Amesite Inc

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and related notes for the year ended June 30, 2023 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on October 6, 2022. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this Quarterly Report on Form 10-Q, including those factors set forth in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” and in the section entitled “Risk Factors” in Part II, Item 1A.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and related notes for the year ended June 30, 2024 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on September 30, 2024. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this Quarterly Report on Form 10-Q, including those factors set forth in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” and in the section entitled “Risk Factors” in Part II, Item 1A.

Previous wording

The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the nine months ended March 31, 2024 and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on our unaudited condensed financial statements contained in this Quarterly Report on Form 10-Q, which we have prepared in accordance with United States generally accepted accounting principles, or GAAP, and the requirements of the SEC. You should read the discussion and analysis together with such financial statements and the related notes thereto.

Current wording

The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the three months ended September 30, 2024 and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on our unaudited condensed financial statements contained in this Quarterly Report on Form 10-Q, which we have prepared in accordance with United States generally accepted accounting principles, or GAAP, and the requirements of the SEC. You should read the discussion and analysis together with such financial statements and the related notes thereto.

Previous wording

We are not currently profitable, and we cannot provide any assurance that we will ever be profitable. We incurred a net loss of $3.2 million for the nine months ended March 31, 2024, and we incurred a net loss of $36.7 million for the period from November 14, 2017 (date of incorporation) to March 31, 2024.

Current wording

We are not currently profitable, and we cannot provide any assurance that we will ever be profitable. We incurred a net loss of $908,045 for the three months ended September 30, 2024, and we incurred a net loss of $38.7 million for the period from November 14, 2017 (date of incorporation) to September 30, 2024.

Previous wording

On February 16, 2022, we closed on a public offering of common stock and received approximately $2.51 million of cash proceeds, net of underwriting discounts, commissions, and other offering costs (Note 4 to the Financial Statements).

Current wording

On February 16, 2022, we closed on a public offering of common stock and received approximately $2.51 million of cash proceeds, net of underwriting discounts, commissions, and other offering costs.

Previous wording

On September 1, 2022, we closed on a public offering of common stock and concurrent private placement of warrants and received approximately $1.85 million of cash proceeds, net of underwriting discounts, commissions, and other offering costs (Note 4 to the Financial Statements).

Current wording

On September 1, 2022, we closed on a public offering of common stock and concurrent private placement of warrants and received approximately $1.85 million of cash proceeds, net of underwriting discounts, commissions, and other offering costs.

Previous wording

As of March 31, 2024, our cash and cash equivalent balance totaled $3 million.

Current wording

As of September 30, 2024, our cash and cash equivalent balance totaled $1,434,753.

Previous wording

The assessment of the Company’s ability to meet its future obligations is inherently judgmental, subjective and susceptible to change. Based on their current forecast, management believes that it may not have sufficient cash and cash equivalents to maintain the Company’s planned operations for the next twelve months following the issuance of these financial statements.

Current wording

The assessment of the Company’s ability to meet its future obligations is inherently judgmental, subjective and susceptible to change. Based on their current forecast, management believes that it may not have sufficient cash and cash equivalents to maintain the Company’s planned operations for the next twelve months following the issuance of these condensed financial statements.

Previous wording

The Company has considered both quantitative and qualitative factors that are known or reasonably known as of the date of these financial statements are issued and concluded that there are conditions present in the aggregate that raise substantial doubt about the Company’s ability to continue as a going concern. In response to the conditions, management plans include generating cash by completing financing transactions, which may include offerings of common stock. However, these plans are subject to market conditions, and are not within the Company’s control, and therefore, cannot be deemed probable. There is no assurance that the Company will be successful in implementing their plans. As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern. The condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Current wording

The Company has considered both quantitative and qualitative factors that are known or reasonably known as of the date of these condensed financial statements are issued and concluded that there are conditions present in the aggregate that raise substantial doubt about the Company’s ability to continue as a going concern. In response to the conditions, management plans include generating cash by completing financing transactions, which may include offerings of common stock. However, these plans are subject to market conditions, and are not within the Company’s control, and therefore, cannot be deemed probable. There is no assurance that the Company will be successful in implementing their plans. As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern. The condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Previous wording

This management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. In accordance with U.S. GAAP, we base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from these estimates if conditions differ from our assumptions. While our significant accounting policies are more fully described in Note 2 in the “Notes to Condensed Financial Statements,” we believe the following accounting policies are critical to the process of making significant judgments and estimates in preparation of our financial statements.

Current wording

This management’s discussion and analysis of financial condition and results of operations is based on our condensed financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed financial statements, and the reported amounts of revenue and expenses during the reported period. In accordance with U.S. GAAP, we base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from these estimates if conditions differ from our assumptions. While our significant accounting policies are more fully described in Note 2 in the “Notes to Condensed Financial Statements,” we believe the following accounting policies are critical to the process of making significant judgments and estimates in preparation of our condensed financial statements.

Previous wording

As of March 31, 2024 and June 30, 2023 our cash and cash equivalents totaled $3 million and $5.4 million, respectively with the majority invested in a short-term US Treasury Fund returning approximately 5%. The Fund is invested in US Treasuries with a 7-day liquidity. The decision to allocate funds to the short-term US Treasury Fund is based on our investment strategy, which prioritizes liquidity and stability while receiving current rate returns. The returns from the fund for the nine months ended March 31, 2024 were 5% and in line with our expectations and the broader market trends for similar investment vehicles. We continuously monitor our investment portfolio, considering market conditions and our liquidity needs, ensuring alignment with our broader financial strategy and risk tolerance.

Current wording

As of September 30, 2024 and June 30, 2024 our cash and cash equivalents totaled $1,434,753 and $2.071,016, respectively with the majority invested in a short-term US Treasury Fund returning approximately 4.2. The Fund is invested in US Treasuries with a 7-day liquidity. The decision to allocate funds to the short-term US Treasury Fund is based on our investment strategy, which prioritizes liquidity and stability while receiving current rate returns. The returns from the fund for the three months ended September 30, 2024 were 4.2% and in line with our expectations and the broader market trends for similar investment vehicles. We continuously monitor our investment portfolio, considering market conditions and our liquidity needs, ensuring alignment with our broader financial strategy and risk tolerance.

Previous wording

The Company capitalized software of $227,600 and $369,000 and recognized amortization expense of $395,000 and $657,000 for the nine months ended March 31, 2024 and year ended June 30, 2023, respectively.

Current wording

The Company capitalized software of $148,000 and $374,700 and recognized amortization expense of $111,939 and $508,318 for the three months ended September 30, 2024 and year ended June 30, 2024, respectively.

Previous wording

We have recorded accounts receivable of $0 and $15,000 as of March 31, 2024 and June 30, 2023, respectively. We have set up deferred revenue liabilities at the end of each period to reflect performance obligations to be performed in future periods for our services delivered over time. Future obligations related to deferred revenue totaled $2,000 and $54,000 as of March 31, 2024 and June 30, 2023 respectively.

Current wording

We have recorded accounts receivable of $0 and $30,600 as of September 30, 2024 and June 30, 2024, respectively. We have set up deferred revenue liabilities at the end of each period to reflect performance obligations to be performed in future periods for our services delivered over time. Future obligations related to deferred revenue totaled $24,375 and $0 as of September 30, 2024 and June 30, 2024 respectively.

Previous wording

The majority of our Customers are private and public learning institutions across various domestic regions. For the nine months ended March 31, 2024, three Customers comprised approximately 72% of total revenue.

Current wording

The majority of our customers are private and public learning institutions across various domestic regions. For the three months ended September 30, 2024, one customer comprised 100% of total revenue.

Previous wording

We generated revenues of $34,000 for the three months ended March 31, 2024 as compared to $205,000 for the three months ended March 31, 2023. We generated revenues of $139,000 for the nine months ended March 31, 2024 as compared to $722,000 for the nine months ended March 31, 2023.

Current wording

We generated revenues of $11,250 for the three months ended September 30, 2024 as compared to $63,333 for the three months ended September 30, 2023.

Previous wording

We issue four types of stock-based awards under our stock plans: stock options, restricted stock units, deferred stock units, and stock warrants. All stock-based awards granted to employees, directors and independent contractors are measured at fair value at each grant date. We rely on the Black-Scholes option pricing model for estimating the fair value of stock-based awards granted, and expected volatility is based on the historical volatility of the Company’s stock prices. Stock options generally vest over two years from the grant date and generally have ten-year contractual terms. Restricted stock units generally have a term of 12 months from the closing date of the agreement. Stock warrants issued have a term of five years. Information about the assumptions used in the calculation of stock-based compensation expense is set forth in Note 3 in the Notes to Financial Statements.

Current wording

We issue four types of stock-based awards under our stock plans: stock options, restricted stock units, deferred stock units, and stock warrants. All stock-based awards granted to employees, directors and independent contractors are measured at fair value at each grant date. We rely on the Black-Scholes option pricing model for estimating the fair value of stock-based awards granted, and expected volatility is based on the historical volatility of the Company’s stock prices. Stock options generally vest over two years from the grant date and generally have ten-year contractual terms. Restricted stock units generally have a term of 12 months from the closing date of the agreement. Stock warrants issued have a term of five years. Information about the assumptions used in the calculation of stock-based compensation expense is set forth in Note 3 in the Notes to Condensed Financial Statements.

Previous wording

General and administrative expenses for the three months ended March 31, 2024 were $1,135,000 as compared to $653,000 for the three months ended March 31, 2023. The increase between the three-month periods is due to the March 2024 issuance of $600,000 restricted stock units with no cash outlay, net of general and administrative expense savings of $118,000. General and administrative expenses for the nine months ended March 31, 2024 were $2,017,000 as compared to $1,946,000 for the nine months ended March 31, 2023 which also reflects the March 2024 issuance of $600,000 restricted stock units with no cash outlay, net of general and administrative expense savings of $529,000. The savings are primarily due to deliberate cost reductions, including reductions in headcount and associated administrative costs. These reductions were made possible by completion of certain features and platform capabilities that require less staffing to maintain than to build.

Current wording

General and administrative expenses for the three months ended September 30, 2024 were $633,122 as compared to $438,262 for the three months ended September 30, 2023. The increase between the three-month periods is due to the recording of Board Compensation in the current quarter, offset by savings due to deliberate cost reductions, including reductions in headcount and associated administrative costs. These reductions were made possible by completion of certain features and platform capabilities that require less staffing to maintain than to build.

Previous wording

Technology and content development expenses for the three months ended March 31, 2024 were $224,000 as compared to $279,000 for the three months ended March 31, 2023. Technology and content development expenses for the nine months ended March 31, 2024 were $889,000 as compared to $1,191,000 for the nine months ended March 31, 2023. The decreases between the three-month periods and the nine-month periods in technology are also principally related to reductions in headcount and associated administrative costs, since these costs scale with staff. The reductions in the three-month and nine-month periods in content development are principally due to completion of certain learning programs that are now offered by our Customers and require less staffing to maintain than to build.

Current wording

Technology and content development expenses for the three months ended September 30, 2024 were $139,658 as compared to $333,434 for the three months ended September 30, 2023. The decreases between the three-month periods in technology reflect the increase in capital asset additions and reductions in headcount and associated administrative costs, since these costs scale with staff.

Previous wording

Sales and marketing expenses for the three months ended March 31, 2024 were $139,000 as compared to $218,000 for the three months ended March 31, 2023. Sales and marketing expenses for the nine months ended March 31, 2024 were $603,000 as compared to $825,000 for the nine months ended March 31, 2023. The decrease between the three-month periods and the nine-month periods in sales and marketing are principally related to refinement of sales and marketing processes to those that focus messaging directly to our key markets and offer improved lead generation. We have seen increases in marketing qualified leads (MQLs) in both periods, while reducing the overall sales and marketing spend.

Current wording

Sales and marketing expenses for the three months ended September 30, 2024 were $165,814 as compared to $241,627 for the three months ended September 30, 2023. The decrease between the three-month periods in sales and marketing are principally related to moving certain marketing functions from outside providers to inside staff.

Previous wording

For the three months ended March 31, 2024, interest income totaled $38,000 as compared to interest income of $18,000 for the three months ended March 31, 2023. For the nine months ended March 31, 2024, interest income totaled $148,000 as compared to interest income of $36,000 for the nine months ended March 31, 2023.

Current wording

For the three months ended September 30, 2024, interest income totaled $19,299 as compared to interest income of $59,297 for the three months ended September 30, 2023.

Previous wording

Our net loss for the three months ended March 31, 2024 was $1,426,000 as compared to a net loss for the three months ended March 31, 2023 of $928,000. Our net loss for the nine months ended March 31, 2024 and March 31, 2023 was $3.2 million. The current quarter and year to date losses include $600,000 from the March 2024 issuance of $600,000 restrictive stock units with no cash outlay, net of savings in other expense areas of $100,000 and $600,000 for the three and nine months ended March 31, 2024 as discussed above.

Current wording

Our net loss for the three months ended September 30, 2024 was $908,045 as compared to a net loss for the three months ended September 30, 2023 of $890,693.

Previous wording

During the three months ended March 31, 2024 and 2023, we had capital asset additions of $109,000 and $113,000, respectively. During the nine months ended March 31, 2024 and 2023, we had capital asset additions of $228,000 and $288,000 in capitalized technology and content development. We will continue to capitalize significant software development costs, comprised primarily of internal payroll, payroll related and contractor costs, as we build out and complete our technology platforms.

Current wording

During the three months ended September 30, 2024 and 2023, we had capital asset additions of $148,000 and $65,200, respectively. We will continue to capitalize significant software development costs, comprised primarily of internal payroll, payroll related and contractor costs, as we build out and complete our technology platforms.