Amesite(AMST) - 2022 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS This section presents the unaudited condensed financial statements for Amesite Inc for the period ended September 30, 2021 Condensed Balance Sheets (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][11] Condensed Statements of Operations (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] Condensed Statements of Stockholders' Equity (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] Condensed Statements of Cash Flows (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] Notes to Condensed Financial Statements Note 1 - Nature of Business - Amesite Inc is an artificial intelligence-driven platform providing customized online learning products for schools and businesses[19] - The company completed an initial public offering (IPO) on September 25, 2020, raising approximately $12.8 million in net proceeds[21] Note 2 - Significant Accounting Policies - The financial statements are prepared in accordance with GAAP and SEC requirements, with a fiscal year ending June 30[22][23] - Revenue is primarily generated from annual licensing arrangements with two-year terms and is recognized ratably over the contract term[32][33] - Capitalized software costs are amortized over an estimated useful life of three years, with amortization expense of approximately $208,000 for the quarter[31] - The company's operations are subject to significant risks, and management is monitoring the potential impact of the COVID-19 pandemic[49][50] 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 - The company's Equity Incentive Plan allows for grants of stock options, restricted stock, and restricted stock units[52] - Stock-based compensation expense was $389,085 for the quarter, an increase from $212,413 in the prior year[57] - As of September 30, 2021, approximately $1,038,000 of unrecognized compensation cost remains for nonvested options[57] - On September 28, 2021, the Board approved stock options ($172,702) and restricted stock ($600,000) for board members[58] 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 - The company has not generated taxable income or tax liabilities since inception[59] - Amesite has approximately $17,040,000 in net operating loss carryforwards, with a full valuation allowance recorded against deferred tax assets[59] Note 5 - Common Stock - The company completed an IPO of 3,000,000 shares at $5.00 per share, generating approximately $12.8 million in net proceeds[60] - During July 2021, warrant holders exercised 834,544 warrants on a cashless basis, resulting in the issuance of 488,728 shares[61] - 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][64] Note 6 - Convertible Notes Payable - 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][67] - The conversion resulted in a recognized interest expense of $3,383,546, representing the discount provided to note holders[67] Note 7 - Subsequent Events - The company determined that no subsequent events arose that require disclosure[68] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses financial conditions and operational results for the quarter, highlighting revenue growth and recent financing activities Overview - Amesite Inc is an AI software company offering a cloud-based platform for business and university education and upskilling[71][72] - The company continues to monitor the COVID-19 pandemic's impact, acknowledging potential downside risks to pipeline growth and sales[73] Basis of Presentation - The discussion is based on unaudited condensed financial statements prepared in accordance with GAAP and SEC requirements[74][75] Critical Accounting Policies and Significant Judgments and Estimates - Key accounting policies requiring significant judgment include capitalized software, stock-based compensation, and revenue recognition[76] - Costs for internally-developed software are capitalized and amortized over an estimated useful life of three years[78] - Revenue is primarily derived from annual licensing arrangements and recognized ratably over the contract term[80][81] Results of Operations 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] - Operating expenses increased across all categories, with significant rises in G&A, Technology, and Sales and Marketing[92][96][99] - The company launched its fourth-generation (Version 4.0) platform in October 2021, featuring a guaranteed 24-hour launch[95] - Amesite secured a contract with Michigan Works! Southeast for workforce training, expanding into the Government sector[98] Financial Position, Liquidity, and Capital Resources - 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] - 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][103] Off-Balance Sheet Arrangements - The company did not have any off-balance sheet arrangements[104] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure - There were no changes in or disagreements with accountants on accounting and financial disclosure[104] ITEM 3. QUALITATIVE AND QUANTITATIVE DISCUSSION ABOUT MARKET RISK 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] ITEM 4. CONTROLS AND PROCEDURES Management evaluated disclosure controls and procedures and concluded they were effective as of September 30, 2021 Evaluation of Disclosure Controls and Procedures - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[105] Changes in Internal Controls Over Financial Reporting - There were no material changes in internal control over financial reporting during the period[105] Limitations on Effectiveness of Controls and Procedures - Management acknowledges that no controls can provide absolute assurance of meeting objectives or detecting all fraud[106] PART II – OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 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] ITEM 1A. RISK FACTORS 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] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section details the company's unregistered sales of equity securities to consultants Sales of Unregistered Securities - On September 10, 2021, Amesite agreed to issue 9,901 shares of common stock to consultants for services rendered[107][108] Repurchase of Equity Securities - The company did not repurchase any equity securities during the period[108] Use of Proceeds - There was no specific use of proceeds to report under this item[108] ITEM 3. DEFAULTS UPON SENIOR SECURITIES Amesite Inc reported no defaults upon senior securities during the period - The company reported no defaults upon senior securities[108] ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to Amesite Inc's operations - Mine safety disclosures are not applicable to the company[108] ITEM 5. OTHER INFORMATION Amesite Inc reported no other information requiring disclosure under this item - No other information was reported under this item[108] ITEM 6. EXHIBITS 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] SIGNATURES 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][112]