Research Solutions, Inc 10-Q for FY2023 Q2

Research Solutions, Inc. (RSSS)

10-Q 2023-02-10 For: 2022-12-31

Added on April 06, 2026

About this 10-Q

Research Solutions, Inc filed this 10-Q on February 10, 2023, covering the quarter ended December 31, 2022 (FY2023 Q2).

Headline figures

Quarter ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $8.72M; up 10.7% from $7.87M a year earlier
Net loss: $255.53K; compared with a net loss of $481.59K a year earlier
Diluted EPS: -$0.01; compared with -$0.02 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 February 3, 2023
Common Stock, $0.001 par value		29,164,809

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	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	31
Item 4. Controls and Procedures	31

PART II — OTHER INFORMATION	32
Item 1A. Risk Factors	32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 6. Exhibits	33

SIGNATURES	34


	December 31,
	2022		June 30,
	(unaudited)		2022
Assets
Current assets:
Cash and cash equivalents	$	11,262,564	$	10,603,175
Accounts receivable, net of allowance of $71,019 and $94,144, respectively		5,243,386		5,251,545
Prepaid expenses and other current assets		343,629		276,026
Prepaid royalties		41,216		846,652
Total current assets		16,890,795		16,977,398

Other assets:
Property and equipment, net of accumulated depreciation of $855,494 and $840,996, respectively		55,165		47,985
Non-refundable deposit for asset acquisition		297,450		—
Deposits and other assets		924		893
Total assets	$	17,244,334	$	17,026,276

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	5,629,101	$	6,604,032
Deferred revenue		5,967,525		5,538,526
Total current liabilities		11,596,626		12,142,558

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; 29,154,737 and 27,075,648 shares issued and outstanding, respectively		29,155		27,076
Additional paid-in capital		28,874,383		28,072,855
Accumulated deficit		(23,135,237)		(23,094,272)
Accumulated other comprehensive loss		(120,593)		(121,941)
Total stockholders’ equity		5,647,708		4,883,718
Total liabilities and stockholders’ equity	$	17,244,334	$	17,026,276


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2022		2021		2022		2021

Revenue:
Platforms	$	2,110,272	$	1,604,829	$	4,130,239	$	3,114,703
Transactions		6,606,394		6,267,458		13,271,070		12,500,088
Total revenue		8,716,666		7,872,287		17,401,309		15,614,791

Cost of revenue:
Platforms		253,073		231,668		483,546		477,324
Transactions		5,059,766		4,802,959		10,164,688		9,639,432
Total cost of revenue		5,312,839		5,034,627		10,648,234		10,116,756
Gross profit		3,403,827		2,837,660		6,753,075		5,498,035

Operating expenses:
Selling, general and administrative		3,726,928		3,315,249		6,890,735		6,339,236
Depreciation and amortization		6,342		4,260		12,154		7,156
Total operating expenses		3,733,270		3,319,509		6,902,889		6,346,392

Loss from operations		(329,443)		(481,849)		(149,814)		(848,357)

Other income		74,695		264		113,764		540

Loss from operations before provision for income taxes		(254,748)		(481,585)		(36,050)		(847,817)
Provision for income taxes		(782)		—		(4,915)		(5,770)

Net loss		(255,530)		(481,585)		(40,965)		(853,587)

Other comprehensive income (loss):
Foreign currency translation		6,524		185		1,348		(2,790)
Comprehensive loss	$	(249,006)	$	(481,400)	$	(39,617)	$	(856,377)

Loss per common share:
Net loss per share, basic and diluted	$	(0.01)	$	(0.02)	$	-	$	(0.03)
Weighted average common shares outstanding, basic and diluted		26,816,550		26,351,947		26,767,360		26,314,532


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

Balance, September 30, 2022	27,330,878	$	27,331	$	28,298,171	$	(22,879,707)	$	(127,117)	$	5,318,678

Fair value of vested stock options	—		—		261,031		—		—		261,031

Fair value of vested restricted common stock	1,800,000		1,800		345,872		—		—		347,672

Repurchase of common stock	(16,141)		(16)		(30,651)		—		—		(30,667)

Common stock issued upon exercise of stock options	40,000		40		(40)		—		—		—

Net loss for the period	—		—		—		(255,530)		—		(255,530)

Foreign currency translation	—		—		—		—		6,524		6,524

Balance, December 31, 2022	29,154,737	$	29,155	$	28,874,383	$	(23,135,237)	$	(120,593)	$	5,647,708

Balance, July 1, 2022	27,075,648	$	27,076	$	28,072,855	$	(23,094,272)	$	(121,941)	$	4,883,718

Fair value of vested stock options	—		—		301,737		—		—		301,737

Fair value of vested restricted common stock	2,022,334		2,022		480,305		—		—		482,327

Fair value of vested unrestricted common stock	36,509		36		68,236		—		—		68,272

Repurchase of common stock	(25,800)		(25)		(48,704)		—		—		(48,729)

Common stock issued upon exercise of stock options	46,046		46		(46)		—		—		—

Net loss for the period	—		—		—		(40,965)		—		(40,965)

Foreign currency translation	—		—		—		—		1,348		1,348

Balance, December 31, 2022	29,154,737	$	29,155	$	28,874,383	$	(23,135,237)	$	(120,593)	$	5,647,708


	As of December 31, 2022				As of June 30, 2022
United States	$	3,068,940	58.5	%	$	3,255,976	62.0	%
Europe		1,645,037	31.4	%		1,665,111	31.7	%
Rest of World		529,409	10.1	%		330,458	6.3	%
Total	$	5,243,386	100	%	$	5,251,545	100	%


	Six Months Ended		Year Ended
	December 31,		June 30,
	2022	2021	2022	2021
Period end Euro : US Dollar exchange rate	1.07	1.13	1.05	1.19
Average period Euro : US Dollar exchange rate	1.01	1.17	1.13	1.19

Period end GBP : US Dollar exchange rate	1.21	1.35	1.21	1.38
Average period GBP : US Dollar exchange rate	1.17	1.37	1.34	1.34

Period end Mexican Peso : US Dollar exchange rate	0.05	0.05	0.05	0.05
Average period Mexican Peso : US Dollar exchange rate	0.05	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, 2022	3,182,872	$	1.79	2,999,974	$	1.75	182,898	$	2.49
Granted	200,000		2.15	—		—	200,000		2.15
Options vesting	—		—	279,805		2.25	(279,805)		2.25
Exercised	(162,648)		1.40	(162,648)		1.40	—		—
Forfeited	(150,000)		1.81	(147,917)		1.78	(2,083)		3.92
Repurchased	—		—	—		—	—		—
Outstanding at December 31, 2022	3,070,224	$	1.84	2,969,214	$	1.81	101,010	$	2.45


	Option		Remaining
	Exercise	Options	Contractual	Options
	Price	Outstanding	Life (in years)	Exercisable
$	0.70	225,000	2.93	225,000
	0.77	25,000	1.63	25,000
	0.80	16,000	2.64	16,000
	0.90	15,000	2.59	15,000
	1.00	15,000	2.19	15,000
	1.05	305,000	3.65	305,000
	1.09	40,000	3.40	40,000
	1.10	105,000	2.50	105,000
	1.15	104,400	0.10	104,400
	1.20	274,000	4.55	274,000
	1.25	32,000	0.12	32,000
	1.59	25,000	5.36	25,000
	1.80	62,800	0.73	62,800
	1.85	16,000	0.38	16,000
	1.95	200,000	5.51	200,000
	2.10	238,767	9.11	238,767
	2.13	216,708	7.88	212,530
	2.15	200,000	9.95	200,000
	2.17	35,955	8.36	20,974
	2.19	5,000	9.05	—
	2.40	302,833	5.87	302,833
	2.43	61,250	8.43	48,750
	2.45	163,000	7.59	135,833
	2.49	78,435	7.42	73,956
	2.50	20,000	6.38	20,000
	2.64	30,882	8.60	15,441
	2.67	33,194	8.72	16,597
	2.99	8,000	7.37	7,333
	3.13	208,000	6.87	208,000
	3.50	8,000	7.12	8,000
	Total	3,070,224		2,969,214


				Weighted
				Average
	Number of			Grant Date
	Shares	Fair Value		Fair Value
Non-vested, June 30, 2022	400,092	$	775,453	$	2.38
Granted	2,022,334		2,958,528		1.46
Vested	(122,143)		(482,327)		2.54
Forfeited	—		—		—
Non-vested, December 31, 2022	2,300,283	$	3,251,654	$	1.56


	Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec 31,		Sept. 30,		June 30,		Mar. 31,
	2022		2022		2022		2022		2021		2021		2021		2021
Revenue:
Platforms	$	2,110,272	$	2,019,967	$	1,886,845	$	1,786,224	$	1,604,829	$	1,509,874	$	1,429,160	$	1,344,183
Transactions		6,606,394		6,664,676		6,675,164		6,971,128		6,267,458		6,232,630		6,788,494		6,996,349
Total revenue		8,716,666		8,684,643		8,562,009		8,757,352		7,872,287		7,742,504		8,217,654		8,340,532

Cost of revenue:
Platforms		253,073		230,473		240,214		219,051		231,668		245,656		257,320		233,696
Transactions		5,059,766		5,104,922		5,038,653		5,299,804		4,802,959		4,836,473		5,218,118		5,404,196
Total cost of revenue		5,312,839		5,335,395		5,278,867		5,518,855		5,034,627		5,082,129		5,475,438		5,637,892

Gross profit:
Platforms		1,857,199		1,789,494		1,646,631		1,567,173		1,373,161		1,264,218		1,171,840		1,110,487
Transactions		1,546,628		1,559,754		1,636,511		1,671,324		1,464,499		1,396,157		1,570,376		1,592,153
Total gross profit		3,403,827		3,349,248		3,283,142		3,238,497		2,837,660		2,660,375		2,742,216		2,702,640

Operating expenses:
Sales and marketing		666,608		521,216		691,368		543,496		518,357		522,951		521,220		566,713
Technology and product dev.		922,132		875,290		1,049,430		971,959		868,236		821,460		732,371		664,195
General and administrative		1,613,664		1,519,424		1,663,671		1,629,371		1,616,135		1,497,223		1,354,244		1,233,603
Depreciation and amortization		6,342		5,812		5,507		4,988		4,260		2,896		2,694		2,066
Stock-based comp. expense		608,703		175,361		225,501		399,234		300,539		171,110		221,589		179,345
Foreign currency transaction loss (gain)		(84,179)		72,516		91,279		29,394		11,982		11,243		(890)		6,648
Total operating expenses		3,733,270		3,169,619		3,726,756		3,578,442		3,319,509		3,026,883		2,831,228		2,652,570
Other income (expenses and income taxes)		73,913		34,936		5,347		(585)		264		(5,494)		136		(322)
Net income (loss)		(255,530)		214,565		(438,267)		(340,530)		(481,585)		(372,002)		(88,876)		49,748

Basic income (loss) per common share:
Net income (loss) per share	$	(0.01)	$	0.01	$	(0.02)	$	(0.01)	$	(0.02)	$	(0.01)	$	—	$	—
Basic weighted average common shares outstanding		26,816,550		26,718,171		26,576,054		26,512,195		26,351,947		26,277,116		26,145,794		26,027,665

Diluted income (loss) per common share:
Net income (loss) per share	$	(0.01)	$	0.01	$	(0.02)	$	(0.01)	$	(0.02)	$	(0.01)	$	—	$	—
Diluted weighted average common shares outstanding		26,815,550		27,779,841		26,576,054		26,512,195		26,351,947		26,277,116		26,145,794		26,565,892


	Three Months Ended December 31,
	2022		2021		$ Change		% Change

Revenue:
Platforms	$	2,110,272	$	1,604,829	$	505,443	31.5	%
Transactions		6,606,394		6,267,458		338,936	5.4	%
Total revenue		8,716,666		7,872,287		844,379	10.7	%

Cost of revenue:
Platforms		253,073		231,668		21,405	9.2	%
Transactions		5,059,766		4,802,959		256,807	5.3	%
Total cost of revenue		5,312,839		5,034,627		278,212	5.5	%

Gross profit:
Platforms		1,857,199		1,373,161		484,038	35.2	%
Transactions		1,546,628		1,464,499		82,129	5.6	%
Total gross profit		3,403,827		2,837,660		566,167	20.0	%

Operating expenses:
Sales and marketing		666,608		518,357		148,251	28.6	%
Technology and product development		922,132		868,236		53,896	6.2	%
General and administrative		1,613,664		1,616,135		(2,471)	(0.2)	%
Depreciation and amortization		6,342		4,260		2,082	48.9	%
Stock-based compensation expense		608,703		300,539		308,164	102.5	%
Foreign currency transaction loss (gain)		(84,179)		11,982		(96,161)	(802.5)	%
Total operating expenses		3,733,270		3,319,509		413,761	12.5	%

Loss from operations		(329,443)		(481,849)		152,406	31.6	%

Other income		74,695		264		74,431	28,193.6	%

Loss from operations before provision for income taxes		(254,748)		(481,585)		226,837	47.1	%
Provision for income taxes		(782)		—		(782)	—	%

Net loss	$	(255,530)	$	(481,585)		226,055	46.9	%


	Six Months Ended
	December 31,
	2022		2021
Expected dividend yield	—	%	—	%
Risk-free interest rate	3.76	%	0.92 - 1.01	%
Expected life (in years)	5		6
Expected volatility	56	%	56	%


Category	Impact			Key Drivers
Platforms	↑	$	505,443	Increased due to additional deployments to new and existing customers, and expansion from existing customers. Revenue is recognized ratably over the term of the subscription agreement, which is typically one year, provided all other revenue recognition criteria have been met. Billings or payments received in advance of revenue recognition are recorded as deferred revenue.
Transactions	↑	$	338,936	Increased primarily due to higher paid order volume.


Category	Impact			Key Drivers
Platforms	↑	$	1,015,536	Increased due to additional deployments to new and existing customers, and expansion from existing customers. Revenue is recognized ratably over the term of the subscription agreement, which is typically one year, provided all other revenue recognition criteria have been met. Billings or payments received in advance of revenue recognition are recorded as deferred revenue.
Transactions	↑	$	770,982	Increased due to higher paid order volume and pricing initiatives.


	Three Months Ended
	December 31,
	2022		2021		% Change *
As a percentage of revenue:
Platforms	12.0	%	14.4	%	(2.4)	%
Transactions	76.6	%	76.6	%	-	%
Total	61.0	%	64.0	%	(3.0)	%


	Six Months Ended December 31,
	2022		2021		$ Change		% Change

Revenue:
Platforms	$	4,130,239	$	3,114,703	$	1,015,536	32.6	%
Transactions		13,271,070		12,500,088		770,982	6.2	%
Total revenue		17,401,309		15,614,791		1,786,518	11.4	%

Cost of revenue:
Platforms		483,546		477,324		6,222	1.3	%
Transactions		10,164,688		9,639,432		525,256	5.4	%
Total cost of revenue		10,648,234		10,116,756		531,478	5.3	%

Gross profit:
Platforms		3,646,693		2,637,379		1,009,314	38.3	%
Transactions		3,106,382		2,860,656		245,726	8.6	%
Total gross profit		6,753,075		5,498,035		1,255,040	22.8	%

Operating expenses:
Sales and marketing		1,187,824		1,041,308		146,516	14.1	%
Technology and product development		1,797,422		1,689,696		107,726	6.4	%
General and administrative		3,133,088		3,113,358		19,730	0.6	%
Depreciation and amortization		12,154		7,156		4,998	69.8	%
Stock-based compensation expense		784,064		471,649		312,415	66.2	%
Foreign currency transaction loss (gain)		(11,663)		23,225		(34,888)	(150.2)	%
Total operating expenses		6,902,889		6,346,392		556,497	8.8	%

Loss from operations		(149,814)		(848,357)		698,543	82.3	%

Other income		113,764		540		113,224	20,967.4	%

Loss from operations before provision for income taxes		(36,050)		(847,817)		811,767	95.7	%
Provision for income taxes		(4,915)		(5,770)		855	14.8	%

Net loss	$	(40,965)	$	(853,587)	$	812,622	95.2	%


	Impact as percentage
Category	of revenue			Key Drivers
Platforms	↓	2.4	%	Decreased primarily due to lower software expense and lower personnel costs.


				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
Oct 1-31, 2022	—		—	—	$	237,283
November 1-30, 2022	—		—	—	$	237,283
December 1-31, 2022	16,141	$	1.90	—	$	206,616
Total	16,141	$	1.90	—		—

Exhibit Number	Description
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 *
101.INS	INLINE XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
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 – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document


	RESEARCH SOLUTIONS, INC.

	By:	/s/ Roy W. Olivier
		Roy W. Olivier
Date: February 10, 2023		Chief Executive Officer and President (Principal Executive Officer)

	By:	/s/ William Nurthen
		William Nurthen
Date: February 10, 2023		Chief Financial Officer (Principal Financial and Accounting Officer)


/s/ Roy W. Olivier
Roy W. Olivier
Chief Executive Officer and President (Principal Executive Officer)
February 10, 2023