,482,340 | $7,729,996 | | Total Noncurrent Assets | $867,412 | $1,153,864 | | Total Assets | $6,349,752 | $8,883,860 | | Total Current Liabilities | $265,327 | $748,108 | | Total Stockholders' Equity | $6,084,425 | $8,135,752 | Statements of Operations Summary (Year Ended June 30) | Item | 2023 | 2022 | | :--------------------------- | :------------ | :------------ | | Net Revenue | $845,009 | $697,001 | | Total Operating Expenses | $5,069,517 | $9,753,519 | | Loss from Operations | $(4,224,508) | $(9,056,518) | | Net Loss | $(4,153,303) | $(9,059,923) | | Basic and Diluted Loss per Share | $(1.68) | $(4.67) | Statements of Cash Flows Summary (Year Ended June 30) | Activity | 2023 | 2022 | | :---------------------------------------- | :-------------- | :-------------- | | Net cash (used) in operating activities | $(3,249,176) | $(6,715,652) | | Net cash (used) in investing activities | $(396,033) | $(711,622) | | Net cash provided by financing activity | $1,850,503 | $3,869,550 | | Net decrease in cash and cash equivalents | $(1,794,706) | $(3,557,724) | | Cash and cash equivalents, end of year | $5,360,661 | $7,155,367 | Revenue by Customer Type (Year Ended June 30) | Customer Type | 2023 | 2022 | | :------------ | :---------- | :---------- | | Enterprise | $513,969 | $579,664 | | University | $331,040 | $97,337 | | K-12 | $0 | $20,000 | | Total | $845,009 | $697,001 | Report of Independent Registered Public Accounting Firm (PCAOB ID No. 76) REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID No. 34) Balance Sheets Statements of Operations Statements of Changes in Stockholders' Equity Statements of Cash Flows Notes to Financial Statements ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in or disagreements with accountants on accounting and financial disclosure - None[220] ITEM 9A. CONTROLS AND PROCEDURES Amesite's management concluded that disclosure controls and internal control over financial reporting were effective as of June 30, 2023, having remediated prior material weaknesses - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2023[222] - Management concluded that internal control over financial reporting was effective as of June 30, 2023[225] - Previously reported material weaknesses in risk assessment, control activities, and monitoring activities have been adequately addressed and remediated[225] Evaluation of Disclosure Controls and Procedures Management's Annual Report on Internal Control over Financial Reporting ITEM 9B. OTHER INFORMATION. There is no other information to report under this item - None[226] ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. This disclosure item is not applicable to Amesite Inc - Not applicable[227] PART III This section incorporates by reference information on directors, executive compensation, security ownership, related transactions, and principal accountant fees from the company's Proxy Statement ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement for the 2023 Annual Meeting of Stockholders[228] ITEM 11. EXECUTIVE COMPENSATION Executive compensation details are incorporated by reference from the company's definitive Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement[229] ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. Security ownership information for beneficial owners and management is incorporated by reference from the definitive Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement[229] ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Details on certain relationships, related transactions, and director independence are incorporated by reference from the definitive Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement[229] ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Information regarding principal accountant fees and services is incorporated by reference from the definitive Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement[229] PART IV This section details the exhibits and financial statement schedules filed with the report, along with a statement on the Form 10-K summary's applicability ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES This section lists the filed financial statements and a comprehensive array of exhibits, including corporate governance documents, equity plans, and various agreements - The report includes audited financial statements: Balance Sheets, Statements of Operations, Statements of Changes in Stockholders' Equity, Statements of Cash Flows, and Notes to Financial Statements[231] - All financial statement schedules have been omitted as they are not applicable, not required, or the information is presented within the financial statements or notes[231] - A comprehensive list of exhibits is provided, including merger agreements, certificates of incorporation, bylaws, equity incentive plans, employment agreements, and various other contracts and certifications[233][234][235] ITEM 16. FORM 10-K SUMMARY This item is not applicable to the company - Not applicable[237] SIGNATURES The report is duly signed by Amesite Inc.'s authorized officers and directors, including the CEO, CFO, and Board members, as of October 6, 2023 - The report is signed by Ann Marie Sastry, Ph.D. (CEO, President, and Chairman), Sherlyn W. Farrell (CFO), and other Directors[240] - All signatures are dated October 6, 2023[239][240]