Research Solutions, Inc 10-Q for FY2024 Q3

Research Solutions, Inc. (RSSS)

10-Q 2024-05-13 For: 2024-03-31

Added on April 06, 2026

About this 10-Q

Research Solutions, Inc filed this 10-Q on May 13, 2024, covering the quarter ended March 31, 2024 (FY2024 Q3).

Headline figures

Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $12.12M; up 17.1% from $10.34M a year earlier
Net income: $76.3K; down 67.8% from net income of $236.84K 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 May 3, 2024
Common Stock, $0.001 par value		32,282,039

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	22
Item 3. Quantitative and Qualitative Disclosures About Market Risk	34
Item 4. Controls and Procedures	34

PART II — OTHER INFORMATION	35
Item 1A. Risk Factors	35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 6. Exhibits	36

SIGNATURES	37


	March 31,
	2024		June 30,
	(unaudited)		2023
Assets
Current assets:
Cash and cash equivalents	$	4,221,424	$	13,545,333
Accounts receivable, net of allowance of $103,319 and $85,015, respectively		7,323,379		6,153,063
Prepaid expenses and other current assets		635,000		400,340
Prepaid royalties		1,004,790		1,202,678
Total current assets		13,184,593		21,301,414

Non-current assets:
Property and equipment, net of accumulated depreciation of $920,918 and $881,908, respectively		94,078		70,193
Intangible assets, net of accumulated amortization of $1,237,311 and $747,355, respectively ($10,527,713 provisional)		11,029,679		462,068
Goodwill (provisional)		16,493,763		—
Deposits and other assets		1,086		1,052
Total assets	$	40,803,199	$	21,834,727

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	9,011,868	$	8,079,516
Deferred revenue		8,870,316		6,424,724
Total current liabilities		17,882,184		14,504,240

Non-current liabilities:
Contingent earnout liability		8,792,756		—
Total liabilities		26,674,940		14,504,240

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; 32,281,424 and 29,487,508 shares issued and outstanding, respectively		32,281		29,487
Additional paid-in capital		37,695,960		29,941,873
Accumulated deficit		(23,488,019)		(22,522,649)
Accumulated other comprehensive loss		(111,963)		(118,224)
Total stockholders’ equity		14,128,259		7,330,487
Total liabilities and stockholders’ equity	$	40,803,199	$	21,834,727


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2024		2023		2024		2023

Revenue:
Platforms	$	3,953,403	$	2,249,632	$	9,679,179	$	6,379,871
Transactions		8,162,269		8,092,794		22,811,206		21,363,864
Total revenue		12,115,672		10,342,426		32,490,385		27,743,735

Cost of revenue:
Platforms		571,352		268,630		1,440,151		752,176
Transactions		6,062,388		6,046,523		17,052,934		16,211,211
Total cost of revenue		6,633,740		6,315,153		18,493,085		16,963,387
Gross profit		5,481,932		4,027,273		13,997,300		10,780,348

Operating expenses:
Selling, general and administrative		5,084,371		3,875,802		14,903,319		10,766,537
Depreciation and amortization		309,898		18,332		525,267		30,486
Total operating expenses		5,394,269		3,894,134		15,428,586		10,797,023

Income (loss) from operations		87,663		133,139		(1,431,286)		(16,675)

Other income		31,228		104,331		547,965		218,095

Income (loss) from operations before provision for income taxes		118,891		237,470		(883,321)		201,420
Provision for income taxes		(42,590)		(628)		(82,049)		(5,543)

Net income (loss)		76,301		236,842		(965,370)		195,877

Other comprehensive income (loss):
Foreign currency translation		858		(4,149)		6,261		(2,801)
Comprehensive income (loss)	$	77,159	$	232,693	$	(959,109)	$	193,076

Basic income (loss) per common share:
Net income (loss) per share	$	-	$	0.01	$	(0.03)	$	0.01
Weighted average common shares outstanding		30,020,652		26,929,314		28,377,199		26,820,557

Diluted income (loss) per common share:
Net income (loss) per share	$	-	$	0.01	$	(0.03)	$	0.01
Weighted average common shares outstanding		33,511,242		29,791,719		28,377,199		28,837,774


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

Balance, December 31, 2023	32,619,598	$	32,620	$	37,607,895	$	(23,564,320)	$	(112,821)	$	13,963,374

Fair value of vested stock options	—		—		42,788		—		—		42,788

Fair value of vested restricted common stock	—		—		498,214		—		—		498,214

Forfeited restricted common stock	(200,000)		(200)		200		—		—		—

Repurchase of common stock	(159,044)		(159)		(453,117)		—		—		(453,276)

Common stock issued upon exercise of stock options	20,870		20		(20)		—		—		—

Net income for the period	—		—		—		76,301		—		76,301

Foreign currency translation	—		—		—		—		858		858

Balance, March 31, 2024	32,281,424	$	32,281	$	37,695,960	$	(23,488,019)	$	(111,963)	$	14,128,259

Balance, July 1, 2023	29,487,508	$	29,487	$	29,941,873	$	(22,522,649)	$	(118,224)	$	7,330,487

Fair value of vested stock options	—		—		104,502		—		—		104,502

Fair value of vested restricted common stock	380,000		380		1,603,440		—		—		1,603,820

Forfeited restricted common stock	(200,000)		(200)		200		—		—		—

Repurchase of common stock	(186,148)		(186)		(521,838)		—		—		(522,024)

Common stock issued upon exercise of stock options	71,050		71		(71)		—		—		—

Common stock issued for acquisition of Scite	2,729,014		2,729		6,546,905		—		—		6,549,634

Modification cost of accelerated vesting of restricted common stock	—		—		20,949		—		—		20,949

Net loss for the period	—		—		—		(965,370)		—		(965,370)

Foreign currency translation	—		—		—		—		6,261		6,261

Balance, March 31, 2024	32,281,424	$	32,281	$	37,695,960	$	(23,488,019)	$	(111,963)	$	14,128,259


	As of March 31, 2024				As of June 30, 2023
United States	$	3,940,160	53.8	%	$	3,727,977	60.6	%
Europe		2,332,562	31.9	%		1,763,044	28.7	%
Rest of World		1,050,657	14.3	%		662,042	10.8	%
Total	$	7,323,379	100	%	$	6,153,063	100	%


	Nine Months Ended		Year Ended
	March 31,		June 30,
	2024	2023	2023	2022
Period end Euro : US Dollar exchange rate	1.08	1.09	1.09	1.05
Average period Euro : US Dollar exchange rate	1.08	1.03	1.05	1.13

Period end GBP : US Dollar exchange rate	1.26	1.24	1.27	1.21
Average period GBP : US Dollar exchange rate	1.26	1.19	1.20	1.34

Period end Mexican Peso : US Dollar exchange rate	0.06	0.05	0.06	0.05
Average period Mexican Peso : US Dollar exchange rate	0.06	0.05	0.05	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, 2023	2,909,574	$	1.87	2,865,593	$	1.86	43,981	$	2.47
Granted	257,934		2.73	—		—	257,934		2.73
Options vesting	—		—	37,389		2.45	(37,389)		2.45
Exercised	(371,883)		2.00	(371,883)		2.00	—		—
Forfeited	(5,000)		2.67	(4,583)		2.67	(417)		2.67
Outstanding at March 31, 2024	2,790,625	$	1.93	2,526,516	$	1.84	264,109	$	2.73


	Option		Remaining
	Exercise	Options	Contractual	Options
	Price	Outstanding	Life (in years)	Exercisable
$	0.70	225,000	1.68	225,000
	0.77	25,000	0.38	25,000
	0.80	16,000	1.39	16,000
	0.90	15,000	1.35	15,000
	1.00	15,000	0.94	15,000
	1.05	305,000	2.40	305,000
	1.09	40,000	2.15	40,000
	1.10	105,000	1.25	105,000
	1.20	249,000	3.62	249,000
	1.59	25,000	4.11	25,000
	2.10	238,767	7.86	238,767
	2.13	216,708	6.64	216,708
	2.15	200,000	8.70	200,000
	2.17	35,955	7.12	35,955
	2.19	5,000	7.81	3,750
	2.40	284,000	4.62	284,000
	2.43	61,250	7.18	61,250
	2.45	89,500	6.35	89,500
	2.49	78,435	6.17	78,435
	2.50	20,000	5.13	20,000
	2.64	30,882	7.35	28,308
	2.67	28,194	7.47	25,843
	2.73	257,934	9.69	—
	2.99	8,000	6.12	8,000
	3.13	208,000	5.62	208,000
	3.50	8,000	5.87	8,000
	Total	2,790,625		2,526,516


				Weighted
				Average
	Number of			Grant Date
	Shares	Fair Value		Fair Value
Non-vested, June 30, 2023	2,477,794	$	2,711,661	$	1.52
Granted	380,000		860,650		2.26
Vested	(691,503)		(1,603,820)		1.68
Forfeited	(200,000)		(268,000)		1.40
Non-vested, March 31, 2024	1,966,291	$	1,700,491	$	1.63


	Pro Forma (Unaudited)				Pro Forma (Unaudited)
	Three Months ended March 31,				Nine Months ended March 31,
	2024		2023		2024		2023

Revenue	$	12,115,672	$	10,597,376	$	33,950,021	$	28,260,869
Cost of revenue		6,633,740		6,365,805		18,601,290		17,108,554
Gross profit		5,481,932		4,231,571		15,348,731		11,152,315

Total operating expenses		5,394,269		4,238,441		16,591,696		11,699,530

Income (loss) from operations		87,663		(6,870)		(1,242,965)		(547,215)

Other income		31,228		104,331		548,967		218,095

Income (loss) from operations before provision for income taxes		118,891		97,461		(693,998)		(329,120)
Provision for income taxes		(42,590)		(628)		(82,049)		(5,543)

Pro Forma Net income (loss)	$	76,301	$	96,833	$	(776,047)	$	(334,663)
Pro Forma Net income (loss) per weighted average share, basic	$	-	$	-	$	(0.03)	$	(0.01)
Pro Forma Net income (loss) per weighted average share, diluted	$	-	$	-	$	(0.03)	$	(0.01)


	Mar. 31,		Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec. 31,		Sept. 30,		June 30,
	2024		2023		2023		2023		2023		2022		2022		2022
Revenue:
Platforms	$	3,953,403	$	3,125,584	$	2,600,192	$	2,303,375	$	2,249,632	$	2,110,272	$	2,019,967	$	1,886,845
Transactions		8,162,269		7,188,158		7,460,779		7,656,342		8,092,794		6,606,394		6,664,676		6,675,164
Total revenue		12,115,672		10,313,742		10,060,971		9,959,717		10,342,426		8,716,666		8,684,643		8,562,009

Cost of revenue:
Platforms		571,352		486,185		382,615		275,110		268,630		253,073		230,473		240,214
Transactions		6,062,388		5,343,755		5,646,791		5,764,064		6,046,523		5,059,766		5,104,922		5,038,653
Total cost of revenue		6,633,740		5,829,940		6,029,406		6,039,174		6,315,153		5,312,839		5,335,395		5,278,867

Gross profit:
Platforms		3,382,051		2,639,399		2,217,577		2,028,265		1,981,002		1,857,199		1,789,494		1,646,631
Transactions		2,099,881		1,844,403		1,813,988		1,892,278		2,046,271		1,546,628		1,559,754		1,636,511
Total gross profit		5,481,932		4,483,802		4,031,565		3,920,543		4,027,273		3,403,827		3,349,248		3,283,142

Operating expenses:
Sales and marketing		1,122,365		804,927		685,016		455,030		642,624		666,608		521,216		691,368
Technology and product dev.		1,371,754		1,336,558		1,244,579		991,093		953,677		922,132		875,290		1,049,430
General and administrative		2,027,073		2,023,848		2,542,868		1,649,333		1,871,590		1,613,664		1,519,424		1,663,671
Depreciation and amortization		309,898		155,749		59,620		22,163		18,332		6,342		5,812		5,507
Stock-based comp. expense		541,002		596,455		591,814		585,384		480,458		608,703		175,361		225,501
Foreign currency transaction loss (gain)		22,177		(13,738)		6,620		(37,743)		(72,547)		(84,179)		72,516		91,279
Total operating expenses		5,394,269		4,903,799		5,130,517		3,665,260		3,894,134		3,733,270		3,169,619		3,726,756
Other income (expenses and income taxes)		(11,362)		366,369		110,909		120,463		103,703		73,913		34,936		5,347
Net income (loss)		76,301		(53,628)		(988,043)		375,746		236,842		(255,530)		214,565		(438,267)

Basic income (loss) per common share:
Net income (loss) per share	$	-	$	-	$	(0.04)	$	0.01	$	0.01	$	(0.01)	$	0.01	$	(0.02)
Basic weighted average common shares outstanding		30,020,652		28,092,945		27,052,445		26,981,813		26,929,314		26,816,550		26,718,171		26,576,054

Diluted income (loss) per common share:
Net income (loss) per share	$	-	$	-	$	(0.04)	$	0.01	$	0.01	$	(0.01)	$	0.01	$	(0.02)
Diluted weighted average common shares outstanding		33,511,242		28,092,945		27,052,445		30,058,791		29,791,719		26,815,550		27,779,841		26,576,054


Category	Impact			Key Drivers
Platforms	↑	$	1,703,771	Increased due to additional deployments to new and existing customers, expansion from existing customers and additional revenue from the ResoluteAI and Scite transactions. 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	↑	$	69,475	Increased primarily due to organic higher paid order volume.


Category	Impact			Key Drivers
Platforms	↑	$	3,299,308	Increased due to additional deployments to new and existing customers, expansion from existing customers and additional revenue from the ResoluteAI and Scite transactions. 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	↑	$	1,447,342	Increased primarily due to organic higher paid order volume and additional paid order volume due to the FIZ asset acquisition.


	Three Months Ended
	March 31,
	2024		2023		% Change *
As a percentage of revenue:
Platforms	14.5	%	11.9	%	2.6	%
Transactions	74.3	%	74.7	%	(0.4)	%
Total	54.8	%	61.1	%	(6.3)	%


	Impact as percentage
Category	of revenue			Key Drivers
Platforms	↑	2.6	%	Increased primarily due to proportionally greater hosting costs from ResoluteAI.
Transactions	↓	0.4	%	Decreased primarily due to higher copyright 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
January 1-31, 2024	—		—	—	$	82,347
February 1-29, 2024	—		—	—	$	82,347
March 1-31, 2024	159,044	$	2.85	—	$	379,071
Total	159,044	$	2.85	—		—

Exhibit Number	Description
2.1	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. (Incorporated by reference to Exhibit 2.1 to the registrant’s Current Report on Form 8-K filed on July 31, 2023.)
2.2	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. (Incorporated by reference to Exhibit 2.1 to the registrant’s Current Report on Form 8-K filed on November 24, 2023.)
3.1.1	Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to the registrant’s Registration Statement on Form SB-2 filed on December 28, 2007.)
3.1.2	Articles of Merger Effective March 4, 2013. (Incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on March 6, 2013.)
3.2	Amended and Restated Bylaws. (Incorporated by reference to Exhibit 3.2 to the registrant’s Current Report on Form 8-K filed on October 17, 2012.)
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 *
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	RESEARCH SOLUTIONS, INC.

	By:	/s/ Roy W. Olivier
		Roy W. Olivier
Date: May 13, 2024		Chief Executive Officer and President (Principal Executive Officer)

	By:	/s/ William Nurthen
		William Nurthen
Date: May 13, 2024		Chief Financial Officer (Principal Financial and Accounting Officer)


/s/ Roy W. Olivier
Roy W. Olivier
Chief Executive Officer and President (Principal Executive Officer)
May 13, 2024