Research Solutions, Inc 10-Q for FY2025 Q1

Research Solutions, Inc. (RSSS)

10-Q 2024-11-14 For: 2024-09-30

Added on April 06, 2026

About this 10-Q

Research Solutions, Inc filed this 10-Q on November 14, 2024, covering the quarter ended September 30, 2024 (FY2025 Q1).

Headline figures

Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $12.04M; up 19.7% from $10.06M a year earlier
Net income: $669K; compared with a net loss of $988.04K a year earlier
Diluted EPS: $0.02; compared with -$0.04 a year earlier

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Nevada	11-3797644
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Address not applicable¹	N/A
(Address of principal executive offices)	(Zip Code)


Title of each Class	Trading Symbol(s)	Name of each Exchange on which registered
Common stock, $0.001 par value	RSSS	The Nasdaq Stock Market LLC

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer þ	Smaller reporting company þ
	Emerging growth company ☐


Title of Class		Number of Shares Outstanding on November 8, 2024
Common Stock, $0.001 par value		32,513,172

PART I — FINANCIAL INFORMATION	3
Item 1. Condensed Consolidated Financial Statements (unaudited)	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3. Quantitative and Qualitative Disclosures About Market Risk	33
Item 4. Controls and Procedures	33

PART II — OTHER INFORMATION	34
Item 1A. Risk Factors	34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 6. Exhibits	35

SIGNATURES	36


	September 30,
	2024		June 30,
	(unaudited)		2024
Assets
Current assets:
Cash and cash equivalents	$	6,924,773	$	6,100,031
Accounts receivable, net of allowance of $101,949 and $68,579, respectively		6,298,606		6,879,800
Prepaid expenses and other current assets		649,497		643,553
Prepaid royalties		572,524		1,067,237
Total current assets		14,445,400		14,690,621

Non-current assets:
Property and equipment, net of accumulated depreciation of $927,386 and $922,558, respectively		71,659		88,011
Intangible assets, net of accumulated amortization of $1,834,897 and $1,535,310, respectively ($8,117,222 provisional)		10,497,023		10,764,261
Goodwill ($13,171,486 provisional)		16,345,888		16,315,888
Deposits and other assets		915		981
Total assets	$	41,360,885	$	41,859,762

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	8,257,821	$	8,843,612
Deferred revenue		8,046,056		9,023,848
Total current liabilities		16,303,877		17,867,460

Non-current liabilities:
Contingent earnout liability		12,298,114		12,298,114
Total liabilities		28,601,991		30,165,574

Commitments and contingencies

Stockholders’ equity:
Preferred stock; $0.001 par value; 20,000,000 shares authorized; no shares issued and outstanding		—		—
Common stock; $0.001 par value; 100,000,000 shares authorized; 32,513,172 and 32,295,373 shares issued and outstanding, respectively		32,513		32,295
Additional paid-in capital		38,491,610		38,089,958
Accumulated deficit		(25,640,242)		(26,309,246)
Accumulated other comprehensive loss		(124,987)		(118,819)
Total stockholders’ equity		12,758,894		11,694,188
Total liabilities and stockholders’ equity	$	41,360,885	$	41,859,762


	Three Months Ended
	September 30,
	2024		2023

Revenue:
Platforms	$	4,329,645	$	2,600,192
Transactions		7,714,837		7,460,779
Total revenue		12,044,482		10,060,971

Cost of revenue:
Platforms		547,167		382,615
Transactions		5,731,439		5,646,791
Total cost of revenue		6,278,606		6,029,406
Gross profit		5,765,876		4,031,565

Operating expenses:
Selling, general and administrative		4,807,090		5,070,897
Depreciation and amortization		312,095		59,620
Total operating expenses		5,119,185		5,130,517

Income (loss) from operations		646,691		(1,098,952)

Other income		68,525		140,311

Income (loss) from operations before provision for income taxes		715,216		(958,641)
Provision for income taxes		(46,212)		(29,402)

Net income (loss)		669,004		(988,043)

Other comprehensive income (loss):
Foreign currency translation		(6,168)		(946)
Comprehensive income (loss)	$	662,836	$	(988,989)

Basic income (loss) per common share:
Net income (loss) per share	$	0.02	$	(0.04)
Weighted average common shares outstanding		30,346,871		27,052,445

Diluted income (loss) per common share:
Net income (loss) per share	$	0.02	$	(0.04)
Weighted average common shares outstanding		33,234,858		27,052,445


				Additional				Other		Total
	Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Equity

Balance, July 1, 2024	32,295,373	$	32,295	$	38,089,958	$	(26,309,246)	$	(118,819)	$	11,694,188

Fair value of vested stock options	—		—		28,856		—		—		28,856

Fair value of vested restricted common stock	250,000		250		388,883		—		—		389,133

Forfeited restricted common stock	(48,584)		(48)		48		—		—		—

Repurchase of common stock	(5,757)		(6)		(16,113)		—		—		(16,119)

Common stock issued upon exercise of stock options	22,140		22		(22)		—		—		—

Net income for the period	—		—		—		669,004		—		669,004

Foreign currency translation	—		—		—		—		(6,168)		(6,168)

Balance, September 30, 2024	32,513,172	$	32,513	$	38,491,610	$	(25,640,242)	$	(124,987)	$	12,758,894


	As of September 30, 2024				As of June 30, 2024
United States	$	3,491,224	55.4	%	$	4,125,696	60.0	%
Europe		2,242,100	35.6	%		2,082,900	30.2	%
Rest of World		565,282	9.0	%		671,204	9.8	%
Total	$	6,298,606	100	%	$	6,879,800	100	%


	Three Months Ended		Year Ended
	September 30,		June 30,
	2024	2023	2024	2023
Period end Euro : US Dollar exchange rate	1.12	1.06	1.07	1.09
Average period Euro : US Dollar exchange rate	1.09	1.10	1.08	1.05

Period end GBP : US Dollar exchange rate	1.34	1.22	1.26	1.27
Average period GBP : US Dollar exchange rate	1.29	1.28	1.26	1.20

Period end Mexican Peso : US Dollar exchange rate	0.05	0.06	0.05	0.06
Average period Mexican Peso : US Dollar exchange rate	0.05	0.06	0.06	0.05


	All Options			Vested Options			Unvested Options
		Weighted			Weighted			Weighted
		Average			Average			Average
		Exercise			Exercise			Exercise
	Shares	Price		Shares	Price		Shares	Price
Outstanding at June 30, 2024	2,788,625	$	1.93	2,529,856	$	1.85	258,769	$	2.73
Granted	—		—	—		—	—		—
Options vesting	—		—	417		2.19	(417)		2.19
Exercised	(74,321)		1.92	(74,321)		1.92	—		—
Forfeited	—		—	—		—	—		—
Outstanding at September 30, 2024	2,714,304	$	1.93	2,455,952	$	1.84	258,352	$	2.73


	Option		Remaining
	Exercise	Options	Contractual	Options
	Price	Outstanding	Life (in years)	Exercisable
$	0.70	225,000	1.18	225,000
	0.80	16,000	0.89	16,000
	0.90	15,000	0.84	15,000
	1.00	15,000	0.44	15,000
	1.05	305,000	1.90	305,000
	1.09	40,000	1.65	40,000
	1.10	105,000	0.75	105,000
	1.20	247,000	3.14	247,000
	1.59	25,000	3.61	25,000
	2.10	238,767	7.36	238,767
	2.13	211,500	6.13	211,500
	2.15	200,000	8.19	200,000
	2.17	28,000	6.61	28,000
	2.19	5,000	7.30	4,582
	2.40	284,000	4.12	284,000
	2.43	61,250	6.68	61,250
	2.45	89,500	5.84	89,500
	2.49	73,000	5.61	73,000
	2.50	20,000	4.63	20,000
	2.64	7,353	6.85	7,353
	2.67	21,000	6.96	21,000
	2.73	257,934	9.19	—
	2.99	8,000	5.62	8,000
	3.13	208,000	5.12	208,000
	3.50	8,000	5.37	8,000
	Total	2,714,304		2,455,952


				Weighted
				Average
	Number of			Grant Date
	Shares	Fair Value		Fair Value
Non-vested, June 30, 2024	1,957,726	$	1,375,199	$	1.63
Granted	250,000		532,000		2.13
Vested	(29,619)		(389,133)		2.14
Forfeited	(48,584)		(96,925)		2.18
Non-vested, September 30, 2024	2,129,523	$	1,421,141	$	1.67


	Pro Forma (Unaudited)
	Three Months ended September 30,
	2024		2023

Revenue	$	12,044,482	$	10,800,908
Cost of revenue		6,278,606		6,090,058
Gross profit		5,765,876		4,710,850

Total operating expenses		5,119,185		5,673,375

Loss from operations		646,691		(962,525)

Other income (expense)		68,525		141,313

Income (loss) from operations before provision for income taxes		715,216		(821,212)
Provision for income taxes		(46,212)		(29,402)

Pro Forma Net income (loss)	$	669,004	$	(850,614)
Pro Forma Net income (loss) per weighted average share, basic	$	0.02	$	(0.03)
Pro Forma Net income (loss) per weighted average share, diluted	$	0.02	$	(0.03)


In thousands	ResoluteAI		Scite
Fair value of consideration
Cash	$	2,774	$	7,217
Holdback cash paid		125		175
Common Stock (2,729,014 shares at $2.40 per share)		—		6,549
Contingent earn-out		1,867		7,194
Total purchase price		4,766		21,135

Allocation of the consideration to the fair value of assets acquired and liabilities assumed:
Cash and cash equivalents		59		—
Accounts receivable		162		109
Prepaid expenses		43		—
Accounts payable and accrued expenses		(33)		—
Deferred revenue		(649)		(997)
Other current liabilities		(60)		(18)
Net tangible assets		(478)		(906)

Intangible assets:
Developed technology		2,000		8,800
Customer relationships		100		70
Net identifiable intangible assets		2,100		8,870

Goodwill		3,144		13,171

Fair value of net assets acquired	$	4,766	$	21,135


	Sept. 30,		June 30,		Mar. 31,		Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec. 31,
	2024		2024		2024		2023		2023		2023		2023		2022
Revenue:
Platforms	$	4,329,645	$	4,277,338	$	3,953,403	$	3,125,584	$	2,600,192	$	2,303,375	$	2,249,632	$	2,110,272
Transactions		7,714,837		7,856,176		8,162,269		7,188,158		7,460,779		7,656,342		8,092,794		6,606,394
Total revenue		12,044,482		12,133,514		12,115,672		10,313,742		10,060,971		9,959,717		10,342,426		8,716,666

Cost of revenue:
Platforms		547,167		627,051		571,352		486,185		382,615		275,110		268,630		253,073
Transactions		5,731,439		5,863,596		6,062,388		5,343,755		5,646,791		5,764,064		6,046,523		5,059,766
Total cost of revenue		6,278,606		6,490,647		6,633,740		5,829,940		6,029,406		6,039,174		6,315,153		5,312,839

Gross profit:
Platforms		3,782,478		3,650,287		3,382,051		2,639,399		2,217,577		2,028,265		1,981,002		1,857,199
Transactions		1,983,398		1,992,580		2,099,881		1,844,403		1,813,988		1,892,278		2,046,271		1,546,628
Total gross profit		5,765,876		5,642,867		5,481,932		4,483,802		4,031,565		3,920,543		4,027,273		3,403,827

Operating expenses:
Sales and marketing		1,190,407		830,195		1,122,365		804,927		685,016		455,030		642,624		666,608
Technology and product dev.		1,372,758		1,489,491		1,371,754		1,336,558		1,244,579		991,093		953,677		922,132
General and administrative		1,930,176		1,917,908		2,027,073		2,023,848		2,542,868		1,649,333		1,871,590		1,613,664
Depreciation and amortization		312,095		311,004		309,898		155,749		59,620		22,163		18,332		6,342
Stock-based comp. expense		417,989		426,190		541,002		596,455		591,814		585,384		480,458		608,703
Foreign currency transaction loss (gain)		(104,240)		6,336		22,177		(13,738)		6,620		(37,743)		(72,547)		(84,179)
Total operating expenses		5,119,185		4,981,124		5,394,269		4,903,799		5,130,517		3,665,260		3,894,134		3,733,270
Other income (expenses and income taxes)		22,313		(3,482,970)		(11,362)		366,369		110,909		120,463		103,703		73,913
Net income (loss)	$	669,004	$	(2,821,227)	$	76,301	$	(53,628)	$	(988,043)	$	375,746	$	236,842	$	(255,530)

Basic income (loss) per common share:
Net income (loss) per share	$	0.02	$	(0.09)	$	-	$	-	$	(0.04)	$	0.01	$	0.01	$	(0.01)
Basic weighted average common shares outstanding		30,346,871		30,314,522		30,020,652		28,092,945		27,052,445		26,981,813		26,929,314		26,816,550

Diluted income (loss) per common share:
Net income (loss) per share	$	0.02	$	(0.09)	$	-	$	-	$	(0.04)	$	0.01	$	0.01	$	(0.01)
Diluted weighted average common shares outstanding		33,234,858		30,314,522		33,511,242		28,092,945		27,052,445		30,058,791		29,791,719		26,815,550


Category	Impact			Key Drivers
Platforms	↑	$	1,729,453	Increased due to additional deployments to new and existing customers, expansion from existing customers and additional revenue from the Scite acquisition. Revenue is recognized ratably over the term of the subscription agreement, which is typically one year for commercial customers and monthly for individual subscribers, provided all other revenue recognition criteria have been met. Billings or payments received in advance of revenue recognition are recorded as deferred revenue.
Transactions	↑	$	254,058	Increased primarily due to organic higher copyright revenues.


	Three Months Ended
	September 30,
	2024		2023		% Change *
As a percentage of revenue:
Platforms	12.6	%	14.7	%	(2.1)	%
Transactions	74.3	%	75.7	%	(1.4)	%
Total	52.1	%	59.9	%	(7.8)	%


	Impact as percentage
Category	of revenue			Key Drivers
Platforms	↓	2.1	%	Decreased primarily due to lower personnel costs.
Transactions	↓	1.4	%	Decreased primarily due to higher copyright margins slightly offset by lower service fee margins.


				Total Number of Shares	Approximate Dollar Value
	Total Number	Average		Purchased as Part of	of Shares that May Yet Be
	of Shares	Price Paid		Publicly Announced	Purchased Under the
Period	Purchased¹	per Share		Plans or Programs	Plans or Programs
July 1-31, 2024	—		—	—	$	346,893
August 1-31, 2024	—		—	—	$	346,893
September 1-30, 2024	5,757	$	2.80	—	$	330,774
Total	5,757	$	2.80	—		—


		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Date	Number	Filed Herewith
2.1	Share Exchange Agreement between Research Solutions, Inc. and Reprints Desk Inc. dated as of November 13, 2006.	SB-2	12/28/2007	2.1
2.2	Agreement and Plan of Merger by and among Reprints Desk, Inc., Research Solutions Acquisition Corp 1, Research Solutions, Inc., as Parent Guarantor, Resolute Innovation, Inc. and Shareholder Representative Services LLC dated as of July 28, 2023.	8-K	7/31/2023	2.1
2.3	Agreement of Merger and Plan of Reorganization, by and among the Research Solutions, Inc., Research Solutions Acquisition 2, LLC, Scite, Inc., and the Stockholder Representative, dated as of November 24, 2023.	8-K	11/24/2023	2.1
3.1.1	Articles of Incorporation.	SB-2	12/28/2007	3.1
3.1.2	Articles of Merger Effective March 4, 2013.	8-K	3/6/2013	3.1
3.2	Amended and Restated Bylaws.	8-K	10/17/2012	3.2
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer				*
32.2	Section 1350 Certification of Chief Financial Officer				*
101.INS	INLINE XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)


	RESEARCH SOLUTIONS, INC.

	By:	/s/ Roy W. Olivier
		Roy W. Olivier
Date: November 14, 2024		Chief Executive Officer and President (Principal Executive Officer)

	By:	/s/ William Nurthen
		William Nurthen
Date: November 14, 2024		Chief Financial Officer (Principal Financial and Accounting Officer)


/s/ Roy W. Olivier
Roy W. Olivier
Chief Executive Officer and President (Principal Executive Officer)
November 14, 2024